
        ASSESSMENT OF THE POTENTIAL COSTS, BENEFITS,
AND OTHER IMPACTS
                                  FINAL RULE
CATEGORICAL NON-WASTE DETERMINATION FOR SELECTED NON- HAZARDOUS SECONDARY MATERIALS (NHSMs): 
                          OTHER-TREATED RAILROAD TIES
                                       
                                       

Office of Resource Conservation and Recovery
U. S. Environmental Protection Agency
1200 Pennsylvania Ave., N. W.
Washington, DC 20460
                                       
                                       
                                       
                                       
                                       
                                       
                                       
                                       
                               December 20, 2017

                                       
                           Purpose of this Document
      The proposed Other Treated Railroad Ties (OTRT) rule stated that the action was definitional in nature, and any costs or benefits accrued to the corresponding Clean Air Act rules (81 FR 75798).  In accordance with the Office of Management and Budget (OMB) Circular A-4 requirement that EPA analyze the costs and benefits of regulations, EPA prepared an economic assessment (EA) document for the proposal that examined the scope of indirect impacts for both costs and benefits.  The assessment found that facilities operating under CAA section 129 standards that are currently burning OTRTs, and no other solid wastes, and who had planned to continue burning these materials, may experience cost savings associated with the potential modification and operational adjustments of their affected units. In this case, the unit-level cost savings were estimated, on average, to be approximately $266,000 per year.  In addition, the assessment indicated that the increased regulatory clarity associated with the action could stimulate increased product fuel use for one or more of these NHSMs, potentially resulting in upstream life cycle benefits associated with reduced extraction of selected virgin materials. 
      
      Based on public comments, information from stakeholders and the Executive Order 13771 signed January 30, 2017, the Agency has expanded the EA for the final rule to take into account additional cost savings.  In considering this information, EPA determined that the final OTRT rule EA should consider the potential aggregate cost savings to industry when these materials are regulated as non-waste fuels (because of this rulemaking), rather than as solid waste. In addition, the Agency is ensuring that its cost benefit analysis is consistent with the OMB guidance for EO 13771. To do that, we made necessary adjustments to the final OTRT rule EA. 

    In this economic analysis, we model two baseline scenarios for the end destination of OTRTs assuming this rule does not go into effect.  Both scenarios entail potential costs that industry may incur either to find alternative fuel sources or meet additional standards that would be required for a facility to burn OTRTs.  Baseline Scenario 1 models OTRTs being sent to landfills and boilers burning virgin material as a substitute.  Baseline Scenario 2 models OTRTs being sent to CAA 129 compliant energy recovery facilities.

      The two baseline scenarios can be taken as a lower and upper bound on the range of potential baseline costs and rule cost savings.  Assuming a 7% discount rate, the present value range of cost savings for this rule are approximately $6.9 million on the low end (baseline scenario 1) and approximately $111.3 million on the high end (baseline scenario 2).
      
      The following sections provide an overview of the OTRT categorical rule, the methodology and findings of the economic assessment of the costs and savings to affected combustion units and OTRT generators as a result of this rule, and, as required by applicable statutes and executive orders, a summary of equity considerations and other regulatory concerns associated with the final rule.
                                       

                                   Section 1
                                 Introduction
                                       
 Historical Background of the Non-Hazardous Secondary Material Rules

      Section 129 of the Clean Air Act (CAA) directs EPA to promulgate regulations to control emissions of nine specified pollutants from "solid waste incineration units." EPA did so in December 2000 with the publication of the final Standards of Performance for New Stationary Sources and Emission Guidelines for Existing Sources: Commercial and Industrial Solid Waste Incineration Units (the "CISWI Rule"). In September 2004, under section 112(d) of the CAA, the Agency promulgated the National Emissions Standards for Hazardous Air Pollutants for Industrial, Commercial, and Institutional Boilers and Process Heaters (the "Boilers Rule"). This rule established Maximum Achievable Control Technology (MACT) standards for this source category. Units regulated under section 129 cannot be subject to any rule promulgated under section 112. 
      Responding to a petition for reconsideration, EPA amended the CISWI Rule in September 2005 with a rule that revised definitions for "solid waste," "commercial or industrial waste," and "commercial and industrial solid waste incineration unit" (the "CISWI Definitions Rule"). As part of the CISWI Definitions Rule, EPA made a distinction between solid waste incinerators and boilers, characterizing the former as units that are designed and operated to discard materials through high temperature combustion. However, EPA excluded from the definition of a solid waste incinerator those units designed to recover energy for "useful purposes such as steam generation or process heating."
      In July 2007, the Court of Appeals for the District of Columbia Circuit vacated and remanded to EPA both the CISWI Definitions Rule and the Boilers Rule. In vacating the Definitions Rule, the Court noted that, despite the potential reasonableness of the functional distinction between boilers and incinerators, the CAA is unambiguous in its requirement that EPA regulate as a solid waste incineration unit any commercial or industrial incinerator that combusts any solid waste material, regardless of whether the waste is burned as a "fuel." The Court also concluded that EPA erred in excluding from the CISWI Definitions Rule units that combust solid waste for the purposes of energy recovery and including these units in the Boilers Rule. 
      In partial response to the Court's decision, EPA published the Non-Hazardous Secondary Materials (NHSM) Rule on March 21, 2011. In this rule, EPA finalized standards and procedures to be used to identify whether NHSMs are solid wastes when used as fuels or ingredients in combustion units. "Secondary material" was defined for the purposes of that rulemaking as any material that is not the primary product of a manufacturing or commercial process, and can include post-consumer material, off-specification commercial chemical products or manufacturing chemical intermediates, post-industrial material, and scrap (codified in 40 CFR 241.2). "Non-hazardous secondary material" is a secondary material that, when discarded, would not be identified as a hazardous waste under 40 CFR part 261 (codified in 40 CFR 241.2). Traditional fuels, including historically managed traditional fuels (e.g., coal, oil, natural gas) and "alternative" traditional fuels (e.g., clean cellulosic biomass) are not secondary materials and thus, are not solid wastes under the rule unless discarded (40 CFR 241.2).
      Amendments to the 40 CFR part 241 regulations were published in the Federal Register on February 7, 2013. These amendments provided clarification on certain issues on which EPA received new information, as well as specific targeted revisions. In addition, these amendments listed several NHSMs as categorical non-wastes when used as fuels. The Agency also indicated that we would consider adding additional materials to the categorical listings as more information became available. Additional amendments to the regulations were finalized on February 8, 2016, categorically listing three additional materials, including creosote treated railroad ties (CTRTs) as non-waste fuels. A proposal of further amendments to add three types of OTRTs to the list of categorical non-waste fuels, namely creosote borate, copper naphthenate, and copper naphthenate-borate treated railroad ties was published on November 1, 2016. 

 Need for Regulatory Action

      The Agency received a petition from the Treated Wood Council (TWC) in April 2013 requesting that nonhazardous treated wood (including borate and copper naphthenate) be categorically listed as non-waste fuels in 40 CFR 241.4(a). Under the April 2013 petition, nonhazardous treated wood would include wood treated with: waterborne borate based preservatives, waterborne organic based preservatives, waterborne copper based wood preservatives (ammoniacal/ alkaline copper quat, copper azole, copper HDO, alkaline copper betaine, or copper naphthenate), creosote, oilborne copper naphthenate, pentachlorophenol, or dual-treated with any of the above. 
      As part of the Agency's response to the 2013 petition, noted above, EPA finalized a rule on February 8, 2016 that added CTRTs to the list of categorical non-waste fuels.  In addition, TWC requested, in an August 21, 2015 letter, that the Agency move forward on a subset of materials that were identified in the April 2013 petition.  TWC indicated that creosote borate, copper naphthenate, and copper naphthenate-borate treated railroad ties are increasingly being used as alternatives to CTRTs due, in part, to lower overall contaminant levels, and that the ability to reuse the ties is an important consideration in rail tie purchasing decisions. After reviewing TWC's information on these three treated railroad tie types, EPA determined that these three types of treated railroad ties are candidates for categorical non-waste listings.
      The purpose of the final action is to establish a categorical non-waste determination for the OTRTs. By listing the materials as categorical non-wastes, the rule provides for greater regulatory clarity and certainty, as persons burning these materials do not need to evaluate them under the general self-implementing case-by-case standards and procedures that would otherwise apply to NHSMs used in combustion units. 

 Summary of the Final Rule

   Based on the information in the rulemaking record, the Agency is amending 40 CFR 241.4(a) by categorically listing as non-waste fuels railroad ties treated with creosote-borate, copper naphthenate, copper naphthenate-borate, or mixtures of railroad ties treated with these preservatives.

      For units combusting copper-naphthenate-borate and/or copper naphthenate railroad ties, such materials could be combusted in units designed to burn biomass only, biomass and fuel oil, or biomass and coal. For units combusting railroad ties containing creosote, including creosote-borate or any mixtures of ties containing creosote, borate, and copper naphthenate, such materials must be burned in combustion units that are designed to burn both biomass and fuel oil. Units meeting designed to burn requirements for fuel oil and biomass may also be designed to burn coal. The Agency would consider units to meet this requirement if the unit combusts fuel oil as part of normal operations and not solely as part of start up or shut down operations. 

      Consistent with the approach for CTRTs outlined in the February 2016 rule, the Agency is also making final amendments that extend this categorical listing to units combusting railroad ties treated with creosote-borate (or other mixtures of treated railroad ties containing creosote, borate and copper naphthenate) at major pulp and paper mills or units at power production facilities subject to 40 CFR part 63, subpart DDDDD (Boiler MACT) that combust such ties and had been designed to burn biomass and fuel oil, but are modified (e.g., oil delivery mechanisms are removed) in order to use natural gas instead of fuel oil as part of normal operations and not solely as part of start-up or shut-down operations. These ties may continue to be combusted as a product fuel only if certain conditions are met, which are intended to ensure that they are not being discarded: 

 Must be combusted in existing (i.e., commenced construction prior to April 14, 2014) stoker, bubbling bed, fluidized bed or hybrid suspension grate boilers; and
 Must comprise no more than 40 percent of the fuel that is used on an annual heat input basis.

     This standard would be applicable to existing units burning creosote-borate, and mixtures of creosote, copper naphthenate and borate treated railroad ties that had been designed to burn fuel oil and biomass and have been modified to burn natural gas instead of fuel oil. This standard will also apply if an existing unit designed to burn fuel oil and biomass is modified at some point in the future to replace fuel oil with natural gas. Such units that have switched to natural gas from fuel oil as described above may also be designed to burn coal. 

 Human Health and Environmental Impacts

      Together with the corresponding CAA rules, this rule will likely result in various changes in materials management practices that may yield a variety of human health, environmental, and economic positive or negative impacts. To the extent that the rule affects the CAA regulatory status of individual combustion units burning the selected material(s), the rule may affect criteria pollutant and air toxics emissions. In addition, any increased quantities of these NHSMs burned as a non-waste fuel would result in upstream life cycle benefits associated with reduced extraction of traditional fuel(s). Finally, to the extent that the rule may influence market dynamics within affected industries, economic benefits or costs may occur. 
      
      Our research finds that the NHSM fuels selected are generally comparable in BTU and contaminant levels to fuels that the combustors would otherwise burn Therefore, the overall level of emissions, or the emissions mix from boilers is not expected to change significantly under this proposal. However, we cannot confirm that there would be no cases of an incremental increase in exposure (negative impacts) as an indirect result of this rule if the affected facilities accept more, or a different combination of non-hazardous secondary materials. 

      This rule may stimulate the increased use of the selected NHSMs for use as a fuel in CAA section 112 boilers. The increased use of these NHSMs would likely result in the displacement of selected traditional fuels, or other non-waste fuels, depending upon availability, prices, and unit design. A net displacement of coal or other fossil fuels could result in various environmental benefits, including reduced upstream emissions of particulate matter, criteria pollutants, and toxic emissions and carbon emissions. 
      
      Because of their high energy content processed OTRTs are beneficially used as an alternative to traditional fuels for heat and energy recovery in a wide variety of different unit types and industrial sectors. These may include units designed specifically to burn crossties, industrial wood fired boilers, utility boilers, or cement kilns. 
      
      There may also be reduced water and energy usage. Any reduced emissions or activities at virgin fuel mining or processing facilities may result in reduced environmental impacts to citizens living near or around the affected operations.
      
      The net human health and environmental impacts from the potential changes discussed above have not been assessed. Therefore, the overall net impact from combustion of OTRTs could be either positive or negative.
      
      Increased beneficial fuel use of the selected materials could lead to increased market valuations of these materials, and potentially reduced valuations of substitutes. These changes in market valuations, and corresponding supply and demand, could disrupt the market equilibrium and alter the economics of the affected materials and industries. This could potentially lead to incremental changes in employment, revenues, and profitability for certain industrial sectors, subsectors, or individual companies. Liability and goodwill considerations may also be factors. Facilities burning the materials as a non-waste fuel may receive economic value from the avoided stigma of burning a solid waste, and the corresponding liability concerns.
   

1.5 Market Failure 

      In determining whether OTRTs represent a market failure (i.e. inefficient allocation of goods and services) several end-use applications for used railroad ties were taken into account.  They include burning for energy recovery, landscaping, and agricultural applications.  The remaining portion of ties are landfilled.  Burning railroad ties for energy recovery is the largest and most valuable use, accounting annually for 62% of the ties pulled out of service.  Section 2.3 of this document contains a more comprehensive discussion of the spent railroad tie universe. 
      
      OTRTs currently make up a small percentage of the total railroad ties in use, and therefore account for a small portion of ties pulled out of use and available for energy recovery.  However, industry has informed EPA that OTRTs will make up a larger percentage over time.  As traditional ties are replaced, is it likely that OTRTs will be the preferred replacement across the country.

      EPA has already promulgated a final rule designating CTRTs as a non-waste fuel.  This allows boilers to burn CTRTs as a fuel in units subject to CAA 112 standards.  Currently, it is assumed that OTRTs would be burned in units subject to CAA 129 for energy recovery.  Due to the expense of combusting OTRTs in such solid waste incinerators, industry has informed EPA that OTRTs would be sent to landfills if they remained classified as a solid waste fuel. Therefore, absent this rule, an increasing portion of the spent railroad tie universe would be unavailable as a fuel, which is its most prevalent use.  Accordingly, this outcome would constitute a net cost to the economy.

      OTRTs are pulled from service after their useful life or after any structural damage no matter how long they have been in service.  This final rule allows OTRTs to be classified in a similar manner to CTRT and be burned for energy recovery in units subject to CAA 112.  Such facilities value the fuel potential of OTRTs and their use as an alternative to CTRTs. 

      

                                   Section 2
                         Universe of Affected Entities
                                       
      This section provides an overview of the universe of combustion units that may be affected by the NHSM OTRT final rule.  The rule may affect any unit that uses OTRTs as an alternative fuel.  To provide a comprehensive picture of this universe, this chapter describes and categorizes potentially affected units within the NHSM framework.


2.1 Summary of Affected Boiler Universe  

      Based on the information presented in Table 5 of the Boiler MACT Preamble (78 FR 7155-7156. January 31, 2013), we estimate there may be as many as 502 biomass-capable industrial boiler facilities subject to CAA section 112 standards in the U.S.  It is assumed that the number of these biomass-capable units that would include OTRTs as a non-waste fuel in their fuel mix would depend on OTRT availability. At highest OTRT availability, it is assumed that 20 percent of biomass-capable units, approximately 100 units, would combust OTRTs.  This value was assumed for 2038, and values for prior years were estimated based on the rate of increase in the percentage of used ties that are OTRTs. 
      The number of existing biomass-capable boilers that are potentially affected by this final rule (i.e. may include OTRTs in their fuel mix) is expected to increase over time as OTRTs become more available.  In 2018, it is estimated that 13 boilers will affected by this rule.  Each year after, another four boilers will be affected as the availability of OTRTs available.  As stated earlier, by the year 2038, it's expected that 100 boilers will be affected.  

2.2 What distinguishes the affected boilers from unaffected boilers?

      As indicated above, at most only 20 percent of biomass-capable units would combust OTRTs.  This number is based on the assumption that if the 91,000 tons of OTRT available (see section 2.5) were divided evenly amongst the total universe of 502 biomass-capable boilers, each boiler would derive only a marginal amount of additional energy from the combustion of OTRTs.  Practical barriers to burning OTRTs such as the need to negotiate shipments with suppliers, account for the costs of transporting OTRTs to the boiler, and potentially the need to modify permits make it unlikely that facilities would burn only a marginal amount of OTRTs.  Instead, it is more likely that a subset of the universe of biomass-capable boilers would combust OTRTs. This analysis settles on 20 percent as a conservative estimate of the proportion of the biomass-capable boiler universe that will burn OTRTs and be affected by this rule.




2.3 Overview of OTRT Universe

      The OTRT universe consists of crossties that have been removed from service and are processed for fuel.  The wood preservative formulations covered by this rule (creosote-borate, copper naphthenate, copper naphthenate-borate, or mixtures of railroad ties treated with these preservatives) are increasingly being used as alternatives to creosote, due, in part, to lower overall contaminant levels and that the ability to reuse the ties is an important consideration rail tie purchasing decisions. 

      OTRTs typically comprise North American hardwoods that have been treated with a wood preservative. Most energy recovery from OTRTs is conducted through three parties: the railroad or utility generating the crossties; the reclamation company that sorts and sometimes processes the crossties; and the third-party combustor that produces the energy. Typically, ownership of the OTRTs is transferred directly from the generator to the reclamation company that sorts materials for highest value secondary uses and then sells the products to end-users, including those combusting the material as fuel. Some reclamation companies sell OTRTs to processors who remove metal contaminants and grind the ties into chipped wood. Other reclamation companies have their own grinders, do their own contaminant removal, and can sell directly to the combusting facilities. Information submitted to the Agency indicates there are approximately 15 railroad tie recovery companies in North America, with industry wide revenues of $65-75 million. 
      After crossties are removed from service, they are transferred for sorting/processing, but in some cases, they may be temporarily stored in the railroad rights-of-way or at another location selected by the reclamation company. When the crossties are temporarily stored, they are stored until their value as an alternative fuel can be realized, generally through a contract completed for transferal of ownership to the reclamation contractor or combustor. This means that not all OTRTs originate from crossties removed from service in the same year; some OTRTs are processed from crossties removed from service in prior years and stored by railroads or removal/reclamation companies until their value as a landscaping element or fuel could be realized. 

      Typically, reclamation companies receive OTRTs by rail. The processing of the crossties into fuel by the reclamation/processing companies involves several steps. Contaminant metals (spikes, nails, plates, etc.) undergo initial separation and removal by the user organization (railroad company) during inspection. At the reclamation company, metal is further removed by magnets and may occur in multiple stages. After removal of contaminant metals, the crossties are then ground or shredded to a specified size depending on the needs of the end-use combustor, with chip size typically between 1  -  2 inches. Such grinding and shredding facilitates handling, storage, and metering to the combustion chamber. By achieving a uniform particle size, combustion efficiency will be improved due to the uniform and controlled fuel feed rate and the ability to regulate the air supply. Additionally, the reduction process exposes a greater surface area of the particle to the heated gases, thus releasing any moisture more rapidly, and thereby enhancing its heating value. This step may occur in several phases, including primary and secondary grinding, or in a single phase. 

      Once the crossties are ground to a specific size, there is further screening based on the needs of the end-use combustor. Depending on the configuration of the facility and equipment, screening may occur concurrently with grinding or at a subsequent stage. Once the processing of OTRTs is complete, the OTRTs are sold directly to the end-use combustor for energy recovery. Processed OTRTs are delivered to the buyers by railcar or truck. The OTRTs are then stockpiled prior to combustion, with a typical storage timeframe ranging from a day to a week. When the OTRTs are to be burned for energy recovery, the material is then transferred from the storage location using a conveyor belt or front-end loader. The OTRTs may be combined with other biomass fuels, including hog fuel and bark. OTRTs are commonly used to provide the high Btu fuel to supplement low-Btu biomass to ensure proper combustion, often in lieu of coal or other fossil fuels. The combined fuel may be further hammered and screened prior to combustion. 

    In general, contracts for the purchase and combustion of OTRTs include fuel specifications limiting contaminants, such as metals, and prohibiting the receipt of wood treated with other preservatives such as pentachlorophenol.
    
2.4   Summary of Overall OTRT Availability for Use as Fuel 
      The percentage of railroad ties that are OTRTs is expected to rise over time. Direct OTRT data were not readily available, so estimates were made based on information gathered on the availability of CTRT railroad ties used as fuel. Overall, as many as 20 million railroad ties (which equals 1.82 million tons assuming a weight of 182 pounds per tie) are removed from service annually.[,]  For this analysis, we assumed that this 1.82 million tons of railroad ties will remain constant over time.  
  
      Currently, 62 percent of the 1.82 million tons of railroad ties (1.13 million tons) are burned for energy recovery.  It is also assumed that this amount will remain constant and continue to be burned for energy recovery.  Thirty three (33) percent of railroad ties (0.69 million tons) are used for alternative uses including commercial and residential landscaping, commercial farming, and other uses.    
      
      Based on comments from the Association of American Railroads, the remaining 5 percent of the 1.82 million tons of railroad ties pulled out of service each year are suitable for energy recovery, but are landfilled instead.  For the purposes of this analysis, due to unknowns regarding OTRT purchasing decisions by railroads, EPA made a very conservative assumption that while the number of OTRTs will increase over time, that number will be limited to the overall additional 5 percent of railroad ties that are currently landfilled but could be used as fuel. EPA assumes that due to this final action this 5 percent of ties that are landfilled today will instead go to energy recovery. Assuming a weight of 182 pounds per tie, the 5 percent converts to approximately 91,000 tons of ties available annually for additional energy recovery.
      According to the Railway Tie Association, CTRTs account for 93 percent of all railway ties used in the United States. EPA assumed for this analysis that OTRTs comprise the remaining 7 percent of all railway ties in use. We apply this overall tie composition of 93 percent CTRT and 7 percent OTRT to the additional 5 percent of ties that will go to energy recovery because of this final action for year one. Then over time, the ratio of the 5 percent of ties that are OTRT versus CTRT will increase and that percentage is expected to increase to 75 percent of the 5 percent of additional ties now going to energy recovery. This analysis assumes that OTRT use will reach its peak of 75 percent (of the 5 percent) 20 years after rule promulgation (i.e., in 2038).  OTRT percentage values for future years were extrapolated assuming a starting value of 7 percent for 2017, and increasing by 3 percent each year until 2038. Thus, there will be 6,370 tons of OTRTs available in 2017 (7 percent), and 68,250 tons of OTRTs in 2038 (75 percent) (see attached OTRT Volume and Cost Model).  
      
      The universe of ties considered in this analysis is limited to the 5 percent of ties that would be diverted from landfilling to energy recovery.  The analysis does not attempt to model changes in the uses of the 62 percent of CTRT railroad ties that are burned for energy recovery because insufficient information and unknowable information (such as future purchasing decisions of railroads) was available to make reliable assumptions about this portion of the railroad tie universe.  It is possible that without a non-waste determination for OTRTs, the proportion of railroad ties burned for energy would decline over time from 62 percent as OTRTs replace CTRTs.  The impacts estimated in this analysis from examining only 5 percent of the total tie universe should, therefore, be considered a very conservative lower bound estimate of the potential impacts of this rule. 
      
      


                                   Section 3
                  Baseline Calculations and Rule Cost Savings
                                       
      This assessment considers the costs and savings to affected combustion units and OTRT generators as a result of this rule, which categorically lists OTRTs as a non-waste fuel provided certain conditions are met.  The calculations are based on the 91,000 tons of additional energy recovery potential identified by industry as discussed in Section 2.  
    
    There are two baseline scenarios calculated that model the end destination of OTRTs assuming this rule does not go into effect.  Both scenarios entail potential costs that industry may incur either to find alternative fuel sources or meet additional standards that would be required for a facility to burn OTRTs.  Baseline Scenario 1 models OTRTs being sent to landfills and boilers burning virgin material as a substitute.  Baseline Scenario 2 models OTRTs being sent to CAA 129 compliant energy recovery facilities.  The estimated costs of these two baseline scenarios are also considered the cost savings attributable to this rule because the rule will allow firms to combust OTRT's for energy recovery without incurring either of the alternative sets of costs estimated in either baseline scenario.  Section 3.4 discusses the equivalence of baseline costs and rule cost savings in further detail.
    
    This analysis considers Baseline Scenario 1 to be the more likely of the two scenarios. For this reason, the baseline costs attributable to baseline scenario 1, and the resulting savings attributable to the rule of avoiding these costs, are considered the primary analysis.
    
3.1 Baseline Scenario 1  -  Primary Analysis

      Absent a categorical non-waste fuel product determination for OTRTs, combustors may decide not to combust OTRTs and not install air pollution control upgrades to meet section 129 standards. In Baseline Scenario 1, OTRTs are instead disposed of in landfills, and virgin biomass is purchased by the combustor to make up for the additional heat content that OTRTs would provide. Landfilling costs were estimating assuming a tipping fee of $48 per ton minus the avoided processing costs to prepare the ties for combustion. The cost to process railroad ties was assumed to be $30 per ton, based on industry analysis. The resulting $18 per ton cost differential was multiplied by the tons of OTRTs available each year. 

      When considering the cost to replace OTRTs with virgin biomass as a fuel, the difference in heat content between the two materials must be accounted for. Based on information submitted by the Treated Wood Council, there is a 10 to 20 percent increase in heat content from virgin biomass to OTRTs. For the purpose of this analysis, we've assumed a 10 percent difference, which was applied to the annual tons of available OTRTs to be replaced in order to determine the amount of virgin biomass required. We assumed a virgin biomass cost of $31.3 per ton, which was multiplied by the required tonnage of virgin biomass for each year. 

      As shown in Attachment A, the cost-savings resulting from industry choosing to landfill OTRTs and replace them with biomass, ranges from $192,000 per year in undiscounted costs, to $1.4 million per year in undiscounted costs.  Baseline Scenario 1 does not require capital improvements or initial compliance monitoring, so costs are direct annual costs based on 2016 cost data.

3.2 Baseline Scenario 2  -  Alternative Analysis

      Baseline Scenario 2 examines the representative average per unit cost differential for combustors operating under CAA section 112 requirements versus CAA section 129 requirements.  Without the final rule, if units burned OTRTs as a fuel in their combustion unit, the cost differential would roughly reflect the average per unit cost impact for burners currently operating under section 112 requirements to upgrade to meet the required section 129 standards.  With this rule, the differential reflects the avoidance of these anticipated costs. In order for units operating under 112 requirements to upgrade to 129 standards, they would incur annual per unit costs associated with O&M and design modifications necessary to meet more stringent section 129 standards.  
      
      In order to estimate the average cost of upgrading a unit from meeting CAA section 112 standards to be able to meet CAA section 129 standards, this analysis incorporates cost information for 30 boilers gathered during the Commercial and Industrial Solid Waste Incinerator (CISWI) rulemaking. For each unit, annual costs for compliance with CAA section 112 was subtracted from the annual cost of compliance estimated for CAA section 129 standards. The resulting incremental costs were then averaged and rounded to the nearest thousand, yielding an estimated cost of $266,000 (2008 USD) per unit per year to upgrade for section 129 compliance.  For the purposes of estimating Baseline Scenario 2 costs this estimate was adjusted to 2016 dollars based on Chemical Engineering Plant Cost Indices.  This yields a per unit per year differential cost of CAA Section 129 compliance of $250,421.  
      
      To estimate baseline costs under this scenario, the analysis first subtracts the landfilling and virgin fuel costs estimated in baseline scenario 1 from the CAA Section 129 costs derived above.  These costs are subtracted because under this scenario ties are burned rather than landfilled or replaced with virgin fuel.  For each year of the analysis this modified CAA Section 129 cost is multiplied by the number of boilers assumed to burn OTRTs in any given year.  This results in undiscounted baseline costs of approximately $3 million in 2018 when there are 13 affected boilers, and approximately $24 million in 2038 when there are 100 affected boilers. 
      
      Exhibit 3.1 below summarizes the estimated baseline costs that firms will incur under either scenario absent the rule. It shows the low-end and high-end undiscounted annual costs of both scenarios, as well as the sum of undiscounted costs over the 20-year period of analysis.  It also shows the present value and annualized value of the costs of both baseline scenarios when discounting at seven percent and three percent.  The present value of baseline costs under Scenario 1 is estimated to be approximately $6.9 million when discounting at seven percent and approximately $11 million when discounting at three percent.  The annualized costs under Scenario 1 approximately equal $330,000 when discounting at seven percent and $530,000 when discounting at three percent.  The present value of baseline costs under Scenario 2 is estimated to be approximately $110 million when discounting at seven percent and approximately $180 million when discounting at three percent.  The annualized costs under Scenario 2 approximately equal $5.3 million when discounting at seven percent and $8.5 million when discounting at three percent.
      
                Exhibit 3-1 Summary of Baseline Scenario Costs
            (Millions of 2016$), Rounded to Two Significant Figures
Item
                                  Scenario 1
                                  Scenario 2
1
Low-End Undiscounted Cost (2018)
                                     $0.19
                                     $3.1
2
High-End Undiscounted Cost (2038)
                                     $1.4
                                      $24
3
Sum Undiscounted Costs Stream for 20 years
                                      $16
                                     $260
4
Present Value discounted at 7%
                                     $6.9
                                     $110
5
Annualized at 7%
                                     $0.33
                                     $5.3
6
Present Value discounted at 3%
                                      $11
                                     $180
7
Annualized at 3%
                                     $0.52
                                     $8.5
Note: See Appendix B for the derivation of the costs presented in this table.
      
3.3 Costs attributable to the Rule

      This analysis does not estimate any costs resulting from the provisions of this rule.  The rule's provisions are deregulatory in that they allow industry to burn OTRTs for energy without incurring costs estimated in either of the baseline scenarios above.  Recordkeeping requirements do exist for facilities that burn fuels that have received non-waste determinations through the petition process, such as OTRTs under the current rulemaking.  However, these requirements were promulgated as part of the CISWI rule and are accounted for in the assessment of costs and benefits there. In addition, EPA calculated one-time costs for 517 facilities to read and familiarize themselves with the new rule.  This nominal amount of $52,827 was not subtracted from the overall cost savings of the rule. For more information on this minor one time cost, please see the ICR.

3.4 Cost Savings of the Rule

      This analysis assumes that with today's final action listing OTRTs as categorical non-waste fuels, industry will divert the 5 percent of used railroad ties identified in Chapter 2 from landfilling and other uses to burning for energy recovery.  As a result, industry will not incur the costs of landfilling spent ties and the costs of purchasing alternative fuels estimated in baseline scenario 1.  Industry will also not incur the incremental costs of complying with CAA 129 standards identified in baseline scenario 2 to burn OTRTs.  The benefits of this rule are therefore the avoided baseline costs summarized in Exhibit 3-1 above.  
      
      This analysis does not attempt to model the number of affected entities that would, absent this rule, incur the costs described in either baseline scenario.  For this reason, it is not possible to construct a point estimate of baseline costs, and therefore not possible to construct a point estimate of costs savings attributable to the rule.  The two baseline scenarios can be taken as a lower and upper bound on the range of potential baseline costs and rule cost savings.  Assuming a 7% discount rate, the present value range of cost savings for this rule are approximately $6.9 million on the low end (baseline scenario 1) and approximately $111.3 million on the high end (baseline scenario 2).  Alternatively, this analysis considers baseline scenario 1 to be the more likely of the two scenarios examined here, and therefore the baseline scenario 1 costs avoided are a morelikely point estimate for the impacts of the rule.
      

      

                                   SECTION 4
                    EQUITY CONSIDERATIONS AND OTHER IMPACTS

      As required by applicable statutes and executive orders, this section summarizes our analysis of equity considerations and other regulatory concerns associated with the final rule. This chapter assesses potential impacts, with respect to the following issues:

4.1 Regulatory Planning and Review

      Under Executive Order 12866: Regulatory Planning and Review and Executive Order 13563: Improving Regulation and Regulatory Review, the Agency, in conjunction with the Office of Management and Budget's (OMB's) Office of Information and Regulatory Affairs (OIRA) must determine whether a regulatory action is "significant" and therefore subject to OMB review. The Order defines a "significant regulatory action" as one that is likely to result in a rule that may: 

      (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; 
      (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; 
      (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or 
      (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order. 

      Pursuant to the terms of Executive Order 12866, this action is "other significant" and will undergo OMB review.

4.2 Regulatory Flexibility

      The Regulatory Flexibility Act (RFA) as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 USC 601 et seq., generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act, or any other statute.  This analysis must be completed unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities.  Small entities include small businesses, small organizations, and small governmental jurisdictions.

      For purposes of assessing the impacts of this rule on small entities, small entity is defined as: (1) a small business as defined by the Small Business Administration's (SBA) regulations at 13 CFR 121.201; (2) a small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; and (3) a small organization that is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.

      In determining whether a rule has a significant economic impact on a substantial number of small entities, the impact of concern is any significant adverse economic impact on small entities, since the primary purpose of the regulatory flexibility analysis is to identify and address regulatory alternatives "which minimize any significant economic impact of the rule on small entities" (5 USC 603 and 604). Thus, an agency may certify that a rule will not have a significant economic impact on a substantial number of small entities if the rule relieves regulatory burden, or otherwise has a positive economic effect on all of the small entities subject to the rule.  

      The addition of the NHSM to the list of categorical non-waste fuels is expected to indirectly reduce materials management costs.  In addition, this action will provide greater clarity and reduce regulatory uncertainty associated with this material and help increase management efficiency.  We have therefore determined that today's rule will not have a significant economic impact on a substantial number of small entities.

4.3 Unfunded Mandates

      The Unfunded Mandates Reform Act (UMRA) of March 22, 1995, calls on all federal agencies to provide a statement supporting the need to issue any regulation containing an unfunded federal mandate, and to describe prior consultation with representatives of affected state, local, and tribal governments.  

      The final rule is not subject to the requirements of sections 202, 204 and 205 of UMRA.  In general, a rule is subject to the requirements of these sections if it contains "Federal mandates" that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year.  The final rule does not result in $100 million or more in expenditures for any of these groups.

4.4 Federalism

      Executive Order 13132, entitled "Federalism" (64 FR 43255, August 10, 1999), requires EPA to develop an accountable process to ensure "meaningful and timely input by state and local officials in the development of regulatory policies that have federalism implications."  "Policies that have federalism implications" is defined in the Executive Order to include regulations that have "substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government."  Internal EPA guidance indicates that a policy has federalism implications if it results in the expenditure by State and/or local governments in the aggregate of $25 million or more in any one year.

      Under Executive Order 13132, EPA may not issue a regulation that has federalism implications, that imposes substantial direct compliance costs, and that is not required by statute, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by State and local governments, or EPA consults with State and local officials early in the process of developing the regulation.

      This action does not have federalism implications.  It will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in the Order.  This rule will not impose direct compliance costs on state or local governments and will not preempt state law.  Thus, Executive Order 13132 does not apply to this action.

4.5 Consultation and Coordination with Indian Tribal Governments

      Executive Order 13175, entitled "Consultation and Coordination with Indian Tribal Governments" (65 FR 67249, November 9, 2000), requires EPA to develop an accountable process to ensure "meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications." 

      EPA has concluded that this action may have tribal implications.  However, it will neither impose substantial direct compliance costs on tribal governments, nor preempt Tribal law.  Potential aspects associated with the categorical non-waste fuel determinations under this final rule may invoke minor indirect tribal implications to the extent that entities generating or consolidating this NHSM on tribal lands could be affected.  However, any impacts are expected to be negligible.

4.6 Children's Health Protection

      Executive Order 13045, entitled "Protection of Children from Environmental Health Risks and Safety Risks" (62 FR. 19885, April 23, 1997) applies to any rule that: (1) is determined to be "economically significant" as defined under E.O. 12866, and (2) concerns an environmental health or safety risk that EPA has reason to believe may have a disproportionate effect on children. If the regulatory action meets both criteria, the Agency must evaluate the environmental health or safety effects of the planned rule on children, and explain why the planned regulation is preferable to other potentially effective and reasonably feasible alternatives considered by the Agency.  

      This action is not subject to E.O. 13045 (62 FR 19885, April 23, 1997) because it is not economically significant as defined in E.O. 12866, and because the Agency does not believe the environmental health or safety risks addressed by this action present a disproportionate risk to children.  Based on the discussion below, the Agency found that the populations of children near potentially affected boilers are either not significantly greater than national averages, or in the case of landfills, may potentially result in reduced discharges near such populations.

      The final rule may indirectly stimulate the increased fuel use the NHSM by providing enhanced regulatory clarity and certainty.  This increased fuel use may also result in the diversion of a certain quantity of the NHSM away from current baseline management practices.  Any corresponding disproportionate impacts among children would depend upon: (1) any potential change in emissions from combustion units subject to the CAA section 112 standards, relative to baseline management patterns, and (2) whether children make up a disproportionate share of the population near the affected combustion units.  Therefore, to assess the potential for the final rule to result in an indirect disproportionate effect on children, we conducted a demographic analysis for this population group surrounding CAA section 112 major source boilers, municipal solid waste (MSW) landfills, and construction and demolition (C&D) landfills.  We assessed the share of the population under the age of 18 living within a three-mile (approximately five kilometers) radius of these facilities.  

      For major source boilers, our findings indicate that the percentage of the population in these areas under age 18 years of age is generally the same as the national average.  While the fuel source and corresponding emission mix for some of these boilers may change as an indirect response to this rule, emissions from these sources remain subject to the CAA section 112 standards.  For MSW and C&D landfills, we do not have demographic results specific to children.  However, using the population below the poverty level as a rough surrogate for children, we found that within three miles of facilities that may experience diversions of the NHSM, low-income populations, as a percent of the total population, are disproportionately high relative to the national average.  Thus, to the extent that the NHSM are diverted away from MSW or C&D landfills, any landfill-related emissions, discharges, or other negative activity potentially impacting low-income (children) populations living near these units are likely to be reduced. Transportation emissions associated with the diversion of some of this material away from landfills to boilers are likely to be generally unchanged.

4.7 Energy Impact

      Executive Order 13211, "Actions Concerning Regulations that Affect Energy Supply, Distribution, or Use" (66 FR 28355, May 22, 2001), addresses the need for regulators to more fully consider the potential energy impacts of regulatory action. Under Executive Order 13211, agencies are required to prepare a Statement of Energy Effects when a regulatory action may have significant adverse effects on energy supply, distribution, or use, including impacts on price and foreign supplies.  Additionally, the requirements obligate agencies to consider reasonable alternatives to regulatory actions with adverse effects and the impacts that such alternatives might have on energy supply, distribution, or use.

      This action is not a "significant energy action" as defined under the Order because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy.  The selected NHSM affected by this final action is not generated in quantities sufficient to significantly (adversely or positively) impact the supply, distribution, or use of energy at the national level. 

4.8 Environmental Justice

      Executive Order (EO) 12898 (59 FR 7629, Feb. 16, 1994) establishes federal executive policy on environmental justice.  Its main provision directs federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low-income populations in the United States.  

      The overall level of emissions, or the emissions mix from affected boilers are not expected to change significantly as a result of this rule.  The NHSM categorically listed as non-waste fuels is generally comparable to the types of fuels that the combustors would otherwise burn.  Therefore, while we cannot definitively determine that there would be no cases of an incremental increase in exposure (negative impacts) if the affected facilities accept more, or a different combination of non-hazardous secondary materials, the boilers indirectly affected by this action would remain subject to the same CAA section 112 standards.  

      Our environmental justice assessment reviewed the distributions of minority and low-income groups that might be impacted by the sources indirectly affected by this proposal.  We focused on census blocks within three miles (approximately five kilometers) of these facilities.  We then determined the demographic composition (e.g., race, income, etc.) of these census blocks and compared them to the corresponding national compositions.  Our findings indicate that populations living within three miles of major source boilers represent areas with minority and low-income populations that are higher than the national averages.  In these areas, the minority share of the population was found to be 33 percent, compared to the national average of 25 percent.  For these same areas, the percent of the population below the poverty line (16 percent) is also higher than the national average (13 percent).  

      We also considered the potential for non-combustion environmental justice concerns related to the potential incremental increase in NHSM diversions from current baseline management practices.  These may include the following: 

 Reduced upstream emissions resulting from the reduced production of virgin fuel: Any reduced upstream emissions that may indirectly occur in response to reduced virgin fuel mining or extraction may result in a human health and/or environmental benefit to minority and low-income populations living near these projects. 

 Alternative materials transport patterns: Transportation emissions associated with NHSM diverted from landfills to boilers are likely to be similar.

 Change in emissions from baseline management units:  The diversion of some of the NHSM away from disposal in landfills may result in a marginal decrease in activity at these facilities.  This may include non-adverse impacts, such as marginally reduced emissions, odors, groundwater and surface water impacts, noise pollution, and reduced maintenance cost to local infrastructure.  Because MSW and C&D landfills were found to be located in areas where minority and low-income populations are disproportionately high relative to the national average, any reduction in activity and emissions around these facilities is likely to benefit (even if only marginally) the citizens living near these facilities.

      This rule, in conjunction with the corresponding CAA rules, may also help accelerate the abatement of any existing stockpiles of the selected NHSMs.  To the extent that these stockpiles may represent negative human health or environmental implications, minority and/or low-income populations that live near such stockpiles may experience marginal health or environmental improvements.  Aesthetics may also be improved in such areas.

4.9 Joint Impacts of Rules

      The final rule has applicability to the universe of facilities subject to CAA sections 112 or 129, as well as other rules and agency regulatory programs.  In fact, the final rule, with the exception of certain administrative requirements, only engenders economic effects by its actual application in the context of these other regulatory regimes.  Thus, the final rule shares joint impacts with existing, and prospective regulatory initiatives.  

Examples of other rules or regulatory initiatives with which the final rule may have joint impacts include: the Portland Cement MACT, the Commercial, Industrial Solid Waste Incinerators (CISWI) rules, the Boiler MACT rules (Major Source and Area Source), and the Other Solid Waste Incinerators (OSWI) rule.
















                                  Appendix A
Estimating Section 129 Compliance Costs Compared to Section 112 Compliance Costs

This Appendix details our assessment of the derivation of representative unit and average CAA section 129 and section 112 compliance costs for model units. Table A-1 presents the following information for each of the 30 representative units: (1) unit and facility identification data, (2) the estimated annual costs of section 129 compliance, (3) the estimated annual costs of section 112 compliance, and (4) the annual costs of section 129 incremental to section 112 (i.e., the difference between (2) and (3) for each unit). Averaging the incremental section 129 costs for the 30 representative units, we find that the cost of upgrading to section 129 standards (incremental to Section 112), is nearly $266,000 per unit per year (2008 USD). 


Table A-1
Facility Name
City
State
Unit Number
Section 129 Unit Costs
(year 2008$)
Section 112 Unit Costs
(year 2008$)
Incremental Costs of Section 129
(year 2008$)
OFS Fitel, LLC Norcross Facility
Norcross
GA
Unit 1
325,382
111,194
214,188
OFS Fitel, LLC Norcross Facility
Norcross
GA
Unit 2
325,382
152,643
172,739
J.R. Simplot Company
Pocatello
ID
Unit 1
325,382
0
325,382
J.R. Simplot Company
Pocatello
ID
Unit 2
325,382
0
325,382
Thermafiber, Inc
Wabash
IN
Unit 1
325,382
0
325,382
3M Alexandria
Alexandria
MN
Unit 1
325,382
0
325,382
3M Alexandria
Alexandria
MN
Unit 2
325,382
0
325,382
PPG Industries, Inc. (Lexington, NC)
Lexington
NC
Unit 1
325,382
152,643
172,739
PPG Industries, Inc. (Lexington, NC)
Lexington
NC
Unit 2
325,382
152,643
172,739
PPG Industries, Inc. (Lexington, NC)
Lexington
NC
Unit 3
325,382
152,643
172,739
PPG Industries, Inc. (Lexington, NC)
Lexington
NC
Unit 4
325,382
152,643
172,739
PPG Industries, Inc. (Shelby, NC)
Shelby
NC
Unit 1
325,382
152,643
172,739
PPG Industries, Inc. (Shelby, NC)
Shelby
NC
Unit 2
325,382
152,643
172,739
AGY Huntingdon, LLC
Huntingdon
PA
Unit 1
325,382
0
325,382
AGY Huntingdon, LLC
Huntingdon
PA
Unit 2
325,382
0
325,382
McAvoy Vitrified Brick Co.
Phoenixville
PA
Unit 1
325,382
0
325,382
AGY Aiken LLC
Aiken
SC
Unit 1
325,382
0
325,382
AGY Aiken LLC
Aiken
SC
Unit 2
325,382
0
325,382
AGY Aiken LLC
Aiken
SC
Unit 3
325,382
0
325,382
Kohler Co.
Spartanburg
SC
Unit 1
325,382
0
325,382
Kohler Co.
Spartanburg
SC
Unit 2
325,382
0
325,382
Owens Corning Insulating Systems, LLC Waxahachie Plant
Waxahachie
TX
Unit 1
325,382
0
325,382
Owens Corning Insulating Systems, LLC Waxahachie Plant
Waxahachie
TX
Unit 2
325,382
0
325,382
Corning Incorporated
Danville
VA
Unit 1
325,382
0
325,382
Corning Incorporated
Danville
VA
Unit 2
325,382
0
325,382
3M Prairie du Chien
Prairie du Chien
WI
Unit 1
325,382
152,643
172,739
3M Prairie du Chien
Prairie du Chien
WI
Unit 2
325,382
152,643
172,739
3M Prairie du Chien
Prairie du Chien
WI
Unit 3
325,382
152,643
172,739
3M Wausau - Downtown
Wausau
WI
Unit 1
325,382
152,643
172,739
Guardian Fiberglass, Inc
Inwood
WV
Unit 1
325,382
0
325,382

Average PER UNIT Incremental Cost of Section 129 OVER Seciton 112

$265,706


















                                  Appendix B
                                       
                                     Year
                            Count Boilers Impacted
                         Landfilling & Fuel Costs*
                                    CAA 129
              Compliance Costs Less Landfilling & Fuel Costs
                                Discount Rates
                   Discounted Landfilling and Biomass Costs
                      Discounted CAA 129 Compliance Costs
                                       A
                                       B
                                       C
                                       D
                                       E
                                       F
                                    (C x E)
                                    (C x F)
                                    (D x E)
                                    (D x F)
                                       
                                       
                                       
                                       
                                   7% rates
                                   3% rates
                                Discounted @ 7%
                                Discounted @ 3%
                                Discounted @ 7%
                                Discounted @ 3%
                                     2018
                                      13
                                   $192,283
                                  $3,063,189
                                    0.9346
                                    0.9709
                                  $179,707.69
                                  $186,687.56
                                 $2,862,856.46
                                 $2,974,050.22
                                     2019
                                      17
                                   $249,968
                                  $4,007,188
                                    0.8734
                                    0.9426
                                  $218,321.96
                                  $235,619.74
                                 $3,499,877.84
                                 $3,777,175.24
                                     2020
                                      21
                                   $307,653
                                  $4,951,187
                                    0.8163
                                    0.9151
                                  $251,136.98
                                  $281,533.08
                                 $4,041,653.63
                                 $4,530,830.87
                                     2021
                                      25
                                   $365,338
                                  $5,895,185
                                    0.7629
                                    0.8885
                                  $278,716.13
                                  $324,602.55
                                 $4,497,436.95
                                 $5,237,872.24
                                     2022
                                      29
                                   $423,023
                                  $6,839,184
                                     0.713
                                    0.8626
                                  $301,615.11
                                  $364,899.29
                                 $4,876,338.34
                                 $5,899,480.30
                                     2023
                                      33
                                   $480,708
                                  $7,783,183
                                    0.6663
                                    0.8375
                                  $320,295.41
                                  $402,592.53
                                 $5,185,934.84
                                 $6,518,415.77
                                     2024
                                      37
                                   $538,392
                                  $8,727,182
                                    0.6227
                                    0.8131
                                  $335,256.95
                                  $437,766.86
                                 $5,434,416.11
                                 $7,096,071.53
                                     2025
                                      41
                                   $596,077
                                  $9,671,181
                                     0.582
                                    0.7894
                                  $346,916.99
                                  $470,543.42
                                 $5,628,627.11
                                 $7,634,429.97
                                     2026
                                      45
                                   $653,762
                                  $10,615,179
                                    0.5439
                                    0.7664
                                  $355,581.26
                                  $501,043.35
                                 $5,773,596.08
                                 $8,135,473.50
                                     2027
                                      49
                                   $711,447
                                  $11,559,178
                                    0.5083
                                    0.7441
                                  $361,628.56
                                  $529,387.79
                                 $5,875,530.28
                                 $8,601,184.50
                                     2028
                                      53
                                   $769,132
                                  $12,503,177
                                    0.4751
                                    0.7224
                                  $365,414.61
                                  $555,620.96
                                 $5,940,259.39
                                 $9,032,295.07
                                     2029
                                      57
                                   $826,817
                                  $13,447,176
                                     0.444
                                    0.7014
                                  $367,106.70
                                  $579,929.37
                                 $5,970,546.06
                                 $9,431,849.11
                                     2030
                                      61
                                   $884,502
                                  $14,391,175
                                     0.415
                                     0.681
                                  $367,068.25
                                  $602,345.73
                                 $5,972,337.46
                                 $9,800,389.90
                                     2031
                                      65
                                   $942,187
                                  $15,335,173
                                    0.3878
                                    0.6611
                                  $365,380.00
                                  $622,879.63
                                 $5,946,980.24
                                $10,138,083.13
                                     2032
                                      69
                                   $999,872
                                  $16,279,172
                                    0.3624
                                    0.6419
                                  $362,353.47
                                  $641,817.58
                                 $5,899,572.00
                                $10,449,600.63
                                     2033
                                      73
                                  $1,057,557
                                  $17,223,171
                                    0.3387
                                    0.6232
                                  $358,194.39
                                  $659,069.21
                                 $5,833,488.02
                                $10,733,480.16
                                     2034
                                      77
                                  $1,115,241
                                  $18,167,170
                                    0.3166
                                     0.605
                                  $353,085.43
                                  $674,721.05
                                 $5,751,725.96
                                $10,991,137.72
                                     2035
                                      81
                                  $1,172,926
                                  $19,111,169
                                    0.2959
                                    0.5874
                                  $347,068.89
                                  $688,976.91
                                 $5,654,994.79
                                $11,225,900.43
                                     2036
                                      85
                                  $1,230,611
                                  $20,055,167
                                    0.2765
                                    0.5703
                                  $340,264.00
                                  $701,817.57
                                 $5,545,253.78
                                $11,437,461.96
                                     2037
                                      89
                                  $1,288,296
                                  $20,999,166
                                    0.2584
                                    0.5537
                                  $332,895.71
                                  $713,329.55
                                 $5,426,184.54
                                $11,627,238.32
                                     2038
                                      100
                                  $1,442,123
                                  $23,599,970
                                    0.2415
                                    0.5375
                                  $348,272.58
                                  $775,140.84
                                 $5,699,392.74
                                $12,684,983.85
                                  Annualized
                                       
                                       
                                       
                                       
                                  $326,489.58
                                  $521,444.03
                                 $5,300,809.65
                                 $8,474,162.12
                                   PV total
                                  $16,247,914
                                 $264,223,522
                                       
                                       
                                 $6,856,281.08
                                $10,950,324.57
                                $111,317,002.64
                                $177,957,404.43
















                                  Appendix C
                                     Year
                            Count Boilers Impacted
               Landfilling & Fuel Costs (Undiscounted 2016$)
           Landfilling & Fuel Variable Costs (Discounted at 7%)
             Landfilling & Fuel Fixed Costs (Discounted at 7%)
 CAA 129 Compliance Costs Less Landfilling and Fuel Costs (Undiscounted 2016$)
CAA 129 Compliance Variable Costs Less Landfilling and Fuel Costs (Discounted at 7%)
CAA 129 Compliance Fixed Costs Less Landfilling and Fuel Costs (Discounted at 7%)
                                       A
                                       B
                                       C
                                       D
                                       E
                                       F
                                       G
                                       H
                                     2018
                                      13
                                   $192,283
                                   $179,708
                                      $0
                                  $3,063,189
                                      $0
                                  $2,862,856
                                     2019
                                      17
                                   $249,968
                                   $218,322
                                      $0
                                  $4,007,188
                                      $0
                                  $3,499,878
                                     2020
                                      21
                                   $307,653
                                   $251,137
                                      $0
                                  $4,951,187
                                      $0
                                  $4,041,654
                                     2021
                                      25
                                   $365,338
                                   $278,716
                                      $0
                                  $5,895,185
                                      $0
                                  $4,497,437
                                     2022
                                      29
                                   $423,023
                                   $301,615
                                      $0
                                  $6,839,184
                                      $0
                                  $4,876,338
                                     2023
                                      33
                                   $480,708
                                   $320,295
                                      $0
                                  $7,783,183
                                  $5,185,935
                                      $0
                                     2024
                                      37
                                   $538,392
                                   $335,257
                                      $0
                                  $8,727,182
                                  $5,434,416
                                      $0
                                     2025
                                      41
                                   $596,077
                                   $346,917
                                      $0
                                  $9,671,181
                                  $5,628,627
                                      $0
                                     2026
                                      45
                                   $653,762
                                   $355,581
                                      $0
                                  $10,615,179
                                  $5,773,596
                                      $0
                                     2027
                                      49
                                   $711,447
                                   $361,629
                                      $0
                                  $11,559,178
                                  $5,875,530
                                      $0
                                     2028
                                      53
                                   $769,132
                                   $365,415
                                      $0
                                  $12,503,177
                                  $5,940,259
                                      $0
                                     2029
                                      57
                                   $826,817
                                   $367,107
                                      $0
                                  $13,447,176
                                  $5,970,546
                                      $0
                                     2030
                                      61
                                   $884,502
                                   $367,068
                                      $0
                                  $14,391,175
                                  $5,972,337
                                      $0
                                     2031
                                      65
                                   $942,187
                                   $365,380
                                      $0
                                  $15,335,173
                                  $5,946,980
                                      $0
                                     2032
                                      69
                                   $999,872
                                   $362,353
                                      $0
                                  $16,279,172
                                  $5,899,572
                                      $0
                                     2033
                                      73
                                  $1,057,557
                                   $358,194
                                      $0
                                  $17,223,171
                                  $5,833,488
                                      $0
                                     2034
                                      77
                                  $1,115,241
                                   $353,085
                                      $0
                                  $18,167,170
                                  $5,751,726
                                      $0
                                     2035
                                      81
                                  $1,172,926
                                   $347,069
                                      $0
                                  $19,111,169
                                  $5,654,995
                                      $0
                                     2036
                                      85
                                  $1,230,611
                                   $340,264
                                      $0
                                  $20,055,167
                                  $5,545,254
                                      $0
                                     2037
                                      89
                                  $1,288,296
                                   $332,896
                                      $0
                                  $20,999,166
                                  $5,426,185
                                      $0
                                     2038
                                      100
                                  $1,442,123
                                   $348,273
                                      $0
                                  $23,599,970
                                  $5,699,393
                                      $0
                                                                    Annualized:
                                   $326,489
                                      $0
                                       
                                  $5,721,117
                                  $3.955,632
                                                                 Present Value:
                                  $6,856,281
                                      $0
                                       
                                  $91,538,839
                                  $19,778,163
Notes: This table displays the Variable and Fixed portions of costs estimated in Baseline Scenarios 1 and 2. It is based on the following assumptions:
 All costs estimated for Baseline Scenario 1 are assumed to be variable costs. It is possible that there may be fixed costs associated with this scenario. These are the costs of renewing existing capital (112 boilers) earlier than firms otherwise would as a result of increased use of railroad ties for energy recovery. These fixed costs would likely occur in the middle years of the analysis (e.g. 2023 to 2029).
 Cost estimated under Baseline Scenario 2 are assumed to be fixed costs in the first five years of the analysis and to be variable costs in the remaining years.
 The analysis in this EA estimates that the impacts of this rule asymptote in 2038 as the availability of OTRT's peaks. Therefore, to estimate impacts of this rule in the years beyond 2038 multiply the undiscounted 2038 impacts of either Baseline Scenario 1 (Column C) or Baseline Scenario 2 (Column F) by the appropriate discount factor.

