The cost of retrofitting an oxidation catalyst to an existing 4SLB engine was estimated using cost data obtained from vendors and industry groups covering engines ranging from 400 HP to 8,000 HP. Again, an equipment life of 10 years and an interest rate of 7 percent were used to estimate the capital recovery of the control technology and the fuel penalty was assumed to be negligible. The cost equations are presented in 2009 dollars.
The total annualized cost equation for retrofitting an oxidation catalyst on a 4SLB engine was estimated to be:
        4SLB Oxidation Catalyst Total Annual Cost = $1.81 x HP + $3,442
where
HP = engine size in HP.
The linear equation has a correlation coefficient of 0.9779, which shows the data fits the equation very closely. Therefore, this equation was used to estimate annualized cost for an oxidation catalyst on a 4SLB engine.
The total capital cost equation for retrofitting an oxidation catalyst on a 4SLB SI engine was estimated to be:
       4SLB Oxidation Catalyst Total Capital Cost = $12.8 x HP + $3,069
where
HP = engine size in HP.
A summary of the cost calculations, regression analyses, and graphical representations of the annual and capital cost data are presented in Appendix A of the cost memo that is the basis for the cost data presented in this RIA.
<IP_ADDRESS>	Non-Selective Catalytic Reduction
The NSCR or three-way catalyst is used to control HAP emissions from 4SRB engines. In addition to HAP reductions, NSCR also reduces the emissions of nitrogen oxides (NOx), CO, and other hydrocarbons (HC). The reduction of HAP and CO takes place through an oxidation reaction that converts HAP to CO2 and water and converts CO to CO2. The conversion of NOx takes place through a reduction of the NOx to nitrogen gas and oxygen.
The cost of retrofitting an NSCR on an existing 4SRB engine was estimated based on cost data received from vendors and industry groups. A linear regression analysis was done on the data set and the linear equation for annualized cost was;
                    NSCR Annual Cost = $4.77 x HP + $5,679
where
HP = engine size in HP.
The linear equation has a correlation coefficient of 0.7987, which shows an acceptable representation of the cost data. Therefore, this equation was used to estimate annualized cost for retrofitting the NSCR control technology on 4SRB engines.
The capital cost equation for retrofitting an air-to-fuel ratio (AFR) controller and NSCR on a 4SRB engine was estimated to be:
                   NSCR Capital Cost = $24.9 x HP + $13,118
where
HP = engine size in HP.
4.4.4	Summary
Table 4-1 presents a summary of the annual and capital control costs as a function of engine size for the control technologies applicable to existing stationary SI engines, as discussed in this memorandum.
Table 4-1.	Summary of Annual and Capital Costs Equations for Existing Stationary SI Engines
                              HAP Control Device
                              Annual Cost ($2009)
                             Capital Cost ($2009)
2SLB Oxidation Catalyst
$11.4 x HP + $13,928
$47.1 x HP + $41,603
4SLB Oxidation Catalyst
$1.81 x HP + $3,442
$12.8 x HP + $3,069
NSCR
$4.77 x HP + $5,679
$24.9 x HP + $13,118

A summary of the annual and capital costs associated with the rule and obtained using the methodology described above are presented in Tables 4-2 to 4-5 below. These costs are used as input to the economic impact as well as the small entity analysis.

Table 4-2.	Summary of Major Source and Area Source Costs for the SI RICE NESHAP[a]
                                Size Range (HP)
                             Capital Control Cost
                              Annual Control Cost
                                 Initial Test
                                Record-keeping
                                   Reporting
                           Monitoring -- Capital Cost
                           Monitoring -- Annual Cost
                              Total Annual Costs
                              Total Capital Costs
Major Sources

 25 - 50
                                                                             $0
                                                                             $0
                                                                             $0
                                                                     $4,060,795
                                                                             $0
                                                                             $0
                                                                             $0
                                                                     $4,060,795
                                                                             $0
 50 - 100
                                                                             $0
                                                                             $0
                                                                             $0
                                                                     $1,087,540
                                                                             $0
                                                                             $0
                                                                             $0
                                                                     $1,087,540
                                                                             $0
 100 - 175
                                                                    $48,502,361
                                                                    $37,071,061
                                                                    $15,971,384
                                                                     $1,721,899
                                                                     $5,725,314
                                                                             $0
                                                                             $0
                                                                    $60,489,657
                                                                    $48,502,361
 175 - 300
                                                                    $13,225,919
                                                                     $8,382,568
                                                                     $3,442,648
                                                                       $371,157
                                                                     $1,234,097
                                                                             $0
                                                                             $0
                                                                    $13,430,470
                                                                    $13,225,919
 300 - 500
                                                                    $10,934,795
                                                                     $5,562,872
                                                                     $2,123,326
                                                                       $228,919
                                                                       $761,155
                                                                             $0
                                                                             $0
                                                                     $8,676,262
                                                                    $10,934,795
 500 - 600
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
 600 - 750
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
 >750
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
Total
                                                                    $72,663,076
                                                                    $51,016,500
                                                                    $21,537,358
                                                                     $7,470,310
                                                                     $7,720,566
                                                                             $0
                                                                             $0
                                                                    $87,744,734
                                                                    $72,663,076
Area Sources

 25 - 50
                                                                             $0
                                                                             $0
                                                                             $0
                                                                     $6,668,944
                                                                             $0
                                                                             $0
                                                                             $0
                                                                     $6,668,944
                                                                             $0
 50 - 100
                                                                             $0
                                                                             $0
                                                                             $0
                                                                     $2,868,511
                                                                             $0
                                                                             $0
                                                                             $0
                                                                     $2,868,511
                                                                             $0
 100 - 175
                                                                             $0
                                                                             $0
                                                                             $0
                                                                     $3,529,711
                                                                             $0
                                                                             $0
                                                                             $0
                                                                     $3,529,711
                                                                             $0
 175 - 300
                                                                             $0
                                                                             $0
                                                                             $0
                                                                     $1,264,799
                                                                             $0
                                                                             $0
                                                                             $0
                                                                     $1,264,799
                                                                             $0
 300 - 500
                                                                             $0
                                                                             $0
                                                                             $0
                                                                       $908,913
                                                                             $0
                                                                             $0
                                                                             $0
                                                                       $908,913
                                                                             $0
 500 - 600
                                                                     $7,547,433
                                                                     $2,662,805
                                                                       $248,366
                                                                       $454,493
                                                                      $1,26,426
                                                                              0
                                                                              0
                                                                     $3,492,090
                                                                     $7,547,433
 600 - 750
                                                                     $1,522,236
                                                                       $505,221
                                                                        $44,323
                                                                        $77,882
                                                                        $22,562
                                                                              0
                                                                              0
                                                                       $649,988
                                                                     $1,522,236
 >750
                                                                    $21,075,418
                                                                     $6,214,397
                                                                       $472,244
                                                                       $829,795
                                                                       $240,387
                                                                              0
                                                                              0
                                                                     $7,756,823
                                                                    $21,075,418
Total
                                                                    $30,145,088
                                                                     $9,382,423
                                                                       $764,933
                                                                    $16,603,048
                                                                       $389,375
                                                                              0
                                                                              0
                                                                    $27,139,780
                                                                    $30,145,088
Grand Total

Total
                                                                   $102.808,163
                                                                    $60,398,923
                                                                    $22,302,292
                                                                    $24,073,358
                                                                     $8,106,972
                                                                              0
                                                                              0
                                                                   $114,884,514
                                                                   $102,808.163

[a]	Costs are presented in 2009 dollars.
Table 4-3.	Summary of Major Source and Area Source NAICS Costs for the SI RICE NESHAP[a]

                                 Major Source
                                  Area Source
                             Total (Major + Area)
NAICS

                                 Capital Cost
                                  Annual Cost
                                 Capital Cost
                                  Annual Cost
                                 Capital Cost
Annual Cost
2211
Electric Power Generation
                                                                    $52,905,258
                                                                    $63,062,494
                                                                    $11,698,144
                                                                    $12,138,277
                                                                    $64,603,403
                                                                    $75,200,772
48621
Natural Gas Transmission
                                                                     $1,484,494
                                                                     $1,462,530
                                                                    $13,718,381
                                                                     $6,142,839
                                                                    $15,202,876
                                                                     $7,605,369
211111
Crude Petroleum & NG Production
                                                                     $4,561,236
                                                                     $6,138,383
                                                                        $71,439
                                                                       $951,462
                                                                     $4,632,675
                                                                     $7,089,844
211112
Natural Gas Liquid Producers
                                                                     $4,561,236
                                                                     $6,138,383
                                                                        $71,439
                                                                       $951,462
                                                                     $4,632,675
                                                                     $7,089,844
92811
National Security
                                                                     $5,878,362
                                                                     $7,006,944
                                                                    $1, 299,794
                                                                     $1,348,697
                                                                    $7,178,1566
                                                                     $8,355,641
335312
Hydro Power Units
                                                                             $0
                                                                        $25,248
                                                                             $0
                                                                        $37,872
                                                                             $0
                                                                        $63,120
335312
Irrigation Sets
                                                                     $3,025,050
                                                                     $3,230,856
                                                                     $3,285,990
                                                                     $4,999,041
                                                                     $6,310,940
                                                                     $8,229,896
333992
Welders
                                                                       $247,440
                                                                       $679,896
                                                                             $0
                                                                       $570,130
                                                                       $247,440
                                                                     $1,250,027

                                     Total
                                                                    $72,663,076
                                                                    $87,744,734
                                                                    $30,145,088
                                                                    $27,139,780
                                                                   $102,808,163
                                                                   $114,884,514
[a]	Costs are presented in 2009 dollars.
Table 4-4.	Summary of Major Source and Area Source NAICS Costs for the SI RICE NESHAP, by Size[a]

                                 Major Source
                                  Area Source
                             Total (Major + Area)
NAICS
                                 Capital Cost
                                  Annual Cost
                                 Capital Cost
                                  Annual Cost
                                 Capital Cost
                                  Annual Cost
Electric Power Generation (2211)

 25 - 50 hp
                                                                             $0
                                                                     $2,758,459
                                                                             $0
                                                                     $4,137,688
                                                                             $0
                                                                     $6,896,147
 50 - 100 hp
                                                                             $0
                                                                       $606,144
                                                                             $0
                                                                       $909,215
                                                                             $0
                                                                     $1,515,359
 100 - 175 hp
                                                                    $33,868,173
                                                                    $42,238,648
                                                                             $0
                                                                     $1,803,548
                                                                    $33,868,173
                                                                    $44,042,196
 175 - 300 hp
                                                                    $10,603,849
                                                                    $10,767,847
                                                                             $0
                                                                       $446,361
                                                                    $10,603,849
                                                                    $11,214,209
 300 - 500 hp
                                                                     $8,433,236
                                                                     $6,691,397
                                                                             $0
                                                                       $264,820
                                                                     $8,433,236
                                                                     $6,956,217
 500 - 600 hp
                                                                             $0
                                                                             $0
                                                                     $2,543,944
                                                                     $1,177,047
                                                                     $2,543,944
                                                                     $1,177,047
 600 - 750 hp
                                                                             $0
                                                                             $0
                                                                       $515,514
                                                                       $220,122
                                                                       $515,514
                                                                       $220,122
 >750 hp
                                                                             $0
                                                                             $0
                                                                     $8,638,687
                                                                     $3,179,475
                                                                     $8,638,687
                                                                     $3,179,475
 Total Electric Power Generation 2211
                                                                    $52,905,258
                                                                    $63,062,494
                                                                    $11,698,144
                                                                    $12,138,277
                                                                    $64,603,403
                                                                    $75,200,772
Natural Gas Transmission (48621)

 25 - 50 hp
                                                                             $0
                                                                           $102
                                                                             $0
                                                                         $1,934
                                                                             $0
                                                                         $2,036
 50 - 100 hp
                                                                             $0
                                                                         $4,872
                                                                             $0
                                                                        $92,571
                                                                             $0
                                                                        $97,443
 100 - 175 hp
                                                                       $301,721
                                                                       $376,291
                                                                             $0
                                                                       $203,518
                                                                       $301,721
                                                                       $579,809
 175 - 300 hp
                                                                       $643,157
                                                                       $653,104
                                                                             $0
                                                                       $342,928
                                                                       $643,157
                                                                       $996,032
 300 - 500 hp
                                                                       $539,617
                                                                       $428,162
                                                                             $0
                                                                       $214,637
                                                                       $539,617
                                                                       $642,799
 500 - 600 hp
                                                                             $0
                                                                             $0
                                                                     $1,925,560
                                                                       $890,929
                                                                     $1,925,560
                                                                       $890,929
 600 - 750 hp
                                                                             $0
                                                                             $0
                                                                       $949,443
                                                                       $405,408
                                                                       $949,443
                                                                       $405,408
 >750 hp
                                                                             $0
                                                                             $0
                                                                    $10,843,377
                                                                     $3,990,913
                                                                    $10,843,377
                                                                     $3,990,913
 Total Natural Gas Transmission (48621)
                                                                     $1,484,494
                                                                     $1,462,530
                                                                    $13,781,381
                                                                     $6,142,839
                                                                    $15,202,876
                                                                     $7,605,369
Crude Petroleum & NG Production (211111)

 25 - 50 hp
                                                                             $0
                                                                       $388,115
                                                                             $0
                                                                       $582,173
                                                                             $0
                                                                       $970,288
 50 - 100 hp
                                                                             $0
                                                                        $66,698
                                                                             $0
                                                                       $100,047
                                                                             $0
                                                                       $166,744
 100 - 175 hp
                                                                     $4,549,775
                                                                     $5,674,246
                                                                             $0
                                                                       $242,285
                                                                     $4,549,775
                                                                     $5,916,531
                                                                    (continued)
Table 4-4.	Summary of Major Source and Area Source NAICS Costs for the SI RICE NESHAP, by Size[a] (continued)

                                 Major Source
                                  Area Source
                             Total (Major + Area)
NAICS
                                 Capital Cost
                                  Annual Cost
                                 Capital Cost
                                  Annual Cost
                                 Capital Cost
                                  Annual Cost
 175 - 300 hp
                                                                         $1,037
                                                                         $1,053
                                                                             $0
                                                                            $44
                                                                         $1,037
                                                                         $1,096
 300 - 500 hp
                                                                        $10,424
                                                                         $8,271
                                                                             $0
                                                                           $327
                                                                        $10,424
                                                                         $8,598
 500 - 600 hp
                                                                             $0
                                                                             $0
                                                                         $3,102
                                                                         $1,435
                                                                         $3.102
                                                                         $1,435
 600 - 750 hp
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
 >750 hp
                                                                             $0
                                                                             $0
                                                                        $68,337
                                                                        $25,151
                                                                        $68,337
                                                                        $25,151
 Total Crude Petroleum & NG Production (211111)
                                                                     $4,561,236
                                                                     $6,138,383
                                                                        $71,439
                                                                       $951,462
                                                                     $4,632,675
                                                                     $7,089,844
Natural Gas Liquid Producers (211112)

 25 - 50 hp
                                                                             $0
                                                                       $388,115
                                                                             $0
                                                                       $582,173
                                                                             $0
                                                                       $970,288
 50 - 100 hp
                                                                             $0
                                                                        $66,698
                                                                             $0
                                                                       $100,047
                                                                             $0
                                                                       $166,744
 100 - 175 hp
                                                                     $4,549,775
                                                                     $5,674,246
                                                                             $0
                                                                       $242,285
                                                                     $4,549,775
                                                                     $5,916,531
 175 - 300 hp
                                                                         $1,037
                                                                         $1,053
                                                                             $0
                                                                            $44
                                                                         $1,037
                                                                         $1,096
 300 - 500 hp
                                                                        $10,424
                                                                         $8,271
                                                                             $0
                                                                           $327
                                                                        $10,424
                                                                         $8,598
 500 - 600 hp
                                                                             $0
                                                                             $0
                                                                         $3,102
                                                                         $1,435
                                                                         $3,102
                                                                         $1,435
 600 - 750 hp
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
 >750 hp
                                                                             $0
                                                                             $0
                                                                        $68,337
                                                                        $25,151
                                                                        $68,337
                                                                        $25,151
 Total Natural Gas Liquid Producers (211112)
                                                                     $4,561,236
                                                                     $6,138,383
                                                                        $71,439
                                                                       $951,462
                                                                     $4,632,675
                                                                     $7,089,844
National Security (92811)

 25 - 50 hp
                                                                             $0
                                                                       $306,495
                                                                             $0
                                                                       $459,743
                                                                             $0
                                                                       $766,239
 50 - 100 hp
                                                                             $0
                                                                        $67,349
                                                                             $0
                                                                       $101,024
                                                                             $0
                                                                       $168,373
 100 - 175 hp
                                                                     $3,763,130
                                                                     $4,693,183
                                                                             $0
                                                                       $200,394
                                                                     $3,763,130
                                                                     $4,893,577
 175 - 300 hp
                                                                     $1,178,205
                                                                     $1,196,427
                                                                             $0
                                                                        $49,596
                                                                     $1,178,205
                                                                     $1,246,023
 300 - 500 hp
                                                                       $937,026
                                                                       $743,489
                                                                             $0
                                                                        $29,424
                                                                       $937,026
                                                                       $772,913
 500 - 600 hp
                                                                             $0
                                                                             $0
                                                                       $282,660
                                                                       $130,783
                                                                       $282,660
                                                                       $130,783
                                                                    (continued)
Table 4-4.	Summary of Major Source and Area Source NAICS Costs for the SI RICE NESHAP, by Size[a] (continued)

                                 Major Source
                                  Area Source
                             Total (Major + Area)
NAICS
                                 Capital Cost
                                  Annual Cost
                                 Capital Cost
                                  Annual Cost
                                 Capital Cost
                                  Annual Cost
 600 - 750 hp
                                                                             $0
                                                                             $0
                                                                        $57,279
                                                                        $24,458
                                                                        $57,279
                                                                        $24,458
 >750 hp
                                                                             $0
                                                                             $0
                                                                       $959,854
                                                                       $353,275
                                                                       $959,854
                                                                       $353,275
 Total National Security (92811)
                                                                     $5,878,362
                                                                     $7,006,944
                                                                    $1,299,794,
                                                                     $1,348,697
                                                                     $7,178,156
                                                                     $8,355,641
Hydro Power Units (335312)

 25 - 50 hp
                                                                             $0
                                                                        $22,688
                                                                             $0
                                                                        $34,032
                                                                             $0
                                                                        $56,721
 50 - 100 hp
                                                                             $0
                                                                         $2,560
                                                                             $0
                                                                         $3,840
                                                                             $0
                                                                         $6,399
 100 - 175 hp
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
 175 - 300 hp
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
 300 - 500 hp
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
 500 - 600 hp
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
 600 - 750 hp
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
 >750 hp
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
 Total Hydro Power Units (335312)
                                                                             $0
                                                                        $25,248
                                                                             $0
                                                                        $37,872
                                                                             $0
                                                                        $63,120
Irrigation Sets (335312)

 25 - 50 hp
                                                                             $0
                                                                        $32,913
                                                                             $0
                                                                       $625,338
                                                                             $0
                                                                       $658,251
 50 - 100 hp
                                                                             $0
                                                                        $65,825
                                                                             $0
                                                                     $1,250,677
                                                                             $0
                                                                     $1,316,502
 100 - 175 hp
                                                                     $1,222,348
                                                                     $1,524,449
                                                                             $0
                                                                       $824,505
                                                                     $1,222,348
                                                                     $2,348,954
 175 - 300 hp
                                                                       $798,634
                                                                       $810,986
                                                                             $0
                                                                       $425,827
                                                                       $798,634
                                                                     $1,236,813
 300 - 500 hp
                                                                     $1,004,068
                                                                       $796,683
                                                                             $0
                                                                       $399,376
                                                                     $1,004,068
                                                                     $1,196,060
 500 - 600 hp
                                                                             $0
                                                                             $0
                                                                     $2,789,064
                                                                     $1,290,460
                                                                     $2,789,064
                                                                     $1,290,460
 600 - 750 hp
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
 >750 hp
                                                                             $0
                                                                             $0
                                                                       $496,827
                                                                       $182,857
                                                                       $496,827
                                                                       $182,857
 Total Irrigation Sets (335312)
                                                                     $3,025,050
                                                                     $3,230,856
                                                                     $3,285,890
                                                                     $4,999,041
                                                                     $6,310,940
                                                                     $8,229,896
                                                                    (continued)
Table 4-4.	Summary of Major Source and Area Source NAICS Costs for the SI RICE NESHAP, by Size[a] (continued)

                                 Major Source
                                  Area Source
                             Total (Major + Area)
NAICS
                                 Capital Cost
                                  Annual Cost
                                 Capital Cost
                                  Annual Cost
                                 Capital Cost
                                  Annual Cost
Welders (333992)

 25 - 50 hp
                                                                             $0
                                                                       $163,908
                                                                             $0
                                                                       $245,862
                                                                             $0
                                                                       $409,771
 50 - 100 hp
                                                                             $0
                                                                       $207,394
                                                                             $0
                                                                       $311,091
                                                                             $0
                                                                       $518,485
 100 - 175 hp
                                                                       $247,440
                                                                       $308,594
                                                                             $0
                                                                        $13,177
                                                                       $247,440
                                                                       $321,771
 175 - 300 hp
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
 300 - 500 hp
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
 500 - 600 hp
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
 600 - 750 hp
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
 >750 hp
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
                                                                             $0
 Total Welders (333992)
                                                                       $247,440
                                                                       $679,896
                                                                             $0
                                                                       $570,130
                                                                       $247,440
                                                                     $1,250,027
Total
                                                                    $72,663,076
                                                                    $87,744,734
                                                                    $30,145,088
                                                                    $27,139,780
                                                                   $102,808,163
                                                                   $114,884,514
[a]	Costs are presented in 2009 dollars.
Table 4-5.	Summary of Major Source and Area Source NAICS Costs for the SI RICE NESHAP, by Number of Engines[a]

                               Number of Engines
                             Total (Major + Area)
NAICS
                                     Major
                                     Area
                                     Total
                                 Capital Cost
                                  Annual Cost
Electric Power Generation (2211)

 25 - 50 hp
                                                                         37,933
                                                                         56,900
                                                                         94,833
                                                                             $0
                                                                     $6,896,147
 50 - 100 hp
                                                                          8,336
                                                                         12,503
                                                                         20,839
                                                                             $0
                                                                     $1,515,359
 100 - 175 hp
                                                                         16,534
                                                                         24,802
                                                                         41,336
                                                                    $33,868,173
                                                                    $44,042,196
 175 - 300 hp
                                                                          4,092
                                                                          6,138
                                                                         10,230
                                                                    $10,603,849
                                                                    $11,214,209
 300 - 500 hp
                                                                          2,428
                                                                          3,642
                                                                          6,070
                                                                     $8,433,236
                                                                     $6,956,217
 500 - 600 hp
                                                                              0
                                                                          2,107
                                                                          2,107
                                                                     $2,543,944
                                                                     $1,177,047
 600 - 750 hp
                                                                              0
                                                                            363
                                                                            363
                                                                       $515,944
                                                                       $220,122
 >750 hp
                                                                              0
                                                                          4,677
                                                                          4,677
                                                                     $8,638,687
                                                                     $3,179,475
 Total Electric Power Generation (2211)
                                                                         69,323
                                                                        111,132
                                                                        180,455
                                                                    $64,603,403
                                                                    $75,200,772
Natural Gas Transmission (48621)

 25 - 50 hp
                                                                              1
                                                                             27
                                                                             28
                                                                             $0
                                                                         $2,036
 50 - 100 hp
                                                                             67
                                                                          1,273
                                                                          1,340
                                                                             $0
                                                                        $97,443
 100 - 175 hp
                                                                            147
                                                                          2,799
                                                                          2,946
                                                                       $301,721
                                                                       $579,809
 175 - 300 hp
                                                                            248
                                                                          4,716
                                                                          4,964
                                                                       $643,157
                                                                       $996,032
 300 - 500 hp
                                                                            155
                                                                          2,952
                                                                          3,107
                                                                       $539,617
                                                                       $642,799
 500 - 600 hp
                                                                              0
                                                                          1,595
                                                                          1,595
                                                                     $1,925,560
                                                                       $890,929
 600 - 750 hp
                                                                              0
                                                                            668
                                                                            668
                                                                       $949,443
                                                                       $405,408
 >750 hp
                                                                              0
                                                                          5,871
                                                                          5,871
                                                                    $10,843,377
                                                                     $3,990,913
 Total Natural Gas Transmission (48621)
                                                                            619
                                                                         19,899
                                                                         20,519
                                                                    $15,202,876
                                                                     $7,605,369
Crude Petroleum & NG Production (211111)

 25 - 50 hp
                                                                          5,337
                                                                          8,006
                                                                         13,343
                                                                             $0
                                                                       $970,288
 50 - 100 hp
                                                                            917
                                                                          1,376
                                                                          2,293
                                                                             $0
                                                                       $166,744
 100 - 175 hp
                                                                          2,221
                                                                          3,332
                                                                          5,553
                                                                     $4,549,775
                                                                     $5,916,531
                                                                    (continued)
Table 4-5.	Summary of Major Source and Area Source NAICS Costs for the SI RICE NESHAP, by Number of Engines[a] (continued)

                               Number of Engines
                             Total (Major + Area)
NAICS
                                     Major
                                     Area
                                     Total
                                 Capital Cost
                                  Annual Cost
 175 - 300 hp
                                                                              0
                                                                              1
                                                                              1
                                                                         $1,037
                                                                         $1,096
 300 - 500 hp
                                                                              3
                                                                              5
                                                                              8
                                                                        $10,424
                                                                         $8,598
 500 - 600 hp
                                                                              0
                                                                              3
                                                                              3
                                                                         $3,102
                                                                         $1,435
 600 - 750 hp
                                                                              0
                                                                              0
                                                                              0
                                                                             $0
                                                                             $0
 >750 hp
                                                                              0
                                                                             37
                                                                             37
                                                                        $68,337
                                                                        $25,151
 Total Crude Petroleum & NG Production (211111)
                                                                          8,479
                                                                         12,758
                                                                         21,237
                                                                     $4,632,675
                                                                     $7,089,844
Natural Gas Liquid Producers (211112)

 25 - 50 hp
                                                                          5,337
                                                                          8,006
                                                                         13,343
                                                                             $0
                                                                       $970,288
 50 - 100 hp
                                                                            917
                                                                          1,376
                                                                          2,293
                                                                             $0
                                                                       $166,744
 100 - 175 hp
                                                                          2,221
                                                                          3,332
                                                                          5,553
                                                                     $4,549,775
                                                                     $5,916,531
 175 - 300 hp
                                                                              0
                                                                              1
                                                                              1
                                                                         $1,037
                                                                         $1,096
 300 - 500 hp
                                                                              3
                                                                              5
                                                                              8
                                                                        $10,424
                                                                         $8,598
 500 - 600 hp
                                                                              0
                                                                              3
                                                                              3
                                                                         $3,102
                                                                         $1,435
 600 - 750 hp
                                                                              0
                                                                              0
                                                                              0
                                                                             $0
                                                                             $0
 >750 hp
                                                                              0
                                                                             37
                                                                             37
                                                                        $68,337
                                                                        $25,151
 Total Natural Gas Liquid Producers (211112)
                                                                          8,479
                                                                         12,758
                                                                         21,237
                                                                     $4,632,675
                                                                     $7,089,844
National Security (92811)

 25 - 50 hp
                                                                          4,215
                                                                          6,322
                                                                         10,537
                                                                             $0
                                                                       $766,239
 50 - 100 hp
                                                                            926
                                                                          1,389
                                                                          2,315
                                                                             $0
                                                                       $168,373
 100 - 175 hp
                                                                          1,837
                                                                          2,756
                                                                          4,593
                                                                     $3,763,130
                                                                     $4,893,577
 175 - 300 hp
                                                                            455
                                                                            682
                                                                          1,137
                                                                     $1,178,205
                                                                     $1,246,023
 300 - 500 hp
                                                                            270
                                                                            404
                                                                            674
                                                                       $937,026
                                                                       $772,913
 500 - 600 hp
                                                                              0
                                                                            234
                                                                            234
                                                                       $282,660
                                                                       $130,783
                                                                    (continued)
Table 4-5.	Summary of Major Source and Area Source NAICS Costs for the SI RICE NESHAP, by Number of Engines[a] (continued)

                               Number of Engines
                             Total (Major + Area)
NAICS
                                     Major
                                     Area
                                     Total
                                 Capital Cost
                                  Annual Cost
 600 - 750 hp
                                                                              0
                                                                             40
                                                                             40
                                                                        $57,279
                                                                        $24,458
 >750 hp
                                                                              0
                                                                            520
                                                                            520
                                                                       $959.854
                                                                       $353,275
 Total Natural Gas Liquid Producers (211112)
                                                                          7,702
                                                                         12,347
                                                                         20,050
                                                                     $7,178,156
                                                                     $8,355,641
Hydro Power Units (335312)

 25 - 50 hp
                                                                            312
                                                                            468
                                                                            780
                                                                             $0
                                                                        $56,721
 50 - 100 hp
                                                                             35
                                                                             53
                                                                             88
                                                                             $0
                                                                         $6,399
 100 - 175 hp
                                                                              0
                                                                              0
                                                                              0
                                                                             $0
                                                                             $0
 175 - 300 hp
                                                                              0
                                                                              0
                                                                              0
                                                                             $0
                                                                             $0
 300 - 500 hp
                                                                              0
                                                                              0
                                                                              0
                                                                             $0
                                                                             $0
 500 - 600 hp
                                                                              0
                                                                              0
                                                                              0
                                                                             $0
                                                                             $0
 600 - 750 hp
                                                                              0
                                                                              0
                                                                              0
                                                                             $0
                                                                             $0
 >750 hp
                                                                              0
                                                                              0
                                                                              0
                                                                             $0
                                                                             $0
 Total Hydro Power Units (335312)
                                                                            347
                                                                            521
                                                                            868
                                                                             $0
                                                                        $63,120
Irrigation Sets (335312)

 25 - 50 hp
                                                                            453
                                                                          8,599
                                                                          9,052
                                                                             $0
                                                                       $658,251
 50 - 100 hp
                                                                            905
                                                                         17,199
                                                                         18,104
                                                                             $0
                                                                     $1,316,502
 100 - 175 hp
                                                                            597
                                                                         11,338
                                                                         11,935
                                                                     $1,222,348
                                                                     $2,348,954
 175 - 300 hp
                                                                            308
                                                                          5,856
                                                                          6,164
                                                                       $798,634
                                                                     $1,236,813
 300 - 500 hp
                                                                            289
                                                                          5,492
                                                                          5,781
                                                                     $1,004,068
                                                                     $1,196,060
 500 - 600 hp
                                                                              0
                                                                          2,310
                                                                          2,310
                                                                     $2,789,064
                                                                     $1,290,460
 600 - 750 hp
                                                                              0
                                                                              0
                                                                              0
                                                                             $0
                                                                             $0
 >750 hp
                                                                              0
                                                                            269
                                                                            269
                                                                       $496,827
                                                                        $182857
 Total Irrigation Sets (335312)
                                                                          2,552
                                                                         51,063
                                                                         53,615
                                                                     $6,310,940
                                                                     $8,229,896
                                                                    (continued)
Table 4-5.	Summary of Major Source and Area Source NAICS Costs for the SI RICE NESHAP, by Number of Engines[a] (continued)

                               Number of Engines
                             Total (Major + Area)
NAICS
                                     Major
                                     Area
                                     Total
                                 Capital Cost
                                  Annual Cost
Welders (333992)

 25 - 50 hp
                                                                          2,254
                                                                          3,381
                                                                          5,635
                                                                             $0
                                                                       $409,771
 50 - 100 hp
                                                                          2,852
                                                                          4,278
                                                                          7,130
                                                                             $0
                                                                       $518,485
 100 - 175 hp
                                                                            121
                                                                            181
                                                                            302
                                                                       $247,440
                                                                       $321,771
 175 - 300 hp
                                                                              0
                                                                              0
                                                                              0
                                                                             $0
                                                                             $0
 300 - 500 hp
                                                                              0
                                                                              0
                                                                              0
                                                                             $0
                                                                             $0
 500 - 600 hp
                                                                              0
                                                                              0
                                                                              0
                                                                             $0
                                                                             $0
 600 - 750 hp
                                                                              0
                                                                              0
                                                                              0
                                                                             $0
                                                                             $0
 >750 hp
                                                                              0
                                                                              0
                                                                              0
                                                                             $0
                                                                             $0
 Total Welders (333992)
                                                                          5,227
                                                                          7,840
                                                                         13,067
                                                                       $247,440
                                                                     $1,250,027
Total
                                                                        102,729
                                                                        228,319
                                                                        331,047
                                                                   $382,802,298
                                                                   $253,374,939
[1]	Costs are presented in 2009 dollars.

4.4.5	Caveats and Uncertainties in the Cost Estimates
*	Current knowledge about NOx control techniques and costs is applied in this
study. Advances such as alternative catalyst formulations may occur between
now and when sources comply with this rulemaking that may lower costs. Scale
economies can also lower per unit production costs as the market for these NOx
control techniques expands.

*	 The alternative control techniques and corresponding emission reductions and
costs may not apply to every unit within the source category. Many factors
influence the performance and cost of any control technique. Because control
technology references typically evaluate average retrofit situations, costs may
be underestimated for the fraction of the source population with difficult to
retrofit conditions. Difficult to retrofit conditions may be less of an issue for
RICEs than for other point sources, however.

*	NOx control efficiency and cost estimates associated with source category-control
strategy combinations are represented as point estimates. In practice, control
effectiveness and costs will vary by engine.
Baseline Emissions and Emission Reductions
The baseline emissions, emissions factors and emissions reductions associated with the proposed reconsideration rule are provided in the tables below.   Baseline emissions are estimated for 2013 using the emissions dataset generated for the final SI RICE rule in 2010.  The baseline emissions thus assume the final SI RICE rule has not been implemented.  Emissions are in tons per year.
Table 4-6.	Summary of Major Source and Area Source Baseline Emissions for the SI RICE NESHAP in 2013

                           Baseline  Emissions (TPY)
                                Size Range (HP)
                                      HAP
                                      CO
                                      NOx
                                      VOC
Major Sources

 25 - 50 hp
1,107
28,557
41,751
5,696
 50 - 100 hp
593
15,296
22,363
3,051
 100 - 175 hp
1,721
44,399
64,913
8,855
 175 - 300 hp
641
16,530
24,168
3,297
 300 - 500 hp
666
17,171
25,105
3,425
 500 - 600 hp
0
0
0
0
 600 - 750 hp
0
0
0
0
 >750 hp
0
0
0
0
 Total
4,728
121,953
178,301
24,323
Area Sources

 25 - 50 hp
1,818
46,898
68,566
9,354
 50 - 100 hp
1,564
40,344
58,985
8,047
 100 - 175 hp
3,529
91,013
133,065
18,153
 175 - 300 hp
2,184
56,331
82,359
11,235
 300 - 500 hp
2,643
68,178
99,679
13,598
 500 - 600 hp
1,830
47,273
69,094
9,415
 600 - 750 hp
383
9,876
14,438
1,969
 >750 hp
6,041
155,890
227,890
31,076
 Total
19,993
515,803
754,077
102,846
 Major + Area
 Total
24,722
637,756
932,377
127,169

Table 4-7.	Emissions Factors
                                    Engine
                                HAP
(lb/hp-hr)
                                 CO
(lb/hp-hr)
                                NOx
(lb/hp-hr)
                                VOC
(lb/hp-hr)
                            Formaldehyde
(lb/hp-hr)
2SLB
                                  5.9610[-4]
                                 1.0610[-][2]
                                 4.1810[-][2]
                                 3.0710[-][3]
                                  4.2910[-4]
4SLB
                                  5.4110[-4]
                                 3.9210[-][3]
                                 1.1510[-][2]
                                 2.7810[-][3]
                                  3.9610[-4]
4SRB
                                  2.4310[-4]
                                 1.9310[-][2]
                                 1.4710[-][2]
                                 1.2510[-][3]
                                  1.7510[-4]

Table 4-8.	Summary of Major Source and Area Source Emissions Reductions for the SI RICE NESHAP in 2013

                           Emission Reductions (TPY)
                                Size Range (HP)
                                      HAP
                                      CO
                                      NOx
                                      VOC
Major Sources

 25 - 50 hp
0
0
0
0
 50 - 100 hp
0
0
0
0
 100 - 175 hp
744
7,124
0
3,826
 175 - 300 hp
277
2,653
0
1,424
 300 - 500 hp
288
2,755
0
1,480
 500 - 600 hp
N/A
N/A
N/A
0
 600 - 750 hp
N/A
N/A
N/A
0
 >750 hp
N/A
N/A
N/A
0
 Total
1,308
12,532
0
6,730
Area Sources

 25 - 50 hp
0
0
0
0
 50 - 100 hp
0
0
0
0
 100 - 175 hp
0
0
0
0
 175 - 300 hp
0
0
0
0
 300 - 500 hp
0
0
0
0
 500 - 600 hp
101
2,070
2,,063
517
 600 - 750 hp
22
453
452
113
 >750 hp
347
7,156
7,133
1,787
 Total
470
9,679
9,648
2,418
Major + Area Total
1,778
22,211
9,648
9,147

Economic Impact Analysis, Energy Impacts, and Social Costs
The EIA provides decision makers with social cost estimates and enhances understanding of how the costs may be distributed across stakeholders (EPA, 2010). Although several economic frameworks can be used to estimate social costs for regulations of this size and sector scope, OAQPS has typically used partial equilibrium market models. However, the current data do not provide sufficient details to develop a market model; the data that are available have little or no sector/firm detail and are reported at the national level. In addition, some sectors have unique market characteristics that make developing partial equilibrium models difficult. Given these constraints, we used the direct compliance costs as a measure of total social costs. In addition, we also provide a qualitative analysis of the proposed reconsidered rule's impact on stakeholder decisions, a qualitative discussion on if unfunded mandates occur as a result of this proposed reconsidered  rule, and the potential distribution of social costs between consumers and producers.
Compliance Costs of the Proposed Reconsidered Rule
 EPA's engineering cost analysis estimates the total annualized costs of the proposed reconsidered rule are $115 million (in 2010 dollars) (EC/R, 2012).
      The majority of the costs are incurred by the electric power sector (65%). The remaining industries each account for less than 8% of the total annualized cost. The industrial classification for each engine is taken from the Power Systems Research (PSR) database, which is the major source of data for the engines affected by this rule.  The PSR database used as a basis for the analyses in this RIA contains information on both mobile and stationary engines, among other data, and does so not only for the U.S. but worldwide.  PSR has collected such data for more than 30 years.  The Office of Transportation and Air Quality (OTAQ) uses this database frequently in the development of their mobile source rules.
The annualized compliance costs per engine vary by the engine size. For 500 hp engines or less, the annualized per-engine costs are below $371 per engine. Per-engine annualized compliance costs for higher horsepower (hp) engines range up to $2,800.
The proposed reconsidered rule will affect approximately 331,000 existing stationary SI engines. As shown in Figure 5-1, most of the affected engines fall within the 25 to 50 hp category (45%). The next highest categories are 100 to 175 hp (22%) and 50 to 100 hp (16%).

Figure 5-1.	Distribution of Engine Population by Horsepower Group

To assess the size of the compliance relative to the value of the goods and services for industries using affected engines, we collected Census data for selected industries. At the industry level, the annualized costs represent a very small fraction of revenue (less than 1%), for all affected industries.  Results for affected industries can be found in Table 5-1. These industry level cost-to-sales ratios can be interpreted as an average impact on potentially affected firms in these industries. Based on the cost-to-sales ratios, we can conclude that the annualized cost of this rule should be no higher than 1% of the sales on average for a firm in each of these industries, excluding natural gas transmission and natural gas liquid producers, which face slightly higher costs to sales ratios.

Social Cost Estimate
As shown in Table 5-1, the compliance costs are only a small fraction of the affected product value; this suggests that shift of the supply curve may also be small and result in small changes in market prices and consumption. EPA believes the national annualized compliance cost estimates provide a reasonable approximation of the social cost of this proposed reconsidered rule.  EPA believes this approximation is better for industries whose markets are well characterized as perfectly competitive.  This approximation is less well understood for industries where the characterization of markets is not always perfectly competitive such as electric power generation whose legal incidence of this rule is approximately 65 percent of the annualized compliance cost.   However, given the data limitation noted earlier, EPA believes the accounting for compliance cost is a reasonable approximation to inform policy discussion in this rulemaking.  To shed more light on this issue, EPA ran hypothetical analyses and the results are in Tables 5-2 and 5-3 later in this RIA.

How Might People and Firms Respond? A Partial Equilibrium Analysis
Markets are composed of people as consumers and producers trying to do the best they can given their economic circumstances. One way economists illustrate behavioral responses to pollution control costs is by using market supply and demand diagrams. The market supply curve describes how much of a good or service firms are willing and able to sell to people at a
Table 5-1.	Selected Industry-Level Annualized Compliance Costs as a Fraction of Total Industry Revenue: 2009

                            Total Annualized Costs
               Sales, Shipments, Receipt, or Revenue ($Billion)

Industry (NAICS)
Industry Name
                                ($ million)[a]
                                    ($2007)
                                    ($2009)
                              Cost-to-Sales Ratio
2211
Electric Power Generation
$128.4
$440.4
$453.7
0.004%
48621
Natural Gas Transmission
$68.9
$16.4
$16.9
0.41%
211111
Crude Petroleum & NG Production
$7.4
$214.2
$220.5
0.001%
211112
Natural Gas Liquid Producers
$7.4
$42.4
$43.6
0.005%
92811
National Security
$14.3
                                     #N/A
                                     #N/A
                                     #N/A
333992
Welders
$1.3
$5.2
$5.5
0.025%
111 and 112
Agriculture using irrigation systems[a]
$25.7
$27.9
$28.8
0.09%
a Irrigation engine costs assumed to be passed on to agricultural sectors that use irrigation systems.
N/A: receipts are Not Available for National Security
Sources:	U.S. Census Bureau; generated by RTI International; using American FactFinder; "Sector 00: All sectors: Geographic Area Series: Economy-Wide Key Statistics: 2007" <http://factfinder.census.gov>; (July 7th , 2010).
	U.S. Department of Agriculture (USDA), National Agricultural Statistics Service (NASS). 2009. "2008 Farm and Ranch Irrigation Survey." Washington, DC: USDA-NASS.
	Costs from Existing SI RICE NESHAP Impacts received from EPA 1/26/12
particular price; we often draw this curve as upward sloping because some production resources are fixed. As a result, the cost of producing an additional unit typically rises as more units are made. The market demand curve describes how much of a good or service consumers are willing and able to buy at some price. Holding other factors constant, the quantity demand is assumed to fall when prices rise. In a perfectly competitive market, equilibrium price (P0) and quantity (Q0) is determined by the intersection of the supply and demand curves (see Figure 5-4).
5.3.1	Changes in Market Prices and Quantities
To qualitatively assess how the regulation may influence the equilibrium price and quantity in the affected markets, we assumed the market supply function shifts up by the additional cost of producing the good or service; the unit cost increase is typically calculated by dividing the annual compliance cost estimate by the baseline quantity (Q0) (see Figure 5-4). As shown, this model makes two predictions: the price of the affected goods and services are likely to rise and the consumption/production levels are likely to fall.

                              consumer surplus =  - [fghd + dhc]
                              producer surplus = [fghd  -  aehb]  -  bdc
                              total surplus = consumer surplus + producer surplus =
                               - [aehb + dhc + bdc]
Figure 5-2.	Market Demand and Supply Model: With and Without Regulation

The size of these changes depends on two factors: the size of the unit cost increase (supply shift) and differences in how each side of the market (supply and demand) responds to changes in price. Economists measure responses using the concept of price elasticity, which represents the percentage change in quantity divided by the percentage change in price. This dependence has been expressed in the following formula:

As a general rule, a higher share of the per-unit cost increases will be passed on to consumers in markets where
goods and services are necessities and people do not have good substitutes that they can switch to easily (demand is inelastic) and
suppliers have excess capacity and can easily adjust production levels at minimal costs, or the time period of analysis is long enough that suppliers can change their fixed resources; supply is more elastic over longer periods.
Short-run demand elasticities for energy goods (electricity and natural gas), agricultural products, and construction are often inelastic. Specific estimates of short-run demand elasticities for these products can be obtained from existing literature. For the short-run demand of energy products, the National Energy Modeling System (NEMS) buildings module uses values between 0.1 and 0.3; a 1% increase in price leads to a 0.1 to 0.3% decrease in energy demand (Wade, 2003). For the short-run demand of agriculture and construction, the EPA has estimated elasticities to be 0.2 for agriculture and approximately 1 for construction (U.S. EPA, 2004). As a result, a 1% increase in the prices of agriculture products would lead to a 0.2% decrease in demand for those products, while a 1% increase in construction prices would lead to approximately a 1% decrease in demand for construction. Given these demand elasticity scenarios (shaded in gray), approximately a 1% increase unit costs would result in a price increase of 0.1 to 1% (Table 5-2). As a result, 10 to 100% of the unit cost increase could be passed on to consumers in the form of higher goods/services prices. This price increase would correspond to a 0.1 to 0.8% decline in consumption in these markets (Table 5-3).
Table 5-2.	Hypothetical Price Increases for a 1% Increase in Unit Costs
                           Market Demand Elasticity
                           Market Supply Elasticity

                                      0.1
                                      0.3
                                      0.5
                                      0.7
                                       1
                                      1.5
                                       3
−0.1
0.5%
0.8%
0.8%
0.9%
0.9%
0.9%
1.0%
−0.3
0.3%
0.5%
0.6%
0.7%
0.8%
0.8%
0.9%
−0.5
0.2%
0.4%
0.5%
0.6%
0.7%
0.8%
0.9%
−0.7
0.1%
0.3%
0.4%
0.5%
0.6%
0.7%
0.8%
−1.0
0.1%
0.2%
0.3%
0.4%
0.5%
0.6%
0.8%
−1.5
0.1%
0.2%
0.3%
0.3%
0.4%
0.5%
0.7%
−3.0
0.0%
0.1%
0.1%
0.2%
0.3%
0.3%
0.5%

53.2	Regulated Markets: The Electric Power Generation, Transmission, and Distribution Sector
Given that the electric power sector bears majority of the estimated compliance costs and the industry is also among the last major regulated energy industries in the United States (EIA, 2010), the competitive model is not necessarily applicable for this industry.
Table 5-3.	Hypothetical Consumption Decreases for a 1% Increase in Unit Costs
                           Market Demand Elasticity
                           Market Supply Elasticity

                                      0.1
                                      0.3
                                      0.5
                                      0.7
                                       1
                                      1.5
                                       3
−0.1
−0.1%
−0.1%
−0.1%
−0.1%
−0.1%
−0.1%
−0.1%
−0.3
−0.1%
−0.2%
−0.2%
−0.2%
−0.2%
−0.3%
−0.3%
−0.5
−0.1%
−0.2%
−0.3%
−0.3%
−0.3%
−0.4%
−0.4%
−0.7
−0.1%
−0.2%
−0.3%
−0.4%
−0.4%
−0.5%
−0.6%
−1.0
−0.1%
−0.2%
−0.3%
−0.4%
−0.5%
−0.6%
−0.8%
−1.5
−0.1%
−0.3%
−0.4%
−0.5%
−0.6%
−0.8%
−1.0%
−3.0
−0.1%
−0.3%
−0.4%
−0.6%
−0.8%
−1.0%
−1.5%

Although the electricity industry continues to go through a process of restructuring, whereby the industry is moving toward a more competitive framework (see Figure 5-3 for the status of restructuring by state), in many states, electricity prices continue to be fully regulated by Public Service Commissions. As a result, the rules and processes outlined by these agencies would ultimately determine how these additional regulatory costs would be recovered by affected entities.
5.3.3	Partial Equilibrium Measures of Social Cost: Changes Consumer and Producer Surplus
In partial equilibrium analysis, the social costs are estimated by measuring the changes in consumer and producer surplus, and these values can be determined using the market supply and demand model (Figure 5-2). The change in consumer surplus is measured as follows:
	CS =  -  [Q1 x p] + [0.5 x Q x p].	(5.1)
Higher market prices and lower quantities lead to consumer welfare losses. Similarly, the change in producer surplus is measured as follows:
	PS = [Q1 x p]  -  [Q1 x t]  -  [0.5 x Q x (p  -  t)].	(5.2)
Higher unit costs and lower production level reduce producer surplus because the net price change (p  -  t) is negative. However, these losses are mitigated because market prices tend to rise.

Figure 5-3.	Electricity Restructuring by State
Source.	U.S. Energy Information Administration. 2010b. <http://www.eia.doe.gov/cneaf/electricity/page/restructuring/restructure_elect.html>. Last updated September 2010.

Energy Impacts
Executive Order 13211 (66 FR 28355, May 22, 2001) provides that agencies will prepare and submit to the Administrator of the Office of Information and Regulatory Affairs, Office of Management and Budget, a Statement of Energy Effects for certain actions identified as "significant energy actions." Section 4(b) of Executive Order 13211 defines "significant energy actions" as any action by an agency (normally published in the Federal Register) that promulgates or is expected to lead to the promulgation of a final rule or regulation, including notices of inquiry, advance notices of proposed rulemaking, and notices of proposed rulemaking: (1) (i) that is a significant regulatory action under Executive Order 12866 or any successor order, and (ii) is likely to have a significant adverse effect on the supply, distribution, or use of energy; or (2) that is designated by the Administrator of the Office of Information and Regulatory Affairs as a significant energy action.
This rule is not a significant energy action as designated by the Administrator of the Office of Information and Regulatory Affairs because it is not likely to have a significant adverse impact on the supply, distribution, or use of energy. EPA has prepared an analysis of energy impacts that explains this conclusion as follows below.
With respect to energy supply and prices, the analysis in Table 5-4 suggests at the industry level, the annualized costs represent a very small fraction of revenue (all industries are impacted under 1%). As a result, we can conclude supply and price impacts should be small.
To enhance understanding regarding the regulation's influence on energy consumption, we examined publicly available data describing energy consumption for the electric power sector that will be affected by this rule. The Annual Energy Outlook 2011 (EIA, 2011) provides energy consumption data. As shown in Table 5-4, this industry account for less than 0.3% of the U.S. total liquid fuels and less than 8.0% of natural gas. As a result, any energy consumption changes attributable to the regulatory program should not significantly influence the supply, distribution, or use of energy.
Table 5-4.	U.S. Electric Powera Sector Energy Consumption (Quadrillion BTUs): 2013

                                   Quantity
                           Share of Total Energy Use
Distillate fuel oil
0.09
0.1%
Residual fuel oil
0.22
0.2%
Liquid fuels subtotal
0.31
0.3%
Natural gas
7.63
7.9%
Steam coal
17.37
18.0%
Nuclear power
8.50
8.8%
Renewable energy[b]
4.63
4.8%
Electricity Imports
0.12
0.1%
 Total Electric Power Energy Consumption[c]
38.77
40.1%
Delivered Energy Use
70.56
73.2%
Total Energy Use
96.66
100.0%
[a]Includes consumption of energy by electricity-only and combined heat and power plants whose primary business is to sell electricity, or electricity and heat, to the public. Includes small power producers and exempt wholesale generators.
[b]Includes conventional hydroelectric, geothermal, wood and wood waste, biogenic municipal solid waste, other biomass, petroleum coke, wind, photovoltaic and solar thermal sources. Excludes net electricity imports.
cIncludes non-biogenic municipal waste not included above.
Source: U.S. Energy Information Administration. 2011a. Supplemental Tables to the Annual Energy Outlook 2011. Table 2. Available at: <http://www.eia.doe.gov/oiaf/aeo/aeoref_tab.html>.
Unfunded Mandates
The UMRA requires that we estimate, where accurate estimation is reasonably feasible, future compliance costs imposed by the rule and any disproportionate budgetary effects. Our estimates of the future compliance costs of the proposed rule are discussed previously in Section 4 of this RIA. We do not believe that there will be any disproportionate budgetary effects of the proposed rule on any particular areas of the country, State or local governments, types of communities (e.g., urban, rural), or particular industry segments.
5.5.1	Future and Disproportionate Costs
The UMRA requires that we estimate, where accurate estimation is reasonably feasible, future compliance costs imposed by the rule and any disproportionate budgetary effects. Our estimates of the future compliance costs of the proposed rule are discussed previously in Chapter 4 of this RIA. We do not believe that there will be any disproportionate budgetary effects of the proposed rule on any particular areas of the country, State or local governments, types of communities (e.g., urban, rural), or particular industry segments.
5.5.2	Effects on the National Economy
The UMRA requires that we estimate the effect of the proposed rule on the national economy. To the extent feasible, we must estimate the effect on productivity, economic growth, full employment, creation of productive jobs, and international competitiveness of the U.S. goods and services if we determine that accurate estimates are reasonably feasible and that such effect is relevant and material. The nationwide economic impact of the proposed rule is presented earlier in this RIA chapter. This analysis provides estimates of the effect of the proposed rule on most of the categories mentioned above, and these estimates are presented earlier in this RIA chapter. In addition, we have determined that the proposed rule contains no regulatory requirements that might significantly or uniquely affect small governments. Therefore, today's rule is not subject to the requirements of section 203 of the UMRA.
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.
      Assuming that our baseline for this RIA does not include implementation of the final 2010 SI RICE rule, as we state earlier in this document, EPA has determined that this proposed rule will not have disproportionately high and adverse human health or environmental effects on minority or low-income populations because it increases the level of environmental protection for all affected populations without having any disproportionately high and adverse human health or environmental effects on any population, including any minority or low-income population.  This rule is a nationwide standard that reduces air toxics emissions from existing stationary SI engines, thus decreasing the amount of such emissions to which all affected populations are exposed.

5.7   Employment Impact Analysis

      In addition to addressing the costs and benefits of the proposed reconsideration rule, EPA has analyzed the impacts of this rulemaking on employment, which are presented in this section.  While a standalone analysis of employment impacts is not included in a standard cost-benefit analysis, such an analysis is of particular concern in the current economic climate of sustained high unemployment. Executive Order 13563, states, "Our regulatory system must  protect public health, welfare, safety, and our environment while promoting economic growth, innovation, competitiveness, and job creation" (emphasis added). Therefore, and consistent with recent efforts to characterize the employment effects of economically significant rules, the Agency has provided this analysis to inform the discussion of labor demand and employment impacts.
This employment impact analysis includes estimates of certain short-term and on-going labor requirements (increase in labor demand) associated with reporting and recordkeeping, and the installation, operating and maintenance of control devices.    EPA estimates that about 200 full-time equivalents (FTE) will be created or supported in the short-term and about 400 FTEs will be created or supported annually on a permanent basis.   EPA also provides a qualitative discussion of other potential employment effects, including both increases and decreases. Because of the uncertainties involved, these sets of estimates should not be added in an attempt to characterize the overall employment effect.
We have not quantified the rule's net effects on the overall labor market, or the potential changes to  workers' incomes. EPA continues to explore the relevant theoretical and empirical literature and to seek public comments in order to ensure that such estimates are as accurate, useful and informative as possible.
From an economic perspective, labor is an input into producing goods and services; if regulation requires that more labor be used to produce a given amount of output, that additional labor is reflected in an increase in the cost of production.  When an increase in employment occurs as a result of a regulation, it is a cost to firms.  Moreover, when the economy is at full employment, we would not expect an environmental regulation to have an impact on overall employment because labor is being shifted from one sector to another. On the other hand, in periods of high unemployment, an increase in labor demand due to regulation may result in a short-term net increase in overall employment due to the potential hiring of previously unemployed workers by the regulated sector to help meet new requirements (e.g., to install new equipment) or by the environmental protection sector to produce new abatement capital. When significant numbers of workers are unemployed, the opportunity costs associated with displacing jobs in other sectors are likely to be smaller.  To provide a partial picture of the employment consequences of this rule, EPA takes two approaches. First, EPA uses information such as monitoring, recordkeeping, and reporting estimates derived from its cost analysis documentation to generate estimates of employment impacts.  Second, the analysis considers the results of Morgenstern, Pizer, and Shih (2002) in estimating the effects of the regulation on the regulated industry. This approach has been used by EPA previously in recent Regulatory Impact Analyses. EPA is interested in public comments on the merits of including information derived in this fashion for assessing the employment consequences of regulations.

 5.7.1  Employment Impacts from Pollution Control Requirements

      Regulations set in motion new orders for pollution control equipment and services. When a new regulation is promulgated, one typical response of industry is to order pollution control equipment and services in order to comply with the regulation when it becomes effective, while closure of plants that choose not to comply is assumed to occur after the compliance date. With such a response by industry as a basis, this section presents estimates for short term labor requirement needed associated with the monitoring, recordkeeping, and reporting requirements for this proposed rule.  Environmental regulation may increase revenue and employment in the environmental technology industry.  While these increases represent gains for that industry, they are costs to the regulated industries required to install the equipment. As with any pool of labor, the gross size of the labor pool does not reflect the net impact on overall employment after adjusting for shifts in other sectors.
Regulated firms may hire workers to design and build pollution controls.  Once the equipment is installed, regulated firms may hire workers to operate and maintain the pollution control equipment  -  much like they may hire workers to produce more output.  Of course, these firms may also reassign existing employees to do these activities.  A study including an analysis of environmental protection employment in six U.S. states in 2003 by Bezdek, Wendling, and DiPernab (2008) found that "investments in environmental protection create jobs and displace jobs, but the net effect on employment is positive."
      Once the equipment is installed, regulated firms may hire workers to operate and maintain the pollution control equipment  -  much like they may hire workers to produce more output.
      The focus of this part of the analysis is on labor requirements related to the compliance
actions of the affected entities within the affected sector.  The employment analysis uses a bottom-up engineering-based methodology to estimate employment impacts. The engineering cost analysis summarized in Section 4 of this RIA includes estimates of the labor requirements associated with implementing the proposed regulations. Each of these labor changes may either be required as part of an initial effort to comply with the new regulation or required as a continuous or annual effort to maintain compliance.  We estimate up-front and continual, annual labor requirements by estimating hours of labor required and converting this number to full-time equivalents (FTEs) by dividing by 2,080 (40 hours per week multiplied by 52 weeks). We note that this type of FTE estimate cannot be used to make assumptions about the specific number of people involved or whether new jobs are created for new employees.

      The results of this employment estimate are presented in Table 5-5 for the proposed NESHAP. The tables breaks down the installation, operation, and maintenance estimates by type of pollution control evaluated in the RIA and present both the estimated hours required and the conversion of this estimate to FTE.  For the proposed NESHAP, reporting and recordkeeping requirements were estimated requirements were estimated for the entire rule rather than by anticipated control requirements;  the reporting and recordkeeping estimates are consistent with estimates EPA submitted as part of its Information Collection Request (ICR) that is in the Supporting Statement for the proposed reconsideration rule.