September 10, 2010

Portland Cement NESHAP

Proposed Rule
Summary

Score: 35 / 60

Additional details
Agency
Environmental Protection Agency
Regulatory Identification Number
2060-AO15
Agency Name
Environmental Protection Agency
Rule Publication Date
05/06/2009
Comment Closing Date
07/06/2009

RULE SUMMARY

EPA is proposing amendments to the current National Emission Standards for Hazardous Air Pollutants (NESHAP) from the Portland Cement Manufacturing Industry. These proposed amendments would add or revise, as applicable, emission limits for mercury, total hydrocarbons (THC), and particulate matter (PM) from kilns and in-line kiln/raw mills located at a major or an area source, and hydrochloric acid (HCl) from kilns and in-line kiln/raw mills located at major sources. These proposed amendments also would remove the following four provisions in the current regulation: the operating limit for the average hourly recycle rate for cement kiln dust; the requirement that cement kilns only use certain type of utility boiler fly ash; the opacity limits for kilns and clinker coolers; and the 50 parts per million volume dry (ppmvd) THC emission limit for new greenfield sources. EPA is also proposing standards which would apply during startup, shutdown, and operating modes for all of the current section 112 standards applicable to cement kilns. Finally, EPA is proposing performance specifications for use of mercury continuous emission monitors (CEMS), which specifications would be generally applicable and so could apply to sources from categories other than, and in addition to, portland cement, and updating recordkeeping and testing requirements.

METHODOLOGY

There are twelve criteria within our evaluation within three broad categories: Openness, Analysis and Use. For each criterion, the evaluators assign a score ranging from 0 (no useful content) to 5 (comprehensive analysis with potential best practices). Thus, each analysis has the opportunity to earn between 0 and 60 points.

Criterion Score

Openness

1. How easily were the RIA , the proposed rule, and any supplementary materials found online?
2060-AO15 can be found on regulations.gov using the RIN and a keyword search. To find the RIA on regulations.gov, search by keyword (the title). On the EPA website, the proposed regulation can be found by clicking on Laws and Regulations. The regulation is not on the EPA website, but directs the reader to regulations.gov, explains how to search for a specific regulation, and provides information about ongoing regulatory activities.
4/5
2. How verifiable are the data used in the analysis?
Data sources are cited, with links provided in the list of references.
5/5
3. How verifiable are the models and assumptions used in the analysis?
Oligopoly assumption appears to be justified by two arguments (neither very strong): a general claim that firms in oligopoly have market power, and the fact that EPA has made this assumption before. This assumption matters because it increases the estimate of social costs of the regulation. Checking its veracity would require going back through cited prior RIAs to find out if there is any explicit study of pricing in the industry that justifies the assumption. Sources for assumptions used in benefits calculations are given, so the reader can form his/her own opinion by consulting those sources. It appears that the epidemiological studies and the EPA's process for estimating benefis were both peer-reviewed.
4/5
4. Was the analysis comprehensible to an informed layperson?
The separate RIA is very readable, with a good summary. The background section is helpful but a bit long; it could probably be pared back to just the information needed to understand the analysis. The main body of the text presents results, with calculations left to the appendices. A few spots require specialized knowledge to follow fully.
4/5

Analysis

5. How well does the analysis identify the desired outcomes and demonstrate that the regulation will achieve them?
4/5
Does the analysis clearly identify ultimate outcomes that affect citizens’ quality of life?
Improved human health due to reduction in emissions of harmful pollutants.
5/5
Does the analysis identify how these outcomes are to be measured?
Emissions reductions are calculated, but the economic value of benefits is calculated using reductions in particulates, not direct reduction in the regulated pollutants.
5/5
Does the analysis provide a coherent and testable theory showing how the regulation will produce the desired outcomes?
Regulations require installation of equipment to reduce emissions, and equipment reduces particulate emissions. Only the health outcomes for Americans are counted; if increased imports lead to increased emissions in other countries, that is not considered.
4/5
Does the analysis present credible empirical support for the theory?
Benefits are driven by reduced exposure to particulates, not directly by reductions in the affected pollutants. The analysis considers two epidemiological studies plus expert opinions on the health benefits of reducing exposure to particulates. This is also consistent with past EPA practice.
4/5
Does the analysis adequately assess uncertainty about the outcomes?
The RIA lists sources of uncertainties about benefits. It presents a range of estimates based on the two epidemiological studies plus a sensitivity analysis.
4/5
6. How well does the analysis identify and demonstrate the existence of a market failure or other systemic problem the regulation is supposed to solve?
0/5
Does the analysis identify a market failure or other systemic problem?
The need to reduce emissions is simply taken as given. Externality is mentioned but not really explained. The analysis does repeatedly mention oligopoly structure of cement industry, but since the regualtion is for emissions the market structure cannot be said to be the reason for the regulation.
1/5
Does the analysis outline a coherent and testable theory that explains why the problem (associated with the outcome above) is systemic rather than anecdotal?
No relevant discussion.
0/5
Does the analysis present credible empirical support for the theory?
No relevant discussion.
0/5
Does the analysis adequately assess uncertainty about the existence or size of the problem?
No relevant discussion.
0/5
7. How well does the analysis assess the effectiveness of alternative approaches?
3/5
Does the analysis enumerate other alternatives to address the problem?
It considers multiple ways of setting standards.
4/5
Is the range of alternatives considered narrow (e.g., some exemptions to a regulation) or broad (e.g., performance-based regulation vs. command and control, market mechanisms, nonbinding guidance, information disclosure, addressing any government failures that caused the original problem)?
The preamble considers and rejects different standards for different subcategories of kilns. It also considers defining the standard in terms of control efficiency (percent of mercury removed) instead of total emissions allowed. It also considers standards in excess of the floor. All of these are variations on performance standards.
3/5
Does the analysis evaluate how alternative approaches would affect the amount of the outcome achieved?
The impact of alternatives on human health is not evaluated. Rejection of subcategories is based on concern that allowing subcategories would increase emissions. For one type of category, based on mercury content of limestone, the statistics seem to show that kilns achieve widely varying levels of emissions even controlling for mercury content of limestone. Similarly, rejection of a percentage reduction standard is based on the likelihood that this will lead to larger emissions. However, these emissions differences are not estimated or quantified. Emissions effects of a standard above the floor are calculated for a "typical" kiln.
2/5
Does the analysis adequately address the baseline? That is, what the state of the world is likely to be in the absence of federal intervention not just now but in the future?
Baseline includes current production plus kilns that are likely to come online in the near future. Does not consider what types of kilns might shut down, or how the industry might change its practices, even if the regulation is not adopted. The report acknowledged that emissions have improved due to voluntary adoption of new technology, but the report does not seem to take further adoption of new technology into account when addressing the baseline.
3/5
8. How well does the analysis assess costs and benefits?
4/5
Does the analysis identify and quantify incremental costs of all alternatives considered?
It includes compliance costs estimates with engineering analysis.
5/5
Does the analysis identify all expenditures likely to arise as a result of the regulation?
It considers compliance costs, but no other possible expenditures.
5/5
Does the analysis identify how the regulation would likely affect the prices of goods and services?
It calculates change in the price of Portland cement caused by the regulations.
5/5
Does the analysis examine costs that stem from changes in human behavior as consumers and producers respond to the regulation?
It uses standard microeconomic analysis to calculate lost consumer and producer surplus.
5/5
If costs are uncertain, does the analysis present a range of estimates and/or perform a sensitivity analysis?
Engineering vs. social cost estimates implicitly account for some uncertainty about industry pricing behavior, but otherwise costs are assumed to be certain.
2/5
Does the analysis identify the alternative that maximizes net benefits?
The RIA calculates net benefits only of the approach chosen. The preamble to the rule estimates compliance costs associated with stricter standards.
2/5
Does the analysis identify the cost-effectiveness of each alternative considered?
The RIA does not, but in the preamble, the cost-effectivenes of more stringent standards is calculated.
3/5
Does the analysis identify all parties who would bear costs and assess the incidence of costs?
Costs are broken down by size of entity, for individual markets, and in some cases kilns.
4/5
Does the analysis identify all parties who would receive benefits and assess the incidence of benefits?
There is no discussion on incidence of benefits, though there is a table showing what kinds of mortality and morbidity are reduced and by how much.
2/5

Use

9. Does the proposed rule or the RIA present evidence that the agency used the analysis?
Rejection of different rules for sub-categories of kilns is based on concern that allowing subcategories would increase emissions. For one type of category, based on mercury content of limestone, the statistics seem to show that kilns achieve widely varying levels of emissions even controlling for mercury content of limestone. This is good analysis, but it is not in the RIA! The RIA itself simply shows that the chosen option's benefits exceed the costs regardless of uncertainty about benefits.
2/5
10. Did the agency maximize net benefits or explain why it chose another alternative?
Standards above the floor are rejected on the grounds that high costs per amount of pollutant removed were not "justified." But this conclusion does not come from the RIA. The decision shows some sensitivity to net benefits, though.
3/5
11. Does the proposed rule establish measures and goals that can be used to track the regulation's results in the future?
Since the rule's benefits derive from reductions in particulates, EPA could set goals for measured particulate reduction near the kilns. This has not been done.
1/5
12. Did the agency indicate what data it will use to assess the regulation's performance in the future and establish provisions for doing so?
The EPA could monitor to see if the regulation reduces particulate exposure in areas around the kilns.
1/5
 
Total 35 / 60