Socioeconom ic Analysis Draft Am endm ents to Rule 470 2: Internal - PowerPoint PPT Presentation

Socioeconom ic Analysis Draft Am endm ents to Rule 470 2: Internal Com bustion Engines – Phase 2 September 9, 2010

Outline of Presentation 1. Summary of Methodology 1.1 Economic Characteristics of Affected I ndustries and Sources 1.2 Compliance Cost 1.3 Socioeconomic I mpacts a. Net profit b. Threshold of significance 1.4 Socioeconomic I mpacts on Small Businesses 1.5 I ndirect Employment I mpacts 2. I ndustry Responses To I mpacts: Comments Outline

1. Summary of Methodology Methodology

1.1 Economic Characteristics of Affected Industries • ADE prepares statistical descriptions of affected industries and sources • Data sources − US Economic Census 2002 and 2007 − Manta / Dun and Bradstreet / 10-K − California Employment Development Department • Organize data by NAI CS and by four year intervals (ex. 2000, 2004, and 2008) • Key data: employment, number of establishments, value in inflation-adjusted dollars, and value per unit Methodology

1.1 Economic Characteristics of Affected Industries 0 4-0 8 SIC NAICS Industry Description 20 0 4 20 0 8 CAGR TOTAL 120,823 124,056 0 .7% 723 115112 Crop preparation services 3,373 4,004 4.4% 0851 115310 Forestry services 123 45 -22.3% 1311 211111 Crude petroleum and natural gas 1,011 2,808 29.1% 1321 211112 Natural gas liquids 34 100 31.0 % 1389 213112 Oil and gas field services, nec 3,234 5,950 16.5% 1442 212321 Construction sand and gravel 302 272 -2.6% 1781 221310 Water well drilling 469 699 10 .5% 2033 311421 Canned fruits and vegetables 8,784 8,245 -1.6% 2037 311411 Frozen fruits and vegetables 4,381 2,012 -17.7% 2044 311212 Rice milling 3 134 158 .6% 2048 311119 Prepared feeds, nec 1,218 1,553 6.3% 2084 312130 Wines, brandy, and brandy spirits 4,491 5,405 4.7% 2099 311991 Food preparations, nec 2,674 2,387 -2.8 % 2911 324110 Petroleum refining 958 849 -3.0 % 3069 325212 Fabricated rubber products, nec 0 20 3086 326140 Plastics foam products 592 475 -5.4 % 3231 327215 Glass products, made of purchased glass 214 221 0 .8 % 3471 332813 Plating and polishing 415 213 Methodology -15.4%

1.1 Economic Characteristics of Affected Industries (cont.) 0 4-0 8 SIC NAICS Industry Description 20 0 4 20 0 8 CAGR 4222 493120 Refrigerated warehousing and storage 1,417 1,013 -8 .0 % 4612 486110 Crude petroleum pipelines 67 126 17.2% 4813 517110 Telephone communications, exc radio 2,850 1,460 -15.4% 4911 221122 Electric services 2,791 1,098 -20 .8 % 4922 221210 Natural gas transmission 1,182 1,331 3.0 % 4931 221110 Electric and other services combined 746 809 2.1% 4932 221200 Gas and other services combined 1,280 1,471 3.5% 4941 221310 Water supply 469 699 10 .5% 4952 221320 Sewerage systems 14 46 33.5% 4953 221320 Refuse systems 14 46 33.5% 4971 221310 Irrigation systems 469 699 10 .5% 5084 423830 Industrial machinery and equipment 2,521 2,740 2.1% 5999 453998 Miscellaneous retail stores, nec 810 993 5.2% 8062 622110 General medical and surgical hospitals 33,921 36,895 2.1% Methodology

1.1 Economic Characteristics of Affected Industries (cont.) 0 4-0 8 SIC NAICS Industry Description 20 0 4 20 0 8 CAGR 8211 611110 Elementary and secondary schools 2,263 2,644 4 .0 % 8221 611310 Colleges, universities and prof schools 3,370 3,170 -1.5% 8222 611210 Junior colleges 764 1,073 8 .8 % 8222 611510 Technical institutes 764 1,073 8 .8 % 8733 541720 Noncommercial research organizations 198 491 25.5% 9199 921140 General government, NEC (local) 16,701 14,429 -3.6% 9221 922120 Police protection 1,308 1,531 4 .0 % 9223 922140 Correctional institutions 14,158 14,444 0 .5% 9511 813312 Air/ water/ solid waste management 295 269 -2.3% Methodology

1.1 Economic Characteristics of Affected Industries (cont.) Group 1 Oil and Natural Gas Production/ Pipeline Industries (SICs 1311, 1321,1389, 4612) Group 2 Petroleum Refining (SIC 2911) Group 3: Manufacturing Industries (SICs 3069, 3086) Group 4: Water Supply (SIC 4941) Group 5: Electric Services and Natural Gas Transmission (SICs 4911, 4922, 4931, 4932) Group 6: Sanitary, Sewerage, and Refuse (SICs 4952, 4953, 4959) Group 7: Agricultural Products and Food Processing (SICs 0723, 2033, 2037, 2048, 2084, 2099) Group 8: Other Industries (SICs 3471, 4813, 5084, 5999) Group 9: Hospitals (SIC 8062) Group 10: Schools and Universities (SICs 8211, 8221, 8222) Group 11: General Government (SICs 8733, 9199, 9511) Group 12: Other Industries Methodology

1.2 Compliance Cost • San Joaquin Valley Unified Air Pollution Control District estimates annual compliance cost of rule • SJVUAPCD provides annual compliance cost estimates to ADE and affected stakeholders • Stakeholders discuss estimates with SJVUAPCD • ADE analyzes annual compliance cost in context of economic trends of affected industries and sources Methodology

1.3 Socioeconomic Impacts 1.3.1 Net Profit Ratios: Due Diligence Review of Various Sources � Dun and Bradstreet � CC & H, I ncorporated � I nternal Revenue Service � Corporate annual reports Methodology

1.3 Socioeconomic Impacts 1.3.2 Revenues and Net Profits (PRELI MI NARY) Net Profits (where Revenues appropriate) Private Sector Group 1 Oil and Natural Gas $8,987,070,394 $359,482,816 Group 2 Petroleum Refining $1,507,500,000 $60,300,000 Group 3: Manufacturing Industries $52,500,000 $2,100,000 Group 5: Electric Services and Natural Gas $24,303,593,025 $972,143,721 Group 7: Ag. Products and Food Processing $1,045,875,486 $41,835,019 Group 8: Other Industries $54,365,782 $2,174,631 Group 9: Hospitals $230,169,205 $230,169,205 Group 12: Other Industries $86,251,068 $3,450,043 Public Sector Group 4: Water Supply $122,854,000 Group 6: Sanitary, Sewerage, and Refuse $576,323,575 Group 10: Schools and Universities $455,800,000 Group 11: General Government $2,832,500,000 $40,254,802,536 $1,671,655,435 Methodology

1.3 Socioeconomic Impacts 1.3.3 Threshold of Significance “Development of a Methodology to Assess the Economic I mpact Required by SB513/ AB969”, by Peter Berck, PhD, UC Berkeley Department of Agricultural and Resources Economics, Contract No. 93-314, August, 1995 Methodology

1.4 Disproportionate Impact Analysis: Small Business Methodology

2. Industry Responses to Impacts: Comments and Questions Industry Responses

2.1 Anticipated Industry Responses To Impacts � Can industry absorb the costs if they are not substantial? � Will industry accept lower rate of return? � Will industry shift from lower-value to higher-value products, where practical? � Will industry shut down affected business operations? � How will industry increase productivity\ lower costs? � Will industry pass costs to consumers? Industry Responses

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