United Stales
Environmental Protection
Agency
Engineering and Analysis
Division WH-552
Washington, DC 20460
EPA 440/1-91/0096
August 1991
U.CVv4*«A
©EPA
Water
Re-Evaluation of the Economic Impact
Analysis of Effluent Limitations
Guidelines for the Organic Chemicals,
Plastics, and Synthetic Fibers Industry
Using Revised Compliance Costs
QUANTITY
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EPA 440/1-91/0095
Re-evaluation of the Economic Impact Analysis of
Effluent Limitations Guidelines for
the Organic Chemicals, Plastics, and Synthetic Fibers Industry
using Revised Compliance Costs
Engineering and Analysis Division
Office of Science and Technology
Office of Water
U.S. Environmental Protection Agency
Wansington, DC 20460
August 1991
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ACKNOWLEDGEMENTS
This report was prepared for the Economic and Statistical Analysis Branch of the
Office of Water's Engineering and Analysis Division. Economic analysis support was
provided by Abt Associates Inc., under EPA Contract Number 6iB*CO-0080.
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PREFACE
This report summarizes the effects that revised compliance cost estimates have on
the economic impact analysis (EIA) of effluent limitations guidelines for the Organic
Chemicals, Plastics, and Synthetic Fibers (OCPSF) Industry. The original EIA was prepared
for the final OCPSF rule which was promulgated in November 1987. The primary purpose
of revisiting the economic impact analysis is to determine if, in light of the compliance cost
revisions, the OCPSF rule remains economically achievable. The analyses and results
reported below cover all cost revisions and corrections available as of August 1991.
TV*
tfc»*
(51
2239). ^vs
noui dov*rs
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TABLE OF CONTENTS
A. Background 1
B. Changes in Compliance Cost Estimates 2
C. Plant impact Analysis 3
D. Cost-Effectiveness Analysis 11
E. Regulatory Flexibility Analysis 16
F. Overall Summary and Conclusions 18
Appendix A Calculation of Costs and Impacts Used in the Preamble 20
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A. Background
In November 1987, the U.S. Environmental Protection Agency (EPA) promulgated
effluent limitations guidelines for the OCPSF manufacturing point source category. As a
result of a settlement stemming from several lawsuits, certain portions of the OCPSF
regulation were remanded to EPA for further rulemaking proceedings. One consequence
of these actions is that the costs for particular control technologies were revised. The
Chemicals Industry Branch (CIB) is responsible for developing revised compliance cost
estimates. The Economic and Statistical Analysis Branch (ESAB) in the Office of Water's
Engineering and Analysis Division is responsible for re-evaluating all elements of the EIA
carried out in support of the 1987 OCPSF rulemaking to determine if the selected control
options remain economically achievable given the compliance cost revisions. Abt Associates
assisted ESAB in re-evaluating the economic impact analysis for the OCPSF effluent
limitations guidelines.
ESAB considers a re-evaluation of the EIA to be important because alteration of the
compliance cost estimates could substantially alter the results of the economic impact
analyses that were conducted as part of the promulgated effluent limitations guidelines for
the OCPSF industry (EPA 440/2/87-007). Three types of analyses were undertaken as part
of this project:
• a revised plant impact analysis
• a revised regulatory flexibility analysis (RFA)
• a revised cost-effectiveness (CE) analysis
The plant impact analysis is used as the primary basis for evaluating economic
achievability. The regulatory flexibility analysis provides information with which to
determine if small plants are disproportionately affected by the revised cost estimates. The
cost-effectiveness analysis provides information for (1) determining if the selected option
remains the most cost-effective in reducing pollutant discharges; and (2) comparing the cost-
effectiveness ($/amount of pollutant removed) of the selected control option to other
effluent limitations guidelines promulgated by the Agency.
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B. Changes in Compliance Cost Estimates
Two types of compliance cost changes are included in this analysis. The first type of
cost change covers revisions and corrections that were made lifter the final rule was
promulgated. These changes were not incorporated in the EIA conducted for the final
OCPSF rule, but are evaluated here as a Revised Baseline. The second type of change
relates to the re-estimate of compliance costs for in-plant biological treatment as ordered
by the federal court Costs for three control options designed to meet the court-ordered
remand (Options 1, 2, and 3) were evaluated in the economic impact analysis.
The revised economic impact analysis reported below used the EIA of the final
OCPSF rule as a baseline. That is, the impact analysis examined the costs of the revisions
and control options (to meet the remanded portion of the rule) together. Such an analysis
facilitates a consistent comparison of revised control options to the EIA that accompanied
the final rule.
B.I Revisions and Corrections to Compliance Cost Estimations
Revised Baseline - The Agency's Industrial Technology Division revised and corrected
compliance cost estimates for particular plants as additional infoimation (regarding plant
wastewater processes and treatment technologies) became available. These cost revisions
reflect the addition of steam stripping and chemical precipitation upgrades as well as
correction of some errors (such as inaccurate wastewater flow and treatment technologies).
£9 j fdlou.;/v<
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• Hie Agency's Industrial Technology Division costed alternative activated carbon
treatment for all indirect discharging plants that were projected to close under Option 1.
Control technologies for other indirect discharging plants remain as in Option 1. The costs
reported for Option 2 are cumulative; they include the cost revisions attributed to Revised
Baseline. A total of 250 indirect dischargers incur cost changes under Option 2. This
option was not considered for direct dischargers.
Option 3 . The Agency's Industrial Technology Division costed alternative activated carbon
treatment for all plants that are assumed to be unable to obtain sufficient land for larger
in-plant biological treatment systems called for under Option 1 (Le, land requirements are
greater than 1.0 acres). The costs reported for Option 3 are cumulative; they include the
cost revisions attributed to Revised Baseline. A total of 250 indirect dischargers incur cost
changes under Option 3. This option was not considered for direct dischargers.
C. Plant Impact Analysis
The plant impact analysis is conducted separately for direct and indirect dischargers.1
Several measures are used to summarize the impact of the regulations on OCPSF plants.
They include: total annualized cost of the selected option, number of plants expected to
close number of product lines expected to close, number of plants with significant sales or
profit impacts, and expected job losses (associated with closures). Additional information
regarding the calculation of impact measures, and their significance can be found in the EIA
prepared for the final OCPSF rule (EPA 440/2/87-007).
Tricrem*"*?1 A"nVa1ized Costs
The costs subject to revision in this analysis are the costs of controlling priority
pollutants. These costs are incremental to the cost of removing conventional pollutants,
such as biological oxygen demand (BOD) and total suspended solid > (TSS) from the
wastestream. Tables 1 and 3 include costs fora&direct dischargers. Tables 2, 4, 5, and
6 include costs for 365 indirect dischargers. Slightly fewer plants are analyzed for impact
results for direct dischargers.
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measures because some plants did not provide sufficient financial information with which
to calculate impacts. The costs (and impacts) for joint dischargers are reported in Table 1
along with direct dischargers.
Plant and Product Line Closures
A closure is expected where the liquidation value of the plant exceeds the present
value of cash flow minus annualized compliance costs. The entire plant is expected to close
if the OCPSF employment is 80 percent or more of total plant employment. Otherwise the
plant is expected to remain open but the OCPSF product line will close.
Profit or Sales Impacts
Even if a plant is not expected to incur a plant or product line closure, it may still
incur a significant adverse impact due to compliance costs. Adverse impacts on both profit
and sales measures are included in the economic impact model. !If post-compliance plant
profitability falls below the lowest decile of the industry segment.01 compliance costs exceed
5 percent of sales, then the impact is considered significant.
Employment Reduction
Employment losses are expected at plants where the cost olf compliance results in a
plant or product line closure. In plants where less than 80 percent of the employees work
on OCPSF product lines, a closure is assumed to affect only the OCPSF product lines. The
employment reduction of a product line closure is, therefore, equal to the plant's OCPSF
employment However, in plants where 80 percent or more of the employees work on
OCPSF product lines, a closure is assumed to affect the entire facilty and the employment
reduction is equal to total plant employment
The percentage reduction in employment is calculated using the total OCPSF
employment for all plants consider within scope. Total OCPSF' employment does not
include plant workers who work on non-OCPSF product lines. Employment reductions
associated with controls for both direct and indirect dischargers are compared to total
OCPSF employment of 180,739.
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C.1 Plant Impact Analysis Results
Two types of comparisons are made between the impacts of the OCPSF rule as
promulgated and the impacts of the rule including the cost revisions:
• the absolute change in the impact measure (e.g., the number of direct
discharging plants expected to dose rises from a to b)\ and
• the change in the percentage of the industry subject to a specific impact (e.g.,
the percentage of all direct dischargers that are expected to close rises from
x to y percent).
Both types of measures are considered when comparing the impacts of the revisions to the
impacts of the OCPSF rule as promulgated
Revised Baseline; Revisions and Corrections
Direct Dischargers (Table 1). Compliance costs for 23 of the 386 direct dischargers have
been revised since the OCPSF rule was promulgated. The total annualized cost of the
revised BAT option increased by $2.0 million (less than 1 percent) to $208.0 million. There
are no incremental impacts associated with these cost changes. Consequently, the change
in compliance costs would not alter the findings of the EIA of the rule as promulgated.
Table 1
Direct Dischargers - Revised Baseline
Inpact M«Murt
Plants Analyzad/Plants Cottad
Total Annualizad Cost
(1982 $, Millions)
Plant Closuras
(X of direct ditcharfling plants)
Product Lfnt Closures
(X of diract discharging plants)
Profit or Salts Ispacts
(X of dlrtct discharging plants)
EMploywtnt Reduction
(X of total OCPSF e*ploy*ent)
Promulgated IAT
Option
ra/attan
$206.0
11
(3.8X)
9
(3.1X)
17
(5.9X)
1,359
(0.8X)
Revised lasclint
283/ae*at1
8208.0
11
C3.8X)
9
(3. IX)
17
(5.9X)
1.359
(0.8X)
Incremental Changt
of Revised
lasalint
n.a.
S2.0
0
(OX)
0
(OX)
0
(OX)
0
(OX)
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Indirect Dischargers (Table 2). Compliance costs for 51 of the 365 indirect dischargers have
been revised since the OCPSF rule was promulgated. The total annualized cost increased
by $7.9 million (4 percent), from $182.7 million to $190.6 million. Ifhe cost revisions result
in one additional product line closure, 3 additional sales/profit impacts, and an additional
employment reduction of 19 workers. Across the base of 365 plants, such changes do not
change the findings of the economic impact analysis of the rule as promulgated.
Table 2
Indirect Dischargers - Revised Baseline
lapect Measure
Plants Analyzed/Plants Coated
Total Annualized Coat
(1982 $, Billions)
Plant CloaurM
(X of Indlract discharging plants)
Product Una Cloauraa
(X of Indirect discharging plants)
Profit or Salts lapacts
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: Revised Baseline + Revised Costs for In-Plant Biological Treatment
t pi^hargers (Table 3). For the 386- direct dischargers with cost information, the
compliance costs associated with revisions and the remanded portions of the OCPSF rule
under Option 1 total S22fcl million. This is a $l£! million ($ percent) increase over the
cost of the rule as promulgated. The cost of Option 1 is significantly less than that of other
control options evaluated but not selected in the EIA for the promulgated rule.
There*a*£-»o incremental impacts (i.e., plant clooufes? product line closures-,
;, or tmploymtgt 1"rf«c) associated with this cost increase. .Becauoe the
proSt/ialM imjw
eost iaerttmo tut
1-fuf opecifie planta IB tin impact model, increased cooto arc not
trrl
{myinrtr Under Option 1, costs increased for specific
niooccdy nrinrntrr -ni •-•""' ,
plants but did not trigger their impact measures' thresholds (U cases) 2L the costs increased
for plants that were previously projected to incur an economic impact (8 cases).
t.
Plants Analyztd/Plants Costad
Table 3
«- Direct Dischargers • Option 1
Proaulgatad IAT
Option
Total ArrualtzKl Cost
(1982 », «UUons)
SBBMMMiilBW""^""""^^'"1"1
Plant ClMurt*
(X of dJrtet dUcharging plants)
Product Lfnt Closurts
(X of direct discharging plants)
Profit or Salts lapaets
(X of direct discharging plants)
Enployntnt Ieduction
(X of Total OCPSF afploywent)
S206.0
11
(3.8X)
9
(3.1X)
17
'(5.9X)
11
(3.8%)
9
(3.1X)
•4?*
Incremental Change
of Option 1
0
(OX)
0
(OX)
•ft I
&8T-
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Indirect Dischargers (Table 4). For the 365 indirect dischargers with cost information,
compliance costs increased from $182.7 (as promulgated) to $2iS?fc£ million under Option
1 - an increase of $§7:6 million (2i percent). The revised cost: of controls for indirect
dischargers remains less than any other control option evaluated in the EIA for the
promulgated rule.
Unlike the cost revisions for direct dischargers, plant impacts increase under Option
1. The number of plant and product line closures rises from 52 (14 percent of the indirect
dischargers analyzed) for the rule as promulgated to 56, an increase of 4 plants - another
1 percent of the indirect discharging plants and product lines are; expected to close. The
number of profit/sales impacts also increases, from 63 (17 percent) to 66 (18 percent). For
the rule as promulgated, 32 percent of the indirect dischargers were expected to incur some
type of significant impact The revised costs raise the percentage of significantly affected
plants to 33 percent The employment reduction associated with these closures increases
from 2,190 (12 percent of total OCPSF employment) to 3,396 (1.9 percent of total OCPSF
employment) under Option 1.
Table 4
Indirect Dischargers • Option 1
Impact Mcasura
Plants Analyzad/Ptantt Costad
Total Annualizad Coat
(1982 *, •Uliona)
Plant Cloauras
(X of fndirtct discharging plants)
Product Una Cloauras
(X of indirect discharging plants)
Profit or Salts lapacts
(X of indiract discharging plants)
EtployMnt Reduction
(X of Total OCPSF aaployMnt)
Proiulgatad PSES
Option
362/365
$182.7
25
<6.8X)
27
(7.4X)
63
(17.3X)
2,190
(1.2X)
Option 1
362/365
J33.O
ftdAOaBat
9CWTV
27
<7.*X)
29
(7.9X)
66
(18.1X)
3.396
(1.9X)
Incremental Change
of Option 1
n.a.
SO. 3
Wr»
2
(0.5X)
2
<0.5X)
3
(0.8X)
1.206
8
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Optton2; Option 1 with Activated Carbon Treatment for Plants Projected to Close under
Option 1
pjrect Dischargers. Option 2 modified the costs only for plants that closed under Option
1. Costs were not revised for direct dischargers under Option 2 since no plants sustained
significant adverse impacts to due to the incremental costs of Option 1 (over the
promulgated BAT option).
Indirect Dischargers. (Table 5). Option 2 resulted in cost changes for 8 plants that sustained
impacts under Option 1. Under Option 2, the total annualized cost is $215.9 million - a
decrease of $4.4 million from Option 1. The annualized cost of Option 2 is, however, $33.2
million (18 percent) more than the selected option for the final OCPSF rule. Despite the
fact that Option 2 costs are lower than Option 1 costs, there is no substantial difference in
the impacts (one fewer profit/sales impact under Option 2). Under Option 2:56 plants and
product lines are expected to close (1 percent more than the rule as promulgated); 65 plants
are expected to incur a profit or sales impact (less than 1 percent more than the rule as
promulgated); and employment losses increase by 1,206 workers (55 percent more than the
rule as promulgated).
Table 5
Indirect Dischargers - Option 2
iNpeCt Measure
Plant* Analyzed/Plants Coated
Total Annualized Coat
(1982 *, •Illiona)
Plant Cloaurn
(X of fndlract discharging plants)
Product Lint Cloaurts
(X of Indirect discharging plants)
Profit or Salaa lapeets
(X of indirect discharging plants)
Eeployieent Reduction
(X of Total OCPSF employment)
Promulgated PSES c
Option
362/365
S182.7
25
(6.8X)
27
<7.«)
63
(17.3X)
2,190
(1.2X)
Option 2
362/365
$215.9
27
C7.4X)
29 .
(7.9X)
63
(17.8X)
3,396
(1.9X)
Incremental Change
of Option 2
n.a.
S33.2
2
(0.5X)
2
(O.SX)
2
. <0.5X)
1.206
, (0.7X)
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Option 3; Option 1 with Activated Carbon Treatment for Plants with Land Constraints
pfrcrt Dischargers. Option 3 modified the treatment technologies assumed for indirect
discharging plants that may not have sufficient land available to build the, appropriately sized
biological treatment plant assumed under Option 1. Consequently, costs were not revised
for direct dischargers under Option 3.
Indirect Dischargers (Table 6). Option 3 resulted in cost changes for twelve indirect
dischargers due to constraints on land availability. Under Option 3, the total annualized
cost is $2402 million - an increase of $19.9 million over Option 1 costs. The annualized
cost of Option 3 is $57.5 million (31 percent) more than the selected PSES option for the
final OCPSF rule. Despite this increase in costs, there is little change from Option 1 in
impact measures. In fact, the expected employment reduction is smaller. Under Option 3 -
- 56 plants and product lines are expected to close (1 percent more than the rule as
promulgated); 67 plants (1 percent more than the rule as promulgated) are expected to
incur a profit or sales impact; and the employment losses increase by 1,143 workers (52
percent more than the rule as promulgated, but lower than Option 1).
Table 6
Indirect Dischargers • Option 3
lapact N*Murt
Plants Analyzed/Plants Costed
Total Annual Izad Coat
(1982 S, •Uliona)
Plant Cloauraa
63
(17.3X)
2,190
(1.2X)
Option 3 .
362/365
$240.2
27
(7.4X)
29
(7.9X)
67
(18.4X)
3.333
<1.8X)
Incramntal Change
Of Option 3
n.n.
$57.5
2
2
(0.5X)
4
<1.«>
1.143
(0.6X)
10
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D. Cost-Effectiveness Analysis
THe revised cost-effectiveness (CE) analysis can be used to determine:
. if the selected option remains the most cost-effective manner by which to
achieve the reduction in pollutant discharges; and
. the relative cost-effectiveness ($/amount of pollutant removed) of the selected
control option, compared to other effluent limitations guidelines promulgated
by the Agency.
Typically, a cost-effectiveness value, expressed as the cost of treatment (in 1981
doUars^Se^^
^LTo J.m reld CE analysis follows the same methodology to calculate CE
£ each control option evaluate, * CE ^^^*^™*
2 ENR's CCI 1981/ENR's CO 1982 « 3535/3825 - 0.924.
11
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D.I Cost-Effectiveness Analysis Results
Direct Dischargers:
The CE value for the selected BAT option for the final OCPSF rale was $423/lb-eq.
removed ($ 1981).3 This is calculated as the cost of BAT controls for all plants with
pollutant removal information ($203.9 million x .924) divided by the totid pollutant removals
(44,489,543 Ib-eq.) for those plants. Table 7 presents the CE values for the re-evaluation
of BAT options. The CE value for the Revised Baseline increases by less than 1 percent
from the value for the selected BAT option as promulgated to $4.27/lb-eq. removed. The
CE value for Option 1 is $4-5*/lb-eq. removed, aa-8 percent increase over the selected BAT
option. Because other BAT options evaluated for the final OCPSF rule were costlier (BAT
n-A and BAT V) or removed less pollutant loading from OCPSF wastestreams, Option 1
remains a cost-effective BAT control. BAT controls are also relatively cost-effective when
compared to the CE values for other effluent limitations guidelines (Table 8).
Table 7
Cost-Effectiveness Values for BAT Options
Promulgated IAT Option
Revised laseline
Option 1
Annual izad Cost
for Plants xith
Removals
O982 SMN/year)
203.9
205.8
tlfc*
Annual izad Cost
for Plants with
Removals
(1981 SMN/year)
188.4
190.2
sia
Pollutant
Removal*
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Table 8
Industry Comparison of Cost Effectiveness for
Direct Dischargers
(Toxic and Nonconventional Pollutants Only)
Copper Based Weights
(1981 Dollars)
Industry
Aluminum Forming
Battery Manufacturing
Coal Mining
Coil Coating
Copper Forming
Electronics I
Electronics n
Foundries
Inorganic Chemicals I
Inorganic Chemicals n
Iron & Steel
Leather Tanning
Metal Finishing
Nonferrous Metals Forming
Nonferrous Metals Mfg I
Nonferrous Metals Mfg n
OCPSF*
Pesticides
Pharmaceuticals
Plastics Molding & Forming
Porcelain Enameling
Petroleum Refining
Pulp & Paper**
Textile Mills
Pounds Equivalent
Currently Discharged
flMQ's't
L340
4,126
12
BAT-BPT
2^89
70
9
NA
Pounds Equivalent
Remaining at
Selected Option
32^03
60S
40,746
259
3,305
34
6,653
1,004
54,225
2,461
208
44
1,086
BAT-BPT
1330
BAT-BPT
90
5
02
BAT-BPT
9
8
3
NA
39
27
1,040
112
3,268
2
313
12
9,735
371
4
41
63
BAT-BPT
748
BAT-BPT
+ + Less than a dollar.
• Reflects costs and removals of both air and water pollutants.
•* PCB control for Deink subcategory only.
13
Cost
Effectiveness
Selected Option(s)
(S/lb-eo. removed^
121
2
10
BAT-BPT
49
27
404
NA
. 84
+ +
6
2
BAT-BPT
12
69
4
6
5
15
1
BAT-BPT
6
BAT-BPT
18
BAT-BPT
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Indirect Dischargers:
The CE value for the selected PSES option for the final OCPSF rule was
$31.13/lb-eq. removed (1981 dollars).4 This is calculated as the cost of PSES controls
for all plants with pollufarfl rerjioval information ($173.1 million a; .924) divided by the
total pollutant removals (5,138,182 Ib-eq.) for those plants. Table 9 presents the CE
values for the re-evaluation of PSES options. Under Option 3, the costliest control
option evaluated in this analysis, the CE value increases to $41.43/lb-eq. removed, a 33
percent increase. Because other PSES options evaluated for the 15nal OCPSF rule were
more costly (PSES IV-A, and PSES VII) or removed less pollutant loading from OCPSF
wastestreams, any of Options 1,2, and 3 remain the most cost-effective PSES controls.
PSES controls are also relatively cost-effective when compared to the CE values for
other effluent limitations guidelines (Table 10).
Table 9
Cost-Effectiveness Values for PSES Options
Promulgated PSES
Option
Revised last 1 irw
Option 1
Option 2
Option 3
Amalfzed Coat
for Plants with .
Removals
(1962 $ NM/year)
173.1
181.0
aaa,A
3i£_^
^^^^j^r
206.2
230.4
Amualized Co*t
for Plants Kith
Removals
(1981 $ Wt/yaar)
159.9
167.2
a«&**
190.5
212.9
Pollutant
Removals
(lb-iiq.)
5,1S8,1li2
5,138,1112
5,138,1152
5.138.1S2
5,138,1112
Cost-
Effectiveness
Value
($/lb-eq.
removed)
31.13
32.55
MO.lM
^LZoafl?
37.08
41.43
4 The CE value for the selected PSES option was reported as S33.69/Ib-eq. removed. The difference is
attributable to the adjustment control costs to 1981 dollars. The actual value, calculated as S173.1 million * .924
/ 5,138,182 Ib eq. removed « $31.13/lb-eq. removed, is used in this analysis to compare CE values of revised
options to the CE value of the selected PSES option of the rule as promulgated,
14
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Table 10
Industry Comparison of Cost Effectiveness for
Indirect Dischargers
(Toxic and Nonconventional Pollutants Only)
Copper Based Weights
(1981 Dollars)
Industry
Pounds Equivalent
Currently Discharged
(To Surface Waters)
(000*51
Aluminum Forming 1,602
Battery Manufacturing 1,152
Can Making 252
Coal Mining" N/A
Cofl Coating 2,503
Copper Forming 34
Electronics I 75
Electronics H 260
Foundries 2,136
Inorganic Chemicals I 3,971
Inorganic Chemicals n 4,760
Iron & Steel 5,599
Leather Tanning 16,830
Metal Finishing 11,680
Nonferrous Mtls Forming 189
Nonferrous Metals Mfg I 3,187
Nonferrous Metals Mfg n 38
OCPSF 5,210
Pesticides 9,522
Pharmaceuticals 340
Plast Molding&Forming N/A
Porcelain F""T"'l|'ng 1^565
Pulp & Paper N/A
Pounds Equivalent
Remaining at
Selected Option
(To Surface Waters)
fQQQ'sl
18
5
5
N/A
10
4
35
24
18
3,004
6
1,404
1399
755
5
19
0.41
72
162
63
N/A
96
N/A
Cost
Effectiveness
Selected Option(s)
Beyond BPT*
(S/Ib-ea. removed')
155
15
38
N/A*
10
10
14
14
116
9
+ +
6
111
10
90
15
12
34
3
1
N/A
14
N/A
* N/A: Pretreatment Standards not promulgated, or no incremental costs will be incurred.
•• Reflects costs and removals of both air and water pollutants.
*•* Industry has no known or expected indirect dischargers.
+ + Less than a dollar.
15
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E. Regulatory Flexibility Analysis
A Regulatory Flexibility Analysis (RFA) allows the Agency and other reviewers to
specifically address the burden of regulatory actions on small business entities. In the
cases of the effluent limitations guidelines for the OCPSF industry, the RFA examined
whether small plants (as defined by annual organic chemical production thresholds of 5,
10, and 15 million pounds) were disproportionately affected by the regulations.
Regulatory relief for small entities must also be balanced against greater pollutant
discharges that would result from relaxed or no controls. The RFA is conducted
separately for direct and indirect dischargers.
As a result of the original RFA, BAT controls were not required for small (5
million pounds ore less of annual production) direct dischargers. Small indirect
dischargers were required to comply with PSES controls to remove priority pollutants.
E.1 Regulatory Flexibility Analysis Results
The RFA for this re-evaluation is limited to evaluating the effects of cost changes
on small indirect dischargers since there are no incremental impacts; of direct
dischargers, large or small. Table 11 summarizes the impacts on small indirect
dischargers for the OCPSF rule as promulgated and for Options 1, 2, and 3 (plant
impacts on small dischargers are the same for all of these options). For the selected
option under the OCPSF rule as promulgated, 65 of the 106 small indirect dischargers
(61 percent) sustained significant impacts, which include closures and sales or profit
impacts. Another 3 small plants (revised total equals 68 plants, 64 percent of the 106
small plants) are significantly affected by Options 1, 2, and 3. Most of the cost changes
associated with Options 1, 2, and 3 affect larger facilities (greater than 5 million pounds
of production).
When compared to the impacts on small direct dischargers (for whom less
stringent regulatory requirements were promulgated), a number of other differences are
evident. Most significant is that the percentage of indirect discharging plants adversely
affected rises from 61 to 64 percent due to the revisions and remand, but is well below
the 79 percent for the small direct dischargers. In addition, controls, for small indirect
dischargers remove a far greater amount of pollutants (619,000 ll>eq.) than do controls
for small (exempted) direct dischargers (44,000 lb-eq.). Expanding the exemption from
small direct dischargers to include small indirect dischargers would increase the amount
of pollutant discharges exempted by fifteen fold.
16
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Table 11
Comparison of Impacts for Small Indirect Discharger, and
Direct Dischargers Exempted from BAT Controls
——^——^^•^•^•^^^|**^^^^^
Dirtet DJschsrotr*
indirect
Dlschsrfltrs
Option* 1, 2, 3
< 5 MM lb*
BAT Control*
« S MM UM
Tottl H*«t« Uncter Thr«hold
»—
C(0*UTM
SMll Plants Aff*et«d
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After extensive review
Compliance costs o
18
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pollutant removals of small direct dischargers exempted account for 0.1 percent of all
direct discharges, whereas the possible pollutant removals of small indirect dischargers
account for approximately 12 percent of all indirect discharges. The change in
compliance costs for PSES plants do not alter the original findings that alternative
regulatory controls are warranted for small direct dischargers but not for small indirect
dischargers.
Using revised.compliance costs for PSES Option 1, the cost-effectiveness result for
HQ*tH
PSES controls ($3?£7/lb-eq. removed, 1981 $) remains well within the range of other
promulgated rules (Table 10). Furthermore, no other PSES control option evaluated for
the final OCPSF rule would have removed as much or more pollutants at the same or
lower cost Consequently, the changes in compliance costs for indirect discharging plants
do not affect the findings of the original CE analysis.
19
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Appendix A
Calculation of Costs and Impacts Used in the Preamble
The costs reported in the preamble to the proposed rule differ in two respects
from the compliance costs reported in the body of this report5 First, the preamble costs
are reported in 1986 year dollars, whereas costs in the EIA are reported in 1982 year
dollars. Second, the preamble reports impact measures for BAT options after removing
costs and impacts associated with small direct dischargers (those vrith less than 5 million
pounds annual organic chemical production) as a result of the orijjinal regulatory
flexibility analysis. This appendix facilitates the comparison of impact measures reported
in the preamble of the OCPSF rule as promulgated.
In Tables A-l and A-2, compliance costs used in the EIA (1982 year dollars) are
indexed to 1986 year dollars using Engineering News Record's Construction Cost Index
(CCI) for 1986 and 1982. The inflation factor is calculated as follows*:
1986 CCI/1982 CCI - 4295/3825 * 1.123 !
The compliance costs associated with small direct dischargers were removed prior to
indexing the compliance costs for BAT options presented in Tablo A-l. The other
impact measures in Table A-l (e.g., closures and employment losses) were also adjusted
to remove the impacts associated with the incremental cost of BAT for small directs.
Indexed costs for PSES options are presented in Table A-2; all other impact measures
are identical to those summarized in the body of this report
5 While proposed amendments to the OCPSF rule have not been published as of the date of this report,
the reference here is to the preamble to that proposed rule, based on EPA's draft of the Federal Register notice.
20
$£00
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Table A-l
Direct Dischargers
Costs and Impacts Used in the Preamble
Excluding Costs and Impacts Associated with 19 Small Plants
Table A-2
Costs and Impacts Used in the Preamble
Indirect Dischargers
\
lepact Measure
Plants Costad
Total Annual Ixed Coat
(1966$. Billions)
Plant Closures
(X of direct discharging plants) .
Product Line Closures
(X of direct discharging plants)
Profit or Sales Ispects
(X of direct discharging plants)
EsployMnt Reduction
(X of Total OCPSF aMpley«ent)
Promulgated
•AT Option
3*7470
S224.2
5
levdsed
•asoltne
MT 210
8226.9 '
5
6
(2.1X)
11
(3.8X)
1.197
(0.7X)
Option 1
a*?J70
SL3J.*
•If Tit
9^^^CT*
9
(i.TX)
-*•?
** .«.«*>.
^•^^TWy
yr 10
^iW^Wr
^^i*Mk
i ^ i * i
^vrfln*
lepect Measure
Plants tested
Total ArrualUed Cost
(19A& *, •Ullons)
Plant Closures
(X of Indirect discharging plants)
Product Line Closures
(X of indirect discharging plants)
Profit or Sales lapects
(X of indirect discharging plants)
E«ploy»*nt leductlon
(X of Total OCPSF scployvent)
Prasulgeted
PSES Option
365
S204.3
25
(6.8X)
27
<7.4X)
63
(17.3X)
2.190
<1.2X)
tevised
•aseline
365
S2U.O
25
(6.8X)
28
(7.7X)
66
(18. IX)
2.209
(1.2X)
Option 1
365
afri.7
Sttfe*
27
(7.4X)
29
(7.9X)
66
(18.4X)
3,396
(1.9X)
Option 2
365
S242.5
27
(7.4X)
29
(7.9X)
65
(17.8X)
3.396
(1.9X)
Option 3
365
S269.7
27
<7.*X)
29
<7.9X>
67
(18.4X)
3.333
(1.8X)
21
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