United States Office of Water EPA-821-B-00-007
Environmental Protection (4303) December 2000
Agency
& EPA Cost-Effectiveness Analysis
of Proposed Effluent
Limitations Guidelines and
Standards for the Metal
Products and Machinery
Industry
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Cost-Effectiveness Analysis of Proposed
Effluent Limitations Guidelines and Standards
for the Metal Products and Machinery Industry
U.S. Environmental Protection Agency
Office of Science and Technology
Engineering and Analysis Division
Washington, DC 20460
December 2000
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This document was prepared by the Office of Water staff. Abt Associates provided assistance and support in performing the
underlying analysis supporting the conclusions detailed in this report.
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MP&M Proposed Effluent Guidelines
Cost-Effectiveness Analysis
Cost-Effectiveness Analysis
INTRODUCTION
This cost-effectiveness analysis supports the proposed
effluent limitations guidelines and standards for the Metal
Products and Machinery (MP&M) Industry. The report
assesses the cost-effectiveness of three regulatory options
for indirect dischargers, which discharge effluent to
publicly-owned treatment works (POTWs), and direct
dischargers, which discharge effluent directly to a surface
water.
Cost-effectiveness analysis is used in the development of
effluent limitations guidelines to evaluate the incremental
efficiency of different regulatory options. Cost-
effectiveness is traditionally defined as the incremental
annual cost (in 1981 constant dollars) per incremental toxic-
weighted pound of pollutant removed. This definition
includes the following concepts:
«> Toxic-weighted removals
Because pollutants differ in their toxicity, the reductions in
pollutant discharges, or pollutant removals, are adjusted for
toxicity by multiplying the estimated removal quantity for
each pollutant by a normalizing weight, called a toxic
weighting factor (TWF).' The TWF for each pollutant
measures its toxicity relative to copper, with more toxic
pollutants having higher TWFs. The use of toxic weights
allows the removals of different pollutants to be expressed
on a constant toxicity basis as toxic pound-equivalents (Ib-
eq). The weighted quantities removed for the different
pollutants may then be summed to yield an aggregate
measure of the reduction in toxicity-normalized pollutant
discharges that is achieved by a regulatory option.
The cost-effectiveness analysis focuses on toxic pollutants
in MP&M facility dischargers to surface waters. The
analysis does not address the removal of conventional
pollutants (oil and grease, biochemical oxygen
demand (BOD), and total suspended solids (TSS)).
nor does it address the removal of bulk parameters, such as
chemical oxygen demand (COD). Although EPA has
accounted for reductions to pollutants loadings due to
treatment at publicly-owned treatment works
(POTWs). the cost-effectiveness analysis does not address
DOCUMENT CONTENTS:
1 Methodology 2
1.1 Overview 2
1.2 Regulatory Options 3
1.3 Pollutant Removals 5
1.4 Annualized Costs 6
1.5 Ranking Options 6
1.6 Incremental Cost-Effectiveness 6
2 Results 7
2.1 Indirect Dischargers 7
2.2 Direct Dischargers 9
3 Comparison with Values for Previous Effluent
Guidelines and Standards 11
4 MP&M Pollutants of Concern 14
Glossary 19
Acronyms 21
References 22
Appendix A: Alternative CE Measures 23
A.I CE Including Costs to Closing Facilities 23
A.2 CE to Industry 24
1 The following formats are used in this document as an aid
to readers:
glossary: a term defined in the glossary section
acronym: included in the acronym list
routes of potential environmental damage and human
exposure other than via surface waters, such as POTW
inhibition problems and contamination of POTW biosolids
(sewage sludge.)
The cost-effectiveness ratio considers reductions in loadings
from two sources:
>• facilities that undertake pollution prevention and
waste water treatment to comply with the rule, and
* facilities that close as a result of the rule.
Loadings eliminated by baseline closures (i.e., MP&M
facilities that are projected to close even if there is no
MP&M regulation) are not attributed to the rule and are not
considered in the analysis.
«> Annual costs
The cost-effectiveness analysis uses the estimated annual
costs of complying with the alternative regulatory options.
The annual costs include annual expenses for operating and
maintaining compliance equipment and for meeting
monitoring requirements, and the annualized cost of capital
outlays for pollution prevention and treatment systems.
These costs are calculated on a pre-tax basis (i.e., without
any adjustment for tax treatment of capital outlays and
operating expenses), using an assumed opportunity cost of
capital of 7 percent.
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MP&M Proposed Effluent Guidelines
Cost-Effectiveness Analysis
Compliance costs are calculated in 1981 dollars to allow for
comparison with cost-effectiveness values for regulations
developed at different times for different industries. This
analysis maintains this practice for comparability, but also
presents cost-effectiveness results in 1999$.
EPA does not include any costs for facilities that close due
to the rule in the traditional cost-effectiveness calculation.
Appendix A provides an alternative calculation that
attributes costs to facilities that close due to the rule equal to
the compliance costs they would have incurred if they
instead continued to operate. This calculation overstates
costs because these facilities are expected to find it more
economic to shut down rather than incur the compliance
costs. No costs or loadings reductions from facilities that
close in the baseline are included in the analysis.2
«> Incremental calculations
The incremental values that are calculated for a given option
are the change in total annual compliance costs and the
change in removals from the next less stringent option, or
the baseline if there is no less stringent option, where
regulatory options are ranked by increasing levels of toxic-
weighted removals. Thus, the cost-effectiveness values for
a given option are relative to another option, or, for the least
stringent option, to the baseline.
The result of the cost-effectiveness calculation represents
the unit cost of removing the next pound-equivalent of
pollutants. Cost-effectiveness is strictly a relative measure
used for comparative purposes. This analysis does not
provided an absolute scale by which a particular cost-
effectiveness value can be assigned a qualitative judgment.
Because cost-effectiveness values for different rules are
expressed in the same year dollars per pound-equivalent
removed, cost-effectiveness values for a given option may
be roughly compared with those of other options being
considered for a given regulation and also with those
calculated for other industries in past regulations.
Comparisons with CE values for past regulations are only
somewhat approximate because scientific and engineering
information changes over time. Thus, the estimated POTW
removals, toxic weights, and treatment process removals
may be quite different for the same pollutants in regulations
that are developed in different years.
Although not required by the Clean Water Act, cost-
effectiveness analysis is a useful tool for evaluating options
for the removal of toxic pollutants. It is not intended to
analyze the removal of conventional pollutants, however,
such as oil and grease, chemical oxygen demand and total
suspended solids, and removals of these pollutant are not
included in the cost-effectiveness calculation.
2 Chapter 5 of the Economic, Environmental, and Benefit
Analysis document discusses baseline closures.
The remaining parts of this report are organized as follows.
Section 1 defines cost-effectiveness, discusses the cost-
effectiveness methodology, and describes the relevant
regulatory options. Section 2 presents the findings of the
separate analyses for direct dischargers and for indirect
dischargers. Section 3 compares the cost-effectiveness of the
proposed regulation with the cost-effectiveness values
calculated for previously promulgated rules. Section 4 lists
the pollutants of concern, their CAS numbers, the Toxic
Weighting Factor (TWF) for each pollutant, and the Publicly
Owned Treatment Work (POTW) removal efficiencies used
in this analysis. These removal efficiencies are the
percentage of each pollutant that a typical POTW is expected
to remove from indirect facility discharges. Appendix A
presents an alternative measure of cost-effectiveness, which
includes costs for facilities that close due to the rule.
1 METHO&OLoey
1.1 Overview
Three factors are of particular importance in the calculation
and use of cost-effectiveness values:
*• normalizing pounds of pollutant removed to copper-
based toxic pounds-equivalent;
* calculating cost-effectiveness on an incremental
basis; and
* use of CE values for comparison rather than on an
absolute basis.
First, the analysis is based on removals of pounds-equivalent
— a pound of pollutant weighted by its toxicity relative to
copper. These toxic weighting factors are based on
comparisons with copper, because it is a toxic metal
commonly released in industrial effluent. By expressing
removals in common terms, EPA can sum across pollutants
to compare cost-effectiveness results among alternative
regulatory options or different regulations.
Cost-effectiveness analysis is done on an incremental basis to
compare the incremental or marginal cost and removals of
one control option to another control option or to existing
treatment. It, therefore, measures the cost-effectiveness of
more stringent controls in a step-wise comparison. In
contrast, calculating average (rather than incremental) CE
would show the cost per toxic pound removed for an option
relative to the baseline, rather than relative to the next less
stringent option.
There are no absolute scales for judging CE values as
indicating that an option is "cost-effective" or "not cost-
effective." The values are considered comparatively high or
low only within a given context, such as similar discharge
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MP&M Proposed Effluent Guidelines
Cost-Effectiveness Analysis
status or compared to effluent limitations guidelines for
other industries.
Cost-effectiveness analysis includes the following steps:
* Determine the relevant wastewater pollutants;
>• Estimate the relative toxic weights of priority and
other pollutants;
* Define the pollution control or regulatory
approaches;
* Calculate pollutant removals for each control or
regulatory option;
*• Determine the annualized cost of each control or
regulatory option;
*• Rank the options by increasing stringency and cost;
* Calculate incremental cost-effectiveness values;
and
>• Compare cost-effectiveness values.
These steps are discussed below.
«> Pollutant discharges considered in the cost-
effectiveness analysis
Pollutants are selected for analysis based on their toxicity,
frequency of occurrence, and amount of pollutant in the
waste stream. This cost-effectiveness analysis is based on
132 of the 150 pollutants of concern listed in Section 4.
«> Relative toxic weights of pollutants
EPA has developed toxic weighting factors (TWFs) for a
range of pollutants. A higher TWF indicates a more toxic
pollutant. For example, a pound of nickel (TWF=0.11) in
an effluent stream has significantly less potential effect on
human health and aquatic life than a pound of cadmium
(TWF=2.6).
In the majority of cases, toxic weighting factors are derived
from both chronic freshwater aquatic criteria (or toxic effect
levels) and human health criteria (or toxic effect levels) for
the consumption of fish. These factors are then
standardized by relating them to copper. The resulting toxic
weighting factors for each pollutant are provided in Section
4. Table 1 shows some examples of the effects of different
aquatic and human health criteria on weighting factors.
Table 1 : Weighting Factors Based on Copper Freshwater Chronic Criteria
Pollutant
Copperb
Hexavalent Chromium
Nickel
Cadmium
Benzene
Human
Health Criteria3
( 8/1)
1,200
1,000,000
4,600
84
710
Aquatic Chronic
Criteria
( g/1)
9.0
74.0
52.0
2.2
530
Weighting Calculation
5.6/1,200 + 5.6/9.0
5.6/1,000,000 + 5.6/74.0
5.6/4,600 + 5.6/52
5.6/84 + 5.6/2.2
5.6/710 + 5.6/530
Toxic Weighting
Factor
0.63
0.076
0.11
2.6
0.018
Criteria are maximum contamination thresholds. Using the above calculation, the higher the thresholds, the lower the toxic
weighting factor. Units for criteria are micrograms of pollutant per liter of water.
a. Based on ingestion of 6.5 grams offish per day.
b. While the water quality criterion for copper has been revised (to 9.0 g/1), the cost-effectiveness analysis uses the old criterion
(5.6 g/1) to facilitate comparisons with cost-effectiveness values for other effluent limitations guidelines. The revised higher
criteria for copper results in a toxic weighting factor for copper that is not equal to 1.0 but equal to 0.63. This value is used in the
analysis to reflect the new estimates of copper toxicity, while still maintaining a scale that enables comparison with earlier CE
analyses.
Source: U.S. EPA analysis.
As indicated in Table 1, the toxic weighting factor is the
sum of two criteria-weighted ratios: the "old" copper
criterion divided by the human health criterion for the
particular pollutant, and the "old" copper criterion divided
by the aquatic chronic criterion. For example, using the
values reported in Table 1, 4.13 pounds of copper pose the
same relative hazard in surface waters as one pound of
cadmium, since cadmium has a toxic weight 4.13 times
(2.6/0.63 = 4.13) as large as the toxic weight of copper.
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MP&M Proposed Effluent Guidelines
Cost-Effectiveness Analysis
1.2 Regulatory Options
The regulatory options considered by EPA for the MP&M
effluent guidelines are described in detail in the preamble
accompanying the proposed rule and in Chapter 4 of the
Economic, Environmental, and Benefit Analysis document.
This section provides a brief summary of the technology and
regulatory options.
EPA selected subcategories within the MP&M industry
based on similarity in effluent and economic characteristics.
The subcategories differ in part based on the type of
wastewater facilities discharge, including facilities that
discharge wastewaters with high metals content (with or
without oil and grease) and facilities that discharge
wastewaters containing primarily oil & grease, with limited
metals. The subcategories identified by EPA in each group
are:
Metal-bearing (with or without oil & grease):
*• Non Chromium Anodizing
* Metal Finishing Job Shops
*• Printed Wiring Board
>• Steel Forming & Finishing
>• General Metals
Oil-bearing only:
*• Shipbuilding Dry Docks
* Railroad Line Maintenance
- Oily Waste
EPA evaluated 10 technology options that might be used to
treat wastes from the MP&M facilities. Table 2 lists these
technology options:
Table 2: Technology Options
Option #
Description
For metal-bearing wastes
1
segregation of wastewaters, preliminary treatment (including oil-water
separation), chemical precipitation, and sedimentation using a clarifier
(chemical precipitation with gravity clarification)
in-process flow control and pollution prevention + option 1
segregation of wastewaters, preliminary treatment (including oil
removal by ultrafiltration), chemical precipitation, and solids separation
using a micro filter
in-process flow control and pollution prevention + option 3
For oil-bearing wastes
oil-water separation by chemical emulsion breaking
in-process flow control and pollution prevention + option 5
oil-water separation by ultrafiltration
in-process flow control and pollution prevention + option 7
9
10
oil-water separation by dissolved air flotation (DAF)
in-process flow control and pollution prevention + option 9
Source: U.S. EPA analysis.
The even-numbered options add in-process flow controls
and pollution prevention (pollution prevention, recycling
and water conservation to allow recovery and reuse of
materials) to the treatment technologies specified in the odd-
numbered options. In all cases, options with in-process flow
control and pollution prevention cost less and remove more
pollutant than the comparable option without pollution
prevention. Therefore, this document analyzes only the
even-numbered options with flow control and pollution
prevention.
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MP&M Proposed Effluent Guidelines
Cost-Effectiveness Analysis
EPA selected Best Practicable Control (BPT)
technologies for direct dischargers in each subcategory
based on the average of the best performances within the
industry of various ages, sizes, processes and other
characteristics. EPA also considered the cost of these
treatment technologies relative to the effluent reductions
achieved, to assess the cost-reasonableness of these
limitations. EPA then considered application of the Best
Available Technology Economically Achievable
(BAT). The Agency is proposing BAT equivalent to BPT
for all subcategories except Railroad Line Maintenance and
Shipbuilding Dry Docks, for which EPA is not proposing
BAT limitations.
EPA evaluated Pretreatment Standards for Existing
Sources (PSES) for indirect dischargers by evaluating
whether pollutants would "pass through" POTWs and
whether a combination of POTW treatment and the PSES
standards would achieve limitations equivalent to those
required for direct dischargers. The same 10 technologies
were considered for BPT and for PSES. (See the Technical
Development Document for a discussion on the pass-through
analysis.)
The Agency also considered a range of low flow exclusions
for indirect dischargers, to reduce burdens on permitting
officials and reduce the economic impacts of the rule.
Evaluation of the low flow cutoffs also considered the
amount of pollutant discharged by each subcategory and
flow size category.
Table 3 lists the technology options and exclusions
proposed
for the MP&M effluent guidelines, along with two other
regulatory options considered by EPA for this rule-making.
These options include:
* Option 2/6/10, which applies the same technologies for
each subcategory, and eliminates the low-flow and
subcategory exclusions of the proposed rule.
* Option 4/8, which applies more stringent technology
requirements for all subcategories and does not include
low-flow exclusions.
Table 3: Regulatory Options Considered in the Cost -Effectiveness Analysis
Subcategory
General Metals
Metal Finishing Job Shop
Non-Chromium Anodizing
Printed Wiring Board
Steel Forming & Finishing
Oily Waste
Railroad Line Maintenance
Shipbuilding Dry Dock
Proposed rule
Lechnology option 2;
1MGY flow cutoff for
indirect dischargers
Lechnology option 2
Lechnology option 2; no
PSES/PSNS for indirect
dischargers
Lechnology option 2
Lechnology option 2
Lechnology option 6;
2 MGY flow cutoff for
indirect dischargers
Lechnology option 10; no
PSES/PSNS for indirect
dischargers
Lechnology option 10; no
PSES/PSNS for indirect
dischargers
Option 2/6/10
Lechnology option 2
Lechnology option 2
Lechnology option 2
Lechnology option 2
Lechnology option 2
Lechnology option 6
Lechnology option 10
Lechnology option 10
Option 4/8
Lechnology option 4
Lechnology option 4
Lechnology option 4
Lechnology option 4
Lechnology option 4
Lechnology option 8
Lechnology option 8
Lechnology option 8
Source: U.S. EPA analysis.
Technology options 1, 3, 5, 7 and 9 (without pollution
prevention) were not further analyzed, because they remove
fewer pollutants and cost more than the comparable
technology options with pollution prevention.
1.3 Pollutant Removals
EPA calculated the reductions in pollutant loadings to the
receiving water body for each regulatory option. At-
stream and end-of-pipe pollutant removals may differ
because a portion of the end-of-pipe loadings for indirect
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MP&M Proposed Effluent Guidelines
Cost-Effectiveness Analysis
dischargers may be removed by a POTW. As a result, the
at-stream removal of pollutants due to PSES regulations are
less than end-of-pipe removals. The cost-effectiveness
analysis is based upon removals at-stream, as shown in the
following example calculation:
Baseline facility discharge of pollutant x to POTW: 100 Ibs
POTW removal of pollutant x: 40%
Baseline discharge to surface water: 60 Ibs
Reduced facility discharge due to the rule: 30 Ibs
Post-rule discharge to POTW: 70 Ibs
POTW removal (40%): 28 Ibs
Post-rule discharge to surface water: 42 Ibs
Reduced loading to surface water due to the rule: 18 Ibs
In general, at-stream loadings for facilities that discharge to
a POTW are calculated by multiplying end-of-pipe loadings
by (1 - POTW removal efficiency). In this example, a
reduction of 18 Ibs in loadings to surface waters would be
included in the cost-effectiveness calculation.
Because the cost-effectiveness analysis reflects changes in
at-stream loadings, it does not address other environmental
concerns such as POTW interference problems, or the
quantities of pollutants transferred to biosolids (i.e.,
sewage sludge) as a result of being removed from the water
by the POTW.
1.4 Annualizcd Costs
Full details of the methods by which the costs of complying
with the regulatory options were estimated can be found in
the Technical Development Document and the Economic,
Environmental, and Benefit Assessment Report. A brief
summary of the compliance cost analysis is provided below.
Two categories of compliance costs were included in the
cost-effectiveness analysis:
>• capital costs, and
* operating and maintenance (O&M) costs (including
monitoring costs.)
Although O&M costs occur annually, capital costs are one-
time "lump sum" costs. To express the capital costs on a
annual basis, capital costs were annualized over the
expected useful life of the capital equipment, 15 years, at an
opportunity cost of capital of 7 percent.
Total annualized costs are the sum of annualized capital
costs and the annual operating and maintenance costs. The
cost-effectiveness analysis presented here uses pre-tax costs
as the basis for its calculations. Thus, these costs may be
interpreted as the cost to society of the facility-level actions
taken to comply with the MP&M regulatory options.
Appendix A presents an alternative version of cost-
effectiveness performed with after-tax costs in the appendix.
This represents the incremental cost to industry of each
additional pound removed.
Compliance costs were originally calculated in 1996 dollars,
the base year of the MP&M industry regulation analysis.
The compliance costs are reported in 1999 dollars. They
were inflated using Engineering News Record's
Construction Cost Index (CCI). For comparing cost-
effectiveness values of the options under review to those of
other promulgated rules, the compliance costs used in the
cost-effectiveness analysis were also deflated from 1999 to
1981 dollars using the CCI. This adjustment factor is:
Adjustment factor =
1981 CCI 3535
1999 CCI 6060
= 0.583
1.5 Ranking Options
The regulatory options were ranked to determine relative
cost-effectiveness. Options were first ranked in increasing
order of stringency, where stringency is aggregate pollutant
removals, measured in pounds-equivalent. If two or more
options remove equal amounts of pollutants, these options
would then be ranked in increasing order of cost. For
example, if two or more options specify zero discharge, the
removals under each option would be equal. The options
would then be ranked from least expensive to most
expensive. There were no cases in the MP&M analysis
where an option had the same removals but higher costs than
the next less-stringent option.
1.6 Incremental Cost-Effectiveness
EPA calculated incremental cost-effectiveness values for the
options ranked by increasing stringency. Cost-effectiveness
values were calculated separately for indirect and direct
dischargers. For each discharger category, the cost-
effectiveness value of a particular option is calculated as the
incremental annual cost of that option divided by the
incremental pounds-equivalent removed by that option:
CEk =
ATCk - ATCk_
PEk ~ PEk_,
where:
CEk
ATCk
Incremental cost-effectiveness of option k
relative to option k-1,
Total annualized compliance cost under
option k; and
Removals in pounds-equivalent under
option k.
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MP&M Proposed Effluent Guidelines
Cost-Effectiveness Analysis
When k corresponds to the least stringent option (k = 1), the
incremental costs and removals are the increments in moving
from the baseline case to Option k.
2 RESULTS
2.1 Indirect Dischargers
Table 4 summarizes the cost-effectiveness analysis results
for the PSES regulatory options applicable to indirect
dischargers. Annual compliance costs are shown in 1999
dollars, as reported in the EEBA, and in 1981 dollars. The
regulatory options are listed in order of increasing
stringency on the basis of the estimated toxic-weighted
pollutant removals. Costs presented here do not include
costs for facilities that close in the baseline or close due to
the technology option being analyzed. Therefore, these
costs will not be the same as the engineering costs presented
in the MP&M Technical Development Document.
Table 4: Cost -Effectiveness for Indirect Dischargers (PSES)
Regulatory
Option
Proposed Option
Option 2/6/10
Option 4/8
Annual Before-Tax Compliance Costs
(excluding regulatory closures)
Total Cost
(millions)
1999$
1,730.1
2,421.9
3,795.1
1981$
1,009.2
1,412.8
2,213.8
Incremental Cost
(millions)
1999$
1,730.1
691.8
1,373.2
1981$
1,009.2
403.6
801.0
Weighted Pollutant Removals
Total Removals
(000 Ibs-eq)
9,372.3
9,755.5
9,936.9
Incremental
Removals
(000 Ibs-eq)
9,372.3
383.2
181.4
Cost-Effectiveness
Ratio
($/lb-eq)
1999$
185
1,805
7,570
1981$
108
1,053
4,416
Source: U.S. EPA analysis.
As shown in Table 4, the proposed option removes 9.4
million pounds. The proposed option is the least stringent of
those considered, and the incremental cost-effectiveness for
indirect dischargers is $108 per pound-equivalent removed
(1981$). EPA considers this value to be acceptable when
compared to values calculated for previous regulations.
Option 2/6/10 would remove an additional 0.4 million toxic
weighted pounds, at an incremental cost of $0.4 billion
(1981$), for a cost-effectiveness ratio of $1,000 per
additional pound-equivalent removed. This
cost-effectiveness value is higher than the values calculated
for other industrial discharge limitations previously
promulgated by EPA. The differences between the
proposed option and Option 2/6/10 for indirect dischargers
include the proposed option's one million gallon per year
cutoff for the General Metals subcategory, two million
gallon per year cutoff for the Oily Wastes subcategory, and
exclusion of pretreatment standards for the Non-Chromium
Anodizing, Railroad Line Maintenance and Shipbuilding
Dry Dock subcategories under the MP&M rule. These
provisions of the proposed rule reduce before-tax
compliance costs by 29 percent compared with Option
2/6/10, while losing 4 percent of the pound-equivalents
removed.
On the basis of this analysis, EPA determined that the
proposed option is cost effective. The cost-effectiveness
analysis supports the proposed PSES regulatory option for
indirect dischargers.
Table 5 presents the results of the cost-effectiveness analysis
for indirect dischargers by subcategory. The proposed
option for indirect dischargers in the Printed Wiring Board,
Metal Finishing Job Shop, and Steel Forming and Finishing
subcategories is the same as Option 2/6/10.
The proposed option includes a flow cutoff of one million
and two million gallons per year for the General Metals and
Oily Wastes subcategories, respectively. Therefore, in these
two subcategories, there are no proposed pretreatment
standards under the MP&M rule for all indirect dischargers
that fall below those cutoffs. There are also no proposed
pretreatment standards for indirect dischargers in the Non
Chromium Anodizing, Railroad Line Maintenance and
Shipbuilding Dry Dock subcategories. (See the preamble
for the proposed rule and the Technical Development
Document for a discussion of EPA's rationale for proposing
the low flow cutoffs and subcategory specific exclusions).
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Table 5: Cost- Effectiveness for Indirect Dischargers by Subcategory
Subcategory & Regulatory
Option
Printed Wiring Boards
Proposed Option
Option 2/6/10
Option 4/8
Metal Finishing Job Shops
Proposed Option
Option 2/6/10
Option 4/8
General Metals
Proposed Option
Option 2/6/10
Option 4/8
Non-Chromium Anodizing
Proposed Option
Option 2/6/10
Option 4/8
Oily Wastes
Proposed Option
Option 2/6/10
Option 4/8
Railroad Line Maintenance
Proposed Option
Option 2/6/10
Option 4/8
Shipbuilding Dry Dock
Proposed Option
Option 2/6/10
Option 4/8
Steel Forming & Finishing
Proposed Option
Option 2/6/10
Option 4/8
Incremental Before-Tax
Compliance Cost
(million 1981$)
81.17
40.87
68.82
26.54
844.52
279.12
487.21
15.23
7.27
2.52
109.04
232.35
0.15
0.13
0.10
0.00
12.19
6.63
Incremental Removals
(Ibs-eq)
1,195,260
8,010
1,766,063
62,554
6,216,887
318,594
103,514
13,598
434
14,140
51,008
5,885
17
132
0
26
179,900
865
Cost-Effectiveness Ratio
(1981S/lb-eq)
68
5,103
39
424
136
876
4,707
1,120
16,756
178
2,138
39,484
8,560
995
767,794
0
68
7,659
Source: U.S. EPA analysis.
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2.2 Direct Dischargers
Table 6 summarizes the cost-effectiveness for the BPT/BAT
regulatory options applicable to direct dischargers. As with
indirect dischargers, regulatory options are listed in order of
increasing stringency, measured by toxic-weighed pollutant
removals.
Table 6 shows that the proposed option achieves 1.3 million
pounds of removals. The resulting cost-effectiveness is
$107 per pound-equivalent (1981$). Because the only
differences between Option 2/6/10 and the proposed option
occur for indirects (i.e. flow cutoffs and no regulation
options), Option 2/6/10 is the same as the proposed option
for direct dischargers.
Option 4/8 would remove an additional 0.003 million pound
equivalents, as compared with the proposed option, at an
additional cost of $0.08 billion, or $2,391 per pound-
equivalent.
On the basis of this analysis, EPA determines that the
proposed option is cost-effective, and that the cost-
effectiveness supports the choice of the proposed BPT/BAT
option for direct dischargers.
Table 6: Cost -Effectiveness For Direct Dischargers (BAT)
Regulatory
Option
Proposed Option
Option 2/6/10
Option 4/8
Annual Before-Tax Compliance Costs
(excluding regulatory closures)
Total Cost
(millions)
1999$
245.8
245.8
381.6
Total Cost
(millions)
1981$
143.4
143.4
222.6
Incremental Cost
(millions)
1999$
245.8
135.8
1981$
143.4
79.2
Weighted Pollutant Removals
Total
Removals
(000 Ibs-eq)
1,333.6
1,333.6
1,366.7
Incremental
Removals
(000 Ibs-eq)
1,333.6
33.1
Cost-Effectiveness
Ratio
( $/lb-eq)
1999$
184
4,103
1981$
107
2,391
Source: U.S. EPA analysis.
Table 7 presents the results of the cost-effectiveness analysis
for direct dischargers by subcategory. The proposed option
is more stringent and efficient than Option 4/8 for the Oily
Wastes subcategory, in that it removes more toxic weighted
pounds of pollutants and costs less than Option 4/8. It
therefore dominates Option 4/8 from the perspective of toxic
pollutant removals, and has an average cost per pound-
equivalent removed of $399.
Table 7 shows a high cost-effectiveness for the Railroad
Line Maintenance and the Shipbuilding Dry Dock
subcategories. EPA is not proposing BAT limitations for
these subcategories because of the small quantities of toxic
pollutants in the wastewater from facilities in these
subcategories. However, EPA is proposing BPT limitations
for these subcategories in order to control the discharge of
conventional pollutants.
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MP&M Proposed Effluent Guidelines
Cost-Effectiveness Analysis
Table 7: Cost- Effectiveness for Direct Dischargers by Subcategory
Subcategory &
Regulatory Option
Printed Wiring Boards
Proposed Option
Option 2/6/10
Option 4/8
Metal Finishing Job Sh
Proposed Option
Option 2/6/10
Option 4/8
General Metals
Proposed Option
Option 2/6/10
Option 4/8
Non-Chromium Anodizi
Proposed Option
Option 2/6/10
Option 4/8
Oily Wastes
Option 4/8
Proposed Option*
Option 2/6/10
Railroad Line Maintena
Proposed Option
Option 2/6/10
Option 4/8
Shipbuilding Dry Dock
Proposed Option
Option 2/6/10
Option 4/8
Steel Forming & Finish
Proposed Option
Option 2/6/10
Option 4/8
Incremental Before-Tax
Compliance Cost
(million 1981$)
1.42
1.14
jps
0.69
0.52
114.54
52.20
ng°
NA
NA
NA
31.34
-24.92
0.00
nee
0.67
0.05
1.24
-0.91
ng
18.39
1.28
Incremental Removals
(Ibs-eq)
64,573
2,270
14,194
265
899,372
21,620
NA
NA
NA
15,703
366
0
174
23
111
335
339,147
8,977
Cost-Effectiveness Ratio
(1981S/lb-eq)
22
501
49
1,968
127
2,414
1,996
-68,007
3,831
2,181
11,179
-2,728
54
143
a. EPA estimates that there are no direct discharging non-chromium anodizing facilities.
b. The proposed option has a cost-effectiveness value of 399 when compared to the baseline. This is the number that is presented in the preamble.
Source: U.S. EPA analysis.
10
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MP&M Proposed Effluent Guidelines Cost-Effectiveness Analysis
3 COMPARISON WITH VALUES FOR loadings and resulting cost-effectiveness values that were
calculated for previous regulations. The values for the
PREVIOUS EFFLUENT GUIDELINES AND proposed MP&M rule are also listed in these tables. All
values are based on Toxic Weighting Factors normalized to
copper and the cost-effectiveness values are presented in
both 1981 and 1999 dollars.
Tables 8 and 9 present, for indirect and direct dischargers
respectively, the baseline and post-compliance pollutant
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MP&M Proposed Effluent Guidelines
Cost-Effectiveness Analysis
Table 8: Industry Comparison of Cost -Effectiveness Values for Indirect Dischargers
Toxic and Nonconventional Pollutants Only, Copper Based Weights)"
Industry
.Aluminum. Eomuug
Battery Manufacturing
Can Making
Centralized Waste Treatment
Coal Mining
Coil Coating
Copper Forming
Electronics I
Electronics II
Foundries
Inorganic Chemicals I
Inorganic Chemicals II
Iron & Steel
Leather Tanning
Metal Finishing
Metal Products & Machineryb
Nonferrous Metals Forming
Nonferrous Metals Mfg I
Nonferrous Metals Mfg II
Organic Chemicals, Plastics...
Pesticide Manufacturing (1993)
Pesticide Formulating,
Packaging...
Pharmaceuticals
Plastic. Molding & Forming
Porcelain Enameling
.Pulp.& Paper
Transportation Equipment
Cleaning
Pounds Equivalent
Currently Discharged
(To Surface Waters)
(000' s)
r U6.0.2.
U52
252
689
N/A
2,503
934
75
260
2,136
3,971
4,760
5,599
16,830
11,680
15,677
189
3,187
38
5,210
257
7,746
340
N/A
1,565
9,5.?.?.
38
Pounds Equivalent
Remaining at Selected
Option (To Surface
Waters) (000' s)
, 18
5
5
328-330
N/A
10
4
35
24
18
3,004
6
1,404
1,899
755
6,305
5
19
0.41
72
19
112
63
N/A
96
1Q3
19
Cost-effectiveness of Selected Option
Beyond BPT
(S/lb-eq. removed)
1981$
r 15.5.
15
38
70-110
N/A
10
10
14
14
116
9
< 1
6
111
10
108
90
15
12
34
18
<3
\
N/A
14
65
380
1999$
26.7.
26
65
121-189
N/A
17
17
24
24
200
15
<2
10
191
17
185
155
26
21
59
31
<5
2
N/A
24
1.1.2
654
a. Toxic weighting factors for priority pollutants varied across these rules. This table reflects the factors used and the resulting cost-effectiveness
values at the time of regulation. Estimates of POTW removals also changed over time.
b. Proposed rule.
N/A: Pretreatment Standards not promulgated, or no incremental costs will be incurred.
Source: U.S. EPA analysis.
12
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MP&M Proposed Effluent Guidelines
Cost-Effectiveness Analysis
Table 9: Industry Comparison of Cost- Effectiveness Values for Direct Dischargers
Toxic and Nonconventional Pollutants Only, Copper Based Weights)0
Industry
Aluminum Fanning
Battery Manufacturing
Can Making
Centralized Waste Treatment
Coal Mining
Coastal Oil and Gas
- Produced Water
- Drilling Waste
-TWCd
Coil Coating
Copper Forming
Electronics I
Electronics II
Foundries
Inorganic Chemicals I
Inorganic Chemicals II
Iron & Steel
Leather Tanning
Metal Finishing
Metal Products & Machinery0
Nonferrous Metals Forming
Nonferrous Metals Mfg I
Nonferrous Metals Mfg II
Offshore Oil and Gasb
Organic Chemicals^ Plastics...
Pesticide Manufacturing (1993J
Pharmaceuticals
Plastics Molding & Forming
Porcelain Enameling,
Petroleum Refining
Pulp & Paper
Textile Mills
Transportation Equipment Cleaners
Pounds Equivalent
Currently Discharged
(To Surface Waters)
(000' s)
1.340
4126
12
3,372
BAT=BPT
5,998
7
2
r 2:28.9.
70
9
NA
2:308
32:503
605
40;746
259
3:305
3,103
34
6:653
L004
3;808
54;225
r 2,461.
208
44
1.086
BAT=BPT
6L713
BAT=BPT
BAT=BPT
1
Pounds Equivalent
Remaining at Selected
Option (To Surface
Waters) (000' s)
90
0.2
L2671.:271
BAT=BPT
506
0
0
9
8
NA
39
1,290
27
1,040
112
3:268
1,769
2
313
12
2;328
9;735
371
4
41
63
BAT=BPT
2:628
BAT=BPT
BAT+BPT
NTV
Cost-effectiveness of Selected
Option Beyond BPT
(S/lb-eq. removed)
1981$
121
2
10
5-7
BAT=BPT
3
292
200
49
27
404
NA
84
<1
6
2
BAT=BPT
12
BAT=BPT
69
4
6
33
5
15
1
BAT=BPT
6
BAT=BPT
39
BAT=BPT
BAT=BPT
3^
1999$
208
3
17
9-12
BAT=BPT
5
503
344
84
46
696
NA
145
<2
10
3
BAT=BPT
21
BAT=BPT
118
7
10
57
9
26
2
BAT=BPT
10
BAT=BPT
67
BAT=BPT
BAT+BPT
5^
a. Toxic weighting factors for priority pollutants varied across these rule This table reflects the factors used and resulting cost-effectiveness
values at the time of regulation. Estimated POTW removals have also changed over time.
b. Produced water only. For produced sand and drilling fluids and drill cuttings, BAT=BPT.
c. Proposed rule.
d. Treatment, workover, and completion fluids.
Source: U.S. EPA analysis.
13
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MP&M Proposed Effluent Guidelines
Cost-Effectiveness Analysis
4 MP&M POLLUTANTS OF CONCERN
Table 10 shows the 150 MP&M pollutants of concern with
their CAS number, toxic weighting factor (TWF), and
POTW removal percent. Nineteen of the pollutants did not
appear in MP&M facility loadings and were therefore not
included in the cost-effectiveness analysis.
Table 10: MP&M Pollutants of Concern
Name
Bod 5-day (Carbonaceous)
Oil and Grease
Oil and Grease (As HEM)
Total Suspended Solids
Aluminum
Gold
Boron
Barium
Bismuth
Calcium
Cobalt
Iron
Iridium
Potassium
Magnesium
Manganese
Molybdenum
Sodium
Niobium
Osmium
Phosphorus
Silicon
Tin
Strontium
Sulfur
Tantalum
Titanium
Vanadium
Tungsten
Yttrium
CAS Number
Conventional Po
COOS
C036
C009
Non-Conventiona
7429905
7440575
7440428
7440393
7440699
7440702
7440484
7439896
7439885
7440097
7439954
7439965
7439987
7440235
7440031
7440042
7723140
7440213
7440315
7440246
7704349
7440257
7440326
7440622
7440337
7440655
POTW Removal
Efficiency %
llutants
89.12
88.25
86.08
89.55
il Metals
91.36
32.52
30.42
15.98
32.52
8.54
6.11
81.99
32.52
32.52
14.14
35.51
18.93
2.69
32.52
32.52
32.52
32.52
42
32.52
32.52
32.52
91.82
9.51
32.52
32.52
Toxic Weighting Factor
(TWF)
0.064
0.18
0.002
0.000028
0.11
0.0056
0.0011
0.00087
0.07
0.2
0.0000055
0
0.3
0.0000082
0.0000056
0.06
0.029
0.62
0.0053
14
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MP&M Proposed Effluent Guidelines
Cost-Effectiveness Analysis
Table 10: MP&M Pollutants of Concern
Name
N,n-dimethylformamide
N-decane
N-docosane
N-dodecane
N-eicosane
N-hexacosane
N-hexadecane
N-nitro sopiperidine
N-octacosane
N-octadecane
N-tetracosane
N-tetradecane
N-triacontane
O+p Xylene
O-cresol
P-cresol
P-cymene
Pyridine
Styrene
1 ,4-dioxane
Trichlorofluoromethane
Tripropyleneglycol Methyl Ether
M+p Xylene
O-xylene
1 -bromo-2-chlorobenzene
1 -bromo-3-chlorobenzene
1 -methy Ifluorene
1 -methy Iphenanthrene
2-butanone
2-hexanone
2-isopropylnaphthalene
2-methyhiaphthalene
2-propanone
3 ,6-dimethy Iphenanthrene
4-methyl-2-pentanone
Acetophenone
Alpha-terpineol
Aniline
CAS Number
Non-Conventional
68122
124185
629970
112403
112958
630013
544763
100754
630024
593453
646311
629594
638686
136777612
95487
106445
99876
110861
100425
123911
75694
20324338
179601231
95476
694804
108372
1730376
832699
78933
591786
2027170
91576
67641
1576676
108101
98862
98555
62533
POTW Removal
Efficiency %
Organic*
87
9
88
95.05
92.4
71.11
71.11
77.32
71.11
71.11
71.11
71.11
77.32
65.4
52.5
71.67
99.79
95.4
93.65
45.8
77.32
52.4
77.32
77.32
77.32
77.32
84.55
84.55
96.6
77.32
77.32
28
83.75
84.55
87.87
95.34
94.4
93.41
Toxic Weighting Factor
(TWF)
0.0000079
0.0043
0.000082
0.0043
0.0043
0.000082
0.0043
0.00002
0.000082
0.0043
0.000082
0.0043
0.000082
0.0047
0.0027
0.004
0.024
0.0013
0.014
0.00023
0.00096
0.0000082
0.0047
0.0043
0.0047
0.0082
0.049
0.1
0.000025
0.00023
0.072
0.08
0.000005
0.27
0.00013
0.00024
0.0011
1.4
15
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MP&M Proposed Effluent Guidelines
Cost-Effectiveness Analysis
Table 10: MP&M Pollutants of Concern
Name
Benzoic Acid
Benzyl Alcohol
Biphenyl
Carbon Bisulfide
Dibenzofuran
Dibenzothiophene
Diphenyl Ether
Diphenylamine
Hexanoic Acid
Isobutyl Alcohol
M-xylene
Methyl Methacrylate
Acidity
Amenable Cyanide
Total Alkalinity
Chloride
Chemical Oxygen Demand (COD)
Hexavalent Chromium
Fluoride
Total Fluoride
Ammonia as Nitrogen
Total Phosphorus
Sulfate
Total Petroleum Hydrocarbons (As
Sgt-HEM)
Total Sulfide
Total Dissolved Solids
Total Kjeldahl Nitrogen
Total Organic Carbon (TOC)
Total Recoverable Phenolics
Weak-acid Dissociable Cyanide
Silver
Arsenic
Beryllium
Cadmium
Cyanide
Chromium
Copper
CAS Number
65850
100516
92524
75150
132649
132650
101848
122394
142621
78831
108383
80626
Other Non-Conventior
C025
16887006
C004
18540299
16984488
7664417
14265442
14808798
C037
18496258
C010
C021
C012
C020
C042
Priority Pollutan
7440224
7440382
7440417
7440439
57125
7440473
7440508
POTW Removal
Efficiency %
80.5
78
96.28
84
77.32
84.68
77.32
77.32
84
28
95.07
99.96
ltd Pollutants
57.41
57.41
81.3
57.41
61.35
57.41
38.94
57.41
84.61
57.41
57.41
8
57.41
70.28
57.41
t Metals
88.28
65.77
71.66
90.05
70.44
80.33
84.2
Toxic Weighting Factor
(TWF)
0.00033
0.0056
0.029
2.8
0.2
0.046
0.013
0.00037
0.0014
0.0015
0.0003
0.000024
0.51
0.035
0.0025
0.0000056
2.8
16
3.5
1.1
2.6
1.1
0.076
0.63
16
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MP&M Proposed Effluent Guidelines
Cost-Effectiveness Analysis
Table 10: MP&M Pollutants of Concern
Name
Mercury
Nickel
Lead
Antimony
Selenium
Thallium
Zinc
Acenaphthene
1,1,1 -trichloroethane
1 , 1 -dichloroethane
1 ,1 ,2,2-tetrachloroethane
Chloroethane
Acrolein
4-chloro-3-methylphenol
Chloroform
1 ,2-dichlorobenzene
1 , 1 -dichloroethene
2,4-dimethylphenol
2,6-dinitrotoluene
Ethylbenzene
Fluoranthene
Benzene
Methylene Chloride
Chloromethane
Isophorone
Naphthalene
2-nitrophenol
4-nitrophenol
2,4-dinitrophenol
N-nitrosodimethylamine
N-nitrosodiphenylamine
Phenol
Bis(2-ethylhexyl) Phthalate
Butyl Benzyl Phthalate
Di-n-butyl Phthalate
Di-n-octyl Phthalate
Chlorobenzene
Dimethyl Phthalate
CAS Number
7439976
7440020
7439921
7440360
7782492
7440280
7440666
Priority Pollutant
83329
71556
75343
79345
75003
107028
59507
67663
95501
75354
105679
606202
100414
206440
71432
75092
74873
78591
91203
88755
100027
51285
62759
86306
108952
117817
85687
84742
117840
108907
131113
POTW Removal
Efficiency %
71.66
51.44
77.45
66.78
34.33
71.66
79.14
Organics
98.29
90.45
70
77.51
77.51
77.51
63
73.44
77.51
77.51
77.51
77.51
93.79
42.46
77.51
54.28
69.74
77.51
94.69
26.83
77.51
77.51
77.51
90.11
95.25
59.78
81.65
84.66
68.43
96.37
77.51
Toxic Weighting Factor
(TWF)
120
0.11
2.2
0.0048
1.1
1
0.047
0.029
0.0045
0.00039
0.053
0.0014
0.97
0.0043
0.0021
0.011
0.18
0.0053
0.1
0.0014
0.8
0.018
0.00042
0.0021
0.00073
0.015
0.0016
0.0094
0.0075
0.07
0.04
0.028
0.095
0.023
0.012
0.22
0.0029
0.0033
17
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MP&M Proposed Effluent Guidelines
Cost-Effectiveness Analysis
Table 10: MP&M Pollutants of Concern
Name
Anthracene
Fluorene
Phenanthrene
Pyrene
Tetrachloroethene
Toluene
Trichloroethene
CAS Number
120127
86737
85018
129000
127184
108883
79016
POTW Removal
Efficiency %
77.51
69.85
94.89
83.9
84.61
96.18
77.51
Toxic Weighting Factor
(TWF)
2.5
0.7
0.29
0.11
0.013
0.0056
0.0064
18
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MP&M Proposed Effluent Guidelines
Cost-Effectiveness Analysis
GLOSSARY
at-stream: As discharged to surface waters, after POTW
treatment in the case of indirect dischargers.
Best Available Technology Economically
Achievable: Effluent limitations for direct dischargers,
addressing priority and non-conventional pollutants. BAT is
based on the best existing economically achievable
performance of plants in the industrial subcategory or
category. Factors considered in assessing BAT include the
cost of achieving BAT effluent reductions, the age of
equipment and facilities involved, the processes employed,
engineering aspects of the control technology, potential
process changes, non-water quality environmental impacts
(including energy requirements), economic achievability,
and such factors as the Administrator deems appropriate.
The Agency may base BAT limitations upon effluent
reductions attainable through changes in a facility's
processes and operations. Where existing performance is
uniformly inadequate, EPA may base BAT upon technology
transferred from a different subcategory within an industry
or from another industrial category.
Best Practicable Control: Effluent limitations for direct
discharging facilities, addressing conventional, toxic, and
non-conventional pollutants. In specifying BPT, EPA
considers the cost of achieving effluent reductions in
relation to the effluent reduction benefits. The Agency also
considers the age of the equipment and facilities, the
processes employed and any required process changes,
engineering aspects of the control technologies, non-water
quality environmental impacts (including energy
requirements), and such other factors as the Agency deems
appropriate. Limitations are traditionally based on the
average of the best performances of facilities within the
industry of various ages, sizes, processes, or other common
characteristics. Where existing performance is uniformly
inadequate, EPA may require higher levels of control than
currently in place in an industrial category if the Agency
determines that the technology can be practically applied.
biochemical oxygen demand: The amount of
dissolved oxygen consumed by microorganisms as they
decompose organic material in an aquatic environment.
biosolids: nutrient-rich organic materials resulting from
the treatment of sewage sludge
chemical oxygen demand: A measure of the oxygen
required to oxidize all compounds, both organic and
inorganic, in water.
(http://www.epa.gov/OCEPAterms/cterms.html)
conventional pollutants: Statutorily listed pollutants
understood well by scientists. These may be in the form of
organic waste, sediment, acid, bacteria, viruses, nutrients, oil
and grease, or heat.
(http://www.epa.gov/OCEPAterms)
end of pipe: As discharged from the source outfall to
surface waters (for direct dischargers) or to sewers (for
indirect dischargers.
interference: The obstruction of a routine treatment
process of POTWs that is caused by the presence of high
levels of toxics, such as metals and cyanide in wastewater
discharges. These toxic pollutants kill bacteria used for
microbial degradation during wastewater treatment.
oil and grease: These organic substances may include
hydrocarbons, fats, oils, waxes and high-molecular fatty
acids. Oil and grease may produce sludge solids that are
difficult to process, (http://www.epa.gov/owmitnet/reg.htm)
pass through: Pollutants "pass through" a POTW if they
are not removed by treatment and are present in the POTW's
discharges to waters of the U.S. EPA compares the
percentage of a pollutant removed by well-operated POTWs
achieving secondary treatment with the percentage of the
pollutant removed by facilities meeting BAT effluent
limitations. For purposes of defining PSES and PSNS, a
pollutant is determined to pass through if the median
percentage removed by a well-operated POTW is less than
the median percentage removed under BAT limitations.
Pretreatment Standards for Existing Sources:
Categorical pretreatment standards for existing indirect
dischargers, designed to prevent the discharge of pollutants
that pass through, interfere with, or are otherwise
incompatible with the operation of POTWs. Standards are
technology-based and analogous to BAT effluent limitations
guidelines.
publicly-owned treatment works: A treatment works,
as defined by section 212 of the Clean Water Act, that is
owned by a State or municipality. This definition includes
any devices or systems used in the storage, treatment,
recycling, and reclamation of municipal sewage or industrial
wastes of a liquid nature. It also includes sewers, pipes, or
other conveyances only if they convey wastewater to a
POTW Treatment Plant.
(http://www.epa.gov/owm/permits/pretreat/final99.pdf)
total suspended solids: A measure of the suspended
solids in wastewater, effluent, or water bodies, determined
by tests for "total suspended non-filterable solids."
(http://www.epa.gov/OCEPAterms/tterms.html).
19
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MP&M Proposed Effluent Guidelines Cost-Effectiveness Analysis
toxic pound-equivalent: Pound of pollutant weighted by toxic weighting factor: A factor that measures the
the pollutants toxic weighting factor, to provide a toxicity of a given pollutant relative to the toxicity of
comparable toxicity-adjusted measure of pollutants copper, where toxicity is assessed based on chronic
discharged or removed by treatment or pollution prevention. freshwater aquatic criteria (or toxic effects levels) and on
human health criteria (or toxic effects levels) for the
consumption of fish.
20
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MP&M Proposed Effluent Guidelines Cost-Effectiveness Analysis
ACRONYMS
BAT: Best Available Technology Economically Achievable MP&M: Metal Products and Machinery
BOD: biochemical oxygen demand POTW: publically owned treatment works
BPT: Best Practicable Control TSS: total suspended solids
CCI: Engineering News-Record Construction Cost Index TWF: toxic weighting factor
COD: chemical oxygen demand
21
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MP&M Proposed Effluent Guidelines Cost-Effectiveness Analysis
REFERENCES
U.S. EPA (2000). Technical Development Document for Proposed Effluent Limitations Guidelines and Standards for the
Metal Products and Machinery Point Source Category. Office of Water. EPA-821-B-00-005.
U.S. EPA (2000). Economic, Environmental, and Benefit Analysis of the Proposed Metal Products and Machinery Rule.
Office of Water. EPA-821-B-00-008.
Engineering News Record. Construction Cost Index, http://www.enr.com/cost/costcci.asp
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MP&M Proposed Effluent Guidelines
Cost-Effectiveness Analysis
Appendix A: Alternative CE
easures
INTRODUCTION
This appendix provides two alternative measures of cost-
effectiveness:
>• Cost-effectiveness including costs to closing
facilities; and
>• Cost-effectiveness to industry
A.I CE INCLU&INS COSTS TO CLOSING
FACILITIES.
The traditional calculation of cost-effectiveness values
includes reductions in loadings that occur when facilities
close due to the rule, along with reductions achieved by
pollution prevention and treatment, but does not include
costs for facilities that close. An alternative measure,
presented in this appendix, attributes costs to the facilities
that close due to the rule.
This cost-effectiveness measure includes costs for facilities
that close due to the rule equal to the compliance costs they
would have incurred if they instead continued to operate.
This calculation overstates costs because these facilities are
expected to find it more economic to shut down rather than
incur the compliance costs. No costs or loadings reductions
from facilities that close in the baseline are included in the
analysis, as in the traditional analysis.
The following tables present the values for this alternative
cost-effectiveness measure for the proposed rule by
subcategory, and compares the results with the traditional
measures presented in the report, for indirect and direct
dischargers respectively. Table A.I and A.2 present this
comparison for indirect and direct dischargers, respectively.
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MP&M Proposed Effluent Guidelines
Cost-Effectiveness Analysis
Table A.I: Cost-Effectiveness for Indirect Dischargers by Subcategory
With and Without Costs for Regulatory Closures
Subcategory
General Metals
Metal Finishing Job Shop
Non-Chromium Anodizing
Printed Wiring Board
Steel Forming & Finishing
Oily Wastes
Railroad Line Maintenance
Shipbuilding Dry Dock
Total
Removals,
Ib-eq
6,216,887
1,766,063
1,195,260
179,900
14,140
9,372,250
Without Costs for Regulatory
Closures
Costs
(millions of
1981$)
844.52
68.82
81.17
12.19
2.52
1,009.22
Cost-
Effectiveness
Ratio, S/lb-eq
136
39
68
68
178
108
With Costs for Regulatory Closures
Costs
(millions of
1981$)
848.40
87.02
84.89
13.66
4.94
1,038.92
Cost-Effectiveness
Ratio, $/lb-eq
136
49
71
76
350
111
Source: U.S. EPA analysis.
Table A. 2: Cost-Effectiveness for Direct Dischargers by Subcategory
With and Without Costs of Regulatory Closures
Subcategory
General Metals
Metal Finishing Job Shop
Non-Chromium Anodizing
Printed Wiring Board
Steel Forming & Finishing
Oily Wastes
Railroad Line Maintenance
Shipbuilding Dry Dock
Total
Removals,
Ib-eq
899,372
14,194
64,573
339,147
16,070
174
111
1,333,642
Without Costs for Regulatory
Closures
Costs
(millions of
1981$)
114.54
0.69
1.42
18.39
6.42
0.67
1.24
143.37
Cost-
Effectiveness
Ratio, $/lb-eq
127
49
22
54
400
3,851
11,171
108
With Costs for Regulatory Closures
Costs
(millions of
1981$)
118.60
0.69
1.42
18.39
6.42
0.67
1.24
147.42
Cost-
Effectiveness
Ratio, $/lb-eq
132
49
22
54
400
3,851
11,171
111
Source: U.S. EPA analysis.
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MP&M Proposed Effluent Guidelines
Cost-Effectiveness Analysis
A.2 CE TO INDUSTRY
This section presents the incremental costs to industry per
pound of pollutants removed, and cost-effectiveness values
based on those costs to industry. These costs are the after-
tax compliance costs as incurred by the regulated facilities.
The costs exclude costs for both baseline and regulatory
closures, and are annualized at 7 percent. Tables A.3 and
A.4 present the results for indirect and direct dischargers,
respectively.
Table A.3: Industry Cost-Effectiveness for Indirect Dischargers (PSES)
Regulatory
Option
Proposed Option
Option 2/6/10
Option 4/8
Annual After-Tax Compliance Costs
(excluding regulatory closures)
Total Cost
(millions)
1999$
1,161.7
1,645.0
2,644.5
1981$
677.7
959.6
1,542.6
Incremental Cost
(millions)
1999$
1,161.7
483.3
999.5
1981$
677.7
281.9
583.0
Weighted Pollutant Removals
Total Removals
(000 Ibs-eq)
9,372.3
9,755.5
9,936.9
Incremental
Removals
(000 Ibs-eq)
9,372.3
383.2
181.4
Cost-Effectiveness
Ratio
($/lb-eq)
1999$
124
1,261
5,510
1981$
72
736
3,214
Source: U.S. EPA analysis.
Table A.4: Industry Cost -Effectiveness for Direct Dischargers (BAT)
Regulatory
Option
Proposed Option
Option 2/6/10
Option 4/8
Annual After-Tax Compliance Costs
(excluding regulatory closures)
Total Cost
(millions)
1999$
167.3
167.3
273.7
1981$
97.6
97.6
159.7
Incremental Cost
(millions)
1999$
167.3
106.4
1981$
97.6
62.1
Weighted Pollutant Removals
Total Removals
(000 Ibs-eq)
1,333.6
1,333.6
1,366.7
Incremental
Removals
(000 Ibs-eq)
1,333.6
33.1
Cost-Effectiveness
Ratio
($/lb-eq)
1999$
125
3,215
1981$
73
1,876
Source: U.S. EPA analysis.
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