The Regulatory Flexibility Act ( RFA) generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations, and small governmental jurisdictions.

For purposes of assessing the impacts of today's rule on small entities, small entity is defined as: ( 1) a small business according to Small Business Administration ( SBA) size standards by the North American Industry Classification System ( NAICS) category of the owning entity. The range of small business size standards for the 40 affected industries ranges from 500 to 1,000 employees, except for petroleum refining and electric utilities. In these latter two industries, the size standard is 1,500 employees and a mass throughput of 75,000 barrels/ day or less, and 4 million kilowatt hours of production or less, respectively. ( 2) a small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; and ( 3) a small organization that is any not for profit enterprise which is independently owned and operated and is not dominant in its field. Table 7 1. Summary of Small Entity Impacts MACT Floor Alternative Option 1A Alternative Number of small entities 185 369 Total number of entities 576 970 Average annual control cost per small entity $ 198,675 $ 269,842 Average control cost/ sales ratio 0.78% 1.65%

Number of small entities with cost to sales ratios

1 percent 34 148 Number of small entities with cost to sales ratios

3 percent 10 45 10The ICCR Inventory Database contains data for boilers, process heaters, incinerators, landfill gas flares, turbines, and internal combustion engines.

7 2 This section investigates characteristics of businesses and government entities that own existing boilers and process heaters affected by this rule and provides a preliminary screening level analysis to assist in determining whether this rule is likely to impose a significant impact on a substantial number of the small businesses within this industry. The screening level analysis employed here is a " sales test," which computes the annualized compliance costs as a share of sales/ revenue for existing companies/ government entities.

7.3 Identifying Small Businesses To support the economic impact analysis of the regulation, EPA identified 2,186 ( 3,580) boilers and process heaters located at commercial, industrial, and government facilities that would be affected by the regulation. The population of boilers and process heaters was developed from the EPA ICCR Inventory Database version 4.1.10 The list of boilers and process heaters contained in these databases was developed from information in the AIRS and OTAG databases, state and local permit records, and the combustion source ICR conducted by the Agency. Industry and environmental stakeholders reviewed the units contained in these databases as part of the ICCR FACA process. In addition, stakeholders contributed to the databases by identifying and including omitted units. Information was extracted from the ICCR databases to support the ICI boilers and process heaters NESHAP. This modified database containing information on only boilers and process heaters is referred to as the Inventory Database.

The small entities screening analysis for the regulation is based on the evaluation of existing owners of boilers and process heaters for which information was available. It is assumed that the size and ownership distribution of units in the Inventory Database is representative of the entire estimated population of existing boilers and process heaters. In addition, it is assumed that new sources included in the 2005 population will also be representative of the Inventory Database. However, because our analysis is based on a subset of the total population of boilers and process heaters, the number of entities identified as highly affected in this analysis may not be identical to the actual impact of the regulation on small entities.

The remainder of this section presents cost and sales information on small companies and government organizations that own existing boilers and process heaters. Also, in this section, as in previous sections, the values from the Inventory Database in the text are for the floor alternative. Following in parentheses are those for the Option 1A alternative.

7.4 Analysis of Facility Level and Parent Level Data The 2,186 ( 3,580) units in the Inventory Database with full information were linked to 1,214 ( 1,881) existing facilities. As shown in Table 7 2, these 1,186 ( 1,521) facilities are owned by 576 ( 970) parent companies. The average number of facilities per company is approximately 2.0 ( 2.2); however, as is also illustrated in Table 7 2, several large entities in the health services industry and government sectors own many facilities with boilers and process heaters. 7 3 Table 7 2. Facility Level and Parent Level Data by Industry Floor Alternative Option 1A Alternative SIC Code NAICS Code Description Number of Units Number of Facilities Number of Parent Companies Avg. Number of Facilities Per Parent Entity Number of Units Number of Facilities Number of Parent Companies Avg. Number of Facilities Per Parent Entity 01 111 Agriculture   Crops 3 3 3 1.0 6 6 6 1.0 02 112 Agriculture   Livestock                 07 115 Agricultural Services                 10 212 Metal Mining 9 4 2 2.0 11 5 2 2.5 12 212 Coal Mining 2 1     2 1     13 211 Oil and Gas Extraction         18 4 1 4.0 14 212 Mining/ Quarrying   Nonmetallic Minerals 8 4 3 1.3 10 5 4 1.3 17 235 Construction   Special Trade         2 1 1 1.0 20 311 Food and Kindred Products 138 60 32 1.9 163 72 38 1.9 21 312 Tobacco Products 11 7 4 1.8 22 11 6 1.8 22 313 Textile Mill Products 135 71 33 2.2 250 134 73 1.8 23 315 Apparel & Other Products from Fabrics 2 2 1 2.0 4 4 3 1.3 24 321 Lumber and Wood Products 360 262 122 2.1 462 337 175 1.9 25 337 Furniture and Fixtures 234 154 67 2.3 310 209 100 2.1 26 322 Paper and Allied Products 321 194 68 2.9 503 272 100 2.7 27 511 Printing, Publishing, and Related Industries         8 6 3 2.0 28 325 Chemicals and Allied Products 174 70 41 1.7 433 163 91 1.8 29 324 Petroleum Refining and Related Industries 11 8 9 0.9 162 50 31 1.6 30 326 Rubber and Misc. Plastics Products 17 13 9 1.4 56 37 24 1.5 ( continued) 7 4 Table 7 2. Facility Level and Parent Level Data by Industry ( continued)

Floor Alternative Option 1A Alternative SIC Code NAICS Code Description Number of Units Number of Facilities Number of Parent Companies Avg. Number of Facilities Per Parent Entity Number of Units Number of Facilities Number of Parent Companies Avg. Number of Facilities Per Parent Entity 31 316 Leather and Leather Products 1 1 1 1.0 22 12 8 1.5 32 327 Stone, Clay, Glass, and Concrete Products 9 7 4 1.8 42 25 15 1.7 33 331 Primary Metal Industries 41 16 10 1.6 85 33 22 1.5 34 332 Fabricated Metal Products 16 10 7 1.4 44 28 18 1.6 35 333 Industrial Machinery and Computer Equip. 23 12 9 1.3 46 25 20 1.3 36 335 Electronic and Electrical Equipment 5 5 3 1.7 45 29 19 1.5 37 336 Transportation Equipment 102 41 12 3.4 158 61 26 2.3 38 334 Scientific, Optical, and Photographic Equipment 8 4 3 1.3 33 16 9 1.8 39 339 Misc. Manufacturing Industries 2 2 2 1.0 14 10 9 1.1 40 482 Railroad Transportation 4 1 1 1.0 4 1 1 1.0 42 484 Motor Freight and Warehousing 5 1 1 1.0 7 3 3 1.0 46 486 Pipelines, Except Natural Gas         6 5 1 5.0 49 221 Electric, Gas, and Sanitary Services 318 160 80 2.0 372 185 98 1.9 50 421 Wholesale Trade   Durable Goods 3 2 1 2.0 3 2 1 2.0 51 422 Wholesale Trade   Nondurable Goods 2 1 1 1.0 2 1 1 1.0 55 441 Automotive Dealers and Gasoline Service Stations         1 1 1 1.0 58 722 Eating and Drinking Places                 59 445   454 Miscellaneous Retail         1 1 1 1.0 60 522 Depository Institutions                 ( continued) 7 5 Table 7 2. Facility Level and Parent Level Data by Industry ( continued)

Floor Alternative Option 1A Alternative SIC Code NAICS Code Description Number of Units Number of Facilities Number of Parent Companies Avg. Number of Facilities Per Parent Entity Number of Units Number of Facilities Number of Parent Companies Avg. Number of Facilities Per Parent Entity 70 721 Hotels and Other Lodging Places 1 1 1 1.0 1 1 1 1.0 72 812 Personal Services                 76 811 Misc. Repair Services 2 1     2 1     80 621 Health Services 37 18 2 9.0 40 19 2 9.5 81 541 Legal Services                 82 611 Educational Services 105 45 30 1.5 114 50 35 1.4 83 624 Social Services 2 1     3 2 2 1.0 86 813 Membership Organizations                 87 541 Engineering, Accounting,

Research, Management and Related Services 2 2 1 2.0 6 5 2 2.5 89 711/ 514 Services, N. E. C. 2 1     2 1     91 921 Executive, Legislative, and General Administration 1 1     2 2 1 2.0 92 922 Justice, Public Order, and Safety 29 9     33 10     94 923 Administration of Human Resources 1 1     1 1     96 926 Administration of Economic Programs 4 3 1 3.0 4 3 1 3.0 97 928 National Security and International Affairs 29 11 2 5.5 41 13 2 6.5 NA SIC Information Not Available 7 4     24 18 2 9.0 State Parent is a state government     10       11   Total 2,186 1,214 576 2.0 3,580 1,881 970 2.2 Source: Industrial Combustion Coordinated Rulemaking ( ICCR). 1998. Data/ Information Submitted to the Coordinating Committee at the Final Meeting of the Industrial Combustion Coordinated Rulemaking Federal Advisory Committee. EPA Docket Numbers A 94 63, II K 4b2 through  4b5. Research Triangle Park,

North Carolina. September 16 17. 11Total annualized cost is compared to tax revenue to assess the relative impact on local governments.

7 6 10 12 31 125 52 121 141 55 0 50 100 150 200 < 25 25 to 49 50 to 99 100 to 499 500 to 999 1,000 to 4,999 5,000 to 24,999 > 25,000 Parent Employment Number of Parents Figure 7 1. Parent Size by Employment Range, Floor Alternative * Excludes 29 parent entities for which employment information was unavailable. Employment and sales are typically used as measures of business size. Employment, sales, population, and tax revenue data ( when applicable) were collected for the 576 ( 970) parent companies and government entities. 11 Figure 7 1 shows the distribution of employees by parent company for the floor alternative. Employment for parent companies ranges from 5 to 608,000 employees. One hundred seventyeight or more of the firms have fewer than 500 employees, and 55 companies have more than 25,000 employees. The distribution of parents by employment range for the above the floor alternative is similar to the floor alternative.

Sales provide another measure of business size. Figure 7 2 presents the sales distribution for affected parent companies for the floor alternative. The median sales figure for affected companies is $ 300 million ($ 200 million), and the average sales figure is $ 4.1 billion ($ 3.5 billion) ( excluding the federal government). As shown in Figure 7 2, revenue and sales figures vary greatly across the population: 209 firms and governments affected by the floor alternative have annual revenues less than $ 100 million per year. These figures include all sales associated with the parent company, not just facilities affected by the 12Small business guidelines typically define small businesses based on employment, and the threshold varies from industry to industry. For example, in the paints and allied products industry, a business with fewer than 500 employees is considered a small business; whereas in the industrial gases industry, a business with fewer than 1,000 employees is considered small. However, for a few industries, usually services, sales are used as the criterion. For example, in the veterinary hospital industry, companies with less than $ 5 million in annual sales are defined as small businesses.

7 7 7 18 128 56 110 51 133 20 33 17 0 50 100 150 200 < 5 5 to 9 10 to 49 50 to 99 100 to 499 500 to 999 1,000 to 4,999 5,000 to 9,999 10,000 to 24,999 > 25,000 Parent Sales ($ 106) Number of Parents Figure 7 2. Number of Parents by Sales Range, Floor Alternative * Excludes 3 parent entities for which sales or revenue information was unavailable.

regulation ( i. e., facilities with boilers or process heaters). The distribution for the Option 1A above thefloor alternative is similar to that for the floor alternative.

Based on SBA guidelines, 185 ( 369) of the companies were identified as small businesses. 12 Small businesses by business type are presented in Table 7 3. The lumber and wood products industry contains the largest number of the small businesses with 84 ( 134), followed by furniture and fixtures with 28 ( 55), electric services with 26 ( 30), and paper and allied products with 13 ( 30). The remaining small businesses are distributed across 40 different two digit SIC code groupings. 7 8 Table 7 3. Small Parent Companies by Industry Floor Alternative Option 1A Alternative SIC Code NAICS Code Description Number of Parent Companies Number of Small Parent Companies Number of Parent Companies Number of Small Parent Companies 01 111 Agriculture   Crops 3   6 1 02 112 Agriculture   Livestock         07 115 Agricultural Services         10 212 Metal Mining 2 2 2 2 12 212 Coal Mining         13 211 Oil and Gas Extraction     1 1 14 212 Mining/ Quarrying   Nonmetallic Minerals 3   4   17 235 Construction   Special Trade Contractors     1 1 20 311 Food and Kindred Products 32 12 38 15 21 312 Tobacco Products 4   6   22 313 Textile Mill Products 33 5 73 27 23 315 Apparel and Other Products from Fabrics 1   3 2 24 321 Lumber and Wood Products 122 84 175 134 25 337 Furniture and Fixtures 67 28 100 55 26 322 Paper and Allied Products 68 13 100 30 27 511 Printing, Publishing, and Related Industries     3 2 28 325 Chemicals and Allied Products 41 4 91 19 29 324 Petroleum Refining and Related Industries 9 2 31 9 30 326 Rubber and Misc. Plastics Products 9 1 24 4 31 316 Leather and Leather Products 1 1 8 4 32 327 Stone, Clay, Glass, and Concrete Products 4   15 3 33 331 Primary Metal Industries 10 1 22 3 34 332 Fabricated Metal Products 7 3 18 5 ( continued) 7 9 Table 7 3. Small Parent Companies by Industry ( continued)

Floor Alternative Option 1A Alternative SIC Code NAICS Code Description Number of Parent Companies Number of Small Parent Companies Number of Parent Companies Number of Small Parent Companies 35 333 Industrial Machinery and Computer Equip. 9 1 20 5 36 335 Electronic and Electrical Equipment 3   19   37 336 Transportation Equipment 12 1 26 5 38 334 Scientific, Optical, and Photographic Equip. 3   9 1 39 339 Miscellaneous Manufacturing Industries 2   9 1 40 482 Railroad Transportation 1   1   42 484 Motor Freight and Warehousing 1   3 1 46 486 Pipelines, Except Natural Gas     1   49 221 Electric, Gas, and Sanitary Services 80 26 98 30 50 421 Wholesale Trade   Durable Goods 1   1   51 422 Wholesale Trade   Nondurable Goods 1   1   55 441 Automotive Dealers and Gasoline Service Stations     1 1 58 722 Eating and Drinking Places         59 445   454 Miscellaneous Retail     1 1 60 522 Depository Institutions         70 721 Hotels and Other Lodging Places 1   1   72 812 Personal Services         76 811 Misc. Repair Services         80 621 Health Services 2 1 2 1 81 541 Legal Services         82 611 Educational Services 30   35 3 83 624 Social Services     2 1 ( continued) 7 10 Table 7 3. Small Parent Companies by Industry ( continued)

Floor Alternative Option 1A Alternative SIC Code NAICS Code Description Number of Parent Companies Number of Small Parent Companies Number of Parent Companies Number of Small Parent Companies 86 813 Membership Organizations         87 541 Engineering, Accounting, Research, Management and Related Services 1   2   89 711/ 514 Services, N. E. C.         91 921 Executive, Legislative, and General Administration     1   92 922 Justice, Public Order, and Safety         94 923 Administration of Human Resources         96 926 Administration of Economic Programs 1   1   97 928 National Security and International Affairs 2   2   NA SIC Information Not Available     2 2 State Parent is a State Government 10   11   Total 576 185 970 369 Source: Industrial Combustion Coordinated Rulemaking ( ICCR). 1998. Data/ Information Submitted to the Coordinating Committee at the Final Meeting of the Industrial Combustion Coordinated Rulemaking Federal Advisory Committee. EPA Docket Numbers A 94 63, II K 4b2 through  4b5. Research Triangle Park, North Carolina. September 16 17.

Fifty nine governmental jurisdictions are affected by the final rule. The entities operate 290 units located at 121 facilities. Thirteen of these jurisdictions are classified as small because they serve a population of 50,000 or fewer. The affected small governments operate 13 units at 13 facilities. More information on impacts to these entities can be found in Section 7.6.

7.5 Small Business Impacts Table 7 4 presents a summary of the ratio of floor and above the floor control costs to sales for affected large and small entities. The average CSR is 0.14 ( 0.23) percent for large entities 7 11 Table 7 4. Summary Statistics for SBREFA Screening Analysis: Floor and Above the Floor Cost to Sales Ratios Floor Option 1A Total Number of Small Entities 185 369 Average Annual Compliance Cost per Small Entity $ 198,675 $ 269,842 Entities with Sales/ Revenue Data Compliance costs are < 1% of sales 141 176 Compliance costs are

1 to 3% of sales 34 148 Compliance costs are

3% of sales 10 45 Compliance Cost to Sales/ Revenue Ratios Average 0.78 1.65 Median 0.50 0.77 Maximum 7.83 38.83 Minimum 0.011 0.009 7 12 ( excluding the federal government) and 0.78 ( 1.65) percent for small entities. Forty four ( 193) small parents had floor CSRs greater than 1 percent, assuming add on control is employed to meet the standard. For these 44 ( 193) parent companies, the CSRs ranged from 1.00 ( 1.00) percent to 7.83 ( 38.83) percent. Ten ( 45) entities out of these 44 ( 193) had CSRs ratios greater than 3 percent.

7.6 Affected Government Entities The RFA as amended by SBREFA provides the following standard definition of " small governmental jurisdiction": a city, county, town, township, village, school district, or special district with a population of less than fifty thousand. Using this definition, EPA identified thirteen small governmental jurisdictions that own and operate " public power" producers with affected boilers. For this part of the small entity analysis, which focuses on affected government entities, public power producers are defined as nonprofit publicly owned electrical utilities operated by municipalities, counties, and states or other publicly owned bodies such as public utility districts. This excludes rural electric cooperatives.

As illustrated in Table 7 5, the vast majority of small municipal systems with affected boilers are located in the Midwest ( 11 systems or 85 percent). Four of the eleven municipal systems are located in Minnesota, with two in Indiana and two in Michigan.

Table 7 5. Regional Distribution of Municipal Systems Regional Distribution # of Facilities East Vermont 1 Midwest Indiana 2 Iowa 1 Michigan 2 Minnesota 4 Ohio 1 Wisconsin 1 West California 1 Total 13 Historically municipal utilities were set up to provide residents of a community with reliable energy. For example, the residential sector accounts more than two thirds of total consumers in all cases ( see Table 7 6). However the residential sector generally represents smallest group in terms of total energy consumption. The industrial and commercial sectors consume approximately 70 percent of total energy supplied. Power not consumed by the residential, commercial or industrial sectors is sold into wholesale energy market.

Table 7 6. Selected Municipal Utilities' Capacity, Usage and Consumer Types 7 13 Distribution of Energy Usage by Customer Type Distribution of Customers RO W ID Capacit y ( MW) Energy Usage Residentia l Commerc ial Industri al Total Consumer Residenti al Commercia l Industri al 1 50.5 332,524,000 27% NA NA 19,313 82% 15% 3.7%

2 115 371,823,000 36% 28% 16% 15,615 87% 11% 0.3%

3 24.3 388,066,000 19% 10% 70% 9,082 84% 14% 1.0%

4 22.2 185,191,000 26% 14% 58% 6,235 86% 13% 1.6%

5 34.5 147,335,000 26% 27% 44% 5,955 86% 14% 0.3%

6 23 573,003,000 8% NA NA 7,207 90% 7% 1.0%

7 35 338,903,000 38% 8% 51% 13,247 87% 11% 1.3%

8 46 194,753,000 22% NA NA 6,890 85% 13% 0.1%

9 103.1 837,175,000 NA NA NA NA NA NA NA 10 32 218,208,000 40% 3% 55% 10,829 88% 3% 8.4%

11 26 267,201,000 16% NA NA 9,471 75% 24% 0.3%

12 34 95,642,000 33% 67% NA 5,747 83% 17% 0.3%

Source: Giles, Ellen F. 2000. platts Directory of Electric Power Producers and Distributors 109th Edition of the Electrical World Directory. New York: McGraw Hill.

Public power producers do not pay state or local taxes. However, they typically are under agreement to make annual contributions to state and local government operating funds. In addition, they are not guaranteed at rate of return ( as regulated public utilities are), however,

their rates are set by agreement with local councils and these rates are typically adjusted to reflect changes in operating costs.

Municipal utilities have the ability to generate capital through the issuance of tax exempt municipal bonds. These municipal bonds are exempt from federal income tax which allows the publicly owned utilities to finance capital projects at a more affordable rate. 13Based on SBA guidelines for determining small businesses.

7 14 Additionally the local governments investing in municipal utilities generally issue revenue bonds rather than general obligation bonds. This ensures that the debit can be paid back through revenues from the generation of electricity and does not obligate the local government or community tax base.

As shown in Table 7 7, the average total annual compliance costs per entity are $ 223 thousand under the floor alternative and increase to $ 548 thousand for the above   the floor alternative ( Option 1A). For the floor alternative, the median cost to revenue ratio is 0.94 percent and ratios range from less than 0.5 percent to 8 percent. Three of the affected small governments have cost to revenue ratios at or above 3 percent. Similar analysis for the above the MACT floor alternative shows the median cost to revenue ratio is 2.2 percent and ratios range from less than 0.5 percent to 16 percent. Five of the thirteen affected small governments have cost to revenue ratios at or above 3 percent.

Table 7 7. Summary of Impacts to Small Government Entities Floor Option 1A Total Number of Small Entities 13 13 Average Total Annual Compliance Cost ( TACC) per Small Entity ($) $ 223 $ 548 Compliance Costs are < 1% of Revenue 7 2 Compliance Costs are 1 to 3% of Revenue 3 6 Compliance Costs are >= 3% of Revenue 3 5 Average Compliance Cost as a % of Revenue 1.67 4.18 Median 0.94 2.21 Maximum 7.83 16.30 Minimum 0.02 0.02 Source: American Public Power Association ( APPA). 2002. Straight Answers to False Charges about Public Power. Washington D. C.: APPA. As obtained on November 13, 2003 at http:// www. appanet. org/ about/ publicpower/ index. cfm .

7.6 Assessment of SBREFA Screening This analysis indicates that over two thirds of the parent companies affected by the industrial boilers and process heaters standard are large companies. 13 The relatively small proportion of small businesses affected by the regulation at the floor level is due in part to the exclusion of ICI boilers and process heaters with less than 10 MMBtu input capacity that also use a fossil fuel liquid or gas as primary fuel. As a result, a large share of small boilers and process heaters, which are presumably owned disproportionately by smaller entities, will not incur compliance costs. The Agency estimates that approximately 57 percent of the U. S. population are less than 10 MMBtus or are emergency units and, hence, are excluded from the proposed regulation for the floor alternative. These units are included, however, in the Option 1A above the floor alternative, except where they consume a fossil fuel liquid or gas other than residual fuel oil.

Of the small businesses affected by the regulation, the majority are in the lumber and wood products, furniture and fixtures, paper and allied products, and electric, gas and sanitary services sectors. As shown in Table 7 5, the median profit margin for these four sectors is approximately 7 15 3 percent. Table 7 5 also shows the profit margins for the other industry sectors with affected small businesses. All profit margins of industry sectors with affected small businesses are above 2 percent.

After considering the economic impact of today's rule on small entities, EPA certifies that this action will not have a significant impact on a substantial number of small entities. In accordance with the RFA, as amended by the SBREFA, 5 U. S. C. 601, et. seq., EPA conducted an assessment of the standard on small businesses within the industries affected by the rule. Based on SBA size definitions for the affected industries and reported sales and employment data, the Agency identified 185 of the 576 companies, or 32 percent, owning affected facilities as small businesses. Although small businesses represent 32 percent of the companies within the SBREFA screening population, they are expected to incur only 8 percent of the total compliance costs of $ 445.6 million ( 1998$) for the evaluated 576 firms. Only ten small firms have compliance costs equal to or greater than 3 percent of their sales. In addition, only 24 small firms have CSRs between 1 and 3 percent.

An EIA was performed to estimate the changes in product price and production quantities for this rule. As mentioned in the summary of economic impacts earlier in this report, the estimated changes in prices and output for affected firms are no more than 0.04 percent.

This analysis indicates that the rule should not generate a significant impact on a substantial number of small entities for following reasons. First, only 31 small firms ( or 17 percent of all affected small firms) have compliance costs equal to or greater than 1 percent of their sales. Of these, only ten small firms ( or 5 percent of all affected small firms) have compliance costs equal to or greater than 3 percent of their sales. Second, the EIA results show minimal impacts on prices and output from affected firms, including small entities, due to implementing this rule. This analysis therefore allows us to certify that there will not be a significant impact on a substantial number of small entities from the implementing this rule.

This rule will not have a significant economic impact on a substantial number of small entities as a result of several decisions EPA made regarding the development of this rulemaking which resulted in limiting the impact of this rule on small entities. First, as mentioned earlier, EPA identified small units ( heat input of 10 MMBtu/ hr or less) and limited use boilers ( operate less than 10 percent of the time) as separate subcategories from large units. Many small and limited use units are located at small entities. As also discussed earlier, the result of the MACT floor analysis for these subcategories of existing sources was that no MACT floor could be identified except for the limited use solid fuel subcategory, which is less stringent than the MACT floor for large units. Furthermore, the results of the above the floor analysis for these subcategories indicated that the costs would be too high to be Table 7 5. Profit Margins for Industry Sectors with Affected Small Businesses SIC Code NAICS Code Description Median Profit Margin 20 311 Food and Kindred Products 3.6%

22 313 Textile Mill Products 2.1%

24 321 Lumber and Wood Products 3.0%

25 337 Furniture and Fixtures 3.0%

26 322 Paper and Allied Products 3.3%

28 325 Chemicals and Allied Products 2.7%

49 221 Electric, Gas, and Sanitary Services 7.5%

Source: Dun & Bradstreet. 1997. Industry Norms & Key Business Ratios. Desktop Edition 1996 97. Murray Hill, NJ: Dun & Bradstreet, Inc. 7 16 considered feasible. Consequently, this rule contains no emission limitations for any of the existing small and limited use subcategories except the existing limited use solid fuel subcategory. In addition, the alternative metals emission limit resulted in minimizing the impacts on small entities because some of the potential entities burning a fuel containing very little metals are small entities. Finally, the riskbased alternative compliance options for HCl and manganese sources may also serve to mitigate impacts to small entities.

References U. S. Environmental Protection Agency, Office of Air Quality Planning and Standards. Industrial Combustion Coordinated Rulemaking, Inventory Database V4.1 Boilers. February 26, 1999.

U. S. Environmental Protection Agency, Office of Air Quality Planning and Standards. Industrial Combustion Coordinated Rulemaking, Inventory Database V4  Process Heaters. November 13, 1998.

U. S. Small Business Administration. Small Business Size Standards by NAICS Codes. February 22, 2002. Found on the Internet at http:// www. sba. gov/ size/ Table of Small Business Size Standards from final rule. html.

References Federal Register, 2001. Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. Vol. 66, May 22, 2001, pg. 28355. 8 17 CHAPTER 8 EMISSIONS INVENTORIES AND AIR QUALITY CHANGES 8.1 Results in Brief An analysis of changes in air quality associated with implementation of the industrial boilers and process heaters MACT rule shows that the majority of the U. S. population in 2005 will live in 8 18 areas with predicted improvement in annual average visibility of between 0.4 to 0.6 deciviews resulting from the rule. Almost 4 percent of the projected 2005 U. S. population are predicted to experience improved annual average visibility of greater than 0.25 deciviews. Furthermore, roughly 10 percent of the projected 2005 U. S. population will benefit from reductions in annual average visibility of greater than 0.1 deciviews. The mean improvement across all U. S. counties is 0.05 deciviews, or almost 2 percent from baseline visibility levels. In urban areas ( i. e., areas with a population of 250,000 or more), the mean improvement in annual visibility was 0.06 deciviews. In rural areas ( i. e. all non urban areas), the mean improvement in visibility was 0.04 deciviews in 2005.

On average, the Eastern U. S. experienced slightly larger absolute but smaller relative improvements in visibility than the Western U. S. from the emission reductions associated with this rule.

8.2 Introduction Executive Order 12866 as amended by E. O. 13258 contains as one its requirements the assessment of benefits for any major rule, where a major rule is one that meets one or more of the 4 criteria listed in Chapter 1 of this RIA. Since this regulation is a major rule according to the Executive Order, we have undertaken to estimate the benefits associated with implementation of this regulation. Assessing the benefits requires knowledge of the emission reductions resulting from application of this rule, the change in air quality due to the emission reductions, and the locations where these emission reductions and air quality changes take place. This chapter of the RIA presents the baseline emissions upon which the emission reductions are calculated and the changes in air quality resulting from the emission reductions.

While this regulation is intended to reduce HAP emissions, including mercury, from industrial boilers and process heaters, it also provides reductions in non HAP species such as particulate matter ( PM) and sulfur dioxide ( SO2). Reductions in PM and SO2 are those that are the focus of the benefits assessment, for we currently have sufficient information to monetize the benefits from reductions of these pollutants. We currently lack sufficient information to monetize the benefits from the HAP and mercury reductions from this regulation. It is quite possible that the benefits from the 58,575 tons of HAP reductions and the 1.7 tons of mercury emission reductions may be substantial.

8.3 Baseline Emissions We measure air quality impact as a change in concentration in PM in the counties affected by the emission reductions taking place due to implementation of this regulation. In this case, changes in particulate matter less than 10 microns ( PM10) and changes in the particulate matter fraction of less than 2.5 microns ( PM2.5) are calculated in this analysis. Calculations of changes in both PM fractions are necessary in order to provide a more complete assessment of benefits. In addition, changes in visibility are also estimated in order to calculate the benefits associated with this category of effects. In order to determine the air quality impact of the emission reductions, we first calculated a baseline, then took the PM and SO2 emission reductions prepared in the engineering analysis, estimated the PM2.5 reductions from the PM10 reductions, and then entered the emission reductions into an air quality model. This section describes how the baseline inventories were determined.

8.3.1 EPA's Baseline Inventory 8 1 Initially, our plan was to utilize the same baseline and control scenarios being analyzed to estimate the control costs. The baseline inventory for the control costs is the Industrial Combustion Coordinated Rulemaking ( ICCR) inventory database, which was developed to support the rulemakings for the Combustion Turbines and Reciprocating Internal Combustion Engine MACTs as well as this MACT. However, we were unable to use this baseline inventory because it did not contain a number of data fields necessary for air quality modeling and possessed incomplete data at the unit level necessary for such modeling. Instead, we included 1996 National Emission Trends ( NET) inventory data for these sources to augment the ICCR data in order to prepare an inventory with sufficient data for the air quality modeling. The NET inventory provides baseline emissions data of criteria pollutants from point, area, and mobile sources. Version 3.12 of the NET is being used to prepare the baseline inventory for this air quality analysis. The ICCR inventory provides the PM and SO2 emissions. All other pollutant emissions used to establish the baseline inventory are taken from the NET. Readers desiring more information about the inventory methodologies or results should consult those documents for details.

The baseline reflects air quality and emissions present in 1996, therefore, it reflects controls from various air pollution programs that are implemented by 1996. To the extent that additional controls are implemented before 2005, the year of analysis in this report, the air quality results would differ but the extent of the difference cannot be determined. To our knowledge, only phase II of the the Acid Rain Program which was implemented at utility sources nationwide in 2000 could influence baseline emission inventories. For more details see Pechan, 2001.

The analysis uses a baseline inventory with a base year of 1996 to estimate the benefits of the regulation in 2005. We determined that minimal changes in unit population and baseline emissions would occur between the current time and 2005, so that the use of this inventory without imposition of growth factors was deemed adequate.

8.3.2 The MACT floor and Other Emissions Reduction Scenarios Table 8 1 summarizes the baseline PM10, PM2.5, and SO2 emissions and emission reductions nationwide for the MACT floor option. Baseline emission and emission reductions nationwide for Option 1A, an above the MACT floor option, are presented in Appendix C of the RIA. These regulatory options are described in Chapter 1 of the RIA. The air quality analysis presumes no change in volatile organic compound ( VOC), nitrogen oxides ( NOx), carbon monoxide ( CO), and ammonia ( NH3) emissions. Hence, the baseline emissions for these pollutants are not shown in this table. For these baseline emissions, refer to Pechan, 2001.

The split of emission reductions shown in the latter two columns results from the assignment of specific control devices to only a portion of the affected units. The emissions reductions associated with this portion, which is slightly more than half of the known affected units, can be included in the benefits model ( described in Chapter 10 of the RIA) for calculation of the benefits from these reductions. This is true since these emission reductions can be linked to decreased exposures to affected populations. For the emission reductions from the other affected others, we employ a benefits transfer method that takes the benefits values estimated for the units with assigned control devices and transfers them to these remaining emission reductions to estimate the resulting monetized benefits. For more information on the benefits transfer method, refer to Chapter 10.

As mentioned earlier in this chapter, we conducted no air quality modeling for the HAP or the mercury emission reductions that occur from implementation of this regulation. These emission reductions are listed in Table 8 2. For a description of how HAP emissions and emission factors are 8 2 estimated for this rule, refer to the emission factors/ emissions estimates memo in the public docket ( ERG, 2002).

Table 8 1. Summary of Nationwide Baseline Emissions and Emission Reductionsa for the MACT floor, Existing Units Onlyb, c in 2005 Pollutant Source Type 1996 Baseline Emissions ( tons/ year) MACT Floor Option Emission Known Affected Units Unknown Affected Units Total Emission Reductions for MACT floor option Option 1A Emission Reductions Known Unknown Total Affected Affected Units Units SO2 Point 3,745,790 82,542 30,394 112,936 95,361 41,372 136,733 Area 1,397,425

Motor Vehicle 302,938

Nonroad 840,167

PM10 Point 1,167,995 266,491 298,109 564,600 313,947 255,282 569,229 Area 30,771,607

Motor Vehicle 294,764

Nonroad 463,579  8 3 PM2.5 Point 576,022 75,095 84,125 159,220 94,565 76,894 171,459 Area 6,675,777

Motor Vehicle 230,684

Nonroad 410,334  a Reductions are Baseline Emissions  Control Scenario Emissions. All emissions estimates are in tons.

b The totals reflect emissions for the 48 contiguous States, excluding Alaska and Hawaii.

cThe totals do not reflect new source emissions and emission reductions. These emission reductions were not considered in the air quality modeling since they were far smaller that those for existing units ( 484 tons for PM10 from new units, versus 564,600 tons from existing units). The differences between such emission reductions for PM2.5 are identical, since PM2.5 emissions are derived from PM10 emissions. Also, the differences between SO2 emission reductions for existing and new units are just as great.

Table 8 2. HAP Emission Reductions for the MACT floor option, 2005 Existing Sources Only Pollutant Emission Reductions ( tons/ year)

MACT floor HCl 42,100 Pb 105 Hg 1.7 Non mercury metalsa 1,080 Selected inorganicsb 18,000 Total HAP reductions 58,350 aNon mercury metals include: arsenic, beryllium, cadmium, chromium, manganese, and nickel.

bSelected inorganics include: chlorine, hydrofluoric acid, and phosphorus.

8.4 Air Quality Impacts This section summarizes the methods for and results of estimating air quality for the baseline and control scenarios. Based on the emissions inventories described above, ambient particulate matter ( PM10 and PM2.5) concentrations are projected from the S R Matrix developed from the Climatological Regional Dispersion Model ( CRDM). In Section 8.3.1, we provide brief background on the S R Matrix model. In Section 8.3.2, we estimate PM air quality, and in Section 8.3.3, we estimate visibility degradation. Visibility degradation ( i. e., regional haze), is developed using empirical estimates of light extinction coefficients and efficiencies in combination with modeled reductions in pollutant concentrations. 14 The PM Calculator Tool can be found on the Internet at www. epa. gov/ chief/ software/ pmcalc/ index. html.

8 4 8.4.1. PM Air Quality Modeling EPA used the emissions inputs described above with a national scale source receptor ( S R) Matrix to evaluate the effects of the milestone reductions on ambient concentrations of both PM10 and PM2.5. Ambient concentrations of PM are composed of directly emitted particles and of secondary aerosols of sulfate, nitrate, ammonium, and organics.

The S R Matrix was developed from multiple simulations of the CRDM using meteorological data for 1990 coupled with emissions data from version 2.0 of the 1990 National Particulate Inventory ( NPI). Relative to more sophisticated and resource intensive three dimensional modeling approaches, the CRDM and its associated S R Matrix do not fully account for all the complex chemical interactions that take place in the atmosphere in the secondary formation of PM. Instead it relies on more simplistic species dispersion   transport mechanisms supplemented with chemical conversion at the receptor location.

The S R Matrix consists of fixed coefficients that reflect the relationship between annual average PM concentration values at a single receptor in each county ( i. e., a hypothetical monitor sited at the county population centroid) and the contribution by PM species to this concentration from each emission source ( E. H. Pechan, 1996). The modeled receptors include all U. S. county centroids as well as receptors in 10 Canadian provinces and 29 Mexican cities/ states. The methodology used here for estimating PM air quality concentrations is detailed in Pechan Avanti ( 2000) and is similar to the method used in the July 1997 PM and Ozone NAAQS RIA ( U. S. EPA, 1997e) and the RIA for the final Regional Haze Rule ( U. S. EPA, 1999a), and the Tier 2/ Gasoline Sulfur Rule ( US EPA, 1999c).

8.4.2 PM Air Quality Results This section presents the projected reductions in particulate matter concentrations resulting from reductions in SO2 and PM10, with PM2.5 emissions being derived from the PM10 emissions using the PM Calculator tool14 for the final rule ( MACT floor). The results for the above the floor option, Option 1A, are presented in Appendix C of the RIA.

<IP_ADDRESS> MACT Floor Option Table 8 3 provides a summary of the predicted ambient PM10 and PM2.5 concentrations from the S R matrix for the 2005 baseline and changes associated with the rule. The results indicate that the predicted change in PM concentrations is composed almost entirely of reductions in fine particulates ( PM2.5) with little or no reduction in coarse particles ( PM10 less PM2.5). Therefore, the observed changes in PM10 are composed primarily of changes in PM2.5. In addition to the standard frequency statistics ( e. g., minimum, maximum, average, median), Table 8 3 provides the population weighted average which better reflects the baseline levels and predicted changes for more populated areas of the nation. This measure, therefore, will better reflect the potential benefits of these predicted changes through exposure changes to these populations. As shown, the average annual mean concentrations of PM2.5 across all U. S. grid cells declines by roughly 0.8 percent, or 0.09

g/ m3. The population 8 5 weighted average annual mean PM2.5 concentration declined by 0.7 percent, or 0.10

g/ m3, which is roughly similar in absolute terms to the spatial average. This indicates the rule generates roughly equivalent absolute air quality improvements in less populated, rural areas as in more populated, urban areas.

Table 8 3.

Summary of 2005 Base Case PM Air Quality and Changes Due to MACT Floor Option: Industrial Boiler/ Process Heater Source Categories Statistic 2005 Baseline Changea Percent Change PM10 Minimum Annual Mean (

g/ m3) b 6.09  0.07  1.2%

Maximum Annual Mean (

g/ m3) b 69.30  0.03  0.1%

Average Annual Mean (

g/ m3) 22.68  0.32  1.4%

Median Annual Mean (

g/ m3) 21.84  0.36  1.6%

Population Weighted Average Annual Mean (

g/ m3) c 28.79  0.33  1.1%

PM2.5 Minimum Annual Mean (

g/ m3) b 0.74  0.01 0.0%

Maximum Annual Mean (

g/ m3) b 30.35  0.71  2.3%

Average Annual Mean (

g/ m3) 11.15  0.09  0.8%

Median Annual Mean (

g/ m3) 11.11  0.11  1.1%

Population Weighted Average Annual Mean (

g/ m3) c 13.50  0.10  0.7%

a The change is defined as the control case value minus the baseline value.

b The baseline minimum ( maximum) is the value for the populated county with the lowest ( highest) annual average. The change relative to the baseline is the observed change for the populated county with the lowest ( highest) annual average in the baseline.

c Calculated by summing the product of the projected 2005 county population and the estimated 2005 PM concentration for that county, and then dividing by the total population in the 48 contiguous States.

Table 8 4 provides information on the 2005 populations that will experience improved PM air quality. There are significant populations that live in areas with meaningful reductions in annual mean PM2.5 concentrations resulting from the rule. As shown, just over 2 percent of the 2005 U. S. population are predicted to experience reductions of greater than 0.5

g/ m3. Furthermore, almost 8 percent of the 2005 U. S. population will benefit from reductions in annual mean PM2.5 concentrations of greater than 0.2

g/ m3 and slightly over 28 percent will live in areas with reductions of greater than 0.1

g/ m3. This information indicates how widespread the improvements in PM air quality are expected to be and the large populations that will benefit from these improvements.

Table 8 4.

Distribution of PM2.5 Air Quality Improvements Over 2005 Population Due to MACT Floor Option: Industrial Boiler/ Process Heater Source Categories 8 6 2005 Population Change in Annual Mean PM2.5 Concentrations (

g/ m3) Number ( millions) Percent (%)

0 >   PM2.5 Conc  0.05 105.0 37.1%

0.05 >   PM2.5 Conc  0.1 56.3 19.9%

0.1 >   PM2.5 Conc  0.25 57.2 20.2%

0.25 >   PM2.5 Conc  0.5 17.1 6.1%

0.5 >   PM2.5 Conc  1.0 4.5 1.6%

1.0 >   PM2.5 Conc  2.0 1.3 0.5%

  PM2.5 Conc > 2.0 0.2 0.1%

a The change is defined as the control case value minus the baseline value.

Table 8 5 provides additional insights on the changes in PM air quality resulting from the final rule. The information presented previously in Table 8 3 illustrated the absolute and relative changes for different points along the distribution of baseline 2005 PM concentration levels, e. g., the change reflects the lowering of the minimum predicted baseline concentration rather than the minimum predicted change for 2005. The latter is the focus of Table 8 5 as it presents the distribution of predicted changes in both absolute terms ( i. e.,

g/ m3) and relative terms ( i. e., percent) across individual grid cells. Therefore, it provides more information on the range of predicted changes that as shown, the absolute reduction in annual mean PM10 concentration ranged from a low of 0.00

g/ m3 to a high of 16.89

g/ m3, while the relative ( or percent) reduction ranged from a low of 0.0 percent to a high of 50.5 percent. Alternatively, for mean PM2.5, the absolute reduction ranged from 0.00 to 4.65

g/ m3, while the relative reduction ranged from 0.0 to 29.4 percent.

Table 8 5.

Summary of Absolute and Relative Changes in PM Air Quality Due to MACT Floor Option: Industrial Boiler/ Process Heater Source Categories Statistic PM10 Annual Mean PM2.5 Annual Mean Absolute Change from 2005 Baseline (

g/ m3) a Minimum 0.00 0.00 Maximum  16.89  4.65 Average  0.32  0.09 8 7 Median  0.16  0.05 Population Weighted Average c  0.33  0.10 Relative Change from 2005 Baseline (%) b Minimum 0.00% 0.00%

Maximum  50.52%  29.37%

Average  1.32%  0.70%

Median  0.78%  0.50%

Population Weighted Average c  1.26%  0.71%

a The absolute change is defined as the control case value minus the baseline value for each county.

b The relative change is defined as the absolute change divided by the baseline value, or the percentage change, for each county. The information reported in this section does not necessarily reflect the same county as is portrayed in the absolute change section.

c Calculated by summing the product of the projected 2005 county population and the estimated 2005 county PM absolute/ relative measure of change, and then dividing by the total population in the 48 contiguous states.

For this standard, the MACT floor was chosen as the final alternative. For more information on the choice of this option as the alternative, please refer to Chapter 1 of this RIA and the preamble.

It should be noted that air quality modeling runs using the S R matrix are available for cases in which only PM emission reductions occur and only SO2 reductions occur. These runs are necessary as inputs to the benefits transfer method that estimates monetized benefits for emissions from sources that are not linked to a specific control device. Results from these pollutant specific runs are presented in the technical support document ( Pechan, 2001). The benefits transfer method is explained in Chapter 10, and results from the use of that method are also shown in that chapter.

8.4.3. Visibility Degradation Estimates Visibility degradation is often directly proportional to decreases in light transmittal in the atmosphere. Scattering and absorption by both gases and particles decrease light transmittance. To quantify changes in visibility, our analysis computes a light extinction coefficient, based on the work of Sisler ( 1996), which shows the total fraction of light that is decreased per unit distance. This coefficient accounts for the scattering and absorption of light by both particles and gases, and accounts for the higher extinction efficiency of fine particles compared to coarse particles. Fine particles with significant light extinction efficiencies include sulfates, nitrates, organic carbon, elemental carbon ( soot), and soil ( Sisler, 1996).

Based upon the light extinction coefficient, we also calculated a unitless visibility index, called a " deciview," which is used in the valuation of visibility. The deciview metric provides a linear scale for perceived visual changes over the entire range of conditions, from clear to hazy. Under many scenic conditions, the average person can generally perceive a change of one deciview. The higher the deciview value, the worse the visibility. Thus, an improvement in visibility is a decrease in deciview value. 8 8 Table 8 6 provides the distribution of visibility improvements across the 2005 U. S. population resulting from the industrial boilers and process heaters rule. The majority of the 2005 U. S. population live in areas with predicted improvement in annual average visibility of between 0.4 to 0.6 deciviews resulting from the rule. As shown, almost 4 percent of the 2005 U. S. population are predicted to experience improved annual average visibility of greater than 0.25 deciviews. Furthermore, roughly 10 percent of the 2005 U. S. population will benefit from reductions in annual average visibility of greater than 0.1 deciviews. The information provided in Table 8 6 indicates how widespread the improvements in visibility are expected to be and the share of populations that will benefit from these improvements.

Because the visibility benefits analysis distinguishes between general regional visibility degradation and that particular to Federally designated Class I areas ( i. e., national parks, forests, recreation areas, wilderness areas, etc.), we separated estimates of visibility degradation into " residential" and " recreational" categories. The estimates of visibility degradation for the " recreational" category apply to Federally designated Class I areas, while estimates for the " residential" category apply to non Class I areas. Deciview estimates are estimated using outputs from the S R matrix for the 2005 baseline and the MACT floor, which are the same scenarios for which changes in PM10 and PM2.5 concentrations are estimated and shown earlier in this chapter. Deciview estimates for Option 1A are presented in Appendix C of this RIA Table 8 6.

Distribution of Populations Experiencing Visibility Improvements in 2005 Due to MACT Floor Option: Industrial Boiler/ Process Heater Source Categories 2005 Population Improvements in Visibility a ( annual average deciviews) Number ( millions) Percent (%)

  Deciview = 0 46.0 16.3%

0 >   Deciview  0.05 168.5 59.5%

0.05 >   Deciview  0.1 41.1 14.5%

0.1 >   Deciview  0.15 11.5 4.1%

0.15 >   Deciview  0.25 5.9 2.1%

0.25 >   Deciview  0.5 3.7 3.1%

  Deciview > 0.5 1.1 0.4%

a The change is defined as the MACT Floor control case deciview level minus the baseline deciview level.

8.4.4 Residential Visibility Improvements Air quality modeling results predict that the rule will create improvements in visibility through the country. In Table 8 7, we summarize residential visibility improvements across the Eastern and Western U. S. in 2005. The baseline annual average visibility for all U. S. counties is 21.2 deciviews. The mean improvement across all U. S. counties is 0.05 deciviews, or almost 2 percent. In urban areas 8 9 ( i. e., areas with a population of 250,000 or more), the mean improvement in annual visibility was 0.06 deciviews. In rural areas ( i. e. all non urban areas), the mean improvement in visibility was 0.04 deciviews in 2005.

On average, the Eastern U. S. experienced slightly larger absolute but smaller relative improvements in visibility than the Western U. S. from the industrial boilers and process heaters emission reductions. In Eastern U. S., the mean improvement was 0.05 deciviews from an average baseline of 22.00 deciviews. Western counties experienced a mean improvement of 0.01 deciviews from an average baseline of 17.82 deciviews projected in 2005. Overall, the data suggest that the rule has the potential to provide some improvements in visibility across the U. S. in 2005.

Table 8 7.

Summary of 2005 Baseline Visibility and Changes by Region for the MACT Floor Option: Residential ( Annual Average Deciviews)

Regionsa 2005 Baseline Changeb Percent Change Eastern U. S. 22.00  0.05  0.2%

Urban 22.95  0.06  0.3%

Rural 21.62  0.05  0.2%

Western U. S. 17.82  0.01  0.1%

Urban 19.19  0.01  0.1%

Rural 17.55  0.01  0.1%

National, all counties 21.19  0.05  0.2%

Urban 22.49  0.06  0.3%

Rural 20.72  0.04  0.2%

a Eastern and Western regions are separated by 100 degrees West longitude. Background visibility conditions differ by region.

b An improvement in visibility is a decrease in deciview value. The change is defined as the MACT Floor control case deciview level minus the baseline deciview level.

8.4.5. Recreational Visibility Improvements In Table 8 8, we summarize recreational visibility improvements by region in 2005 in Federal Class I areas. These recreational visibility regions are shown in Figure 8 1. As shown, the national improvement in visibility for these areas is 0.1 percent, or 0.02 deciviews. Predicted relative visibility improvements are the largest in the Eastern U. S. as shown for the Southeast ( 0.4%), and the Northeast/ Midwest ( 2.3%). The Southwest and California regions are predicted to have the smallest relative visibility improvement at 0.0 percent, or 0.00 deciview decline from the baseline. 8 10 Table 8 8.

Summary of 2005 Baseline Visibility and Changes by Region for the MACT Floor Option: Recreational ( Annual Average Deciviews)

Class I Visibility Regionsa 2005 Baseline Changeb Percent Change Southeast 21.49  0.08  0.4%

Southwest 17.18 0.00 0.0%

California 19.86 0.00 0.0%

Northeast/ Midwest 20.64  0.04  0.2%

Rocky Mountain 17.29  0.01  0.1%

Northwest 20.62  0.01  0.1%

National Average ( unweighted) 19.17  0.02  0.1%

a Regions are pictured in Figure 8 1 and are defined in the technical support document to the Heavy Duty Vehicle/ Diesel Fuel TSD, U. S. EPA, 2001.

b An improvement in visibility is a decrease in deciview value. The change is defined as the MACT Floor control case deciview level minus the baseline deciview level. 8 11 Nor thwest Rocky Mountain Nor theast/ Midwest Southeast Southwest California Study Region Transfer Region Note: Study regions were represented in the Chestnut and Rowe ( 1990a, 1990b) studies used in evaluating the benefits of visibility improvements, while transfer regions used extrapolated study results. These are referred to in the Heavy Duty Vehicle/ Diesel Fuel Benefits TSD ( U. S. EPA, 2000).

Figure 8 1. Recreational Visibility Regions for Continental U. S. 8 12 References Eastern Research Group. Memorandum to Jim Eddinger, U. S. Environmental Protection Agency, Office of Air Quality Planning and Standards. " Development of Average Emission Factors and Baseline Emissions Estimates for the Industrial, Commercial, and Institutional Boiler and Process Heater NESHAP." Draft Memorandum. May 23, 2002.

E. H. Pechan & Associates, Inc. " Emissions and Air Quality Impacts of NESHAP for Industrial, Commercial, and Institutional Boilers and Process Heaters." Revised Final Report. March, 2001.

Sisler, J. " Spatial and Seasonal Patterns and Long Term Variability of the Composition of Haze in the United States ( An Analysis of Data from the IMPROVE Network)," report prepared for the Cooperative Institute for Research in the Atmosphere, Colorado State University, 1996.

U. S. Environmental Protection Agency, Regulatory Impact Analysis: Heavy Duty Engine and Vehicle Standards and Highway Diesel Fuel Sulfur Control Requirements. Prepared by: Office of Air and Radiation. Available at http:// www. epa. gov/ otaq/ diesel. htm. December, 2000. 9 13 CHAPTER 9 QUALITATIVE ASSESSMENT OF BENEFITS OF EMISSION REDUCTIONS The emission reductions achieved by this environmental regulation will provide benefits to society by improving environmental quality. In this chapter, and the following chapter, information is provided on the types and levels of social benefits anticipated from the Industrial and Commercial Boilers and Process Heaters NESHAP. This chapter discusses the health and welfare effects associated with the HAPs and other pollutants emitted by affected boilers and process heaters. The following chapter places a monetary value on a portion of the benefits that are described here.

In general, the reduction of HAP emissions, including mercury, resulting from the regulation will reduce human and environmental exposure to these pollutants and thus, reduce potential adverse health and welfare effects. This chapter provides a general discussion of the various components of total benefits that may be gained from a reduction in HAPs and mercury through this NESHAP. The rule will also achieve reductions of particulate matter ( PM), both coarse ( PM10) and fine ( PM2.5) particle fractions, and sulfur dioxide ( SO2), which results in additional health and welfare benefits above those achieved by the HAP reductions. HAP benefits are presented separately from the benefits associated with other pollutant reductions.

9.1 Identification of Potential Benefit Categories The benefit categories associated with the emission reductions predicted for this regulation can be broadly categorized as those benefits which are attributable to reduced exposure to HAPs, and those attributable to reduced exposure to other pollutants. Several of the HAPs associated with this regulation have been classified as known or probable human carcinogens. As a result, one of the benefits of the proposed regulation is a reduction in the risk of cancer. Other benefit categories include: reduced incidence of neurological effects and irritations of the lungs and skin, reduced mortality and other morbidity effects associated with PM and SO2 ( as it transforms into PM). In addition to health impacts occurring as a result of reductions in HAPs and other pollutant emissions, there are welfare impacts which can also be identified. In general, welfare impacts include effects on crops and other plant life, materials damage, soiling, visibility impairment, and acidification of water bodies. Each category is discussed separately in the following section.

9.2 Qualitative Description of Air Related Benefits The health and welfare benefits of HAPs, including mercury, PM, and SO2 reductions are summarized separately in the discussions below.

9.2.1 Benefits of Reducing HAP Emissions According to baseline emission estimates, the source categories affected by this currently emits approximately 102,927 tons per year of HAPs at existing sources including about 11 tons of mercury and it is estimated that by the year 2005, new boilers and process heaters will emit 1,548 tons 9 14 per year of HAPs and 0.4 tons of mercury. This totals 104,474 tons of HAPs and 11.4 tons of mercury annually at all boiler and process heater sources. The regulation will reduce approximately 58,575 tons of emissions of HAPs and 1.9 tons of mercury at new and existing sources by 2005. For more information on these HAP emissions and emission reductions, please refer to Chapter 8 of this RIA and the docket for this rule.

Human exposure to these HAPs may occur directly through inhalation or indirectly through ingestion of food or water contaminated by HAPs or through exposure to the skin. HAPs may also enter terrestrial and aquatic ecosystems through atmospheric deposition. HAPs can be deposited on vegetation and soil through wet or dry deposition. HAPs may also enter the aquatic environment from the atmosphere via gas exchange between surface water and the ambient air, wet or dry deposition of particulate HAPs and particles to which HAPs adsorb, and wet or dry deposition to watersheds with subsequent leaching or runoff to bodies of water ( EPA, 1992a). This analysis is focused only on the air quality benefits of HAP reduction.

<IP_ADDRESS> Health Benefits of HAP and Mercury Reductions.

The HAP emission reductions achieved by this rule are expected to reduce exposure to ambient concentrations of arsenic, cadmium, chromium, hydrogen chloride, hydrogen flouride, lead, manganese, mercury, and nickel, which will reduce a variety of adverse health effects considering both cancer and noncancer endpoints. Information for each pollutant to be reduced by this rule is obtained from the Integrated Risk Information System ( IRIS), an EPA system for disseminating information about the effects of several chemicals emitted to the air and / or water, and classifying these chemicals by cancer risk ( IRIS, 2000). These adverse health effects include chronic health disorders ( e. g., irritation of the lung, skin, and mucus membranes and effects on the blood, digestive tract, kidneys, and central nervous system), and acute health disorders ( e. g., lung irritation and congestion, alimentary effects such as nausea and vomiting, and effects on the central nervous system). EPA has classified several of these HAPs as known or probable human carcinogens.

The EPA does not have the type of current detailed data on each of the facilities covered by the emissions standards for this source category, and the people living around the facilities, that would be necessary to conduct an analysis to determine the actual population exposures to the HAP emitted from these facilities and potential for resultant health effects. Therefore, the EPA does not know the extent to which the adverse health effects described above occur in the populations surrounding these facilities. However, to the extent the adverse effects do occur, the rule will reduce emissions and subsequent exposures. Health effects associated with the significant HAPs emitted from boilers and process heaters are discussed below.

Arsenic Acute ( short term) high level inhalation exposure to arsenic dust or fumes has resulted in gastrointestinal effects ( nausea, diarrhea, abdominal pain), and central and peripheral nervous system disorders. Chronic ( long term) inhalation exposure to inorganic arsenic in humans is associated with irritation of the skin and mucous membranes. Human data suggest a relationship between inhalation exposure of women working at or living near metal smelters and an increased risk of reproductive effects, such as spontaneous abortions. Inorganic arsenic exposure in humans by the inhalation route has been shown to be strongly associated with lung cancer, while ingestion of inorganic arsenic in humans has been linked to a form of skin cancer and also to bladder, liver, and lung cancer. EPA has classified inorganic arsenic as a Group A, known human carcinogen.

Cadmium The acute ( short term) effects of cadmium inhalation in humans consist mainly of effects on the lung, such as pulmonary irritation. Chronic ( long term) inhalation or oral exposure to cadmium 9 15 leads to a build up of cadmium in the kidneys that can cause kidney disease. Cadmium has been shown to be a developmental toxicant in animals, resulting in fetal malformations and other effects, but no conclusive evidence exists in humans. An association between cadmium exposure and an increased risk of lung cancer has been reported from human studies, but these studies are inconclusive due to confounding factors. Animal studies have demonstrated an increase in lung cancer from long term inhalation exposure to cadmium. EPA has classified cadmium as a Group B1, probable carcinogen.

Chromium Chromium may be emitted in two forms, trivalent chromium ( chromium III) or hexavalent chromium ( chromium VI). The respiratory tract is the major target organ for chromium VI toxicity, for acute ( short term) and chronic ( long term) inhalation exposures. Shortness of breath, coughing, and wheezing have been reported from acute exposure to chromium VI, while perforations and ulcerations of the septum, bronchitis, decreased pulmonary function, pneumonia, and other respiratory effects have been noted from chronic exposure. Limited human studies suggest that chromium VI inhalation exposure may be associated with complications during pregnancy and childbirth, while animal studies have not reported reproductive effects from inhalation exposure to chromium VI. Human and animal studies have clearly established that inhaled chromium VI is a carcinogen, resulting in an increased risk of lung cancer. EPA has classified chromium VI as a Group A, human carcinogen.

Chromium III is less toxic than chromium VI. The respiratory tract is also the major target organ for chromium III toxicity, similar to chromium VI. Chromium III is an essential element in humans, with a daily intake of 50 to 200 micrograms per day recommended for an adult. The body can detoxify some amount of chromium VI to chromium III. EPA has not classified chromium III with respect to carcinogenicity. For this rule, EPA has not determined the species of chromium emitted at industrial boilers and process heaters.

Hydrogen chloride Hydrogen chloride, also called hydrochloric acid, is corrosive to the eyes, skin, and mucous membranes. Acute ( short term) inhalation exposure may cause eye, nose, and respiratory tract irritation and inflammation and pulmonary edema in humans. Chronic ( long term) occupational exposure to hydrochloric acid has been reported to cause gastritis, bronchitis, and dermatitis in workers. Prolonged exposure to low concentrations may also cause dental discoloration and erosion. No information is available on the reproductive or developmental effects of hydrochloric acid in humans. In rats exposed to hydrochloric acid by inhalation, altered estrus cycles have been reported in females and increased fetal mortality and decreased fetal weight have been reported in offspring. EPA has not classified hydrochloric acid for carcinogenicity.

Hydrogen fluoride Acute ( short term) inhalation exposure to gaseous hydrogen fluoride can cause severe respiratory damage in humans, including severe irritation and pulmonary edema.

Lead Lead is a very toxic element, causing a variety of effects at low dose levels. Brain damage, kidney damage, and gastrointestinal distress may occur from acute ( short term) exposure to high levels of lead in humans. Chronic ( long term) exposure to lead in humans results in effects on the blood, central nervous system ( CNS), blood pressure, and kidneys. Children are particularly sensitive to the chronic effects of lead, with slowed cognitive development, reduced growth and other effects reported. Reproductive effects, such as decreased sperm count in men and spontaneous abortions in women, have been associated with lead exposure. The developing fetus is at particular risk from maternal lead exposure, with low birth weight and slowed postnatal neurobehavioral development noted. Human studies are inconclusive regarding lead exposure and cancer, while animal studies have reported an 15 In addition to the information provided in IRIS, another detailed discussion of the benefits of reducing lead emissions can be found in the Final Report to Congress on Benefits and Costs of the Clean Air Act, 1970 to 1990 ( EPA 410 R 97 002).

9 16 increase in kidney cancer from lead exposure by the oral route. EPA has classified lead as a Group B2 pollutant, probable human carcinogen15.

Manganese Health effects in humans have been associated with both deficiencies and excess intakes of manganese. Chronic ( long term) exposure to low levels of manganese in the diet is considered to be nutritionally essential in humans, with a recommended daily allowance of 2 to 5 milligrams per day ( mg/ d). Chronic exposure to high levels of manganese by inhalation in humans results primarily in central nervous system ( CNS) effects. Visual reaction time, hand steadiness, and eye hand coordination were affected in chronically exposed workers. Manganism, characterized by feelings of weakness and lethargy, tremors, a mask like face, and psychological disturbances, may result from chronic exposure to higher levels. Impotence and loss of libido have been noted in male workers afflicted with manganism attributed to inhalation exposures. EPA has classified manganese in Group D, not classifiable as to carcinogenicity in humans.

Nickel Nickel is an essential element in some animal species, and it has been suggested it may be essential for human nutrition. Nickel dermatitis, consisting of itching of the fingers, hand and forearms, is the most common effect in humans from chronic ( long term) skin contact with nickel. Respiratory effects have also been reported in humans from inhalation exposure to nickel. No information is available regarding the reproductive or developmental effects of nickel in humans, but animal studies have reported such effects. Human and animal studies have reported an increased risk of lung and nasal cancers from exposure to nickel refinery dusts and nickel subsulfide. Animal studies of soluble nickel compounds ( i. e., nickel carbonyl) have reported lung tumors. EPA has classified nickel refinery subsulfide as Group A, human carcinogens and nickel carbonyl as a Group B2, probable human carcinogen.

Mercury Mercury emitted from industrial boiles and other natural and man made sources is carried by winds through the air and eventually is deposited to water and land. Recent estimates ( which are highly uncertain) of annual total global mercury emissions from all sources ( natural and anthropogenic) are about 5,000 to 5,500 tons per year ( tpy). Of this total, about 1,000 tpy are estimated to be natural emissions and about 2,000 tpy are estimated to be contributions through the natural global cycle of reemissions of mercury associated with past anthropogenic activity. Current anthropogenic emissions account for the remaining 2,000 tpy. Point sources such as fuel combustion; waste incineration; industrial processes; and metal ore roasting, refining, and processing are the largest point source categories on a world wide basis. Given the global estimates noted above, U. S. anthropogenic mercury emissions are estimated to account for roughly 3 percent of the global total, and U. S. utilities are estimated to account for about 1 percent of total global emissions. Mercury exists in three forms: elemental mercury, inorganic mercury compounds ( primarily mercuric chloride), and organic mercury compounds ( primarily methylmercury). Mercury is usually released in an elemental form and later converted into methylmercury by bacteria. Methylmercury is more toxic to humans than other forms of mercury, in part because it is more easily absorbed in the body ( EPA, 1996).

If the deposition is directly to a water body, then the processes of aqueous fate, transport, and transformation begin. If deposition is to land, then terrestrial fate and transport processes occur first and then aqueous fate and transport processes occur once the mercury has cycled into a water body. In both cases, mercury may be returned to the atmosphere through resuspension. In water, mercury is transformed to methylmercury through biological processes and for exposures affected by this rulemaking, methylmercury is considered to be the form of greatest concern. Once mercury has been transformed into methylmercury, it can be ingested by the lower trophic level organisms where it can 9 1 bioaccumulate in fish tissue ( i. e., concentrations of mercury remain in the fish's system for a long period of time and accumulates in the fish tissue as predatory fish consume other species in the food chain). Fish and wildlife at the top of the food chain can, therefore, have mercury concentrations that are higher than the lower species, and they can have concentrations of mercury that are higher than the concentration found in the water body itself. In addition, when humans consume fish contaminated with methylmercury, the ingested methymercury is almost completely absorbed into the blood and distributed to all tissues ( including the brain); it also readily passes through the placenta to the fetus and fetal brain ( EPA, 2001a).

Based on the findings of the National Research Council, EPA has concluded that benefits of Hg reductions would be most apparent at the human consumption stage, as consumption of fish is the major source of exposure to methylmercury. At lower levels, documented Hg exposure effects may include more subtle, yet potentially important, neurodevelopmental effects. Some subpopulations in the U. S., such as: Native Americans, Southeast Asian Americans, and lower income subsistence fishers, may rely on fish as a primary source of nutrition and/ or for cultural practices. Therefore, they consume larger amounts of fish than the general population and may be at a greater risk to the adverse health effects from Hg due to increased exposure. In pregnant women, methylmercury can be passed on to the developing fetus, and at sufficient exposure may lead to a number of neurological disorders in children. Thus, children who are exposed to low concentrations of methylmercury prenatally may be at increased risk of poor performance on neurobehavioral tests, such as those measuring attention, fine motor function, language skills, visual spatial abilities ( like drawing), and verbal memory. The effects from prenatal exposure can occur even at doses that do not result in effects in the mother. Mercury may also affect young children who consume fish contaminated with Hg. Consumption by children may lead to neurological disorders and developmental problems, which may lead to later economic consequences.

In response to potential risks of mercury contaminated fish consumption, EPA and FDA have issued fish consumption advisories which provide recommended limits on consumption of certain fish species for different populations. EPA and FDA are currently developing a joint advisory that has been released in draft form. This newest draft FDA EPA fish advisory recommends that women and young children reduce the risks of Hg consumption in their diet by moderating their fish consumption, diversifying the types of fish they consume, and by checking any local advisories that may exist for local rivers and streams. This collaborative FDA EPA effort will greatly assist in educating the most susceptible populations. Additionally, the reductions of Hg from this regulation may potentially lead to fewer fish consumption advisories ( both from federal or state agencies), which will benefit the fishing community. Currently 44 states have issued fish consumption advisories for non commercial fish for some or all of their waters due to contamination of mercury. The scope of FCA issued by states varies considerably, with some warnings applying to all water bodies in a state and others applying only to individual lakes and streams. Note that the absence of a state advisory does not necessarily indicate that there is no risk of exposure to unsafe levels of mercury in recreationally caught fish. Likewise, the presence of a state advisory does not indicate that there is a risk of exposure to unsafe levels of mercury in recreationally caught fish, unless people consume these fish at levels greater than those recommended by the fish advisory.

Reductions in methylmercury concentrations in fish should reduce exposure, subsequently reducing the risks of mercury related health effects in the general population, to children, and to certain subpopulations. Fish consumption advisories ( FCA) issued by the States may also help to reduce exposures to potential harmful levels of methylmercury in fish ( although some studies have shown limited knowledge of and compliance with advisories by at risk populations ( May and Burger, 1996; Burger, 2000)). To the extent that reductions in mercury emissions reduces the probability that a water body will have a FCA issued, there are a number of benefits that will result from fewer advisories, including increased fish consumption, increased fishing choices for recreational fishers, increased producer and consumer surplus for the commercial fish market, and increased welfare for subsistence fishing populations. 9 2 There is a great deal of variability among individuals in fish consumption rates; however, critical elements in estimating methylmercury exposure and risk from fish consumption include the species of fish consumed, the concentrations of methylmercury in the fish, the quantity of fish consumed, and how frequently the fish is consumed. The typical U. S. consumer eating a wide variety of fish from restaurants and grocery stores is not in danger of consuming harmful levels of methylmercury from fish and is not advised to limit fish consumption. Those who regularly and frequently consume large amounts of fish, either marine or freshwater, are more exposed. Because the developing fetus may be the most sensitive to the effects from methylmercury, women of child bearing age are regarded as the population of greatest interest. The EPA, Food and Drug Administration, and many States have issued fish consumption advisories to inform this population of protective consumption levels.

The EPA's 1997 Mercury Study RTC supports a plausible link between anthropogenic releases of Hg from industrial and combustion sources in the U. S. and methylmercury in fish. However, these fish methylmercury concentrations also result from existing background concentrations of Hg ( which may consist of Hg from natural sources, as well as Hg which has been re emitted from the oceans or soils) and deposition from the global reservoir ( which includes Hg emitted by other countries). Given the current scientific understanding of the environmental fate and transport of this element, it is not possible to quantify how much of the methylmercury in locally caught fish consumed by the U. S. population is contributed by U. S. emissions relative to other sources of Hg ( such as natural sources and re emissions from the global pool). As a result, the relationship between Hg emission reductions from Utility Units and methylmercury concentrations in fish cannot be calculated in a quantitative manner with confidence. In addition, there is uncertainty regarding over what time period these changes would occur. This is an area of ongoing study.

Given the present understanding of the Hg cycle, the flux of Hg from the atmosphere to land or water at one location is comprised of contributions from: the natural global cycle; the cycle perturbed by human activities; regional sources; and local sources. Recent advances allow for a general understanding of the global Hg cycle and the impact of the anthropogenic sources. It is more difficult to make accurate generalizations of the fluxes on a regional or local scale due to the site specific nature of emission and deposition processes. Similarly, it is difficult to quantify how the water deposition of Hg leads to an increase in fish tissue levels. This will vary based on the specific characteristics of the individual lake, stream, or ocean.

<IP_ADDRESS> Welfare Benefits of HAP Reductions.

The welfare effects of exposure to HAPs have received less attention from analysts than the health effects. However, this situation is changing, especially with respect to the effects of toxic substances on ecosystems. Over the past ten years, ecotoxicologists have started to build models of ecological systems which focus on interrelationships in function, the dynamics of stress, and the adaptive potential for recovery. Chronic sub lethal exposures may affect the normal functioning of individual species in ways that make it less than competitive and therefore more susceptible to a variety of factors including disease, insect attack, and decreases in habitat quality ( EPA, 1991). All of these factors may contribute to an overall change in the structure ( i. e., composition) and function of the ecosystem.

The adverse, non human biological effects of HAP emissions include ecosystem and recreational and commercial fishery impacts. Atmospheric deposition of HAPs directly to land may affect terrestrial ecosystems. Atmospheric deposition of HAPs also contributes to adverse aquatic ecosystem effects. This not only has adverse implications for individual wildlife species and ecosystems as a whole, but also the humans who may ingest contaminated fish and waterfowl.

A number of wildlife species are a risk from consuming mercury contaminated fish ( Duvall and Baron, 2000). Mercury can affect reproductive success in birds and mammals which may affect 9 3 population levels ( Peakall, 1996). This can affect human welfare in several ways. If changes in populations reduces biological diversity in an area this may impact the total ecological system. To the extent that people value biological diversity ( existence value), there may be benefits to preventing this loss. Also, hunters may experience direct losses if populations of game birds or animals are reduced. Hunters may also experience welfare losses if game birds or animals are not fit for consumption. Hunters may also be affected if predator populations are reduced from reduced availability of prey species. In addition to hunting, other non consumptive uses of wildlife including bird or wildlife viewing may be impacted by reductions in bird and animal populations. In one special case, that of the endangered Florida panther, there may be special value placed on reducing the risks of species loss.

In general, HAP emission reductions achieved through the Industrial Boilers and Process Heaters NESHAP should reduce the associated adverse environmental impacts.

9.2.2 Benefits of Reducing Other Pollutants Due to HAP Controls As is mentioned above, controls that will be required on boilers and process heaters to reduce HAPs will also reduce emissions of other pollutants, namely: PM10, PM2.5, and SO2. According to baseline emission estimates, the source categories affected by this proposal currently emit approximately 766,000 tons per year of PM10, 217,000 tons per year of PM2.5, and 3,405,000 tons per year of SO2 at existing sources. It is estimated that by the year 2005, new boilers and process heaters will emit 3,600 tons per year of PM10, 1,000 tons of PM2.5, and 38,200 tons of SO2. This totals 769,600 tons of PM10, 218,000 tons of PM2.5, and 3,443,200 tons of SO2 annually at all boiler and process heater sources. The regulation will reduce approximately 562,500 tons of PM10 emissions, 159,000 tons of PM2.5, and 113,000 tons of SO2 at new and existing sources by 2005. For more information on these HAP emissions and emission reductions, please refer to Chapter 8 of this RIA and the docket for this rule. The adverse effects from PM ( both coarse and fine) and SO2 emissions are presented below.

<IP_ADDRESS> Benefits of Particulate Matter Reductions. Scientific studies have linked PM ( alone or in combination with other air pollutants) with a series of health effects ( EPA, 1996). Coarse ( PM10) particles can accumulate in the respiratory system and aggravate health problems such as asthma. Fine ( PM2.5) particles can penetrate deep into the lungs to contribute to a number of the health effects. These health effects include decreased lung function and alterations in lung tissue and structure and in respiratory tract defense mechanisms which may be manifest in increased respiratory symptoms and disease or in more severe cases, increased hospital admissions and emergency room visits or premature death. Children, the elderly, and people with cardiopulmonary disease, such as asthma, are most at risk from these health effects.

PM also causes a number of adverse effects on the environment. Fine PM is the major cause of reduced visibility in parts of the U. S., including many of our national parks and wilderness areas. Other environmental impacts occur when particles deposit onto soil, plants, water, or materials. For example, particles containing nitrogen and sulfur that deposit onto land or water bodies may change the nutrient balance and acidity of those environments, leading to changes in species composition and buffering capacity.

Particles that are deposited directly onto leaves of plants can, depending on their chemical composition, corrode leaf surfaces or interfere with plant metabolism. Finally, PM causes soiling and erosion damage to materials.

Thus, reducing the emissions of PM and PM precursors from boilers and process heater sources can help to improve some of the effects mentioned above  either those related to primary PM emissions, or the effects of secondary PM generated by the combination of SO2 with other pollutants in the atmosphere. 9 4 <IP_ADDRESS> Benefits of Sulfur Dioxide Reductions. Very high concentrations of sulfur dioxide ( SO2) affect breathing and ambient levels have been hypothesized to aggravate existing respiratory and cardiovascular disease. Potentially sensitive populations include asthmatics, individuals with bronchitis or emphysema, children and the elderly. SO2 is also a primary contributor to acid deposition, or acid rain, which causes acidification of lakes and streams and can damage trees, crops, historic buildings and statues. In addition, sulfur compounds in the air contribute to visibility impairment in large parts of the country. This is especially noticeable in national parks.

PM can also be formed from SO2 emissions. Secondary PM is formed in the atmosphere through a number of physical and chemical processes that transform gases, such as SO2, into particles. Overall, emissions of SO2 can lead to some of the effects discussed in this section  either those directly related to SO2 emissions, or the effects of ozone and PM resulting from the combination of SO2 with other pollutants.

9.3 Lack of Approved Methods to Quantify HAP Benefits The most significant effect associated with the HAPs that are controlled with the rule is the potential incidence of cancer. In previous analyses of the benefits of reductions in HAPs, EPA has quantified and monetized the benefits of potential reductions in the incidences of cancer ( EPA, 1992b, 1995). In some cases, EPA has also quantified ( but not monetized) reductions in the number of people exposed to non cancer HAP risks above no effect levels ( EPA, 1995).

Monetization of the benefits of reductions in cancer incidences requires several important inputs, including central estimates of cancer risks, estimates of exposure to carcinogenic HAPs, and estimates of the value of an avoided case of cancer ( fatal and non fatal). In the above referenced analyses, EPA relied on unit risk factors ( URF) developed through risk assessment procedures. The unit risk factor is a quantitative estimate of the carcinogenic potency of a pollutant, often expressed as the probability of contracting cancer from a 70 year lifetime continuous exposure to a concentration of one µ g/ m3 of a pollutant. These URFs are designed to be conservative, and as such, are more likely to represent the high end of the distribution of risk rather than a best or most likely estimate of risk.

In a typical analysis of the expected health benefits of a regulation ( see for example the benefit analysis of the Interstate Air Quality Rule), health effects are estimated by applying changes in pollutant concentrations to best estimates of risk obtained from epidemiological studies. As the purpose of a benefit analysis is to describe the benefits most likely to occur from a reduction in pollution, use of high end, conservative risk estimates over estimate of the expected benefits of the regulation. For this reason, we will not attempt to quantify the health benefits of reductions in HAPs unless best estimates of risks are available. While we used high end risk estimates in past analyses, recent advice from the EPA Science Advisory Board ( SAB) and internal methods reviews have suggested that we avoid using high end estimates in current analyses. EPA is working with the SAB to develop better methods for analyzing the benefits of reductions in HAPs.

While not appropriate as part of a primary estimate of benefits, to estimate the potential baseline risks posed by the industrial boiler and process heater source categories and the potential impact of applicability cutoffs discussed in Chapter 3 of this RIA, EPA performed a " rough" risk assessment, described below. There are large uncertainties regarding all components of the risk quantification step, including location of emission reductions, emission estimates, air concentrations, exposure levels and dose response relationships. However, if these uncertainties are properly identified and characterized, it is possible to provide upper bound estimates of the potential reduction in inhalation cancer incidence associated with this rule. It is important to keep in mind that these estimates will not cover non inhalation based cancer risks and non cancer health effects. 9 5 To estimate the potential baseline risks posed by the industrial boiler and process heater source categories, EPA performed a crude risk analysis of the industrial boiler and process heater source categories that focused only on cancer risks. The results of the analysis are based on approaches for estimating cancer incidence that carry significant assumptions, uncertainties, and limitations. Based on the assessment, if this proposed rule is implemented at all affected facilities, annual cancer incidence is estimated to be reduced on the order of tens of cases/ year. Due to the uncertainties associated with the analysis, annual cancer incidence could be higher or lower than these estimates. ( Details of this assessment are available in the docket.)

For non cancer health effects, previous analyses have estimated changes in populations exposed above the reference concentration level ( RfC). However, this requires estimates of populations exposed to HAPs from controlled sources. Due to data limitations, we do not have sufficient information on emissions from specific sources and thus are unable to model changes in population exposures to ambient concentrations of HAPs above the RfC. As a result, we are unable to place a monetary value of the HAP benefits associated with this rule.

9.4 Summary The HAPs that are reduced as a result of implementing the Industrial Boilers and Process Heaters NESHAP will produce a variety of benefits, some of which include: the reduction in the incidence of cancer to exposed populations, neurotoxicity, irritation, and crop or plant damage. The rule will also produce benefits associated with reductions in fine and coarse PM and SO2 emissions. Exposure to PM ( either directly or through secondary formation from SO2) can lead to several health effects, including premature death and increased hospital admissions and emergency room visits, increased respiratory symptoms and disease, decreased lung function, and alterations in lung tissue and structure and in respiratory tract defense mechanisms. Children, the elderly, and people with cardiopulmonary disease, such as asthma, are most at risk from these health effects. It can also form a haze that reduces the visibility of scenic areas, can cause acidification of water bodies, and have other impacts on soil, plants, and materials. High concentrations of SO2 affect breathing and may aggravate existing respiratory and cardiovascular disease, which is more likely to affect asthmatics, individuals with bronchitis or emphysema, children and the elderly. SO2 is also a primary contributor to acid deposition, or acid rain, which causes acidification of lakes and streams and can damage trees, crops, historic buildings and statues. In addition, sulfur compounds in the air contribute to visibility impairment in large parts of the country. This is especially noticeable in national parks. 9 6 REFERENCES:

EPA, 2000. U. S. Environmental Protection Agency. Integrated Risk Information System; website access available at www. epa. gov/ ngispgm3/ iris. Data as of December 2000.

EPA, 1991. U. S. Environmental Protection Agency. Ecological Exposure and Effects of Airborne Toxic Chemicals: An Overview. EPA/ 6003 91/ 001. Environmental Research Laboratory. Corvallis, OR. 1991.

EPA, 1992a. U. S. Environmental Protection Agency. Regulatory Impact Analysis for the National Emissions Standards for Hazardous Air Pollutants for Source Categories: Organic Hazardous Air Pollutants from the Synthetic Organic Chemical Manufacturing Industry and Seven Other Processes. Draft Report. Office of Air Quality Planning and Standards. Research Triangle Park, NC. EPA 450/ 3 92 009. December 1992.

EPA, 1992b. U. S. Environmental Protection Agency. Draft Regulatory Impact Analysis of National Emissions Standards for Hazardous Air Pollutants for By Product Coke Oven Charging, Door Leaks, and Topside Leaks. Office of Air Quality Planning and Standards, Research Triangle Park, NC. 1992.

EPA, 1995. U. S. Environmental Protection Agency. Regulatory Impact Analysis for the Petroleum Refinery NESHAP. Revised Draft for Promulgation. Office of Air Quality Planning and Standards, Research Triangle Park, N. C. 1995.

EPA, 1996. Review of the National Ambient Air Quality Standards for Particulate Matter: Assessment of Scientific and Technical Information. Office of Air Quality Planning and Standards, Research Triangle Park, N. C.; EPA report no. EPA/ 4521R 96 013. 10 1 10.0 QUANTIFIED BENEFITS 10.1 Results in Brief In this section, we calculate monetary benefits for the reductions in ambient PM concentrations resulting from the emission reductions described in Chapters 3 and 9. Benefits related to PM10 and PM2.5 reductions are calculated using a combination of two approaches: ( 1) a direct valuation based on air quality analysis of modeled PM and SO2 reductions at specific industrial boilers/ process heaters, and ( 2) a benefits transfer approach which uses dollar per ton values generated from the air quality analysis completed in the first approach to value reductions from non specific sources. Incremental benefits ( in 1999 dollars) from boilers and process heater PM and SO2 emission reductions are approximately $ 16 billion for the MACT floor. We also evaluated an above the floor regulatory option that is more stringent than final rule's MACT floor. Total annual benefits of the above the floor option are $ 17 billion. Although the benefits of the more stringent option are greater than the MACT floor, there are other costs and economic impacts that deem it an inferior regulatory option. Thus, the final rule is based on the selection of the MACT floor.

This benefits analysis does not quantify all potential benefits or disbenefits associated with PM and SO2 reductions. This analysis also does not quantify the benefits associated with reductions in hazardous air pollutants ( HAP). The magnitude of the unquantified benefits associated with omitted categories and pollutants, such as avoided cancer cases, damage to ecosystems, or materials damage to industrial equipment and national monuments, is not known. However, to the extent that unquantified benefits exceed unquantified disbenefits, the estimated benefits presented above will be an underestimate of actual benefits. There are many other sources of uncertainty in the estimates of quantified benefits. These sources of uncertainty, along with the methods for estimating monetized benefits for this NESHAP and a more detailed analysis of the results are presented below. 10 2 Table 10 1. Summary of Results: Estimated PM Related Benefits of the Industrial Boilers and Process Heaters NESHAP Estimation Method Total BenefitsA, B ( millions 1999$)

MACT Floor:

Using a 3% discount rate Using a 7% discount rate $ 16 + B $ 15 + B Above the MACT Floor:

Using a 3% discount rate Using a 7% discount rate $ 17 + B $ 16 + B A Benefits of HAP emission reductions are not quantified in this analysis and, therefore, are not presented in this table. The quantifiable benefits are from emission reductions of SO 2 and PM only. For notational purposes, unquantified benefits are indicated with a " B" to represent additional monetary benefits. A detailed listing of unquantified SO 2, PM , and HAP related health effects is provided in Table 10 13.

B Results reflect the use of two different discount rates; a 3% rate which is recommended by EPA's Guidelines for Preparing Economic Analyses ( US EPA, 2000a), and 7% which is recommended by OMB Circular A 94 ( OMB, 1992).

10.2 Introduction This chapter presents the methods used to estimate the monetary benefits of the reductions in PM and SO 2 emissions associated with control requirements resulting from the Industrial Boilers/ Process Heaters NESHAP. Results are presented for the emission controls described in Chapter 3. The benefits that result from the rule include both the primary impacts from application of control technologies or changes in operations and processes, and the secondary effects of the controls. The regulation induced reductions in PM and SO 2 emissions also described in Chapter 3 will result in changes in the physical damages associated with exposure to elevated ambient concentrations of PM. These damages include changes in both human health and welfare effects categories. Benefits are calculated for the nation as a whole, assuming that controls are implemented at major sources ( sources emitting > 10 tons of a HAP annual, or > 25 tons of two or more HAPs annually).

The remainder of this chapter provides the following:

Subsection 3 provides an overview of the benefits methodology.

Subsection 4 discusses Phase One of the analysis: modeled air quality change and health effects resulting from a portion of emission reductions at a subset of boiler and process heaters sources

Subsection 5 discusses Phase Two of the analysis: Benefit transfer valuation of remaining emission reductions 10 3

Subsection 6 discusses total benefit estimated by combining the results of Phases 1 and 2.

Subsection 7 discusses potential benefit categories that are not quantified due to data and/ or methodological limitations, and provides a list of analytical uncertainties, limitations, and biases.

10.3 Overview of Benefits Analysis Methodology This section documents the general approach used to estimate benefits resulting from emissions reductions from boiler and process heater sources. We follow the basic methodology described in the Regulatory Impact Analysis of the Heavy Duty Engine/ Diesel Fuel rule [ hereafter referred to as the HDD RIA] ( US EPA, 2000), as well as discussions provided in the Proposed Non Road Diesel Engines rule ( NRD rule) and the Integrated Air Quality Rule ( IAQR).

Since proposal of the Industrial Boilers and Process Heaters NESHAP, the benefit methodology utilized by EPA has been updated to reflect the current science in air quality modeling and benefits modeling. EPA has carefully considered the differences in methodology from proposal. Based on the IAQR benefit analysis document, we determined that the NESHAP's analysis from proposal does not include additional benefit endpoints ( i. e., infant mortality, heart attacks, and asthma exacerbation), which would increase the total benefit estimate from proposal. The IAQR also uses a newer study of premature mortality due to PM, which would increase the benefit estimate from proposal. The VSL estimate for premature mortality has been lowered slightly from $ 6 million to $ 5.5 million in the IAQR, which would decrease the benefit estimate from proposal. Finally, an updated air quality model ( i. e., REMSAD) would also increase our total benefit estimate in this analysis. Although the overall impact on total benefits is not determinable without a full reassessement of benefits, it is unlikely that our comparison of benefits to costs would not reveal a substantially different conclusion ( e. g., we still expect benefits to exceed costs by a substantial amount). Therefore, we did not update the benefit analysis from proposal as it would not impact the benefit cost comparison for this rule.

On September 26, 2002, the National Academy of Sciences ( NAS) released a report on its review of the Agency's methodology for analyzing the health benefits of measures taken to reduce air pollution. The report focused on EPA's approach for estimating the health benefits of regulations designed to reduce concentrations of airborne particulate matter ( PM).

In its report, the NAS said that EPA has generally used a reasonable framework for analyzing the health benefits of PM control measures. It recommended, however, that the Agency take a number of steps to improve its benefits analysis. In particular, the NAS stated that the Agency should:

include benefits estimates for a range of regulatory options;

estimate benefits for intervals, such as every five years, rather than a single year;

clearly state the project baseline statistics used in estimating health benefits, including those for air emissions, air quality, and health outcomes; 10 4

examine whether implementation of proposed regulations might cause unintended impacts on human health or the environment;

when appropriate, use data from non US studies to broaden age ranges to which current estimates apply and to include more types of relevant health outcomes;

begin to move the assessment of uncertainties from its ancillary analyses into its primary analyses by conducting probabilistic, multiple source uncertainty analyses. This assessment should be based on available data and expert judgment.

Although the NAS made a number of recommendations for improvement in EPA's approach, it found that the studies selected by EPA for use in its benefits analysis were generally reasonable choices. In particular, the NAS agreed with EPA's decision to use cohort studies to derive benefits estimates. It also concluded that the Agency's selection of the American Cancer Society ( ACS) study for the evaluation of PM related premature mortality was reasonable, although it noted the publication of new cohort studies that should be evaluated by the Agency.

Several of the NAS recommendations addressed the issue of uncertainty and how the Agency can better analyze and communicate the uncertainties associated with its benefits assessments. In particular, the Committee expressed concern about the Agency's reliance on a single value from its analysis and suggested that EPA develop a probabilistic approach for analyzing the health benefits of proposed regulatory actions. The Agency agrees with this suggestion and is working to develop such an approach for use in future rulemakings. In particular, the EPA is currently in the process of developing a comprehensive integrated strategy for characterizing the impact of uncertainty in key elements of the benefits modeling process ( e. g., emissions modeling, air quality modeling, health effects incidence estimation, valuation) on the results that are generated. A subset of this effort, which is currently underway, involves an expert elicitation designed to characterize uncertainty in the estimation of PM related mortality resulting from both short term and longer term exposure. The EPA will be evaluating the results of this elicitation to determine its usefulness in characterizing uncertainty in our estimates of PM related mortality benefits. As elements of this uncertainty analysis strategy are finalized, it may be possible to integrate them into later iterations of regulatory analyses.

In this RIA at proposal, the Agency used an interim approach for characterizing uncertainty that showed the impact of several important alternative assumptions about the estimation and valuation of reductions in premature mortality and chronic bronchitis. This approach provided an alternative estimate of health benefits using the time series studies in place of cohort studies, as well as alternative valuation methods for mortality and chronic bronchitis risk reductions. However, reflecting comments from the SAB HES as well as the NAS panel, rather than including an alternative estimate in the final rule, the EPA will continue to investigate the impact of key assumptions on mortality and morbidity estimates.

The analysis of benefits of this NESHAP is conducted in two phases. For a portion of the emission reductions expected from this rule, the first phase of analysis models the change in air quality and health effects around specific boiler and process heater sources. The benefits resulting from the changes in air quality are then quantified and monetized. For the remaining set of emission reductions, the specific location of the emission reduction is unknown due to limitations in the data. Therefore, the second phase of our benefits analysis is based on 10 5 benefits transfer of the modeled changes in air quality and health effects from the location specific emissions reductions achieved in phase one of the analysis. More specifically, the benefit value per ton of emission reduction estimated in phase one is transferred and applied to the emission reductions in phase two of the analysis. Table 10 2 summarizes the emissions reductions associated with the phase one and phase two analyses. This table shows the emission reduction expected from two regulatory options considered for this rulemaking: the MACT floor, and an above the floor regulatory option. Although the NESHAP is expected to result in reductions in emissions of many HAPs as well as PM and SO 2, benefits transfer values are generated for only PM and SO 2 due to limitations in availability of transfer values, concentration response functions, or air quality and exposure models for HAPs. For this analysis, we focus on directly emitted PM, and SO 2 in its role as a precursor in the formation of ambient particulate matter. Other potential impacts of PM and SO 2 reductions not quantified in this analysis, as well as potential impacts of HAPs reductions are described in Chapter 9.

Table 10 2.

Estimate of Emission Reductions for Phases One and Two of the Benefit Analysis Regulatory Option Total Emission Reductions ( tons/ yr) Phase One: Modeled Emission Reductions ( tons/ yr) Phase Two: Reductions Applied to Benefit Transfer Values MACT Floor:

SO 2 112,936 82,542 30,394 PM10 562,110 265,115 296,955 PM2.5 159,196 75,095 84,101 Above MACT Floor:

SO 2 136,733 95,361 41,372 PM10 569,229 313,947 255,282 PM2.5 171,459 94,565 76,894 The general term " benefits" refers to any and all outcomes of the regulation that contribute to an enhanced level of social welfare. In this case, the term " benefits" refers to the dollar value associated with all the expected positive impacts of the regulation, that is, all regulatory outcomes that lead to higher social welfare. If the benefits are associated with market goods and services, the monetary value of the benefits is approximated by the sum of the predicted changes in consumer ( and producer) " surplus." These " surplus" measures are standard and widely accepted measures in the field of applied welfare economics, and reflect the degree of well being enjoyed by people given different levels of goods and prices. If the benefits are non market benefits ( such as the risk reductions associated with environmental quality improvements), however, other methods of measuring benefits must be used. In contrast to market goods, non market goods such as environmental quality improvements are public goods, whose benefits are shared by many people. The total value of such a good is the sum of the dollar amounts that all those who benefit are willing to pay. 10 6 We follow a " damage function" approach in calculating total benefits of the modeled changes in environmental quality. This approach estimates changes in individual health and welfare endpoints ( specific effects that can be associated with changes in air quality) and assigns values to those changes assuming independence of the individual values. Total benefits are calculated simply as the sum of the values for all non overlapping health and welfare endpoints. This imposes no overall preference structure, and does not account for potential income or substitution effects, i. e. adding a new endpoint will not reduce the value of changes in other endpoints. The " damage function" approach is the standard approach for most cost benefit analyses of regulations affecting environmental quality, and it has been used in several recent published analyses ( Banzhaf et al., 2002; Levy et al, 2001; Kunzli et al, 2000; Levy et al, 1999; Ostro and Chestnut, 1998). Time and resource constraints prevented us from performing extensive new research to measure either the health outcomes or their values for this analysis. Thus, similar to these studies, our estimates are based on the best available methods of benefits transfer. Benefits transfer is the science and art of adapting primary research from similar contexts to obtain the most accurate measure of benefits available for the environmental quality change under analysis.

10.3.1 Methods for Estimating Benefits from Air Quality Improvements Environmental and health economists have a number of methods for estimating the economic value of improvements in ( or deterioration of) environmental quality. The method used in any given situation depends on the nature of the effect and the kinds of data, time, and resources that are available for investigation and analysis. This section provides an overview of the methods we selected to monetize the benefits included in this RIA.

We note at the outset that EPA rarely has the time or resources to perform extensive new research in the form of evaluating the response in human health effects from specific changes in the concentration of pollutants, or by issuing surveys to collect data of individual's willingness to pay for a particular rule's given change in air quality, which is needed to fully measure the economic benefits of individual rulemakings. As a result, our estimates are based on the best available methods of benefit transfer from epidemiological studies and studies of the economic value of reducing certain health and welfare effects. Benefit transfer is the science and art of adapting primary benefits research on concentration response functions and measures of the value individuals place on an improvement in a given health effect to the scenarios evaluated for a particular regulation. Thus, we strive to obtain the most accurate measure of benefits for the environmental quality change under analysis given availability of current, peer reviewed research and literature.

In general, economists tend to view an individual's willingness to pay ( WTP) for an improvement in environmental quality as the most complete and appropriate measure of the value of an environmental or health risk reduction. An individual's willingness to accept ( WTA) compensation for not receiving the improvement is also a valid measure. Willingness to pay and Willingness to accept are comparable measures when the change in environmental quality is small and there are reasonably close substitutes available. However, WTP is generally considered to be a more readily available and conservative measure of benefits. Adoption of WTP as the measure of value implies that the value of environmental quality improvements is dependent on the individual preferences of the affected population and that the existing distribution of income ( ability to pay) is appropriate. 10 7 For many goods, WTP can be observed by examining actual market transactions. For example, if a gallon of bottled drinking water sells for one dollar, it can be observed that at least some persons are willing to pay one dollar for such water. For goods not exchanged in the market, such as most environmental " goods," valuation is not as straightforward. Nevertheless, a value may be inferred from observed behavior, such as sales and prices of products that result in similar effects or risk reductions, ( e. g., non toxic cleaners or bike helmets). Alternatively, surveys may be used in an attempt to directly elicit WTP for an environmental improvement.

One distinction in environmental benefits estimation is between " use values" and " nonuse values." Although no general agreement exists among economists on a precise distinction between the two, the general nature of the difference is clear. Use values are those aspects of environmental quality that affect an individual's welfare more or less directly. These effects include changes in product prices, quality, and availability, changes in the quality of outdoor recreation and outdoor aesthetics, changes in health or life expectancy, and the costs of actions taken to avoid negative effects of environmental quality changes.

Non use values are those for which an individual is willing to pay for reasons that do not relate to the direct use or enjoyment of any environmental benefit, but might relate to existence values and bequest values. Non use values are not traded, directly or indirectly, in markets. For this reason, the measurement of non use values has proved to be significantly more difficult than the measurement of use values. The air quality changes produced by this NESHAP cause changes in both use and non use values, but the monetary benefit estimates are almost exclusively for use values.

More frequently than not, the economic benefits from environmental quality changes are not traded in markets, so direct measurement techniques can not be used. Avoided cost methods are ways to estimate the costs of pollution by using the expenditures made necessary by pollution damage. For example, if buildings must be cleaned or painted more frequently as levels of PM increase, then the appropriately calculated increment of these costs is a reasonable lower bound estimate ( under most conditions) of true economic benefits when PM levels are reduced. Avoided costs methods are used to estimate some of the health related benefits related to morbidity, such as hospital admissions ( see the NRD rule and the IAQR for a detailed discussion of methods to value benefit categories).

Indirect market methods can also be used to infer the benefits of pollution reduction. The most important application of this technique for our analysis is the calculation of the value of a statistical life for use in the estimate of benefits from mortality reductions. There exists no market where changes in the probability of death are directly exchanged. However, people make decisions about occupation, precautionary behavior, and other activities associated with changes in the risk of death. By examining these risk changes and the other characteristics of people's choices, it is possible to infer information about the monetary values associated with changes in mortality risk ( see Section 10.4). For measurement of health benefits, this analysis captures the WTP for most use and non use values, with the exception of the value of avoided hospital admissions, which only captures the avoided cost of illness because no WTP values were available in the published literature.

10.3.2 Methods for Describing Uncertainty 16 It should be recognized that in addition to uncertainty, the annual benefit estimates for the Industrial Boilers/ Process Heaters NESHAP presented in this analysis are also inherently variable, due to the truly random processes that govern pollutant emissions and ambient air quality in a given year. Factors such as electricity demand and weather display constant variability regardless of our ability to accurately measure them. As such, the estimates of annual benefits should be viewed as representative of the types of benefits that will be realized, rather than the actual benefits that would occur every year.

10 8 In any complex analysis using estimated parameters and inputs from numerous models, there are likely to be many sources of uncertainty. 16 This analysis is no exception. As outlined both in this and preceding chapters, there are many inputs used to derive the final estimate of benefits, including emission inventories, air quality models ( with their associated parameters and inputs), epidemiological estimates of concentration response ( C R) functions, estimates of values ( both from WTP and cost of illness studies), population estimates, income estimates, and estimates of the future state of the world ( i. e., regulations, technology, and human behavior). Each of these inputs may be uncertain, and depending on their location in the benefits analysis, may have a disproportionately large impact on final estimates of total benefits. For example, emissions estimates are used in the first stage of the analysis. As such, any uncertainty in emissions estimates will be propagated through the entire analysis. When compounded with uncertainty in later stages, small uncertainties in emission levels can lead to much larger impacts on total benefits.

Some key sources of uncertainty in each stage of the benefits analysis are:

° Gaps in scientific data and inquiry;

° Variability in estimated relationships, such as C R functions, introduced through differences in study design and statistical modeling;

° Errors in measurement and projection for variables such as population growth rates;

° Errors due to mis specification of model structures, including the use of surrogate variables, such as using PM 10 when PM 2.5 is not available, excluded variables, and simplification of complex functions; and ° Biases due to omissions or other research limitations.

Some of the key uncertainties in the benefits analysis are presented in Table 10 3. Several of the methods employed in this analysis are similar to the methods employed in the Heavy Duty Diesel and Fuel Standard ( HDD TSD). Information on the uncertainty surrounding particular C R and valuation functions is provided in the HDD TSD, and have been updated in the TSD for the benefits of the Proposed Non Road Diesel Engines rule ( NRD rule) ( EPA, 2003a), and in the documentation for the Integrated Air Quality Rule ( IAQR) ( EPA, 2003b).

Our estimated range of total benefits should be viewed as an approximate result because of the sources of uncertainty discussed above ( see Table 10 3). The total benefits 10 9 estimate may understate or overstate actual benefits of the rule.

In considering the monetized benefits estimates, the reader should remain aware of the many limitations of conducting these analyses mentioned throughout this RIA. One significant limitation of both the health and welfare benefits analyses is the inability to quantify many of the serious effects discussed in Chapter 9.

In particular, there are significant categories of PM related benefits that cannot be monetized ( or in many cases even quantified), and thus they are not included in our accounting of health and welfare benefits. These unquantified effects include low birth weight, changes in pulmonary function, chronic respiratory diseases other than chronic bronchitis, morphological changes, altered host defense mechanisms, non fatal cancers, and non asthma respiratory emergency room visits. A complete discussion of PM related health effects can be found in the PM Criteria Document ( U. S. EPA, 1996). In general, if it were possible to monetize these benefits categories, the benefits estimates presented in this analysis would increase. Unquantified benefits are qualitatively discussed in the in Chapter 9 and presented in Table 10 16. The net effect of excluding benefit and disbenefit categories from the estimate of total benefits depends on the relative magnitude of the effects.

In addition, when we proposed the Industrial Boilers and Process Heaters NESHAP in 2003, we also included an alternative estimate of benefits in addition to a base estimate that was intended to evaluate the impact of several key assumptions on the estimated reductions in premature mortality and CB. However, reflecting comments from the SAB HES as well as the NAS panel, we do not present an alternative estimate to reflect uncertainty in our benefit estimate. To better understand the scope of potential uncertainties, in several upcoming analyses EPA will investigate the impact of key assumptions on mortality and morbidity estimates through a series of sensitivity analyses.

The benefits estimates generated for the final rule are subject to a number of assumptions and uncertainties, which are discussed throughout the document. For example, key assumptions underlying the primary estimate for the mortality category include the following:

( 1) Inhalation of fine particles is causally associated with premature death at concentrations near those experienced by most Americans on a daily basis. Although biological mechanisms for this effect have not yet been definitively established, the weight of the available epidemiological evidence supports an assumption of causality.

( 2) All fine particles, regardless of their chemical composition, are equally potent in causing premature mortality. This is an important assumption, because PM produced via transported precursors emitted from EGUs may differ significantly from direct PM released from automotive engines and other industrial sources, but no clear scientific grounds exist for supporting differential effects estimates by particle type.

( 3) The C R function for fine particles is approximately linear within the range of ambient concentrations under consideration. Thus, the estimates include health benefits from reducing fine particles in areas with varied concentrations of PM, including both regions that are in attainment with fine particle standard and those that do not meet the standard.

( 4) The forecasts for future emissions and associated air quality modeling are 10 10 valid. Although recognizing the difficulties, assumptions, and inherent uncertainties in the overall enterprise, these analyses are based on peer reviewed scientific literature and up to date assessment tools, and we believe the results are highly useful in assessing this proposal. 10 11 Table 10 3. Primary Sources of Uncertainty in the Source Benefit Analyses 1. Uncertainties Associated With Health Impact Functions S The value of the PM effect estimate in each impact function.

S Application of a single effect estimate to pollutant changes and populations in all locations.

S Similarity of future year effect estimates to current effect estimates.

S Correct functional form of each impact function.

S Application of effect estimates to changes in PM outside the range of PM concentrations observed in the study.

S Application of effect estimates only to those subpopulations matching the original study population.

2. Uncertainties Associated With PM Concentrations S Responsiveness of the models to changes in precursor emissions.

S Projections of future levels of precursor emissions, especially ammonia and crustal materials.

S Model chemistry for the formation of ambient nitrate concentrations.

S Use of separate air quality models for ozone and PM does not allow for a fully integrated analysis of pollutants and their interactions.

3. Uncertainties Associated with PM Mortality Risk S Limited scientific literature supporting a direct biological mechanism for observed epidemiological evidence.

S Direct causal agents within the complex mixture of PM have not been identified.

S The extent to which adverse health effects are associated with low level exposures that occur many times in the year versus peak exposures.

S The extent to which effects reported in the long term exposure studies are associated with historically higher levels of PM rather than the levels occurring during the period of study.

S Reliability of the limited ambient PM 2.5 monitoring data in reflecting actual PM 2.5 exposures.

4. Uncertainties Associated With Possible Lagged Effects S The portion of the PM related long term exposure mortality effects associated with changes in annual PM levels would occur in a single year is uncertain as well as the portion that might occur in subsequent years.

5. Uncertainties Associated With Baseline Incidence Rates S Some baseline incidence rates are not location specific ( e. g., those taken from studies) and may therefore not accurately represent the actual location specific rates.

S Current baseline incidence rates may not approximate well baseline incidence rates in 2010.

S Projected population and demographics may not represent well future year population and demographics.

6. Uncertainties Associated With Economic Valuation S Unit dollar values associated with health endpoints are only estimates of mean WTP and therefore have uncertainty surrounding them.

S Mean WTP ( in constant dollars) for each type of risk reduction may differ from current estimates due to differences in income or other factors.