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4.5. Other Air Pollution Documents

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Among the downloadable documents in the REAI database are several not classified as RIAs. This section provides a brief review of a few of these documents and links to the downloadable files.

Architectural Coatings EIA and RFA

Section 183(e)(3)(A) of the Clean Air Act directs the EPA to identify consumer products that account for 80 percent of more of VOC emissions and to determine appropriate control measures. Architectural and industrial maintenance (AIM) coatings were the first consumer product to be regulated under this authority. The Economic Impact and Regulatory Flexibility Analyses of the Final Architectural Coatings VOC Rule dates from 1998.

EPA determined that paint manufacturers should be the target of the regulations as emissions are more easily and cheaply controlled at the paint formulation stage than later during use. Among the regulatory alternatives considered was an exceedance fee of $5,000 (1995 dollars) per ton of VOC for paint manufacturers who used VOCs in excess of the regulatory limit. The report includes a cost and economic analysis, cost-effectiveness analysis, and a regulatory flexibility analysis of the impact of the proposed regulations on the AIM industry.

The document does not contain any type of environmental benefits analysis. Indeed most regulations designed to reduce emissions of ozone precursor emissions (VOC and NOx) have not been accompanied by an economic analysis of benefits. The reason is that a complete cost and benefit analysis accompanied the primary national ambient air quality standard for ozone. With many areas out of attainment for ozone, the objective of industry-specific control measures is to identify cost-effective measures. Hence, the careful treatment of industry costs and cost-effectiveness in the AIM EIA and RFA.

Economic Impact Analysis for the Petroleum Refinery NESHAP

Section 112 of the Clean Air Act has a list of hazardous air pollutants (HAP) for which EPA has identified the source categories. EPA develops regulations, as appropriate, for those source categories. Section 317 of the CAA requires that EPA evaluate regulatory alternatives through an EIA, though it should be noted that this EIA compared just one alternative to the baseline of no regulation for HAP. Executive Order 12866 requires an economic assessment that includes an EIA. Thus this document may be viewed satisfying certain requirements of the Clean Air Act as well as part of the requirements of E.O. 12866.

The objective of this EIA is to evaluate the impact of petroleum industry NESHAP controls on petroleum refinery output, price, employment, and trade. No attempt is made to characterize emission reductions, the health effects averted, or any other measure of benefits. It should be noted that the proposed regulation of hazardous air pollutants from refineries was accompanied by an RIA that treated benefits as well as costs.

To comply with the Regulatory Flexibility Act, special attention is given to impacts on smaller refineries, including their possible closure. Between zero and seven small refineries were considered to be at some risk of closure due to the regulations.

EPA developed a profile of petroleum industry characteristics, complete with estimates of supply and demand for refined products. The model included market and price impacts, financial impacts on firms, potential closure of refineries, welfare analysis, small business impacts, labor market impacts, energy impacts, foreign trade impacts, and regional effects. The primary impacts of regulations to control HAP emissions are increases in the retail prices of refined products. Production of refined products falls, but revenues to the industry increase because of inelastic demand for the products. The estimated price impacts on products range from $0.03 per barrel of residual fuel oil to $0.14 per barrel for jet fuel. Total industry revenues are predicted to rise by $107 million per year. Economic costs of the regulation (measured as changes in consumer and producer surplus) are estimated to be $95 million per year.

The cost effectiveness of the proposed regulation was $317 per ton of VOC and $1,645 per ton when measured only as HAP. The $317 per ton cost for VOC is very low relative to other available ozone control measures, indicating the regulation would be particularly cost-effective in controlling VOC. How it should be viewed as a measure to control risks of HAP exposure is best evaluated in terms of cost per statistical life saved, a calculation reserved for the full economic analysis required under the executive order.


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