EPA-450/3-80-037a
Industrial Surface Coating: Appliances —
Background Information for
Proposed Standards
Emission Standards and Engineering Division
U.S.-ENVIRONMENTAL PROTECTION AGENCY
Office of Air, Noise, and Radiation
Office of Air Quality Planning and Standards
Research Triangle Park, North Carolina 27711
November 1980
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This report has been reviewed by the Emission Standards and
Engineering Division of the Office of Air Quality Planning and
Standards, EPA, and approved for publication. Mention of
trade names or commercial products is not intended to constitute
endorsement or recommendation for use. Copies of this report
are available through the Library Services Office (MD-35) ,
U.S. Environmental Protection Agency, Research Triangle Park,
N.C. 27711, or from National Technical Information Services,
5285 Port Royal Road, Springfield, Virginia 22161.
Publication No. EPA-450/3-80-037a
11
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ENVIRONMENTAL PROTECTION AGENCY
Background Information
and Draft
Environmental Impact Statement
for Industrial Surface Coating: Appliances
Prepared by:
Don R. Goodwii/
Director, Emission Standards and Engineering Division
U.S. Environmental Protection Agency
Research Triangle Park, NC 27711
(Date)
1. The proposed standards of performance would limit emissions of volatile
organic compounds from new, modified, and reconstructed appliance
surface coating operations. Section 111 .of the Clean Air Act (42 USC
7411), as amended, directs the Administrator to establish standards of
performance for any category of new stationary source of air pollution
which "...causes or contributes significantly'to air pollution which
may reasonably be anticipated to endanger public health or welfare."
The States of Ohio, Illinois, Michigan, Kentucky, Tennessee, and
California would be particularly affected.
2. Copies of this document have been sent to the following Federal
Departments: Labor; Health and Human Services; Defense; Transportation;
Agriculture; Commerce; Interior; and Energy; the National Science
Foundation; and Council on Environmental Quality; to members of the
State and Territorial Air Pollution Program Administrators (STAPPA)
and the Association of Local Air Pollution Control Officials (ALAPCO);
to EPA Regional Administrators; and to other interested parties.
3. The comment period for review of this document is 60 days. Mr. Gene
Smith may be contacted regarding the date of the comment period.
4. For additional information contact:
• Mr. Gene Smith
Standards Development Branch (MD-13)
U.S. Environmental Protection Agency
Research Triangle Park, NC 27711
Telephone: (919) 541-5421
5. Copies of this document may be obtained from:
U.S. EPA Library (MD-35)
Research Triangle Park, NC 27711
National Technical Information Service
5285 Port Royal Road
Springfield, VA 22161
i i i
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IV
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TABLE OF CONTENTS
Chapter
SUMMARY
1.1 Regulatory Alternatives
1.2 Environmental Impact . .
1.3 Economic Impact . . . .
1.4 References
2.3
2 INTRODUCTION .
2.1 Background and Authority for Standards . . . .
2.2 Selection of Categories of Stationary Sources
Procedure for Development of Standards of
Performance
Consideration of Costs . .
Consideration of Environmental Impacts . . . .
Impact on Existing Sources .
Revision of Standards of Performance . . . . .
References
2.4
2.5
2.6
2.7
2.8
THE LARGE APPLIANCE SURFACE COATING INDUSTRY . .
3.1 General .
3.2 Processes or Facilities and Their Emissions
3.2.1 Coating Methods
3.
3.
.1.1
,1.2
3.2.1.3
3.2.1.4
3.2.
3.2.
,1.
,1.
3.2.2 Types of Coatings
Dip Coating
Flow Coating .
Air and Airless Spray Coating . . .
Electrostatic Spray Coating . . . .
Electrostatic Bell and Disk Coating
Electrostatic Dip Coating . . . . .
3.3
3.4
3.2.2.1 Waterborne Coating
3.2.2.2 Conventional Organic-Solvent-Borne
Coati ngs
3.2.2.3 Powder Coatings
3.2.2.4 High-Solids Coatings
Baseline Emissions
References .
EMISSION CONTROL TECHNIQUES
4.1 General
4.2 Prime Coat Application
Page
1-1
1-1
1-2
1-4 .
1-4
2-1
2-1
2-5
2-6
2-9
2-10
2-11
2-11
2-11
3-1
3-1
3-2
3-4
3-4
3-4
3-6
3-6
3-6
3-10
3-10
3-10
3-13
3-14
3-16
3-17
3-18
4-1
4-1
4-3
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TABLE OF CONTENTS (continued)
Chapter
4.3 Topcoat Application 4-5
4.3.1 Waterborne Coatings 4-5
4.3.2 High-Solids Coatings 4-5
4.3.3 Powder Coatings 4-6
4.4 Capture Systems and Control Devices 4-6
4.4.1 Carbon Adsorption 4-6
4.4.2 Incineration 4-7
4.4.2.1 Introduction 4-7
4.4.2.2 Thermal Incineration 4-8
4.4.2.3 Catalytic Incineration 4-9
4.4.2.4 General Comments 4-10
4.5 References 4-10
5 MODIFICATIONS AND RECONSTRUCTION 5-1
5.1 Background 5-1
5.2 Modifications . 5-2
5.2.1 Increased Production 5-2
5.2.2 Additional Coating Stations 5-3
5.2.3 Increased Film Thickness 5-3
5.2.4 Changes in Raw Materials 5-3
5.3 Reconstruction 5-4
5.3.1 Increased Solvent Costs 5-4
5.3.2 Changes in Material Costs 5-4
5.3.3 Change in Product Demand. . 5-4
5.4 References 5-5
6 MODEL PLANTS AND REGULATORY ALTERNATIVES 6-1
6.1 General 6-1
6.2 Model Plants 6-1
6.3 Regulatory Alternatives 6-4
6.3.1 Baseline Controls 614
6.3.2 Regulatory Alternatives for Prime Coat
Operations 6-7
6.3.3 Regulatory Alternatives for Top Coat
Operations -. 6-8
6.4 References 6-11
Annex to Chapter 6 6-12
7 ENVIRONMENTAL IMPACT 7-1
7.1 General 7-1
7.2 State Regulations and Controlled Emissions 7-2
7.2.1 Revised State Implementation Plans and VOC
Regulations 7-2
7.2.2 State Regulations and Controlled Emissions. . . 7-2
7.3 Options: Uncontrolled and Controlled Emissions. . . . 7-4
7.4 Water Pollution Impacts : 7-5
7.4.1 Paint Booth Effluents 7-5
7.4.2 EDP Effluents 7-10
7.4.3 Conclusions, Water Impacts 7-10
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TABLE OF CONTENTS (continued)
Chapter
7.5 Solid Waste Impacts 7-10
7.6 Energy Impact ' 7-11
7.7 Other Environmental Impacts . 7-11
7.8 Other Environmental Concerns 7-11
7.8.1 Irreversible and Irretrievable Commitment of
Resources 7-11
7.8.2 Environmental Impact of Delayed Standards . . . 7-13
7.8.3 Environmental Impact of No Standards ..... 7-13
7.9 References 7-13
8 ECONOMIC IMPACT . 8-1
8.1 Industry Characterization 8-1
8.1.1 General Profile 8-1
8.1.2 Historical Trends 8-14
8.1.3 Future Trends . . 8-17
8.2 Cost Analysis 8-19
8.2.1 Introduction 8-19
8.2.2 New Facilities 8-21
8.2.2.1 Capital Costs 8-21
8.2.2.2 Annual!zed Costs ._ 8-21
8.2.2.3 Cost Effectiveness 8-31
8.2.3 Modified/Reconstructed Facilities 8-35
8.3 Other Cost Considerations 8-38
8.3.1 The Clean .Water Act * 8-38
8.3.2 Occupational Exposure 8-38
8.3.3 Toxic Substances Control 8-39
8.4 Economic Impact Analysis . . 8-41
8.4.1 Summary 8-42
8.4.2 Economic Environment ...... 8-43
8.4.2.1 Economic Structure 8-44
8.4.2.2 Cost of Capital 8-47
8.4.3 Methodology 8-48
8.4.3.1 Discounted Cash Flow Approach .... 8-50
8.4.3.2 Projected Ranking Criterion 8-53
8.4.3.3 Determining the Impacts of the
Control Alternatives 8-55
8.4.4 Economic Impacts 8-56
8.4.4.1 Price Impacts 8-63
8.4.4.2 Rate of Return Impacts 8-64
8.4.4.3 Incremental Capital Requirements . . . 8-64
8.5 Potential Socioeconomic and Inflationary Impacts . . . 8-71
8.6 References 8-73
VI 1
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TABLE OF CONTENTS (continued)
Chapter Page
Appendix A—Evolution of the Background Information Document . . A-l
Appendix B—Index to Environmental Impact Considerations .... B-l
Appendix C—Emission Source Test Data C-l
Appendix D—Emission Measurement and Monitoring D-l
Appendix E—Environmental, Energy, and Economic Impacts—
Other Appliances
E-l
vn
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LIST OF TABLES
Number Page
1-1 Assessment of Environmental and Economic Impacts for
Each Regulatory Alternative Considered 1-3
4-1 - Common Methods of Reduction of VOCs in the Large
Appliance Surface Coating Industry 4-4
6-1 Model Large Appliance Surface Coating Plants ...... 6-5
6-2 Equipment, Energy, and Manpower Requirements for Model
Plants 6-6
6-3 Model Plant 1: Annual VOC Emissions 6-9
6-4 Model Plant 2: Annual VOC Emissions 6-9
6-5 Model Plant 3: Annual VOC Emissions 6-10
6-6 Model Plant 4: Annual VOC Emissions 6-10
7-1 Annual VOC Emissions Estimates: 1976, 1981, 1986. ... 7-6
7-2 Estimates of Annual Energy Consumption: 1976, 1981,
1986 7-12
8-1 Consumer Price Indexes, Annual Average 8-3
8-2 Wholesale Price Index, Annual Average 8-4
8-3 Leading Manufacturers of Large Appliances: 1978 .... 8-5
8-4 Values of Annual Shipments of Large Appliances by
Product: 1967-1977 8-10
8-5 Annual Production by Product: 1967-1977 8-11
8-6 Annual Production, Capacity Utilization, and Implied
Production Capacity, by SIC, of the Large Appliance
Industry: 1976 and 1977 8-13
8-7 Percent of Market Penetration of Selected Large
Appliances: 1976 and 1977 8-15
8-8 U.S. Exports of Large Appliances: 1975-1976 8-15
8-9 Percent Per Year Production Change in Large
Appliance Manufacturing: 1968-1977 8-18
8-10 Five-Year Forecast for Selected Appliances 8-18
8-11 Regulatory Alternatives and Control Options Considered
in the Economic Analysis 8-20
8-12 Key Parameters for Control Options Applied to
. Model Plant 1 8-22
8-13 Key Parameters for Control Options Applied to Model
Plant 2 8-23
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LIST OF TABLES (continued)
Number
8-14 Key Parameters for Control Options Applied to
Model Plant 3
8-15 Key Parameters for Control Options Applied to
Model Plant 4
8-16 Capital Costs of Control Options Applied to
Model Plants
8-17 Itemized Installed Capital Costs for Control
Options Applied to Model Plant 1
8-18 Itemized Installed Capital Costs for Control
Options Applied to Model Plant 2
8-19 Itemized Installed Capital Costs for Control Options
Applied to Model Plant 3
8-20 Itemized Installed Capital Costs for Control Options
Applied to Model Plant 4
8-21 Total Annualized Costs of Control Options
8-22 Annualized Costs for Control Options Applied to
Model Plant 1
8-23 Annualized Costs for Control Options Applied to
Model Plant 2
8-24 Annualized Costs for Control Options Applied to
Model Plant 3
8-25 Annualized Costs for Control Options Applied to
Model Plant 4
8-26 Marginal Cost Effectiveness for Control Options Applied
to Model Plant 1
8-27 Marginal Cost Effectiveness for Control Options Applied
to Model Plant 2
8-28 Marginal Cost Effectiveness for Control Options Applied
to Model Plant 3
8-29 Marginal Cost Effectiveness for Control Options Applied
to Model Plant 4
8-30 Threshold Limit Values and Lower Explosive Limits of
Typical Adhesive and Release Solvents
8-31 Concentration Ratios of Four Largest Firms in the
Large-Appliance Industry Defined by Value of
Shipments
8-32 Cost of Equity Capital for the Large Appliance
Industry
8-33 Definitions
8-34 Capital and Operating Costs for Model Plants
8-35 Definition of Regulatory Alternatives
8-36 Model Plant I: Ranking of Coating Lines by Present
Worth-Cost
8-37 Model Plant II: Ranking of Coating Lines by Present
V/orth-Cost
8-38 Model Plant III: Ranking of Coating Lines by Present
V/orth-Cost
8-39 Model Plant IV: Ranking of Coating Lines by Present
V/orth-Cost
Page
8-24
8-25
8-26
8-27
8-28
8-29
8-30
8-32
8-33
8-33
8-34
8-35
8-36
8-36
8-37
8-37
8-40
8-45
8-49
8-51
8-58
8-60
8-60
8-61
8-61
8-62
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LIST OF TABLES (continued)
Number
8-40 Model Line 1: Price Impacts of Control Options,
Constrained Case
8-41 Model Line 2: Price Impacts of Control Options,
Constrained Case
8-42 Model Line 3: Price Impacts of Control Options,
Constrained Case
8-43 Model Line 4: Price Impacts of Control Options,
Constrained Case
8-44 Model Line 1: Return on Investment Impacts of Control
Options, Constrained Case . .
8-45 Model Line 2: Return on Investment Impacts of
Control Options, Constrained Case
8-46 Model Line 3: Return on Investment Impacts of
Control Options, Constrained Case
8-47 Model Line 4: Return on Investment Impacts of
Control Options, Constrained Case
8-48 Model Line 1: Incremental Capital Requirements
of Control Options
8-49 Model Line 2: Incremental Capital Requirements
of Control Options
8-50 Model Line 3: Incremental Capital Requirements
of Control Options
8-51 Model Line 4: Incremental Capital Requirements
of Control Options
8-52 Potential Incremental Annual!zed Cost of Compliance
with Regulatory Alternative A-III/B-III, 1986. . . .
8-65
8-65
8-66
8-66
8-67
8-67
8-68
8-68
8-69
6-69
8-70
8-70
8-72
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LIST OF FIGURES
Number
Paqe
3-1 Block Diagram of Large Appliance Manufacturing
Operations 3-3
3-2 Typical Applications of Coating Methods in the Large
Appliance Industry 3-5
3-3 Diagram of an Airless Spray Gun With an Attached Paint
Heater 3-7
3-4 Diagram of Stationary Bell 3-8
3-5 Diagram of a Reciprocating Disk and Spray Booth 3-9
3-6 Diagram of an Electrostatic Dip Coating System 3-11
3-7 Plan View of a Powder Coating Line 3-15
7-1 Annual Prime Coat Emissions for Various Regulatory
Alternatives 7-7
7-2 Annual Topcoat Emissions for Various Regulatory
Alternatives 7-8
7-3 Combined Annual Emissions (Prime Coat and Topcoat) for
Various Regulatory Alternatives 7-9
8-1 Size Distribution of Large Appliance Manufacturing
Plants According to Employment: 1978
8-9
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1. SUMMARY
1.1 REGULATORY ALTERNATIVES
Section 111 (42 USC 7411) of the Clean Air Act1 as amended directs the
Administrator to establish standards of performance for any category of new
stationary sources of air pollution that "causes, or contributes signifi-
cantly to, air pollution which may reasonably be anticipated to endanger
public health or welfare." Appliance surface coating operations have been
determined to fall into this classification and standards of performance
have been developed for volatile organic compounds (VOCs).
The material in this document pertains to the surface coating of
traditional large household appliances, the industry listed in the "Priority
List and Additions to the List of Categories of Stationary Sources."2 The
decision to include other products such as lighting fixtures, heat pumps,
and dehumidifiers in the source category was made subsequent to the develop-
ment of the majority of these materials. The decision was made because
many appliances not customarily considered to be large household appliances
are similar in size and shape to common household appliances such as refrig-
erators, freezers, washers, dryers, and ranges. The coating application
methods—flow coat, dip coat, electrodeposition (EDP), and air, airless,
and electrostatic spray—are identical. These additional appliance coating
operations use coating materials similar to those used in large appliance
coating operations. Coating performance specifications are also similar
except for slight variations depending upon whether the unit is designed
for indoor or outdoor use. Therefore, these operations produce the same
types, and proportionately the same quantities, of VOC emissions as large
appliance surface coating operations.
In addition, these other segments of the appliance industry would not
be subject to other standards either under development or proposed by the
Agency. Because these other products have been added, the environmental
1-1
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impacts forecast here may be somewhat conservative. That is, the direction
or trend of the impact is correct, but the magnitude may be greater than
that shown. The environmental and economic impacts of imposing any of the
several regulatory alternatives on manufacturers coating these other pro-
ducts are addressed in Appendix E.
Three regulatory alternatives are considered for prime coat opera-
tions, and four are considered for topcoat operations. For each operation,
the first involves no additional regulation beyond that imposed by the
States. The second regulatory alternative in each case is the promulgation
of a standard equivalent to the assumed no-additional-regulation (no NSPS)
baseline. For prime coat operations, the third alternative would limit
emissions to levels equivalent to those resulting from the application of
waterborne prime coats applied by EDP.
For topcoat operations, the third regulatory alternative would reduce
emissions by 30 percent from the no NSPS baseline. This limitation could
be achieved through the use of 70 percent solids coatings or through the
use of lower solids (65.5 percent) coatings plus incineration of the exhaust
gas from the topcoat oven. The fourth alternative would eliminate topcoat
emissions from new sources and could only be achieved through the use of
powder coatings.
1.2 ENVIRONMENTAL IMPACT
Regulatory Alternatives A-I and B-I (no NSPS for prime coat and top
coat, respectively), would create no environmental impact, either benefi-
cial or adverse. Regulatory Alternatives A-II and B-II would reduce VOC
emissions by a negligible amount. Regulatory Alternative A-III would
reduce industry prime coat emissions by about 10 percent (175 Mg/yr) by
1986. Regulatory Alternative B-III would reduce industry topcoat emissions
10 percent (225 Mg/yr). In addition to eliminating topcoat emissions,
Regulatory Alternative B-IV also reduces prime coat emissions because in
some cases powder can be applied direct-to-metal. This alternative would
reduce total industry emissions by 40 percent (1,800 Mg/yr) by 1986.
.Little adverse environmental, energy, or economic impact would result
from any of the regulatory alternatives, primarily because changes in
coatings technology or application methods would not be required for compli-
ance. A matrix summarizing the impacts is presented in Table 1-1.
1-2
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1.3 ECONOMIC IMPACT
No major adverse economic impacts on the appliance industry are likely
to occur under any of the regulatory alternatives. In every case, the
estimated price impact is less than 1 percent of the unit cost of an appli-
ance.
1.4 REFERENCES
1. United States Congress. Clean Air Act, as amended August 1977. 42
USC 7401 et seq. Washington, DC. U.S. Government Printing Office.
November 1977.
2. U.S. Environmental Protection Agency. Priority List and Addition to
the List of Categories of Stationary Sources. Federal Register.
44(163): 49222. August 21, 1979.
1-4
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2. INTRODUCTION
2.1 BACKGROUND AND AUTHORITY FOR STANDARDS
Before standards of performance are proposed as a Federal regulation,
air pollution control methods available to the affected industry and the
associated costs of installing and maintaining the control equipment are
examined in detail. Various levels of control based on different technolo-
gies and degrees of efficiency are expressed as regulatory alternatives.
Each of these alternatives is studied as a prospective basis for a standard.
The alternatives are investigated in terms of their impacts on the economics
and well-being of the industry, impacts on the national economy, and impacts
on the environment. This document summarizes the information obtained
through these studies so that interested persons will be able to see the
information considered by the U.S. Environmental Protection Agency (EPA) in
the development of the proposed standards.
Standards of performance for new stationary sources are established
under Section 111 (42 USC 7411) of the Clean Air Act as amended, herein
referred to as the Act.1 Section 111 directs the Administrator to establish
standards of performance for any category of new stationary source of air
pollution that "... causes, or contributes significantly to, air pollution
which may reasonably be anticipated to endanger public health or welfare."
The Act requires that standards of performance for stationary sources
reflect "... the degree of emission reduction achievable which (taking
into consideration the cost of achieving such emission reduction, and any
nonair quality health and environmental impact and energy requirements) the
Administrator determines has been adequately demonstrated for that category
of sources." The standards apply only to stationary sources, the construc-
tion or modification of which commences after regulations are proposed by
publication in the Federal Register.
2-1
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The 1977 amendments to the Act altered or added numerous provisions
that apply to the process of establishing standards of performance.
EPA is required to list the categories of major stationary
sources that have not already been listed and regulated
under standards of performance. Regulations must be promul-
gated for these new categories on the following schedule:
25 percent of the listed categories by August 7,
1980;
75 percent of the listed categories by August 7,
1981; and
100 percent of the listed categories by August 7,
1982.
A governor of a State may apply to the Administrator to add
a category not on the list or may apply to the Administrator
to have a standard of performance revised.
EPA is required to review the standards of performance every
4 years and, if appropriate, to revise them.
EPA is authorized to promulgate a standard based on design,
equipment, work practice, or operational procedures when a
standard based on emission levels is not feasible.
The term "standards of performance" is redefined, and a new
. term, "technological system of continuous emission reduction,"
is defined. The new definitions clarify that the control
system must be continuous and may include a low-polluting or
nonpolluting process or operation.
The time between the proposal and promulgation of a standard
under Section 111 of the Act may be extended to 6 months.
Standards of performance, by themselves, do not guarantee protection
of health or welfare because they are not designed to achieve any specific
air quality levels. Rather, they are designed to reflect the degree of
emission limitation achievable through application of the best adequately
demonstrated technological system of continuous emission reduction, consid-
ering the cost of achieving such emission reduction, any nonair quality
health and environmental impacts, and energy requirements.
Congress had several reasons for adopting this approach. First,
standards with a degree of uniformity are needed to prevent situations
where some States may attract industries by relaxing standards relative to
2-2
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other States. Second, stringent standards enhance the potential for long-
term growth. Third, stringent standards may help achieve long-term cost
savings by eliminating the need for more expensive retrofitting should it
be necessary to reduce pollution ceilings in the future. Fourth,.certain
types of standards for coal-burning sources can adversely affect the coal
market by driving up the price of low-sulfur coal or effectively excluding
certain coals from the reserve base because their untreated pollution
potentials are high. Congress did not intend for New Source Performance
Standards to contribute to these problems. Fifth, the standard-setting
process was intended to create incentives for improved technology.
Promulgation of standards of performance does not prevent State or
local agencies from adopting more stringent emission limitations for the
same sources. States are free under Section 116 (42 USC 7416) of the Act
to establish even more stringent emission limits than those established
under Section 111 or those necessary to attain or maintain the National
Ambient Air Quality Standards (NAAQS) under Section 110 (42 USC 7410).
Thus, new sources may in some cases be subject to limitations more stringent
than standards of performance under Section 111, and prospective owners and
operators of new sources should be aware of this possibility in planning
for such facilities.
A similar situation may arise when a major emitting facility is to be
constructed in a geographic area that falls under the provisions for the
prevention of significant deterioration of air quality in Part C of the
Act. These provisions require, among other things, that major emitting
facilities to be constructed in such areas are to be subject to best avail-
able control technology. The term best available control technology (BACT),
as defined in the Act, means:
... an emission limitation based on the maximum degree of
reduction of each pollutant subject to regulation under this
Act emitted from, or which results from, any major emitting
facility, which the permitting authority, on a case-by-case
basis, taking into account energy, environmental, and economic
impacts and other costs, determines is achievable for such
facility through application of production processes and avail-
able methods, systems, and techniques, including fuel cleaning
or treatment or innovative fuel combustion techniques for
control of each such pollutant. In no event shall application
of "best available control technology" result in emissions of
2-3
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any pollutants which will exceed the emissions allowed by any
applicable standard established pursuant to section 111 or 112
of this Act. (42 USC 7479 (3))1
Where feasible, standards of performance are normally structured in
terms of numerical emission limits. However, alternative approaches are
sometimes necessary. In some cases physical measurement of emissions from
a new source may be impractical or exorbitantly expensive. Section lll(h)
provides that the Administrator may promulgate a design or equipment stand-
ard in cases where it is not feasible to prescribe or enforce a standard of
performance. For example, hydrocarbon emissions from storage vessels for
petroleum liquids are greatest during tank filling. The nature of the
emissions—high concentrations for short periods during filling and low
concentrations for longer periods during storage—and the configuration of
storage tanks make direct emission measurement impractical. Therefore, a
more practical approach to standards of performance for storage vessels has
been equipment specification.
In addition, Section lll(j) authorizes the Administrator to waive
compliance to permit a source to use innovative continuous emission control
technology. To grant the waiver, the Administrator must find that:
A substantial likelihood exists that the technology will
produce greater emission reductions than the standards
require or an equivalent reduction at lower economic, energy,
or environmental cost;
The proposed system has not been adequately demonstrated;
The technology will not cause or contribute to an unreason-
able risk to the public health, welfare, or safety;
• The governor of the State where the source is located con-
sents; and
The waiver will not prevent the attainment or maintenance of
any ambient standard.
A waiver may have conditions attached to ensure that the source will
not prevent attainment of any NAAQS. Any such condition will have the
force of a performance standard. Finally, waivers have definite end dates
and may be terminated earlier if the conditions are not met or if the
system fails to perform as expected. In such a case, the source may be
given up to 3 years to meet the standards with a mandatory progress schedule.
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2.2 SELECTION. OF CATEGORIES OF STATIONARY SOURCES
Section 111 of the Act directs the Adminstrator to list categories of
stationary sources. The Administrator ". . . shall include a category of
sources in such list if in his judgment it causes, or contributes signifi-
cantly to, air pollution which .may reasonably be anticipated to endanger
public health or welfare."1 Proposal and promulgation of standards of
performance are to follow.
Since passage of the Clean Air Amendments of 1970, considerable atten-
tion has been given to the development of a system for assigning priorities
to various source categories. The approach specifies areas of interest
through-consideration of the broad strategy of the Agency for implementing
the Clean Air Act. Often, these "areas" are actually pollutants emitted by
stationary sources. Source categories that emit these pollutants are
evaluated and ranked by a process involving such factors as:
Level of emission control (if any) already required by State
regulations,
Estimated levels of control that might be required from
standards of performance for the source category,
Projections of growth and replacement of existing facilities
for the source category, and
Estimated incremental amount of air pollution that could be
prevented in a preselected future year by standards of
performance for the source category.
Sources for which new source performance standards were promulgated or
under development during 1977, or earlier, were selected based on these
criteria.
The Act Amendments of August 1977 establish specific criteria to be
used in determining priorities for all major source categories not yet
listed by EPA. These are:
Quantity of air pollutant emissions that each such category
will emit, or will be designed to emit;
Extent to which each such pollutant may reasonably be antici-
pated to endanger public health or welfare; and
Mobility and competitive nature of each such category of
sources and the consequent need for nationally applicable
new source standards of performance.
2-5
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The Administrator is to promulgate standards for these categories
according to the schedule referred to earlier.
In some cases it may not be feasible to develop immediately a standard
for a high-priority source category. This problem might arise when a
program of research is needed to develop control techniques or because
techniques for sampling and measuring emissions may require refinement. In
the development of standards, differences in the time required to complete
the necessary investigation for different source categories must also be
considered. For example, substantially more time may be necessary if
numerous pollutants must be investigated from a single source category.
Further, even late in the development process the schedule for completion
of a standard may change. For example, inability to obtain emission data
from well-controlled sources in time to pursue the development process in a
systematic fashion may force a change in scheduling. Nevertheless, priority
ranking is, and will continue to be, used to establish the order in which
projects are initiated and resources assigned.
After the source category has been chosen, the types of facilities
within the source category to which the standard will apply must be deter-
mined. A source category may have several facilities that cause air pollu-
tion and the cost of controlling these emissions to vary widely. Economic
studies of the source category and of applicable control technology may
show that air pollution control is better served by applying standards to
the more severe pollution sources. For this reason, and because there is
no adequately demonstrated system for controlling emissions from certain
facilities, standards often do not apply to all facilities at a source. For
.the same reasons, the standards may not apply to all air pollutants emitted.
Thus, although a source category may be selected to be covered by a standard
of performance, not all pollutants or facilities within that source category
may be covered by the standards.
2.3 PROCEDURE FOR DEVELOPMENT OF STANDARDS OF PERFORMANCE
Standards of performance must:
Realistically reflect best demonstrated control practice;
Adequately consider the cost, the nonair quality health and
environmental impacts, and the energy requirements of such
control;
2-6
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Apply to existing sources that are modified or reconstructed
as well as to new installations; and
Meet these conditions for all variations of operating condi-
tions considered anywhere in the country.
The objective of a program for developing standards is to identify the
best technological system of continuous emission reduction that has been
adequately demonstrated. The standard-setting process involves three
principal phases of activity: information gathering, analysis of the
information, and development of the standard of performance.
During the information-gathering phase, industries are queried through
a telephone survey, letters of inquiry, and plant visits by EPA representa-
tives. Information is also gathered from many other sources, and a litera-
ture search is conducted. From the knowledge acquired about the industry,
EPA selects certain plants at which emission tests are cc..ducted to provide
reliable data that characterize the pollutant emissions from well-controlled
existing facilities.
In the second phase of a project, the information about the industry
and the pollutants emitted is used in analytical studies. Hypothetical
"model plants" are defined to provide a common basis for analysis. The
model plant definitions, national pollutant emission data, and existing
State regulations governing emissions from the source category are then
used in establishing "regulatory alternatives." These regulatory alterna-
tives are essentially different levels of emission control.
EPA conducts studies to determine the impact of each regulatory alter-
native on the economics of the industry and on the national economy, on the
environment, and on energy consumption. From several possibly applicable
alternatives, EPA selects the single most efficient regulatory alternative
as the basis for a standard of performance for the source category under
study.
In the third phase of a project, the selected regulatory alternative
is translated into a standard of performance, which, in turn, is written in
the form of a Federal regulation. The Federal regulation, when applied to
newly constructed plants, will limit emissions to the levels indicated in
the selected regulatory alternative.
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As early as is practical in each standard-setting project, EPA repre-
sentatives discuss with members of the National Air Pollution Control
Techniques Advisory Committee (NAPCTAC) the possibilities of a standard and
the form it might take. Industry representatives and other interested
parties also participate in these meetings.
The information acquired in the project is summarized in the Background
Information Document (BID). The BID, the standard, and a preamble explain-
ing the standard are widely circulated to the industry being considered for
control, environmental groups, other government agencies, and offices
within EPA. Through this extensive review process, the points of view of
expert reviewers are considered as changes are made to the documentation.
A "proposal package" is assembled and sent through the offices of EPA
Assistant Administrators for concurrence before the proposed standards are
officially endorsed by the EPA Administrator. After they are approved by
the Administrator, the preamble and the proposed regulation are published
in the Federal Register.
As a part of the Federal Register announcement of the proposed stand-
ards, the public is invited to participate in the standard-setting process.
EPA invites written comments on the proposal and also holds a public hear-
ing to discuss the proposed standards with interested parties. All public
comments are summarized and incorporated into a second volume of the BID.
All information reviewed and generated in studies in support of the standard
of performance is available to the public in a "docket" on file in Washing-
ton, DC.
Comments from the public are evaluated, and the standard of performance
may be altered in response to the comments.
The significant comments and EPA1s. position on the issues raised are
included in the "preamble" of a "promulgation package," which also contains
the draft of the final regulation. The regulation is then subjected to
another round of review and refinement until it is approved by the EPA
Administrator. After the Administrator signs the regulation, it is pub-
lished as a "final rule" in the Federal Register.
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2.4 CONSIDERATION OF COSTS
Section 317 (42 USC 7617) of the Act requires an economic impact
assessment with respect to any standard of performance established under
Section 111 of the Act. The assessment is required to contain an analysis
of:
Costs of compliance with the regulation, including the
extent to which the cost of compliance varies, depending on
the effective date of the regulation and the development of
less expensive or more efficient methods of compliance;
Potential inflationary or recessionary effects of the regula-
tion;
• - Effects the regulation might have on small business with
respect to competition;
Effects of the regulation on consumer costs; and
Effects of the regulation on energy use.
Section 317 also requires that the economic impact assessment be as extensive
as practicable.
The economic impact of a proposed standard upon an industry is usually
addressed both in absolute terms and in terms of the control costs that
would be incurred as a result of compliance with typical, existing State
control regulations. An incremental approach is necessary because both new
and existing plants would be required to comply with State regulations in
the absence of a Federal standard of performance. This approach requires a
detailed analysis of the economic impact from the cost differential that
would exist between a proposed standard of performance and the typical
State standard.
Air pollutant emissions may cause water pollution problems, and cap-
tured potential air pollutants may pose a solid waste disposal problem.
The total environmental impact of an emission source must therefore be
analyzed and the costs determined whenever possible.
A thorough study of the profitability and price-setting mechanisms of
the industry is essential to the analysis so an accurate estimate of poten-
tial adverse economic impacts can be.made for proposed standards. It is
also essential to know the capital requirements, for pollution control
systems already placed on plants so additional capital requirements neces-
sitated by these Federal standards can be placed in proper perspective.
2-9
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Finally, it is necessary to assess the availability of capital to provide
the additional control equipment needed to meet the standards of performance.
2.5 CONSIDERATION OF ENVIRONMENTAL IMPACTS
Section 102(2)(C) of the National Environmental Policy Act (NEPA)2 of
1969 requires Federal agencies to prepare detailed environmental impact
statements on proposals for legislation and other major Federal actions
significantly affecting the quality of the human environment. The objective
of NEPA is to build into the decisionmaking process of Federal agencies a
careful consideration of all environmental aspects of proposed actions.
In a number of legal challenges to standards of performance for various
industries, the United States Court of Appeals for the District of Columbia
Circuit has held that environmental impact statements need not be prepared
by the Agency for proposed actions under Section 111 of the Clean Air Act.
Essentially, the Court of Appeals has determined that the best system of
emission reduction requires that the Administrator take into account counter-
productive environmental effects of a proposed standard, as well as economic
costs to the industry. On this basis, therefore, the Court established a
narrow exemption from NEPA for EPA determination under Section 111.
In addition to these judicial determinations, the Energy Supply and
Environmental Coordination Act (ESECA)3 of 1974 specifically exempted
proposed actions under the Clean Air Act from NEPA requirements. According
to Section 7(c)(l), "No action taken under the Clean Air Act shall be
deemed a major Federal action significantly affecting the quality of-the
human environment within the meaning of the National Environmental Policy
Act of 1969." (15 USC 793(c)(l))
Nevertheless, the Agency has concluded that the preparation of environ-
mental impact statements could have beneficial effects on certain regulatory
actions. Consequently, although not legally required to do so by Section 102
(2)(C) of NEPA, EPA has adopted a policy requiring that environmental
impact statements be prepared for various regulatory actions, including
standards of performance developed under Section 111 of the Act. This
voluntary preparation of environmental impact statements, however, in no
way legally subjects the Agency to NEPA requirements.
2-10
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To implement this policy, a separate section in this document is
devoted solely to an analysis of the potential environmental impacts associ-
ated with the proposed standards. Both adverse and beneficial impacts in
such areas as air and water pollution, increased solid waste disposal, and
increased energy consumption are discussed.
2.6 IMPACT ON EXISTING SOURCES
Section 111 of the Act defines a new source as ". . . any stationary
source, the construction or modification of which is commenced ..." after
the proposed standards are published. An existing source is redefined as a
new source if "modified" or "reconstructed" as defined in amendments to the
general provisions of Subpart A of 40 CFR Part 60,4 which were promulgated
in the Federal Register, December 16, 1975.
Promulgation of a standard of performance requires SMtes to establish
standards of performance for existing sources in the same industry under
Section lll(d) of the Act if the standard for new sources limits emissions
of a "designated" pollutant (i.e., a pollutant for which air quality criteria
have not been issued under Section 108 (42 USC 7408) or which has not been
listed as a hazardous pollutant under Section 112) (42 USC 7412). If a
State does not act, EPA must establish such standards. General provisions
outlining procedures for control of existing sources under Section lll(d)
were promulgated November 17, 1975, as Subpart B of 40 CFR Part 60.5
2.7 REVISION OF STANDARDS OF PERFORMANCE
Congress was aware that the level of air pollution control achievable
by any industry may improve with technological advances. Accordingly,
Section 111 of the Act provides that the Administrator ". . . shall, at
least every 4 years, review and, if appropriate, revise ..." the stand-
ards. Revisions are made to ensure that the standards continue to reflect
the best systems that become available in the future. Such revisions will
not be retroactive, but will apply to stationary sources constructed or
modified after proposal of the revised standards.
2.8 REFERENCES
1. United States Congress. Clean Air Act, as amended August 1977.
42 USC 7401 et seq. Washington, DC. U.S. Government Printing Office
November 1977.
2-11
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2. United States Congress. National Environmental Policy Act. 42 USC
4332. Washington, DC. U.S. Government Printing Office. 1969.
3. United States Congress. Energy Supply and Environmental Coordination
Act. 15 USC 793(c)(l). Washington, DC. U.S. Government Printing
Office. 1974.
4. Code of Federal Regulations. Title 40, Chapter I. Subchapter A,
Part 60. Washington, DC. Office of the Federal Register. December 16,
1975.
5. Code of Federal Regulations. Title 40, Chapter I. Subchapter B,
Part 60. Washington, DC. Office of the Federal Register. November 17,
1975.
2-12
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3. THE LARGE APPLIANCE SURFACE COATING INDUSTRY
3.1 GENERAL
For developing New Source Performance Standards (NSPS), the U.S. Envi-
ronmental Protection Agency (EPA) has researched those segments of the appli-
ance surface coating industry consisting of manufacturing facilities produc-
ing some appliances classified in Standard Industrial Classification (SIC)1
codes as follows:
SIC 3631: Household Cooking Equipment;
SIC 3632: Household Refrigerators and Home and Farm Freezers;
SIC 3633: Household Laundry Equipment; and
SIC 3639: Household Appliances, Not Elsewhere Classified.
This NSPS is specifically intended to control the volatile organic
compound (VOC) emissions resulting from the surface coating of large appli-
ances. EPA is adding to the general provisions of 40 CFR Part 60 the
definition of a VOC as "any organic compound which participates in atmos-
pheric photochemical reactions; or which is measured by a reference method,
an equivalent method, an alternative method, or which is determined by
procedures specified under any subpart."
Approximately 190 facilities for manufacturing large appliances are
found in the continental United States, distributed across 29 States.
Ohio, Illinois, Michigan, Kentucky, Tennessee, and California have the
largest numbers of plants.2 The size of the facility and the number of
employees vary from plant to plant, but an average plant employs about
1,000 people.
A typical large appliance manufacturing plant produces only one or two
related products, such as refrigerators and freezers or washers and dryers.
However, in at least one case (General Electric's Appliance Park in Louis-
ville, Kentucky) several facilities are located at the same site. Even in
this instance, however, each facility has a separate operating area.
3-1
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Regardless of the appliance manufactured or the method of coating it,
similar manufacturing operations are involved (Figure 3-1). Coiled or
sheet metal enters the facility and is cut and stamped into the proper
shapes. The major parts are then welded together, with minor or small parts
not yet attached. The welded parts are cleaned with organic degreasers and
mild caustic soda to remove grease and mill scale accumulated during hand-
ling. After treatment, parts are rinsed with cleaning solutions.
The next step is treatment in a phosphate bath. This process commonly
uses iron or zinc phosphate. A microscopic matrix of crystalline phosphate
is deposited on the surface of the metal, increasing the surface area of
the part to be coated, allowing superior coating adhesion, and yielding cor-
rosion resistance. The process leaves the surface acidic, however, and care
must be taken to ensure that this acidity does not interfere with the normal
curing mechanism. Such interference is not normally a problem because most
thermosetting coatings respond positively or not at all to acid catalysis.
Prime coat application and prime coat cure are the next process steps
and are discussed later in this chapter. Topcoat application and topcoat
cure are also discussed. In some cases, parts receive only a prime coat
before assembly, while others receive a top coat directly after metal
preparation. These special cases are demonstrated by the loops in Figure 3-1.
After coating application and cure, the coated parts converge at the assembly
area.
3.2 PROCESSES OR FACILITIES AND THEIR EMISSIONS
Several methods are commonly used to coat parts for large appliances.
These methods are: dip coating, flow coating, air and airless spray coat-
ing, electrostatic spray coating, electrostatic bell or disk coating, and
electrostatic dip coating. Spray and bell coating equipment is available
both in manual and automatic versions. Appliance coatings fall into three
categories:
Low-organic-solvent coatings: waterborne and "high-solids"
coatings (>62 percent solids*),
Conventional organic-solvent-borne coatings (~30 percent
solids), and
Powder coatings.
*A11 percentages are by volume unless otherwise stated.
3-2
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FORMING OF
PARTS
CLEANING
METAL PREPARATION
PRIME COAT
APPLICATION
PRIME COAT
CURE
TOPCOAT
APPLICATION
TOPCOAT
CURE
FIIMAL
ASSEMBLY
Figure 3-1. Block diagram of large appliance manufacturing operations.
3-3
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3.2.1 Coating Methods
The concept of transfer efficiency must be defined before the coating
methods are described. In this document transfer efficiency is the ratio
of the amount of paint solids deposited on the surface to the total amount
of coating solids used. For liquid spray systems, therefore, transfer
efficiency is the ratio of the solids adhering to the coated part to the
solids delivered through the application device. For recycling systems
(dip coats, flow coats, and powder systems), transfer efficiency is the
ratio of solids that adhere to the coated part to the solids delivered,
excluding the solids recovered for reuse.
Typical uses for the coating methods discussed below are shown in
Figure 3-2.
3.2.1.1 Dip Coating. Dip coating is used primarily to apply a single
prime coat to parts that are not visible after assembly.2 This method can
be used where the coating surface need not be smooth. The equipment consists
of a large main tank in which the mixed coating is contained. An overhead
conveyor lowers each part into the tank, where the coating is applied. As
they emerge from the tank, the coated parts move into an area where excess
paint drips off. The excess paint is collected and returned to the main
tank.
The paint in the main tank is kept at a constant solids concentration
by the addition of fresh, properly mixed paint and water or organic solvent
to account for usage and evaporation. This recycling and reuse ensures an
overall transfer efficiency of about 85 percent.
3.2.1.2 Flow Coating. Flow coating is accomplished by engulfing the
part in a stream of the coating.3 The coating is pumped from a holding
tank into mechanical arms that are fitted with nozzles. The arms pass over
the part "flowing" the coating over it. Excess paint drips off the part
and back into the holding tank for reuse. This recovery ensures a transfer
efficiency of about 85 percent.
Flow coating is a single coat or prime coat method resulting in a
coating of variable and uneven thickness. It is commonly used as a single
coat method to coat parts not visible after assembly. Flow coating equipment
is simple and readily available.
3-4
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3.2.1.3 Air and Airless Spray Coating. The three basic types of
spray methods are air spray, airless spray, and electrostatic spray. Air
spray coating requires compressed air, which may be heated, filtered, or
humidified.4 The air-atomized coating is then directed onto the part to be
coated. The transfer efficiency of air spray is about 40 percent.5
In airless spray coating, the coating is atomized without air as the
liquid material is forced through specially designed nozzles at pressures
of 7 to 14 Megapascals (MPa) (1,000 to 2,000 psi). The transfer efficiency
for airless spray is about 45 percent.5 An airless spray gun is shown in
Figure 3-3.
3.2.1.4 Electrostatic Spray Coating. There are electrostatic ver-
sions of both air and airless spray guns. These spray guns are commonly
air ionizing; i.e., the paint particles are not directly charged. A dis-
charge electrode ionizes the air in its immediate vicinity, with paint
particles being propelled into this ionized air blanket by the forces
causing atomization. The paint particles then become negatively charged.
The part to be sprayed is positively grounded, and the oppositely charged
paint particles are electrically attracted to it. Although not as common,
some electrostatic systems use positively charged paint particles and
negatively charged parts. The particle velocity, in the direction of the
object, is controlled by the applied voltage of the system. This coating
method results in a coating evenly deposited on all sides of the object
because of the action of paint particles in the electrostatic field. Spray
gun-to-part distances average about 30 cm (12 in.). Electrostatic airless
spray coating is approximately 55 percent efficient, while electrostatic
air spray is about 60 percent efficient.5 6 7
3.2.1.5 Electrostatic Bell and Disk Coating. Other electrostatic
methods of applying coatings are bells (Figure 3-4) and disks (Figure 3-5).
In these methods, atomization is caused to a small extent by the centri-
fugal forces associated with rapid spinning of the bell or disk and to a
greater extent by the high voltage applied to repel the particles from the
disk or bell and from each other.4 In addition, the bell or disk housing
may reciprocate up and down or back and forth to allow complete coating of
the object. The surface of the bell or disk is negatively charged, giving
a negative charge to the particles passing across it. The particles are
3-6
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AIRLESS
PUMP
BACKPRESSURE
VALVE
Figure 3-3. Diagram of an airless spray gun with an attached paint heater.
3-7
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Dj; =
PAINT
MANIFOLD
TRIGGERING VALVE
ELECTROSTATIC BELL
SOLVENT DRAIN
HIGH-VOLTAGE SUPPLY
Figure 3-4. Diagram of stationary bell.
3-8
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3-9
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then attracted to the positively grounded parts, as controlled by the
applied voltage and the centrifugal force of the system. A typical transfer
efficiency for these systems is about 90 percent.
3.2.1.6 Electrostatic Dip Coating. Electrodeposition (EDP) of paint
(Figure 3-6) is known by many names, including electrophoretic coating,
E-coating, and electrostatic dip coating. During this process, a DC voltage
is applied between carbon or stainless steel electrodes located in a bath
of coating and the part to be coated. The part, which can act as the
cathode or the anode, is dipped into the bath. Coating particles are
attracted from the bath to the part because they are charged oppositely,
yielding an extremely even coating. The process is a prime coat or single
topcoat method.5
Coatings in the dip tank for EDP usually consist of about 90 percent
water, 4 percent organic solvents, and 6 percent paint solids;3 these
percentages may vary with the specific application of the coating. The
conductivity of the aqueous solution in the bath is extremely sensitive to
impurities. For this reason, parts are usually thoroughly rinsed in de-
ionized water before immersion in the dip tank. Most systems are recycling
systems in which the .water is recovered from the dip tank by ultrafiltra-
tion. The deionized water is used to rinse parts, is deionized again, and
is then remixed with virgin paint solids and organic solvent and pumped
back into the dip tank. This process helps to agitate and properly mix the
coating in the tank, preventing paint solids from settling to the bottom.
Electrostatic dip coating produces an even coat with good edge coverage
and coating penetration in inaccessible areas.5 The composition of the
coating as it leaves the system is about 75 percent solids, plus water and
some organic solvent. Transfer efficiencies are commonly above 95 percent.4
The thickness of the applied coating depends on the current density and the
length of time the part remains in the tank.
3.2.2 Types of Coatings
3.2.2.1 Waterborne Coating. There are three classes of waterborne
coatings: water solutions, water emulsions, and water dispersions.3
Commonly, waterborne coatings for spray, dip, and flow coating are 56
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percent water, 14 percent organic solvent, and 30 percent paint solids.
For electrocoating, about 90 percent water, 4 percent organic cosolvents,
and 6 percent paint solids solutions are used.5 The organic solvents used
in waterborne coatings act as stabilizing, dispersing, and emulsifying
agents. Evaporation of these solvents are the only VOC emissions from
waterborne coatings.3
Waterborne coatings can be applied by dip coating, flow coating, spray
coating, and EDP. Waterborne coatings can be sprayed electrostatically,
but this means of application is not common in the large appliance.industry.
Because the coating is electrically conductive, the necessary electrical
potential cannot be developed without isolating the entire coating system,
including the paint handling and storage apparatus, from ground. While
this is not a problem for one-color systems where the storage tank is in
close proximity to the application device, for the multicolor, central
batch systems commonly used in the large appliance industry, electrostatic
installations are not economically attractive.
Waterborne coatings offer some advantages. Waterborne systems generally
do not exhibit as great an increase in viscosity with increasing molecular
weight of the solids as do organic-solvent systems.5 In addition, they are
nonflammable and have limited toxicity because of the small amount of
organic solvent present in the coatings.
Waterborne coatings have some disadvantages, such as increased rust
and corrosion potential .compared to organic-solvent-borne coatings. Water-
borne coatings do not exhibit the self-cleaning (degreasing) ability that
some organic-solvent-borne coatings exhibit on parts, which may lead to
greater expenditure of time and money in the precleaning process.
More energy is required to cure waterborne coatings than those based
on organic solvents. Water has a heat of vaporization of about 2,300 kJ/kg
(1,000 Btu/lb), while most organic solvents used for coating large appliances
have heat of vaporization of about 450 kJ/kg (200 Btu/lb). Thus, it takes
approximately five times as much energy to vaporize a gram of water as to
vaporize a gram of organic solvent.5
At first it would appear that more energy would be required to cure
waterborne coatings because of the higher cure temperatures and longer oven
3-12
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times required. However, fewer VOCs are emitted from waterborne coatings
because of the smaller amount of organic solvents in the coating. There-
fore, exhaust flow rates in the oven can be reduced with VOC concentrations
consistently maintained below 25 percent of the lower explosive limit
(LEL). The reduced flow rate means that a smaller volume of air is heated
in the ovens, compared to organic-sol vent-borne coatings, to cure the same
amount of coated parts. Thus, an energy savings results.8
Problems with the aesthetic appearance of the final finish of water-
borne coatings may be caused by the relatively slow evaporation rate of
water that results from its high boiling point. The organic solvents used
in appliance surface coating are multicomponent in nature and have a variety
of boiling points, yielding a range of relatively rapid evaporation rates.
When organic-sol vent-borne coatings are sprayed, one portion of the solvent
evaporates between the gun and the part, with more of the solvent evaporat-
ing quickly after contact with the part.5 The result is an applied coating
with a viscosity designed to avoid dripping and running. The remaining,
higher boiling solvents evaporate more slowly, facilitating an even coating
without bubbles. Water evaporates more slowly, depending upon the relative
humidity. A bumpy "orange peel" surface may result from the slow evapora-
tion of water. The addition of small amounts of organic solvents to water-
borne coatings creates a wider range of evaporation rates, greatly enhancing
final coating appearance.2
3.2.2.2 Conventional Organic-Solvent-Borne Coatings. Conventional
organic-solvent-borne coatings (~30 percent solids) can be applied by the
air, airless, and electrostatic methods described for waterborne coatings.
In fact, these coatings are more readily sprayed electrostatically than
waterborne coatings, because of the inherent corrosion potential and insula-
tion problems associated with the high conductivity of water systems.
Electrostatic application equipment includes guns, disks, and bells.
Transfer efficiencies are increased over air and airless spray guns, to
over 60 percent.6 The accumulation of coating reduces the potential,
making it more difficult to attract the coating to the part. Coating
thickness can be controlled by the potential developed between the applica-
tion device and the part.
3-13
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Uncontrolled emissions from electrostatic spraying of conventional
organic-solvent-borne coatings would be fewer than those from air and
airless spray coating but would still be more than those from waterborne or
powder methods because of the high concentrations of organic solvent.
Flammability of these emissions is much higher than for other systems.
3.2.2.3 Powder Coatings. Powder coatings are-most commonly applied
by electrostatic spray and fluidized bed methods. The fluidized bed method
uses particles with sizes ranging up to about 200 urn in diameter. Particles
of this size are impractical to use in the large appliance industry where
coatings of 2 to 3 mils (1 mil = 25 urn) thickness are desired;8 therefore,
the fluidized bed method is used infrequently.
In electrostatic spray coating with powders (Figure 3-7), an electro-
static potential is used to hold the powder particles to the object until
heat can be applied to form a continuous coating. The appliance part is
electrically grounded, and the powder is passed through a blanket of ionized
air to charge the particles, causing them to be attracted to the part.
Buildup of the nonconductive powder on the part reduces the electrical
attraction, so there is a maximum thickness of powder that can be applied,
but this maximum thickness exceeds that needed for large appliances. The
object need not be hot during application.8 Powder coatings contain no
organic solvent, so VOC emissions from their operations are negligible, and
potential toxicity and flammability problems are reduced.
Transfer efficiency for powder systems is usually expressed as a
material use and can approach 99 percent in a well-designed spray booth,
with an adequate recovery system. Most booths are designed with a conveyor
belt that moves across the bottom, collecting the powder that does not
adhere to the appliance part during the first application. A dual vacuum
system removes the powder from the belt and recycles it to the holding
tank.
Baking temperatures are comparable to those for waterborne coatings.
Temperatures of 140° to 195° C (285° to 385° F) are needed for about 20 min-
utes to achieve complete curing; the exact temperature depends on the
coating design.9
Powder coatings require resins that are solid at room temperature and
have a sharp melting point to a much lower viscosity to promote merging of
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the particles and achievement of a smooth, high-gloss finish. Quality
control ensures a narrow range in melt temperature and melt viscosity,8
allowing oven temperatures to remain constant.
Controlling coating thickness has been a problem in powder coating
large appliances. To date, typical particles for sprayed powder coatings
are about 28 to 32 pm in diameter. Making uniform application of the
particles is essential to achieve a consistent thin film. More consistent
application methodologies now make it possible to control coating thickness
to 1.3 mil ± 0.5 mil.8 9
Although there are no organic-solvent VOC emissions from powder coatings,
the coatings undergo post-application changes that emit some VOCs. Data on
the potential toxicity of these emissions are limited. One source indicates
that these emissions are primarily carbon dioxide and water, as well as
E-caprolactam.9 Another source with more extensive test data indicates
that post-application emissions may include methyl isobutyl ketone, tetra-
hydrophthalic anhydride, benzoin, and some low-molecular-weight polymers.10
Any organic powder suspended in air has an explosion potential. A
heat or spark source is needed to cause ignition. Ventilation rates in
powder spray booths are maintained high enough to keep the powder concentra-
tion safely below its LEL. The LEL used by insurance companies, if no
experimental data are available on the particular powder, is 0.026 g/m3
(0.030 oz/ft3).8
3.2.2.4 High-Solids Coatings. The method of VOC reduction expected
to be adopted by many existing plants to meet reasonably available control
technology (RACT) guidelines and by many new sources is the spraying of
high-solids coatings, as opposed to the conventional organic-solvent-borne
coatings presently used. The term "high-solids coatings" is usually reserved
for coatings with a low-solvent content that are conventionally applied and
cured.
The Control Techniques Guideline (CTG) describes high-solids coatings
as 0.34 kg (2.8 Ib/gal) of organic solvent per liter of coating (minus
water), or approximately 62 percent (vol.) solids.2 This amount is roughly
equivalent to 70 percent (wt.) solids, depending upon the densities of the
solids and the solvent.
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Single-component, heat-cured, high-solids coatings are typically
epoxies, acrylics, polyesters, and alkyds. Two-component, ambient-tempera-
ture cure, high-solids coatings include urethanes, acrylic-urethanes, and
epoxy/amines.2 Only two-component systems with an extended pot life (after
mixing) can be applied with equipment presently used in the large appliance
industry. Use of these coatings is limited because of their expense,
limited application, and potential toxicity.
Electrostatic spray equipment currently used by appliance manufac-
turers can accommodate solids concentrations of 45 to 55 percent (vol.)
without the use of add-on paint heaters to reduce the viscosity.4 For much
of the present spray equipment, paint heaters may be required to apply :
62 percent (vol.) solids coatings.
3.3 BASELINE EMISSIONS
The baseline emission level is the level of emission control required
of the appliance surface coating industry in the absence of a New Source
Performance Standard (NSPS). In many States little or no control is required
on sources emitting less than 100 tons of VOCs annually.
The level of control that would probably exist in the absence of an
NSPS is based on the CTG for large appliance surface coating, which was
issued in December 1977. Because the CTG does not differentiate between
prime coat and topcoat operations, the recommended level of control applies
to both. Therefore, the CTG-recommended limit (0.34 kg of organic solvent
per liter of coating, minus water [62 percent solids by volume]) constitutes
the baseline control level for both operations. Because the CTG-recommended
limit does not specify a transfer efficiency, a transfer efficiency had to
be assumed to complete a meaningful analysis. The estimated average indus-
try transfer efficiency of 60 percent was used for this purpose.
State air pollution control agencies are currently revising their
State Implementation Plans (SIPs), and it appears that most of the revised
SIPs will incorporate the CTG-recommended limit. Therefore, the CTG-
recommended limit plus an assumed 60-percent industry average transfer
efficiency form the basis for estimating the baseline level of control as
discussed in Chapter 6.
3-17
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3.4 REFERENCES
1. Statistical Policy Division, Office of Management and Budget.
Standard Industrial Classification Manual. U.S. Government Printing
Office. Washington, DC. 1972.
2. Emissions Standards and Engineering Division, U.S. Environmental
Protection Agency. Control of Volatile Organic Emissions From
Existing Stationary Sources—Volume V: Surface Coating of Large
Appliances. Research Triangle Park, NC. EPA-450/2-77-034. December
1977.
3. Emissions Standards and Engineering Division, U.S. Environmental
Protection Agency. Control of Volatile Organic Emissions From
Existing Stationary Sources—Volume I: Control Methods for Surface-
Coating Operations. Research Triangle Park, NC. EPA-450/2-76-028.
November 1976.
4. Memo from Daum, K. A., Research Triangle Institute, to Docket.
April 12, 1979. Meeting with DeVilbiss Company, Toledo, OH.
5. Air Pollution Engineering Manual, Second edition, Danielson, John A.
(ed.). U.S. Environmental Protection Agency. Research Triangle
Park, NC. Publication Number AP-40. May 1973.
6. Letter from Acker, Robert M., Ransburg Electrostatic Equipment
Corporation, to McCrodden, Brian J., Research Triangle Institute.
December 4, 1979. New Source Performance Standards.
7. Baum, Bernard, et al. Second Interim Report on Air Pollution Control
Engineering and Cost Study of the General Surface Coating Industry.
Springborn Laboratories, Inc. (Prepared for Emission Standards and
Engineering Division, U.S. Environmental Protection Agency. Research
Triangle Park, NC.) EPA Contract Number 68-02-2075. August 23, 1977.
8. Increasing Commitment to Powder Coating through Education. (Powder
Coating 5 Conference Industry Papers. Cincinnati, OH. November 7,
1978.)
9. Letter from Ramig, Alexander, Jr., Glidden Coatings and Resins
Company, to McCrodden, Brian J., Research Triangle Institute.
November 27, 1979, Background Information Document for Large Appli-
ance Surface Coating Operations.
10. Cole, Gordon E. Powder Coating—State of the Art. GCA Chemical
Corporation. Stamford, CT. 1979.
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4. EMISSION CONTROL TECHNIQUES
4.1 GENERAL
Emissions from the surface coating of large appliances consist
primarily of volatile organic compounds (VOCs) from evaporation of the
organic solvents in the coatings. These organic solvents include ketones,
alcohols, esters, saturated and unsaturated hydrocarbons, and ethers.
About 80 percent of evaporation occurs in the spray booth .nd flashoff
area.1 Other post-application emissions include some of the lower mole-
cular weight polymers used in the coatings and the evaporation of solvents
used during thinning, storage, color change, and cleanup operations.
Particulate emissions do not pose a problem; most are trapped in the water
wash spray booths commonly used in the industry.2
VOC emissions can occur in a number of places along the production
line: during atomization and transfer of the coating, during initial air
drying of the part after it leaves the spray booth (flashoff), and in the
curing oven. Emissions other than organic-solvent VOCs may be present in
the oven. Outgasing of polymeric binders, for instance, can occur at the
elevated temperatures found in the oven. Fugitive emissions only occur
when coatings are mixed and loaded into the application device, during
transport of coated parts from the spray booth to the oven (flashoff), and
during post-curing. Emissions in the spray booth and oven pass through a
stack and thus are not considered fugitive.
Visible emissions—those that attenuate light in the visible wave-
lengths—occur when large appliances are coated. Coating a part usually
generates a significant amount of overspray, which includes paint solids
and the VOCs from the solvent. If not trapped by the spray booth, visible
emissions from atomized paint solids may be released to the atmosphere.
In the large appliance surface coating industry, several techniques
are used to reduce VOCs from coatings application. The presently used
4-1
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techniques employ modified or new coating technologies. Because these
coatings contain lower percentages of organic solvent, they have the poten-
tial for fewer VOC emissions. Most large appliances are finished in a
two-coat process—a prime coat covered by a top coat. Industry trends
favor the use of high-solids or electrodeposition (EDP) coatings for prime
coats. EDP is widely used in the laundry sector because of its favorable
environmental qualities and excellent part-covering and corrosion resist-
ance characteristics. Top coats will probably be high-solids coatings or
powder coatings, although some waterborne coatings may be used.
Organic-solvent-borne coatings currently used in the large appliance
industry contain about 0.63 kg organic solvent per liter of coating (~30
percent solids*). The Control Techniques Guidelines (CTGs) recommend the
use of coatings containing 0.34 kg (or less) of organic solvent per liter
of coating (minus water) (~62 percent solids) in all areas where those
guidelines are applicable. High-solids (62-percent solids) coatings contain
about 70 percent less solvent than conventional coatings. The concentration
of organic solvent in waterborne coatings varies with the application
method, but all have VOC emissions less than the 0.34-kg-per-liter value of
high-solids coatings. Powder coatings contain no organic solvent.
Transfer efficiency is a major parameter that governs the effective
reduction of VOC emissions by low-organic-solvent coatings. Chapter 3
defines transfer efficiency as the ratio of the amount of paint solids
transferred to a surface, to the total amount of coating solids used.
Improved transfer efficiency decreases the volume of coating that must be
sprayed to cover a specific part, thereby decreasing the total VOC emission
rate. Even with high-solids coatings, a low transfer efficiency could
result in high VOC emissions.
Other parameters influencing the effectiveness of emission reduction
through transfer efficiency could be categorized as "fine tuning" of the
application equipment. Cleanliness, maintenance of proper electrical
potential, and adjustment of equipment to maintain proper atomization and
application velocity promote high transfer efficiency and, therefore,
reduced emissions.
*A11 percentages are by volume unless otherwise stated.
4-2
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Transfer of emission reduction technology from other coatings indus-
tries has had little impact on the large appliance industry. Coatings used
in the large appliance industry are unique in that they require high deter-
gent resistance, high pencil hardness (resistance to scratching with a
sharp instrument), and good aesthetic appearance. These standards limit
the technology transfer from other coatings industries, which do not always
require these, qualities in a coating. In general, the coating industries
are switching to low-organic-solvent coatings both to achieve VOC reduction
for environmental standards and to reduce the use of organic solvents,
which are steadily increasing in cost.
4.2 PRIME COAT APPLICATION :
Appliance quality prime coats can be applied by spray and EDP methods.
Spraying of waterborne and organic-solvent-borne coatings is described in
Chapter 3. Briefly, conventional organic-solvent-borne coatings, high-solids
coatings, and water-based coatings can be applied by spray methods. Spray-
ing of high-solids prime coats can result in a 70-percent reduction of VOC
emissions over the use of conventional organic-solvent-borne prime coats.
Spraying of water-based coatings can result in a 92-percent reduction in
VOC emissions over the use of conventional organic-solvent-borne prime
coats.
EDP coating, the best method for application of prime coats in some
instances, is fully described in Chapter 3. During this process a direct
current is applied between carbon or steel electrodes located in a bath of
the coating and the part to be coated. The part, which can act as the
cathode or the anode, is dipped into the bath. Coating particles are
attracted from the solution to the part because they are charged oppositely,
yielding an even coating. This coating makes a good prime coat because it
is evenly applied to the entire part. Coatings in the dip tank for EDP
usually consist of about 90 percent water, 4 percent organic solvents, and
6 percent paint solids. The use of EDP for prime coats will result in a
94-percent reduction in VOC emissions over the use of conventional coating
for prime coats (see Table 4-1). However, the overall effectiveness of EDP
as a means of control is mitigated because the method may result in the
deposition of a greater volume of solids than is necessary when a prime
4-3
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TABLE 4-1 COMMON METHODS OF REDUCTION OF VOCs IN THE LARGE APPLIANCE
SURFACE COATING INDUSTRY
% reduction over uncontrolled
conventional coatings
Control method
Means of reduction
High-solids coatings Lower organic-solvent
(0.340 kg VOC/£) content
Powder coatings
EDP
(0.040 kg VOC/£)
No use of organic
solvent
Lower organic-solvent
content
Lower organic-solvent
content
99C
94C
47C
Water-based coatings
(0.140 kg VOC/2)
Carbon adsorption13'c'd Adsorption of hydrocarbon Topcoat spray booth~33
emissions on a carbon
bed
Incineration
b,c
Catalytic or thermal
oxidation of hydrocarbon
emissions
Topcoat oven—15
Topcoat spray booth—33
Topcoat oven—15
Calculated by determining the difference in the organic-solvent content
of the coating and a conventional coating containing 0.61 kg VOC/£
(30 percent solids).
b81 percent overall control efficiency.
GBased on 40 percent of emissions occurring in the spray booth, 40 percent
in the flashoff, and 20 percent in the curing oven.
dln addition to control of VOCs, solvents may be recovered through carbon
adsorption.
4-4
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coat is not actually required on all surfaces (e.g., the interior surface
of a refrigerator case).
4.3 TOPCOAT APPLICATION
4.3.1 Waterborne Coatings
Waterborne coatings for spray, dip, and flow coating are approximately
56 percent water, 14 percent organic solvent, and 30 percent paint solids.
The organic cosolvents used in waterborne coatings act as stabilizing,
dispersing, and emulsifying agents. Evaporation of these solvents creates
the only VOC emissions from waterborne coatings. Waterborne coatings of
this formulation yield a 47-percent reduction in emissions over conventional
coatings (see Table 4-1).
Extensive use of waterborne top coats is not anticipated in the large
appliance surface coating industry. Although a wide var1_iy of coatings
are available in waterborne systems, many of these coatings do not meet
large appliance performance specifications. Use of waterborne coatings
also increases the corrosion potential to the application device. As
discussed in Chapter 3, the nature of appliance coating operations makes
the electrostatic application of waterborne coatings more difficult, and
less attractive economically, than in other industries.
4.3.2 High-Solids Coatings
The CTG describes low-organic-solvent coatings as those containing
0.34 kg of organic solvent (or less) per liter of coating (minus water), or
62 percent solids. The term "high-solids coatings" is usually reserved for
low-organic-solvent coatings that are conventionally applied and cured.
Use of high-solids coatings for top coats will result in a 70-percent
reduction in emissions over top coating with conventional coatings (see
Table 4-1).
High-solids coatings are a likely method for applying top coats at new
plants in the large appliance industry. These coatings are applied by
methods already used in the industry: air and airless spray, electrostatic
spray, bells and disks, and high-speed bells and disks. The higher vis-
cosity of these coatings may be reduced by the use of paint heaters to
apply the coatings with existing equipment.
4-5
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4.3.3 Powder Coatings
Powder coatings are fully described.in Chapter 3. Basically, they can
be top coats or single coats and are applied in the large appliance indus-
try by electrostatic spraying. An electrostatic potential is used to hold
the powder particles on the object until heat can be applied to form a
continuous coating. Powder coatings contain no organic solvent, so no VOC
emissions result from their application. Powder coating application is
equivalent to a 99-percent reduction in VOC emissions over use of conven-
tional coatings as top coats (see Table 4-1). Powder coatings undergo
post-application changes that do emit some VOCs. These emissions are
caused by cross!inking and polymerization. Data are limited on the nature
of these emissions, but some sources indicate they are primarily combustion
products (i.e., carbon dioxide and water) as well as E-caprblactarn.3
Another source with more extensive test data on these post-application
emissions indicates they may include methyl isobutyl ketone, tetrahydro-
phthalic anhydride, benzoin, and some low-molecular-weight polymers.4
Powder coatings have many applications in the large appliance industry,
but they have not been adequately demonstrated for all appliances under all
conditions. Because the technology is new, their use is not yet widespread.
4.4 CAPTURE SYSTEMS AND CONTROL DEVICES
Process designs in other coating industries allow emissions to be
captured easily by the control devices, which are usually carbon adsorption
units or incinerators. The commonly used process design in surface coating
of large appliances is spread out, making reasonable capture efficiences
for add-on control devices cost prohibitive. Control devices could, however,
be installed on the spray booth or on the curing oven.
4.4.1 Carbon Adsorption
Carbon adsorption as a technique for organic-solvent recovery has been
used commercially for several decades. Applications include solvent recovery
from dry cleaning, metal degreasing, printing operations, and rayon manu-
facture5—as well as from industrial finishing.6
In the large appliance surface coating industry, the emissions of
greatest concern come from dip tanks, spray booths, and their respective
curing ovens. Adsorption systems for spray booth emissions must be designed
to handle air with a high water vapor content. This high humidity results
4-6
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from the use of water curtains on both sides of the spray booths to capture
overspray.2 Although carbon preferentially adsorbs organics, water will
compete for available sites on the carbon surface. Generally, the relative
humidity should be kept below 80 percent to minimize this problem.7 Partic-
ulates from oversprayed coating must be removed from the air stream because
this material coats the carbon and/or plugs the interstices between carbon
particles. Such plugging reduces adsorption efficiency and increases
pressure drop through the bed.
The exhaust from the spray booths, particularly during periods of cool
ambient temperatures, can be saturated with moisture. One solution to this
problem-would be to preheat the moisture-laden air to lower the relative
humidity to below 80 percent; 5° C (9° F) heating would be sufficient.8
In the cure oven, high temperatures and flame contact can cause poly-
mer"ization of the volatiles into high-molecular-weight resinous materials
that can deposit on and foul the carbon bed. Various high-molecular-weight
volatiles in the coatings, such as oligomers, curing agents, or plasticizers,
can cause similar problems. For removal of these materials, filtration
and/or condensation of the oven exhaust air would be necessary prior to
adsorption.
For satisfactory performance, it would also be necessary to cool the
oven exhaust to a temperature no greater than 38° C. Without cooling, many
of the more volatile organics will not adsorb but will pass through the
adsorber.9
Assuming 90 percent capture efficiency, 90 percent adsorption of
captured emissions, 40 percent of emissions in the spray booth, 40 percent
of emissions as flashoff, and 20 percent of emissions in the curing oven,
carbon adsorption will yield a 33-percent reduction in emissions, if used
on the spray booth, and a 15-percent reduction in emissions, if used on the
curing ovens. At this time, carbon adsorption is probably not a practical
control option for the large appliance surface coating industry primarily
because of the auxiliary equipment that would be required to pretreat the
feed gas streams.
4.4.2 Incineration
4.4.2.1 Introduction. Incineration is the most universally applic-
able technique for reducing the emission of volatile organics from indus-
trial processes. In the industrial finishing industry, these volatile
4-7
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organic emissions consist mostly of organic solvents comprised of carbon,
hydrogen, and oxygen. Such solvents can be burned or oxidized in specially
constructed incinerators into carbon dioxide and water vapor.
Industrial incinerators or afterburners are either noncatalytic (com-
monly called thermal or direct fired) or catalytic. Sufficient differences
divide these control methods to warrant a separate discussion of each.
4.4.2.2 Thermal Incinerators. Direct-fired units operate by heating
the organic-solvent-laden air to temperatures approaching combustion and
bringing the air into direct contact with a flame. High temperature and
high organic concentration favor combustion; a temperature of 760° C
(1,400° F) is generally sufficient for nearly complete combustion.
For the prevention of fire hazards, industrial finishing ovens seldom
used to be operated with concentrations of solvent vapor in the air greater
than 25 percent of the lower explosive limit (LEL). In recent years, how-
ever, concentrations of up to 50 percent of the LEL have been permitted
with use of automatic monitors and shutdown devices.10 Nonetheless, the
concentrations of organic vapors in the exhausts both from ovens and spray
booths are so low that auxiliary heating would be required to burn the
vapors. Natural gas combustion usually provides the heat and direct flame
contact in thermal incinerators, but propane and fuel oil are also used.11
The quantity of heat to be supplied depends on the concentration of
organics in the air stream; the higher the concentration the lower the
auxiliary heat requirement because of the fuel value of the organics,. For
most organic solvents, the fuel value is equivalent to 18.5 kJ/m3 (0.5
Btu/scf), which translates into a temperature rise of approximately 15° C
(27° F) for every percentage point of LEL that is incinerated. .For an air
stream with a solvent content of 25 percent of LEL, the contribution from
the heat of combustion of the solvent would be approximately 480 kJ/m3
(13 Btu/scf), equivalent to a temperature rise of 345° C (620° F).
Heat transfer devices are often used to recover some of the combustion
heat to reduce the cost of thermal incineration. Primary heat recovery is
often in the form of a recuperative heat exchanger—either tube- or plate-
type--which is used to preheat the incoming process vapors. Units of this
type are capable of recovering 50 to 70 percent of the total heating value
of solvent and fuel.12
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A more efficient type of heat recovery system and one widely used in
vapor incineration equipment is the regenerative heat exchanger, both
refractory and rotary-plate types. Units of these types are capable of
heat recoveries of 75 to 90 percent.13 In some cases, secondary recovery
is also used to convert additional exhaust heat into process steam or to
warm makeup air for the plant.
4.4.2.3 Catalytic Incineration. This add-on control method uses a
metal catalyst to promote or speed combustion of volatile organics. Oxida-
tion takes place at the surface of the catalyst to convert organics into
carbon dioxide and water. No flame is required. The catalyst—usually a
noble metal such as platinum or palladium—is supported in the hot gas
stream so a large surface area is presented to the waste organics. A
variety of designs are available for the catalyst, but most units use a
noble metal electrodeposited on a high-area support, such.as ceramic rods
or honeycombed alumina pellets.12
As with thermal incinerators, the performance of the catalytic unit
depends on the temperature of the gas passing across the catalyst and the
residence time. In addition, the efficiency of the incinerator varies with
the type of organic oxidized. While high temperatures are desirable for
good emission reduction, temperatures in excess of 600° C (1,100° F) can
cause serious deactivation of the catalyst through recrystallization of the
noble metal.
The use of a catalyst permits lower operating temperatures than for
direct-fired units. Temperatures normally range from 260° to 320° C (500°
to 600° F) for the incoming air stream and 400° to 550° C (750° to 1,000° F)
for the exhaust. The exit temperature from the catalyst bed depends on
inlet temperature, organic concentration, and completeness of combustion.
The Increase in temperature results from the heat of combustion of the
organics.
As with thermal incinerators, primary and secondary heat recovery can
be used to reduce auxiliary fuel requirements for the inlet air stream and
to reduce the overall energy needs for the plant. Although catalysts are
not consumed during chemical reaction, they tend to deteriorate, causing a
gradual loss of effectiveness in oxidizing the organics. This deteriora-
tion is caused by:
4-9
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Poisoning with chemicals, such as phosphorus and arsenic,
which react with the catalyst;
Coating the catalyst with particulates or condensates; and
High operating temperatures, which tend to cause the noble
metal to recrystallize with less surface area.
In most cases, catalysts are guaranteed for 1 year by the equipment sup-
plier,14 but with proper cleaning and attention to moderate operating
temperatures, the catalyst should have a useful life of 2 to 3 years.12
4.4.2.4 General Comments. The two most likely places for incineration
to be used are on the topcoat spray booth and on the curing oven. Assuming
90 percent capture efficiency, 90 percent incinerator efficiency, 40 percent
of emissions in the spray booth, 40 percent of emissions as flashoff, and
20 percent in the curing oven, incineration will yield a 33-percent reduc-
tion in emissions if applied to the spray booth, and a 15-percent reduction
in emissions on the curing oven.
4.5 REFERENCES
1. Baum, Bernard, et al. Second Interim Report on Air Pollution Control
Engineering and Cost Study of the General Surface Coating Industry.
Springborn Laboratories, Inc. (Prepared for Emission Standards and
Engineering Division, U.S. Environmental Protection Agency. Research
Triangle Park, NC). EPA Contract Number 68-02-2075. August 23, 1977.
2. Telecon. Pleva, M., Ransburg Electrostatic Equipment Corporation,
with Mahadeven, V., Research Triangle Institute. December 7, 1979.
New Source Performance Standards.
3. Letter from Ramig, Alexander, Jr., Glidden Coatings and Resins Company,
to McCrodden, Brian J., Research Triangle Institute. November 27,
1979. Background Information Document for Large Appliance Surface
Coating Operations.
4. Cole, Gordon E. -Powder Coating—State of the Art. GCA Chemical
Corporation. Stamford, Conn. 1979.
5. Mantell, C. L. Adsorption. New York, McGraw-Hill, 1951. p. 237-248.
6. Kanter, C. B., et al. Control of Organic Emissions from Surface
Coating Operations. In: Proceedings of the 52nd APCA Annual Meeting.
June 1959.
7. Cavanaugh, E. C., G. M. Clancy, and R. G. Wetherold. Evaluation of a
Carbon Adsorption/Incineration Control System for Auto Assembly Plants.
Radian Corporation. Austin, TX. EPA Contract Number 68-02-1319,
Task 46. May 1976. p. 54-58.
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8. Handbook of Chemistry and Physics. Weast, R. C. (ed.). Cleveland,
The Chemical Rubber Company, 1964. p. E-26.
9. Grandjacques, B. Air Pollution Control and Energy Savings with Carbon
Adsorption Systems. Calgon Corporation. Report APC 12-A. July 19,
1975.
10. National Fire Protection Association. Ovens and Furnaces, 1973. NFPA
Number 86A. Boston, MA. 1973.
11. Stern, A. C. Air Pollution, Vol. Ill, Sources of Air Pollution and
Their Control. New York, Academic Press, 1968.
12. Lund, H. F. P. Industrial Pollution Control Handbook, New York,
McGraw Hill, 1971. p. 7-8 to 7-11.
13. REECO Regenerative Environmental Equipment Company, Inc. Re-Therm
Oxidation Equipment. Product bulletin REE-1051-975-15M. Morris
Plains, NJ.
14. Kent, R. W. Thermal Versus Catalytic Incineration. Products Finish-
ing. 40(2):83-85. November 1975.
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4-12
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5. MODIFICATIONS AND RECONSTRUCTION
5.1 BACKGROUND
New Source Performance Standards (NSPS) apply to new sources and to
existing sources that undergo modification or reconstruction. The pro-
posal date of the standards separates new and existing sources. Existing
sources are those that commenced construction or modification prior to the
proposal date; new sources are those that began construction subsequent to
that date. Upon modification or reconstruction, existing facilities become
affected facilities and are therefore subject to the standards. This
chapter's purpose is not to define changes to facilities or processes that
would be judged modifications or reconstructions but to present and discuss
characteristic changes. Determination of modification and reconstruction
is made on a case-by-case basis by the appropriate enforcement authority.
The owner or operator of any source classified as an existing facility
must notify the U.S. Environmental Protection Agency (EPA) of changes that
could increase emissions of an air pollutant for which a standard of perform-
ance applies.1 An increase in emissions from an existing facility is
defined as a modification. The Code of Federal Regulations states:
(a) . . . any physical or operational change to an existing
facility which results in an increase in the emission rate
to the atmosphere of any pollutant to which the standard
applies shall be considered a modification within the meaning
of Section 111 of the Act. Upon modification, an existing
facility shall become an affected facility for each pollutant
to which the standard applies and for which there is an
increase in the emission rate to the atmosphere.
A reconstruction is defined in 40 CFR 60.15:
(a) An existing facility, upon reconstruction, becomes an affected
facility, irrespective of any change in emission rate.
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(b) "Reconstruction" means the replacement of components of an
existing facility to such an extent that:
(1) The fixed capital cost of the new components exceeds 50 per-
cent of the fixed capital cost that would be required to
construct a comparable, entirely new facility; and
(2) It is technologically and economically feasible to meet the
applicable standards set forth in this part.3
The purpose of this provision is to discourage the perpetuation of a facil-
ity that, in the absence of a regulation, would normally have been replaced.
The owner or operator must provide EPA with advance information concerning
the reconstruction of an existing facility.3
5.2 MODIFICATIONS
Increased emissions could result from any number of physical or opera-
tional changes in existing plants. Several of the more plausible changes
are discussed here. The list is not exhaustive but rather is intended to
illustrate the types of changes that might reasonably be expected to occur.
5.2.1 Increased Production
Other factors remaining equal, an increase in the number of units
coated will result in increased emissions. This change, however, is explic-
itly covered in the Code of Federal Regulations:
(e) The following shall not by themselves be considered modifi-
cations under this part.
(2) An increase in production rate of an existing facility, if
that increase .can be accomplished without a capital expendi-
ture on the stationary source containing that facility.
(3) An increase in the hours of operation.2
A capital expenditure is defined as an expenditure exceeding the product of
the annual asset guideline repair allgwance percentage specified in the
latest edition of Internal Revenue Service Publication 534 and the facility's
basis (Section 1012, Internal Revenue Code).4 For tax year 1979, the
repair allowance for the electrical equipment industry (including commercial
and domestic appliances) was 5.5 percent of the basis.
Thus, a company that increases production by increasing line speed or
expanding operating hours might not have undergone a modification if these
changes could be made without a capital expenditure.
5-2
-------
5.2.2 Additional Coating.Stations
If additional coating stations were added, emissions could increase.
If the addition of extra spray booths resulted in the redesignation of that
coating operation as an "affected" facility, an additional capital expendi-
ture might be required to upgrade the other coating stations in that facility
to comply with the proposed NSPS standards.
5.2.3 Increased Film Thickness
A change to a thicker coating, if other factors remained constant,
could increase VOC emissions. However, if this change were made only to
improve product reliability, it might not be considered a modification.
5.2.4 Changes in Raw Materials
Changes in coating materials to produce new colors or appearance
finishes, increase corrosion resistance, or otherwise improve the quality
of 'the surface coating could be associated with increased organic-solvent
emissions. When these coating changes increase emissions, they will be
examined by the Administrator on a case-by-case basis to determine whether
or not they will be considered a modification of an existing facility.
Such changes in coating materials might be considered changes in raw mater-
ials, a category of change addressed specifically in the Code of Federal
Regulations:
(e) The following shall not, by themselves, be considered modifi-
cations under this part.
(4) Use of an alternative fuel or raw material if . . . .the
existing facility was designed to accommodate that alterna-
tive use. A facility shall be considered to be designed to
accommodate an alternative fuel or raw material if that use
could be accomplished under the facility's construction
specifications as amended prior to the change.2
Any of the following changes in materials or coating formulation could
increase organic-solvent emissions and would warrant a determination by the
Administrator as to whether it constituted a modification.
Lower solids coatings. If a change is made from a higher to
a lower solids coating (e.g., from an enamel to a lacquer),
more material—and hence more organic solvent—will be used
to maintain the same thickness of applied coating. While
unlikely, a change in the direction of lower solids could
occur in any one plant as a result of changed paint systems,
colors, models, or use of metallic coatings.
5-3
-------
Use of higher density solvent. Regulations normally restrict
the mass of organic solvent that can be emitted. An increase
in the density of the organic solvents used, even if the
volumetric amounts used were the same, would result in more
mass of organic solvent emitted. Such substitutions might
result from solvent shortages or attempts to cut paint
costs.
Increased thinning of coatings. A change to a higher viscos-
ity coating could increase use of organic solvents for
thinning the coating to proper viscosity for application.
5.3 RECONSTRUCTION
The term reconstruction means the replacement of components of an
existing facility to such an extent that the fixed capital cost of the new
components exceeds 50 percent of the fixed capital cost that would be
required to construct a comparable, entirely new facility.3 The circum-
stances that might lead to a reconstruction are too numerous to list. In
general, however, an extensive replacement of components might be required
if existing equipment were worn out, if there were an economic incentive to
change coating systems, or as a result of some combination of these two
factors.
The following examples illustrate the types of factors that might make
it economical to reconstruct an existing coating line.
5.3.1 Increased Solvent Costs
A significant increase in the cost of organic solvent could prompt
several coating system changes. A change to a high-solids coating contain-
ing less organic solvent might require new application equipment and/or
paint heaters. Conversely, new application equipment might be installed to
improve the efficiency with which the existing coating is applied.
5.3.2 Changes in Material Costs
Changes in the relative costs of various coating materials could make
a different coating system more attractive. For instance, a small increase
in the cost of prime coat materials might make powder more economical
because conversion to a powder system usually eliminates the need for a
prime coat. Likewise, an increase in coating cost might make the installa-
tion of new, more efficient application equipment economical.
5.3.3 Change in Product Demand
Increased product demand would lead to increased production. An
5-4
-------
increased production rate could make the economies of scale inherent with
more expensive equipment attainable.
5.4 REFERENCES
1. U.S. Environmental Protection Agency. Code of Federal Regulations.
Title 40, Chapter I. Subchapter A, Section 60.7. Washington, DC.
Office of the Federal Register.
2. U.S. Environmental Protection Agency. Code of Federal Regulations.
Title 40, Chapter I. Subchapter A, Section 60.14. Washington, DC.
Office of the Federal Register.
3. U.S. Environmental Protection Agency. Code of Federal Regulations.
Title 40, Chapter I. Subchapter A, Section 60.15. Washington, DC.
Office of the Federal Register.
4. U.S. Environmental Protection Agency. Code of Federal Regulations.
Title 40, Chapter I. Subchapter A, Section 60.2. Washington, DC.
Office of the Federal Register. .
5-5
-------
5-6
-------
6. MODEL PLANTS AND REGULATORY ALTERNATIVES
6.1 GENERAL •
Chapter 4 describes and evaluates the performance of individual control
technologies that can be used to reduce volatile organic compound (VOC)
emissions from surface coating operations in the large appliance industry.
This chapter identifies several practical regulatory alternatives based on
combinations of those previously described control technologies. The
relative effectiveness of these alternatives is assessed by their applica-
tion to four model plants that were developed to represent plants that will
be subject to the proposed standards. The environmental and economic
impacts of the several regulatory alternatives are discussed in Chapters 7
and 8.
6.2 MODEL PLANTS
The model plants defined herein are considered representative of new
or modified coating operations that might be installed in the 1981-1986
period. The plants attempt to model typical sizes, product mixes, and
coating techniques that would be installed in the absence of further air
pollution regulations. As such, they represent a "base case" for comparing
not only the effectiveness of the regulatory alternatives in controlling
air pollution but also the economic, energy, and adverse environmental
impacts of these alternatives. The selection of coating materials and
methods incorporated in the models is based on a review of published infor-
mation and discussions with appliance manufacturers, coating equipment
vendors, and coating formulators. The model plants provide for applica-
tion of organic-solvent-borne coatings conforming to the reasonably avail-
able control technology (RACT) guidelines for both prime coats and top
coats. In each case, curing occurs in a gas-fired oven.
6-1
-------
Four model plants of different size and product mix were selected as
representative of those likely to be constructed or modified during the
1981-1986 period:
13,000 units produced per year: 75 percent ranges and
25 percent microwave ovens (SIC 3631);
107,000 units produced per year: 75 percent ranges and
25 percent microwave ovens (SIC 3631);
392,000 units produced per year: 78 percent refrigerators
and 22 percent freezers (SIC 3632); and
657,000 units produced per year:
42 percent dryers (SIC 3633).
58 percent washers and
The plants operate 2,000 hours per year, and all of the products are to be
produced in four colors.
Estimating the capacity of each line (units per year) involved several
steps. First, 1978 sales data1 for plants in SIC codes 3631, 3632, and
3633 were arrayed in ascending order of magnitude. These data were then
plotted in a cumulative distribution of the percentage of total sales.
Because of the capital-intensive nature of large appliance surface coating
operations, new installations were anticipated to be large. For this
reason, a plant corresponding to the 75th percentile of the sales distribu-
tion for each of the three SIC codes was selected to represent a new line
that might be constructed in the 1981-1986 period. The 25th percentile of
the sales distribution for SIC code 3631 was also selected to ensure that a
small line was included for economic impact analysis. A model coating line
was not developed for SIC code 3639 (Household Appliances, Not Elsewhere
Classified) because of the diversity of products and line configurations in
'that classification. Sales data, however, indicated that the distribution
of plant sizes in SIC code 3639 was similar to the distribution in other
large appliance classifications. Therefore, the impacts of the several
regulatory alternatives on SIC code 3639 were reasoned to be similar to the
impacts predicted for the other three classification codes.
The mix of products for each plant was based on 1977 factory shipments
within that SIC category.2
Four primary factors determine the VOC emissions from large appliance
surface coating operations:
6-2
-------
Area coated,
Coating thickness,
Transfer efficiency, and
Coating composition.
Each of these parameters had to be defined for each model plant. The
area coated depends on production (more fully defined by parameters such as
capacity, degree of capacity use, and line speed), product mix, and unit
areas. Capacity was assumed to be fully used. Unit areas to be coated for
each of the appliances are shown in Table 7-1. In addition, three other
factors—organic-solvent type, curing time, and curing temperature—require
definition. In practice, a variety of organic solvents are used in appli-
ance coatings. However, for convenience, toluene was selected as the
solvent to be used for all operations in the model plants. The application
of organic-solvent-borne coatings conforming to RACT guidelines (62 percent
solids*) was selected for both prime coat and topcoat operations in
all the model plants. Because the Control Techniques Guidelines (CTGs)3 do
not specify a transfer efficiency, the model plants use an estimated indus-
try average transfer efficiency of 60 percent.
Application of a waterborne prime coat by electrodeposition (EDP) is
gaining wide acceptance in some sectors of the industry because of its
superior corrosion resistance and may be used to comply with State Imple-
mentation Plans (SIPs) conforming to the CTGs. EDP is also the most effec-
tive control technology for prime coating. Water-based flow coats may also
be used to comply with revised SIPs. For the segment of the large appli-
ance industry that adopts these technologies in the absence of regulatory
pressure, a New Source Performance Standard (NSPS) will have no impact on
VOC emissions. To the extent that EDP is adopted, subsequent calculations
may overestimate the emissions attributable to the NSPS. Nonetheless,
inclusion of either of these techniques in the model plants might have
underestimated the economic impact of the prime coat regulatory alterna-
tives described below. Underestimation of the economic impact was con-
sidered a more significant error than overestimation of emission reduction.
Through similar reasoning, a 62-percent (vol.) solids top coat applied
at a 60-percent transfer efficiency was selected for all the model plants,
although powder coatings represent the most effective control technology
*A11 percentages are by volume unless otherwise stated.
6-3
-------
for topcoating operations and may be used to achieve compliance. Because
powder coating technology is not universally applicable or accepted, it is
not represented in the model plants. To the extent that powder coating is
adopted, subsequent calculations may overestimate the emissions reductions
attributable to the NSPS.
A parametric description of each of the four model coating lines is
shown in Table 6-1 and Table 6-2.
6.3 REGULATORY ALTERNATIVES
This section discusses the several regulatory alternatives that were
developed following the study of control techniques available. Because
prime coating and top coating are independent sources of VOC emissions,
separate regulatory alternatives were required for each operation. These
alternatives are enumerated following a discussion of the baseline control
level.
6.3.1 Baseline Controls
Not promulgating an NSPS is one regulatory alternative that exists for
both surface coating operations. The level of control that would probably
exist in the absence of an NSPS is based on CTG recommendations. Because
the CTG does not differentiate between prime coat and topcoat operations,
the recommended level of control applies to both. Therefore, the CTG-
recommended limit (0.34 kg of organic solvent per liter of coating, minus
water [-62 percent solids by volume]) constitutes the baseline control
level for both operations. Because the CTG-recommended limit does not
specify a transfer efficiency, a transfer efficiency had to be assumed to
complete a meaningful analysis. The estimated average industry transfer
efficiency of 60 percent was used for this purpose.
As discussed in Section 6.2, some segments of the industry will prob-
ably employ control techniques that yield emission levels considerably
below those recommended by the CTG, even in the absence of further regula-
tions. Regulatory impact analyses, however, traditionally use the existing
emission limit as the baseline control level. One advantage of this approach
is that a worst case economic impact is assured. That is, the economic
impact is overestimated if a portion of the industry would have voluntarily
adopted more stringent controls than those assumed. On the other hand, the
6-4
-------
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assumption that new coating lines will meet existing regulations exactly
may result in an overly optimistic estimate of the emissions reduction
attributable to the NSPS. Energy and environmental impacts may also be
misrepresented to the extent that portions of the industry would have
voluntarily adopted more stringent controls than those required by existing
regulations.
6.3.2 Regulatory Alternatives for Prime Coat Operations
The three regulatory alternatives examined for prime coat operations
are:
A-I—not promulgating an NSPS,
A-II--promulgating an NSPS equivalent to the assumed CTG
limit, and
A-III--reducing emissions by 55 percent from the no NSPS
baseline.*
The no NSPS alternative is discussed in Section 6.3.1. The no NSPS
baseline is an emission limit equivalent to that resulting from the applica-
tion of a coating containing 62 percent (vol.) solids applied at an assumed
transfer efficiency of 60 percent.
Although the second alternative (promulgating an NSPS equivalent to
the assumed CTG limit) would have a limited impact on emissions, it offers
distinct advantages. The primary advantage is the specification of a
minimum transfer efficiency dependent upon the solids content of the coat-
ing, which would provide a more solid basis for future NSPS revisions and
would also permit an equivalence provision in the regulation. Such a
provision would permit tradeoffs between solids content and transfer effi-
ciency.
The third alternative (reducing emissions by 55 percent from the
no NS'PS baseline) could be accomplished through the use of a waterborne
coating containing 0.38 kg VOC per liter of solids applied by EDP (transfer
efficiency of 95 percent). EDP, the most effective control technology for
prime coating operations, is gaining wide acceptance, particularly in the
laundry products portion of the industry, because it provides superior
corrosion resistance.
^Reduction specified as a percent by weight per volume of solids
applied.
6-7
-------
The control levels of each regulatory alternative are shown in Tables 6-3
through 6-6.
6.3.3 Regulatory Alternatives for Topcoat Operations
For topcoat application and cure, the range of regulatory alternatives
available is adequately represented by the following:
B-I—not promulgating an NSPS,
B-II—promulgating an NSPS equivalent to the assumed CTG
limit,
B-III—reducing emissions by 30 percent from the no NSPS.
baseline,* and
B-IV—eliminating emissions.
The no NSPS alternative is discussed above. As was the case for prime
coat operations, the no NSPS baseline is an emission limit equivalent to
the limit resulting from the application of a coating containing 62 percent
(vol.) solids applied at an assumed transfer efficiency of 60 percent.
While the second alternative (promulgating an NSPS equivalent to the
assumed CTG limit) would have a limited impact on emissions, it has the
advantage of specifying a minimum transfer efficiency. This advantage has
been discussed previously in conjunction with the comparable prime coat
alternative.
The third alternative (reduction of emissions by 30 percent from the
no NSPS baseline) is based on the application of a 70-percent (vol.) solids
top coat applied at a 60-percent transfer efficiency. An equal reduction
can be achieved with a 65.5-percent (vol.) solids top coat coupled with an
incinerator (90 percent overall efficiency) on the topcoat oven exhaust.
The fourth regulatory alternative (elimination of emissions) can only
be achieved through the use of 100 percent (vol.) solids coatings (i.e.,
powder). The use of powder is the most effective control technology for
topcoat operations.
The levels of control of each of the regulatory alternatives are shown
in Tables 6-3 through 6.6.
^Reduction specified as a percent by weight per volume of solids
applied.
6-8
-------
TABLE 6-3. MODEL PLANT 1: ANNUAL VOC EMISSIONS
Topcoat regulatory alternative
B-IF
B-Iir
B-IV"
Prime coat (% (% (% (%
regulatory reduc- reduc- reduc- reduc-
alternative (kg/yr) tion) (kg/yr) tion) (kg/yr) tion) (kg/yr) tion)
A-Ia
A-IIb
A-III6
768
768
, 747
0
0
3
768
768
747
0
0
3
599
599
578
22
22
25
0
0
0 ;
100
100
100
Not promulgating an NSPS.
Promulgating an NSPS equivalent to the assumed CTG limit.
cApplying a 70-percent solids at 60 percent transfer efficiency.
Applying a powder; prime coat not required.
eApplying a waterborne prime coat by EDP; area coated is twice the area
for spray application.
TABLE 6-4. MODEL PLANT 2: ANNUAL VOC EMISSIONS
Topcoat regulatory alternative
B-Ia
Prime coat
regulatory
alternative
A-Ia
A-IIb
A-III6
(kg/yr)
6,330
6,330
6,160
(%
reduc-
tion)
0
0
3
R TTb R-TTTC
£511 Dill
(kg/yr)
6,330
6,330
6,160
(%
reduc-
tion)
0
0
3
(kg/yr)
4,940
4,940
4,770
(%
reduc-
tion)
22
22
25
B-IVd
(kg/yr)
0
0
0
(%
reduc-
tion)
100
100
100
Not promulgating an NSPS.
Promulgating an NSPS equivalent to the assumed CTG limit.
GApplying a 70-percent solids at 60 percent transfer efficiency.
Applying a powder; prime coat not required.
eApplying a waterborne prime coat by EDP; area coated is twice the area
for spray application.
6-9
-------
TABLE 6-5. MODEL PLANT 3: ANNUAL VOC EMISSIONS
Topcoat regulatory alternative
B-r
B-IF
B-nr
B-IV1
Prime coat (% (% <% ^
regulatory reduc- reduc- reduc- reduc-
alternative (kg/yr) tion) (kg/yr) tion) (kg/yr) tion) (kg/yr) tion)
A-Ia
A-IIb
A-IIl'
107,000 0 107,000 0 94,100 12 64,100
107,000 0 107,000 0 94,100 12 64,100
71,900 33 71,900 33 59,000 45 28,900
40
40
73
aNot promulgating an NSPS.
bPromulgating an NSPS equivalent to the assumed CTG limit.
Applying a 70-percent solids at 60 percent transfer efficiency.
Applying a powder.
eApplying a waterborne prime coat by EDP.
TABLE 6-6. MODEL PLANT 4: ANNUAL VOC EMISSIONS
Topcoat regulatory alternative
B-r
B-II
B-iir
B-IV1
Prime coat (% (* <% (^
requlatory reduc- reduc- reduc- reduc-
alternative (kg/yr) tion) (kg/yr) tion) (kg/yr) tion) (kg/yr) tion)
A-Ia
A-IIb
A-ine
77,800
77,800
74,900
0
0
4
77,800
77,800
74,900
0
0
4
63,100
63,100
60,300
19
19
22
0
0
-0
" 100
100
100
aNot promulgating an NSPS.
bPromulgating an NSPS equivalent to the assumed CTG limit.
cApplying a 70-percent solids at 60 percent transfer efficiency.
Applying a powder; prime coat not required.
Applying a waterborne prime coat by EDP; area coated is twice the
area for spray application.
6-10
-------
6.4 REFERENCES
1.
EPA Economic Information System (EIS), Plant Data Base.
Library. Research Triangle Park, NC. 1978.
EPA Technical
Major Household Appliance Industry. In: Current Industrial Reports.
Bureau of the Census, U.S. Department of Commerce. MA-36R (77)-l.
Washington, DC. 1978.
Emissions Standards and Engineering Division, U.S. Environmental
Protection Agency. Control of Volatile Organic Emissions From Existing
Stationary Sources—Volume V: Surface Coating of Large Appliances.
Research Triangle Park, NC. EPA-450/2-77-034. December 1977.
6-11
-------
"ANNEX TO CHAPTER 6
SAMPLE CALCULATIONS—MODEL PLANT 2
VOC EMISSIONS
Prime Coat
160,500 "i2 of appliance coated x 12 x 1Q-6 ffl th1ck
m3 of coating _ _ m3 of coating used _ _'
0.62 ma of coating solids 0.60 m3 of coating applied to parts
c TO m3 of coating used
= 5.18 - yp-3 -
Organic solvent assumed to be toluene
_ __ m3 of coating used v n no m3 VOC emitted
5.18 j^ x U.CJB ma coating
_ , 7nf;
~ -1'706
kg VOCs emitted
VOCs -' yr
80% of emissions in application (including flashoff)
20% of emissions in cure oven
T
1,
kg VOCs emitted
— - — -
kg VOCs emitted in application
kg VOCs emitted v n 9n _ OAT kg VOCs emitted in cure oven
1,706 - — - x u.^u - 5i\. yr
Top Coat
9cn fli9 m2 coated ?n in-6 ... k m3 coating
260,812 - — - x 20 x iu m tnicK x 0 62 ma g^
m3 coating used
0.60 ma coating applied to parts
kg VOCs emitted
n
m3 VOC emitted
m3 coating x m3 VOCs
86? kg
3
k VOCs
4 619 kg VOCs x 0.80 = 3,695 ka VOCs emitted in application
4 619 kg VOCs x o 20 = 924 kfl VOCs emitted in cure oven
6-12
-------
ENERGY REQUIREMENTS
Pretreatment—Washer
Cleaner Stage
7 rings with 16 nozzles per ring
n HOPS
of fluid
minute nozzle
Fluid' temperature: 71° C
,'. v 16 nozzles v 0.02275 m3
7 rings x - ^— x m1nute nozz1e
-, ,9I. in?
1-625 x 10
60 min
hr
x2'000 hrx
GJ
yr
W
x 2 cleaning stages
V I JL.\J W
Rinse Stage
6 rings with 10 nozzles per ring
9»937 ^
0.0228
f f1u1
minute nozzle
Fluid temperature: 71° C
10 nozzles
6 rings x
x 0.02275
minutnozzle
i.625 x 10'
hr
x 60 x 2,000 x
M-, x 2 rinse stages = 5,324 ^ .
P 7
Total washer energy requirements: 15,261 — .
Pretreatment — Dryoff Oven
Dimensions: 100 ft long by 5 ft wide by 7 ft high
Surface area: 2(100 ft x 5 ft) + 2(5 ft x 35 ft) + 2(100 ft x 7 ft)
= 2,470 ft2 = 228 m2
Oven temperature: 150° C
Radiation loss
228 m2 x e^ x (1500 C - 20° C) x 2
x
= 363 GJ/yr
6-13
-------
Heat conveyor
Line speed = 0.061 m/s.
Assume steel construction, conveyor reaches 127° C.
0.061 - x 32.74 ^fl x 1,000 ^ x (127° C - 20° C) x 0.125
X 3>600 X 2>000 = 804
0.239 cal 10
Heat appliances
Assume 1.5 lb/ft2 (7.32 kg/m2) coated.
160j500 M2 coated x 7.32 -^ x 1,000 SE x 0.125
yr m Kg gin
x (150° C - 20° C)
X
0.239 cal
Heat air
= 80
Solution is by trial and error. Only air requirements are for natural
gas burner.
(1) Sum of energy requirements found so far:
363 GJ/yr + 804 GJ/yr + 80 GJ/yr = 1,247 GJ/yr .
(2) Air required for combustion to provide the total energy requirement:
1Q9 J
x
x 2.83 x 10~7 ^r x hr
yr ^vT " 2,000 hr " t""" " " J 3,600 s
= 0.049 -p air @ STP .
(3) Energy required to heat air to oven temperature:
0.049
x
X 2'000
= 64 GJ/yr
(4) Add this energy requirement to sum found in Step 1:
1,247 GJ/yr + 64 GJ/yr = 1,311 GJ/yr .
c) x
5
hr
6-14
-------
(5) Recalculate combustion air and energy to heat it:
yr
2'83 X 10
hr
x 1,294.5 P x 0.24
2,000 hr " t"J" " "" J 3,600 s
x (150 - 10) °C x 3,600 f-
, ' i n -t r* 1
li^C U uU __ /-~7 *3vJ •
x 2,000 — x 0 239 cal x ^gg-j - b/ —
A repeated iteration would not significantly increase accuracy. Total pre-
PI
treatment dryoff oven energy requirement is: 1,314 —
Total pretreatment energy requirement is:
15,261 |p + 1,314 |£ = 16,575 |£ '
Prime Coat Application .
1.672 m2 of booth openings x 30.48 act^I m = 50.98 actual mVmin .
^n Qft m3 x 273 standard m3
50'98 iTn" 293 actual m3
x 0 24 x
nr gm °C
C)
x 60 H"n x 2,000 SJ x
GJ
-p^ - t,«uu — - 0 23g ca]
Prime Coat Cure Oven
= 74 GJ/yr
Oven dimensions: 80 ft long by 16 ft wide by 8 ft high
Surface area: 2(80 x 16) + 2(8 x 16) + 2(8 x 80) =4,096 ft2 = 381 m2
Oven temperature: 164° C
Calculations similar to dryoff oven except that air to maintain a maximum
of 25% of LEL must be supplied.
Organic solvent assumed to be toluene:
_ _ (403) (D) (100) (C) .
q ~ (MW) (LEL) (B)
Q = exhaust gas flow, actual ft3 @ 70° F/pt of VOCs emitted.
D = density 0.866 g/m£.
C = safety factor (to maintain vapor concentration at 25 percent of the
LEL in continuous, properly ventilated ovens, 1=4).
6-15
-------
MW = molecular weight of toluene, 92.13 Ib/lb-mole.
LEL= lower explosive limit of toluene in percent, 1.4%.
B = constant to account for the fact that the LEL decreases at elevated
temperatures (B = 0.7 for temperatures above 250° F).
(403) (0.866) (100) (4) _ , ,-/,<: acf @ 70 °F Q
(92.13) (1.4) (0.7) ~ •L'D4b pt of VOCs
OAT kg VOCs m3 q? ,-fin am3 of air 273 sm3
341 ~yr 866 kg 92'560 m3 of VOCs 294 am3
actual m3 of air 0 21° C
m3 of VOCs
yr
x
X
hr = n 0047
°-0047
2,000 hr 3,600 s
*>
0.0047 |- x 1,294.5 ^ x 0.24
at STP
x (164° C - 10° C) x 3,600
hr
x 2,000 — x
yr
GJ _
= 7 GJ/yr
0.239 cal 109
Total prime coat energy requirement
Application 74 GJ/yr
Radiation losses 653 GJ/yr
Conveyor 1,053 GJ/yr
Appliances 86 GJ/yr
Heat total air 103 GJ/yr
Total 1,972 GJ/yr
Topcoat Application
Similar to prime coat application except additional ventilation air is
required for the touchup booth:
-------
7. ENVIRONMENTAL IMPACT
7.1 GENERAL
Surface coating lines for large appliances are stationary point sources
of organic solvent emissions. These emissions occur entirely inside a
plant, during coating application, solvent flashoff, and the curing process.
Chapter 6 discusses several model plants that were used to estimate the
volatile organic compound (VOC) emissions from prime coating and top coating
representative large appliances in four Standard Industrial Classification
(SIC) categories:
3631: Household Cooking Equipment,
3632: Household Refrigerators and Home and Farm Freezers,
3633: Household Laundry Equipment, and
3639: Household Appliances, Not Elsewhere Classified.
The objective of this New Source Performance Standard (NSPS) is to
limit VOC emissions through standards that reflect the degree of emission
reduction achievable by using the best system of continuous emission reduc-
tion. The Control Techniques Guidelines (CTGs) call for using reasonably
available control technology (RACT) to control existing sources. Several
alternative solvent emission control techniques (options) have been identi-
fied in the large appliance industry, the environmental impacts of which
are discussed in this chapter.
Total U.S. VOC emissions resulting from the surface coating of major
household appliances were determined for 1981, assuming the use of 62 per-
cent solids coatings for both prime coats and top coats, a standard area of
metal coated for each appliance, a U.S. production figure for each repre-
sentative appliance, and toluene as the organic solvent. Estimates were
made of 1986 emissions, assuming the imposition of the various regulatory
alternatives.
7-1
-------
7.2 STATE REGULATIONS AND CONTROLLED EMISSIONS
7.2.1 Revised State Implementation Plans and VOC Regulations
The Clean Air Act Amendments of 1977 require each State not meeting
primary standards for photochemical oxidants to submit to EPA a revised
State Implementation Plan (SIP) containing regulations for the control of
VOC emissions from existing stationary sources in nonattainment areas. The
regulations are to be based on RACT and are to be modeled after the recom-
mended standard contained in the CTG document for that particular source
category.
The CTG for the surface coating of large appliances recommends a VOC
emission limit of 0.34 kg/A (2.8 Ib/gal) of coating (minus water). The
standard can be achieved through the application of add-on controls or
through the use of low-organic-solvent coating technology.
States are also encouraged to adopt the 1976 EPA policy regarding the
use of photochemically reactive organic compounds (41 FR 5350, February 5,
19761). Generally, this policy recognizes that nearly all of the previously
acceptable organic-solvent compounds listed in Appendix B of 40 CFR Part 512
are ultimately photochemically reactive.
Revised SIP regulations are expected to have a significant impact on
VOC emissions from existing facilities. Of the 171 large appliance surface
coating facilities, a total of 123 are located in nonattainment areas where
these VOC regulations will apply. However, only a portion of the draft
plans required from 41 States have been submitted to EPA to date. For this
reason Section 7.2.2, below, focuses on State regulations that are cur-
rently in effect.
7.2.2 State Regulations and Controlled Emissions
Sixteen States currently apply specific organic-solvent usage regula-
tions on a statewide basis. With few exceptions, these regulations prescribe
specific numerical limitations unless emissions are reduced by 85 percent
prior to discharge. Regulations typically require that reduction be achieved
through incineration, adsorption, or other equally efficient State-approved
means. Such regulations usually provide that oven emissions not exceed
3 Ib/hr, or a total of 15 Ib/day.
Many States also impose a limitation of 8 Ib/hr of photochemically
reactive solvents, or a total of 40 Ib/day. A majority of States require
7-2
-------
that any emissions resulting from the actual drying period (up to 12 hours),
as well as from the use of solvents for the cleanup of machinery, be included
as emissions sources. However, the typical regulation contains a provision
that permits the sale or disposal of containers of up to 1% gallons of such
matter. Such provisions are usually directed at the use of photochemically
reactive solvents in architectural coatings.
Limitations on photochemically nonreactive emissions are currently
imposed by only four States: California, Colorado, Connecticut, and Okla-
homa. Connecticut, with the most stringent standards, determines that
emissions may not exceed 160 Ib/hr or a total of 800 Ib/day, unless reduced
by 85 percent prior to discharge. However, California, which currently
imposes a limitation of 396 Ib/hr (not to exceed 2,970 Ib/day), will require
that sources emit no more than 81 Ib/hr (or 600 Ib/day) of photochemically
nonreactive solvents by December 1980. In contrast, both Colorado and
Oklahoma currently impose an emission limitation of 450 Ib/hr of photo-
chemically nonreactive matter, or a total of emissions that may not exceed
3,000 Ib/day.
As noted, most regulations encourage the use of photochemically non-
reactive solvents by offering exemptions for their use. Both Indiana and
Virginia provide specific exemptions for surface coating operations that
use nonphotochemically reactive solvents. Similar provisions are included
in regulations developed in Colorado and Louisiana, although, with evidence
of economic hardship, some exemptions from emission limitations may still
be obtained.
The majority of States or localities that have promulgated specific
solvent regulations also provide one or more of the following use or process
exemptions for paint and coating operations:
Application of waterborne or high-solids coatings;
Manufacture, transport, and storage of organic solvents; and
Application, sale, and disposal of architectural coatings
containing photochemically nonreactive solvents.
Some States exempt surface coating operations entirely from regulatory
restrictions. For example, Alabama does not impose an emission limitation
on the application of organic solvents in paint spray booth installations.
Other States permit higher emissions from painting operations, depending on
7-3
-------
the size of the facility or the amount of coating used. A regulation
imposed in Connecticut exempts all equipment used in surface coating opera-
tions if the quantity of coating (including organic solvent) is less, than
30 Ib/hr. In Illinois, painting operations that use less than 5,000 gal/yr
of coating (including organic solvent) are exempted from regulation.
Wisconsin permits spray booth operations to emit up to 30 Ib/hr of organic
solvent in lieu of the 15-lb/hr limitation imposed on other sources.
Of those 36 States that currently provide general control of VOC
emissions through permit systems, most specifically address emissions
resulting from paint and coating operations. Generally, facilities must
register as emission sources pursuant to their State permit system require-
ments. Although emission reductions may be required on a case-by-case
basis, specific emission limitations are not imposed. However, sources may
not permit emissions that violate applicable ambient air quality standards
or other Federal laws. State regulations often exempt the following equip-
ment from permit requirements:
Porcelain enameling furnaces and drying ovens,
Sources emitting less than 10 Ib/hr of VOCs,
Unheated rinsing or solvent-dispensing containers under 60
gallons, and
Equipment used exclusively for washing or drying products
fabricated from metal.
7.3 OPTIONS: UNCONTROLLED AND CONTROLLED EMISSIONS
The CTG for large appliance surface coating recommends the use of
coatings containing a maximum of 0.34 kg of organic solvent per liter of
coating (less water). In response to these guidelines, States are submit-
ting revised SIPs to control VOCs. It appears that most of these revised
SIPs will incorporate the CTG-recommended limit exactly. Therefore, this
level of control represents the baseline with which the effects of the
various regulatory alternatives are to be compared. Because the concept of
transfer efficiency was not included in the CTG, an industry average transfer
efficiency has been assumed for makihg/these comparisons. Thus, the no
NSPS baseline is an emission limit equal to the limit resulting from a
coating containing 62 percent (vol.) solids applied at an assumed transfer
efficiency of 60 percent. Estimates of nationwide emissions have been made
7-4
-------
for each regulatory alternative for 1981—the year of promulgation—and for
1986. For a historical perspective of these estimates, nationwide emissions
for the industry for 1976 have also been estimated. These estimates are
shown in Table 7-1 and Figures 7-1 through 7-3, which follow.
7.4 WATER POLLUTION IMPACTS
Wastewater sources from large appliance surface coating operations
consist of discharges from paint booths, EDP operations, and associated
rinses. These discharges include paint, paint additives, and rinse water.
Analytical tests have been completed on samples taken from each of these
discharges, with analysis schemes based on historical knowledge of pollutants
in paint. Many of the pollutants characterized are on the water priority
pollutant list.3
*The efficiency of paint application is a significant factor in the
quantities of pollutants discharged because the majority of the paint
solids not applied to the product are trapped in the water curtain designed
for this purpose.
7.4.1 Paint Booth Effluents .
Sludge accumulates in spray booths to the point that they are period-
ically drained and cleaned. The usual time interval for this process is
about 1 month, although paint type, paint additives, application method,
transfer efficiency, paint booth size, and line speed all influence the
time interval.
The sludge is almost entirely composed of the paint solids overspray.
Some of the VOCs, which also constitute part of the overspray, are ini-
tially entrapped in the water wash spray, but most of these VOCs are even-
tually reevaporated into the atmosphere. The solids are mechanically
separated from the water to form a sludge, leaving some organics in the
water from the solvent and the solids.
The most commonly detected organic pollutants in significant quant-
ities were toluene, bis(2-ethylhexyl)phthalate, naphthalene, and ethylben-
zene. These organics are all found in substantial quantities as constituents
of paint.3
The mass discharge rates of these pollutants should not increase with
any NSPS option. The transfer efficiency of spray painting should not
7-5
-------
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20
15
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A-I or A-II
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1976 1981 1986
Figure 7-1. Annual prime coat emissions for various regulatory alternatives.
7-7
-------
20
15
CO
O
c. 10
in
§
8
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B-I or B-II
B-HI
B-IV
1976
1981
1986
Figure 7-2. Annual topcoat emissions for various regulatory alternatives.
7-8
-------
20
15
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S
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E
UJ
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1976
1981
1988
Figure 7-3. Combined annual emissions (prime coat and topcoat)
for various regulatory alternatives.
7-9
-------
decrease with the spraying of coatings with higher solids concentration.6
Therefore, no greater amounts of solids or organic solvent should be en-
trapped in spray booth water.
7.4.2 EDP Effluents
Priority pollutants found in EDP processes come mainly from rinse
water and to a lesser extent spills and drips from the actual coating in
the dip tank. Commonly detected pollutants are toluene, phenol, ethyl ben-
zene, bis(2-ethylhexyl)phthalate, and methyl chloride.3 One source has
analyzed anodic rinse effluent and determined a 5-day Biochemical Oxygen
Demand (BOD5) of about l.-OOO mg/£.3 Another source indicates that a BOD5
from anodic permeate may be as high as 10,000 mg/£ and have a Chemical
Oxygen Demand (COD) of 40,000 mg/£.7 Although the volumes of these wastes
are small, they have a high pollution potential.
If there is a shift from organic-solvent-based systems to EDP, the
BOD5 and COD load to the plant wastewater will increase. This increase is
not believed to be of sufficient magnitude to impact on existing water
pollution problems.
7.4.3 Conclusions. Water Impacts
The surface coating of large appliances detrimentally affects the
water environment. However, the problem would be minimal with any of the
options proposed for NSPS development. As noted, transfer efficiency will
not diminish with the spraying of coatings with higher solids concentra-
tions.6 Thus, no greater quantity of solids or organic solvent should
enter the spray booth or EDP water.
7.5 SOLID WASTE IMPACTS
No serious solid waste impacts are associated with any of the regula-
tory alternatives. Sludge requiring eventual disposal may develop in an
EDP dip tank but is usually the result of improperly controlled chemistry
or poor upkeep.3 Likewise, sludge may accumulate on the spray booth walls
or floor. In the case of spray booth sludge, however, the volume is expected
to decrease because improved transfer efficiencies will decrease the amount
of overspray. Although not an incremental impact attributable to any of
the regulatory alternatives, these paint wastes have been defined as hazard-
ous in 40 CFR 261.318 and therefore must be disposed of in accordance with
40 CFR Part 262.9
7-10
-------
Reuse of coatings containers makes their impact on solid waste small.
7.6 ENERGY IMPACT
The energy usage in the large appliance surface coating industry is
presented in Table 7-2. The energy used in 1976 is contrasted with projec-
tions of energy use for 1981 and for 1986, assuming the imposition of the
several regulatory alternatives. The projections are based on estimates of
energy consumption per unit of production developed for the model plants in
Chapter 6.
As shown in Table 6-2, pretreatment (cleaning and dryoff) accounts for
roughly 80 percent of the energy consumed in coating operations. Because
pretreatment energy is such a large portion of the total, none of the
regulatory alternatives has an impact of more than 5 percent in a typical
plant. The nationwide impact (Table 7-2) is even less significant because
only a fraction of the industry will be subject to the NSPS by 1986.
If the pretreatment energy is excluded, the relative impacts of the
several regulatory alternatives become more clear. Although the EDP process
(Regulatory Alternative A-III) is more energy intensive than spray prime
coating methods, a net energy savings is possible because parts can be
placed in the EDP tank while still wet. Hence, the need for a dryoff oven
is eliminated and an energy savings of approximately 10 percent results.
On the other hand, use of an incinerator with 60 percent heat recovery on
the topcoat oven (Regulatory Alternative B-III) would increase energy
consumption approximately 8 percent. Powder (Regulatory Alternative B-IV)
would result in a savings of roughly 20 percent. The savings is possible
because, except in the case of laundry equipment and dishwashers, powder
can be applied direct-to-metal and the prime coat step eliminated.
7.7 OTHER ENVIRONMENTAL IMPACTS
No other environmental impacts are expected to arise from standards of
performance for large appliance surface coating, regardless of the alterna-
tive emission control system selected as the basis for standards.
7.8 OTHER ENVIRONMENTAL CONCERNS
7.8.1 Irreversible and Irretrievable Commitment of Resources
The alternative control systems will require installation of additional
equipment in new sources for each alternative emission control system,
7-11
-------
TABLE 7-2. ESTIMATES OF ANNUAL ENERGY CONSUMPTION: 1976. 1981, 1986
Annual energy consumption (10a GJ)
Production
SIC code 1975
3631 -
3632 -
3633 -
3639 -
Household Cooking Equip- 6,036
ment
Household Refrigerators 6
and Freezers
Household Laundry Equip- 7
ment
Household Appliances not 11
Elsewhere Classified
,359
,665
,613
CIO3
•1981
8
7
8
12
,300
,570
,635
,845
units)3
1986
10
8
9
16
,385
,595
,485
,825
1QQG
1976 1981 No NSPS
1,
1,
1,
1,
158 1,606 2,009
211 1,414 1,606
090 1,263 1
933 2,153 2
Production data:
1976: yearly production figure for
1981: yearly production figure for
1986: yearly production figure for
average growth rate projected
each appliance
each appliance
each appliance
by Appliance
from
Appliance magazine
from Appl iance magazine
obtained by extending "f
magazine, January 1980, s
,388
,820
1986 incremental
consumption
A-III B-III
(28) 36
(15) 6
(5) 7
(27) 21
B-IV
(56)
(45)
3
(47)
-
, April 1980."
, January 1980. 5
or 1 year the annual
for the 1981-1985 period.
^Annual energy consumption:
1976:
1981-
19NSPS)?
assumes the use of coatings containing 30 percent (vol.) solids applied at a transfer
tnumesnthe0use0ofeCTG-recommended coatings containing 62 percent (vol.) solids applied
at an assumed transfer efficiency of 60 percent.
energy required for any combination of prime coat Regulatory Alternatives A-I or A-II and
topcoat Regulatory Alternatives B-I, B-II, or B-IV.
SIC 3631: based on energy consumption per unit of production for Model plant 2, Chapter 6.
SIC 3632: based on energy consumption per unit of production for Mode plant 4, Chapter 6.
SIC 3633: based on energy consumption per unit of production for Model plant 3.Chapter 6.
SIC 3639: based on average energy consumption per unit of production developed for Model
plants 1, 2, 3, and 4, Chapter 6.
C19S6 incremental consumption:
i-rrr- incremental energy required if Regulatory Alternative A-III is adopted.
tin- nlrementa energy required if Regulatory Alternative B-III (incineration option) is adopted;
-"'
-------
except for the 62-percent solids topcoat option. This requirement will
necessitate the additional use of steel and other resources. The commit-
ment of resources will be small compared to national use of each resource.
Ultimately, a good quantity of these resources will be salvaged and recycled.
No significant amounts of space (or land) are required to install control
equipment and/or new coating technology because all control systems can be
located within little additional space. Therefore, only limited land
commitment is expected for additional control devices and/or application
equipment.
7.8.2 Environmental Impact of Delayed Standards
Delay of standards proposal for the large appliance surface coating
industry will have minor negative environmental effects on hydrocarbon
emissions to the atmosphere and minor or no impacts on water and solid
waste. Furthermore, no emerging emission control technology appears to be
on the horizon that could achieve greater emission reductions or result in
lower costs than those represented by the emission control alternatives
considered here. Consequently, delaying standards to allow further tech-
nical developments appears to present no tradeoff of higher organic-solvent
emissions in the near future for lower emissions in the distant future.
7.8.3 Environmental Impact of No Standards
Growth projections are presented in earlier sections. The increase in
production of all large appliances will add little to nationwide VOC emissions.
Essentially no adverse water and solid waste disposal impacts are
associated with the alternative emission control systems proposed in this
section. Therefore, as in the case of delayed standards, there is no
tradeoff of potentially adverse impacts in these areas against the negative
result on air quality that would be inherent with not setting standards.
REFERENCES
7.9
1.
Strelow, Roger. Policy Statement on the Use of the Concept of Photo-
chemical Reactivity of Organic Compounds and State Implementation
Plans for Oxidant Control. Federal Register. 41(25):5350. Febru-
ary 5, 1976.
U.S. Environmental Protection Agency. Code of Federal Regulations.
Title 40, Chapter 1, Part 51, Appendix B. Washington, DC. Office of
the Federal Register. July 1979. p. 107.
7-13
-------
3. CENTEC Corporation. Draft-Contractor Report for Development of Efflu-
ent Limitations Guidelines for Paint Application Processes Used in the
Mechanical and Electrical Process Industries. (Prepared for U.S.
Environmental Protection Agency.) EPA Contract Number 68-02-2581.
July 1979.
4. Statistical Review. Appliance. 37(4). April 1980.
5. Owens, D. L., and Stephens, J. 1980-1990: A Promising Transition.
Appliance. 37(1). January 1980.
6. Memo from Daum, K. A., Research Triangle Institute, to Docket.
April 13, 1979. Meeting with Glidden Coatings and Resins Company,
Strongsville, Ohio.
7. Letter from Goodgame, T. H., Whirlpool Corporation, to Johnson, W. L.,
Chemicals and Petroleum Branch, U.S. Environmental Protection Agency,
February 22, 1980. New Source Performance Standards.
8. U.S. Environmental Protection Agency. Code of Federal Regulations.
Title 40, Chapter I, Part 261.3. Washington, DC. Office of the
Federal Register. July 16, 1980.
9. U.S. Environmental Protection Agency. Code of Federal Regulations.
Title 40, Chapter I, Part 262. Washington, DC. Office of the Federal
Register. November 19, 1980.
7-14
-------
8. ECONOMIC IMPACT
8.1 INDUSTRY CHARACTERIZATION
8.1.1 General Profile
In 1978 a total of 95 companies, operating 171 facilities, engaged i i
the production of large appliances. Although plants are widely dispersed
throughout 29 States, industry production is concentrated in the Midwestern
and Midsouthern States. Key producing States include Ohio, Illinois,
Indiana, Michigan, Minnesota, Kentucky, and Tennessee.1 On an EPA regional
basis, Region V contains 37 percent of total establishments and Region IV,
22 percent.
Horizontal integration, or production of more than one type of appliance,
is a distinctive feature of the large appliance industry, and market segmenta-
tion is evident. The large appliance industry is currently dominated by
three manufacturers, the combined sales of which accounted for 65 percent
of total sales in 1978. Each company produces three or four product lines
of most, if not all, Standard Industrial Classification (SIC) categories of
products. Competition among the dominant manufacturers is strong because
each emphasizes the production of traditional large appliance products such
as washing machines and dryers, cooking equipment, and refrigerators. The
numerous smaller companies may experience limited competition in this
field, but most tend to specialize in the production of a certain type or
class of appliance, such as trash compactors, dishwashers, gas ranges, or
water heaters. However, the vast majority of manufacturers, both large and
small, produce only large appliance items.1
The lack of genuine product differentiation in the eyes of the con-
sumer makes competitive pricing a major determinant in market success and a
significant characteristic of the large appliance industry. Efficient*
high-volume production techniques are necessary to achieve and maintain
competitive pricing. Through mass production, economies of scale are
8-1
-------
achieved, lowering the unit cost. Although aggressive competitive pricing
has enabled the industry to maintain product prices with only minimal price
increases, however, it has also resulted in numerous small companies closing
in recent years because of their inability to compete effectively in the
market. New companies are also discouraged from entering the market, and
their number is declining each year.2
Aggressive competitive pricing within the industry is evidenced by the
minimal price increases for large appliance products. The Consumer Price
Index of 114.4 for appliances in December 1975 can be compared to an index
of 193.4 for all manufacturing industries, when measured against the 1957
to 1959 base of 100. The Consumer Price Index for selected large appli-
ances from 1957 through 1977 is indicated in Table 8-1; the wholesale price
index is listed in Table 8-2. Specifically, the typical midrange refriger-
ator that retailed at $299 from 1952 through 1967 currently retails at
approximately $350. The average washing machine that sold for $279.95
through 1967 retails at slightly over $300 in 1979. Again, a midrange
dishwasher that retailed at $289.95 in 1967 now retails at approximately
$300.3 Although inflationary pressures are expected to result in industry-
wide increases during the next few years, industry analysts believe price
increases will remain minimal.4
The industry in this country is dominated by three diversified manu-
facturers: General Electric Company (GE), Whirlpool, and White Consoli-
dated Industries (WCI). . The latter currently markets appliances under such
trade names as Kelvinator, Westinghouse, and Gibson. Table 8-3, based on
information from 171 facilities with employment of 20 or more persons and
annual net income over $100,000, lists the 12 leading manufacturers of
large appliances. Annual sales, market share, and branch plants or sub-
sidiary companies are also indicated for each SIC category of products.
GE is the primary manufacturer of large appliances. In sales, over
25 percent of the electric and gas ranges (SIC 3631); 29.2 percent of the
refrigerators and freezers (SIC 3632); 32.7 percent of the washers and
dryers (SIC 3633); and 19.2 percent of the dishwashers, trash compactors,
and other products included in SIC 3639 are GE products.1 One of the chief
reasons GE dominates the large appliance industry is that approximately
35 percent of its products are purchased directly by the construction
8-2
-------
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Industry for use in new homes and apartments, rather than by retail
distributors.
Second only to GE in appliance sales, Whirlpool specializes in produc-
ing refrigerators and freezers (SIC 3632) and washers and dryers (SIC 3633).
During 1978, Whirlpool accounted for 25.1 percent of all washer and dryer
sales and 31.8 percent of the refrigerator and freezer sales. Whirlpool,
under the Kenmore brand, is the sole supplier of refrigerators, washers,
and dryers to Sears Roebuck and Company. This customer accounts for approxi-
mately two-thirds of Whirlpool's annual sales.6
Rivaling Whirlpool in large appliance sales is WCI. Although WCI's
market shares are currently smaller than those of Whirlpool—5 percent of
electric and gas ranges (SIC 3631), 12.8 percent of refrigerators and
freezers (SIC 3632), and 7.9 percent of washers and dryers (SIC 3633)—the
recent acquisition of General Motors' Frigidaire line will provide WCI with
approximately one-quarter of the large appliance market.6 The acquisition
program initiated by WCI is further discussed in Section 8.1.2 of this
chapter.
Large appliance plants vary widely in both size and age. According to
an industry analyst, the newest major facility was constructed in 1962.
Most plants producing traditional large appliance products such as refrig-
erators and washing machines are approximately 40 to 45 years old. Smaller
plants manufacturing more modern products such as trash compactors or
microwave ovens may be, on the average, about 20 years old. However,
nearly all plants undergo retooling every 5 to 7 years and line modifica-
tions about every 10 to 15-years.7
The sizes of large appliance plants as measured by annual production
depend significantly upon the product manufactured. Thus, the estimated
median sizes of facilities producing large appliances in 1978 were: 44,000,
56,000, 231,000, and 67,000 units per year for SIC categories 3631, 3632,
3633, and 3639, respectively.
Large appliance manufacturing facilities also vary in number of em-
ployees. In 1978, plants engaged in the production of household cooking
equipment (SIC 3631) employed about 250 persons, as did plants manufactur-
ing refrigerators and freezers (SIC 3632). However, household laundry
equipment establishments (SIC 3633) employed 500 to 1,000 persons, while
8-7
-------
plants engaged in the production of large appliances included in SIC cate-
gory 3639 employed about 100 persons. Size distribution of large appliance
manufacturing facilities in terms of the number of employees is shown in
Figure 8-1.
Although employment varies within the industry, the number of employee
shifts is fairly constant, at around one shift, assuming 2,000 hours per
worker-year. Total employment in the large appliance industry peaked in
1973 at slightly over 1 million persons and although total employment
dropped sharply in 1975, it has since increased to prerecession levels.8
During 1977, the total value of shipments for all SIC categories of
products was $6,322 million, a 150-percent increase in current dollars over
the value of 1967 shipments. The value of household cooking equipment
shipments (SIC 3631) totaled $1,515 million during 1977. The value of
parts and accessories ($49.5 million) is included in this figure. The
value of shipments of household refrigerators and freezers (SIC 3632)
reached $1,933 million, while industry shipments of washing machines and
dryers (SIC 3633) were valued at $1,450 million in 1977. The value of
shipments for those products included in SIC 3639 totaled $1,074 million.
Because the production of parts and accessories for SIC categories 3632,
3633, and 3639 is relatively minor, their value of shipments is included in
the total figures for each category. Table 8-4 indicates the value of
annual shipments for each SIC category, by product, for the 10-year period
1967 through 1977.
Factory unit shipments of large appliances totaled 32,618,900 in 1977,
compared to 32,265,100 in 1972. The term "factory shipment" means physical
shipments of large appliances from domestic establishments. The definition
includes the quantity of all products sold, transferred to other plants, or
shipped on consignment. Table 8-5 indicates annual production for each SIC
category of large appliances over the 1967 to 1977 period, including annual
production by product. As reflected in Table 8-5, the industry experienced
a significant decline in production in 1974 and 1975 but had made a full
recovery by 1977. An increase in 1979 product shipments is anticipated
because of several factors, including an estimated increase in disposable
personal income and increased housing starts. The appliance production
index is expected to remain at approximately its mid-1978 level of 166
8-8
-------
to
NUMBER OF PLAN
18
16
14
12
10
8
6
4
2
SIC CO
HOUSEH
EQI
-
I
H
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en en en en en en en
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SIC CODE NO. 3632
HOUSEHOLD REFRIGERATORS
AND HOME AND FARM
FREEZERS
NUMBER OF EMPLOYEES
NUMBER OF EMPLOYEES
z
<
cc
UJ
SIC CODE NO. 3633
HOUSEHOLD LAUNDRY
EQUIPMENT
SIC CODE NO. 3639
HOUSEHOLD APPLIANCES,
NEC
NUMBER OF EMPLOYEES
NUMBER OF EMPLOYEES
Figure 8-1. Size distribution of large appliance manufacturing plants
according to employment: 1978.1
8-9
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through 1979. The index of household appliance production, as reported by
the Federal Reserve Board, was at 128.4 (1967 = 100) in 1976. In 1977, the
index rose to 146.4, and by April 1978 it had risen to 168.6, approximately
the same level as during the peak production year of 1973. However, by
mid-1978 the appliance index dropped slightly to 166, compared to 144.6 for
all industrial production.10
For the fourth quarter of 1977, it is estimated that American industry
as a whole operated at 76 percent of its practical capacity, or about
2 percent above the corresponding quarter in 1976. Practical capacity
means the greatest level of output the plant could achieve within a realis-
tic work pattern. A preferred level of operations means an intermediate
level of operations between actual operations and practical capacity that
the manufacturer would prefer not to exceed because of economic or other
considerations.11
During 1977, the large appliance industry operated at an average of
69 percent capacity, compared to 71 percent for the appliance industry as a
whole. Manufacturers of household cooking equipment (SIC 3631) operated at
75 percent of capacity, while manufacturers of household refrigerators and
freezers (SIC 3632) operated at 57 percent of capacity. Household laundry
equipment manufacturers operated at 66 percent of capacity, and facilities
engaged 'in the production of water heaters, dishwashers, and trash compac-
tors (SIC 3639) operated at 79 percent of capacity. Table 8-6 shows the
production capacity for 1976 and 1977 implied by the capacity utilization
data and the production data for each SIC category of products.
The domestic market for large appliance products is mainly comprised
of retail chain stores and the construction industry. Distribution is
usually accomplished through large franchise or dealership networks. As
much as one-third of all major appliances are sold through retail chain
stores and private labels, representing a significant increase over the
past two decades. Substitutes for large appliances, including restaurants,
laundromats, and dry cleaners, have little or no effect on sales. Once
considered luxury items, appliances such as electric refrigerators, ovens,
and washing machines are now necessities to most consumers.
However, large appliances are durable items and require replacement
only about every 20 years. The most sophisticated marketing techniques
8-12
-------
TABLE 8-6. ANNUAL PRODUCTION, CAPACITY UTILIZATION, AND
IMPLIED PRODUCTION CAPACITY, BY SIC, OF THE
LARGE APPLIANCE INDUSTRY: 1976 and 19772 "
3631
3632
3633
3639
Total
1976
annual
pro-
duction
(000)
6,454.9
6,393.6
7,707.1
9,241.5
29,797.1
1976
capacity
utiliza-
tion
(%)
65
51
62
64
60a
1976
implied
pro-
duction
capacity
(000)
9,900
12,500
12,400
14,400
49,200
1977
annual
pro-
duction
(000)
6,723.4
7,221.5
8,560.1
10,113.9
32,618.9
1977
capacity
utiliza-
tion
(%)
75
57
66
79
69a
1977
implied
pro-
duction
capacity
(000)
8,900
12, POO
12,900
12,800
47,200"
Average.
8-13
-------
have been unable to convince consumers to trade in large appliances after a
few years for a more fashionable model.12 In addition, appliances such as
refrigerators and washing machines have penetrated the 1977 domestic market
by as much as 99.9 percent and 73.3 percent, respectively.13 The degree of
market saturation for certain large appliance products during 1976 and 1977
is indicated in Table 8-7. As domestic market penetration by large appli-
ances increases, manufacturers increasingly rely on foreign trade.
Total foreign trade in large appliances reached $1,213 million in
1976. Exports accounted for $542 million and imports, $671 million. Large
appliance exports are estimated to have increased 10 percent in 1978,
reaching a total of $660 million. Canada remains the most important cus-
tomer, buying 40 percent of all U.S. exports in 1977 from all SIC categories
of large appliance products. However, Venezuela, Saudi Arabia, Kuwait, and
West Germany are all steadily increasing in significance as consumers of
exported appliance products.14 The amount of U.S. exports of large appli-
ances during 1975 and 1976 is indicated in Table 8-8, together with the
applicable percent change per year.
Although the export market is significant, imports still exceed exports.
Refrigerators are a significant large appliance import, accounting for
16 percent of total appliance imports in 1978. These compact refrigerators,
mainly for recreational use, have placed Sweden in second place to Japan as
a foreign source of appliances. Small appliances imported from Japan
account for a vast majority of total appliance imports. However, Japanese
exports of low-priced microwave ovens accounted for 37 percent of that.
country's exports to the United States during 1977, at an estimated value
of $103 million.10
8.1.2 Historical Trends
The most prevalent trend emerging over the past 10 years is the growth
program implemented by certain major manufacturers and its subsequent
effect on industry structure. Although new construction has not been
evident, several major manufacturers have initiated intensive expansion
programs both through acquisition and addition to existing facilities.
Such efforts have elevated a number of companies to top competitive posi-
tions within the industry, rivaling the traditional dominance of GE and
Whirlpool.
8-14
-------
TABLE 8-7. PERCENT OF MARKET PENETRATION OF SELECTED LARGE
APPLIANCES: 1976 and 197713
Production
Refrigerators
Washing machines
Electric ranges
Electric dryers
Dishwashers
Freezers
El ectri c water heaters
Microwave ovens
% market
1976
99.8
72.5
70.1
58.6
39.6
44.4
41.7
N/A
penetration
1977
99.9
73.3
71.9
N/A
40.9 '
44.8
N/A
N/A
N/A = not available.
TABLE 8-8. U.S EXPORTS OF LARGE APPLIANCES:
(In No. of Units)
1975-197615
Item
Refrigerators
Freezers
Washing machines
Electric dryers
Gas dryers
Electric ranges
Gas ranges
Microwave ovens
Dishwashers
1975
226,877
30,452
121,211
65,330
4,039
43,051
81,712
31,139
179,253
1976
266,699
36,395
121,626
71,303
5,085
63,142
87,002
76,642
241,321
Percent change
+17.6
+19. 5
+0.3
+9.1
+25.9
+46.7
+6.5
+146.1
+36.9
8-15
-------
A total of seven acquisitions in the past 12 years by White Consol-
idated Industries (WCI) has transformed that company to a full-line manu-
facturer, third only to GE and Whirlpool in sales. Annual proceeds by WCI
are expected to top $1.7 billion in 1979, with 75 percent of the company
committed to the manufacture of large appliances. WCI acquisitions include
Gibson Refrigerators (Hupp Corp.), Franklin Appliances (Studebaker), Kel-
vinator (American Motors), Philco (Ford), Athens Stove Works, and the
Westinghouse appliance line, in addition to a Bendix plant for the manufac-
ture of cooling compressors. The recent, highly publicized acquisition of
General Motor's Frigidaire division is estimated to boost WCI's market
share to approximately one-fourth of the total market, equal to that of
Whirlpool. Total market shares of electric range production could be
boosted to 18 percent. It is estimated that WCI's market share of electric
dryer, gas dryer, and washing machine sales would increase to 15 percent,
14 percent, and 14 percent, respectively. In addition, White Consolidated
plans to modify existing WCI plants to manufacture the Frigidaire line.12
Through application of effective management techniques and aggressive
cost-cutting policies, WCI has transformed each company into a highly
productive unit without large capital investment or application of new
technology. Industry analysts predict that WCI will emerge from any reces-
sion as'an even stronger competitor within the industry.12
Magic Chef, which has doubled its size in the past 10 years, has also
manifested growth through acquisition. Acquisitions such as the Admiral
Refrigerator Division of Rockwell International and a Fedders-Norge sub-
sidiary for manufacturing washers and dryers have raised Magic Chef to a
full-line top competitor. The company has also become a competitive force
in the private label business, traditionally dominated by Whirlpool and GE,
because of its position as a major supplier to Mobil's Montgomery Ward
retail chain.16
The expansion of Maytag's Newton, Iowa, facility was part of a $50 mil-
lion expansion program expected to increase Maytag's production capacity
75 percent by the early 1980's. The new addition was designed for the
electrocoating, top coating, and powder coating of automatic dryer parts.
The line features a memory chain that governs painting, positioning, color
changes, purges, line stoppage, and automatic blowoff.17
8-16
-------
The Amana refrigeration plant in Amana, Iowa, expanded recently. In
addition, Amana acquired a manufacturing plant in 1977 in Fayetteville,
Tennessee, for the manufacture of electric ranges. However, little infor-
mation is available to determine the overall effect on current market
shares and sales.18
Annual growth of the large appliance industry has been minimal during
the past decade. The industry only returned to prerecession production
levels in 1978. Neither plant sizes nor geographical concentration has
been affected. The percent per year production change from 1968 through
1977 is indicated in Table 8-9.
8.1.3 Future Trends
Economists predict that although growth through the next 5 years will
probably be dampened somewhat by inflation, the large appliance industry
will continue to experience steady, if minimal, overall growth. Real
shipments of household appliances are expected to increase at an average
annual rate of about 2.6 percent over the 5-year period from 1979 through
1983.4 Washer and dryer production is expected to increase to 6 and 4 mil-
lion units, respectively, by 1982, as compared to 5 million washers and
3.7 million dryers produced in 1978. The production of household cooking
equipment, water heaters, and refrigerators, will increase only slightly.
A 5-year forecast for selected large appliance products is provided in
Table 8-10.
Such large appliance items as dishwashers, trash compactors, and
microwave ovens are far from the market saturation point, and manufacturers
are preparing to raise production in this area. In 1977, shipments totaled
1.6 million units, a 73-percent increase over 1975 production. Competition
with Japanese imports of microwave ovens is expected to continue. However,
industry analysts believe domestic industry will soon be able to offer
consumers comparably priced products. Trade agreements are also expected
to restrict Japanese imports in this area.19
Little or no new plant construction is expected in the next 5 years.
As in previous years, industry growth is expected to be confined to major
manufacturers. Retooling and line alterations will probably continue as
the focus of industry growth. The acquisition trend is also expected to
continue as small manufacturers, unable to compete with mass producers,
become prime candidates for acquisition.
8-17
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Little or no change during the next 5 years is expected in the size of
plants or processes. No change in geographic concentration of plants is
anticipated. However, new and modified lines will become increasingly more
automated. And although large appliance products are not expected to
change in basic design or appearance, manufacturers are preparing to add
new energy-saving features to all product lines, in addition to electronic
controls. Neither trend is expected to affect surface coating processes
significantly.
8.2 COST ANALYSIS
8.2.1 Introduction
Costs of the various control options are presented and analyzed in
this section. The control options, discussed in Chapter 4, are summarized
in Table 8-11, along with the regulatory alternatives to which each applies.
The first regulatory alternative for either prime coat or top coat--not
promulgating an NSPS--corresponds to the level of control expected if
States implement Control Technologies Guideline (CTG) limits. The emis-
sions estimates for this alternative are based on the application of a
coating containing 62 percent (vol.) solids at an assumed transfer effi-
ciency of 60 percent.
The second regulatory alternative for either prime coat or top coat--
promulgating an NSPS equivalent to the assumed CTG limit—would have a
limited impact on emissions. This alternative specifies a minimum transfer
efficiency for coating operations. Specification would permit an equivalence
provision to be placed in the standard, allowing tradeoffs between solids
content and transfer efficiency. The costs of the control option are based
on application of a coating containing 62 percent* solids at a transfer
efficiency of 60 percent. Because of the assumed transfer efficiency used
to establish the no NSPS baseline, the application systems and hence the
capital costs of the first two control options are identical.
The third prime coat regulatory alternative—reducing emissions by
55 percent from the no NSPS alternative—is based on the use of a water-
borne coating applied by electrodeposition (EDP). This process is the most
effective control option per volume of solids applied for prime coating
operations and is gaining wide acceptance in the industry.
*A11 percentages are by volume unless otherwise stated.
8-19
-------
TABLE 8-11. REGULATORY ALTERNATIVES AND CONTROL OPTIONS
CONSIDERED IN THE ECONOMIC ANALYSIS
Regulatory alternative
Control options
Prime coat
I. Not promulgating an NSPS 1.
II. Promulgating an NSPS equivalent 2.
to the assumed CTG limit
III. Reducing emissions by 55a percent 3.
from the no NSPS alternative
Topcoat
I. Not promulgating an NSPS
II. Promulgating an NSPS equivalent
to the assumed CTG limit
III. Reducing emissions by 30 percent
from the no NSPS alternative
IV. Eliminating emissions
1.
2.
5.
Application of a 62% solids
coating
Application of a 62% solids
coating at a transfer
efficiency of 60%
Application of a water-
borne coating by EDP
Application of a 62% solids
coating
Application of a 62% solids
coating at a transfer
efficiency of 60%
Application of a 70% solids
coating at a transfer
efficiency of 60%
Application of a 65.5%
solids coating at a
transfer efficiency of
60% with thermal inciner-
ation of oven exhaust
Application of 100% solids
coating (powder)
Deduction specified as a percent by weight per volume of solids applied.
8-20
-------
The third topcoat regulatory alternative--reducing emissions by 30 per-
cent from the no NSPS baseline—can be met by two separate control options.
The first option is the application of a coating containing 70 percent
solids at a transfer efficiency of 60 percent. The second option is the
application of a coating containing 65.5 percent solids at a transfer
efficiency of 60 percent with incineration of the bake oven exhaust. The
incinerator is assumed to operate at a 93-percent overall destruction
efficiency.
The fourth topcoat regulatory alternative—eliminating VOC emissions-
is based on the use of a 100-percent solids coating. The control option
considered for this alternative is the use of a powder coating, which is
the most effective control technology for topcoat operations.
8.2.2 New Facilities
The costs applicable to new coating lines are summarized in this
section. The model plants presented in Chapter 6 form the basis for all
cost analyses in this section. Tables 8-12 through 8-15 list additional
key parameters for each model plant.
8.2.2.1 Capital Costs. Table 8-16 shows the total installed capital
cost for each model plant for each combination Df control options. All
combinations include the cost of pretreatment. Washers and dryers, which
are manufactured in Model plant 3, require a prime coat when coated with
powder (Regulatory Alternative B-IV); the other appliances considered do
not. The costs of the application systems were taken from vendor estimates
of each system.20 21 22 23 The costs of ancillary equipment were taken
from estimates by a-manufacturer of complete finishing systems.24 An
itemized breakdown of capital costs for each model plant for each prime
coat and topcoat control option is presented in Tables 8-17 through 8-20.
'8.2.2.2 Annualized Costs. The annualized costs of the various control
options are discussed in this section. Included are the annualized capital
costs and the operating costs for energy, manpower, and coatings. The fol-
lowing assumptions were used to develop the annualized costs.
8-21
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8-25
-------
TABLE 8-16. CAPITAL COSTS OF CONTROL OPTIONS APPLIED TO MODEL PLANTS
($ Thousands)
Regulatory alternatives
Model plant
A-II, B-II
A-II, B-III (70%)
A-II, B-III (65.5%)
A-II, B-IV
A-III, B-II
A-III, B-III (70%)
A-III, B-III (65.5%)
A-III, B-IV
B-IV
427
427
476
426
426
475
362
1,010
1,010
1,060
1,120
1,120
1,170
538
2,950
2,950
3,100
2,950
3,050
3,050
3,200
3,050
2,360
2,360
2,510
2,530
2,530
2,680
1,570
8-26
-------
TABLE 8-17. ITEMIZED INSTALLED CAPITAL COSTS FOR CONTROL OPTIONS
APPLIED TO MODEL PLANT 1
($ Thousands)
Component
Washer(s)
Dryoff oven
Manual electrostatic gun(s)
Feed system
EDP application system
Powder application and
recovery system
Water wash booths
Dry touchup booth(s)
Bake oven -
Conveyor system
Air makeup system «.
Incinerator
Erection supervision
Total
A-II
77
42
5
20
20
50
29
22
4
269
Regulatory
A-III B-II
77
8
20
85
20
5
50 50
29 29
22 22
5 4
268 158
alternatives
(70%)
8
20
20
5 '
50
29
22
4
158
B-III
(65.5%)
8
20
20
5
50
29
22
49
4
207
B-IV
77
42
160
50
29
4
362
8-27
-------
TABLE 8-18. ITEMIZED INSTALLED CAPITAL COSTS FOR CONTROL
OPTIONS APPLIED TO MODEL PLANT 2
($ Thousands)
Regulatory alternatives
Component
Washer
Dryoff oven
Automatic disks
(36" reciprocation)
Manual electrostatic gun
Memory system
Feed system
EDP application system
Powder application and
recovery system
Shrouds
Water wash touchup booths
Bake oven
Conveyor system
Air makeup system
Incinerator
Erection supervision
Total
A-II A-III
113 113
70
49
35
60
350
28
123 123
52 52
48 48
5 5
583 691
B-II
49
5
35
60
28
24
123
52
48
5
429
B-III
(70%)
49
5
35
60
28
24
123
«*
52
48
5
429
(65.5%)
49
5
35
60
28
24
123
52
48
56
' 5
486
B-IV
113
70
175
123
52
5
538
8-28
-------
TABLE 8-19. ITEMIZED INSTALLED CAPITAL COSTS FOR CONTROL
OPTIONS APPLIED TO MODEL PLANT 3
($ Thousands)
Regulatory alternatives
Component
Washers
Dryoff oven
Automatic disks
(36" reciprocation)
Manual electrostatic guns
Memory system
Feed system
EDP application system
Powder application and
recovery system
Shrouds
Water wash touchup booths
Bake oven
Conveyor system
Air makeup system
Incinerator
Erection supervision
Total
A-II A-III B-II
437 437
140
148 148
15
105 105
60 60
631
83 83
72
382 382 382
200 200 200
160 160 160
-
10 10 10
1,725 1,820 1,235
(70%)
148
15
105
60
83
72
382
200
160
10
1,235
B-III
B-IV
(65.5%)
148
15
105
60
83
72
382
200
160
145
10
1,380
633
382
200
10
1,225
8-29
-------
TABLE 8-20. ITEMIZED INSTALLED CAPITAL COSTS FOR CONTROL
OPTIONS APPLIED TO MODEL PLANT 4
($ Thousands)
Regulatory
Component
Washers
Dryoff oven
Automatic disks
(72" reciprocation)
Manual electrostatic guns
Memory system
Feed system
EDP application system
Powder application and
recovery system
Shrouds
Water wash touchup booths
Bake oven
Conveyor system
Air makeup system
Incinerator
Erection supervision
Total
A-II A-III
415 415
154
102 -
70
60
610
56
266 266
133 133
160 160
8 8
1,424 1,592
B-II
102
10
70
60
56
76
266
133
160
8
941
alternatives
B-III
(70%)
102
10
70
60
56
76
266
133
160
8
941
(65.5%)
102'
10
70
60
56
76
266
133
160
145
8
1,086
B-IV
415
154
594
266
133
8
1,570
8-30
-------
Capital recovery factor
A 10-year equipment life and a 12-percent interest rate added to
a 4-percent allowance for taxes and insurance
21.7 percent of installed capital cost
Building rental fee25
$25.00/ft2-yr of floor space
Labor costs
$10.00/hr of operating labor
$12.50/hr of professional and supervisory labor
Energy costs26
12.84/GJ ($3.00/million Btu) of natural gas
Coating costs
For high-solids prime coat27
- 62% (vol.) solids: $3,170.00/m3 ($12.00/gal) of coating
For high-solids top coat27
- 62% (vol.) solids: $3,381.00/m3 ($12.80/gal) of coating
- 65.5% (vol.) solids: $3,566.00/m3 ($13.50/gal) of coating
- 70% (vol.) solids: $3,830.00/m3 ($14.50/gal) of coating
For EDP28
- $7,601.00/m3 ($29.00 gal) of solids
For powder29
- $0.82/kg ($1.80/lb) of powder
Table 8-21 presents the total annualized costs for each model plant
for each combination of control options. Tables 8-22 through 8-25 show the
itemized operating costs and the annualized costs for each model plant for
each prime coat and topcoat control option.
8.2.2.3 Cost Effectiveness. Cost effectiveness is a common measure
of the economic efficiency of a pollution control system and may be defined
as the annual ized cost of removing a unit of pollutant. The concept of
cost effectiveness is valuable for comparing various proposed control
options for a given industrial source with controls on other industrial
sources. It can also serve as a tool in selecting a control option where a
decision on the basis of plant affordability is not clear cut.
8-31
-------
TABLE 8-21. TOTAL ANNUALIZED COSTS OF CONTROL OPTIONS
($ Thousands/Year)
Regulatory alternatives
Model plant
4
A-II, B-II
A-II, B-III (70%)
A-II, B-III (65.5%)
A-II, B-IV
A-III, B-II
A-III, B-III (70%)
A-III, B-III (65.5%)
A-III, B-IV
B-IV
507
507
521
467
467
481
296
802
802
817
807
807
822
490
2,910
2,910
2,940
2,690
2,700
2,700
2,730
2,480
2,280
2,280
2,310
2,350
2,350
2,390
1,510
8-32
-------
TABLE 8-22. ANNUALIZED COSTS FOR CONTROL OPTIONS
APPLIED TO MODEL PLANT 1
($ Thousands/Year)
Component
Annuall zed capital costs
Building space costs
Direct operating costs
Labor
Natural gas
Coati ng
Total annual i zed costs
Includes pretreatment.
Regulatory
A-IIa A-III3 B-II
58.4 58.2 34.3
45.0 45.0 45.0
150.0 110.0 150.0
15.0 14.5 1.6
2.0 2.5 5.8
270.4 230.2 236.7
TABLE 8-23. ANNUALIZED COSTS FOR CONTROL
TO MODEL PLANT 2
($ Thousands/Year)
Component
Annualized capital costs
Building space costs
Direct operating costs
Labor
Natural gas
Coating
Total annual i zed costs
Reaulatory
A-IIa A-IIIa B-II
126.1 149.9 93.1
90.0 90.0 90.0
130.0 110.0 150.0
52.4 50.1 6.1
16.4 20.4 47.4
414.9 420.4 386.8
alternatives
B-III
(70%) (65.5%)
34.3 44.9
45.0 45.0
150.0 150.0
1.6 4.7
5.8 5.7
236.7 250.3
OPTIONS APPLIED
alternatives
B-III
(70%) (65.5%)
93.1 105.5
90.0 90.0
150.0 150.0
6.1 8.9
47.6 47.3
387.0 401.7
B-IV
78.6
45.0
150.0
15.1
7.2
295.9
B-IVa
116.7
90.0
170.0
53.9
59.0
489.6
Includes pretreatment.
8-33
-------
TABLE 8-24. ANNUALIZED COSTS FOR CONTROL OPTIONS APPLIED
TO MODEL PLANT 3
($ Thousands/Year)
Regulatory alternatives
A-IIa A-IIIa B-II B-III
Component
Annual ized capital
costs
Building space costs
Direct operating costs
Labor
Natural gas
Coati ng
Total annual ized 1
costs
alncludes pretreatment
TABLE 8-25.
Component
Annual ized capital
costs
Building space costs
Direct operating costs
Labor
Natural gas
Coating
373.2
210.0
215.0
233.5
616.4
,648.1
•
394.9 266.9
210.0 210.0
220.0 315.0
229.2 26.7
383.5 "440.7
1,437.6 1,259.3
(70%)
266.9
210.0
315.0
26.6
442.2
1,260.7
ANNUALIZED COSTS FOR CONTROL OPTIONS
TO MODEL PLANT 4
($ Thousands/Year)
A-IIa
308.1
187.5
150.0
186.1
280.6
Total annual ized 1,112.3
costs
Regulatory
A-IIIa B-II
345.0 204.0
187.5 187.5
130.0 250.0
179.5 22.3
349.1 498.9
1,191.1 1,162.7
B-IV
(65.5%)
299.5
210.0
315.0
29.5
440.3
1,294.3
APPLIED
266.9
210.0
175.0
28.4
365.3
1,045.6
alternatives
B-III
(70%)
204.0
187.5
250.0
22.2
500.5
1,164.2
(65.5%)
235.7
187.5
250.0
25.1
498.0
1,196.3
B-IVa
340.9
187.5
170.0
188.5
620.2
1,507.1
Includes pretreatment.
8-34
-------
Marginal cost effectiveness is a measure of the economic efficiency of
additional increments of control. Because the alternatives under considera-
tion in this study represent different control technologies rather than
varying degrees of control within the same technology, the concept of
marginal cost effectiveness is not directly applicable here. That is, a
plant operator must select a specific control technology and does not have
the option of selecting a control system, the efficiency of which depends
upon capital and operating costs.
The cost effectiveness of the various control options applied to each
of the four model plants is shown in Tables 8-26 through 8-29. Because in
most cases the emissions reduction is attributable to a change in coatings
technology rather than to a pollution control system, the control costs
were difficult to determine. Completion of the analysis depended upon the
assumption that the entire difference in annualized plant costs between the
control option under consideration and the base case (Regulatory Alterna-
tive A-I/B-I) was the cost of the "control system."
The tables reveal that incineration (Regulatory Alternative B-III
[65.5 percent]) is relatively cost ineffective. While EDP (Regulatory
Alternative A-III) is cost effective for laundry equipment (Model plant 3),
it is ineffective in the other sectors. Because of the very small, labor-
intensive nature of Model plant 1, practically all options yield a savings
by substituting equipment for labor. This anomaly results from the very
high labor costs associated with operating the plant 2,000 hours per year
to produce only 13,000 units. In actuality, a plant of this size would
probably operate fewer hours per year or the labor would not be dedicated
solely to the coating operation.
8.2.3 Modified/Reconstructed Faci1ities
The only modification or reconstruction likely to bear an increased
cost because of an NSPS would be increased production through a capital
expenditure. An example would be the addition of a new line. Little or no
retrofit penalty is expected to result in such a case. The cost would be
similar to that for a new line except that the existing ovens, air makeup,
and other systems might be able to handle the new capacity and thus would
not need to be purchased for the new line.
8-35
-------
TABLE 8-26. COST EFFECTIVENESS FOR CONTROL OPTIONS
APPLIED TO MODEL PLANT 1
Control Emission
cost (savings) reduction
Regulatory above A- II, B-II from A- II, B-II
alternative ($ thousands/yr) (Mg/yr)
A-III, B-II
A-II, B-III (70%)
A-II, B-III (65.5%)
A-III, B-III (70%)
A-III, B-III (65.5%)
B-IV
TABLE 8-27.
(40)
0
14
(40)
(26)
(211)
0.021
0.169
0.169
0.190
0.190
0.768
COST EFFECTIVENESS FOR CONTROL
APPLIED TO MODEL PLANT 2
Control
cost (savings)
Regulatory above A-II, B-II
alternative ($ thousands/yr)
A-III, B-II
A-II, B-III (70%)
A-II, B-III (65.5%)
A-III, B-III (70%)
A-III, B-III (65.5%)
B-IV
5
0
15
5
20
(312)
Emission
reduction
from A-II, B-II
(Mg/yr)
0.170
1.390
1.390
1.560
1.560
6.330
Cost
(savings) per
unit of
VOC removal
($ thousands/Mg)
(1,900)
0
83
(210)
(137)
(275)
OPTIONS
Cost
(savings) per
unit of
VOC removal
($ thousands/Mg)
29
0
11
3
13
(49)
8-36
-------
TABLE 8-28. COST EFFECTIVENESS FOR CONTROL OPTIONS
APPLIED TO MODEL PLANT 3
Regulatory
alternative
A-II, B-III (70%)
A-II, B-III (65.5%)
A-III, B-II
A-II, B-IV
A-III, B-III (70%)
A-III, B-III (65.5%)
A-III, B-IV
Control
cost (savings)
above A-II, B-II
($ thousands/yr)
0
30
(210)
(220)
(210)
(180)
(430)
Emission
reduction
from A-II, B-II
(Mg/yr)
12.9
12.9
35.1
42.9
48.0
48.0
78.1
Cost
(savings) per
unit of
VOC removal
($ thousands/Mg)
' ° 3*
2.3
(6.0)
(5.1)
(4.4)
(3.8)
(5.5)
TABLE 8-29. COST EFFECTIVENESS FOR CONTROL OPTIONS
APPLIED TO MODEL PLANT 4
Regulatory
alternative
A-III, B-II
A-II, B-III (70%)
A-II, B-III (65.5%)
A- III, B-III (70%)
A-III, B-III (65.5%)
B-IV
Control
cost (savings)
above A-II, B-II
($ thousands/yr)
70
0
30
87
110
(770)
Emission
reduction
from A-II, B-II
(Mg/yr)
2.9
14.7
14.7
17.5
17.5
77.8
Cost
(savings) per
unit of
VOC removal
($ thousands/Mg)
24
0
2.0
5.0
6.3
(9.9)
8-37
-------
8.3 OTHER COST CONSIDERATIONS
The purpose of this section is to summarize, to the extent possible,
the cost impact of requirements imposed on the large appliance industry by
other environmental regulations. Areas of other major regulations perti-
nent to the couung processes include water pollution, occupational exposure
to toxic substances by employees, and toxic substances control.
8.3.1 The Clean Water Act
The large appliance industry is generally subject to effluent discharge
regulations imposed by the Federal Water Pollution Control Act Amendments
of 1972,30 as amended by the Clean Water Act of 1977 ("the Act").31 Basic-
ally, the Act requires that EPA develop effluent limitations both for new
and existing facilities that discharge liquid effluent directly into navig-
able waters. New and existing facilities that discharge to publicly owned
treatment works (POTWs) would also be subject to new pretreatment standards.
In addition, Section 307(a) of the Act requires that the Administrator
promulgate specific effluent guideline limitations for the toxic pollutants
listed under Section 307(a)(l) of the Act. This listing includes several
of the organic solvents commonly used in the surface coating process.30
Estimates of specific compliance costs for Water Act regulations
pertaining to the large appliance industry are not available for inclusion
in this study. However, preliminary estimates indicate no expectation of
plant closures due to the regulations, which are scheduled for proposal in
September 1980.32 New or existing sources that meet, or plan to meet,
existing National Pollutant Discharge Elimination System (NPDES) standards
would incur only minimal economic impact. However, sources that have not
installed direct discharge control systems or pretreatment systems will
incur a significant impact for these requirements.32
8.3.2 Occupational Exposure
The responsibility of regulating emission levels within the plant
working area belongs to the Occupational Safety and Health Administration
(OSHA). OSHA is a part of the U.S. Department of Labor, and its responsi-
bilities include final adoption of occupational exposure standards and
enforcement of the standards through inspection of work places. NIOSH is
an agency of the U.S. Department of Health, Education, and Welfare, and
part of its charter is to provide regulation support information to OSHA.
8-38
-------
OSHA has worker area standards for nearly 500 chemicals. These stand-
ards are similar to the Threshold Limit Values (TLVs) designated by the
American Conference of Governmental Industrial Hygienists (ACGIH). The
ACGIH defines TLVs as "concentrations of air-borne substances which repre-
sent conditions under which it is believed that nearly all workers may be
repeatedly exposed day after day without adverse effect .... TLVs refer
to time-weighted concentrations for a seven or eight hour workday and a
forty hour work week." This same definition may be used for OSHA exposure
standards. The TLVs for typical organic solvents used in the large appli-
ance coating process are shown in Table 8-30.
Control of organic-solvent concentrations in worker areas is accom-
plished through containment, isolation, substitution, general ventilation,
local exhaust ventilation, changed operating procedures, and administrative
control. Many hooding techniques can be used and are discussed in the
ACGIH Industrial Ventilation Manual.33 Around a coating area, a hooding
system combined with a containment system can effectively limit levels of
organic-solvent exposure to employees. The cost of a hood, ducting, and
fan is expected to be a small percent of the total capital cost of a new
coating line.
Another emission level constraint affecting the large appliance coater
is the lower explosive limit (LEL) of organic solvents. Organic-solvent
explosions are not only sources of health and safety concern to the worker,
they also are a great concern to insurers of coating equipment. Insurance
companies require strict monitoring of organic-solvent levels in equipment
areas where such levels might approach the LEL.
The highest organic-sol vent levels are found in the drying ovens.
Most coating systems are designed to maintain a concentration below 25
percent of the LEL in the ovens. Table 8-30 lists LEL values for organic
solvents typically used by the industry. However, meeting the required
levels of organic-solvent concentration in this instance is a design con-
cern rather than an added cost of Federal regulation.
8.3.3 Toxic Substances Control
The EPA Office of Toxic Substances has authority under the Toxic Sub-
stances Control Act (TSCA)34 to regulate the manufacture, importation, proc-
essing, use, and disposal of substances that present unreasonable risk to
8-39
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TABLE 8-30. THRESHOLD LIMIT VALUES (TLVs) AND LOWER
EXPLOSIVE LIMITS (LELs) OF TYPICAL ADHESIVE AND RELEASE SOLVENTS
======3=================:=
Organic solvent
Toluene
Xyl ene
n-Hexane
Cyclohexane
Naphtha
Methyl acetate
Ethyl acetate
n-Butyl acetate
Acetone
Methyl ethyl ketone (MEK)
Methyl isopropyl ketone
Carbon tetrachloride
Methanol
Ethanol
Mg/m3
375
435
(l,800)b
1,100
NA
610
1,400
710
2,400
590
700
65C
260C
1,900
ppm
100
100
L
(500)°
300
NA
200
410
150
1,000
200
200
10C
200C
1,000
_....
Vol (%)
1.27
1.0
1.3
1.31
0.81
4.1
2.2
1.7
2.15
1.81
1.4
NA
6.0
3.3
^ i ' • "••
lb/103ftsa
2.37
2.32
2.75
2.8
2.16
7.45
4.74
4.83
3.04
3.20
3.54
NA
4.70
3.72
Calculated at 100° F.
bln the process of being changed.
cCan be potentially absorbed by the body through skin, eyes, or mucous
membranes.
NA--not available.
8-40
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health or the environment. The paint and coating industries are processors
of chemicals and could be subject to regulations implementing TSCA.
Several of the organic solvents now widely used throughout the indus-
try are on the EPA Priority List of Toxic Substances. These substances,
including toluene, are under testing by the Agency. Accordingly, future
regulations may require listing of these solvents. However, the impact of
such regulations appears to be small.35
8.4 ECONOMIC IMPACT ANALYSIS
The economic impacts of the regulatory control options are presented
in this section. The analysis, based on the industry profile and cost data
in Sections 8.1, 8.2, and 8.3, applies only to new plants.* The impacts of
the control options on existing plants that are modified or reconstructed
are not considered.
Four model plant sizes are used to represent typical new sources in
the industry. Two of the models correspond to small and large facilities
in the household cooking equipment sector (SIC 3631), one corresponds to a
new facility in the refrigerator and freezer sector (SIC 3632), and one
represents the laundry equipment sector (SIC 3633). Each model plant has
one coating line that applies a prime coat and a top coat to the appliance.
For each size, costs are provided for two prime coating alternatives and
four topcoating alternatives. These alternatives correspond to the control
options shown in Table 8-11. The prime coat can be a 62-percent solids
coating or it can be applied by EDP. The top coat can be applied as a
62-percent solids coating, a 70-percent solids coating, a 65.5-percent
solids coating with an incinerator on the topcoat oven, or a 100-percent
solids coating (powder).
Section 8.4.1 summarizes the results and presents the conclusions of
the economic impact analysis. Section 8.4.2 describes the economic environ-
ment in which the industry operates. Section 8.4.3 discusses the methodology
*The analysis was based on model plant costs that were subsequently
revised; the revised costs are presented in Section 8.2. However, the
differences between the original and revised costs were not great enough to
change the conclusions drawn from the economic analysis.
ife
8-41
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used to estimate the economic impacts of the control options, and Section
8.4.4 presents the estimated impacts.
8.4.1 Summary
An alternative to conventional low- and high-solids topcoating methods
is the powder, or 100 percent solids, coating technology. Its adoption by
firms building new plants would eliminate VOC emissions from the topcoating
operation because the coating contains no VOCs. Because powder coating is
a newcomer to the industry, however, some producers doubt that it is capable
of producing a coating with the same properties as a conventional solvent-
borne coating.
Potential limits on the widespread use of powder coating are recognized
when the following procedure is applied. First, the powder coating method
is shown to be more profitable than conventional or high-sol ids coating
technologies. That is, of the eight coating line configurations considered,
the two employing powder can apply the coating for the lowest cost per
appliance. Thus, firms would have an economic incentive to adopt this
technology even in the absence of the regulatory alternatives. Consequently,
if any of the regulatory alternatives were implemented, there would be no
economic impact on firms.
In the second part of the procedure the powder technology is excluded
from the set of control options to account for possible limitations on its
use. The most profitable configuration for each model facility is then
selected from this restricted set of alternatives; these choices are assumed
to represent the investments the industry would make in the absence of the
regulatory alternatives. These choices are compared with the control
options that yield a level of control greater than or equal to the baseline
to determine the economic impacts. (The impacts of control options that
yield lower levels of emissions control are assumed to be zero.) The
baseline configuration varies with the type of model plant. Model lines 1
and 3 would coat appliances with an EDP prime coat and either a 62-percent
or 70-percent solids top coat. Model lines 2 and 4 would use a 62-percent
solids prime coat and top coat.
If all additional production costs were passed forward to the consumer,
the increase in product prices would range from 0.0 to 0.7 percent. The
largest impacts occur with the EDP prime/65.5-percent solids (incineration)
8-42
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r>*« *_|p3ti
topcoat control option. However, the same- level of control could be achieved
with the EDP prime/70-p¢ solids topcoat configuration, which would
reduce the largest price^impact to 0.2 percent.
If producers absorbed all additional costs, the return on investment
(ROI) would fall by 0.0 to 3.7 percentage points from the baseline rate of
return of 19.3 percent. Again, the largest decline for all model lines
would occur with the EDP prime/65.5-percent solids (incineration) configu-
ration. The same level of control could be achieved with a 70-percent
solids topcoat process and would result in a smaller ROI decline of 2.5
percentage points. :
The additional capital required by the regulatory alternatives ranges
from 0.0 to 21.2 percent of the baseline investment. Again, this range
occurs when the 65.5 percent solids (incineration) option is used to apply
the top coat. If a 70-percent solids top coat were used instead, the
maximum increase above the baseline capital requirement would be 16.6
percent.
Growth in the large appliance industry would not be significantly
affected. As pointed out in Section 8.1, growth of individual firms in
recent years has occurred through merger and acquisition. The size of the
profitability impacts would not seriously detract from the attractiveness
of smaller firms as possible takeover candidates. . Additionally, the rela-
tively low average level of^capacity use in the industry implies that much
of the future growth in demand for large appliances could be met by increas-
ing the use of existing capacity. For firms that are operating at close to
full capacity, expansion by .constructing new lines would not be precluded
by the proposed control options,
8.4.2 Economic Environment
This section has three purposes. First, it describes the economic
environment within which firms in the large appliance industry operate.
Second, it augments the quantitative analysis of the economic impacts
presented in Sections 8.4.3 and 8.4.4. That is, the estimated impacts are
based on cost data for "representative" model plants that, while serving a
useful analytical function, must be interpreted in light of actual industry
conditions. Third, it presents estimates of a key financial parameter used
in the analysis, the cost of capital.
^8-43
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8.4.2.1 Economic Structure. The economic structure of the industry
can be succinctly described on the basis of four characteristics: industry
concentration, plant economies of scale, process integration, and growth of
fi rms.
The large appliance industry is relatively concentrated. New firm
entry is rare, the last occurring over 15 years ago. Further, small firms
have lost their share of the market to larger firms, often through acquisi-
tion by large firms. These observations are supported by historical data
on four-firm concentration ratios, as shown in Table 8-31. A four-firm
concentration ratio is calculated by dividing the value of shipments of the
four largest firms by the value of shipments of all firms in the industry.
Reductions in unit costs resulting from increased output occur for a
variety of reasons. Four factors suggest that economies of scale are
important in this industry: large plant size, capital acquisition cost,
transportation costs, and brand name recognition—a function of advertising
costs. Data on optimal firm size are scarce. However, one study revealed
that the plant size with the minimum unit production costs in the refrige-
rator sector had a capacity of 800,000 units per year.37 Technology in the
refrigerator sector has not significantly changed to alter this estimate.
As shown in Table 8-5, average firm production in the refrigerator industry
was about 270,000 units in 1977. The cost to the firm of operating a plant
smaller than the optimum size is not great. Plants with one-third the
optimum capacity incur a unit cost increase of 6.5 percent,38 which suggests
two important results. First, firms with plants of widely varying output
capacity do not differ substantially with respect to production costs.
Second, average costs appear constant over a large region of output.
Product differentiation is also important because in the refrigerator
sector a brand name receives an estimated $10 to $12 premium relative to
private labels before demand decreases.39 Thus, horizontal integration may
be important in realizing scale economies because consumers tend to identify
with an entire appliance line rather than with a specific product.
Horizontal integration, or production of more than one type of appli-
ance, has been a major force in the large appliance industry within the
last 15 years. Specific examples of moves toward full line production are
cited in Section 8.1, a phenomenon of the industry that has occurred in
8-44
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TABLE 8-31. CONCENTRATION RATIOS OF FOUR LARGEST FIRMS
IN THE LARGE APPLIANCE INDUSTRY DEFINED BY VALUE OF SHIPMENTS36
1963
1967
1972
3631 .
0.51 4
0.56
0.60
SIC
3632
, 0.74
0.73
0.85
code
3633
0.78
0.78
0.83
3639
0.41
0.44
0.57
8-45
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Europe as well as in the United States.40 These cases have contributed to
the trend toward increasing concentration. The impetus for horizontal
integration comes from scale economies of supply, brand name recognition,
and ability to supply private label chain stores who prefer to deal with a
single firm for a full line of products. Another indication of horizontal
integration is that most industry sales leaders in each SIC sector carry a
full line.
Vertical integration, which depends upon matching the efficient produc-
tion level of the appliance components to that of the appliance itself, is
not as commonplace. For example, while compressors represent a large cost
component of refrigerators, vertical integration can only occur in the
larger firms, since the optimal plant size for compressor production is
between 2 and 3 million units per year with large unit cost increases below
an output of 1 million.41
Section 8.1 details the growth potential for the large appliance
industry. In all but relatively new product lines; e.g., microwave ovens,
market penetration is quite high. That is, most existing households already
own a set of large appliances. Thus, most future sales will occur for one
of two reasons: replacement of appliances already in place, or establish-
ment of new households.
The most important growth characteristic of the large appliance indus-
try is the tendency of firms to grow by acquiring other firms. Growth
through merger can be explained in terms of the structure and conduct of
the large appliance industry, as discussed above and in Section 8.1.
Economies of scale, in terms of both plant size and reduced costs of sales
and distribution, favor the larger, multiproduct firms. Clearly, this
trend could occur—and to some extend has occurred—with new plants and
equipment. However, with the low overall growth in demand facing the
industry, not all firms have this option, since their anticipated increase
in sales may not justify adding a new production line. Thus, some firms
suffering the cost disadvantages of small-scale production are willing to
be acquired or to sell their equity. Often, acquiring a single line producer
is a comparatively inexpensive method by which existing firms can expand.42
The implications of the characteristics discussed previously are that
the proposed control options will have little impact. First, the low rate
8-46
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of capacity utilization means that some of the increased demand can be met
through an increased use of existing capacity. .Second, larger firms will
probably acquire smaller firms to meet expansion needs. Both factors imply
that fewer new sources, which would have to meet the proposed control
options, would be constructed than would be the case if these factors did
not hold.
8.4.2.2 Cost of Capital. The cost of capital is the cost to the firm
of financing a new investment and-is the rate that a firm must receive if
it is to grow in value over time. ; The cost of capital is a key parameter
in the analysis of the economic impacts of the control options. When
individual firm data are used, the average cost of equity capital is calcu-
lated for each four-digit SIC code within each large appliance industry and
for the industry as a whole.
The cost of equity capital can be calculated in several ways. One is
the dividend method, which assumes that dividend payments will remain
constant over time and is equal>to the dividend price ratio:
Kg ~ "p ' (8~1)
where
k* = dividend method coist of capital,
D = current dividends per share of common stock, and
P = current price per%hare of common stock.
Other methods assume some growth in future earnings. The Gordon-Shapiro
method adds the ratio of retained earnings to book value to the dividend-
price ratio to compute the cost of equity capital:
= ? *
B
(8-2)
where
E
B
= Gordon-Shapiro cost of equity capital,
= current earnings per share of common stock, and
= current book value per share of stock.
8-47
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The Solomon method adds the retained earnings-price ratio to the dividend-
price ratio. The result is the inverse of the price-earnings ratio:
E - D _
—— -
E
P
(8-3)
where
k3 = Solomon cost of equity capital.
As Table 8-32 shows, the Gordon-Shapiro method consistently yields the
highest cost of equity capital—19.3 percent for the entire industry—com-
pared with costs of capital of 18.8 and 6.6 percent given by the Solomon
and dividend methods, respectively. If the most conservative (highest)
estimate is used, the average return on new investments by the industry
would have to yield at least 19.3 percent to finance the investment out of
equity or retained earnings.
8.4.3 Methodology
This section describes the methodology used to estimate the impacts of
the regulatory alternatives. A discounted cash flow (DCF) approach is used
to evaluate the profitability of investing in new production facilities
and, more specifically, to determine which of several alternative facilities
is most profitable for the firm. A production facility consists of a prime
coating and topcoating line whose VOC emissions must at least meet SIP
requirements. The set of production facilities from which firms can choose
comprises the model plants for which cost data are provided in Section 8.2.
The DCF approach is used to select the most profitable production facility
for each sector of the large appliance industry. The resulting choices
show which facilities the industry would construct in the absence of the
regulatory alternatives and thus constitute a baseline from which to measure
the impacts of those alternatives.
The remainder of this section is organized as follows. A general
description of the DCF approach is provided in Section 8.4.3.1. This
background is needed for an understanding of the particular application of
•the DCF approach, which is used to estimate the economic impacts and which
is presented in Section 8.4.3.2. Finally, the method of calculating impacts
is discussed in Section 8.4.3.3.
8-48
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TABLE 8-32. COST OF EQUITY CAPITAL FOR THE LARGE APPLIANCE INDUSTRY43
Dividend
method
Gordon-
Shapiro
method
Solomon
method
Cooking equipment 0.056
(SIC 3631)
Refrigerators/freezers 0.069
(SIC 3632)
Laundry equipment 0.055
(SIC 3633)
Other household appliances 0.061
(SIC 3639)
Large appliance 0.066
industry
0.189
0.217
0.218
0.181
0.193
0.135
0.214
0.115
0.133
0.188
8-49
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8.4.3.1 Discounted Cash Flow Approach. An investment project gener-
ates cash outflows and inflows. Cash outflows include the initial invest-
ment, operating expenses, and interest paid on borrowed funds. Cash inflows
are the revenues from the sales of'the output produced by the project,
depreciation of the capital equipment, an
-------
TABLE 8-33. DEFINITIONS
DF
t
DF
DSL
Et
F
FCC
NPV
P
PDEBT
Q
Rt
rD
r
T
TCC
TCRED
U
V
WC
X
Depreciation in year t
Discount factor = (1 + r)-t
Sum of the discount factors over the life of the project
N -t
I (1 + r) t
t=0
Present value of the tax savings due to straight line
depreciation
Operating expenses in year t
Annual fixed costs
Fixed capital costs
Interest paid on borrowed funds in year t
Project lifetime in years
Net present value
Price per unit of output
Proportion of investment financed by borrowing
Annual plant capacity
Revenues in year t
Interest rate on borrowed funds
Discount rate, or cost of capital
Corporate tax rate
Total capital cost
Investment tax credit
Capacity utilization rate
Annual variable operating costs
Working capital
Minimum ($2,000, 0.2 x FCC)
Cash flow in year t
8-51
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Et = V x U + F
(8-7)
Variable costs include expenditures on raw materials, labor (operating,
supervisory, and maintenance), utilities, and credits for heat recovery.
Fixed costs include expenditures for facility use, insurance, and adminis-
trative overhead. Interest paid on borrowed funds is a function of the
proportion of the project financed by borrowing, the total capital cost of
the project, and an interest rate, and can be given by:
It = PDEBT x TCC x
(8-8)
For income tax purposes, E. and It are deductible from gross revenues, Rt-
Hence, the after-tax cash inflow to the firm can be determined as these
expenses are netted out and the result is multiplied by (1 - T).
Federal income tax laws also allow a deduction for depreciation of the
capital equipment (not including working capital). Although depreciation
is not an actual cash flow, it does reduce income tax payments (which are
cash outflows) since taxes are based on net income after the depreciation
allowance is deducted.46 The expression in Equation 8-5, DtT, represents
the annual tax savings to the firm resulting from depreciation and is
treated as a cash inflow. The analysis in this section employs the straight
line method of depreciation. The salvage value of the line is assumed to
be zero, so the annual depreciation expense is simply given by (FCC - X)/N,
where N is the lifetime of the project and X is $2,000 or 20 percent of the
fixed capital costs, whichever is smaller.
The net cash flows represented by Equation 8-5 occur at the end of the
first through the Nth years. Additional cash inflows occur at the end of
the first and Nth years. The additional cash inflow at the end of the
first year is the tax savings attributable to the additional depreciation
deduction at the end of the first year of 20 percent of the fixed capital
cost or $2,000, whichever is smaller. By law, the basis for calculating
normal depreciation allowances must be reduced by the amount of the addi-
tional first-year depreciation.47 The additional cash inflow at the end of
the Nth year occurs when the working capital, initially treated as a cash
outflow, is recovered.
Because these cash flows occur over a future period of time, they must
be discounted by an appropriate interest rate to reflect the fact that a
8-52
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sum of money received at some future date is worth less than if that sum
were received at the present time. This discount factor, DF., can be given
u
by:
DFt = (1 + r)
-t
t = 0, 1,
N
(8-9)
The sum of the discounted cash flows from a project is called the net
present value of that project. That is:
NPV =
N
*
t=l
(Y x DF.) - Y
o'
or
N
NPV = I [Y. (1 + r)"
t=l l
(8---0)
8.4.3.2 Project Ranking Criterion. The specific application of DCF
used in the economic analysis is discussed in this section. A criterion
for ranking alternative investment projects in terms of profitability is
needed. It is assumed that, in the absence of the regulatory alternatives,
any firm building a new production facility would invest in the most profit-
able project. These facilities can be compared with those that would have
to be built to comply with the regulatory alternatives; this comparison
forms the basis for calculating price and rate of return impacts.
Equation 8-10 can be rearranged and used as the ranking criterion.
The procedure begins when the expressions are substituted for R, E, and I
(given by Equations 8-6, 8-7, and 8-8, respectively) in Equation 8-5.
Next, the expressions for YQ in Equation 8-4 and Yt in Equation 8-5 are
substituted into Equation 8-10. NPV in Equation 8-10 is then set equal to
zero and the unit price, P, is solved by rearranging the terms in Y, so the
U
price is on the left-hand side of the equal sign, all other terms are on
the right-hand side, and all other variables are defined in Table 8-33.
P =
DF x (1 - T) x Q x U
V x U + F + I
Q x U
(8-11)
where
Z = YQ - DSL - WC(1 + r)~N - X(l + r)"1 x T
8-53
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The resulting expression, the present worth-cost of the project, has two
terms. The first, or "capital cost," term is that part of the present
worth-cost accounted for by the initial capital outlay (adjusted for the
tax savings attributable to depreciation, recovery of working capital,
etc.) and including the return on the invested capital. The second, or
"operating cost," term is a function of the fixed and variable operating
costs. Hence, for any configuration, the present worth-cost given by
Equation 8-11 covers the unit operating costs and yields a rate of return,
r, over the project's lifetime on the unrecovered balances of the initial
investment. It also represents the cost to the manufacturer of an input to
the production of a large appliance, namely, the coating.
For each line size, Equation 8-11 is used to calculate the present
worth-cost of the coating from each line configuration. The results are
then ranked by cost, from lowest to highest. The most profitable configura-
tion can coat an appliance for the lowest cost.
This ranking method yields the optimal solution to a simple form of
the "constrained project selection problem."48 The selection of investment
projects by a firm is unconstrained if the projects are independent and
indivisible and if capital is sufficient to invest in all projects with
positive net present values. (A set of projects is economically independent
if the acceptance of one project does not affect the acceptance or rejection
of other projects in the set.)49 If one of these conditions is violated,
the project selection process is considered constrained. The eight coating
line configurations confronting the typical firm represent a set of mutually
exclusive projects; that is, each line produces an identical product,
namely, the coating on a large appliance. Thus, the selection of one
project automatically excludes the remaining seven projects. Because
mutual exclusivity is a form of economic dependence among the projects in
the set, selection of investment projects by the firm is constrained.
Several assumptions are implicit in this ranking procedure. First,
the objective of the firm is assumed to be maximizing the future wealth of
the firm's shareholders, which is the same as maximizing the firm's present
value in a perfect capital market.50 Second, the existence of a perfect
capital market is assumed. This existence implies that the activities of
the individual buyer or seller of securities do not affect prices and that
8-54
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the individual firm can raise or invest as much cash as it desires at the
market rate of interest. It also implies that market transactions are
costless and that the rate of return to the firm's last investment (the
marginal investment rate) is equal to the firm's marginal cost of capital.
Third, investment outcomes are assumed to be known with complete certainty.
Fourth, an investment project is assumed to be indivisible: it must be
undertaken in its entirety or not at all.
8.4.3.3 Determining the Impacts of the Control Alternatives. This
section describes how the impacts of the regulatory alternatives are esti-
mated according to the ranking method discussed in Section 8.4.3.2. The
estimated impacts are presented in Section 8.4.4. Three categories of
impacts are estimated: price, rate of return, and incremental capital
requirements.
- Price impacts are calculated directly from Equation 8-11. Cost in-
creases from the base cost of the most profitable line can be calculated
with the imputed cost of the coating for each control option. These cost
increases are translated into price impacts as they are divided by the
prices received by the producer for the appliance.
Whereas price impacts are calculated under the assumption that all
incremental costs associated with a given control option are passed forward
to the consumer, rate of return impacts are estimated under the assumption
that the producer absorbs all incremental costs, thus lowering the return
on investment. In this case, the price facing the consumer would not
change. For any control option, a discount rate exists that would enable
the producer to maintain the present worth-cost of the coating at its
baseline level; i.e., the cost associated with the most profitable line
configuration that was determined from the procedure described in Sec-
tion 8.4.3.2.
A specific value of the discount rate, r, was used to calculate the
baseline present worth-cost from Equation 8-11. The calculation of the
rate of return impact would begin by setting P = P in Equation 8-11, where
Pis the baseline (lowest) present worth-cost and then iteratively solving
for the value of r that equates the right-hand side of Equation 8-11 with
P. This value, r*, will always be less than r, the baseline rate of return.
The difference between r* and r for each control option constitutes the
rate of return impact.
8-55
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The incremental capital requirements are calculated from the cost data
presented in Section 8.2. The additional capital required to meet the
standards implied by the control options is used as a partial measure of
the financial difficulty firms might face in attempting to conform to the
standard. Incremental capital requirements also constitute a barrier for
firms entering the large appliance market. The magnitude of the additional
capital relative to the baseline capital requirements is a measure of the
size of this barrier.
Impacts on both the structure of the industry and the growth rate will
be treated qualitatively because it is difficult to translate price and
rate of return impacts into changes in concentration ratios and growth
rates. The magnitude of the price impacts, rate of return impacts, and
incremental capital requirements for smaller firms will be compared to
those for larger firms in the industry. If smaller firms are severely
affected, they might be forced to exit the industry. The industry's struc-
ture would thus be more concentrated because the larger firms would take
over markets currently supplied by the smaller firms. If the impacts on
small and large firms are roughly equivalent, no significant structural
changes are anticipated. Information in Sections 8.1 and 8.4.2 will be
considered in conjunction with price, rate of return, and capital require-
ment impacts to evaluate the effect of the control options on the industry
growth rate.
8.4.4 Economic Impacts
This section presents the estimated impacts of the regulatory alter-
natives. Each sector of the industry is assumed to be confronted with a
set of line configurations. Each configuration is a combination of a prime
coat method and a topcoat method. From this set of configurations, each
sector chooses the most profitable, using the ranking method described in
Section 8.4.3.2. The selected configuration is then compared with the
configurations that comply with the various regulatory alternatives. If
the configuration meets or exceeds the control level of the regulatory
alternative considered, there is no impact. If it does not meet the require-
ments of the regulatory alternatives, its impacts are estimated according
to methods described in Section 8.4.3.3.
8-56
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Table 8-34 presents the capital and operating costs for four model
coating lines used to represent new facilities in three sectors of the
large appliance industry: cooking equipment (two line sizes), laundry
equipment, and refrigerators/freezers. For each model line, costs are
provided for the two prime coat methods and the four topcoat methods under
consideration. The prime coat can be applied as a 62-percent solids coat-
ing or by EDP. The top coat can be applied as a 62-percent solids coating,
a 70-percent solids coating, a 65.5-percent solids with incineration, or a
100-percent solids (powder). The operating costs do not include a capital
recovery charge; that is, they are not annualized operating costs. Costs
for each line configuration are obtained when the costs of the appropriable
prime coat and topcoat methods are added. However, for three of the model
lines (both line sizes of the cooking equipment sector and the refrigerator/
freezer sector), no prime coat is needed when a 100-percent solids top coat
is used. These costs and Equation 8-11 were used to calculate the present
worth-cost of applying a coating to an appliance for each line configuration.
The highest cost of equity capital as estimated in Section 8.4.2.2—19.3
percent—was used. The investment tax credit was assumed to be 10 percent.
Investment was financed out of equity or retained earnings (no borrowing).
The capacity utilization rate for the cooking equipment sector was 75
percent; for the laundry sector, 66 percent; and for the refrigerator/
freezer sector, 57 percent. All calculations were based on a corporate tax
rate of 46 percent and straight line depreciation of capital equipment over
10 years with additional first-year depreciation of $2,000. Working capital
was assumed to equal 10 percent of the installed capital cost.
Table 8-35 gives the symbols of the prime coating and topcoating
methods used in the tables in the remainder of this section. Tables 8-36,
8-37,' 8-38, and 8-39 show the present worth-costs for each of the four
model coating lines. Associated with each cost is a ranking, which is also
shown in the tables. The highest ranking (1) corresponds to the most
profitable line configuration; that is, the configuration that can coat an
appliance for the lowest cost.
As the tables show, in the absence of the proposed regulatory alter-
natives, firms in all sectors of the industry would invest in lines that
apply a 100-percent solids top coat. Because these configurations have the
8-57
-------
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-------
TABLE 8-35. DEFINITION OF REGULATORY ALTERNATIVES
Symbol
Definition
A-II
A-III
B-II
B-III
B-IV
62 percent solids prime coat
EDP prime coat
62 percent solids top coat
70 percent solids top coat
or
65.5 percent solids top coat with incineration
100 percent solids top coat (powder)
TABLE 8-36. MODEL PLANT l:a RANKING.OF COATING LINES
BY PRESENT WORTH-COST0
Topcoat regulatory alternative
Prime coat
regulatory
alternative
A-II-
A-III
B-II
B-III
70% solids
Cost
44.28
41.56
Rank
4
2
Cost
44.28
41.56
Rank
4
2
Incineration
Cost
45.88
43.16
Rank
5
3
B-IVC
Cost
27.93
27.93
Rank
1
1
a
Annual line capacity = 17,000 units; capacity utilization = 75 percent.
DCosts are calculated through a discounted cash flow method and the
following assumptions:
(1) Discount rate = 19.3 percent.
(2) Investment tax credit = 10 percent.
(3) Investment is financed out of retained earnings (no borrowing) and
is made at the end of year 0.
(4) Straight line depreciation of capital equipment extends over
10 years.
(5) Firm takes additional first-year depreciation of $2,000.
(6) Working capital = 10 percent of installed capital costs.
(7) Corporate tax rate = 46 percent.
°No prime coat is needed with this method.
8-60
-------
TABLE 8-37. MODEL PLANT 2:
BY PRESENT WORTH-COST
RANKING.OF COATING LINES
Topcoat regulatory alternative
Prime coat
regulatory
alternative
A-II
A-III
B-II
Cost
8.
9.
68
05
Rank
2
5 -
70%
Cost
8
9
.69
.06
B-III
solids
Rank
3
6
B-IVC
Incineration
Cost
8.89
9.26
Rank
4
7
Cost
5.
5.
37
37
Rank
1
1
Annual line capacity = 143,000 units; capacity utilization = 75 percent.
3Costs are calculated through a discounted cash flow method and the
following assumptions:
(1) Discount rate = 19.3 percent.
(2) Investment tax credit = 10 percent.
(3) Investment is financed out of retained earnings (no borrowing) and
is made at the end of year 0.
(4) Straight line depreciation of capital equipment extends over 10 years.
(5) ^Firm takes additional first-year depreciation of $2,000.
(6) 'Working capital = 10 percent of installed capital costs.
(7) Corporate tax rate = 46 percent.
"No prime coat is needed with this method.
TABLE 8-38. MODEL PLANT 3: RANKING OF COATING LINES
BY PRESENT WORTH-COST0
Topcoat regulatory alternative
Prime coat
regulatory
alternative
A-II
A-III
B-II
Cost Rank
5.14 5
4.85 3
70%
Cost
5.14
4.85
B-III
B-IV
solids Incineration
Rank Cost
5 5.21
3 4.92
Rank
6
4
Cost Rank
4.82 2
4.53 1
Annual line capacity = 995,000 units; capacity utilization = 66 percent.
3Costs are calculated -through a discounted cash flow method and the
following assumptions:
(1) Discount rate = 19.3 percent.
(2) Investment tax credit = 10 percent.
(3) Investment financed out of retained earnings (no borrowing) and is
made at the end of year 0.
(4) Straight line depreciation of capital equipment extends over 10 years.
(5) Firm takes additional first-year depreciation of $2,000.
(6) Working capital = 10 percent of installed capital costs.
(7) Corporate tax rate = 46 percent.
8-61
-------
TABLE 8-39. MODEL PLANT 4:3 RANKING.OF COATING LINES
BY PRESENT WOTH-COST0
Topcoat regulatory alternative
B-II
Prime coat
regulatory
alternative Cost Rank
A-II 6.72 2
A-III 6.83 4
B-III
70% solids Incineration
Cost Rank Cost Rank
6.73 3 6.84 5
6.83 4 6.94 6
B-IVC
Cost Rank
4.49 1
4.49 1
a
'Annual line capacity = 688,000 units; capacity utilization = 57 percent.
DCosts are calculated through a discounted cash flow method and the
following assumptions:
(1) Discount rate = 19.3 percent.
(2) Investment tax credit = 10 percent.
(3) Investment is financed out of retained earnings (no borrowing) and
is made at the end of year 0.
(4) Straight line depreciation of capital equipment extends over
10 years.
(5) Firm takes additional first-year depreciation of $2,000.
(6) Working capital = 10 percent of installed capital costs.
(7) Corporate tax rate = 46 percent.
cNo prime coat is needed with this method.
8-62
-------
lowest emission rates and because firms investing in new facilities already
have an economic incentive to adopt this technology, none of the regulatory
alternatives would have an impact on the industry. This conclusion is
based on the assumption that a powder top coat and a conventional solvent-
borne top coat have the same properties (strength, durability, and corrosion
resistance).
Because the powder coating technology is a newcomer to the industry,
however, some producers doubt that it is capable of. producing a coating
with the same properties as a solvent-borne coating. Powder top coating is
excluded from the set of control options to account for possible limitations
on its use. Within each sector of the industry, firms investing in new:
facilities are restricted to a choice of one of the remaining six line
configurations.
- The rankings in Tables 8-36 through 8-39 are used again to determine
the investment behavior of each sector of the industry in the absence of
the regulatory alternatives. The most profitable line configurations for
Model line 1 and Model line 3 are the EDP prime coat with either a 62-percent
solids or a 70-percent solids top coat. For Model line 2 and Model line 4,
the most profitable line configuration is the 62-percent solids prime coat
and top coat. These configurations constitute the baseline from which the
impacts of the regulatory alternatives are calculated.
The remainder of this section presents the impacts of the regulatory
alternatives for each model line on product price, rate of return, and
capital requirements. Because there are no impacts, if producers are able
to use powder coating, the impact analysis that follows is restricted to
the case in which producers cannot use this technology.
8.4.4.1 Price Impacts. Price impacts were estimated based on the
assumption that all incremental costs attributable to the regulatory alter-
natives are passed forward to the consumer, thus enabling the firm to
maintain its return on investment. Tables 8-40, 8-41, 8-42, and 8-43
present these impacts for each of the four model lines. The impacts reported
in these tables depended on the baseline configuration selected by the
representative firm in each sector of the industry. The level of control
associated with this configuration was compared with the levels required by
the remaining alternatives. The impact of any regulatory alternative
8-63
-------
yielding a level of control that was less stringent than the baseline
configuration was assumed to be zero. The estimated increases in the price
received by producers range from 0.0 to 0.7 percent.
For all four model lines, the largest impact occurs for the EDP prime
coat/65.5-percent solids (incineration) topcoat configuration. However, in
all four cases, this impact would be smaller if the EDP prime coat and,
70-percent solids topcoat configuration, which has the same level of control,
were used. In this case, the estimated increases in price would range from
0.0 to 0.2 percent.
8.4.4.2 Rate of Return Impacts. Rate of return impacts were estimated
based on the assumption that producers would absorb all of the incremental
costs of control, thus lowering the return on investment. Tables 8-44,
8-45, 8-46, and 8-47 show for each model line the reduction in the return
on investment attributable to the regulatory alternatives. Given a baseline
return on investment of 19.3 percent, the decline ranges from 0.0 to 3.7
percentage points.
In each of the four model lines, the largest absolute decline in
return on investment occurs with the EDP prime coat/65.5-percent solids
(incineration) topcoat configuration. However, as stated in Section 8.4.4.1,
this same level of control could be obtained with an EDP prime coat and a
70-percent solids topcoat line configuration with a smaller reduction in
return on investment. For example, the return on investment for Model line
4 would decrease by 1.2 percentage points, instead of the 2.4-percentage
point decrease that occurs if the incineration option is used.
8.4.4.3 Incremental Capital Requirements. The additional capital
investment required by the regulatory alternatives is shown for.each model
line in Tables 8-48, 8-49, 8-50, and 8-51. These additional requirements
range from 0.0 to 21.2 percent of the baseline capital requirements.
Again, for all models the largest additional capital investment is required
for the EDP prime coat/65.5-percent solids (incineration) topcoat control
option. With the EDP prime coat and the 70-percent solids topcoat control
option, these increases could be reduced and the same level of control
obtained. For example, for Model line 4 the additional capital requirement
would be 8.6 percent instead of 13.1 percent with the EDP prime coat and
the 70-percent solids top coat rather than the EDP prime coat and the
65.5-percent solids with incineration topcoat control option.
8-64
-------
TABLE 8-40. MODEL LINE 1: PRICE IMPACTS OF CONTROL OPTIONS,
CONSTRAINED CASE (%)a
Prime coat
regulatory
alternative
A-II
A-III
B-II
0.00b
0.00
Topcoat regulatory alternative
B-III
70% solids
0.00b
0.00
Incineration
0.00b
0.69
The producer price of the appliance coated on this line is estimated as
$231 per unit. Topcoat Regulatory Alternative B-IV (powder) is not in-
cluded here because it is assumed not to be perfectly substitutable with
conventional organic-solvent-borne coatings. Percent increase in price
is calculated by dividing the cost increase over the baseline of the
regulatory alternative by the producer price.
There is no impact because the baseline configuration (determined from
the rankings in Table 8-36) has a higher level of control than the alter-
native under consideration.
TABLE 8-41.
MODEL LINE 2: PRICE IMPACTS OF CONTROL OPTIONS,
CONSTRAINED CASE (%)a
Prime coat
regulatory
alternative
A-II
A-III
B-II
0.00
0.16
Topcoat regulatory alternative
B-III
70% solids
0.00
0.16
Incineration
0.09
0.25
The producer price of the appliance coated on this line is estimated as
$231 per unit. Topcoat Regulatory Alternative B-IV (powder) is not in-
cluded here because it is assumed not to be perfectly substitutable with
conventional organic-solvent-borne coatings. Percent increase in price
is calculated by dividing the cost increase over the baseline of the
regulatory alternative by the producer price.
8-65
-------
TABLE 8-42. MODEL LINE 3: PRICE IMPACTS OF CONTROL OPTIONS,
CONSTRAINED CASE (%)a
Prime coat
regulatory
alternative
A-II
A-III
B-II
0.00b
0.00
Topcoat requlatory alternative
B-III
70% solids
0.00b
0.00
Incineration
0.00b
0.04
aThe producer price of the appliance coated on this line is estimated as
$169 per unit. Topcoat Regulatory Alternative B-IV (powder) is not in-
cluded here because it is assumed not to be perfectly substitutable with
conventional organic-solvent-borne coatings. Percent increase in price is
calculated by dividing the cost increase over the baseline of the regula-
tory alternative by the producer price.
bThere is no impact because the baseline configuration (determined from the
rankings in Table 8-36) has a higher level of control than the alternative
under consideration.
TABLE 8-43. MODEL LINE 4: PRICE IMPACTS OF CONTROL OPTIONS,
CONSTRAINED CASE (%)
Prime coat
regulatory
alternative
A-II
A-III
B-II
0.00
0.04
B-III
70% solids
0.00
0.04
Incineration
0.04
0.08
aThe producer price of the appliance coated on this line is estimated as
$268 per unit. Topcoat Regulatory Alternative B-IV (powder) is not in-
cluded here because it is assumed not to be perfectly substitutable with
conventional organic-solvent-borne coatings. Percent increase in price
is calculated by dividing the cost increase over the baseline of the
regulatory alternative by the producer price.
8-66
-------
TABLE 8-44. MODEL LINE 1:
RETURN ON INVESTMENT IMPACTS OF CONTROL OPTIONS,
CONSTRAINED CASE3
Prime coat
regulatory
alternative
Topcoat regulatory alternative
B-II
B-III
70% solids
Incineration
A-II
A-III
0.00"
0.00
0.00L
0.00
0.00U
-3.05
The baseline return on investment is 19.30 percent. Table entries are
percentage point declines in this baseline rate. Topcoat Regulatory
Alternative B-IV (powder) is not included because it is assumed not to be
perfectly substitutable with conventional organic-solvent-borne coatings.
There is no impact because the baseline configuration (determined from
the rankings in Table 8-36) has a higher level of control'than the alter-
native under consideration.
TABLE 8-45. MODEL LINE 2: RETURN ON INVESTMENT IMPACTS OF CONTROL OPTIONS,
CONSTRAINED CASE3
Prime coat
regulatory
alternative
A-II
A-III
B-II
0.00
-2.45
Topcoat regulatory alternative
B-III
70% solids
-0.02
-2.47
Incineration
-1.53
. -3.72
The baseline return on investment is 19.30 percent. Table entries are
percentage point declines in this baseline rate. Topcoat Regulatory
Alternative B-IV (powder) is not included because it is assumed not to
be perfectly substitutable with conventional organic-solvent-borne
coatings.
8-67
-------
TABLE 8-46. MODEL LINE 3:
RETURN ON INVESTMENT IMPACTS OF CONTROL OPTIONS:
CONSTRAINED CASE3
Prime coat
regulatory -
option
A-II
A-III
B-II
0.00b
0.00
Topcoat requlatory alternative
B-III
70% solids
0.00b
-0.03
Incineration
0.00b
-0.96
3The baseline return on investment is 19.30 percent. Table entries are
percentage point declines in this baseline rate. Topcoat regulatory
Alternative B-IV (powder) is not included because it is assumed not to
be perfectly substitutable with conventional organic-solvent-borne
coatings.
bThere is no impact because the baseline configuration (determined from
the rankings in Table 8-38) has a higher level of control than the
alternative under consideration.
TABLE 8-47. MODEL LINE 4: RETURN ON INVESTMENT IMPACTS OF CONTROL OPTIONS,
CONSTRAINED CASE3
Prime coat
regulatory —
alternative
A-II
A-III
B-II
0.00
-1.17
Topcoat requlatory alternative
B-III
70% solids
-0.04
-1.21
Incineration
-1.25
-2.38
aThe baseline return on investment is 19.30 percent. Table entries are
percentage point declines in this baseline rate. Topcoat Regulatory
Alternative B-IV (powder) is not included because it is assumed not to
be perfectly substitutable with conventional organic-solvent-borne
coati ngs.
8-68
-------
TABLE 8-48. MODEL LINE 1: INCREMENTAL CAPITAL REQUIREMENTS OF
CONTROL OPTIONS3
Prime coat
regulatory
alternative
A-II
A-III
B-II
Change
from baseline
000 $ %
0.0b 0.0b
0.0 0.0
Topcoat
regulatory alternative
B-III
Change
000
0.0
0.0
70% solids ,
from baseline
$O/
/o
b o.ob
0.0
Incineration
Change from
000 $
0.0b
40.1
baseline
0.0b
8.9
The baseline capital reguirement for this model plant is $451.6 thousanc
There is no impact because the baseline configuration (determined from the
rankings in Table 8-36) has a higher level of control than the alternative
under consideration.
TABLE 8-49. MODEL LINE 2: INCREMENTAL CAPITAL REQUIREMENTS OF
CONTROL OPTIONS3
Prime coat
regulatory
alternative
A-II
A-III
from
000
0.
168.
B-II
Change
baseline
$ %
0 0.0
7 16.6
Topcoat
Change
000
0
168
regulatory alternative
70%
B-III
solids
from baseline
$
.0
.7
%
0.0
16.6
Incineration
Change
000
45.
214.
from
$
7
3
baseline
%
4.5
21.2
The baseline capital reguirement for this model plant is $1,013.4 thousand.
8-69
-------
TABLE 8-50 MODEL LINE 3: INCREMENTAL CAPITAL REQUIREMENTS OF
CONTROL OPTIONS*
Topcoat regulatory alternative
Prime coat
regulatory
alternative
A-II
A-III
B-II
Change
from baseline
000 $ %
0.0b 0.0b
0.0 0.0
B-III
70% solids
Change from
000 $
0.0b
0.0
baseline
%
0.0b
0.0
Incineration
Change from baseline
000 $ %
o.ob o.ob
115.5 ' 3.5
lThe baseline capital requirement for this model plant is $3,344.0 thousand.
DThere is no impact because the baseline configuration (determined from the
rankings in Table 8-38) has a higher level of control than the alternative
under consideration.
TABLE 8-51 MODEL LINE 4: INCREMENTAL CAPITAL REQUIREMENTS OF
CONTROL OPTIONS3
Toocoat regulatory alternative
Prime coat
regulatory
alternative
A-II
A-III
B-II
Change
from baseline
000 $ %
0.0 0.0
217.6 8.6
70%
B-III
solids
Change from baseline
000 $
0.0
217.6
%
0.0
8.6
Incineration
Change from baseline
000 $ %
115.5 4.6
333.1 13.1
lThe baseline capital requirement for this model plant is $2,535.9 thousand.
8-70
-------
8.5 POTENTIAL SOCIOECONOMIC AND INFLATIONARY IMPACTS
Executive Order 12044 requires the evaluation of the inflationary
impacts of major legislative proposals, regulations, and rules. The regula-
tory options would be considered a major action (thus requiring the prepara-
tion of an Inflation Impact Statement) if either of the following criteria
applies:
Additional annualized costs of compliance, including capital
charges (interest and depreciation), will total $100 million
within any calendar year by the attainment date, if applicable,
or within 5 years of implementation.
• Total additional cost of production is more than 5 percent of
the selling price of the product. :
The regulatory alternatives for the large appliance industry would not
qualify as a major action by the second criterion because the largest price
increase was estimated to be 0.7 percent (Table 8-40). The remainder.of
this section is devoted to estimating the total additional cost of com-
pliance with the regulatory control alternatives.
The first step was to determine annual growth rates for each sector of
the large appliance industry. Data from Table 8-10 were used to calculate
the percent change in forecasted production between 1978 and 1983 for the
three sectors used in the analysis: washers and dryers (SIC 3633), refrig-
erators (SIC 3632), and ranges and microwave ovens (SIC 3631). These
percent changes were then converted into average annual growth rates. For
home cooking equipment, the growth rate averaged 5.5 percent per year; for
refrigerators and freezers, 1.3 percent per year; and for home laundry
equipment, 2.5 percent per year. These growth rates were then multiplied
by 1977 output (Table 8-6) to obtain estimates of 1981 and 1986 production.
(The period from 1981 through 1986 would be the 5-year period following
implementation.) For each of the three sectors, the difference between
1986 and 1981 production represents that portion of the industry's output
that could be affected by the regulatory alternatives. For SIC 3631 (home
cooking equipment), this figure was 2,556.7 thousand units; for SIC 3632
(refrigerators and freezers), 507.3 thousand units; and for SIC 3633 (home
laundry equipment), 1,241.7 thousand units.
For each sector, the projected increase in output was translated into
"model line equivalents" by dividing it by the product of the annual capac-
8-71
-------
TABLE 8-52. POTENTIAL INCREMENTAL ANNUALIZED COST OF COMPLIANCE
WITH REGULATORY ALTERNATIVE A-III/B-III, 1986
Number of
model line
equivalents
Cost
per line
(000 $)
Cost
per sector
(000 $)
Scenario I
Cooking equipment
Refri gerators/freezers
Laundry equipment
Total
Scenario II
Cooking equipment
Refri gerators/freezers
Laundry equipment
Total
200
,2
2
204
24
2
_2
28
17
131
35
41
131
35
3,400
262
70
3,732
984
262
70
1,316
aAssumes that all of the increase in output in SIC 3631 is met with con-
struction of small lines (annual capacity = 17,000 units).
bAssumes that all of the increase in output in SIC 3631 is met with con-
struction of large lines (annual capacity = 143,000 units).
8-72
-------
ity of the model line and the capacity utilization rate. Two scenarios
were analyzed: one in which all of the increase in the output of the home
cooking equipment sector is met by adding small lines, the other in which
all of the increased output is produced by adding large lines. The incre-
mental annualized costs of compliance were calculated based on the data
given in Table 8-34. For each sector, the incremental annualized cost of
compliance for Regulatory Alternative A-III/B-III (incineration) was multi-
plied by the number of model line equivalents to estimate the cost of
compliance for that sector. The costs for each sector were added to deter-
mine the impact of this alternative on the entire industry. All results
are given in Table 8-52.
As the table shows, the incremental cost for the entire large appli-
ance industry to comply with the option that would have the worst impact
would range from $1.3 million to $3.7 million. Most of the additional
costs of compliance would be incurred by the household cooking equipment
sector. However, because neither the annualized costs of compliance nor
the estimated price impacts meet the criteria specified in the Executive
Order, the regulatory alternatives are not a major action and thus do not
require the preparation of an Inflation Impact Statement.
8.6 REFERENCES
1.
2.
3.
4.
5.
EPA Economic Information System (EIS), Plant Data Base.
Library. Research Triangle Park, NC. 1978.
EPA Technical
Current Industrial
Bureau of the Census, U.S. Department of Commerce.
Reports, Series MA-36F, 1968-1977.
The Incredible Value Story. Metal Products Finishing. 24(7):56.
July 1967. —
Stevens, James, and Donald Owens. 1980-1990: Ten Good Years.
•Appliance. 36(1):46-47. January 1979.
Bureau of Labor Statistics, U.S. Department of Labor. Average Annual
Consumer and Wholesale Price Indexes: Washington, DC. 1978.
Few Survivors in the Icebox Field.
p. D-l.
New York Times. February 5, 1979.
Telecon. Scott, Marsha, Research Triangle Institute, with McGraff,
Ted, Bureau of the Census, U.S. Department of Commerce. January 16,
1978.
8-73
-------
8. Bureau of the Census, U.S. Department of Commerce. 1976 Annual Survey
of Manufacturers, Industry Profile Series.
9. Gas Appliance Manufacturers Association, Inc. Statistical Highlights:
Ten Year Summary, 1968-1977. Arlington, VA.
10. Industry and Trade Administration, U.S. Department of Commerce.
U.S. Industrial Outlook. 1978.
11. Bureau of the Census, U.S. Department of Commerce. 1977 Survey of
Plant Capacity.
12. Corporate Strategies: White Consolidated1s New Appliance Punqh.
Business Week. 94-98. May 7, 1979.
13. Standard & Poor's Industry Surveys. Electronics—Electrical Basic
Analysis. September 7, 1978. p. E-19.
14. Industry and Trade Administration, U.S. Department of Commerce.
U.S. Industrial Outlook. 1979.
15. Appliance. 34(9):18. September 1977.
16. Out of the Frying Pan, into the Fray. Forbes. 38. July 23, 1979.
17. Maytag Painting Facility Conserves Energy. Industrial Finishing.
26-31. January 1977.
18. Appliance. 34(2):42. February 1977.
19. Appliance. 34(11):34. November 1977.
20. Telecon. McCrodden, Brian J., with Acker, R., Ransburg Corporation.
May 8, 1980. Costs of electrostatic spray application equipment.
21. Telecon. McCrodden, Brian J., with Lissy, G., Nordson Corporation.
May 9, 1980. Costs of powder application equipment.
22. Telecon. McCrodden, Brian J., with Steinhebel, F., Binks Manufactur-
ing Company. May 8, 1980. Costs of electrocoating equipment.
23. Telecon. McCrodden, Brian J., with White, W., The DeVilbiss Company.
May 8, 1980. Costs of paint handling and memory systems.
24. Letter from Babb, Kenneth, to Borders, S. , Cincinnati Industrial
Machinery. July 30, 1980. Presenting results of finishing systems
cost information developed in April 16, 1980, meeting.
25. Society of Industrial Realtors Industrial Real Estate Market Survey.
Economics and Research Division, National Association of Realtors.
April 1980.
8-74
-------
26. Office of Conservation and Solar Energy, U.S. Department of Energy.
Code of Federal Regulations. Title 10, Chapter IX, Subchapter A,
Part 436. Washington, DC. Office of the Federal Register. January 23,
1980.
27. Telecon. Babb, Kenneth, with Anthony, W., Glidden Coatings and Resins
Company. May 12, 1980. Costs of high-solids coatings.
28. Telecon. McCrodden, Brian J. , with Taylor, R., Glidden Coatings and
Resins Company. May 9, 1980. Costs of electrocoat feed materials.
29. Telecon. McCrodden, Brian J., with Lovano, S., Ferro Corporation.
May 7, 1980. Cost of powder coatings for large appliances.
30. United States Congress. Federal Water Pollution Control Act, as
amended November 1978. 33 USC 1251 et seq. Washington, DC.
U.S. Government Printing Office. December 1978.
31. United States Congress. Clean Air Act, as amended August 1977. 42 USC
„ 7401 et seq. Washington, DC. U.S. Government Printing Office.
November 1977.
32. Telecon. Scott, Marsha, Research Triangle Institute, with Kukulka, J.,
Effluent Guidelines Division, U.S. Environmental Protection Agency.
December 10, 1979. Cost of water pollution control regulations in the
large appliance surface coating industry.
33. Industrial Ventilation Manual. American Conference of Government In-
dustrial Hygienists. Washington, DC. n.d.
34. United States Congress. Toxic Substances Control Act. 15 USC 2601
et seq. Washington, DC. U.S. Government Printing Office. October 1976.
35. Telecon. Scott, Marsha, Research Triangle Institute, with Beronja, G.,
Office of Toxic Substances, U.S. Environmental Protection Agency.
Impact of toxic substances control on the large appliance surface
coating industry.
36. Bureau of the Census, U.S. Department of Commerce. 1972 Census of
Manufactures, Volume 1. Washington, DC. 1976.
37. Scherer, F. M., et al. The Economics of Multi-Plant Operation.
Cambridge, Harvard University Press, 1975.
38. Ref. 36, p. 80.
39. Ref. 36, p. 244.
40. Ref. 36, p. 162.
41. Ref. 36, p. 269.
42. Ref. 36, p. 163.
8-75
-------
43. Moody's Industrial Manual, 1979; Standard and Poor's Corporation Records,
1979; Wall Street Journal, August 15, 1979.
44. Bussey, I.E. The Economic Analysis of Industrial Projects. Englewood
Cliffs, NO, Prentice-Hall, Inc., 1978. p. 220.
45. Ref. 43, p. 222, footnote 13.
46. Ref. 43, p. 73.
47. Ref. 43, p. 78.
48. Ref. 43, pp. 266-276.
49. Ref. 43, p. 245.
50. Ref. 43, p. 153.
8-76
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APPENDIX A
EVOLUTION OF PROPOSED BACKGROUND INFORMATION DOCUMENT
A-l
-------
APPENDIX A
EVOLUTION OF PROPOSED BACKGROUND INFORMATION DOCUMENT
The study to develop a proposed standard of performance for new surface
coating operations within the large appliance industry began in October
1978 under U.S. Environmental Protection Agency (EPA) Contract number
68-02-3056. The Office of Air Quality Planning and Standards (OAQPS), with
Mr. William L. Johnson, lead engineer, of the Chemicals and Petroleum
Branch (CPB), authorized the Research Triangle Institute (RTI) to conduct
the study. In June 1980, Mr. William L. Tippitt of the Standards Development
Branch (SDB) replaced Mr. Johnson as lead engineer.
The overall objective of this study was to compile and analyze data in
sufficient detail to substantiate a standard of performance. To accomplish
this objective, the investigators first acquired the necessary technical
information on:
Coating operations and processes,
Release and controllability of organic emissions from this
source into the atmosphere, and
Costs of demonstrated control techniques.
A literature search was conducted and data obtained from the following:
U.S. Department of Commerce,
National Technical Information Service,
Various trade journals, and
Papers presented at trade association meetings.
This information was supplemented by plant tours, meetings, and telephone
contacts with the large appliance industry, coatings suppliers, and equip-
ment vendors to gain first-hand information on coating operations and
control techniques.
A-2
-------
The technical background chapters describing the industry, emission
control techniques, reconstruction and modification considerations, model
plants, and regulatory alternatives were completed in November 1979 and
mailed to industry for review and comment. The preliminary economic analy-
sis was completed in.December 1979.
Industry comments on the draft BID were analyzed and incorporated into
a revised version that was sent to Working Group in February 1980. Working
Group comments and delayed industry comments were considered and incorporated
into the present version of the BID, along with the proposed standards and
preamble, to complete the package that was distributed to National Air
Pollution Control Techniques Advisory Committee (NAPCTAC) members in May
1980. Similar packages were sent to industry and environmental groups for
additional comment.
- NAPCTAC review was accomplished in June, and the revised proposal
package was submitted for Steering Committee review in July.
Table A-l summarizes the major events in the evolution of the document.
Table A-2 lists the firms and organizations contacted during preparation of
the document.
A-3
-------
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A-4
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TABLE A-2. SUPPLIERS AND MANUFACTURERS CONTACTED
Association of Home Appliance Manufacturers
Cincinnati Industrial Machinery
DeSoto, Incorporated
DeVilbiss Company
Ferro Corporation
General Electric Company
Glidden Coatings and Resins Company
Hobart Corporation
Maytag Company
Nordson Corporation
Pittsburg Paint and Glass Industries, Incorporated
Ransburg Corporation
Whirlpool Corporation
White Consolidated Industries
A-5
-------
A-6
-------
APPENDIX B
INDEX TO ENVIRONMENTAL IMPACT CONSIDERATIONS
B-l
-------
APPENDIX B
INDEX TO ENVIRONMENTAL IMPACT CONSIDERATIONS
Agency guidelines
1. Background and description
a. Process affected
b. Industry affected
c. Availability of control
2. Alternatives considered
a. Taking action or postponing action
• Environmental impacts
b. Promulgating an NSPS equivalent
to the assumed CTG limit
• Air pollution
Water pollution
Solid waste disposal
Location within the BID
The process to be affected
is described in Section 3.2.
Descriptions of the industry
to be affected are given in
Sections 3.1 and 8.1.
Information on the availabil-
ity technology of control
technology is given in
Chapter 4.
The environmental impacts of
not implementing any standard
are discussed in Sections 7.8.2
and 7.8.3.
The air pollution impacts of
this alternative are discussed
in Sections 6.3.2, 6.3.3,
and 7.2.2.
The water pollution impacts
of this alternative are
discussed in Section 7.4.
The solid waste disposal
impacts of this alternative
are discussed in Section 7.5.
B-2
-------
Energy
Economic
c. Promulgating an NSPS that would
reduce prime coat emissions by
55 percent from the no NSPS baseline
• Air pollution
Water pollution
Solid waste disposal
Energy
Economic
d. Promulgating an NSPS that
would reduce topcoat emissions
by 30 percent from the no NSPS
baseline
• Air pollution
• Water pollution
Solid waste disposal
The energy impacts of this
alternative are discussed in
Section 7.6.
The economic impacts of this
alternative are discussed in
Sections 8.2 and 8.3.
The air pollution impacts of
this alternative are discussed
in Sections 6.3.2, 6.3.3,
and 7.2.2.
The water pollution impacts
of this alternative are
discussed in Section 7.4.
The solid waste disposal
impacts of this alternative
are discussed in Section 7.5.
The energy impacts of this
alternative are discussed in
Section 7.6.
The economic impacts of this
alternative are discussed in
Sections 8.2 and 8.3.
The air pollution impacts of
this alternative are dis-
cussed in Sections 6.3.2,
6.3.3, and 7.2.2.
The water pollution impacts
of this alternative are
discussed in Section 7.4.
The solid waste disposal im-
pacts of this alternative
are discussed in Section 7.5.
B-3
-------
Energy
Economic
e. Promulgating an NSPS that would
eliminate topcoat emissions
• Air pollution
• Water pollution
• Solid waste disposal
• Energy
• Economic
3. Other considerations and impacts
a. Other environmental impacts
b. Irreversible and irretrievable
commitment of resources
The energy impacts of this
alternative are discussed in
Section 7.6.
The economic impacts of this
alternative are discussed in
Sections 8.2 and 8.3.
The air pollution impacts of
this alternative are dis-
cussed in Sections 6.3.2,
6.3.3, and 7.2.2.
The water pollution impacts
of this alternative are
discussed in Section 7.4.
The sol.id waste disposal
impacts of this alternative
are discussed in Section 7.5.
The energy impacts of this
alternative are discussed in
Section 7.6.
The economic impacts of this
alternative are discussed in
Sections 8.2 and 8.3.
Other environmental impacts
are discussed in Section 7.7.
The irreversible and irretriev-
able commitment of resources
is discussed in Section 7.8.1.
B-4
-------
APPENDIX C
EMISSION SOURCE TEST DATA
C-l
-------
APPENDIX C
EMISSION SOURCE TEST DATA
Because uncontrolled emissions can be calculated from coatings data,
because of the"dispersed nature of the emissions, and because the use of
capture systems and control devices is not expected, the development of
this standard did not require emission source testing.
C-2
-------
APPENDIX D
EMISSION MEASUREMENT AND MONITORING
D-l
-------
APPENDIX D - EMISSION MEASUREMENT AND MONITORING
D.I EMISSION MEASUREMENT METHODS
During the standard support study for the large appliance industry,
the U.S. Environmental Protection Agency (EPA) did not conduct tests for
volatile organic compounds (VOCs) at any plant. However, some coating
samples were submitted by appliance paint manufacturers and analyzed by the
EPA, and several field source tests were conducted by EPA at plants in
similar surface coating industries (automobile, can, metal coil, and pressure-
sensitive tapes and labels).
D.I.I Coating Analysis Methods
Five appliance coating samples were received from paint manufacturers;
all were high-solids topcoat paints. An earlier version of Reference
Method 24 was used for analysis, and because the coatings contained no
water, the water content was not determined. The results from the analysis
compared favorably with the specifications provided by the manufacturers.
Since the coating tests were performed, Method 24 has been modified.
Statistical confidence intervals are applied to the intermediate water
analysis result to eliminate individual analyst or inter!aboratory biases.
Because this step is merely a refinement of the procedure and because no
water was in the sample coatings, the sample analysis results would not be
affected.
D.1.2 Stack Emission Test Methods
Although no large appliance coating plants were tested, emission tests
were conducted at several plants in similar coating industries. The purposes
of the tests were to determine several conditions: control efficiency
across the vapor control device (usually a carbon adsorber or incinerator),
overall control efficiency of the entire plant, organic-sol vent material
balance for each coating line, amount of fugitive emissions, and effective-
ness of the hooding devices.
D-2
-------
Stack tests were performed at several sites in each plant to measure
the VOC mass flow rate. EPA Reference Method 1 was used to select the
sampling locations, and Reference Method 2 was used to determine the volume-
tric flow rate. Method 3 was used to determine the molecular weight of the
gas stream, and either Method 4 or a standard wet bulb/dry bulb procedure
was used to determine moisture. Methods 2, 3, and 4 were combined to
calculate the dry standard volumetric flow rate. These methods are identi-
cal to the ones recommended for this regulation.
The VOC concentration in each stack was determined by one of the
following methods:
Reference Method 25, "Determination of Total Gaseous Nonmethahe
Organic Emissions as Carbon;"
Integrated bag samples analyzed by a flame ionization analyzer
(BAG/FIA);1 and
Continuous concentration measurements by direct extraction
and a flame ionization analyzer (FIA).2
Usually, the TGNMO method and one of the FIA methods were run simulta-
neously. The BAG/FIA method was used at sites in explosive atmospheres or
remote locations. The direct extraction FIA method was used at convenient
sites that were not in hazardous areas. The direct FIA was preferred
because, with continuous measurements, minor process variations could be
noted. The FIAs in both methods were usually calibrated with propane.
When the TGNMO or BAG/FIA method was used, the VOC measurements were per-
formed for three 45- to 60-minute runs, with volumetric flow measurements
made before and after each VOC run.
The results from the two FIA methods should be equivalent. The TGNMO
results differed somewhat from the results of the two FIA methods. The
differences probably arose from the fact that the TGNMO procedure measures
all carbon atoms equally, while the FIA detector has a varying response
ratio for different organic compounds. The difference in results would be
most pronounced if a multicomponent solvent mixture were used.
D.2 PERFORMANCE TEST METHODS
For the standards support study for the large appliance industry,
performance test methods were needed in two areas: determination of the
organic-sol vent content of the coating, and determination of the overall
D-3
-------
control efficiency of the add-on pollution control system. Furthermore,
the test method for determining control efficiency may vary depending on
the type of add-on control device used.
D.2.1. Analysis of Coatings
For the proposed large appliance regulation, the organic content of
the coating must be determined in units of mass of VOCs per volume of
coating solids. Four coating parameters are needed to calculate this
value: weight fraction volatiles (Wv), weight fraction water (Ww), volume
fraction solids (Vs), and coating density (Dc). These values may be obtained
either from the coating manufacturer's formulation or from Reference Method
24, "Determination of Volatile Matter Content, Water Content, Density,
Volume Solids, and Weight Solids of Surface Coating." Reference Method 24
combines several ASTM standard methods that determine the needed parameters.
This reference method and the rationale leading to its selection are pre-
sented in another EPA document.3
The estimated cost of analysis per coating sample using Method 24 is
$150. For aqueous coatings, an additional $100 per sample is required for
water content determination. Because the testing equipment is standard
laboratory apparatus,, no additional purchasing costs are expected.
D.2.2 Efficiency of the Pollution Control System
If'the amount of organic solvent in the coatings exceeds the standard,
the overall efficiency of the entire vapor control system must be deter-
mined. This efficiency is determined by comparing the amount of solvent
controlled (either recovered or destroyed) to the potential amount of
solvent emitted with no controls. It should be noted that the overall
system control efficiency is not the same as the efficiency of the indivi-
dual vapor control device, because the overall efficiency considers the
fugitive emissions that are not routed to the device. Only two types of
vapor control devices—carbon adsorbers and inci'nerators—are expected to
be used in the large appliance industry.
D.2.2.1 Carbon Adsorber Test Procedure. For carbon adsorbers, per-
formance is demonstrated by comparing the organic solvent used versus the
solvent recovered. This method is particularly easy and practical when a
plant uses only one or two solvents and mixes its own coatings. When a
solvent inventory system is used, it is necessary to monitor two things:
D-4
-------
the amount of solvent used, and the amount of solvent recovered by the
carbon adsorption system. The solvent may be measured either in terms of
volume or mass. These data should be collected over a 1-month period to
determine the efficiency of the carbon adsorber system. This time interval
allows the test to be run with a representative variety of coatings and
appliance products and reduces the impact of variations in the process that
would otherwise affect the representativeness of a short-term test. It
should be noted that this procedure determines the overall control effi-
ciency based on the original amount of solvent used, not the amount enter-
ing the carbon adsorber, and fugitive emissions are allowed as long as the
overall control efficiency meets the standard.
The additional cost of such a performance test should be minimal
because the solvent inventory information is normally monitored by the
plant. If not, the estimated purchase cost of two accurate liquid meters
is $1,400.
D.2.2.2 Incinerator Test Procedure. Because incinerators destruct
rather than recover the solvent, a different type of performance test is
needed. The recommended procedure measures the mass of VOCs (as carbon) in
the incinerator system vents (incinerator inlet, incinerator outlet, and
fugitive emission vents), and determines the overall control efficiency of
the system.
The recommended procedure for determining the mass of VOCs (as carbon)
in the incinerator system vents uses a combination of several standard
methods. EPA Reference Method 1 is used to select the sampling site.
Reference Method 2 is used to measure the volumetric flow rate in the vent:
Methods 3 and 4 are used to measure the molecular weight and moisture
content in order to adjust the volumetric flow to dry standard conditions.
The VOC concentration in the vent is measured by Reference Method 25,
"Determination of Total Gaseous Nonmethane Organic Emissions as Carbon."
The results from these methods are combined to give the mass of VOCs (as
carbon) in the vent.
Three 1-hour runs of Reference Method 25 are recommended for a complete
test, with Reference Methods 2, 3, and 4 performed at least twice during
that period. Measurements at the inlet, outlet, and fugitive emission
vents should be performed simultaneously. Although the actual testing time
with Reference Method 25 is only 3 hours, the total time required for one
D-5
-------
complete performance test is estimated at 8 hours, with an estimated overall
cost of $4,000, plus $2,000 for each fugitive vent measured. During the
performance test, the process should be operating normally. Because this
test is short-term, the enforcement agency should consider the solvents and
coatings used and the products being manufactured to ensure representative-
ness.
The TGNMO method was selected to measure the VOC concentration instead
of one of the other methods discussed in Section D.I.2, "Stack Emission
Test Methods." It is simpler to use, especially in explosive atmospheres
or when high-temperature, moist streams are sampled. Also, because the
detector used in Reference Method 25 measures all the nonmethane organics
as methane, all carbon atoms give an equivalent instrument response. There-
fore, the problem of varying response ratios for different organic compounds
(typical of all flame ionization units) is avoided. A more detailed discus-
sion of the TGNMO method and its advantages is presented in another EPA
document.3
D.2.2.3 Comparison of Test Procedures. The decision to recommend two
different performance test methods was made after several factors were
considered. It is usually preferable to have the same performance test
method regardless of the type of control device. In this case, the stack
sampling procedure described for incinerators is also applicable to carbon
adsorbers and may be used if preferred by the plant. However, the solvent
inventory method is a far more practical and accurate procedure. It is
inexpensive, requires no special technical sampling and analytical proce-
dures, and has a test period of 1 month, so a representative variety of
coatings can be tested. Unfortunately, an inventory-type method cannot be
applied to incinerators. The 1-day TGNMO inlet and outlet stack test
procedure is the best method for testing incinerators, but this method
would become exorbitantly expensive and impractical if a longer test period
were required. Thus, it was decided that the advantages of the solvent
inventory-type test for carbon adsorbers outweigh the disadvantages of two
different performance test methods with two different test periods.
There are important differences between the carbon adsorber and incine-
rator test procedures that should be noted. The test procedure for the
carbon adsorber system relates the original amount of solvent used at the
coating head to the amount of solvent controlled (recovered) by the
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adsorber. It is possible to compare the two amounts because the same
measurement method is used (liquid solvent used versus liquid solvent
recovered). However, for incinerator systems, the amount of solvent used
should not be directly related to the amount of solvent controlled
(destructed), because different measurement procedures are used (solvent
used is measured as a liquid, while solvent destructed is measured as gaseous
VOCs). Thus, for incinerators, the amount controlled is determined by
using the amount of VOCs measured in the inlet vent versus the outlet vent.
The overall incinerator system control efficiency is determined by relating
the amount destructed to all the potential uncontrolled emissions. To make
the incinerator test procedure equivalent to the carbon adsorber test pro-
cedure, one must be able to measure all the potential emissions, both
fugitive emissions and oven emissions ducted into the incinerator. That
is," all fugitive VOC emissions from the coating area must be captured and
vented through stacks suitable for testing. The alternatives are to com-
pletely enclose the coating area within the plant or to construct the
facility so the building ventilation system captures all the fugitive
emissions and ducts them into a testable stack.
D.3 MONITORING SYSTEMS AND DEVICES
The purpose of monitoring is to ensure that the emission control
system is being properly operated and maintained after the performance
test. One can either directly monitor the regulated pollutant, or instead,
monitor an operational parameter of the emission control system. The aim
is to select a relatively inexpensive and simple method that will indicate
that the facility is in continual compliance with the standard.
For carbon adsorption systems, the recommended monitoring test is
identical to the performance test. A solvent inventory record is maintained,
and the control efficiency is calculated monthly. Excluding reporting
costs, this monitoring procedure should not incur any additional costs for
the affected facility because these process data are normally recorded and
the liquid meters were already installed for the earlier performance test.
For incinerators, two monitoring approaches were considered:
Directly monitoring the VOC content of the inlet, outlet,
and fugitive vents so the monitoring test would be similar
to the performance test; and
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Monitoring the operating temperature of the incinerator as
an indicator of compliance.
The first alternative would require at least two continuous hydrocarbon
monitors with recorders (about $4,000 each) and frequent calibration and
maintenance. Instead, it is recommended that a record be kept of the
incinerator temperature. The temperature level for indication of compliance
should be related to the average temperature measured during the performance
test. The averaging time for the temperature for monitoring purposes
should be related to the time period for the performance test (in this
case, 3 hours). Because a temperature monitor is usually included as a
standard feature for incinerators, this monitoring requirement is not
expected to incur additional costs for the plant. The cost of purchasing
and installing an accurate temperature measurement device and recorder is
estimated at $1,000.
D.4 REFERENCES
1. Feairheller, W. F. Measurement of Gaseous Organic Compound Emissions
by Gas Chromatography. Monsanto Research Corporation. EPA Contract
No. 68-02-2818. January 1978.
2. Alternative Test Method for Direct Measurement of Total Gaseous Organic
Compounds Using a Flame lonization Analyzer, in Measurement of Volatile
Organic Compounds. OAQPS Guideline Series, EPA Report No. 450/2-78-041.
October 1978.
3. Automobile and Light-Duty Truck Surface Coating Operations, Background
Information for Proposed Standards. EPA Report No. 450/3-79-030.
September 1979.
D-8
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APPENDIX E
ENVIRONMENTAL, ENERGY, AND ECONOMIC IMPACTS—OTHER APPLIANCES
E-l
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APPENDIX E
ENVIRONMENTAL, ENERGY, AND ECONOMIC IMPACTS—OTHER APPLIANCES
As noted in Chapter 1, the data in this document pertain to the
surface coating of traditional large household appliances. The standards
to be proposed include other appliances that were not the subject of the
same type of detailed analyses as those contained in Chapters 6, 7, and
8. Consequently, the environmental, energy, and economic impacts that
would result from imposition of the several regulatory alternatives on
manufacturers of these other appliances cannot be projected with the
same degree of certainty. For the following reasons, however, the
impacts are expected to be similar both in direction and in proportion
to those anticipated for the large appliance sector.
For prime coating operations, Regulatory Alternative A-l, to forego
the development of an NSPS, would produce no environmental impacts--
either beneficial or adverse. Likewise, because this alternative repre-
sents the status quo, it would not generate any energy or economic
impacts. Regulatory Alternative A-II, promulgation of an NSPS equivalent
to the assumed CTG limit, also would produce no measurable impacts. The
intent of Regulatory Alternative A-II is twofold:
To ensure that manufacturers attain a minimum level of coating
application efficiency, and ,
To provide some flexibility in the regulatory framework for
complying with the standards.
The intent, then, is to allow a tradeoff between the solids content of
the coating and transfer efficiency to achieve compliance.
Regulatory Alternative A-III, prime coating by electrodeposition
(EDP), would not significatly reduce emissions because most of the added
appliances are not designed to operate in extremely corrosive environments.
Because these products may not require a high-quality interior prime
coat, an EDP process may deposit more solids on the part than deemed
E-2
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necessary, thereby mitigating the effect of the lower quantity of VOC
emissions per volume of solids applied. As with the traditional applian-
ces, eliminating the pretreatment dryoff oven would reduce energy consump-
tion slightly. Wastewater Chemical Oxygen Demand (COD), however, would
increase. Although there are instances where production parameters such
as part size and shape and line speed could make EDP the lowest cost
prime coating method, generally such a system is expected to cost somewhat
more to install and operate than conventional spray, dip, or flow coating
methods.
For topcoating operations, Regulatory Alternatives B-I and B-II are
analagous to the prime coat alternatives, A-I and A-II, discussed above.
Regulatory Alternative B-III, reduction of emissions to a level equivalent
to that resulting from use of a 70-percent (vol.) solids top coat at a
60-percent transfer efficiency either through a solids content/transfer
efficiency combination or through use of an incinerator on the topcoat
oven, would reduce emissions proportionally to that described for large
appliances. As with the large appliance sector, incineration would be a
costly means of achieving a modest emissions reduction. The availability
of 70 percent solids coatings for these other appliances is uncertain,
particularly for low-volume products. Imposition of this alternative
could therefore result in an adverse economic impact on operators who
might be forced to install automatic application equipment to achieve
transfer efficiencies of greater than 60 percent. This impact would be
most noticeable on small operators. The energy, solid waste, and water
pollution impacts of this alternative would be minimal.
Powder topcoats, Regulatory Alternative B-IV, would probably provide
the lowest cost top coat while at the same time reducing energy consump-
tion and eliminating VOC emissions. However, it is not known whether
powder top coats have been adequately demonstrated for all of the addi-
tional appliances under all conditions. These coatings are expected to
be adopted voluntarily, however, where practicable.
In summary, the environmental and energy impacts of imposing the
several regulatory alternatives to the surface coating of selected
appliances other than large household appliances, and the economic
impacts of those alternatives on the manufacturers or consumers of these
appliances, are similar enough to those described for the large appliance
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sector that the rationale used to select the best demonstrated system of
continuous emission reduction for large appliances will be applicable to
the other appliances as well.
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TECHNICAL REPORT DATA
(Please read Instructions on the reverse before completing}
3. RECIPIENT'S ACCESSION NO.
4. TITLE AND SUBTITLE
Industrial Surface Coating: Appliances - Background
Information for Proposed Standards
5. REPORT DATE
November 1980
6. PERFORMING ORGANIZATION CODE
'. AUTHOR(S)
8. PERFORMING ORGANIZATION REPORT NO.
. PERFORMING ORGANIZATION NAME AND ADDRESS
Office of Air Quality Planning and Standards
U.S. Environmental Protection Agency
Research Triangle Park, NC • 27711
10. PROGRAM ELEMENT NO.
11. CONTRACT/GRANT NO.
68-02-3056
2. SPONSORING AGENCY NAME AND ADDRESS
DAA for Air Quality Planning and Standards
Office of Air, Noise, and Radiation
U.S. Environmental Protection Agency
Research Triangle Park, NC 27711
13. TYPE OF REPORT AND PERIOD COVERED
Final
14. SPONSORING AGENCY CODE
EPA/200/04
IY NOTES
This document contains information used as the basis for
developing proposed New Source Performance Standards for the
appliance surface coating operations. The document includes
an industry description, descriptions of model plants and
regulatory alternatives considered, and environmental, energy,
and economic impact analyses of the regulatory alternatives.
KEY WORDS AND DOCUMENT ANALYSIS
DESCRIPTORS
b.IDENTIFIERS/OPEN ENDED TERMS
ix COSATI Field/Group
Air pollution
Pollution control
Standards of performance
Appliance
Volatile organic compound
Surface coating
Air Pollution Control
13B
Unlimited
MEN
19. SECURITY CLASS (This Report)'
Unclassified
21. NO. OF PAGES
196
20. SECURITY CLASS (This page)
Unclassified
22. PRICE
EPA Form 2220—1 (Rev. 4—77) PREVIOUS EDITION is OBSOLETE
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