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Economic Analysis of
Final Effluent Limitation Guidelines and Standards
for the Centralized Waste Treatment Industry
William Wheeler
Economic and Statistical Analysis Branch
Engineering and Analysis Division
Office of Science and Technology
U.S. Environmental Protection Agency
Washington, DC 20460
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ACKNOWLEDGMENTS AND DISCLAIMER
The Engineering and Analysis Division, of the Office of Science and Technology, has reviewed
and approved this report for publication. The Office of Science and Technology directed,
managed, and reviewed the work of ERG in preparing this report. Neither the United States
Government nor any of its employees, contractors, subcontractors (Tetra Tech, Inc.), or their
employees make any warranty, expressed or implied, or assumes any legal liability or
responsibility for any third party's use of or the results of such use of any information, apparatus,
product, or process discussed in this report, or represents that its use by such party would not
infringe on privately owned rights.
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IV
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CONTENTS
Section
1
EXECUTIVE SUMMARY ... 1-1
1.1 Introduction 1-1
1.2 Sources of Data 1-2
1.3 Profile of the Industry 1-3
1.4 Annualized Costs of Compliance 1-5
1.5 Facility Impacts 1-6
1.6 Firm Impacts 1-7
1.7 Community Impacts 1-7
1.8 Final Regulatory Flexibility Analysis 1-8
1.9 Cost-Benefit Analysis .......; 1-10
2 DATA SOURCES 2-1
2.1 Data from the Waste Treatment Industry Questionnaire 2-1
2.1.1 Data Modifications and Corrections 2-2
2.1.2 Additions to Data Since Original Proposal (NOA Facilities) .. 2-3
2.2 Data Sources for Demand Characterization 2-4
2.3 Data Sources for Market Characterization 2-4
2.4 Data Sources for Company Analysis 2-4
2.5 References - • - 2-4
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r
CONTENTS (CONTINUED)
BASELINE CONDITIONS AND INDUSTRY PROFILE -.. 3-1
3.1 Industry Profile 3-1
3.1.1 Overview of the CWT Industry 3-1
3.1.1.1 Services Provided 3-2
3.1.1.2 Subcategories ,. 3-2
3.1.2 Demand for CWT Services 3-4
3.1.2.1 Industries Demanding CWT Services 3-4
3.1.2.2 Trends in the Demand for CWT Services (TRI) 3-5
3.1.3 Description of Suppliers of CWT Services 3-5
3.1.3.1 Commercial Status - 3-5
3.1.3.2 Industry Classification by SIC Code ...: 3-7
3.1.3.3 Location of CWT Facilities 3-8
3.1.3.4 Facility Size 3-8
3.1.3.5 Facilities Permitted Under RCRA 3-12
3.1.4 Baseline Facility Conditions .... 3-12
3.1.4.1 Baseline Quantities of Waste Treated 3-12
3.1.4.2 Baseline Costs of CWT Operations 3-12
3.1.4.3 Baseline Revenues for CWT Operations 3-14
3.1.4.4 Baseline Profitability for CWT Facilities 3-14
3.1.4.5 Baseline Conditions for Noncommercial
Facilities 3-15
3.1.5 Baseline Market Conditions 3-17
3.1.5.1 Defining Regional Markets 3-17
3.1.5.2 Defining Markets for Specific CWT Services 3-18
3.1.5.3 Defining Market Structure 3-19
3.1.5.4 Substitutes for CWT Services 3-19
3.1.5.5 Baseline Market Prices and Quantities of CWT
Services • 3-22
3.1.6 Company Financial Profile 3-22
3.2 Baseline Environmental Impacts of The CWT Industry 3-28
3.2.1 Pollutants Discharged 3-28
3.2.2 Affected Streams and Reaches - 3-28
3.3 References ; , • - • 3-34
VI
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CONTENTS (CONTINUED)
Pag
4 DESCRIPTION OF THE CWT EFFLUENT LIMITATIONS GUIDELINES
AND STANDARDS AND COMPLIANCE COST ANALYSIS 4-1
4.1 Controls for Each Subcategory of the CWT Industry 4-1
4.1.1 Metals Subcategory • 4-2
4.1.2 Oils Subcategory 4-3
4.1.3 Organics Subcategory 4-3
4.2 Costs of Controls -4-3
4.2.1 Computing the Annualized Cost of Compliance 4-4
4.2.1.1 Purpose of Cost Annualization 4-4
4.2.1.2 Depreciation and Taxes 4-5
4.2.2 Costs for Facilities with Both Commercial and Noncommercial.
Operations • - - 4-7
4.2.3 Compliance Costs for the Control Options 4-8
4.2.4 Compliance Costs of Combined Regulatory Option 4-10
4.3 References 4-11
5 ECONOMIC IMPACT ANALYSIS METHODOLOGY 5-1
5.1 Overview of Analytic Methodology , 5-3
5.2 Modeling Market and Facility Impacts .'.... 5-4
5.2.1 Defining the Markets for CWT Services 5-5
5.2.2 Modeling Facility Baseline Conditions 5-7
5.2.3 Adjustments in Response to the Variable Costs of
Complying with the Effluent Limitations Guidelines
and Standards 5-8
5.3 Measures of Economic Impacts 5-10
5.3.1 Changes in Market Prices and Quantities V 5-10
5.3.2 Facility Impacts , 5-10
5.3.3 Inputs to the Company-Level Analysis 5-12
5.3.4 Inputs into the Community Impacts Analysis . . . 5-12
5.4 References 5-13
vn
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Section
•CONTENTS (CONTINUED)
ESTIMATED ECONOMIC IMPACTS OF THE CWT EFFLUENT
LIMITATIONS GUIDELINES AND STANDARDS . . ........ .......... 6-1
6.1
Results of the Market Analysis ............. .................. 6-1
6.1.1 Market Impacts ..................................... 6-1
6.1.2 Facility Impacts ......................... . ....... .... 6-3
6.1.3 Employment Impacts . . ....................... ........ 6-5
6.1.4 Financial Impacts on Companies Owning CWT Facilities .... 6-6
6.2
Summary ........ .......... . ............................. 6-9
OTHERIMPACTS ......... . ........ . . ...... . . ................... 7-1
7.1 Community Impacts ........ .................. . ............. 7-1
7.1.1 Direct Employment Changes ............... . ........... 7-2
7.1.1.1 Facility-Specific Changes in Employment
Resulting from Market Adjustments ......... ..... 7-2
7.1.2 Community Employment Impacts ....................... 7-3
7.1.3 Measuring the Significance of the Community
Employment Impacts ................................. 7-6
7.2 Distributional Impacts and Environmental Justice ........... ..... 7-6
7.2.1 Baseline Characterization of Communities in which
CWT Facilities are Located ............................ 7-8
7.2.1.1 Non-Caucasian Population ..................... 7-8
7.2.1.2 Percent of Population with Incomes Below
the Poverty Level ............... ............. 7-8
7.2.2 Distributional Impacts of the CWT Effluent Limitations
Guidelines and Standards ............... ..... ...... ..... 7-11
7.2.3 Environmental Justice Implications of the CWT Effluent
Limitations Guidelines and Standards ................... 7-11
7.3 Indirect Impacts on Customers and Suppliers ................... 7-12
7.4 Impacts on Inflation .... ................................... 7-13
7.5 References ______ . ......... ....... ........................ 7-14
viu
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Sectior
CONTENTS (CONTINUED)
8 FINAL REGULATORY FLEXIBILITY ANALYSIS .................... 8-1
8.1 The Regulatory Flexibility Act (RF A) as Amended by the Small
Business Regulatory Enforcement Fairness Act (SBREFA) 8-1
8.2 Initial Assessment 8-2
8.3 The Final Regulatory. Flexibility Analysis 8-3
8.3.1 Reason EPA is Considering the Effluent Limitations Guidelines
and Standards 8-3
8.3.2 Objectives and Legal Basis for the Regulation 8-3
8.3.3 Description and Estimation of Number of Small Entities to
Which the Regulation Will Apply 8-3
8.3.4 Description of the Reporting, Recordkeeping,
and Other Compliance Requirements 8-4
8.3.5 Identification of Relevant Federal Rules that May
Duplicate, Overlap, or Conflict with the Regulation 8-4
8.3.6 Significant Regulatory Alternatives 8-4
8.4 Impacts on Small Businesses 8-6
8.4.1 Estimated Small Business Impacts of the Combined
Regulatory Option 8-7
8.4.2 Impacts of the Small Business Relief Regulatory Options .... 8-8
8.5 References 8-12
9 COSTS AND BENEFITS OF THE CWT EFFLUENT LIMITATIONS
GUIDELINES AND STANDARDS , 9-1
9.1 Introduction 9-1
9.1.1 Requirements of Executive Order 12866 9-1
9.1,2 Need for the Regulation .9-2
9.2 Social Cost of the Rule 9-3
9.2.1 Aggregate Costs to Consumers and Producers 9-4
9.2.2 . Government's Share of Costs 9-8
IX
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CONTENTS (CONTINUED)
9.3 Pollutant Reductions , 9-9
9.4 Benefits Assessment 9-10
9.4.1 Overview of Benefits Assessment Methodology 9-10
9.4.1.1 A Benefits Analysis Paradigm for Water Quality
Improvements 9-10
9.4.1.2 Other Benefits: Cost Savings for POTWs 9-15
9.4.2 Impacts of Proposed CWT Effluent Limitations
Guidelines and Standards • • 9-15
9.4.2.1 Impacts on Ambient Water Quality and Related
Ecosystems 9-15
9.4.2.2 Affected Populations and Activities 9-18
9.4.2.3 Impacts on Humans ,. 9-21
9.4.3 Valuation of Surface Water Quality Improvements 9-43
9.4.3.1 Health Benefits .- 9-44
9.4.3.2 Recreation Benefits 9-46
9.4.4 POTW Sludge Disposal Cost Savings 9-56
9.4.4.1 Overview of Benefits to POTWs from the
Proposed Regulation 9-57
9.4.4.2 Monetization of One of the Primary Benefits
to POTWs - - - 9-58
9.5 Comparison of Benefits and Costs 9-65
9.5.1 Uncertainties and Limitations of Analysis of Social Costs ... 9-65
9.5.2 Uncertainties and Limitations of Analysis of Benefits 9-67
9.6 Conclusions 9-68
9.7 References 9-69
Appendix A: Copy of Part B of the Waste Treatment Industry Questionnaire A-l
Appendix B: Waste Generation by SIC Code : - • B-l
Appendix C: SIC Code Definitions C-l
Appendix D: Detailed Description of the Economic Impact Analysis Model D-l
Appendix E: Detailed Demand Elasticity Discussion E-l
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LIST OF FIGURES
Section
3-1 Number of CWT Facilities in Each State ..' 3-9
5-1 Integrated Facility-Market Economic Model 5-6
5-2a. Effects of Compliance on Imperfectly Competitive Markets 5-8
5-2b Effects of Compliance on Competitive Supplier 5-9
5-3 Market Adjustments in Response to the CWT Effluent Limitations
Guidelines and Standards 5-10
7-1 Non-Caucasian Share of Community Population Compared to State 7-9
7-2 Poverty Share of Community Population Compared to State 7-11
9-1 Social Cost Computed as Changes in Social Surplus 9-5
9-2 Social Cost of the Regulation *. 9-9
9-3 Conceptual Framework for Benefits Analysis 9-11
9-4 Steps for Assessing Annual Cancer Incidence from Fish Consumption 9-32
XI
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LIST OF TABLES
Number
1-1 Baseline Number of CWT Facilities and Baseline Quantities of Waste
for Commercial CWTs, 1995 1-4
1-2 Costs of Complying with the Combined Regulatory Option 1-6
1-3 Process and Facility Closures at CWT Facilities, by Discharge Status 1-7
1-4 Estimated Aggregate Cost to Consumers and Producers 1-10
1-5 Annual Benefits o£the Proposed Effluent Limitations Guidelines and
Standards ..1-11
3-1 CWT Facilities by Subcategory and CWT-Service 3-3
3-2 Trends in Demand for Off-Site Waste Management Services ..,..' 3-6
3-3 Commercial. Status of CWT Facilities - 3-7
3-4 Facility Size Categories Based on Quantity of Commercial
Wastewater Treated, by Discharge Category 3-10
3-5 Size Distribution of Commercial CWT Facilities by Number of CWT
Employees 3-11
3-6 Quantity of Waste Treated by Commercial Facilities, by Subcategory ...... 3-13
3-7 Baseline Waste Treatment Costs at Commercial CWT Facilities 3-13
3-8 Baseline Treatment and Recovery Revenues at Commercial CWT
Facilities 3-14
3-9 Baseline Profits at Commercial CWT Facilities 3-15
3-10 Baseline Conditions in Regional Markets for CWT Services , 3-20
3-11 Size Distribution of Potentially Affected Companies 3-25
3-12 Baseline Company Financial Profile, by Company Size ........ 3-27
3-13 Categorization of CWT Industry Pollutants 3-29
3-14 Characteristics of Reaches Receiving Discharges from CWT Facilities 3-35
4-1 Compliance Costs by Subcategory 4-9
4-2 Costs of Complying with the Combined Regulatory Option 4-11
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LIST OF TABLES (CONTINUED)
Number
6-1 Market Impacts of BPT/BAT and PSES Controls 6-2
6-2 Process Closures at CWT Facilities, by Discharge Status 6-4
6-3 Facility Closures of CWT Facilities, by Discharge Status 6-5
6-4 Job Losses Resulting from Market Adjustments, by Discharge Status 6-6
6-5 Estimated Changes in Company Profit Margins under the Combined
Regulatory Option, by Company Size Category 6-8
6-6 Estimated Median Profit Margins under the Combined Regulatory
Option, by Company Size Category 6-9
6-7 Estimated Changes in Company Return on Investment under the
Combined Regulatory Option, by Company Size Category 6-10
6-8 Estimated Changes in Median Return on Investment under the
Combined Regulatory Option, by Company Size Category 6-11
7-1 Changes in CWT Employment Resulting from Market Adjustments at
CWT Facilities 7-3
7-2 Direct-Effect Regional Multipliers for States in Which CWT Facilities
Are Located • • 7-4
7-3 Changes in Community Employment Resulting from Market
Adjustments at CWT Facilities 7-5
7-4 Community Employment Impacts '• 7-7
7-5 Frequency Distribution: Percent non-Caucasian Population in CWT
Communities • - • • • 7-9
7-6 Frequency Distribution of Percent of Population Falling Below Poverty 7-10
8-1 Compliance Cost-to-Sales Screening Analysis for Regulatory
Scenarios Designed to Provide Relief to Small Companies 8-11
8-2 Impacts on Facilities Owned by Small Businesses 8-12
9-1 Estimated Aggregate Cost to Consumers and Producers 9-7
9-2 Government's Share of Costs 9-8
9-3 Human Systems/Activities Affected by Surface Water Quality 9-13
9-4 Impacts on Humans 9-14
9-5 Exceedances of Ambient Water Quality Criteria for Aquatic Life 9-17
9-6 Characterization of Carcinogenic Substances in CWT Effluent 9-23
9-7 ' Characterization of Noncancer Effects from Substances in CWT Effluent... 9-25
9-8 Quantified and Unqualified Health Effects of Lead 9-26
9-9 Number of Reaches with AWQC Exceedances for Human Health 9-28
9-10 Cancer Risks for Anglers and Their Families .9-31
xin
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LIST OF TABLES (CONTINUED)
Number
Page
9-11 Baseline Annual Cancer Incidence (Fish Consumption by Anglers) 9-32
9-12 Reduction in Annual Cancer Reduction (Fish Consumption by Anglers) .... 9-32
9-13 Populations at Risk for Noncancer Health Effects Through Fish
Consumption : 9-34
9-14 Reductions in Lead-Related Health Effects 9-36
9-15 Annual Benefits from Reduction in Cancer Incidence from Fish
Consumption : '. 9-45
9-16 Annual Benefits from Reduction in Lead-Related Health Effects from
Fish Consumption 9-46
9-17 Annual Benefits of Reduced Lead-Related Health Effects from Fish
Consumption 9-47
9-18 Number of Reaches with Exceedances of at Least One of the
Four AWQCs 9-49
9-19 Annual Recreation Value of Reducing AWQC Exceedances 9-52
9-20 Annual Cost Savings from Shifts in Sludge Use or Disposal Practices 9-61
9-21 Shifts in POTW Disposal Practice and Annual Cost Savings (Reductions
in Sludge Disposal Costs) 9-63
xiv
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DRAFT
SECTION 1
EXECUTIVE SUMMARY
1.1 Introduction
This report estimates the economic and financial effects and the benefits of
compliance with the proposed effluent limitations guidelines and standards for the
Centralized Waste Treatment (CWT) industry. The Environmental Protection Agency (EPA)
has measured these impacts in terms of changes in the profitability of waste treatment
operations at CWT facilities, changes in market prices of CWT services, and changes in the
quantities of waste managed at CWT facilities in six geographic regions. EPA has also
examined the impacts on companies owning CWT facilities (including impacts on small
entities), on communities in which CWT facilities are located, and on environmental justice.
EPA examined the benefits to society of the CWT effluent limitations guidelines and
standards by examining cancer and non-cancer health effects of the regulation, recreational
benefits, and cost savings to publicly owned treatment works (POTWs) to which indirect-
discharging CWT facilities send their wastewater.
EPA also conducted an analysis of the cost-effectiveness of the regulatory options,
which was published separately in a report entitled, "Cost-Effectiveness of Proposed Effluent
Limitations Guidelines and Standards for the Centralized Waste Treatment Industry."
The effluent limitations guidelines and standards will directly impact the costs and
pollutant discharges of CWT facilities that discharge wastewater directly or indirectly to
surface water. To estimate these impacts, EPA gathered data on CWT facilities, the
companies that own them, the communities in which they are located, the waterbodies into
which they discharge, and the populations exposed to their effluent. Section 1.2 describes the
data used for the analysis.
1-1
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DRAFT
1.2 Sources of Data
In 1990, EPA distributed a questionnaire to a census of 452 CWT facilities under the
authority of Section 308 of the Clean Water Act. The questionnaire requested both technical
and economic information from the CWT facilities. Technical data collected by the
questionnaire characterized the quantities of waste accepted off-site into the waste treatment
and recovery operations at each facility, the treatment technologies in place at baseline, and
the baseline pollutant releases. The economic and financial section of the questionnaire
(shown in Appendix A) characterized the facility CWT costs, revenues, and profits, RCRA
permitting costs, commercial status, employment, and company ownership. Based on the
responses to the questionnaire, EPA proposed effluent limitations guidelines and standards
for the industry in 1995. Comments on the proposed rule led the Agency to reexamine the
scope of the regulation and to consider several additional control technologies. Of critical
importance was the identification of a large number of oil recovery facilities that EPA
believed should be in scope of the regulation. Thus, EPA modeled their oil recovery .
operations and estimated the impacts on these facilities of complying with the 1995 proposal.
This information was published in the Federal Register in a Notice of Data Availability in
1996. Comments on the NO A, together with the comments on the proposed rule, led EPA to
decide to repropose effluent limitations guidelines' and standards. This report analyzes the
costs, impacts, and benefits of the reproposed rule. The analysis is based on data for 145
CWT facilities that provided data, and is scaled up to reflect the estimated universe of
211 CWT facilities. In addition to the 211 (scaled up) facilities for which EPA has data, EPA
estimates that there are 12 additional CWT facilities for which it does not have adequate data
for modeling. Thus, of the estimated universe of 223 facilities, EPA's analysis includes 211
facilities. The remainder of the documents based on the 211 facilities for which modeling
was done.
To conduct these analyses, EPA employed the questionnaire data for facilities
included in the 1995 proposal, modeled facility data as amended to reflect the comments
received on the NOA for the newly included oil recovery facilities, together with publicly
available information on the companies owning CWT facilities, the populations and
demographic characteristics of the communities in which they are located, the characteristics
of the waterbodies into which their effluent is discharged, and the characteristics of
populations exposed to their effluent.
1-2
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DRAFT
1.3 Profile of the Industry
EPA estimates that in 1995, there were 211 CWT facilities that accepted waste from
off-site generators for treatment or recovery. The wastes sent to CWT facilities tend to be
concentrated and difficult to treat, and include process residuals, process wastewater, and
process wastewater treatment residuals such as treatment sludges. CWT facilities discharge
high concentrations of some pollutants either into surface water or to POTWs. Of these 211,
all but four accept at least some waste on a commercial basis. Sixty-one facilities accept
metals waste for treatment or recovery, 168 accept oily waste for treatment or recovery, and
25 accept organic waste for treatment or recovery. Of the 211 facilities, 14 are direct -
dischargers, 153 are indirect dischargers, and 44 are zero dischargers.
The demand for CWT services comes from manufacturing plants in many industries,
whose manufacturing activities produce not only output but also waste. Much of this demand
has resulted from increasingly stringent environmental regulations affecting the generator
facilities. Rather than develop the waste management expertise themselves, many generators
have chosen to rely on the services of waste management professionals. In recent years, the
emphasis on waste minimization and pollution prevention has resulted in an overall decrease
hi the quantity of waste sent off-site for treatment and/or recovery, according to data from
EPA's Toxics Release Inventory. Because substitutes for CWT services are limited, EPA
assumes elasticities of demand that range from -0.5 to -1.5.
Table 1-1 shows the baseline quantities of waste managed in each of the five types of
commercial CWT operations analyzed by EPA. The largest number of facilities and the
largest quantities of waste managed are hi the oils subcategory. Overall, EPA estimates that
CWT facilities accepted approximately 2.2 billion gallons of waste from off-site in 1995.
Commercial CWT facilities are located throughout the U.S. Based on the
characteristics of wastewater, and information provided by CWTs about the location of their
customers, EPA assumed markets for CWT services were regional, and defined markets in
six geographic regions which are assumed in the model to be completely independent. The
markets are further subdivided by baseline waste treatment costs, assuming that treatment
cost differences reflect differences in the types of waste being treated or recovered. The
number of CWT facilities offering a particular type of CWT service hi a region varies from
zero to 31. Depending on the number of CWT facilities hi a specific waste treatment or
recovery market, market structure is modeled as monopoly, duopoly, or perfect competition.
1-3
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DRAFT
Table 1-1. Baseline Number of CWT Facilities and Baseline Quantities of Waste for
Commercial CWTs, 1995
Metals Recovery
Metals Treatment
Oils Recovery
Oils Treatment
Organics Treatment or Recovery
Number of Facilities
9
56
156
123
25
Total Quantity
(103gal/yr)
55,814
554,529
569,873
442,359
95,382
Company data are available for 118 of the 145 facilities providing data. These
118 facilities are owned by 87 companies. For the remaining 27 CWT facilities, EPA
assumed that company revenues and costs are equal to the revenues and costs from their
CWT operations. These 27 CWT facilities are owned by 27 companies. The company-level
analysis is based on 114 companies. After scaling up, EPA estimates that the 211 CWT
facilities are owned by 167 companies. Of these, about half (82) have revenues less than
$6 million, and are therefore characterized as small businesses. It should be noted that the
assumption that company revenues are equivalent to CWT revenues for the 40 (scaled
up) companies without company data may understate their revenues and therefore overstate
the number of small businesses. At baseline, companies owning CWTs are generally
profitable, although 12 companies are unprofitable.
EPA also examined the baseline environmental impacts of the CWT industry. Over
180 hazardous chemical compounds have been detected in the discharges from the 119 CWT
facilities whose discharges were modeled. The pollutants include metals such as arsenic,
chromium, and lead, and organic compounds such as benzene and toluene. Of the pollutants
detected at baseline, 3 are known human carcinogens and another 21 are considered probable
' or possible carcinogens. Almost half of the pollutants are systemic toxicants for humans, and
nearly all are considered hazardous to aquatic life.
1-4
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DRAFT
To analyze water quality impacts, EPA characterized the reaches into which CWT
pollutants are discharged. Of 87 reaches modeled, 77 are in urban areas, and 38 have fish
consumption advisories in effect.
1.4 Annualized Costs of Compliance
EPA is proposing effluent limitations guidelines and standards for direct discharging
CWT facilities based on Best Practicable Control Technology Currently Available (BPT),
Best Conventional Pollutant Control Technology (BCT), Best Available Technology that is
Economically Achievable (BAT), New Source Performance Standards (NSPS) based on the
best available control technology that can be demonstrated. For indirect dischargers, EPA is
proposing Pretreatment Standards for Existing Sources (PSES) and Pretreatment Standards
for New Sources (PSNS). EPA examined three control options to reduce the discharge of
pollutants from the rnetals subcategory of the CWT industry, which are referred to as Metals
Options 2, 3, and 4. Option 4, which includes batch precipitation, liquid-solid separation,
secondary precipitation, and sand filtration, is being proposed as BPT. EPA also examined
three control options for cyanide destruction, and EPA is proposing Cyanide Option 2
(alkaline chlorination at specific operating conditions). EPA examined four control options
to reduce the discharge of pollutants from the oils subcategory. EPA is proposing BPT, BCT,
PSES, PSNS, NSPS, and BAT controls based on Oils Option 9, secondary gravity separation
and dissolved air flotation (DAF). EPA examined two control options to reduce the
discharge of pollutants from the organics subcategory, and is proposing controls based on
Organics Option 4, equalization and biological treatment, for the organics subcategory.
Complying with the proposed regulation will increase,the costs of CWT facilities.
EPA estimated lump-sum capital, land, and RCRA permit modification costs and annual
operating, maintenance, monitoring, and record-keeping costs. Table 1-2 shows the costs of
complying with the proposed regulatory option. Annualized costs are shown both before and
after accounting for tax savings associated with investments in capital equipment and
operating costs.
1.5 Facility Impacts
EPA analyzed the impacts of these costs on affected CWT facilities using a
mathematical model of the facilities and regional CWT markets. Complying with the
proposed regulatory option increases the cost of direct and indirect discharging CWT
facilities. They respond by increasing the prices at which they accept waste. Overall, the
1-5
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DRAFT
Table 1-2. Costs of Complying with the Combined Regulatory Option (106 $1997)a
Costs
BPT/BAT Costs
PSES Costs
Total Costs
Total Lump- Total Annualized Costs Total After-Tax
Sum Costs Before-Tax Savings Annualized Costs'*
5.32
50.4
55.7
4.31
30.8
35.1
2.68
17.2
19.8
a Costs are scaled up to reflect the estimated universe of CWT facilities.
b Costs include the cost of modifying RCRA permit where appropriate.
prices of CWT services increase and the quantity of waste accepted by CWTs decreases. The
increased prices for CWT services results in higher revenues for CWT facilities. EPA
computed the profitability of each CWT operation based on the estimated increases in CWT
costs and revenues. Operations for which estimated with-regulation costs exceed estimated
with-regulation revenues are unprofitable, and are assumed to shut down. If all the affected
CWT operations at a facility are estimated to shut down, EPA considers this a facility
closure. Table 1-3 shows the estimated process and facility closures by discharge status.
EPA estimates that nationwide, 461 jobs will be lost at CWT facilities experiencing
reductions in CWT operations or closures of processes or facilities. This reduction in
employment is expected to be partially offset by the increases in employment required to
operate the controls at affected CWTs. EPA estimates that 97 full-time equivalent employees
will be required to operate the controls, which would offset more than a fifth of the projected
job losses from market adjustments.
1.6 Firm Impacts
EPA analyzed impacts on firms owning CWT facilities by analyzing changes in
company profits and return on investment. For 66 companies, profit margins declined as a
result of the regulation. Thirty-three of the companies experiencing lower profit margins are
small firms. For 34 companies, profit margins increased, because their revenues are
projected to increase by more than their costs. Twenty-one of the 41 companies projected to
experience increased profit margins are small firms. Finally, two companies are projected to
experience no change in their profit margins due to the regulation:
1-6
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DRAFT
Table 1-3. Process and Facility Closures at CWT Facilities, by Discharge Status3
Discharge Status
Direct Dischargers
Indirect Dischargers
Zero Dischargers
Process
Closures
3
15
0
Percentage
13%
5%
0.0%
Facility
Closures
2
15
0
Percentage
14.3%
9.8%
0.0%
1 Data are scaled up to account for the entire universe of CWT facilities.
1.7 Community Impacts
EPA measures impacts on communities in which CWT facilities are located by
estimating the change in community employment that is projected to result from the
regulation. CWT facilities that reduce the quantity of waste they treat, close processes, or
close CWT operations completely, are estimated to experience reduced employment. This
reduction in employment is projected to result in additional employment losses in the
community as the displaced CWT employees reduce their spending, and this generates
additional job losses. EPA made the most conservative assumption, that alljob losses would
occur within the community where the CWT is located. Sixty-nine communities are
projected to experience no change in employment or an increase in employment. Forty-two
communities are projected to experience a decline in employment of less than 0.2 percent.
No community is projected to experience a loss in employment of more than 0.9 percent of
baseline employment.
EPA also examined the demographic characteristics of the communities in which
CWT facilities were located, to assess the distributional and environmental justice impacts of
the regulation. Perhaps because many CWTs are located in industrial urban areas,
populations in the communities in which they are located have, on average, higher
proportions of low income residents and people of color than the states in which they are
located or the country as a whole. EPA examined community employment impacts to ensure
that communities of color and relatively low-income communities are not experiencing
disproportionately high impacts. Of the 37 communities experiencing more than one job
loss, 30 are predominantly low-income or minority. However, the employment losses are at
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most 0.67 percent of baseline employment, so EPA does not believe that significant adverse
employment impacts will occur in communities of color or communities with a relatively
large share of poor residents.
To assess the environmental justice impacts of the CWT regulation, EPA examined
the benefits experienced by communities adjacent to the surface water bodies into which
CWT facilities discharge their wastewater. These are largely, but not entirely, the same as
the communities in which the CWT facilities are located. EPA assumed that all the benefits
of the regulation are experienced by residents of the counties adjacent to the reaches
projected to be less polluted due to the regulation. Seventeen of the 32 communities with
relatively high minority or low income populations are projected to experience quantified
benefits due to the regulation. Thus, the CWT effluent limitations guidelines and standards
are projected to improve environmental justice, by reducing the exposure of these
communities' populations to pollutants discharged by CWTs.
1.8 Final Regulatory Flexibility Analysis
EPA's initial assessment of the possible impact of options being considered on small
CWT companies showed that some options might have significant impacts on some small
CWT companies. Thus, EPA performed an initial regulatory flexibility analysis (IRFA) and
convened a Small Business Advocacy Review (SBAR) panel to collect the advice and
recommendation of small entity representatives (SERs) of CWT businesses that would be
affected by the proposal. For the final rule, EPA conducted a final Regulatory Flexibility
Analysis. EPA estimates that 82 companies owning CWTs have revenues less than $6
million per year, and are considered small companies for this analysis. Of these, 63 own
discharging CWT facilities and may incur increased costs due to the regulation. EPA has
evidence mat the number of affected small businesses may be overstated, because of trends in
the CWT industry since the data were collected, and because facility data were used to
represent company data for companies for which no data were available. However, these
data are the most complete available for these companies and are consistent with the
technical and economic characterization used hi the analysis.
EPA considered a number of measures to mitigate the impact of the proposed rule on
small businesses, including relief from monitoring requirements and other regulatory relief
for indirect dischargers, and a less stringent NSPS for the metals subcategory. In addition,
EPA considered two general options that would mitigate the impacts of the regulation on
small entities. First, EPA proposed regulatory options that were in the form of effluent
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limitations guidelines and standards, not specific requirements for design, equipment, work
practice, or operational standards. Second, the Agency considered less stringent control
options for each of the treatment subcategories than were originally proposed in 1995.
Of the 56 small companies for which EPA has reliable data on baseline profits, 44
own indirect discharging facilities. Fourteen of these are projected to experience increasing
profit margins as a result of the proposed regulatory option, and 28 are projected to
experience decreased profit margins. Overall, small companies are projected to fare better
than either medium sized or large companies. EPA also examined the potential impacts of
the regulatory relief options, and concludes that the analysis does not support the need for a
limitation. EPA is concerned that, by limiting the scope of the proposed rule based on one of
the regulatory relief scenarios, EPA might actually be encouraging ineffective treatment at
the expense of effective treatment. Thus, despite considering a variety of potential
limitations to mitigate small business impacts while still preserving the benefits of the rule,
EPA was unable to identify a single effective solution to incorporate into the regulation.
1.9 Cost-benefit Analysis
EPA examined the costs and benefits to society of the proposed effluent limitations
guidelines and standards. The social costs are defined as the change in consumer and
producer surplus as a result of the regulation. Table 1-4 summarizes the estimated social
costs of the regulation. It should be noted that "consumer" in this case actually means
customer, because CWT services are intermediate goods, sold to producers of other goods
and services.
Table 1-4. Estimated Aggregate Cost to Consumers and Producers
Social Cost Component
Change in Value
($1031997)
Change in Consumer Surplus
Change in Producer Surplus
Sum of Changes in Consumer and Producer Surplus
-$30,137
$4,140
-$25,997
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The Agency estimates that, overall, producers and consumers of CWT services will
lose approximately $26 million in social welfare as a result of the proposed regulation.
EPA's analysis indicates that, overall, the industry will experience increased profits as a
result of the regulation, but that this will be more than offset by the increased costs incurred
by customers, due to the increased prices charged for CWT services.
Because the market model analyzes impacts based on after-tax costs of compliance,
the above values do not include all of the social costs of the proposed rule. In particular, they
do not include the costs to government. EPA estimates government's share of the costs of.
the proposed rule to be approximately $17.9 million. Thus, the total cost of the proposed rule
is estimated to be approximately $43.9 million.
The proposed effluent limitations guidelines and standards for the CWT industry
would reduce pollutant discharges to surface water by approximately 167.7
(estimated—waiting for confirmation from Tt) million pounds per year of conventional
pollutants and 189 million pounds per year of toxic and nonconventional pollutants. This
reduction hi pollutant loadings will lead to improvements in both the instream water quality
and the health of ecological systems in the affected waterbodies. In. addition, POTWs are
expected to experience reductions hi sludge disposal costs.
To estimate the benefits of the proposed effluent limitations guidelines and standards,
EPA first estimated the changes in ambient water quality and related ecosystems that would
result from the reduction in releases. Then, EPA estimated and valued reductions in cancer
and non-cancer health effects, improvements in recreational fishing, and cost savings for
POTWs. Table 1-5 summarizes the EPA's benefits estimates.
There are uncertainties and limitations inherent hi both the estimated costs and
benefits, which may have led to either underestimating or overestimating their values. More
important than these uncertainties for the benefits estimation is the fact that data limitations
prevented EPA from quantifying or valuing many other categories, of benefits, including
benefits to near-stream recreation, commercial fishing, and diversionary users of affected
waterbodies, as well as nonuse benefits. The Agency is certain that the benefits estimates in
Table 1-5 are only a subset of total benefits. Thus, EPA is confident that the benefits of the
proposed regulation justify its costs.
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Table 1-5. Annual Benefits of the Proposed Effluent Limitations Guidelines and
Standards
Benefits Category
Estimated Range of Benefits
($1031997)
Reduction in Cancer Incidence from Fish Consumption
Reduction in Lead-Related Health Effects from Fish
Consumption
Recreation Value of Reducing AWQC Exceedances
Reductions in Sludge Disposal Costs
Sum of These Benefits Categories
$76,000 - $412,000
$488,000-$1,586,000
$1,227,000-$3,490,000
$136,000-$845,000
$1,927,000-$6,333,000
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SECTION 2
DATA SOURCES
EPA collected the data used to profile the CWT industry and to analyze the impacts of
the effluent limitations guidelines and standards from a variety of sources. These include a
census of the industry conducted hi 1991, comments on the original proposal and the Notice
of Data Availability (NOA), the Toxics Release Inventory (TRI) database (EPA, 1991-1995),
and publicly available information, such as financial databases. This section describes the
data sources and how they were combined to provide a baseline characterization of the CWT
industry and markets. Appendix A provides additional detail about the data sources.
2.1 Data from the Waste Treatment Industry Questionnaire
In 1991, EPA collected data from facilities believed to be in the CWT industry
through the Waste Treatment Industry Questionnaire (henceforth to be referred to as the
questionnaire) (EPA, 1991).1 The questionnaire collected technical information for 1989 and
economic information for 1987, 1988, and 1989 under authority of Section 308 of the Clean
Water Act (CWA). Of the 452 facilities receiving the questionnaire, EPA determined that
363 did not treat or recover materials from industrial waste received from off-site. Of the
89 that did treat or recover materials from industrial waste received from off-site, four_
facilities were considered out of scope because they received off-site waste only through a
pipeline from adjacent facilities. The remaining 85 facilities were ultimately determined to
be within the scope of the effluent limitations guidelines and standards at that time.
Technical data collected from these facilities included the quantities of waste they
received from off-site for management in various CWT operations, current treatment
technologies, and current releases.
'Appendix A of EPA (1995) contained a copy of the questionnaire instrument. It is also included in Appendix A
of this report, along with a copy of the Facility Information Sheet provided to each NOA facility with EPA's
estimated data for that facility.
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Economic and financial data collected from these facilities included prices for
wastewater treatment of different waste types,
• facility employment,
• costs and revenues for each CWT operation,
• information on commercial status of CWT operations at the facility,
• Resource Conservation and Recovery Act (RCRA) permit modification costs, and
• limited financial information for the companies owning the CWT facilities.
Most respondents provided data for the years requested: 1987, 1988, and 1989. However,
some facilities had not been in operation during a part of that period, so they provided data
for other years. The Agency conducted a careful review of the responses to ensure that the
data used to develop the effluent limitations guidelines and standards were as complete and
accurate as possible.
2.1.1 Data Modifications and Corrections
The Agency's quality assurance/quality control for the questionnaire data involved
several discrete steps: reviewing the questionnaire responses for completeness and internal
consistency, contacting the facilities for additional information or clarification, comparing
responses from the technical and economic sections of the questionnaire, and adjusting the
data to make the economic and financial data consistent with the technical data.
The Agency reviewed the individual questionnaire responses to ensure that they were
complete and internally consistent. .EPA contacted facilities to verify and correct responses
that were either incomplete or appeared incorrect. After completing this quality assurance/
quality control procedure, the Agency made further adjustments to correct for remaining
discrepancies in the data. These adjustments required
• matching the time period for the technical data and the time period for the
economic data as closely as possible;
• reassigning costs and revenues for waste treatment operations so that they
matched the waste treatment operations reported in the technical section of the
questionnaire; and
• adjusting economic data reported to the base year of the analysis, using the
producers price index.
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In addition, five facilities did not respond to the economic and financial section of the
questionnaire. Cost data were generated for these facilities, based on a simple statistical
analysis of data for facilities that had responded. Revenues were generated by multiplying
the price of the services offered times the quantities they reported in the technical sections of
their questionnaires.
Since the 1995 proposal, EPA has made substantial changes to the scope of the
regulation. Section V of the preamble to the rule discusses these changes. The Agency has
determined that several other facilities that were considered in scope for the 1995 proposal
are no longer in scope, because they no longer conduct CWT operations. These were
removed from the analytical database.
When these adjustments were complete, the Agency had a database of information for
76 facilities that included quantities and flows of waste within the CWTs from the technical
section of the 1991 questionnaire and associated costs, revenues, and employment at the
CWTs from the economic questionnaire.
2.1.2 Additions to Data Since Original Proposal (NOA Facilities)
Comments on the 1995 proposal indicated that a large number of oil recovery
facilities, which had been considered out of scope, were in fact subject to the regulation. To
analyze the impacts of the regulation on these facilities, the Agency developed baseline data
for these facilities using the following data:. publicly available facility employment data, data
for similar facilities from the questionnaire, and information provided by the National
Association of Oil Recyclers (NORA), an industry trade association. The Agency estimated
waste flows at the facilities, baseline costs and revenues for oil recovery and oily wastewater
treatment, and costs to comply with the effluent limitations guidelines and standards and then
analyzed the economic impacts of the rule on these facilities. The results of these analyses
were published in the Federal Register in a NOA (E?A, 1996). To ensure that all the subject
facilities were aware of the information and had the opportunity to comment on the data (and
correct any errors), the Agency prepared Facility Information Sheets describing the data used
for each facility and sent them to the oil recycling facilities.2 Many of the facilities responded
to the NOA with comments and corrections. Based on the data received, the Agency
identified 69 oil recovery facilities that were subject to the regulation. For these, the Agency
2Appendix A of this document contains a copy of the Facility Information Sheet form mailed to each facility to
inform them of the NOA and the data being used to characterize their facility.
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has data on the quantity of oily waste and oily wastewater accepted from off-site, quantity of
oil recovered, quantity of wastewater discharged, facility operating costs and revenues, and
employment. The data used are those generated to analyze the economic impacts of the
effluent limitations guidelines and standards.
2.2 Data Sources for Demand Characterization
Data to characterize the demand for. CWT services come primarily from the TRI, an
annual EPA data collection effort that reports quantities of toxic chemicals released by
manufacturing facilities. Among other types of releases, the generating facilities are asked to
report quantities of waste sent off-site for treatment or recovery.
2.3 Data Sources for Market Characterization
Data used for the market characterization comprise the data from the 1991 Waste
Treatment Industry Questionnaire and data from the NOA database. Facilities were assigned
to markets based on their locations, the types of CWT operations on-site, and the per-gallon
costs of treatment or recovery for those operations. Depending on the number of facilities in
each market, the markets were characterized as monopolistic (one CWT service provider),
duopolistic (two CWT service providers), or perfectly competitive (three or more CWT
service providers).
2.4 Data Sources for Company Analysis
Data were collected from several sources to profile the companies owning the CWT
facilities. These sources included the Waste Treatment Industry Questionnaire; data
developed for the NOA, as corrected by comments on the NOA data; Dun and Bradstreet's
Dun's Market Identifiers (1997) on-line database; the Securities and Exchange Commission's
EDGAR database (SEC, 1997); and other financial databases.
2.5 References
Dun and Bradstreet. 1997. Dun's Market Identifiers Online Database. Accessed through the
EPA National Computation Center Computer, FINDS data system.
Securities and Exchange Commission. 1997. EDGAR Database: . Bethesda, MD: Lexis/Nexis.
U.S. Environmental Protection Agency. 1991 Waste Treatment Industry Questionnaire.
Washington, DC: U.S. Environmental Protection Agency.
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U.S. Environmental Protection Agency. 1996. Notice of Availability Facility Information
Sheets. Washington, DC: U.S. Environmental Protection Agency.
U.S. Environmental Protection Agency. 1995. Economic Impact Analysis of Proposed
Effluent Guidelines and Standards for the Centralized Waste Treatment Industry.
Washington, DC: U.S. Environmental Protection Agency.
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SECTIONS
BASELINE CONDITIONS AND INDUSTRY PROFILE
This section describes the conditions affecting the CWT industry in the absence of
regulation. The industry profile section provides an overall description of the CWT industry
and the markets for CWT services. Following the industry profile is a discussion of the
environmental impacts of the CWT industry at baseline.
3.1 Industry Profile
This section profiles the CWT industry by describing the baseline conditions
characterizing facilities supplying CWT services, the companies that own CWT facilities, the
demand for CWT services, and the markets for CWT services. The baseline represents the
conditions in the CWT industry in the absence of the regulation. Thus, baseline conditions
form the basis for comparison with the projected conditions for these entities when the
regulation is promulgated.
3.1.1 Overview of the CWT Industry
The CWT industry developed primarily in response to environmental legislation. A
more complete description of the development of the CWT industry is found in the preamble
to the rule.
In 1995, there were 211 CWT facilities that accepted waste from off-site sources for
treatment or recovery for which EPA had sufficient data to estimate costs and impacts. The
wastes sent to CWT facilities tend to be concentrated and difficult to treat and include
process residuals, process wastewater, and process wastewater treatment residuals such as
treatment sludges. Because of the toxicity of wastes accepted and the limited treatment
provided at CWT facilities, CWT facilities discharge high concentrations of some pollutants
either into surface water or to publicly owned treatment works (POTWs).
CWT facilities are specialists in waste treatment and may have different relationships
with the facilities generating the waste they treat. In terms of these relationships, CWT
facilities fall into three main categories:
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• commercial: facilities that accept waste only from off-site generators not under
the same ownership as their facility.
• noncommercial: facilities that accept waste only from off-site generators under
the same ownership as their facility or that accept waste on a contract basis from a
small number of adjacent facilities.
• mixed commercial and noncommercial: facilities that treat waste generated by
other facilities under the same ownership as their facility and also accept waste
from off-site generators not owned by the same company.
In developing the guidelines and standards, EPA looked at facilities that accept waste
on a commercial basis and those that accept waste on a noncommercial basis. EPA data
show that 207 CWT facilities accept waste on a commercial basis, managing it for a fee.
They operate either on a strictly commercial basis or are mixed commercial/ noncommercial
facilities. These facilities manage wastes from their own company and also accept some
waste from other companies for a fee. The commercial CWT operations plus the commercial
share of the mixed CWT facilities constitute the supply of marketed CWT services. The
remaining four facilities are classified as noncommercial. Demand for these CWT services
comes from waste generators that do not have the capability to completely treat the waste
they generate on-site.
Detailed questionnaire data are available for 78 of these facilities, and limited data
from notice comments are available on 71 additional facilities. Weights have been computed
and assigned to these 149 facilities to scale up the results to the entire known universe of
211 CWT facilities.
3.1.1.1 Services Provided
CWT facilities provide waste treatment services performed at waste treatment
facilities that accept waste from off-site for treatment. CWT services include the treatment
and recovery of metal and oil-bearing wastewater and the treatment of organic wastewater.
CWT facilities may also transport, incinerate, or otherwise dispose of waste and process
residuals.
3.1.1.2 Subcategories
EPA has divided the industry into three subcategories—metals, oils, and
organics—based on the types of waste treated or recovered:
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• metals subcategory: facilities that accept metal-bearing waste from off-site for
treatment or recovery.
• oils subcategory: facilities that accept oily waste from off-site for treatment or
recovery.
• organics subcategory: facilities that accept organic waste from off-site for
treatment or recovery.
Table 3-1 shows the number of commercial facilities in each industry subcategory
offering each type of waste treatment or recovery service. Many CWT facilities offer more
than one of the above services and thus fall under more than one industry subcategory.
Table 3-1. CWT Facilities by Subcategory and CWT Service8'"
Subcategory
Metals
Total in Subcategory
Oils
Total in Subcategory
Organics
CWT Service
Recovery
Treatment
Recovery
Treatment
Treatment
Number of Facilities
Commercial Noncommercial Total
8
54
58 3 61
156
123
168 0 168
24 1 25
a Facilities are counted as commercial if they treat any waste on a commercial basis. Because many CWT
facilities fall under more than one subcategory, the numbers do not add to the total number, 205 facilities,
in the CWT industry. Similarly, because more facilities performing metals or oils recovery also perform
treatment, the total number of facilities in those categories does not equal the sum of facilities performing
recovery and treatment.
b Data are scaled up to account for the entire universe of CWT facilities.
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5.1.2 Demandfor CWTServices
Producing goods and services almost always involves the simultaneous production of
waste materials. During the process of manufacturing goods or providing services, the
material inputs that are not embodied in the products become waste. Environmental
regulations require that these wastes, once generated, be recycled, treated, or disposed of in
accordance'with regulatory requirements.
The demand for waste management services arises from the generation of waste as a
by-product of manufacturing or other production activities. This means that the demand for
CWT services is derived from and depends on the demand for the goods and services whose
production generates the waste. For example, the higher the demand for plastics, the greater
quantity of plastics produced and, in turn, the greater the quantity of by-products of plastic
manufacturing that must be treated and disposed of.
Producers generating waste have three choices when they determine how to treat the
waste properly. First, they may invest in capital equipment and hire labor to manage the
waste on-site, that is, at the site where it is generated. For large volumes of waste, this is
often the least expensive way to manage the waste because producers can avoid the cost of
transporting it. Some generators may choose to treat waste on-site, because they believe that
it will help them control their ultimate liability under environmental laws. Alternatively,
producers may choose partially to treat waste on-site and then to send it off-site for ultimate
treatment and disposal. This choice is referred to as on-site/off-site in this report. Finally,
producers may choose to send waste they generate directly to a CWT facility, a method that is
called off-site waste management.
The producers of waste who choose either the on-site/off-site or the off-site method
create the demand for CWT services. The guidelines and standards under analysis apply to
all facilities accepting waste from off-site for treatment or recovery.
3.1.2.1 Industries Demanding CWT Services
This report used data from the TRI to characterize the generators of hazardous waste
by industry and to profile the types of waste treated. A wide variety of manufacturing
industries generate waste. Appendix B shows the four-digit Standard Industrial
Classification (SIC) codes and the quantities of waste those industries transferred off-site for
either treatment 9r recycling in 1995. A list of the definitions for SIC codes is provided in
Appendix C. The industries transferring the largest amounts of waste off-site for treatment or
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recycling are blast furnaces and steel mills (3312), storage batteries (3691), nonferrous wire
drawing and insulating (3357), plastics materials and resins (2821), motor vehicle parts and
accessories (3714), and industrial organic chemicals (2869).
3.7.2.2 Trends in the Demand for CWT Services (TRI)
The data described above reflect the demand for off-site hazardous waste
management in 1995. They demonstrate that the demanders of CWT services are diverse and
include most manufacturing and many service sectors. The TRI data provide a time series of
data on releases of materials. Table 3-2 quantifies the changes in the quantity of wastes
transferred off-site for treatment and recycling from 1991 to 1997, based on TRI data over
that time period. Waste transferred off-site for recycling increased a total of 57 percent from
1991 to 1997. In contrast, the amount of waste transferred off-site for treatment decreased a
total of 6 percent over that time period, although a sudden drop-off from 1991 to 1992 is
being offset by more recent increases.
Table 3-2. Trends in Demand for Off-site Waste Management Services
Year
1991
1992
1993
1994
1995
1996
1997
Waste Transferred
Off-Site for Recovery
(106 Ibs)
1.517
1.886
1.940
2.170
2.450
2.397
2.381
Percentage
Change
—
24.32%
2.86%
11.86%
29.90%
23.56%
9.72%
Waste Transferred
Off-Site for Treatment
(106lbs)
244.6
215.3
210.3
219.1
250.6
226.5
258.7
Percentage
Change
—
-11.98%
-2.32%
4.18%
16.40%
7.70%
18.07%
Source: U.S. Environmental Protection Agency. Toxics Release Inventory, 1991-1997.
.
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3.1.3 Description of Suppliers ofCWT Services
As explained previously, CWT facilities accept waste from off-site for treatment. The
generating facility may or may not be owned by the same company as the CWT facility.
Suppliers are characterized by commercial status and types of services performed, SIC code,
location, and size.
3.1.3.1 Commercial Status
As mentioned earlier, CWT facilities have a variety of relationships with the facilities
generating the waste they treat. They fall into three main categories:
• commercial,
• noncommerical, and
• mixed commercial/noncommercial.
Information about commercial status is available from several parts of the Waste
Treatment Industry Questionnaire. A copy of this questionnaire can be found in Appendix A
of the Economic Impact Analysis report prepared for the earlier proposal (EPA, 1995).
Question A35 in the technical section of the questionnaire asks facilities about their overall
commercial status.
The part of the questionnaire where the facility reports its costs and revenues indicates
its commercial status. In Section N, in the economics section of the questionnaire, facilities
were asked to list their commercial waste treatment revenues and costs separately from their
noncommercial. Data on commercial revenues were listed in Questions N27 through N29
and noncommercial revenues were listed in Questions N30 through N32. Purely
noncommercial facilities reported their costs in Questions N30 through N32, while
commercial and mixed facilities reported their costs in Questions N27 through N29. Finally,
in Section O, facilities were asked in Question O4 to report the quantities of aqueous liquid
waste, sludge, and wastewater they treat that is received from off-site facilities not under the
same ownership, that is received from off-site facilities under the same ownership, and that is
generated on-site.
Information from Sections N and O forms the primary basis for determining a
facility's commercial status. When no data were available, or when the data in Sections N
and O conflicted, information from Question A35 was used. Table 3-3 provides the
commercial status of the 211 CWT facilities. The characterization of facilities' commercial
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Table 3-3. Commercial Status of CWT Facilities3
Commercial Status
Number of Facilities
Commercial
Noncommercial
207
4
a Data are weighted to account for entire universe of CWT facilities.
Sources: U.S. Environmental Protection Agency. 1991 Waste Treatment Industry Questionnaire.
Washington, DC: U.S. Environmental Protection Agency.
U.S. Environmental Protection Agency. Notice of Availability Facility Information Sheets.
' Washington, DC: U.S. Environmental Protection Agency.
status in this report refers only to the operations subject to the effluent limitations guidelines
and standards. Facilities classified in this analysis as purely commercial may conduct some
operations not subject to this rulemaking on a noncommercial basis. Similarly, facilities
classified as noncommercial in this analysis may conduct some operations not subject to this
rulemaking on a commercial basis. The noncommercial category includes four facilities that
accept waste from off-site but do not market their CWT services. Included in this category
are a facility owned by the federal government and a facility contracted to accept waste from
an adjacent generator.
3.1.3.2 Industry Classification by SIC Code
In the questionnaire, facilities were asked to report the SIC code that best represents
the facility's main operation. EPA assigned all of the Notice of Availability facilities to
SIC 4953. The responses give one indication of the relative importance of CWT operations
at the facility. No SIC code properly describes CWT services. Facilities that listed 4953,
Refuse Systems, as their SIC code are indicating that they are primarily waste treaters. Of the
facilities responding to the questionnaire, 51 of 76 indicated that SIC 4953 best described
facility operations. SIC code 4953, Refuse Systems, is primarily for municipal waste
disposal services, so the majority of facilities in that SIC code are not CWTs but trash haulers
and municipal solid waste management facilities.
Facilities that listed other SIC codes are indicating that they are primarily
manufacturing facilities that also do some waste management. Three facilities reported 2869,
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Organic Chemicals not elsewhere classified, and four additional facilities reported other SIC
codes in the 2800s, indicating that they are chemicals manufacturers. Four facilities reported
SICs in the 3300s, indicating that they are primarily metals manufacturing facilities.
Therefore, EPA data show that a majority of the facilities expected to be affected by
the effluent limitations guidelines and standards are primarily waste management facilities.
The rest, although they have CWT services on-site, are primarily manufacturing or service
facilities.
• It should be mentioned that the North American Industrial Classification System
(NAICS) is replacing the existing SIC system. NAICS industries will be identified by a
six-digit code, in contrast to the four-digit SIC code, increasing the number of sectors
described and therefore increasing the level of detail possible in the.industry characterization.
SIC 4953, Refuse Systems, is being subdivided into eight new industries. This division will
allow differentiation between hazardous.waste treatment and disposal (NAICS 562211) and
recovering materials (NAICS 56292).
3.1.3.3 Location of CWT Facilities
There are 149 facilities that provided data to EPA through the questionnaire or Notice
of Availability. These facilities are located in 38 states. The states with the highest number
of waste management facilities are Texas with 13, Ohio with 12, and California with 12.
Figure 3-1 shows the number of facilities in each state. Because not all CWT facilities offer
the same set of services, facilities located near one another may not be in the same markets.
Likewise, a CWT facility may compete with facilities located a longer distance away if the
services offered are similar. However, questionnaire responses indicated that most CWTs'
customers are located within the same state as the CWT or within a few adjacent states.
Thus, most of a CWT's competitors will be located relatively close to it.
3.1.3.4 Facility Size
Facility size may be defined hi terms of total quantity of waste accepted for treatment
or recovery, number of employees, or total revenues and costs. This section examines facility
size using quantity of waste accepted and number of employees. Section 3.1.4 discusses
facility revenues and costs. NEED CALLOUT FOR TABLE 3-4.
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Figure 3-1. Number of CWT Facilities in Each State
Note: Data are not scaled up to account for the entire universe of CWT facilities. .These data reflect only the
facilities for which data are available.
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Table 3-4. Facility Size Categories Based on Quantity of Commercial Wastewater
Treated, by Discharge Category2
Direct dischargers
< 5 million.gallons
5 million to 10 million gallons
10 million to 50 million gallons
50 to 100 million gallons
Over 100 million gallons
Total
Indirect dischargers
< 5 million gallons
5 million to 10 million gallons
10 million to 50 million gallons
50 to 100 million gallons
Over 100 million gallons
Total
Zero dischargers
< 5 million gallons
5 million to 10 million gallons ~
10 million to 50 million gallons
50 to 100 million gallons
Over 100 million gallons
Total
Metals
Recovery
2
0
0
0
0
2
4
1
1
0
0
6
1
0
0
, 0
0
1 '
Metals
Treatment
. 2
0
2
1
1
6
27
4
10
0
0
41
7
0
1
0
0
8
Oils
Recovery
2
3
0
0
0
5
69
24
20.
0
0
113
31
0
2
0
0
33
Organics
Oils Treatment or
Treatment Recovery
3
2
0
0
0
5
67
14
15
0
0 '
96
18
0
0
0
2
20
2
0
2'
0
0
4
12
2
1 2
0
0
16
4
1
0
0
0
5
Data are scaled up to account for entire universe of CWT facilities. Counts do nbt include four facilities
that do not treat wastewater commercially.
3-10
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DRAFT
• discharge wastewater, treated or untreated, indirectly to the sewer system, then to
a POTW (indirect dischargers); or
• not discharge their wastewater at all (zero dischargers).
Zero discharge facilities may dispose of their wastewater by pumping it down underground
injection wells, evaporating it, applying it to land, selling it or recycling it, or sending it
off-site to another CWT facility for treatment.
Facility size can also be defined in terms of employment. Nationwide, EPA estimates
that approximately 5,300 full-time equivalent employees (FTEs) work in CWT operations at
the CWT facilities. Employment in CWT operations at CWT facilities ranges from 1 FTE to
more than 100, with a median of 18 FTEs. The Agency is interested in facility-level
employment in CWT operations because, if production falls at a facility as a result of a
regulation, some share of the people employed there may become unemployed. This
reduction in employment may be magnified throughout the community as facilities that
produce goods and services previously demanded by the now unemployed residents
experience decreased demand for their goods and services. Table 3-5 shows the number of
commercial CWT facilities with various numbers of employees in their CWT operations.
Table 3-5. Size Distribution of Commercial CWT Facilities by Number of CWT
Employees
Total Number of Employees
Ito9
10 to 19
20 to 29
30 to 49
50 to 100
More than 100
Number of Facilities
60
50
44
29
19
5
207
Percentage
29%
24%
22%.
14%
9%
2%
100%a
Data are scaled up to account for entire universe of CWT facilities. Counts do not include four facilities
that do not treat wastewater commercially. Does not sum to 100 percent because of rounding.
3-11
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DRAFT
3.1.3.5 Facilities Permitted Under RCRA
Some CWT facilities may manage hazardous wastes in operations that are permitted
tinder RCRA. Of the 145 CWT facilities providing data, 79 do not have a RCRA Part B
permit, and 66 have a RCRA Part B permit. This distinction is important in part because of
what it indicates about the types of wastes the facilities manage and the types of operations
they have on-site. All facilities treating hazardous waste are required to have a RCRA
permit. Facilities engaged in recycling and'recovery operations, such as metals recovery and
oils recovery, may or may not have a RCRA permit.
However, this regulation will not affect the permit status of RCRA permitted
operations. Thus there will be no costs associated with RCRA permits as a result of this.
regulation. .
3.1.4 Baseline Facility Conditions
As described above, this study analyzes the estimated 211 facilities in the CWT
industry. Of these, 207 are commercial and four are noncommercial. In this analysis, the
Agency accepts the definition of "facility" used by responding CWT facilities. In some
cases, the facility is defined as only the waste management part of a plant site, m other cases,
the facility is defined as encompassing the entire plant site, including non-CWT operations.
3.1.4.1 Baseline Quantities of Waste Treated
Table 3-6 shows baseline quantities of waste treated by commercial facilities by
subcategory. The largest number of facilities and the largest quantities are related to oils
treatment and oils recovery. When the responses are scaled up to account for nonresponse,
966 million gallons of waste were accepted from off-site for recovery of oil. Seven hundred
sixty gallons were accepted from off-site for oil treatment.
3.1.4.2 Baseline Costs of CWT Operations
Table 3-7 shows a frequency distribution for the baseline cost of treating waste. The
effluent limitations guidelines and standards, if adopted, are expected to increase the cost of
treating waste at most CWT facilities. This cost increase, in turn, will increase the
3-12
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DRAFT
Table 3-6. Quantity of Waste Treated by Commercial Facilities, by Subcategory (103
Gal/yr)
Total
Number of Quantity
Facilities (ID3 gal/yr)
Metals Recovery
Metals Treatment
Oils Recovery
Oils Treatment
Organics Treatment or
Recovery
8
54
156
123
24
56,538
555,030
569,873
442,359
11,305
Average
Quantity
(103 gal/yr)
6,282
10,091
5,875
5,978
4,452
Minimum
Quantity
(103 gal/yr)
25.9
0.1
17.9
0.1
1.4
Maximum
Quantity
(103 gal/yr)
44,702
129,340
104,885
131,000
23,309
Table 3-7. Baseline Waste Treatment Costs at Commercial CWT Facilities3
Operating Costs ($1997)
<$0.1 million
$0.1 to $1 million
$1 to S2 million
$2 to $5 million
Over $5 million
Total
Number of Facilities
20
89
47
40
10
207
Percentage
10%
43%
23%
20%
5%
100%
1 Data are scaled up to account for entire universe of commercial CWT facilities.
cost of recovery processes because those processes generate wastewater and sludge that must
also be treated. These baseline waste treatment cost figures form a basis for comparing the
costs of compliance, described in Section 4. Baseline in-scope waste treatment costs at
3-13
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DRAFT
commercial facilities range from $3,641 to more than $26 million per facility and total an
estimated S250 million across all 207 commercial facilities. They average $1.7 million
across all commercial facilities.
3.1.4.3 Baseline Revenues for CWT Operations
A frequency distribution of treatment and recovery revenues for commercial CWT
facilities is provided in Table 3-8. Treatment arid recovery revenues at commercial CWT
facilities range from $5.1 to $93.3 million. The average revenue at commercial facilities is
$4.9 million, and CWT revenues total nearly $717 million.
Table 3-8. Baseline Treatment and Recovery Revenues at Commercial CWT
Facilities1^
Revenues ($1997)
< $0.1 million
$0.1 to $1 million
$1 to $2 million
$2 to $5 million
Over $5 million
Total
Number of Facilities
13
58
31
60
45
207
Percentage
6%
28%
15%
29%
22%
100%°
a Includes CWT revenue and revenue from sales of recovered product.
b Data are scaled up to account for entire universe of commercial CWT facilities.
0 Does not sum to 100 percent because of rounding.
3.1.4.4 Baseline Profitability for CWT Facilities
Profitability is not a relevant measure for noncommercial facilities, which are
assumed to be treated as cost centers by their companies. EPA's analysis assumes that
noncommercial CWT operations are not expected to make a profit, any more than a
centralized accounting or legal department is expected to make a profit. Impacts associated
with compliance costs for noncommercial facilities will be incurred at the company level.
Thus, a company-level financial analysis was performed for these facilities, including an
examination of the impacts on company profits. The baseline profits from CWT operations
3-14
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DRAFT
for commercial facilities are described in a frequency distribution in Table 3-9. These profits
range from a loss of $8.0 million to a profit of $375 million.
Table 3-9. Baseline Profits at Commercial CWT Facilities3'"
Profits
< $0.1 million
$0.1 to $1 million
$1 to $2 million
. $2 to $5 million
Over $5 million
Total
Number of Facilities
47
76
29 '
28
27
207
Percentage
23%
37%
14%
14%
13% '
100%c
1 Profits are total revenues minus total costs.
b Data are scaled up to account for entire universe of commercial CWT facilities.
c Does not sum to 100 percent because of rounding.
3.1.4.5 Baseline Conditions for Noncommercial Facilities
Four CWT facilities are classified as being strictly noncommercial or contract
noncommercial. Although they accept waste from off-site for treatment or recovery, they do
not market their CWT services to generators. Instead, their customers are very narrowly
defined. The strictly noncommercial facilities accept waste only from facilities owned by the
same company as their CWT facility. The contract noncommercial facilities accept waste
from a very limited number of adjacent facilities, which they were created to serve. One
facility that accepts some waste from off-site on a commercial basis is being considered
noncommercial for this report, because it is owned by the federal government. For the
purposes of this report, the crucial difference between these facilities and the commercial
facilities is how they are assumed to respqnd to the costs of complying with the CWT
effluent limitations guidelines and standards.
The noncommercial facilities are expected to continue to treat whatever waste their
customers (whether inside their company or contract customers) generate and to pass the
costs of compliance along to their customers. Because strictly noncommercial CWT facilities
3-15
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DRAFT
are generally regarded by their owner companies as providing a service to the rest of the
company, the analysis does not assess impacts at the facility level for them. Rather, the
analysis assumes that added costs will be borne by the company as a whole. The impacts of .
the CWT effluent limitations guidelines and standards on strictly noncommercial facilities
are assessed at the company level. For the companies owning strictly noncommercial
facilities, this will mean that their costs increase by the amount of the costs of compliance
and that their revenues do not increase.
Noncommercial CWT operations typically are treated as a cost center for the
company and may or may not receive explicit revenues or cross-charges in return for their
services. 'Most frequently, the facilities reported that the facility performed CWT services "at
cost" so that revenues from treatment exactly equaled cost Other facilities reported receiving
no revenue for their services. Total cost accounting, which attributes to a production process
all the costs associated with that process, would trace the waste treatment costs back to the
production processes where the waste was generated. Most companies, however, have made
very little progress in adapting theur accounting systems to this approach.
For the contract noncommercial facilities, the customers are not owned by the same
company. Instead, generating companies have created the CWT specifically to treat the
waste they generate. Like the strictly noncommercial facilities, contract noncommercial
CWT facilities treat the waste they receive "at cost" and pass additional costs along to their
customers. Because the customers are different companies, the costs and revenues of
contract noncommercial facilities are both assumed to increase by the amount of the
compliance costs.
At baseline, four CWT facilities are classified as noncommercial. Based on the data
available, EPA has identified one of the facilities as contract noncommercial facilities and
two as strictly noncommercial, plus one federal facility. Among them, the noncommercial
facilities accept 92 million gallons of metal-bearing wastewater per year for treatment and
72 million gallons of organics-bearing wastewater. The companies owning the CWT
facilities have annual sales ranging from $6.0 million to $553 million. For the companies
owning nonfederal noncommercial facilities for which data are available, the median yearly
sales is $177 million.
3-16
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DRAFT
3.1.5 Baseline Market Conditions
This report characterizes the markets for CWT services using questionnaire data and
information gathered in follow-up conversations with facilities and during site visits at
several facilities.
3.1.5.1 Defining Regional Markets
For modeling theimpacts of the regulation on markets for CWT services, this study
divided the contiguous U.S. into six regional CWT markets. In their questionnaire responses,
the facilities indicated that, in general, their customers are located within their own state or in
a few adjacent states. This pattern is 'consistent with predictions of economic geography or
"location theory," which state that heavy, bulky, or fragile materials or materials otherwise
difficult to transport will be traded in localized markets. (Hoover, 1975) wastewater and
concentrated oily or metal-bearing wastes are extremely heavy and bulky. Generators
therefore want to transport waste as short a distance as possible for treatment and are likely to
choose a local CWT facility rather than one located a long distance away, assuming that they
offer equivalent services.
As discussed previously, CWT facilities are widely distributed across the country; for
modeling purposes, the contiguous 48 states were divided into six regions:
• Northeast: CT, DE, MA, MD, ME, NH, NJ, NY, PA, RI, VT
• Northwest: WA, OR, ID, MT, WY
• Southeast: AL, FL, GA, KY, MS, NC, SC, TN, VA, WV
• Southwest: AZ, CA,' CO, NM, NV, UT
• Upper Midwest: IA, IL, IN, MN, MI, NE, ND, OH, SD, WI
• Lower Midwest: AR, KS, LA, MO, OK, TX
This definition of regional markets is a simplification of actual markets. Obviously,
facilities located along the borders of the "regions" designated in this study may compete
with facilities in adjoining regions in addition to competing with facilities in their own
region. The regions were modeled as if they were independent. The presence of other
facilities offering the same CWT services in nearby regions would, however, in reality affect
the structure of the region's markets for CWT services.
3-17
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DRAFT
In reality, there are exceptions to the regional pattern. Highly specialized types of
waste treatment services, such: as precious metals recovery, are offered by only a few
facilities nationwide. Markets for these services may be national. In general, however,
markets for CWT services are regional.
3.1.5.2 Defining Markets for Specific CWT Services
In the market model, facilities are identified as offering one or more of five broad
categories of CWT services:
• metals recovery,
• oils recovery,
• treatment of metal-bearing waste,
• treatment of oily waste, and
• treatment of organic waste.
The first two types of CWT services may result in the production of a salable product. They
also result in the generation of wastewater. Under the general category of wastewater
treatment, facilities may treat any or all of the following: metal-bearing wastewater, oily
wastewater, or organics-bearing wastewater. These three types of wastewater treatment
require different treatment processes and have different prices. Thus, these services are
traded in separate markets. .
As noted above, within the broad types of treatment, considerable variation exists
depending on the specific characteristics of the wastes being treated. Wastes with differing
characteristics may require more treatment chemicals, for example, or more steps in the
treatment process, although the basic overall type of treatment is the same. To reflect the
complexity of these markets, each overall type of treatment or recovery can be broken into as
many as three submarkets, based on the per-gallon cost of treatment. This is based on the
assumption that different per-gallon costs of treatment reflect the different treatments
required by differing waste characteristics. Thus, facilities with similar per-gallon treatment
costs are assumed to treat similar wastes. The modeling approach assumes that each facility
treats waste of a single type within each broad treatment category with a uniform per-gallon
cost of treatment. This modeling approach is a simplification. In fact, different batches of
wastes treated at a single facility vary in type and therefore in cost of treatment. As modeled,
each facility offers at most only a single cost level of each broad treatment category. Data did
3-18
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DRAFT
not permit further detail in the delineation of the types of CWT services offered and their
associated costs at each facility.
As the markets are defined, the number of facilities competing in each market varies
considerably. Table 3-10 presents the number of facilities offering each type of CWT service
by region.
3.1.5.3 Defining Market Structure
Markets in the model are defined as monopoly, duopoly (two sellers), or perfect
competition, depending on the number of sellers. Competitive markets are characterized by
large numbers of suppliers, none of which are able to exert substantial market power. In a
perfectly competitive market, suppliers would decide the most profitable quantity of waste to
treat based on the given market price. Because of the large numbers of CWTs in the oils
recovery and oily wastewater treatment markets, these markets are likely to be perfectly
competitive. Thus, the model was designed so that it would allow either a perfectly
competitive market structure or imperfect competition. In this modeling approach, any
market with more than three sellers is defined as perfectly competitive. In reality, in markets
with fewer than eight or ten sellers, suppliers are probably able to exert some influence on the
outcomes of market negotiations and to consider their rivals' behavior in forming their
decisions related to price and quantity. However, the current modeling approach does not
allow that market structure.
3.1.5.4 Substitutes for CWT Services
The existence of substitutes for CWT services influences the responsiveness of the
demand for CWT services to changes in their price. Non-CWT facilities also produce goods
and services that may be substitutes for the goods and services produced by CWT facilities.
For example, waste-generating facilities may decide to construct treatment units on-site; thus,
on-site waste treatment would be substituted for CWT. Underground injection wells and
other activities that would not be subject to these effluent limitations guidelines and standards
can be substituted for regulated types of CWT. In most of these cases, the non-CWT goods
and services are not perfect substitutes for the goods and services produced by CWT
facilities. Nevertheless, when the cost of CWT-produced commodities increases, some
consumers of these goods and services may choose to substitute the other goods and services,
which are now relatively cheaper.
3-19
-------
DRAFT
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3-21
-------
DRAFT
The increased cost of waste treatment may also induce some demanders of CWT
services to choose another type of substitution. They may modify their processes, essentially
substituting additional capital equipment, materials, and labor upstream in their production
processes for waste treatment, hi other words, some generators may employ pollution
prevention to reduce their demand for CWT services. This type of substitution would result
in smaller quantities of waste being generated per unit of the primary product produced. As
reported in Section 3.1.2, the declining quantity of waste sent off-site for treatment suggests
that pollution prevention is already reducing the demand for CWT services.
3.1.5.5 Baseline Market Prices and Quantities of CWT Services
Table 3-10 also shows the baseline market prices and quantities of CWT services as
defined by the model. As described above, facilities offering CWT services within a region
were grouped into markets according to the type of service offered and the cost of treatment.
For each market, a baseline price was determined. In practice, some facilities price each
batch treated based on laboratory tests on the waste hi the batch, but the model assumes that
all batches treated by a facility hi a given subcategory are similar and would have a single
price. The baseline price depends on the demand elasticity assumed for the market and on
information from the questionnaire, plus comments on the proposal and NO A. The baseline
market quantities are the summed facility quantities as reported in the technical part of the
questionnaire, plus comments on the proposal and NO A.
3.1.6 Company Financial Profile
New effluent lirnitations guidelines and standards for CWT facilities will potentially
affect the companies that own the regulated facilities. The CWT facilities described in
Section 3.1.3 are the location for physical changes hi treatment processes. They are the sites
with plant buildings and equipment where inputs (materials, energy, and labor) are combined
to produce outputs (waste treatment services, recovered metals, organics or oils, and
treatment residuals). Companies that own the CWT facilities are legal business entities that
have the capacity to conduct business transactions and make business decisions that affect the
facility. It is the owners of the companies that will experience the financial impacts of the
regulation.
Potentially affected companies include entities owning facilities that accept waste
from off-site for treatment in CWT processes and that generate wastewater in their waste
treatment process. These facilities are classified as indirect, direct, or zero dischargers.
3-22
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DRAFT
Frequently, the immediate facilities are in turn subsidiaries of larger companies that generate
much of the waste they receive from off-site. The Agency has determined that the
appropriate context for assessing the potential financial impact of the regulation is at the
highest level of corporate ownership.
Questionnaire and NO A comment data were submitted for only 145 of the estimated
211 CWT facilities. The company-level financial profile is based on the companies owning
these 145 facilities, and scaled up to represent the universe of companies owning CWT
facilities. These 145 facilities are owned by 114 individual companies and the federal
government. Company-level information is available for 118 of the 145 CWT facilities for
which the Agency has data. For facilities that responded to the Waste Treatment Industry
Questionnaire, company data are based on their responses to Section M of the questionnaire,
adjusted to 1997 dollars using the producers price index. For facilities identified in the NO A,
company data represent either data provided hi comments on the NOA or data EPA
developed from public financial databases. Four of the 145 facilities are noncommercial,
including a government-owned facility administered by the U.S. Navy. Discussion of the
government-owned facility is omitted from this section. Also omitted is a noncommercial
facility for which no facility or company financial data are available. The 118 facilities with
reliable company data are owned by 87 companies.
For the remaining 27 facilities, for which no reliable company data are available,
EPA, for purposes of this analysis, assumed that company revenues equal the revenues of the
CWT facilities owned by the company. This assumption has several possible consequences
for the analysis, which are described below. These 27 facilities are owned by 27 companies.
Thus, the financial analysis is based on 114 companies.
To obtain an estimate of the universe of companies owning CWT facilities, EPA has
scaled up the responses of the 114 companies for which it has data, using the scaling factors
developed for the NOA data. Companies owning facilities that submitted 308 questionnaires,
and companies owning both NOA and questionnaire facilities, receive a scaling factor of 1.
Companies owning only direct discharging NOA facilities receive a scaling factor of 2.
Companies owning only indirect discharging NOA facilities receive a scaling factor of
1.877551. Companies owning only zero discharge NOA facilities receive a scaling factor of
1.833333. A few companies own both zero and indirect discharging NOA facilities. These
companies receive the scaling factor for the indirect discharging category. Applying these
scaling factors, EPA estimates that 167 companies own the estimated 211 CWT facilities.
3-23
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DRAFT
Table 3-11 presents a size distribution of potentially affected companies and
highlights the effect of assuming company revenues equal CWT revenues for the
27 companies for which no reliable company data are available. The table clearly shows that
the companies with assigned revenues tend to be smaller on average than companies for
which data are available. This may in part be the case because smaller companies are less
likely to be found in published financial databases. It is also possible that some of the
40 companies have sources of revenue beyond their CWT revenues, but the Agency has not
been able to identify those sources or estimate their revenues. Thus, for the 27 companies for
which CWT revenues are assumed to be equal to company revenues, there may be some
underestimation of company revenues.
The assumption that these 27 companies have company revenue equal to facility
revenue may have several consequences. This assumption may understate company revenues
because they may have other revenues for which EPA has no information. If company
revenues are understated, then some of the companies that EPA has classified as small may
be misclassified (as shown in Table 3-11, 23 of the companies that EPA has assumed to have
company revenues equal to facility revenues have revenues of $6 million or less). Finally,
some of the economic impacts of the effluent limitations guidelines and standards may be
overstated. However, EPA has concluded that its assumption, although conservative, is the
most reasonable one to make.
As described above, the Agency scaled up the information on the companies owning
NOA facilities to represent the entire universe of companies owning CWT facilities, using
scaling factors developed to scale up facility-level data from the NOA. While the Agency
recognizes that the scaling is based on facility information and that scaling up the company
data may not be entirely accurate, the Agency believes that the companies owning CWT
facilities with data provide the best source of information about the characteristics of the
companies owning CWT facilities without data. After scaling up, the Agency estimates that
the 211 CWT facilities are owned by 167 companies. Table 3-11 also shows the scaled up
number of companies owning CWTs by baseline revenue categories. It is evident from
comparing the scaled up counts in Table 1 l-3(c) with the unsealed counts in Table 1 l-3(b)
that the companies owning NOA facilities, which are scaled up, are generally smaller than the
questionnaire companies, which are not scaled up. Scaling up the company data increases the
estimated number of small companies by 62 percent, from 51 to 82, while scaling up only
increases the estimated number of companies in the largest size category by 33 percent. The
following discussion uses scaled-up company counts.
3-24 .
-------
DRAFT
Table 3-11. Size Distribution of Potentially Affected Companies
Company Revenues
Number of
Companies
a. Size distribution of companies for which
$6 million or less
$6 to $20 million
$20 to $50 million
$50 to $500 million
Over $500 million
29
52
11
14 .
12
Median
Revenue
Minimum
Revenues
(106 $1997)
Maximum
Revenues
(10* $1997)
the Agency has reliable data
3.1
12.4
37.7
158.0
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0.2
6.2
20.1
62.1. '
661.9
5.7
19.2
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429.1
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b. Sales distribution of all companies, including those for which company revenues are assumed
to equal CWT revenues
$6 million or less
S6 to $20 million
$20 to $50 million
$50 to $500 million
Over $500 million
51
25
11
14
12
2.2
12.4
37.7
158
2,532.0
0.0
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62.1
661.9
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429.0
40,697.0
c. Sales distribution of all companies, scaled up to reflect the universe of companies owning
CWT facilities
$6 million or less
$6 to $20 million
$20 to $50 million
$50 to $500 million
Over $500 million
82
34
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2.0 '
12.1
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40,697.0
Note: Does not include one facility owned by the federal government, and another for which no financial
data are available.
Potentially affected companies range in size from companies with less than $ 100,000
in revenues to companies with over $40 billion in revenues. Eighty-two of 167 companies
3-25
-------
DRAFT
analyzed have sales less than $6 million per year. While EPA is concerned about economic
impacts to all companies owning CWT facilities, impacts to these small companies are of
particular concern. Under the Regulatory Flexibility Act, EPA must prepare a regulatory
flexibility analysis if a regulation will have a significant impact on a substantial number of
small companies. While the number of small companies affected by the CWT effluent
limitations guidelines and standards is relatively small in absolute terms (EPA estimates
fewer than 70 small companies owning direct and indirect dischargers will be affected by the
rule), impacts on individual companies owning CWT facilities may be sizeable.
The two ratios examined in this analysis to determine companies' financial status are
profit margin and return on assets (ROA). They are defined as follows:
Profit Margin = Profit/Revenues
ROA
= Profit/Assets
The profit margin shows what percentage of every sales dollar the firm was able to convert
into net income. This shows how profitable the companies' current operations are. Return
on investment relates net income to total assets, measuring how profitably a firm has used its
assets. Generally, profit data are available for many of the companies owning CWT facilities,
but asset data are not available for the NOA facilities. Thus, the ROA more accurately
reflects baseline company financial performance for the companies owning questionnaire
CWT facilities.
Table 3-12 shows the baseline financial condition of companies owning CWT
facilities. At baseline, companies owning CWT facilities are generally profitable. However,
a total of 12 companies are unprofitable at baseline, and they include companies in all size
categories. Overall profitability appears highest for the smallest and largest companies; the
median profit margin for small companies is 31 percent, and the largest size category of
companies has a median baseline profit margin of approximately 7 percent. For companies
ranging in size from $50 million to $500 million, baseline median profit margins are in the
1 percent range. For companies ranging in size from $20 million to $500 million, baseline
median profit margins are in the 3 percent range.
3-26
-------
DRAFT
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DRAFT
Like profit margin, the return on assets (ROA) varies across size categories, and is
lowest for the $50 million to $500 million size range. Median ROA is highest for companies
with revenues between $20 million and $50 million or with revenues over $500 million.
Companies in the two smallest size categories have median ROAs in the 10 percent range.
3.2 Baseline Environmental Impacts of the CWT Industry
This section focuses on the specific pollutants that originate from CWT facility
effluents and the waterbodies affected by these pollutants. We characterize these pollutants
and the affected streams reaches.
3.2.1 Pollutants Discharged
Over 100 hazardous chemical compounds have been detected in the discharges from
the 119 modeled CWT facilities. These compounds include inorganic compounds such as
arsenic, chromium, and lead, as well as organic compounds such as benzene and toluene.
Table 3-13 lists each of the 102 detected chemicals and provides information about their
toxicity. Three of the chemicals are known to be human carcinogens and another 21 are
considered probable or possible carcinogens. Almost half of the chemicals are considered
systemic toxicants for humans. That is, evidence .shows that above certain thresholds of
exposure they have the potential to damage human health, including neurological,
immunological, circulatory, or respiratory effects. These exposure thresholds are represented
by the reference dose (RED) values reported in Table 3-13. Section 9.4.2.3 provides more
details on the human health effects of these chemicals.
i
In addition to human health effects, a majority of the chemicals are considered
hazardous to aquatic life. To protect aquatic species from potentially lethal chronic and acute
exposures, EPA has established pollutant-specific water quality criteria. As reported in
Table 3-13, these are expressed as maximum allowable in-stream concentrations. EPA has
established similar criteria for the. protection human health, which are also reported in
Table 3-13.
3.2.2 Affected Streams and Reaches
To analyze water quality impacts, waterbodies have been broken down into discrete
geographical segments known as a "reaches." A river network is typically made up of several
branches of rivers and streams that come together at various confluence points. In such a
3-28
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DRAFT
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3-33
-------
DRAFT
network, reaches are defined as the river or stream segments lying between each of these
confluence points. For wider bodies of water, a reach is defined as a section of shoreline
(EPA, 1994c). Reaches in the U.S. average approximately 10 miles in length. This study has
modeled water quality for the reaches affected by pollutants originating from CWT effluents.
When data were insufficient for the receiving stream, water quality was modeled for the
closest downstream reach with available data.
Table 3-14 provides general characteristics of the affected stream segments, or
reaches. The affected reaches are located throughout the country, primarily hi urban areas.
The largest concentrations are found in the northeastern, midwestern, and southeastern
regions of the U.S. The majority of the reaches are affected by dischargers in the oils
subcategory (59 reaches), followed by the metals subcategory (41 reaches) and the organics
subcategory (19 reaches). The sum of the affected reaches in each of these subcategories may
be greater than the total number of affected reaches because some reaches receive discharges
from more than one subcategory; therefore, they may be included in more than one of the
subcategory totals.
Table 3-14 also provides one indicator of the current level of water quality in these
reaches. Twenty-two of the reaches are on rivers that currently have fish consumption
advisories in place. These advisories are largely due to pollutants such as dioxin,
polychlorinated biphenyl (PCBs), and various pesticides, none of which are in the scope of
the regulation. Consequently, reductions in CWT pollutants cannot be anticipated to change
these advisories. Nevertheless, these advisories do provide an important indication of the
quality and level of use of the reaches.
3.3 References
Hoover, Edgar M. 1975. An Introduction to Regional Economics. 2nd Ed. New York:
Alfred A. Knopf.
U.S. Environmental Protection Agency. Toxics Release Inventory database, 1991-1995.
U.S. Environmental Protection Agency. 1991 Waste Treatment Industry Questionnaire.
Washington, DC: U.S. Environmental Protection Agency.
U.S. Environmental Protection Agency. Notice of Availability Facility Information Sheets.
Washington, DC: U.S. Environmental Protection Agency.
3-34
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DRAFT
Table 3-14. Characteristics of Reaches Receiving Discharges from CWT Facilities
Reaches Affected by
Direct Dischargers
Number of Reaches3
Metals subcategory
Oils subcategory
Organics subcategory
Location .
Northeast
Southeast
Upper Midwest
Lower Midwest
Northwest
Southwest
Reaches in Urban Areas
Fish Consumption Advisories
12
9
3
4
7
0
2
2
1
0
10
6
Reaches Affected
by Indirect
Dischargers
75
32
56
15 -
22
16
18
6
3
10
77
32
Total Affected
Reaches
87 -
41
59
19
29
16
20
8
4
10
87
38
Some reaches receive discharges from more than one subcategory; therefore, the total number of reaches
may be less than the total of the subcategories.
U. S. Environmental Protection Agency. 1995. "Appendix A: 1991 Waste Treatment
Industry Questionnaire, Part 2. Economic and Financial Information." Economic
Impact Analysis of Proposed Effluent Limitations Guidelines and Standards for the
Centralized Waste Treatment Industry.
U.S. Environmental Protection Agency, Office of Water, Office of Wetlands, Oceans, and
Watersheds. 1994c. "EPA Reach File 3.0 Alpha Release (RF-3 Alpha) Technical
Reference."
3-35
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DRAFT
SECTION 4
DESCRIPTION OF THE CWT EFFLUENT LIMITATIONS GUIDELINES AND
STANDARDS AND COMPLIANCE COST ANALYSIS
EPA is proposing effluent limitations guidelines and standards to limit the discharge
of pollutants into navigable waters of the United States by new and existing facilities that
receive industrial waste from off-site for treatment or recovery. The Agency is proposing
controls both for facilities that discharge pollutants directly into surface water and for
facilities that discharge pollutants indirectly by sending them via the sewer system to a
POTW. This section describes the control options examined by the Agency for each
subcategory of the CWT industry and the combined regulatory option the Agency is
proposing.
4.1 Controls for Each Subcategory of the CWT Industry
For the CWT industry, the Agency is proposing effluent limitations guidelines and
standards for direct dischargers based on Best Practicable Control Technology Currently
Available (BPT), Best Conventional Pollutant Control Technology (BCT), Best Available
Technology Economically Achievable (BAT), and New Source Performance Standards
(NSPS) based on the best available control technology that can be demonstrated. For indirect
discharging CWT facilities, EPA is proposing Pretreatment Standards for Existing Sources
(PSES), and Pretreatment Standards for New Sources (PSNS). These technologies are .
described below.1 .
The Agency has identified three subcategories within the CWT. industry, which are
defined in terms of the type of waste received for treatment or recovery. After a thorough
examination of the industry, EPA determined that the type of waste accepted for treatment or
recovery was the only factor of primary significance for subcategorization and that it
encompassed many of the other subcategorization factors (e.g., type of treatment processes
used, nature of wastewater generated). EPA's proposed subcategories are as follows:
'These descriptions are based on the descriptions of the technology basis for the CWT effluent limitations
guidelines and standards as contained in the preamble to the proposed rule.
4-1
-------
DRAFT
• metals subcategory: facilities that treat, recover, or treat and recover metal from
metal-bearing waste, wastewater, or used material received from off-site
• oils subcategory: facilities that treat, recover, or treat and recover oil from oily
waste, wastewater, or used material received from off-site
• organics subcategory: facilities that treat, recover, or treat and recover organics,
from other organic waste, wastewater, or used material received from off-site
In the course of selecting the control technologies to establish as BPT, the Agency
evaluated a number of control options for each subcategory of the CWT industry. The
following section describes the control options examined for each subcategory. Note that in
numbering the control options, higher numbers do not necessarily imply greater stringency.
4.1.1 Metals Subcategory
The Agency examined the following three control options to reduce the discharge of
pollutants from the metals subcategory of the CWT industry (facilities that treat, recover, or
treat and recover metal from metal-bearing waste, wastewater, or used material received from
off-site):2
• Option 4: batch precipitation, liquid-solid separation, secondary precipitation,
and sand filtration
The Agency is proposing Option 4 as BPT.
For metal-bearing waste that includes concentrated cyanide streams, cyanide
destruction is assumed to take place prior to metals treatment. For this subset of the metals
subcategory, the Agency evaluated three alternative control technologies:
• Cyanide Option 2: alkaline chlorination at specific operating conditions
EPA is proposing Cyanide Option 2, alkaline chlorination at specific operating conditions,
for this subset.
2Note that the numbering does not indicate the stringency of the .limitations. To maintain a logical cross-
reference with the previous public and confidential rulemaking records, EPA did not sequentially renumber
the options currently under consideration.
4-2
-------
DRAFT
4.1.2 Oils Subcategory
The Agency examined the following control options to reduce the discharge of
pollutants from the oils subcategory of the CWT industry:
'• Option 8: dissolved air flotation (DAF)
• Option 9: secondary gravity separation and DAF
EPA is proposing BPT, BCT, PSNS, NSPS, and BAT controls for direct discharging
facilities in the oils subcategory based on Oils Option 9 and PSES controls for indirect
discharging facilities in the oils subcategory based on Option 8.
4.1.3 Organics Subcategory
The Agency examined the following two control options to reduce the discharge of
pollutants from the organics subcategory of the CWT industry:
• Option 3: equalization, air stripping with air emissions control, and biological
treatment ;
• Option 4: equalization and biological treatment
EPA is proposing controls based on Option 4 for the organics subcategory.
4.2 Costs of Controls
Based on the information received by EPA from the technical questionnaire, a
detailed monitoring questionnaire, and site visits, the Agency has estimated the costs of
complying with each control options. The costs of complying with a control option are
assumed to affect the cost of treating waste hi a single subcategory. (For example, the costs
of complying with Metals Option 4 are assumed to affect metals recovery and metals
treatment operations only.)
hi estimating the costs of implementing the control options, the Agency made the
conservative assumption that each facility would incur the full costs of installing all the
technology upon which the limits are based, unless that facility already had these controls hi
place. This assumption may lead to an overstatement of costs, because facilities have other
potential ways of achieving compliance, and some of these may be less costly for particular
facilities. Because the Agency cannot anticipate which facilities will choose to use different
approaches (such as pollution prevention or off-site transfer), facilities that currently do not
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have adequate treatment in place are assumed to incur the costs of purchasing, installing, and
operating those controls.
Costs of compliance fall into five broad categories:
• costs of capital equipment required, including installation costs;
• annual O&M costs, including costs of additional labor, energy, and materials;-
• costs of additional land required, if any;
• costs of modifying the facility's RCRA permit, if any; and
• costs of monitoring controls and recordkeeping.
The O&M and monitoring compliance costs associated with a control option are ongoing
costs that will vary with the level of throughput at the facility and will therefore increase the
facility's variable costs of operating each process. The capital, land, and RCRA-modification
costs are one-time, lump-sum expenditures. These costs are annualized over the expected life
of the capital equipment (to represent the annual cost of financing the lump sum cost). The
total annual after-tax treatment costs for a given control option are computed by summing the
annual O&M and monitoring compliance costs and the annualized capital, land, and RCRA-
modification costs, after accounting for the tax savings associated with the costs.
Section 4.2.1 describes the computation of the after-tax annualized costs.
4.2.1 Computing the Annualized Cost of Compliance
EPA employs a cost annualization model to compute the annualized cost of the
capital and other lump-sum costs of the regulation. The cost annualization model
incorporates several financial assumptions, including the type of depreciation schedule the '
facility will use, the timing of the initial investment and the start of operation for the newly
installed controls, and tax savings afforded the firm under federal and state tax laws. These
assumptions are examined in greater detail below.
4.2,1.1 Purpose of 'Cost Annualization
The capital costs associated with the regulation are one-time expenses. However, the
lump-sum expenditures are too large for most CWT facilities to finance out of current
revenues. They will probably be paid for by equity or debt financing. The Agency employs a
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cost annualization model that estimates the annual cost associated with incurring these lump-
sum expenses.
4.2.1.2 Depreciation and Taxes
Depreciation is the allocation of an asset's cost over a period.of time longer than one
year. The cost annualization model uses a modified accelerated cost recovery system
(MACRS) of depreciation. This system of depreciation assumes a 150 percent double-
declining balance method through 8 years, with straight line thereafter, and a 1-year period
between construction and start-up. MACRS offers companies an advantage by allowing
them the ability to write off greater portions of an,investment in early years, when the time
value of money is greater.
A business cannot begin to depreciate a capital investment before it goes into
operation. Approximately 1 year would be required to build and install most of the
equipment considered in the regulatory package. Thus, the cost annualization model assumes
a 1-year delay from the initial capital expenditure to operation. In addition, the indirect
discharging facilities have 3 years to begin complying with the regulation. The depreciable
life of the equipment is 20 years.
In the cost annualization model, the MACRS is used to calculate the portion of the
capital costs that can be written off or depreciated each year. Tax laws permit companies to
deduct capital depreciation as an expense and also to deduct annual costs from revenues prior
to computing the tax they owe. To compute a company's after-tax annualized costs, the
model calculates the present value of these expenses, discounted based on each company's
individual real weighted average cost of capital (WACC).
Estimating the Firm's WACC. The Agency requested firms' WACC in the 1991
Waste Treatment Industry Questionnaire. For firms providing this information, the
questionnaire value was used. For most of the firms owning NO A facilities, little or no
company financial information is available. For these firms, the Agency assumes a WACC
of 7 percent.
For firms with adequate data that did not provide this information on the
questionnaire, EPA estimated the weighted average cost of equity and (after-tax) debt based
on the following formula:
WACC = Wd(l -1) - Kd + We • K^
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•where
WACC
Wd
weighted average cost of capital,
= weighting factor on debt,
t = marginal effective state and federal corporate tax rate,
Kj = cost of debt or interest rate
We = weighting factor on equity, and
Kg = cost (required rate of return) on equity.
This formula implicitly assumes that investments in pollution control equipment are similar
in risk to other projects and that the method of financing for control equipment is similar to
other investments by the company.
To estimate the WACC, values for Kd and Ke were estimated. Marginal costs of
capital, not historical average costs are appropriate hurdle rates for new investments (Bowlin
et al., 1990); however, data are available only for historical costs. EPA estimates the cost of
debt for companies owning CWT facilities based on the average bond yields reported by
Standard and Poors (S&P) (1993). Assuming that companies owning CWT facilities are in
average financial condition at baseline, the Agency used yields for corporate bonds rated
BBB and adjusted the cost of debt downward to reflect tax savings because debt interest is
deductible.
To estimate the cost of equity capital, the Agency used the Capital Asset Pricing
Model, which can be expressed:
where
Ke
Rf
Ke = Rf+P(Rm-Rf)
cost of equity capital,
risk free rate of return,
beta,, a measure of the relative risk of the equity asset, and
the market risk premium.
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For the risk-free rate of return, EPA used the average rate of return on long-term treasury
bonds, 7.52 percent (U.S. Department of Commerce, 1991). EPA assumed the risk premium
is 6 percent, its average historical value (Ibbotson and Associates, 1993) and used the average
beta value for companies with bonds rated BBB to B, 1.41 percent. Weighting factors were
estimated based on actual capital structure for the firms, reflecting an assumption that the
firms' actual capital structure approximates their optimal capital structure.
Estimating the After-Tax Annualized Costs of Controls. EPA used the reported or
estimated WACC to compute the present value of the tax shield that results from these
expenses, including the deductions allowed on depreciation and the noncapital costs, as .
described above. EPA then subtracted the present value of the tax shield from the present
value of the 20-year stream of lump-sum and annual compliance costs. Finally, the resulting
present value was annualized over 20 years, also at the individual company's reported or
estimated WACC.
This annualized after-tax cost is the facility's estimated additional treatment cost per
year required to comply with the control option, which is in turn used to compute the increase
in its per-gallon cost of treatment, which in turn shifts the market supply of CWT services
upward. Because indirect discharging facilities are given extra tune to comply with the
regulation, their present value cost of compliance is effectively lower. (Because of the time
value of money, future expenditures are worth less than present expenditures.)
4.2.2 Costs for Facilities with Both Commercial and Noncommercial Operations
Some CWT facilities treat waste that was generated by a production process at
another facility owned by the same company. Because they do not receive payment from
outside the company, they are referred to as noncommercial facilities. Noncommercial CWT
operations are regarded by owner-companies as cost centers, providing a service to the entire
company (similar to a centralized accounting or personnel department). In some cases,
facilities that treat waste from within the company also provide this service to outside
customers on a commercial basis. Only the commercial share of the facility's CWT flows are
part of the market for CWT services. For facilities that perform both commercial and
noncommercial CWT, compliance costs were modified to assign a share of the costs
proportional to the share of the operation that is commercial. For example, if 90 percent of
the waste treated at a given facility were noncommercial and 10 percent were commercial,
only 10 percent of their compliance costs would be included in the market model, because
only 10 percent of their CWT waste is accepted through a marketed transaction. The other
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90 percent are assumed to be absorbed by the noncommercial operations as a cost of doing
business, which is borne by the company as a whole. On the 1991 Waste Treatment Industry
Questionnaire, EPA requested the quantities of waste accepted from off-site generators under
the same ownership and the quantities from of-site facilities not under the same ownership.
These data were used to compute the commercial share of CWT operations. Eighteen
facilities indicated that their CWT operations were at least in part noncommercial. All of the
oil recovery facilities identified through the NOA were assumed to be entirely commercial.
4.2.3 Compliance Costs for the Control Options
Table 4-1 shows the total compliance costs for each control option for each
subcategory. These include, as described above, the costs of purchasing, installing,
operating, maintaining, and monitoring new control equipment.
Table 4-1 shows the costs that would be incurred by CWT facilities for the metals,
oils, organics subcategories to comply with the control options EPA considered for that
subcategory. The first column of the costs shows the lump-sum capital and land costs under
each control option. These costs are sufficiently large that CWT facilities would generally
not be able to meet them without borrowing or selling stock. The second column of costs
shows the total annualized costs of the regulation, not accounting for tax savings of the
facilities. This column includes annualized capital and land costs, plus annual O&M and
monitoring costs; it approximates the cost of the regulation to society each year. The third
column of costs shows the total annualized costs after accounting for tax savings due to
deductions and depreciation. This cost approximates the annual cost to industry. CWT
facilities that discharge metal pollutants directly to surface water would face increased annual
after-tax costs of $2.19 million under Option 4. Indirect dischargers would incur costs of
approximately $6.25 million under Option 4.
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Table 4-1. Compliance Costs by Subcategory (103 $1997)
Costs
BPT/BAT Costs
Metals 4 with CN
Oils 9 (scaled)
Organics 4
PSES Costs
Metals 4 with CN
Oils 8 (scaled)
Organics 4
Total Costs
Metals 4 with CN
Oils 9,8 (scaled)
Organics 4
Total Capital and
Land Costs
4,069.6
1,168.1 .
80.0
11,111.1
23,833.9 .
17,709.2
15,180.6
25,002.0
17,789.2
Total Annualized Costs
Before Tax Savings
3,544.9
542.4
221.9
11,449.6
14,797.6
4,592.8
14,994.5
15,340.0
4,814.7
Total After-Tax
Annualized Costs
2,191.0
348.2
138.3
6,250.3
8,228.2
2,670.8
8,441.2
8,576.4
2,809.1
The Agency has selected Option 9 for direct-discharging oils facilities, because those
controls are"believed to be more effective in removing pollutants from facilities' wastewater
discharges. For indirect-discharging oils facilities, the Agency has selected Option 8, because
it is less costly and results in fewer adverse economic impacts while still being protective of
human health. Direct discharging oils facilities are estimated to incur costs of $0.3 million,
while indirect-discharging oil facilities are estimated to incur after-tax annualized costs of
$8.2 million. ' " .
For CWT facilities in the organics subcategory Option 4 costs are less than other
options previously considered for both direct and indirect dischargers, whether one considers
lump-sum capital and land costs or annualized costs. Direct discharging organics facilities
are estimated to incur after-tax costs of $0.1 million, while indirect discharging organics
facilities are estimated to incur after-tax costs of $2.67 million.
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In addition to this change, several changes have been made in the estimated costs of
complying with the effluent limitations guidelines and standards. These changes include:
• Eliminating RCRA permit modification costs. EPA has determined that permit
modifications would not be needed because wastewater treatment units subject to
NPDES or pretreatment requirements under the Clean Water Act are exempt from
certain RCRA requirements.
• Modified capital costs for Oils facilities. In response to comments that some oils
facilities might need more storage capacity than had been modeled, EPA has
modified the DAF capital costs to include holding tanks capable of retaining
enough flow volume to operate the minimum size DAF system for one 24-hour
period.
• Modified capital and operating costs for Organics facilities. EPA has modified
the estimated capital and O&m cost estimates for sequencing batch reactor (SBR)
treatment to include costs for nutrient addition and waste heating during cold
operating conditions, as well as including sludge disposal costs.
Commercial CWT facilities incurring these costs will respond by changing their
production behavior. This will change market quantities and, in interaction with market
demand, market prices. The changed market quantities and prices for CWT services will in
turn change the revenues and production behavior of all market CWT facilities, including
those that do not incur compliance costs (because they are zero dischargers or because their
treatment already complies with the standards set in the regulation). Such facilities will
experience higher revenues with no change in their costs, so their profits will increase. The
following sections describe the methodologies used to assess the impacts of these costs on
commercial CWT facilities and on companies owning CWT facilities, including both
commercial or noncommercial CWT facilities.
4.2.4 Compliance Costs of Combined Regulatory Option
Many of the facilities in the CWT industry have operations in more than one
subcategory. The overall cost of the regulation on such facilities can be calculated by
summing the costs they incur in each of the subcategories. The Agency evaluates the total
cost of the rule on the industry by combining the costs of the control option for each
subcategory to create a combined regulatory option. Table 4-2 shows the total compliance
costs of the combined regulatory option chosen by
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Table 4-2. Costs of Complying with the Combined Regulatory Option (103 $1997)a
Costs
Total for all Subcategories
BPT/BAT Costs
PSES Costs
Total Costs
Total Annualized
Total Lump- Costs Before Tax Total After-Tax
Sum Costs Savings Annualized Costs
5,317.6
51,912.5
57,230.2
4,309.2
30,840.0
35,149.2
' 2,677.4
17,149.2
19,826.7
a Costs are scaled up to reflect the estimated universe of CWT facilities.
b After tax annualized costs for the mixed waste subcategory are computed assuming that facilities select the
mixed waste option only if it is less expensive than the subcategory option for at least two subcategory
operations.
the Agency as total compliance cost including the mixed. As described above, the combined
regulatory option comprises Metals 4, Oils 9 for direct dischargers, Oils 8 for indirect
dischargers, and Organics 4.
For the CWT industry as a whole, EPA estimates that the total lump-sum costs, which
include one-time capital and land costs, would be approximately $57 million. Annualized
costs to the industry, after accounting for tax savings afforded CWT facilities due to
depreciation and cost deducibility, are estimated to be approximately $20 million. Because
the cost for CWT facilities could be substantial relative to baseline revenues for their CWT
operations, the Agency has conducted a thorough examination of the potential economic
impacts and benefits of the regulation. The following sections describe the methodology
used for these analyses and the results of the analyses.
4.3 References
Bowlin, Oswald D., John D. Martin, and David F. Scott. 1990. Financial Analysis. Second
Edition. McGraw Hill Publishing Co. p. 229-236.
Ibbotson and Associates. 1993. Stocks, Bonds, Bills and Inflation Yearbook. Chicago, IL:
RG Ibbotson Associates. Chapter 6. .
Standard & Poor's. Security Owner's Stock Guide. Vol. 47, No. 1. January 1993.
U.S. Department of Commerce. Survey of Current Business. Vol. 71, No. 9.. 1991.
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SECTIONS
ECONOMIC IMPACT ANALYSIS METHODOLOGY
EPA analyzed the economic impacts of the effluent limitations guidelines and
standards by comparing the baseline conditions of CWT facilities, companies, and markets
with conditions projected to exist with the regulation in place. This section describes the
analytical methods used to project the with-regulation conditions and estimate these measures
of economic impact and defines the measures of economic impact.
The effluent limitations guidelines and standards will directly increase the costs and
reduce the pollutant discharges of CWT facilities that discharge directly or indirectly to
surface water. Faced with increased costs resulting from the regulation, companies owning
CWT facilities have two basic choices:
• Comply with the regulation and incur the costs: The CWT facility would adjust
its operations to maximize profits under the new market conditions that result as
all CWT facilities adjust to the regulation.
• Cease CWT operations: The facility might close completely or cease its CWT
operations so that the facility is no longer subject to the guidelines or standards.
Economic reasoning argues that owner companies will choose between these responses based
on an assessment of the benefits and costs of the facility to the company under each choice.
For commercial CWT facilities, the benefits to the company of its CWT operations are the
revenues from the CWT operations. Costs to the company include the payments made to the
factors of production (e.g., labor and materials) plus the opportunity costs of self-owned
resources (e.g., the land and capital equipment). With the regulation in place, these costs will
include the costs of complying with the effluent limitations guidelines and standards. The
company will compare the with-regulation revenues of its CWT operations with the with-
regulation costs of its CWT operations and will continue to offer a particular CWT service as
long as its revenues from that operation exceed its costs for that operation.
The Agency also estimated impacts on the markets for CWT services. Because
generators have the option of developing on-site treatment or using pollution prevention
techniques to reduce the quantity of waste they generate and send off-site, some" of them may
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reduce the amount of waste they send to CWTs when the price of CWT services increases. In
economic terms, this means that the demand for CWT services is not perfectly inelastic
(unresponsive to price). Thus, CWT operators will be unable to pass all the costs of
complying with the regulation along to their customers. The increased costs of CWT
operations resulting from the effluent limitations guidelines and standards are expected to
result in higher prices for commercial CWT services and lower quantities of waste treated at
commercial CWTs.
The owner of a noncommercial CWT accrues benefits other than revenues from the
operation of its facility. Noncommercial CWT operations are typically treated as a "cost
center" by the company, similar to centralized personnel or accounting services. Clearly,
however, companies have chosen to develop the capacity to manage their wastes in a
centralized manner because they perceive the benefits of captive treatment to exceed the
costs. These benefits may include lower expected future liability costs/more control over the
costs and scheduling of treatment, and certainty that treatment capacity exists for their
wastes. Owners of noncommercial CWT facilities are assumed to absorb the increased costs
of CWT operations and to continue treating the same quantity of off-site waste as they were
without the effluent limitations in place. Similarly, the small number of contract CWT
facilities, which accept waste from a limited number of customers, are assumed to continue
treating the same quantity of waste as before and to pass along the entire costs of complying
with the regulation to their customers.
As described in Section 3, four CWT facilities were identified as being either strictly
noncommercial (receiving waste only from other off-site facilities owned by the same
company) or contract noncommercial (accepting waste on a contract basis from a limited set
of facilities owned by other companies). These facilities treat off-site waste at cost as a
service to the generating facilities and do not change the quantity of waste they treat in
response to market forces. The impact of the effluent limitations guidelines and standards on
these facilities was measured by examining changes in company profits resulting from the
effluent limitations guidelines and standards, assuming that the company absorbs all the costs
of compliance (so that the company's costs increase while their revenues are unchanged).
In addition to the strictly commercial and noncommercial facilities, there are a few
facilities that accept waste on both a commercial and a noncommercial basis. These facilities
are believed to be basically noncommercial facilities that have some unused treatment
capacity on-site. Rather than let the capacity sit idle, these facilities choose to accept some
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waste from unrelated generators. The Agency's analysis of these facilities combined the
approaches used for the commercial and noncommercial facilities. EPA included their
commercial quantity treated in the market analysis and allocated the cost of complying with
the regulation proportionally to the commercial and noncommercial quantities treated. The
company is assumed to require a somewhat higher price of treatment to continue accepting
the commercial share of the waste, but it is assumed to absorb the cost of compliance fully
for their noncommercial share of waste treated.
5.1 Overview of Analytic Methodology
Depending on the commercial status of the facilities, the Agency employed different
methods to estimate, the economic impacts of the effluent limitations guidelines and standards
on the CWT industry. The impacts on commercial CWTs were estimated using a
mathematical model that integrated facility and market responses for each geographical
region. Impacts on noncommercial and contract CWTs were estimated by looking at changes
in the profitability of the company owning the CWT. Impacts on companies owning CWTs
were estimated using the measures described in Section 3.1.6. The rest of this section
describes the approach used to estimate impacts on commercial CWT facilities and CWT
markets.
The Agency employed an integrated facility-market economic impact model to project
the impact of the effluent limitations guidelines and standards on commercial CWTs. As
described in Section 3, the markets for CWT services are regional. This market
characterization is based on responses to the 1991 Waste Treatment Industry Questionnaire
and is consistent with the theory of economic geography, which predicts that markets for
goods that are heavy or difficult to transport will tend to be local (Hoover, 1975). Separate
economic impact analysis models were developed for each of six CWT market regions,
which were assumed to be independent of one another.
These models combine baseline characterizations of the CWT facilities (e.g.,
quantities treated in each CWT operation, costs and revenues of each CWT operation,
employment) with characterizations of the market structure for each CWT market and
estimated costs of compliance. Using a mathematical simulation of facilities'
decisionmaking and market interactions, EPA estimated the changes in quantities treated in
each CWT operation in response to the facilities' compliance costs. Aggregating across
facilities in each market, the model estimates changes in market supply, changes in market
price and quantity, and changes in consumer and producer surplus. An iterative solution
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algorithm seeks a set of prices and quantities at which all markets and all facilities are in
equilibrium.
The model projects equilibrium changes in market prices and quantities and facility
quantities accepted at individual CWT treatment or recovery operations. Changes in the
quantity of CWT services offered would result in changes in the quantity of inputs used to •
produce these services (most importantly, labor). Thus, the Agency projects changes in
employment at CWT facilities. These changes in employment result in impacts in the
communities where CWT facilities are located, as the local labor markets adjust to changes in
CWT demand for labor. Changes in CWT revenues and costs result in changes in revenues
and costs of the companies owning the CWT facilities and, thus, changes in'their profits.
Estimation of company impacts is discussed in Section 6. Section 5.2 describes in greater
detail the methods used to estimate market and facility impacts of the effluent limitations
guidelines and standards.
5.2 Modeling Market and Facility Impacts
As described above, impacts of the effluent limitations guidelines and standards on
affected markets and facilities were estimated using an integrated mathematical simulation
model that estimates the responses of markets and facilities to the costs of complying with
the regulation. The model integrates market and facility responses so that the estimated
changes in facility quantity, market quantity, and market price are consistent. The models .
used are "comparative static" models. Comparative static models start with the baseline state
of the facilities and markets, and by simulating the responses of facilities to their increased
costs and the interactions of the facilities in the markets, they project the with-regulation state
of the facilities and markets. No attempt was made to simulate the adjustment path from the
baseline to the with-regulation state realistically. Similarly, no attempt was made to project
other changes that might affect CWT markets and facilities between now and when the
regulation is promulgated. Thus, the analysis strictly focuses on changes in CWT facilities,
markets, and companies as a result of the regulation. Strictly speaking, it is a "with and
without" regulation analysis, not a "before and after regulation" analysis. The mathematical
workings of the model are described in greater detail in Appendix D.
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5.2.1 Defining the Markets for CWT Services
Each regional economic impact estimation model includes markets for up to ten
specific types of CWT service. In general, five broad types of CWT service are offered:
metals recovery, metals treatment, oils recovery, oils treatment, and organics treatment.
Within several broad categories, the cost per gallon of waste treated varies widely. This is
believed to reflect differences in the characteristics of the waste being treated, which requires
somewhat different treatments methods. Thus, within those broad types of treatment or
recovery, the CWT services offered are further broken down to reflect differences in cost of
treatment. The twelve possible types of CWT services within each regional market,
delineated based on type of waste and cost of treatment, are
• metals recovery—low-cost,
• metals recovery—medium-cost,
• metals recovery—high-cost,
• metals treatment—low-cost,
• metals treatment—medium-cost,
• metals treatment—high-cost,
• oils recovery—low-cost,
• oils recovery—medium-cost,
• oils recovery—high-cost,
• oils treatment,
• organics treatment—low-cost, and
• organics treatment—high-cost.
The actual number of markets for specific types of CWT services within each CWT region
ranges from seven to ten. Market structures are defined as either monopolistic (one CWT
facility offering the service in the region), duopolistic (two CWTs offering the service within
the region), or perfectly competitive (three or more CWTs offering the service within the
region). EPA developed market models that simulated facility and market behavior in
response to the effluent limitations guidelines and standards.
These models, illustrated in Figure 5-1, estimate a facility's quantity of waste
accepted for treatment given the market price and the facility's costs of treatment.
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Baseline
Conditions
Compliance
Costs
Facility-Level
Model
Market
Model
Demand
Conditions
Prices
Figure 5-1. Integrated Facility-Market Economic Model
Aggregating across all the facilities in a market yields the market quantity of CWT services
supplied at the market price. The interaction of market supply and demand may result in
price changes, which may, in turn, prompt further facility quantity adjustments. For example,
if at a given price the quantity of waste CWTs are willing to treat is less than the quantity of
waste generators want to send off-site for treatment, CWTs will find that they can charge
higher prices for their services. As the price of the CWT service increases, some generators
reduce the quantity they send off-site, and some CWTs are willing to increase the quantity of
waste they accept. Equilibrium is achieved when all the markets and facilities are
simultaneously satisfied with quantity and price. Sections 5.2.2 and 5.2.3 describe the
Agency's model of baseline conditions at market CWT operations and the Agency's model of
facility adjustments in their CWT operations in response to the costs of complying with the
effluent limitations guidelines and standards.
5.2.2 Modeling Facility Baseline Conditions
In general, costs of production may be either fixed or variable, unavoidable or
avoidable. Fixed costs include all costs that do not vary with the quantity produced.
Variable costs include all costs that do vary with quantity treated. Fixed costs include many
types of overhead costs and debt service costs. Variable costs include costs of most inputs
(e.g., labor, materials, energy), which vary as the quantity treated varies. The individual
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CWT processes at each facility were assumed to be characterized by constant average
variable costs (AVC). Average variable cost is defined as the variable cost per unit of
output—in this case, the per-gallon costs of treatment or recovery. That is, facility per-gallon
costs of treatment or recovery in each operation were assumed to be constant up to the
facility's capacity in each treatment or recovery operation. Graphically (see Figure 5-2a), the
AVC curve is shaped like a backward "L." It is horizontal up to capacity, at which quantity it
becomes vertical. Although EPA believes that there is substantial unused capacity in the
CWT industry, this analysis assumes for computational simplicity that, in general, facilities
are operating at or near capacity at baseline. Marginal costs are defined as the additional
costs incurred for an additional unit of output (in this case, the additional costs of treating an
additional gallon of incoming waste). Because the per-gallon variable costs are assumed to
be constant, marginal cost equals average variable cost.
At baseline, facilities maximize their profits from a CWT operation by treating every
gallon for which the additional revenue received (marginal revenue or MR) exceeds the
marginal cost (MC), and no gallons for which the MC exceeds MR. This point is shown at
quantity q* in Figure 5-2a. Figure 5-2a shows CWT services in an imperfectly competitive
market. These facilities face downward-sloping demand and MR curves. Treating an
additional gallon of waste requires charging a lower per-gallon price, both for that gallon and
for all the others treated.
In perfectly competitive markets (illustrated in Figure 5-2b), facilities can treat as
much as they wish without affecting the price they receive. In this case, the market price is
the facility's MR. Facilities offer their CWT service as long as the market price exceeds then-
costs. In perfectly competitive CWT service markets, facilities are assumed, in general, to
operate at capacity. That is, they cannot increase the amount of waste that they treat in
response to a price increase.
5.2.5 Adjustments in Response to the Variable Costs of Complying with the Effluent
Limitations Guidelines and Standards
Complying with the effluent limitations guidelines and standards will increase the
cost of performing CWT operations. After annualizing the capital costs and accounting for
depreciation and other tax savings, EPA divided the after-tax total annualized cost of controls
for each type of waste treatment (metals, oils, or organics) by the total quantity of wastewater
treated to find the incremental per-gallon cost associated with compliance. This additional
cost of treatment increases the CWT's MC as shown in Figure 5-2, shifting the MC curve
5-7 •
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S/gallon
I
AVC' = MC'
AVC = MC
MR
Gallons treated
q*' tf
O . per year
^capacity r
Figure 5-2a. Effects of Compliance on Imperfectly Competitive Markets
from MC to MC'. The facilities must now compare this new higher cost of treating each
additional gallon of waste with the additional revenues they will get for treating an additional
gallon (MR for imperfectly competitive facilities, MR=P for competitive ones). CWTs will
continue to treat waste for which MR > MC'. They will not treat any waste for which
MC'> MR. In each CWT market, these adjustments will result in a decrease in supply, as
shown in Figure 5-3.
The interaction of the reduced with-regulation supply, shown by supply curve S2, with
demand for CWT services that declines as price increases results in an increase in the market
price (from Pj to P^) of CWT services and a decline in the quantity (from Qj to Q2) of waste
treated at CWTs, as illustrated in Figure 5-3. As the market prices adjust upward in response
to reductions in the supply of CWT services, facilities continue to evaluate how much off-site
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AVC'=MC'
AVC = MC
^c
apacity
if P > MC', facility continues to operate at capacity
AVC' = MC'
P = MR
* =
Q .
^--capacity
if P < MC', facility shuts down this CWT operation
Figure 5-2b. Effects of Compliance on Competitive Supplier
5-9
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DRAFT
$/gallon
D
Gallons treated per year
Figure 5-3. Market Adjustments in Response to the CWT Effluent Limitations
Guidelines and Standards
waste to accept for treatment or recovery, which in turn affects market supply. Equilibrium is
achieved when a set of prices and quantities satisfies both suppliers and demanders.
As noted above, Appendix D provides a detailed description of the mathematical
workings of the model in estimating the facility-specific and market adjustments in response
to the effluent limitations guidelines and standards.
5.3 Measures of Economic Impacts
The integrated economic impact analysis model simultaneously estimates several
different measures of economic impact. These are changes in market prices and quantities of
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CWT services, changes in facility-level quantities, costs, and revenues, closures of individual
CWT operations, closures of CWT facilities, and changes in employment at CWT facilities.
5.3.1 Changes in Market Prices and Quantities
In each of the individual markets for a CWT service, the market model estimates the
change in price and total quantity treated with the regulation in effect. The model
simultaneously estimates changes in facility quantity treated and changes in market quantity
treated so that the estimates are consistent.
5.3.2 Facility Impacts
The economic impact model estimates impacts to each CWT operation at each facility
as a result of the costs of complying with the effluent limitation guidelines and standards.
For facilities in competitive CWT markets, the cost increase may result in the closure of a
CWT operation, although the highest-cost operation that does not close with the regulation in
effect may experience some reduction in quantity treated without closing its CWT operation.
For facilities operating in monopoly or duopoly markets, the cost increase may result in a
decrease in the quantity of waste treated at a given facility.
Facilities decide whether to close a CWT operation by comparing the revenues earned
by the operation with the costs incurred. At the with-regulation equilibrium price, facilities
will close a CWT operation if the per-gallon cost of treatment for the operation (including
compliance costs) exceeds the per-gallon revenue received (defined as a process closure). If
all the CWT operations close at a CWT facility, this is defined as a facility closure. Data
from the 1991 Waste Treatment Industry Questionnaire indicated that many CWT facilities
have other, nonregulated activities on-site, including other waste treatment operations and/or
manufacturing operations. These operations are assumed to be unaffected by the regulation.
Although the facility may remain open and may continue these other operations, it is
considered closed for the purposes of the CWT economic impact analysis if all the affected
CWT operations at the facility are projected to close.
It should be noted that some facilities offering their services in CWT markets do not
incur costs due to the regulation. These may be zero dischargers or facilities whose treatment
already achieves the standard set by the regulation. For these facilities, the regulation is
expected to result in increased profits, because the price of their service is rising, but then-
costs are unchanged. In Figure 5-3, the lowest cost facility, which treats quantity QA, is such
a facility. Its costs are not changed as a result of the regulation, but market price adjusts
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DRAFT
upward from P! to P2. Facility profits on this CWT operation are increased by the amount (?!
- Pj) • QA. Because of the assumption that facilities are operating at or near capacity,
facilities facing increased profitability of CWT operations do not increase the quantity of
waste they accept. If in fact they are operating below capacity, these facilities could
potentially increase not only profitability but also market share, by accepting more waste.
.The economic impact model also estimates changes in facility CWT employment
proportional to the change in the quantity of waste accepted for treatment or recovery at the
facility.
5.5.3 Inputs to the Company-Level Analysis
The economic impact of the regulation on companies owning CWT facilities is
assessed by examining changes in company profitability resulting from the regulation. The
facility-specific changes in revenues and costs resulting from compliance were aggregated to
the parent-company level. These changes, predicted by the market model, serve as inputs
into the analysis of the company-level impacts. Changes in facility revenues and costs result
in changes in parent-company revenues and costs, and thus in parent-company profits. In
addition, the acquisition of new capital equipment and the financing arrangements estimated
to be made for purchasing the new capital equipment result in changes in parent-company
assets and liabilities. These data were used to estimate the impacts of compliance with the
regulation on the parent companies owning CWT facilities. This analysis is discussed in
Section 6.
5.3.4 Inputs into the Community Impacts Analysis
Communities hi which commercial CWT facilities are located may be affected
because of changes in employment that may occur at these facilities. If facilities decide to
decrease the quantity of waste they accept for treatment or recovery in response to the
regulatory options, the labor needed to run then- CWT operations is assumed to decrease
proportionally. Thus, the market model estimates market-related changes in employment at
each commercial CWT facility. Overall, CWT employment is projected to decline because
of market adjustments to the regulation.
In addition to market-related changes in employment, the Agency has estimated
changes in CWT employment required to operate the controls associated with the effluent
limitations guidelines and standards. These changes in employment are combined with the
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market-related changes in employment as an input into the analysis of total employment
changes in communities where CWTs are located.
5.4 References
Hoover, Edgar M. 1975. An Introduction to Regional Economics. 2nd Ed. New York: .
Alfred A. Knopf. ,
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SECTION 6
ESTIMATED ECONOMIC IMPACTS OF THE CWT EFFLUENT LIMITATIONS
GUIDELINES AND STANDARDS
This chapter describes the results of the analysis of market, facility, and company
impacts resulting from the Agency's regulatory option:
• Regulatory Option 1: Metals Option 4, Oils Option 9—Direct dischargers, Oils
Option 8—Indirect dischargers, Organics Option 4
6.1 Results of the Market Analysis
The economic model described in Section 5 estimated the changes in market prices
and changes in quantities of CWT treatment and recovery services provided as a result of
regulation. It also estimated equilibrium revenues, costs, profits, and quantities accepted at
the facility level as a result of complying with EPA's regulatory options.
6.1.1 Market Impacts
The market impacts of the effluent limitations guidelines and standards, if
promulgated, would include changes in market prices and quantities in affected CWT
markets. As discussed above, the facilities, in deciding how to respond to the O&M
compliance costs, modify the amount of CWT services they offer, resulting in a decrease in
market supply in most CWT markets. The market model simultaneously finds the solution
for the with-regulation equilibrium market price and quantity and the with-regulation facility
quantities in each market. Table 6-1 shows the percentage changes in prices and quantities
for each of the CWT processes analyzed in the market model. These results reflect national
changes in quantity and the quantity-weighted average price change across the regions. A
price or quantity change in any given region may therefore be lower or higher than reflected
in this table.
Most of the analytical inputs and results shown in this report are reported separately
for BPT/BAT controls and for PSES controls. For the market impacts, however, this is not
6-1
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DRAFT
Table 6-1. Market Impacts of BPT/BAT and PSES Controls
Market
Regulatory Option 1
Metals Recovery— High Cost
Metals Recovery — Medium Cost
Metals Recovery — Low Cost
Metals Wastewater Treatment — High Cost
Metals Wastewater Treatment — Medium Cost
Metals Wastewater Treatment — Low Cost
Oils Recovery — High Cost
Oils Recovery — Medium Cost
Oils Recovery — Low Cost
Oils Wastewater Treatment
Organics Wastewater Treatment — High Cost
Organics Wastewater Treatment — Low Cost
Percentage Change Percentage Change
in Price in Quantity
9.06%
47.60%
1.60%
6.04%
3.15%
4.91%
25.10%
4.09%
6.68%
0.52%
24.00%
2.38%
-12.2%
-7.48%
-0.96%
-533%
-2.09% ,
-3-50%
-10.30%
. -2.07%
-3.08%
-0.23%
-9.86%
-1.11%
appropriate. Market-level impacts cannot be broken into impacts of BPT/BAT controls and
impacts of PSES controls. Because many regional markets include both facilities that are
direct dischargers and facilities that are indirect dischargers, and because the Agency is
expecting to promulgate both types of controls simultaneously, market impacts must be
analyzed and reported based on the combined effects of the BPT/BAT and PSES controls
analyzed together.
Under each broad market category, some regional submarkets are virtually unaffected
by the regulation and others incur significant changes in price and quantity. In all cases, the
market prices of broad types of CWT services are projected to increase and the quantity of
waste treated in CWT processes is projected to fall. Thus, one of the expected features of the
guidelines is a reduction hi the absolute quantity of wastes commercially treated, in addition
to an improvement in the level of treatment.
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DRAFT
Demanders of CWT services may have decreased the quantity of CWT services
demanded either by generating less waste (pollution prevention) or by substituting other
waste management options not affected by this regulation for CWT services. These other
waste management options include on-site waste treatment and off-site waste disposal by
such means as underground injection or incineration. The Agency has assumed that demand
is moderately responsive to changes in price; that is, that a 1 percent change in price results in
a 0.5 percent to 1.5 percent change in quantity demanded.1 If demand in some CWT markets
is less responsive to changes in price than was assumed for this analysis, price increases
would be greater than estimated and quantity decreases would be smaller than estimated. The
converse would be true if demand is more responsive to price than assumed.
6.1.2 Facility Impacts
In addition to the changes in prices and quantities experienced by affected markets for
CWT services, complying with the costs of the control options results in impacts on CWT
facilities. Facilities adjust the quantities of waste accepted for treatment in each treatment
process to maximize their profits with the regulation in effect. At the same time, the cost per
gallon treated and the price received per gallon treated also change. Thus, CWT facilities
experience changes in revenues and costs as a results of the effluent limitations guidelines
and standards. Changes in facility revenues and costs resulting from the market and facility
responses to the effluent limitations guidelines and standards combine to result in changes in
facility profitability. This can be expressed
= dTR-dTC,
where
'•rc = Total Profit
TR = Total Revenue
TC = Total Cost
'See Appendix E of the 1999 proposal economic analysis for a detailed discussion and sensitivity analysis of
demand elasticities in waste treatment markets.
., ' • 6-3
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DRAFT
In some cases, facilities may experience increased profitability for some processes.
This occurs when process revenues increase by more than process costs. Approximately
21 percent of facilities in the CWT industry are zero dischargers and thus incur no costs as a
result of the regulation. If the zero discharging facilities provide services in markets where
some other CWT facilities incur costs, they are likely to be able to charge higher prices for
their services and thus experience increased profits. In some other cases, facilities experience
cost increases that are smaller than their revenue increases. Their profits will also rise. Other
, facilities will incur costs exceeding their increase in revenues and will experience reduced
profitability for some processes. In cases in which projected with-regulation costs per gallon
treated for certain processes are higher than the with-regulation market price, CWT processes
at some facilities may become unprofitable and are projected to close down. Table 6-2 shows
the process closures expected to occur as a result of the regulation, broken down by the
discharge status of the facilities.
Table 6-2. Process Closures at CWT Facilities, by Discharge Status3
Discharge Status
Process Closures
Percentage
Direct dischargers
Indirect dischargers
Zero dischargers
3
15
0
13%
5%
0.0%
aData are scaled up to account for the entire universe of CWT facilities.
As described above, when the with-regulation cost per gallon treated exceeds the
with-regulation price received per gallon of a given treatment or recovery process, that CWT
treatment or recovery process is projected to close. In cases where this occurs in every
process at a CWT facility, that facility'is said to close. (Note: the facility may have other
operations on site, either manufacturing or waste management operations, but if the CWT
operations covered by this regulation are all closed, EPA's economic analysis considers that
CWT facility to have closed.) Table 6-3 shows the facility closures expected to occur as a
result of the regulation, broken down by the discharge status of the facilities.
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DRAFT
Table 6-3. Facility Closures of CWT Facilities, by Discharge Status3
Discharge Status
Direct dischargers
Indirect dischargers
Zero dischargers
Facility Closures
2
15
0
Percentage
14.3%
9.8%
0.0%
aData are scaled up to account for the entire universe of CWT facilities.
6.1.3 Employment Impacts
Changes in employment evaluated in this analysis result from two effects:
• Changes in the quantity of CWT services produced require changes in the quantity
of labor used.
• Labor is required to operate the controls on which the control options and
combined regulatory options are based.
To estimate the changes in employment at CWT facilities from changes in the
quantity of CWT services, the Agency used data provided in the questionnaire about hours of
full-time and part-time employment associated with CWT operations. These data were used
to compute the number of full-time equivalent employees associated with each gallon treated
at each CWT facility at baseline. The percent change in facility employment resulting from
market adjustments is equal to the percent change in the quantity of waste treated at each
CWT facility as a result of the regulation. Table 6-4 shows the estimated changes in
employment resulting from market adjustments in the CWT industry (that is, not including
the second effect noted above), by the discharge status of CWT facilities. These employment
losses are further broken down into losses resulting from process closures and losses
resulting from facility closures. There are additional employment losses at facilities
experiencing no process closures. These losses are included in the total.
Several points should be made about these employment impacts. At present, EPA has
only national estimates of the labor requirements to operate the controls (the second effect
noted above). EPA estimates that, to operate the controls, 97 full-time equivalent employees
would be required nationwide. This represents approximately 21 percent of the estimated job
losses due to market adjustments to the regulation. It is not certain (although it appears
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Table 6-4. Job Losses Resulting from Market Adjustments, by Discharge Status3
Job Losses Due to
Process Closures
Job Losses Due to
Facility Closures
Number Percentage Number Percentage
Total
Job Losses
Number Percentage
Direct dischargers
Indirect dischargers
8
115
0
2%
3%
0%
' 33
266
0
8%
7%
0%
47 '
414
0
11%
11%
0%
a Data are scaled up to account for the entire universe of CWT facilities. Percentages are compared to pre-
compliance employment by discharge status.
likely) that the skills required to operate the pollution control equipment are the same as
those required to operate, the capital equipment the CWT had in place at baseline. Thus,
nearly one-third of the displaced CWT employees could be retained in the industry to operate
the controls. However, the employment gains associated with the controls may not
completely offset the job losses from production decreases at a given plant. For example, if
all the CWT operations at a facility are shut down, no employees would be required to
operate control equipment because it would not be installed. Thus, the fact that complying
with the regulation could require additional CWT employment nationwide may not protect an
individual employee from displacement due to the regulation.
6.1.4 Financial Impacts on Companies Owning CWT Facilities
Costs of compliance for each control option were estimated on a facility level. In
some cases, a parent company owns a single facility, so facility costs equal company costs.
In many cases however, a company owns multiple facilities, each incurring different costs.
Adequate information on baseline .facility- and company-level revenue, and profit were
available for 80 companies. Adequate information on baseline facility- and company-level
revenue and assets were available for only 39 companies. Compliance costs were estimated
for each control option on a facility level and applied those costs to companies as follows: for
companies owning noncommercial facilities, company profits were decreased by the amount
of the estimated compliance costs, because companies were assumed to fully absorb the costs
of compliance at noncommercial facilities. For companies owning commercial facilities,
company costs and revenues were adjusted to reflect their facilities' market responses to the
6-6.
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DRAFT
regulation. To estimate with-regulation company sales, baseline parent company sales were
adjusted to reflect changes in the market prices of CWT services, resulting in changes in
facility (and thus company) revenue. Baseline company profits were adjusted to account for
both the changes in revenue and the changes in cost associated with facility market responses
to the costs of compliance. For all companies having baseline asset data, total assets were
adjusted to reflect purchases of capital equipment and land to comply with the regulatory
options. The results are scaled up according to company scaling factors in order to better
estimate the results of regulation on all potentially affected facilities in the economy. The
scaled up results allow us to extrapolate regulatory effects on the profit margins of 109
companies and the return on investment for 49 companies.
The effects of the regulatory options on companies are evaluated here according to
two indicators of company performance: profit margin and return on investment. Profit
margin is defined as company profit (net income) divided by company revenues. Return on
investment is defined as company profit divided by the value of company assets.
Table 6-5 shows how the combined regulatory option will affect company profit
margins. Overall, we estimate that 38 percent of companies will experience a higher or
unchanged profit margin under the combined regulatory option.
Table 6-6 shows that the combined regulatory option can be expected to result in
lower median company profit margins overall. Companies with revenues less than 6 million
dollars experience a small increase in the median profit margin. Fifty-two percent of
companies fall into that category. Companies in all other size categories experience slight
declines in the size categories' median profit margins under the combined regulatory option.
The regulatory options had erratic effects on the return on investment of affected
companies. The range of return rates increased ten-fold for some company size categories.
Since the number of companies with complete asset information is relatively small, the
aggregate results presented in Table 6-7 are probably more meaningful for analysis than are
the median ROI in Table 6-8. Table 6-7 shows that 56 percent of companies are expected to
experience an increased ROI under the regulatory option.
The seemingly illogical result that many companies experience an increase in profit
margin and ROA as a result of regulation can be explained as follows: While the regulation
causes prices to increase for the entire industry, not all companies must bear the higher costs
of complying with the regulation. Facilities that are already in compliance prior to regulation
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DRAFT
Table 6-5. Estimated Changes in Company Profit Margins under Combined
Regulatory Option by Company Size Category
Baseline Company
Revenues (per year)
Less than S6 million
$6 million to $20 million
S20 million to S50 million
S50 million to $500 million
Over $500 million
Estimated
Number of Firms
with Data
56
19
10
14
11
Profit
Margin
Increased
21
8
4
8
1
Profit
Margin
Unchanged
2
0
0
0
0
Profit
Margin
Decreased
33
11
6
6
10
Table 6-6. Estimated Median Profit Margins under the Combined Regulatory
Option, by Company Size Category
Baseline Company
Revenues (per year)
Less than $6 million
$6 million to $20 million
S20 million to $50 million
$50 million to $500 million
Over $500 million
Estimated
Number of Firms
with Data
56
19
10
14
11
Baseline Median
Profit Margin
30.70%
6.00%
3.87%
1.63%
6.83%
With-Regulation
Median Profit
Margin
7.70%
4.95%
3.65%
2.94%
6.83%
benefit from higher prices without incurring any additional costs, as do zero-dischargers. For
example, out of 44 companies owning zero-discharging facilities, 31 are projected to
experience increased profits, and the remaining 13 are projected to experience no change in
profits as a result of the regulation. Thus, a substantial share of the industry is projected to
experience improved financial status as a result of the regulation.
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Table 6-7. Estimated Changes in Company Return on Investment under the
Combined Regulatory Option, by Company Size Category
Baseline Company Number of
Revenues (per year) Firms
Less than $6 million
$6 million to $20 million
$20 million to $50 million
$50 million to $500 million
Over $500 million
26
15
8
6
7
ROI
Increased
15
2
5
5
0
ROI
Unchanged
0
3
0
0
0
ROI
Decreased
5
8
3
1
' • 5
Table 6-8. Estimated Changes in Median Return on Investment under the Combined
Regulatory Options, by Company Size Category
Baseline Company
Revenues (per year)
Less than $6 million
$6 million to $20 million
$20 million to $50 million
$50 million to $500 million
Over $500 million
Number of Firms"
26 (20)
15(10)
8
6
7
Baseline Median
ROI
7.75%
3.60%
11.07%
2.99%
10.46%,
With-Regulation
494 Median ROI
36.9%
-85.9%
10.56%
27.04%
15.29%
"Number in parentheses indicates the number of firms for which with-regulation ROI could be computed.
The changes in revenues and profits are based on outputs from the market model
based on the final market price. EPA notes that use of the market price in competitive
markets that use a step supply function may overstate post-compliance revenues, particularly
for those facilities at the bottom of the supply curve. EPA also notes that using facility
revenues and costs to represent company revenues and costs for those companies for which
no company data were available probably understates company sales, and overstates the
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DRAFT
number of small businesses. EPA also notes that (as discussed in the preamble) assigning
facilities to different market structures may. overestimate or underestimate impacts in the
market model, which would likewise have an effect on the firm analysis. Finally, EPA notes
that profit margin, as measured in this analysis, is not the same as total profit, hi fact, in the
monopoly market model, profit margin will always go up as costs go up (this is a well-known
result from economic theory) but total profits will always go down because the increased
mark-up is more than offset by the decreased volume of sales. In competitive markets,
profits for low-cost firms may go up, particularly if compliance costs fall more heavily on
their competitors, but total industry profit would be expected to fall. EPA has not analyzed
the effects of the rule on total profits. - .
6.2 Summary
Complying with the CWT effluent limitations guidelines and standards will increase
the cost of waste treatment and recovery operations at CWT facilities. CWT facilities
incurring costs of compliance will require a higher price to accept waste for treatment and
recovery, thus decreasing the supply of CWT services. Market prices for CWT treatment and
recovery services are estimated to increase, and the quantity of waste sent to CWTs are
estimated to decline. CWTs are projected to close 22 treatment or recovery processes for
which the with-regulation costs exceed the with-regulation price so that they are unprofitable
to operate. Seventeen CWT facilities, at which all CWT processes are projected to become
unprofitable, are estimated to close. Nationwide, employment at CWTs may fall by
approximately 461 full tune equivalent employees. Thus, the impacts of the regulation on
some CWT facilities and individual employees are projected to be severe. Overall, however,
incomes for many CWT facilities and many companies that own CWTs are estimated to
increase. These facilities and companies either incur no costs or incur relatively low costs of
compliance, and enjoy the benefit of the increased market prices resulting from the
regulation.
This section has examined the direct impacts of the CWT effluent limitations
guidelines and standards on the CWT facilities, employees, and owner companies. The
following section examines indirect impacts of the guidelines and standards, including
impacts on the communities in which the CWT facilities are located; environmental justice
impacts; and impacts on CWT customers, input suppliers, and inflation.
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SECTION?
OTHER IMPACTS
In addition to the impacts on CWT facilities and markets described in Section 6,
indirect impacts of the CWT effluent limitations guidelines and standards may be felt by
residents of the communities in which the CWTs are located, certain subsets of the
population, and customers and suppliers of CWTs; the impacts may also affect the overall
level of inflation in the economy. This section"examines these impacts. It is important to
note in examining the results presented below that they are not scaled to reflect the universe
of CWT facilities. EPA chose not to scale these impacts because there is no way of knowing
whether communities having CWT facilities and for which EPA has data resemble
communities having CWTs and for which EPA does not have data.
7.1 Community Impacts
In response to the effluent limitations guidelines and standards, commercial CWT
facilities are predicted to modify the quantities of waste they treat. This change in production
will be associated with changes in employment. The changes in employment predicted to
occur as a result of the regulation include direct changes and indirect changes. Direct
changes in employment combine changes in employment associated with the labor needed to
comply with the regulation (generally increases in employment) and changes in employment
associated with market adjustments to the regulation (generally decreases in employment).
Indirect changes in employment are experienced elsewhere in the community as a result of
the changed spending of people affected by the direct changes in employment. Because
noncommercial facilities are expected to continue to treat the same quantity of waste as they
treated at baseline, no market-related reductions in employment are expected to occur at
noncommercial facilities. They may have to hire additional labor to implement controls to
comply with the regulation.
Changes in output and employment at a CWT facility affect not only the welfare of
the individual employees either hired or laid off, but also the communities in which the CWT
facilities are located, because unemployed individuals have less income and spend less in the
community, in addition to perhaps placing additional burdens on community services within
7-1
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DRAFT
the community. Conversely, newly employed individuals spend some of their income in the
community, which increases the incomes and spending of other community residents. Direct
changes in employment thus results in a multiplied community-wide impact. The U.S.
Department of Commerce, Bureau of Economic Analysis (BEA) (1992) publishes estimates
of direct-effect employment multipliers for each state for broad industry categories. These
multipliers estimate the direct total change in employment resulting from one job gained or
lost in each industry category in each state.. These data can be used to estimate the total
community employment impacts resulting from changes in the operations of CWT facilities.
7.1.1 Direct Employment Changes
Direct employment changes resulting from compliance with the effluent limitations
guidelines and standards include facility-specific changes in employment at commercial
CWT facilities that result from their changes hi CWT operations as a result of market
adjustments to the regulation. La addition, direct employment effects of the regulation
include the estimated labor requirements of the control. These labor requirements are
estimated on a national basis and are therefore not included in the community-level analysis.
It should be noted, however, that the increased employment needed to comply with the
regulation will in some cases exceed the jobs lost due to market adjustments. The
community impacts are therefore overestimated in the following analysis.
7.1.1.1 Facility-Specific Changes in Employment Resulting from Market Adjustments
The Agency estimated facility-specific changes in employment as facilities responded
to the costs of complying with the effluent limitations guidelines and standards. As described
in Section 6, the facilities were assumed to adjust employment proportional to the changes in
quantity of waste accepted for treatment or recovery at the facility. These employment
adjustments are in general rather small. Table 7-1 shows a distribution of the changes in
employment associated with market adjustments to the regulation.
These changes in employment must be compared with the increased employment
estimated to be required to comply with the regulation. Nationwide, 97 additional employees
are estimated to be needed at CWT facilities to operate the control equipment assumed to be
installed to comply with the regulation. At some facilities, the net direct change in
employment may be positive. This change is not beneficial to the CWT facilities, of course,
because they are in a sense being forced by the regulation to make the decision to hire
employees that they otherwise would not have needed. From the point of view of the
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Table 7-1. Changes in CWT Employment Resulting from Market Adjustments at
CWT Facilities
Change in Employment
Number of Facilities
BPT/BAT (estimated overall job losses: 43)
No change in employment
Decrease by fewer than 10 jobs
Decrease by more than 10 jobs
PSES (estimated overall job losses: 348)
No change in employment
Decrease by fewer than 10 jobs
Decrease by more than 10 jobs
4
5
1
65
35
7
Note: Data are not scaled to reflect the estimated universe of CWT facilities..
employees and the communities, however, this outcome is good. In many cases, the skills
required to comply with the effluent limitations guidelines and standards are similar to the
skills required to run the basic CWT operations at the facilities. Thus, the employment needs
of the regulation may directly mitigate the job losses due to market adjustments, so many
fewer workers may incur employment disruptions due to the regulation.
7.1.2 Community Employment Impacts
The direct market-related changes in employment at commercial CWT facilities can
be used to estimate changes in total employment in the communities in which the CWT
facilities are located. As noted above, the changed incomes of individuals either hired or laid
off at CWT facilities will result in changes in their spending within the community. This
change, in turn, will result in changes in employment at establishments throughout the
community where the CWT employees transact business. The BEA direct-effect regional
employment multipliers, published for broad industry categories in each state, measure the
change in statewide employment expected to result from a one-job change in employment
(including the initial one job change at the CWT). Table 7-2 provides the direct-effect
regional employment multipliers used to estimate the total change in employment resulting
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Table 7-2. Direct-Effect Regional Multipliers for States in Which CWT Facilities Are
Located
AL
AZ
CA
CO
CT
DE
FL
GA
IA
TL
IN
KS
KY
LA
MA
MD
ME
MI
5.5118
4.3034
5.1316
5.5710
3.2796
3.8990
3.4955
4.0769
3.9978
5.3610
5.3335
5.4007
5.4906
4.9349
3.3633
3.9997
2.8376
3.6638
MN
MO
/MS
MT
NC
NJ
NV
NY
OH
PA
RI
SC
TN
TX
- VA
WA
WI
wv
3.6915
4.5339
5.4638
4.8590
3.6247
3.8339
3.0610
2.9124
5.1695
5.6759
3.2728
3.9489
4.4237
6.5537
4.7204
3.8849
3.4751
5.0514
from the market adjustments to CWT controls. These multipliers range from 2.91 in New
York to 6.55 in Texas and average 4.05 across all states. Thus, overall each one-job direct
change in employment at a CWT facility results in a statewide change in employment of
between three and six jobs. While some of the indirect employment impacts may not be
experienced hi the community in which the CWT is located, EPA assumes that all the
indirect impacts are concentrated there.
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Table 7-3. Changes in Community Employment Resulting from Market Adjustments
at CWT Facilities
Change in Community Employment
Number of Communities
BPT/BAT
Increase or no change
Decrease of less than 1 FTE
Decrease of 1 to 20 FTEs
. Decrease of 20 to 50 FTEs
Decrease by more than 50 FTEs
PSES
Increase or no change
Decrease of less than 1 FTE
Decrease of 1 to 20 FTEs
Decrease of 20 to 50 FTEs
Decrease bv more than 50 FTEs
4
1
1
3
1
65
14
14
11
7
Note: Data are not scaled to reflect estimated universe of CWT facilities.
Table 7-3 is a frequency distribution of the total change in community employment
resulting from the changes in CWT employment reported in Table 7-1. For direct
dischargers, changes in employment range from an increase of less than one full-time
equivalent (FTE) employee to a loss of 79 employees. The median change in community
employment resulting from controls on direct discharging facilities is -0.8 FTEs. For indirect
dischargers, changes in community employment range from a loss of 259 FTE employees to
no change in employment. Because so many indirect dischargers are projected to experience
no change in employment as a result of the market adjustments, the median change in
community employment resulting from controls on indirect dischargers is zero FTEs.
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7.1.3 Measuring the Significance of the Community Employment Impacts
To assess the severity of these impacts on the affected communities, the Agency
employed the most conservative definition of "affected community":
• It is the municipality in which the CWT facility is located, if its population is
greater than 10,000.
• For CWTs located in communities with fewer than 10,000 people, the community
is defined as the county in which the CWT is located (U.S. Department of
Commerce, 19.94).
The Agency compared the estimated change in community employment with the baseline
community employment, where community is defined as described above.
A severe employment impact is estimated to occur if the change in community
employment exceeded 1 percent of the baseline 1995 community employment. In no
community did the change in employment exceed 1 percent of baseline community
employment; therefore, no significant community impacts are predicted to result from the
effluent limitations guidelines and standards. Table 7-4 presents a frequency distribution of
the percentage changes in community employment projected to result from the regulation.
Table 7-4. Community Employment Impacts
Percentage Change in Employment
Number of Communities
BPT/BAT
No change or increase
Decrease by less than 0.2 percent
Decrease by 0.2 to 0.3 percent
PSES
No change or increase
Decrease by less than 0.2 percent
Decrease by 0.2 to 0.3 percent
Decrease by 0.3 to 0.9 percent
4
5
1
63
37
1
2
Note: Data are not scaled to reflect estimated universe of CWT facilities.
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Percentage changes in employment range from a loss of 0.29 percent of baseline
employment to a gain of less than 0.001 percent as a result of the controls on direct
discharging facilities. They range from a loss of 0.67 percent of baseline community
employment to no change in community employment as a result of controls on indirect
discharging facilities. The median change in community employment resulting from the
BPT/BAT controls is -0.001 percent of baseline employment in affected communities. The
median change in community employment resulting from PSES controls is 0 percent of
baseline community employment.
7.2 Distributional Impacts and Environmental Justice
Impacts of the CWT effluent limitations guidelines and standards include both
economic impacts such as lost employment and income and environmental impacts such as
cleaner surface water, with attendant reduced risks from drinking and fish consumption.
Environmental justice reflects the concerns that waste management facilities are more likely
to be located in communities of color or low-income communities, which may not have the
resources or political power to affect the siting decisions. If CWT facilities are located in
such communities, both the economic impacts and the benefits of the CWT effluent
limitations guidelines and standards may be disproportionately experienced by non-Caucasian
or low-income communities.
To examine the distributional impacts and the environmental justice implications of
the regulation, the Agency examined both the community employment impacts and the
benefits of the regulation to see if communities with higher proportions of non-Caucasian or
low-income residents incurred disproportionately high employment impacts or experienced a
greater or smaller than proportional share of the benefits. EPA made the conservative
assumption that all the employment impacts are experienced in the immediate community
where the CWT is located. Thus, distributional impacts of the regulation were evaluated by
examining the ethnic and income characteristics of the communities' populations.
7.2.1 Baseline Characterization of Communities in which CWT Facilities are Located
This section characterizes communities in which CWT facilities are located by
examining two specific population characteristics: the share of the population that is non-
Caucasian and the share of the population with incomes falling below the poverty line. To
determine if communities in which CWT facilities are located pose potential environmental
justice issues, the Agency compared the non-Caucasian and poverty proportions of the
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community populations with those of the states in which the communities are located. This
comparison helps account for differing demographic patterns in different regions of the
country.
7.2.1.1 Non-Caucasian Population
For the United States as a whole, non-Caucasian groups make up 16.8 percent of the
population. For communities in which CWTs are located, the non-Caucasian population
share ranges from less than 1 percent to nearly 90 percent, with a median of 26.8 percent.
Approximately 27 percent of CWT communities have populations that are more than 40
percent non-Caucasian. Table 7-5 shows a frequency distribution of the percentage of the
communities' populations that is non-Caucasian. Figure 7-1 compares CWT community
non-Caucasian population share to state non-Caucasian population share. As the figure
shows, more than 60 percent of the CWT communities have non-Caucasian population shares
exceeding that of the state in which they are located by more than five percentage points.
This indicates that inadequately controlled releases from CWT facilities pose a significant
environmental justice concern. Thus, the Agency examined the changes in pollutant releases
and risks in communities with large proportions of people of color in their populations to
ensure that the CWT regulation is sufficiently protective of these populations. For this
analysis, environmental benefits and economic impacts on 1) communities with populations
of people of color that exceed 30 percent of the total population and 2) communities for
which the community's non-Caucasian population share exceeds state non-Caucasian
population share by more than 5 percentage points were examined to determine if the
projected economic impacts or benefits fall disproportionately on communities of color.
7.2.1.2 Percent of Population -with Incomes Below the Poverty Level
The Agency is also concerned that impacts may fall disproportionately on relatively
low-income communities. To analyze this problem, the Agency examined the share of the
population falling below the poverty level of income. For the United States as a whole,
approximately 13 percent of the population falls below poverty. For CWT communities, the
share of the population with incomes below poverty ranges from 2.5 percent to nearly
35 percent, with a median of 16 percent. Approximately 26 percent of the communities have
20 percent or more of their residents with incomes below poverty. Table 7-6 shows a
frequency distribution of the percentage of communities' populations with incomes below
poverty. The Agency compared CWT communities' poverty share of the population to those
of the states in which they are located to account for regional differences in income levels^
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Table 7-5. Frequency Distribution: Percent Non-Caucasian Population in CWT
Communities
Percent Non-Caucasian
Population
Number of Communities
Percent of Communities
Less than 10 percent
10 to 20 percent
20 to 30 percent
30 to 50 percent
50 percent and above
Tntal
32
16
34
39
24
145
22.1
11.0
23.4
26.9
16.6
100.0
Note: Data are not scaled to reflect estimated universe of CWT facilities. Two communities are omitted due to lack
of data. .
Source: U.S. Department of Commerce, Bureau of the Census. County and City Data Book, 1994. Washington, DC:
U.S. Government Printing Office, 1994.
Within 5
Percentage
Points
20.0%
Less Than
State by >5
Percentage
Points
20.0%
Exceeds
State by >5
Percentage
Points
60.0%
Figure 7-1. Non-Caucasian Share of Community Population Compared to State
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Table 7-6. Frequency Distribution of Percent of Population Falling below Poverty
Percent Below Poverty
Number of Communities
Percent of Communities
Less than 7 percent
7 to 13 percent
13 to 20 percent
20 to 30 percent
30 percent and above
Total
20
33
54
31
7
145
13.8
22.8
37.2
21.4
4.8
100.0
Note: Data are not scaled to reflect the estimated universe of CWT facilities. Two communities are omitted due to
lack of data.
Source: U.S. Department of Commerce, Bureau of the Census. County and City Data Book, 1994. Washington, DC:
U.S. Government Printing Office, 1994.
Figure 7-2 illustrates this comparison. Approximately 38 percent of communities
have poverty population shares significantly (five percentage points or more) higher than
those of the states in which they are located. Only about 10 percent of communities have
significantly lower poverty population shares than the states in which they are located. For
the majority of communities (approximately 52 percent), the community poverty population
share is similar to that for the state in which it is located. For this analysis, the Agency
examined impacts on communities with more than 18 percent of the population below
poverty to determine whether economic impacts or environmental benefits fall
disproportionately on relatively low-income communities.
7.2.2 Distributional Impacts of the CWT Effluent Limitations Guidelines and Standards
EPA examined employment impacts felt by communities to ensure that communities
of color and relatively low income communities are not incurring disproportionately high
impacts. Of the 42 communities experiencing more than one FTE job loss, 29 are
communities that have relatively high non-Caucasian populations, and 15 are communities
with a relatively large share of their populations below the poverty level. Thus, there is some
reason for concern about the equity of the impacts on communities in which CWT facilities
are located. However, the largest percentage change in employment for any community is
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Within 5
Percentage
Points
51.7%
Less Than
State by >5
Percentage
Points
10.3%
I
Exceeds
State by >5
Percentage
Points
37.9%
Figure 7-2. Poverty Share of Community Population Compared to State
-0.67 percent. Because the changes in community employment are so small, EPA does not
believe that significant adverse employment impacts will occur in communities of color or in
communities with a relatively large share of poor residents.
7.2.3 Environmental Justice Implications of the CWT Effluent Limitations Guidelines
and Standards
To assess the environmental justice implications of the CWT regulation, EPA
examined the benefits experienced by communities adjacent to the surface water bodies into
which CWT facilities directly or indirectly discharge their wastewater. These communities
are largely, but not entirely, the same as the communities in which the CWT facilities are
located. EPA assumed that all the benefits of the regulation are experienced by residents of
the counties adjacent to the stream reaches and other surface water that are projected to be
less polluted due to the regulation. Again, communities are of concern for environmental
justice if their population
• is more than 30 percent non-Caucasian,
• has a non-Caucasian share that exceeds the state's non-Caucasian share by 5
percentage points,
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• has more than 18 percent of the population with income below the poverty level,
or
• has a poverty share that exceeds the state's poverty share by 5 percentage points.
EPA identified 81 counties bordering stream reaches or other surface water affected by CWT
direct or indirect discharges. Of the 81 counties, EPA identified 32 where environmental
justice may be of concern because of relatively high non-Caucasian or poor populations.
Seventeen (roughly 40.5 percent) of the 32 counties for which environmental justice is a
potential concern are estimated to experience benefits. Thus, the CWT effluent limitations
guidelines and standards are projected to improve environmental justice by reducing
exposure to pollutants in 17 counties that have relatively high non-Caucasian or poor
populations.
7.3 Indirect Impacts on Customers and Suppliers
Indirect impacts on customers and suppliers occur because the facilities adjust both
their prices and their purchases of inputs in response to the regulation, ha general, the
Agency does not expect these indirect impacts of the CWT effluent limitations guidelines and
standards to be large, although specific customers and/or suppliers may incur significant
impacts.
The total costs incurred by waste generators to purchase CWT services (total CWT
costs) are equivalent to the CWT revenues earned by commercial CWT facilities plus the
operating costs of noncommercial CWT facilities. This amount, which is estimated to be
$664.0 million, represents a very small share of the total costs of manufacturing industries.
Appendix B lists quantities of waste sent off-site for treatment or recovery in 1995, according
to the Toxics Release Inventory, by SIC code. These industries represent most of the
customers of CWTs. To estimate the share of these SIC codes' costs represented by
centralized waste treatment, the Agency used the following formula:
(Total CWT costs)/(Value of shipments for SICs 20-39)
The value of shipments for all manufacturing industries in 1997 is $3,842 billion.(DOCs
1997) This formula may overstate the cost share of CWT services in total industrial costs,
because it uses only manufacturing costs as its base. Nevertheless, it is extremely small, less
than 0.001 percent. This small cost share suggests that increases in CWT prices will not
result hi significant changes in the operating costs of manufacturing industries or in the prices
of goods and services whose production generates the demand for CWT services. It should
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be noted, however, that while the costs of CWT services are a small share of manufacturing
costs overall, the increased price of CWT services resulting from the regulation may result in
significant impacts for individual waste generators or individual input suppliers. It is not
possible for the Agency to isolate these individual impacts.
Because the CWT industry is relatively small, changes in its demand for inputs is not
expected to have a significant impact on input prices. The inputs to the production of CWT
services include labor, chemicals, and energy. Impacts on labor are discussed above. The
chemicals used by CWTs in treatment or recovery operations are also used hi many chemical
manufacturing activities. In general, CWTs represent a small share of the demand for these
chemicals. Thus, the CWT regulation is not expected to result in significant impacts on
suppliers of these chemicals. Likewise, CWTs' demand for energy is a small share of
industrial demand for most utilities. Thus, the CWT regulation is not expected to have a
significant impact on energy suppliers.
7.4 Impacts on Inflation
The Agency does not expect the CWT effluent limitations guidelines and standards to
result hi significant impacts on inflation. The prices of CWT services are expected to
increase, in some cases substantially. This increase in CWT prices increases the cost of
production for generators demanding CWT services. This, in turn, may cause them to
increase their prices. However, because the cost of CWT services is generally a small share
of the total cost of production for most manufacturing industries, as discussed in the
preceding section, the Agency does not anticipate significant increases in the prices of
manufactured commodities whose production results in the generation of the wastes managed
at CWT facilities. Thus, no overall inflationary pressure is expected to result from the
regulation.
7.5 References
U.S. Department of Commerce, Economics and Statistics Administration, Bureau of the
Census. 1994. City and County Data Book, 1994. Washington, DC: U.S.
Government Printing Office.
U.S. Department of Commerce, Economics and Statistics Administration, Bureau of the
Census. 1997. Statistical Abstract of the United States. Washington, DC: U.S.
Government Printing Office.
U.S. Department of Commerce, U.S.Census Bureau, 1997 Economic Census: Summary
Statistics for the United States, 1997-NAICS Basis. Sales, receipts, or shipments for
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Manufacturing Industries, .
Accessed April 27,2000.
U.S. Department of Commerce, Economics and Statistics Administration, Bureau of
Economic Analysis^ May 1992. Regional Multipliers: A User Handbook for the
Regional Input-Output Modeling System (RIMS II).
U.S. Department of Labor, Bureau of Labor Statistics. Producer Price Index-Commodities.
Series ID: WPUOOOOOOOO, All Commodities. . Data extracted on September 11, 1998.
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SECTION 8
FINAL REGULATORY FLEXIBILITY ANALYSIS
This section considers the effects that the final CWT effluent limitations guidelines
and pretreatment standards may have on small businesses in the CWT industry.
8.1 The Regulatory Flexibility Act (RFA) as Amended by the Small Business
Regulatory Enforcement Fairness Act (SBREFA)
. Under the Regulatory Flexibility Act (RFA), 5 U. S.C. 601 et seq., as amended by the
Small Business Regulatory Enforcement Fairness Act (SBREFA), EPA generally is required
to prepare a regulatory flexibility analysis describing the impact of the regulatory action on
small entities as part of rulemaking. This rule may have significant economic impact on a
substantial number of small entities, and thus EPA has prepared this Final Regulatory
Flexibility Analysis (FRFA). .
In addition to the preparation of an analysis, the RFA, as amended by the Small
Business Regulatory Enforcement Fairness Act (SBREFA), imposes certain responsibilities
on EPA when it proposes rules that may have a significant impact on a substantial number of
small entities. These include requirements to consult with representatives of small entities
about the proposed rule. The statute requires that, where EPA has prepared an initial RFA,
EPA must convene a Small Business Advocacy Review (SBAR) panel for the proposed rule
to seek the advice and recommendations of small entities concerning the rule. The panel is
composed of employees from EPA, the Office of Information and Regulatory Affairs within
the Office of Management and Budget, and the Office of Advocacy of the Small Business
Administration (SBA).
8.2 Initial Assessment
During development of this rule, EPA undertook a preliminary assessment to
determine the economic effect on small entities of the options being considered for its, 1999
proposed limitations and standards. Based on this initial eyaluation, EPA concluded that, if
EPA adopted limitations and standards based on some of the options being considered, the
impact on some small CWT companies might be significant. As discussed below, this would
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be particularly true with respect to CWT facilities that treated oily waste. Most of the small
businesses potentially affected by the proposal would be found in this subcategory. While the
total number of small businesses engaged in CWT operations was not large—EPA currently
estimates that nationally, there are 63 small businesses that own discharging CWT
facilities—the potential costs for over 70 percent of these companies would have exceeded
3 percent of their revenue (without adjusting for any potential for the CWTs to pass through
increased costs of operations to their customers).
Given that EPA's assessment showed several of the proposed options would have
economic effects described above, EPA decided to prepare an IRFA. In addition, in
November 1997, EPA convened a SBAR Panel for this proposed rule to collect the advice
and recommendation of small entity representatives (SERs) of CWT businesses that would be
affected by the proposal.
8.3 The Final Regulatory Flexibility Analysis
The RFA requires EPA to address the following when completing a FRF A: (1)
provide a succinct statement of the need for, and objectives of, the rule; (2) provide a
summary of the significant issues raised by the public comments on the Initial Regulatory
Flexibility Analysis (IRFA), a summary of EPA's assessment of those issues, and a statement
of any changes made to the proposed rule as a result of those comments; (3) describe the
types and number of small entities to which the rule will apply, or an explanation why no
estimate is available; (4) describe the reporting, recordkeeping, and other compliance
requirements of the rule, including an estimate of tile classes of small entities which will be
subject to the rule and the type of professional skills needed to prepare the report or record;
and (5) describe the steps EPA has taken to minimize the significant impact on small entities
consistent with the stated objectives of the applicable statutes, including a statement of the
factual, policy, and legal reasons why EPA selected the alternative it did in the final rule and
why the other significant alternatives to the rule that EPA considered which affect the impact
on small entities were rejected.
8.3.1 Reason, Objectives, and Legal Basis for the Regulation
A detailed discussion of the reason for the regulation is presented in Section V of the
1999 preamble (64 FR 2293-2295) and the response to comment document (see responses to
Need For Regulation). A summary may also be found in Section 9.1.2. A detailed discussion
of the objectives and legal basis for the rule is presented in Sections I and n of the preamble
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to the final rule and Chapter 1 of the final development document supporting the rule (EPA,
2000). Very briefly, the Clean Water Aet requires EPA to establish effluent limitations
guidelines and standards to control pollutant discharges to the nation's waters. The CWT
industry is not currently subject to national standards that provide for an adequate level of
control.
8.3.2 Significant Comments on the IRFA
The significant comments on the IRFA all addressed the following regulatory
alternatives: exemptions for small businesses, exemptions based on flow cutoffs, reduced
monitoring frequency for small businesses, and the use of an indicator parameter for
compliance monitoring. These alternatives are discussed more fully in Section 8.3.6 and
Section IV of the preamble to the final rule.
Most cornmenters who discussed the small business exemptions, the flow cutoffs, and
the reduced monitoring alternatives were opposed to them. Some commenters argued that
revenue, in particular, was a poor basis for a regulatory exemption because business size is
irrelevant to the impact of a facility's discharges. One commenter also argued that
companies could manipulate their corporate structure in order to take advantage of the
exemption. Further, another commenter expressed .concern over the burden of verifying and
maintaining the confidentiality of the economic information provided by facilities claiming
small business status. Most commenters who discussed the flow exemptions also opposed
them, arguing that wastewater flow and environmental impact of a CWT are not necessarily
related (i.e., the amount of pollutants in wastewater is not a function solely of the volume of
wastes the facility receives). Also, commenters noted that exempted facilities could operate at
a fraction of the cost since they would not have to meet the limitations and standards. Such
facilities would capture more market share, leading to more wastes going to a POTW
untreated.
Commenters also opposed the reduced monitoring option. These commenters stated
that control authorities should continue to establish monitoring frequencies on a case-by-case
basis, taking into account the probable impact of the discharge to surface waters or a POTW,
the compliance history of the facility, and other relevant factors. They also shared similar
concerns about using firm economic information as a regulatory basis to those commenters
on the small business exemption.
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Many commenters responded on the subject of indicator parameters, with essentially
an equivalent number opposing and favoring the use of an indicator parameter for indirect
discharging oils subcategory facilities. Commenters that did not support the use of SGT-
HEM or HEM as indicator pollutants raised a number of technical concerns. The
commenters that supported their use cited the decreased analytical costs and the wide range
of organic compounds that can be measured with these analyses.
EPA shared the concerns of some of these commenters. In the final rule, EPA is not
adopting any of these alternatives, but is taking steps to minimize the impacts on small
businesses (see XTV.B.2.e of the preamble to the final rule). See Section IV of the preamble
to the final rule for more detail on the comments, EPA's responses to those- comments, and
EPA's justification for rejecting these options. EPA's detailed responses to these comments,
and the comments themselves, are contained in the Comment Response Document (DCN
xxx) in response categories SBREFA, Small Business, and Indicator Parameters.
5.3.5 Description and Estimation of Number of Small Entities to Which the Regulation
WillApply
The RFA defines a "small entity"as a small non-for-profit organization, small
governmental jurisdiction, or small business. The small entities subject to this rule are small
businesses. There are no nonprofit organizations or small governmental operations that
operate CWT facilities. In general, the SBA, for specific industries, establishes size
standards to define small businesses by number of employees or amount of revenues. These
size standards vary by SIC code. Over 70 percent of the CWTs responding to the Waste
Industry Questionnaire indicated an SIC code of 4953, "Refuse Systems" (see Table 3-4).
For this SIC code, SBA defines a small business as one receiving less than $6 million/year,
averaged over the most recent three fiscal years (SBA, 1999).
To analyze the impacts of the effluent limitations guidelines and standards on small
companies, EPA compiled data on the companies owning CWT facilities. The company data
come from a variety of sources (see Section 2). These include the 1991 Waste Treatment
Industry Questionnaire and public comments on the 1995 proposal and the Notice of Data
Availability. EPA obtained other financial data were collected from publicly available
sources. Questionnaire responses, generally referring to 1989 company financial conditions,
have been adjusted to 1997 dollars. EPA collected data from other sources for 1995 and
adjusted these data to 1997 dollars. During the years since these data were collected, there
may have been considerable change in the ownership of facilities and the financial status of
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companies. In fact, EPA has information that, due to consolidations in the CWT industry,
some of the CWT businesses counted as small businesses (based on 1989 or 1995 data) in
this analysis are no longer smallbecause they now have higher revenues or have been
purchased by larger companies. In addition, EPA used facility sales, profits, and assets to
represent owner company sales, profits, and assets for 27 facilities for which company data
were unavailable. For both these reasons, EPA has concluded that its analysis may overstate
the number of small CWT businesses and may understate impacts on small CWT businesses.
However, these data represent the most complete information available for the industry and
represent a consistent baseline.
The CWT industry is composed of an estimated 167 businesses (as discussed in
Section 3, this number is scaled up to reflect the total number of CWT companies). Small
companies make up approximately half of all companies in the CWT industry (an estimated
82 of 167). All of these small companies, except for one, operate single CWT facilities. One
company in the analysis operates two facilities. Sixty-three small companies own
discharging facilities (61 own indirect dischargers and 2 own direct dischargers). Fifty-nine
of these small companies are in the oil treatment/recovery business. The number of
employees at each of these companies ranges from 2 to 115, with a median of 18.
There are no nonprofit organizations or small governmental operations that operate
CWT facilities. Consequently, the FRFA analyzes only small businesses. Based on the $6
million revenue cutoff for for SIC code 4953, there are 82 companies operating CWT
facilities that would be classified as small entities. Sixty-three of these companies own
discharging CWTs that are potentially subject to the limitations and standards.
8.3.4 Description of the Reporting, Recordkeeping, and Other Compliance Requirements
For almost all of the small businesses subject to the final CWT rule, this regulation
does not contain any specific new requirements for monitoring, recordkeeping, or reporting.
Regulations for the existing NPDES and national pretreatment programs already contain
minimum requirements, and control authorities establish the monitoring regime for individual
facilities (see also Section 8.3.6). Consequently, for almost all of the CWT facilities owned
by small businesses, there are similarly no professional skills required to meet any new
requirements. .
However, for CWT facilities that accept waste in more than one CWT subcategory
that elect to comply with the multiple wastestream subcategory limitations or standards, the
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final rule does include new requirements for monitoring, recordkeeping, and reporting.
These requirements and the multiple wastestream subcategory are described in Sections F/.F
and XHI.A.5 of the final preamble. See also §437.41. EPA concluded that CWT facilities
already have the professional skills to meet these new requirements. Based on the
information in EPA's database, only two .CWT facilities owned by small businesses may be
subject to these new requirements.
5.5.5 Identification of Relevant Federal Rules that May Duplicate, Overlap, or Conflict
with the Regulation
All direct CWT dischargers must already comply with regulations associated with
wastewater permits, and all indirect dischargers are regulated by local limits and pretreatment
provisions. The SBREFA Small Business Advocacy Review Panel did not identify any
federal rules that duplicate or interfere with the requirements of the effluent limitations
guidelines and standards (EPA, 1998b).
8.3.6 Significant Regulatory Alternatives
EPA considered a number of measures to mitigate the effect of the regulation on
small businesses.
(a.)
Relief from monitoring requirements. EPA assumed, in estimating the costs and
impacts of the regulations, that CWT facilities would monitor at the frequencies used
to generate the limits.! EPA's NPDES and pretreatment program regulations require
monitoring by both direct and indirect dischargers to demonstrate compliance with
discharge limitations and pretreatment standards with the frequency of monitoring
established on a case-by-ease basis dependent on the nature and effect of the
discharge but in no case less than once a year for direct dischargers and twice a year
for indirect dischargers. Local control authorities, under these regulations, have
considerable discretion in determining the frequency of monitoring and may establish
more frequent monitoring than used by EPA to establish the limits.
Because a significant portion of the costs of complying with CWT limitations and
standards is related to monitoring costs, EPA examined approaches to reduce these
costs. EPA considered two options. The first was the use of an indicator parameter
as a surrogate for regulated organic pollutants in the oils subcategory. Under this first
option, instead of being required to monitor for a series of organic pollutants, the
discharger would only need to measure the one indicator parameter. The second
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option was for EPA to develop limits based on a reduced monitoring regime for small
businesses (which would have resulted in less stringent monthly-maximum limits).
This second option could have been combined with the first.- The preamble to the
final rule explains why EPA rejected both options in Section IV.
(b.) Other regulatory relief for indirect dischargers and oily waste treaters. The bulk of
small CWT businesses are indirectly discharging oily waste facilities. Among the
other relief measures the Agency considered are the following:
• Whether the scope of the rule should be limited to CWT facilities other than small
businesses. Whether the scope of the rule should be confined to facilities with
flows greater than 3.5 million gallon per year (or 7 million gallons per year).
Section 8.4 analyzes these options.
• Pretreatment standards for oily waste treaters based on a less costly treatment
option (emulsion breaking and secondary gravity separation) than dissolved air
flotation. This treatment option is discussed with the other technology options
considered for the oils subcategory as the basis for today's rule in Section
IX.B.1 .ii of the preamble to the 1999 proposal.
• Development of a streamlined procedure for obtaining a variance from categorical
pretreatment standards through group applications. The CWA authorizes EPA to
grant a variance from categorical pretreatment standards for facilities that, under
specific circumstances, establish that their facility is "fundamentally different"
with respect to the factors considered in establishing the categorical standard.
EPA discusses this relief option in Section XTV.C of the preamble to the 1999
proposal.
(c.) New source performance standards for metal-bearing waste treaters. EPA based its
assessment of the technology chosen as the basis for new source performance
standards (NSPS) and pretreatment standards for new sources (PSNS) on an analysis
for existing sources. There were suggestions that this approach may not accurately
reflect the costs and effluent reductions for new sources. EPA has therefore examined
the flexibility under the CWA to propose a less stringent option for new sources.
Standards for new sources are addressed in Sections VTH.E, VHI.F, and XI.H of the
preamble to the final rule.
In addition to examining these targeted options, EPA considered one other general
mitigative measure. The Agency considered less stringent control options for each of the
treatment subcategories than were originally proposed in 1995. EPA rejected all of these less
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stringent control options for the reasons stated in Chapter 9 of the final technical
development document (EPA, 2000).
8.4 Impacts on Small Businesses
This section examines the projected impacts of the final CWT effluent limitations
guidelines and standards on small businesses using the methods described in Section 5. First,
this section discusses the impacts of the final limitations and standards. Then, EPA discusses
the estimated impacts under some of the various regulatory alternatives described in Section
8.3.6.
8.4.1 Estimated Small Business Impacts of the Combined Regulatory Option
Estimated 1997 revenues for the 82 small companies that own CWTs (including zero
dischargers) ranged from about $21,000 to $5,600,000, with a median value of approximately
$2 million. Under EPA's analysis, 53 of the 63 small companies that own discharging
facilities would incur costs exceeding 1 percent of sales, and 30 out of 63 would incur costs
exceeding 3 percent of sales.
Because the cost-to-sales comparison does not take into account many factors (such
as the ability of CWTs to pass costs along to their customers or that post-compliance
revenues may increase for some CWTs), the cost-to-sales comparison is only a crude measure
of impacts on small businesses. EPA therefore examined these impacts using the other
methods described in Section 5 for examining impacts on facilities and firms.
Out of 56 small companies for which the Agency has reliable data on baseline profits,
42 own indirect discharging facilities and two own direct dischargers. Of the small
companies owning indirect dischargers, 31 are projected to experience decreased profit
margins and 11 are projected to have increased profit margins as a result of the regulation.
Median return on assets (ROA) is estimated to increase from over 7 percent to more
than 30 percent for small companies with asset data, as a result of the regulation. Of the 26
small companies with asset data, 23 own indirect dischargers and two own direct dischargers,
while one owns a zero discharging facility. Five small companies experience decreased
ROA, while 15 experience increased ROA.
This analysis indicates that eight small companies would close their CWT operations
as a result of the combined regulatory option. -These closures are estimated to result in the
loss of 162 jobs.
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8.4.2 Impacts of the Small Business Relief Regulatory Options
As noted in Section 8.3.6, EPA examined several criteria for establishing an exclusion
for small businesses such as the volume of wastewater flow, employment, or annual
revenues. The objective was to minimize the impacts on small businesses, still achieve the
environmental benefits, and stay responsive to the Clean Water Act. EPA is defining small
CWT businesses according to the SBA size definition of $6 million in annual revenue, but
considered other criteria that would be easier to implement in practice, such as wastewater
flow. To target relief to small businesses, EPA examined the correlation between these
criteria and the size definition.
Because most CWT facilities have similar numbers of employees regardless of then-
size (i.e., revenue), EPA first eliminated employment as a basis for establishing a small
business exclusion. While EPA also found no correlation between annual volume of
wastewater and the size of a facility, EPA retained this criterion in the 1999 proposal due to
the anticipated ease in implementing an exclusion based on this criterion. However, if an
exclusion based on volume of wastewater had ultimately been selected, the regulation would
have excluded both small and large businesses.
EPA evaluated the economic impacts of the regulatory options suggested to provide
relief to small businesses during the SBREFA panel discussions. The analyzed options were
all based on the combined regulatory option with costs reduced for some facilities the
regulation limited to some facilities. Five relief scenarios were examined:
• Scenario 1: Assume less frequent monitoring requirements on indirect
discharging CWT facilities owned by small businesses.
• Scenario 2: Limiting the scope of the effluent limitations and standards to
indirect discharging facilities that accept hazardous waste and indirect discharging
facilities with flows greater than 3.5 million gallons per year that accept only
nonhazardous waste.
• Scenario 3: Limiting the scope of the effluent limitations and standards to all
indirect discharging facilities with flows greater than 3.5 million gallons per year.
• Scenario 4: Limiting the scope of the effluent limitations and standards to all
indirect discharging facilities that accept hazardous waste and indirect discharging
facilities with flows greater than 7.5 million gallons per year that accept only
nonhazardous waste.
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• Scenarios: Limiting the scope of the effluent limitations and standards to all
CWT facilities not owned by small businesses.
Of the five regulatory scenarios considered to provide relief to small companies, only two,
Scenarios 1 and 5, directly target CWT facilities owned by small companies. The other three
scenarios target CWT facilities that are small in terms of their annual flow of CWT
wastewater discharged. These low flow facilities may or may not be owned by small
companies. The results of these analyses are summarized below. Table 8-1 shows the
number of small businesses incurring costs that exceed 1 percent and 3 percent of company
sales. For comparison, the screening analysis for the combined regulatory option with no
limitations to scope or cost reductions is also presented. Small businesses would incur no
costs at all under Scenario 5 because the regulation would not include them. Under all the
other regulatory scenarios, fewer small businesses would incur significant costs compared to
the combined regulatory option.
Table 8-1. Compliance Cost-to-sales Screening Analysis for Regulatory Scenarios
Designed to Provide Relief to Small Companies
Small Companies with Costs
Exceeding 1 Percent of Sales
Companies Companies
Owning Direct Owning Indirect
Small Companies with Sales
Exceeding 3 Percent of Sales
Companies . Companies
Owning Direct Owning Indirect
Regulatory Scenario Dischargers Dischargers
Combined regulatory option 2 51
Dischargers Dischargers
2 28
with Oils 9
1.
2.
3.
4.
5.
Reduced monitoring for 2 35
small companies
Limit to all hazardous 2 30
and nonhazardous >3.5
mg/y
Limit to >3. 5 mg/y .2 24
Limit to all hazardous 2 23
and nonhazardous >7.5
mg/y
Limit to not small .0 0
companies
2 14
2 19
2 14
2 17
0 0
Note: The results have been scaled to reflect the estimated universe of CWT facilities. Results are unadjusted
for cost pass-through or postcompliance changes in revenue.
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The Agency also estimated the number of potential facility closures and process
closures for small businesses. The results of these analyses are summarized in Table 8-2. All
of the scenarios developed to reduce the burden on small businesses result in somewhat lower
impacts than the combined regulatory option. Scenario 5, which includes no small
businesses, obviously has the greatest effect in reducing the impacts on facilities owned by
small businesses. Reduced monitoring for facilities owned by small businesses reduces
impacts on those facilities and processes only slightly. The third regulatory scenario, which
limits the regulation to facilities with flows greater than 3.5 million gallons per year, also
reduces impacts significantly.
Table 8-2. Impacts on Facilities Owned by Small Businesses
Regulatory Scenario
Process Closures at Facilities Owned
by Small Businesses
Direct Indirect
Discharging Discharging
Facilities Facilities
Closures of Facilities Owned
by Small Businesses
Direct Indirect
Discharging Discharging
Facilities Facilities
Final Rule
1. Reduced monitoring for
small companies
2. Limit to all hazardous
andnonhazardous >3.5
mg/y
3. Limit to >3.5 mg/y
4. Limit to all hazardous
and nonhazardous >7.5
mg/y
5. Limit to not small
companies ,
4
4
0
0
0
0
0
0
0
2
Note: The results have been scaled to reflect the estimated universe of CWT facilities.
.EPA has elsewhere explained why it rejected these alternatives: see Section IV of the
preamble to the final rule. CWT facilities are in the business of treating wastes from other
facilities. As such, they provide an alternative to on-site treatment of industrial wastes. It is
EPA's conclusion that the absence of categorical standards for CWTs has been a major
"loophole" in a national program to control industrial pollution, allowing .wastes to be treated
off-site less effectively than would be required of the same wastes if treated on-site. In fact,
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as noted in Section V.B of the preamble to the 1999 proposal (64 FR 2294-2295), in general,
performance at CWT facilities is uniformly poor when compared to on-site treatment at
categorical facilities.
One of EPA's primary concerns with any of the alternatives that limit the scope of the
rule is that the limited scope encourages such a loophole. If a segment of the industry is not
subject to national regulation, these companies might quickly expand, leading to much
greater discharges within a few years. This tendency would be limited by the flow or size
cut-off itself unless more concentrated wastes are funneled through plants below the cut-off.
In addition, as demonstrated by the survey responses and public comments, almost all CWT
facilities have substantial amounts of unused capacity. Because this industry is extremely
competitive, by limiting the scope of the CWT rule, EPA could actually be encouraging
ineffective treatment while discouraging effective treatment.
In summary, in an effort to mitigate small business impacts and still preserve the
benefits of the rule, EPA considered a variety of potential limitations to the scope of the rule
but found no single, effective solution to incorporate into the final rule.
8.5 References
Small Business Administration. 1999. "Size Standards Used to Define Small Business
Concerns." 13 CFR Part 121. Washington, DC: Small Business Administration.
.
U.S. Environmental Protection Agency. April 1992. EPA Guidelines for Implementing the
Regulatory Flexibility Act. Washington, DC: U.S. Environmental Protection
Agency, Office of Policy, Planning, and Evaluation.
U.S. Environmental Protection Agency. July 27,1998a. "Effluent Limitations Guidelines,
Pretreatment Standards, and New Source Performance Standards' for the Centralized
Waste Treatment Point Source Category." Washington, DC: U.S. Environmental
Protection Agency.
U.S. Environmental Protection Agency. January 23,1998b. Final Report of the SBREFA
Small Business Advocacy Review Panel on EPA's Planned Proposed Rule for Effluent
Limitations Guidelines and Standards for the Centralized Waste Treatment Industry.
Washington, DC: U.S. Environmental Protection Agency.
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U.S. Environmental Protection Agency. 2000. Development Document for Final Effluent
Limitations Guidelines and Standards for the Centralized Waste Treatment Industry.
Washington, DC: U. S. Environmental Protection Agency.
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SECTION 9
COSTS AND BENEFITS OF THE CWT EFFLUENT LIMITATIONS
GUIDELINES AND STANDARDS
Pursuant to Executive Order 12866, this section compares the costs and benefits that
are expected to accrue to society if EPA adopts the proposed CWT effluent limitations
guidelines and standards. To gain an overall understanding of whether adoption of the
proposed regulation will improve society's well-being, the Agency compares the costs that
the proposal would impose on society with any benefits it may confer. This report first
characterizes costs imposed by the regulation and then quantifies and monetizes them
(attaches dollar values to them). Similarly, the study identifies, characterizes and, .to the
extent possible, quantifies and monetizes the benefits. If the benefits exceed the costs,
society will be better off as a result of the regulation. However, and accurate comparison of
benefits and costs is difficult because not all benefits can be quantified and monetized.
9.1 Introduction
EPA's analysis concludes that the proposed effluent limitations guidelines and
standards for the CWT industry will to reduce the discharge of pollutants by at least
167.7 million pounds per year of conventional pollutants and 196.4 million pounds per year
of toxic and nqnconventional pollutants. EPA expects this reduction in pollution to improve
water quality and reduce health risks to exposed individuals. In addition, the improved water
quality will confer benefits on recreational users of the affected water bodies. To obtain these
improvements, the study estimates that CWT facilities will spend $41.4 million (before tax
savings) to implement the BAT and PSES controls. This section of the report examines the
costs and benefits of the regulation in detail, and compares them to the extent feasible, to
determine whether society realizes net benefits from the regulation.
9.1.1 Requirements of Executive Order 12866
Executive Order (EO) 12866 requires that, for significant regulations, the Agency
"shall ...propose or adopt a regulation only upon reasoned determination that the benefits of
the intended regulation justify its costs." Regulations are deemed significant if the regulation
9-1
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• has an annual effect on the economy of $100 million or more or adversely affects
in a material way the economy; a sector of the economy; productivity;
competition; jobs; the environment, public health or safety; or state, local, or tribal
governments or communities;
• creates a serious inconsistency or otherwise interferes with an action taken or
planned by another agency;
• materially alters the budgetary impact of entitlements, grants, user fees, or loan
programs, or the rights and obligations of recipients thereof; or
• raises novel legal or policy issues arising out of legal mandates, the President's
priorities, or the principles set forth in this EO.
While EPA expects the CWT effluent limitations guidelines and standards to cost much less
than $100 million per'year, the regulation will require significant changes in wastewater
treatment for the CWT industry. As a result, the Agency chose to perform an economic
analysis in compliance with the requirements of EO 12866. This order requires an economic
analysis that assesses the benefits and costs anticipated from the regulatory action, together
with a quantification of as many of those benefits and costs as can be quantified, and a
description of the underlying analysis of the benefits and costs. Sections 9.2 and 9.4 present
the Agency's analysis of costs and benefits, respectively.
9.1.2 Need for the Regulation
Congress adopted the CWA to "restore and maintain the chemical, physical, and
biological integrity of the Nation's waters" (Section 101(a), 33 U.S.C. 1251(a)). To achieve
this goal, the CWA prohibits the discharge of pollutants into navigable waters except in
compliance with the statute. The primary means the CWA uses to restore and maintain water
quality is establishing restrictions on the types and amounts of pollutants discharged from
various industrial, commercial, and public sources of wastewater.
Facilities that discharge pollutants directly to surface water must comply with effluent
limitations" in National Pollutant Discharge Elimination System (NPDES) permits. Indirect
discharging facilities, which discharge pollutants to sewers flowing to POTWs, must comply
with pretreatment standards that are established for those pollutants in wastewater from
indirect dischargers, which may pass through or interfere with POTW operations. National
limitations and standards are established by regulation for categories of industrial dischargers
and are based on the degree of control that can be achieved using various levels of pollution
control technology.
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CWT facilities may accept a wide variety of wastes from a wide variety of customers,
wastes classified as hazardous or nonhazardous under RCRA. The adoption of the increased
pollution control measures required by the CWA and RCRA regulation was a significant
factor in the formation and development of the CWT industry. Because facilities that do not
discharge their wastewater are not subject to the requirements of the CWA, many industrial
facilities covered by other effluent limitations and guidelines have made process
•modifications to reduce the volume of wastewater they generate and have chosen to send the
remaining wastewater off-site to a CWT facility for treatment.
EPA believes that any waste transferred to an off-site CWT facility should be treated
to at least the same level as required for the same wastes if treated and discharged on-site at
the manufacturing facility. In the absence of appropriate regulations to ensure at least
comparable or adequate treatment, the CWT facility may inadvertently offer an economic
incentive for increasing the pollutant load to the environment. .
In collecting data to develop the CWT effluent limitations guidelines and standards,
EPA identified a wide variation in the level of treatment provided by CWT facilities. Often,
pollutant removals were poor, sometimes significantly lower than would have been required
had the wastewaters been treated at the site where they were generated. In particular, EPA's
survey indicated that some facilities were employing only the most basic pollution control
equipment and, as a result, achieved low pollutant removals compared to those that could
easily be achieved by using other readily available pollutant control technology. EPA had
difficulty identifying more than a handful of facilities throughout the CWT industry that were
achieving optimal removals. Compliance with the proposed effluent limitations guidelines
and standards would ensure that all waste accepted by CWT facilities is adequately and
appropriately treated prior to discharge.
9.2 Social Cost of the Rule
The effluent limitations guidelines and standards would impose costs on society. The
cost of a regulation should represent its opportunity cost, which is the value of the goods and
services that society foregoes to allocate resources to the pollution control activity. This
section describes EPA's estimate of the CWT effluent limitations guidelines and standards'
cost to society. Because the economic impacts of the regulation were estimated based on
compliance costs after deductions and other tax savings, the computation of social cost
involves summing the costs to producers, consumers, and government (costs that were
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DRAFT
transferred to the taxpayer through the tax provisions of the law but represent part of the cost
of compliance with the regulation).
9.2.1 Aggregate Costs to Consumers and Producers
This analysis computes the social cost of the regulation by summing the costs to
consumers, producers, and government. This section discusses the costs experienced by
producers and consumers, Section 9.2.2 discusses the costs to government.
As discussed in Section 5, the CWT regulation increases the cost of providing CWT
services, thus shifting the industry supply curve upward from B! to S2 in Figure 9-1.1 Markets
respond to these increased costs by increasing market price and reducing the quantity of
waste being treated or recovered in each CWT operation (P2 and Q2 in Figure 9-1). Using a
market-based economic impact model EPA has estimated the with-regulation price and
quantity, P2 and Q2, for each affected CWT market. This analysis then computed the social
costs of the regulation by summing the changes in the net benefits to customers and
producers of CWT services, based on changes in market price. In essence, the demand and
supply curves for CWT services used to generate estimates of P2 and Q2 are now being used,
in turn, as valuation tools, to value the changes in welfare experienced by producers and
consumers of CWT services.
This approach to computing social cost divides society into producers and consumers
of the regulated commodity. In a market environment, consumers and producers of the good
or service derive welfare from a market transaction. The difference between the maximum
price consumers are willing to pay for the commodity and the price they actually pay is
referred to as "consumers' surplus." Consumers' surplus is measured as the area under the
'Figure 9-1 is a simplification of the actual computations made to compute social cost; it is a graphical
representation of social cost in a perfectly competitive market. Several CWT markets are either monopolies
or duopolies; imperfectly competitive firms choose the quantity of CWT services that equates the with-
regulation marginal cost with marginal revenue, not price. Conceptually, the computation of social cost is
independent of market structure. The computation of social cost for imperfectly competitive firms is
discussed in detail in a memorandum to the record (Heller and Fox, 1998).
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Q/t
1. loss in consumers' surplus
2. loss in producers' surplus
3. gain in producers' surplus
P2cfP,
abef
P2ceP,
Total loss in social surplus (social cost) = P2cfP! + abef- P2ceP, = abcf
Figure 9-1. Social Cost Computed as Changes in Social Surplus
demand curve and above the price of the product (P,if at baseline and P2ic after market
adjustment to the regulation). Note that in the case of an intermediate good such as CWT
services, the consumers of the service are in fact producers of other goods and services.
Similarly, the difference between the minimum price producers are willing to accept for a
good and the price they actually receive for it is referred to as "producers' surplus."
Producers' surplus, which is a measure of profits, is measured as the area above the supply
curve up to the price of the product (area Pjfa at baseline and area P2cb with the market
adjustment to the regulation). These two areas can be thought of as consumers' net benefit
from consuming the commodity and producers' net benefit from producing it, respectively,
given the prices and consumption/production rates.
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In Figure 9-1, the intersection of the market demand curve D and baseline market
supply curve St represents the baseline equilibrium, with baseline equilibrium market price P!
and equilibrium market quantity Q^. The higher costs associated with complying with the
CWT effluent limitations .guidelines and standards shift the supply curve up to S2. The with-
regulation market price is P2, and the quantity of CWT services produced is Q2. At the higher
market price and lower market quantity resulting from the market adjustment, consumers'
surplus has decreased by the area P2cfPj. The regulation also affects producers' surplus. The
costs of compliance reduce producers' surplus, while the higher market price increases it,
everything else held equal. Thus, the social cost of the regulation can be computed by
summing • .
•' reductions in consumers' surplus due to increased price and reduced quantity (area
• loss in producers' surplus due to higher costs and lower sales (area befa), and
• increased producers' surplus due to the higher price on remaining production (area
P2ceP,). '
Summing all these areas yields the private social cost of the CWT effluent limitations
guidelines and standards, illustrated by area abcf. For the CWT Combined Regulatory
Option, the estimated social cost to producers and consumers (generators or customers in this
case) is shown in Table 9-1.
Overall, the study projects that CWT effluent limitations guidelines and standards
will cost consumers and suppliers of CWT services approximately $26.0 million. These
costs fall more heavily on the CWT's customers than on the CWT industry. The greater
share of the costs of the CWT regulation fall on the customers of the CWTs, who must pay
significantly higher prices for their.CWT services. The waste recovery and wastewater
treatment costs incurred by CWT customers are expected to increase by $30.1 million.
2This diagram is correct for perfectly competitive markets. The social cost of the regulation in imperfectly
competitive markets is calculated in a similar way. Materials describing how to perform this calculation are
elsewhere in the record.
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Table 9-1. Estimated Aggregate Cost to Consumers and Producers
Social Cost Component
Change in Value
(103 $1997)
Change in Consumer Surplus
Metals Recovery—High Cost
Metals Recovery—Medium Cost
Metals Recovery—Low Cost
Metals Treatment—High Cost
Metals Treatment—Medium Cost
Metals Treatment—Low Cost
Oils Recovery—High Cost
Oils Recovery—Medium Cost
Oils Recovery-—Low Cost
Oils Treatment
Organics Treatment—High Cost
Organics Treatment—Low Cost
Change in Producer Surplus
Sum of Changes in Consumer and Producer Surplus
-$30,137
-$1,614
-$5,431
-$133
-$543
-$473
-$7,598
-$4,226
-$1,296
-$5,960
-$1,104
-$1,326
-$431
$4,140
-$25,997
As shown above, the CWT regulation, overall, increases the profits of the CWT industry by
approximately $4.1 million. Obviously, this does not mean that all CWT facilities, or even
the majority of them, experience increased profits. But some CWT facilities do become more
profitable as a result of the market adjustments to the CWT effluent limitations guidelines
and standards, and those facilities' increased profits outweigh the decreases in profits
experienced by others.
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Traditionally, social cost computations are based on estimated market adjustments to
before-tax compliance costs. Because the computations are based on market adjustments to
after-tax compliance costs, this analysis must include an estimate of the burden to
government, which is discussed in the following section.
9.2.2 Government's Share of Costs
The tax savings afforded CWT facilities in complying with the regulation represent
the cost to governments of the CWT regulation. These costs are transferred from CWTs to
other taxpayers through tax deductions and other tax savings. Even though neither the CWT
industry or its customers, these costs represent a reallocation of society's resources and thus
are part of the opportunity cost of the regulation. Table 9-2 shows the estimated before-tax
and after-tax costs of the regulation and government's share of the costs. Government's total
share of the costs of the regulation is approximately $19.3 million per year.
Table 9-2. Government's Share of Costs
Costs
Annualized Costs
before Tax Savings
(106 $1997)
After-Tax Total
Annualized Costs
(106 $1997)
Government Costs
(106 $1997)
BPT/BAT Costs
PSES Costs
Total Costs
$4.31
S30.8
$35.1
$2.68
$17.1
$19.8
$1.63
$10.7
$19.3
To compute the total social cost of this regulation, the Agency summed the costs to
producers, consumers, and government, as illustrated in Figure 9-2. Overall, the costs to
society of complying with the effluent limitations guidelines and standards include
$26.0 million in costs to producers and consumers, plus $19.3 million in costs to government,
for a total of approximately $45.3 million.
The total annual cost to society of the proposed rule exceeds the total annual facility
cost of compliance (before-tax savings) by approximately $10 million, or'approximately
30 percent. This wedge between compliance costs and social costs results from the market
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Government
$19,300
CWT Owners
and Customer
$25,997
Figure 9-2. Social Cost of the Regulation (103 $1997)
adjustments that take place in imperfectly competitive markets for CWT services. Because
some CWT facilities operate in monopolistic or oligopolistic markets., they enjoy market
power that permits them to increase the market price of their service by more than their costs
have increased due to the regulation. This increases the cost of the regulation to society. The
market-based analysis represents a short- or intermediate-run analysis of the impacts of the
CWT effluent limitations guidelines and standards, as CWT decisions are constrained by
existing waste-treatment capacity at each plant an within each market. It represents a high
estimate of social costs, and probably overstates the burden of the regulation on CWT
customers and understates the burden on CWT owners. Ultimately, the projected increases hi
waste treatment prices should lead to increases hi waste-treatment capacity. Future increases
in waste treatment capacity should reduce the projected increases in regional waste treatment
prices and increase the quantity of waste treated or recycled at CWT facilities. In the longer
run, therefore, CWT customers would be somewhat better off than the model projects, while
existing CWT facilities might be somewhat less profitable.
9.3 Pollutant Reductions
The proposed effluent limitations guidelines and standards for the CWT industry
would reduce pollutant discharges to surface water by-approximately 167.7 million pounds
per year of conventional pollutants and 196.4 million pounds per year of toxic and
nonconventional pollutants. The following section examines the benefits that are estimated
' 9-9
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to result from this reduction in discharges. First, EPA describes the methodology to be used.
Then, benefits are identified and, to the extent possible, quantified and monetized.
9.4 Benefits Assessment
EPA's proposed effluent guidelines for the CWT industry will reduce discharges of
pollutants into several waterways around the country and will also reduce discharges of these
substances to a number of POTWs. As a result, the proposed regulation will lead to
improvements in both the in-stream water quality and the health of ecological systems in the
affected waterbodies. In addition, EPA's evaluation shows that POTWs will experience
reduced sludge disposal costs. .
This section discusses the assessment and valuation of the benefits of the proposed
regulation. First, it presents an overview of the benefits assessment by describing the
conceptual framework that guides the analysis and by outlining the steps necessary for
applying this framework. Then, it discusses the impacts of environmental changes on human
systems and recreational conditions, and it provides monetary estimates associated with these
impacts. Finally, the cost savings for POTWs that receive discharges from CWT facilities
are estimated. As noted below, the benefits analysis is based on a subset of the 149 CWT
facilities for which EPA has information. That is, the benefits are not weighted to represent
the universe of CWTs. Therefore the benefits presented in this chapter, to the extent that they
can be quantified and monetized, cannot be directly compared to the weighted costs presented
in earlier chapters.
9.4.1 Overview of Benefits Assessment Methodology
Two primary types of benefits are expected to result from the proposed regulation:
those resulting from instream water quality improvements and those from cost savings to
POTWs. This section develops a conceptual framework for assessing the benefits of surface
water quality improvements and provides an overview of the cost-saving benefits to POTWs.
9.4.1.1 A Benefits Analysis Paradigm for Water Quality Improvements
To associate economic values with changes in environmental quality, developing a
conceptual framework that incorporates the key interactions between environmental systems
and human systems is necessary. Figure 9-3 depicts such a framework. Figure 9-3(a)
9-10
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DRAFT
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illustrates the damage pathways (i.e., the routes through which pollutant releases into the
environment ultimately affect human welfare). Figure 9-3(b), paralleling the damage
pathways, illustrates the analytical framework (i.e., the steps required for evaluating the
damages and assessing the benefits of reductions in pollutant releases). Each step of the
analytical framework is described below.
Sources and Releases. The first step is to define the affected universe of sources of
the harmful pollutants. In total, EPA has information on 149 unweighted CWT facilities that
will be subject to the regulation. Twelve of these facilities are direct dischargers, discharging
effluent directly into nearby surface water. One hundred and eight of these facilities are
indirect dischargers, discharging their effluent to POTWs. The remaining 29 facilities
dispose of their waste in some way other than discharging it and are considered zero
dischargers. Of these 149 facilities, affected stream segments, or "reaches," were identified _
for 113 CWT facilities, 12 of whom discharge directly to these reaches and the remaining 101
of whom discharge indirectly to 75 reaches through their discharges to POTWs.
Section 3.2.1 describes the pollutants released from these facilities.
Ambient Water Quality and Ecosystem Effects. The second step in the benefits
analysis is to distinguish the environmental systems that receive the pollutants and describe
how each system assimilates, disperses, and is affected by the substances. In this analysis,
the environmental systems of interest are the receiving waterbodies and the aquatic species
residing there. Section 3.2.2 describes the 87 waterbodies that receive discharges (directly or
indirectly) from the 123 modeled CWT facilities. It then describes the results of water
quality modeling for baseline conditions and for each of the regulatory options. Based on
facility pollutant loadings and flow rates in the receiving stream, the water quality model
generates estimates of pollutant concentrations in the surface water. These concentrations are
then compared to EPA-established ambient water quality criteria (AWQC) for aquatic life to
provide indicators of potential ecological damage with and without regulation.
Affected Populations and Activities. The third step in the benefits analysis is to
determine how human populations are exposed to, and affected by, water-related
environmental quality. A fundamental distinction can be made between market and
nonmarket effects. As Figure 9-3 (a) shows," environmental quality affects human welfare by
either through market-based activities or nonmarket activities. On the one hand, individuals
interact with markets as both consumers and as suppliers of factors of production (i.e., labor).
They are ..therefore, indirectly affected by environmental changes that influence market
9-12
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DRAFT
production. For example, consumers will face higher prices for agricultural products when
environmental damages lead to higher costs of production for farmers. On the other hand,
individuals interact more directly with the environment in nonmarket contexts, such as most
outdoor recreational activities.
Table 9-3 lists many of the potential areas of market and nonmarket damages
associated with reductions in water quality. These also represent the primary areas in which
benefits may accrue as a result of the proposed rule. Market activities potentially affected by
water quality include a range of commercial activities that require proximity to or diversion
of surface water. Nonmarket activities include "household production" activities, such as
outdoor recreation, as well'as government/public goods production, such as large-scale
drinking water treatment. Section 9.4.3.2 focuses primarily on fishing activities in the
affected reaches and the level of human exposure to contaminated fish. It also discusses the
other potentially affected activities.
Table 9-3. Human Systems/Activities Affected by Surface Water Quality
Mode of Interaction
Affected Activities
Market
Instream
Near stream
Diversionary
Nonmarket/Household
Instream
Near stream
Diversionary
Nonuse
Government/Public
Diversionary
Commercial fishing, tourism
Tourism
Agriculture, manufacturing .
Fishing (recreational and subsistence), swimming, boating
Residence, hiking, wildlife viewing
Water consumption
Perceptions _
Drinking water treatment and delivery ^^_
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DRAFT
Impacts on Humans. The fourth step in assessing benefits is to determine the
impacts of changes in environmental quality on human systems. The impacts of pollutant
discharges can be traced to behavioral changes and other outcomes related to market and
nonmarket activities. Table 9-4 provides examples of the major market and nonmarket
effects. For example, changes in market production costs, such as costs for commercial
fishing, should have observable effects on product prices and quantities sold in markets.
Table 9-4. Impacts on Humans
Changes in Market Behavior'and Outcomes
• changes in production costs (i.e., supply)
• changes in demand for and price of residential property
Changes in Nonmarket Outcomes and Behaviors
• changes in the quality and pattern of recreation
• changes in human health risk and outcomes
• nonbehavioral changes (i.e., nonuse-related perceptions) •
Nonmarket effects, such as changes in human health or recreational activities, should,
in principle, also be observable (or predictable). As shown in Figure 9-3, impacts that alter
human behavior may result in different affected populations. For example, increases in the
time devoted to recreation may involve increases in angler populations. Other impacts may
not be directly observable. For example, nonusers may benefit simply from the knowledge
that water quality is unproved. This is a real effect of not improved water quality but is not
necessarily observable. Section 9.4.2.3 discusses market and nonmarket impacts in more
detail with particular emphasis on changes in cancer risks to apglers.
Valuation of Impacts. The final step is to translate market and nonmarket impacts
into monetary values that reflect changes in human welfare. The paradigm for relating
human welfare to economic valuation is based on the notion of willingness to pay
(WTP)—an approach which has been widely accepted in the economics literature. This
approach is based on the rather straightforward view that the benefits (value) of a given
change (such as improved environmental quality) are equivalent to the maximum amount
9-14
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DRAFT
individuals are willing to pay for the change. Section 9.4.3 discusses WTP-based approaches
for valuing reductions in mortality rates and then apply these measures to value the
reductions in cancer risk that are estimated to occur as a result of the proposed regulation. It
also discusses WTP estimates for valuing recreational fishing days and for valuing
improvements in water quality that enhance recreational fishing. Using benefits transfer,
EPA applied these values to assess the recreation-based benefits of the proposed regulation.
9.4.1.2 Other Benefits: Cost Savings for POTWs
Another category of benefits expected to result from the proposed regulation is cost
savings for POTWs. The fundamental way in which these benefits differ, from those
discussed previously is that they do not occur as a result of changes in environmental quality.
Many of the pollutants from indirect CWT dischargers accumulate in POTW sludges and are,
therefore, not released to surface water. Nevertheless, POTWs must dispose of these sludges
in ways that comply with existing regulations. When concentrations of specific contaminants
in POTW sludges are reduced, POTWs may use or dispose of their sewage sludge less
expensively. (The higher the pollutant concentrations in the sludge, the more restrictive are
Federal use and disposal requirements and resulting disposal costs.) Although these cost-
saving benefits are not directly incorporated in the paradigm presented in Figure 9-3 and
discussed above, they will nonetheless have a positive effect on social welfare. The
procedures for estimating these cost savings and the results of this part of the analysis are
presented hi Section 9.4.4.2.
9.4.2 Impacts of Proposed CWT Effluent Limitations Guidelines and Standards
EPA expects that the proposed regulation, if adopted, will improve water quality in
several waterbodies across the United States by reducing pollutant loadings and instream
concentrations of over 100 pollutants. The following sections discusses the water quality
impacts of the proposed regulation in greater detail below.
9.4.2.1 Impacts on Ambient Water Quality and Related Ecosystems
The proposed regulation will reduce the in-stream concentrations of over
100 pollutants in the waterways affected by CWT facility effluents. In-stream concentrations
were modeled for each of these pollutants under both baseline and with-regulation scenarios.
The details of this modeling process are provided in the Environmental Assessment of
Proposed Effluent Guidelines for the Centralized Waste Treatment Industry (EPA, 2000).
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DRAFT
This assessment bases its estimation of these concentrations on estimates of pollutant
loadings in the affected waterways and on estimates of the stream flow in these waterways.3
Elevated in-stream concentrations of these pollutants have the potential to adversely
affect ecological systems in.a variety of ways. Aquatic organisms, in particular, will face
higher risks as a result of the degradation of the quality of their habitats. For this analysis,
EPA did not conduct a full ecological risk assessment of these impacts for the CWT reaches.
However, the assessment does examine the consequences for aquatic life by comparing in-
stream concentrations of each pollutant with EPA's AWQC for the protection of aquatic life.
EPA has established water quality criteria for many pollutants for the protection of
freshwater aquatic life. These criteria include both acute and chronic criteria. The acute
value represents a maximum allowable 1-hour average concentration of a pollutant at any
time and can be related to acute toxic effects on aquatic life. The chronic value represents the
average allowable concentration of a toxic pollutant over a 4-day period. If these levels are
not exceeded more than once every 3 years, a diverse array of aquatic organisms and their
uses should not be unacceptably affected. For pollutants that do not have specific AWQC,
the study estimates specific toxicity values using various techniques or have been taken from
the published literature.
Table ,9-5 reports the number of reaches with estimated exceedances of the AWQC
for aquatic life based on an analysis of 87 potentially affected CWT reaches. Under baseline
conditions, a total of 25 reaches will exceed the AWQC for acute effects in aquatic life, and a
total of 41 reaches will exceed the AWQC for chronic effects. As noted in the footnote in
Table 9-5, the combined baseline total may be less than the sum of the subcategory
exceedances because some reaches receive discharges from more than one subcategory.
Under the regulatory options, reductions in exceedances for acute and chronic effects in
aquatic life will occur for two of the three subcategories. Under Oils Options 8 and 9, the
number of exceedances will remain unaffected. Metals Option 4 will reduce exceedances for
acute effects to 13, and for chronic effects to 21. Organics Option 4 reduces these
exceedances to 2 and 4, respectively.
3Three stream flow conditions were analyzed (1Q10 low flow, 7Q10 low flow, and harmonic mean flow); the
first two were used to assess aquatic life impacts and the third was used to assess human health impacts.
9-16
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DRAFT
Table 9-5. Exceedances of Ambient Water Quality Criteria for Aquatic Life
Number of Reaches with AWQC
Exceedances for Aquatic Life
Baseline
Metals
Oils
Organics
Combined baseline3
With Regulation
Metals Option 4
Oils Option 8
Oils Option 9
Organics Option 4
Combined Regulatory Option
Acute Effects
17
12
3
25
13
12
12
2
22 '
Chronic Effects
27
21
6
41
21
21
21
4
37
Some reaches receive discharges from more than one subcategory; therefore, the combined baseline total
may be less than the total of the subcategories.
Table 9-5 also indicates that under the Combined Regulatory Option AWQC
exceedances for acute and chronic effects will fall to 22 and 37, respectively. The facilities
included in this combined option are:
• Combined Regulatory Option = Metals Option 4 (direct and indirect dischargers)
+ Oils Option 9 (direct dischargers) + Oils Option 8 (indirect dischargers) +
Organics Option 4 (direct and indirect dischargers)
Two important caveats to these results deserve attention. First, background
concentrations of each pollutant were assumed to be zero. Consequently, EPA evaluated the
impacts of CWT facility discharges. Second, the analysis did not consider pollutant fate
processes such as adsorption to sediments and volatilization, which would lower in-stream
concentrations. The net impact of these two simplifying assumptions is unclear—the former
leads to underestimates of in-stream concentrations, whereas the latter leads to overestimates.
. 9-17
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DRAFT
The impact on changes in the number of exceedances as a result of the proposed regulation is
even less clear. Nevertheless, the results-do indicate potentially important improvements in
the aquatic habitats of the CWT reaches.
The ways in which these improvements in ecological systems will lead to
improvements hi human welfare will ultimately depend on how humans interact with and
perceive the ecological systems. The next section discusses these and other effects on human
systems.
9.4.2.2 Affected Populations and Activities
As shown in Table 9-3, a wide variety of human activities are potentially affected by
changes in water quality due to CWT effluents; however, there is inadequate information for
quantifying many of these effects. As a result, this section focuses on the measurement of
recreational and subsistence fishing populations, for which there is adequate data.
Recreational and Subsistence Fishing: Estimation of Fishing Populations at the
Affected Reaches. To develop an estimate of the number of individuals exposed to the
regulated pollutants through the fish consumption pathway, EPA assumed that the exposed
population consists of both the anglers who fish the CWT reaches and their families. The
following discussion reviews the step-by-step approach used to estimate the number of
affected individuals ha recreational and subsistence fishing households and summarizes the
results of the analysis. .
Step 1: Designate a 30-Mile Buffer Zone Around Each Affected Reach. The first step in
estimating the total exposed population for the fish consumption pathway was to isolate the
area surrounding each reach where these individuals are most likely to reside. This area can
be thought of as the extent of the "market" for the reach. EPA assumed that these individuals
will primarily be located within 30 miles of each reach. Evidence on recreational fishing
behavior for the nation as a whole indicates that between 52 and 68 percent of trips to the
freshwater fishing sites most often used by individual anglers are within 30 miles of their
homes (DOI, 1993). Because the affected reaches are located primarily in urban areas, the
average distance traveled to these reaches is probably below the national average.
Using Arcview Geographic Information System (GIS) software (ESRJ, 1995), EPA
isolated a 30-mile buffer-zone around each reach and estimated the total U.S. land area
within the zone. Because of variations hi the length of each reach and the proximity to large
9-18
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DRAFT
bodies of water, these buffer zones vary substantially, from 900 to 6,700 square miles. The
average area of a buffer zone is 3,400 square miles.
Step 2: Estimate the Population in Each Buffer Zone. To estimate the 1996 population in
the buffer zone, EPA overlaid GIS software onto U.S. Census data. Buffer zone populations
for 1998 were estimated by assuming that the population growth rate from 1996 to 1998 in
each zone was the same as the growth rate for the state in which it is located. This resulted in
1998 population estimates ranging from 8,000 to 14.2 million. The Agency determined the
average population of a buffer zone to be 2.2 million.4
Step 3: Estimate the Total Number of Anglers in the Buffer Zone. As mentioned earlier,
EPA assumed that the relevant exposed population is made up of the fishermen who fish the
CWT reaches and their families. To calculate the number of anglers who live in each buffer
zone, the Agency assumed that the ratio of anglers to total population was the same for the
buffer zone as it was for the state in which the reach'was located. Using data from The 1996
National Survey of Fishing, Hunting, and Wildlife-Associated Recreation (DOI, 1997), EPA'
estimated the percentage of anglers in each state and then applied these values to the affected
reaches in each state. EPA arrived at estimates for the total number of anglers in each buffer
zone that range from 18,500 to 1.9 million. The average number of anglers in the buffer
zones is 320,000.
Step 4: Estimate the Number of Anglers in the Buffer Zone Who Fish the Reach. The
next step was to estimate the number of anglers who fish specifically at the CWT reaches.
To calculate this number, the Agency assumed that anglers within each buffer zone were
evenly distributed to all reach miles within the zone.5 Using GIS, EPA first estimated the
length of each CWT reach as a percentage of total reach miles within their respective buffer
zones. These values range from 0.13 percent to 7 percent. To calculate the number of
anglers who fish the CWT reach, the Agency then multiplied the total number of anglers
within the buffer zone by this ratio. Using this methodology, the number of fishermen who
"Two of the 87 reaches lacked coverage under the Reach File 1 (RF1) database and, as a result, do not have
population estimates associated with them.
5Clearly anglers may visit different reaches on different occasions; however, for purposes of the health risk
analysis, the aggregate health impact of one angler visiting a site all of the time is equivalent to two anglers
visiting the site half the time (or three anglers visiting the site a third of the time, etc.). Therefore, rather
than assuming that fishing trips are evenly distributed to each reach mile over the course of a year, EPA
simply assumed that the anglers themselves are evenly distributed to each reach mile.
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DRAFT
fish each reach was estimated to range from 36 to 27,300. The average number of fishermen
who fish on a particular reach was computed to be 4,300.
Step 5: Adjust Fishing Population Estimates for Existence of Fish Advisories at the CWT
Reaches. A number of the CWT reaches currently have fish consumption health advisories
in place. Although these advisories are generally due to pollutants such as dioxin and PCBs,
which are not affected by this proposed regulation, it is reasonable to assume that some
proportion of anglers would adhere to the advisories and not fish the reach in question.
Past studies suggest that fishermen have a high, although not complete, level of
awareness offish advisories. For example, Fiore et al. (1989) found that 72 percent of
fishermen were familiar with fishing advisories. Connelly, Knuth, and Bisogni (1992) and
Connelly and Knuth (1993) also found high rates of awareness (83 to 85 percent) in Great
Lakes and New York sport fisheries. For Maine sport fisheries, MacDonald and Boyle
(1997) found 76 percent and 33 percent awareness rates, respectively, for residents and
nonresidents. Despite this level of awareness, other evidence suggests individuals do not
necessarily fully adjust their behavior by no longer fishing at the site or no longer consuming
the fish caught at the site (May and Burger, 1996; MacDonald and Boyle, 1997; Velicer and
Knuth, 1994; Cable and Udd, 1990). For the purposes of this analysis, the Agency assumed a
20 percent decrease in fishing activity for reaches under fish advisory. Section 9.4.2.3
discusses in more detail some of the uncertainties associated with this assumption.
Thirty-eight of the reaches in the analysis were determined to have fish advisories.
To adjust for the decline in fishing in these reaches, the analysis reduced the estimated total
number of recreational and subsistence fishermen by 20 percent at these reaches.
Step 6: Estimate the Number of Subsistence and Recreational Fishermen in Each Reach.
The above calculations do not distinguish between recreational and subsistence fishing
populations. However, estimating these populations separately is important because fish
consumption rates differ substantially between recreational and subsistence anglers. The
precise magnitude of subsistence fishing in individual states or the country as a whole is not
known. For the purpose of this analysis, EPA assumed that 5 percent of all anglers are
subsistence fishermen.
Step 7: Estimate Household Exposure for the Fish Consumption Analysis. Finally, the
analysis requires an estimate of the total population exposed to CWT pollutants by
consuming fish. The Agency assumed that this population includes not only the anglers
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DRAFT
themselves but also other members of their households. Therefore, for each reach, the
estimated number of recreational and subsistence fishermen was multiplied by 2.62, the size
of the average U.S. household in 1998 (U.S. Department of Commerce, 1999), to estimate the
total exposed population.
The average exposed household population per reach is 10,000. The average exposed
household population for subsistence and recreational fishermen and their families is 500 and
9,500, respectively. The total exposed household population for all affected reaches is
847,700. Of this total, 805,300 are from recreational fishing households, and 42,400 are from
subsistence fishing households. Section 9.4.2.3 reports the exposed household populations
for each reach, along with the discussion of cancer risks.
9.4.2.3 Impacts on Humans
As discussed earlier in this section, water quality in the affected reaches has the
potential to affect a wide range of both market and nonmarket activities. This report now
focuses on the ways in which these activities are affected and the projected outcomes of
improvements in water quality. Based on these impacts, EPA estimates in Section 9.4.3
some of the human welfare effects of the proposed regulation.
The impacts that are most readily quantified are nonmarket in nature. They are the
human health impacts related to fish consumption from recreational and subsistence fishing.
This section first discusses the quantitative assessment of health impacts, focusing primarily •
on cancer risks. It then discusses the limitations and uncertainties inherent in these
assessments and assesses qualitatively the other potential impacts of the proposed regulation.
Characterization of Human Health Effects. Fish consumption is the primary route
through which individuals are likely to be exposed to the pollutants in the effluents of CWT
facilities. Over 100 hazardous substances have been detected in these effluents, and they are
associated with a wide range of health effects. These effects can be divided into cancer
effects, noncancer effects, and lead-related health effects, each of which is discussed below.
Cancer Effects. Table 9-6 provides a list of the potentially carcinogenic substances
that have been detected and information about the weight of evidence (WOE), cancer potency
factor, and target organ of each substance. EPA has established a WOE classification system
for suspected carcinogens. Carcinogens designated as Class A, which are considered known
carcinogens, are the only chemicals that can be associated with specific types of cancer. This
classification is based primarily on evidence from human data. As indicated in Table 9-6,
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DRAFT
Table 9-6. Characterization of Carcinogenic Substances in CWT Effluent
CAS
Number
7440382
71432
56553
117817
86748
67663
218019
124481
106934
106467
107062
75354
75092
91576
87865
630206
127184
56235
79005
79016
96184
75014
Carcinogen
Arsenic
Benzene
Benzo(a)anthracene
Bis(2-ethylhexyl) phthalate
Carbazole
Chloroform
Chrysene
Dibromochloromethane
Dibromoethane, 1,2-
Dichlorobenzene, 1,4-
Dichloroethane, 1,2-
Dichloroethene, 1,1-
Methylene Chloride
Methylnaphthalene, 2-
Pentachlorophenol
Tetrachloroethane, 1,1,1,2-
Tetrachloroethene
Tetrachloromethane
Trichloroethane, 1,1,2-
Trichloroethene
Trichloropropane, 1,2,3-
Vinyl Chloride
Weight-of-Evidence
Classification"
A
• A
B2
B2
B2
B2
B2
C
B2
C
B2
C
B2
'
B2
C
:
B2
C
•
B2
A
(mg/kg-day)'1
1.5
0.029
0.73
0.014
0.02
0.0061
0.0073
0.084
85
0.024
0.091
0.6
0.0075
0.02
0.12
0.026
0.052
0.13
0.057
0.011
7
1.9
aWeight-of-evidence classification codes:
A-Human carcinogen
Bl-Probable human carcinogen (limited human data)
B2-Probable human carcinogen (animal data only)
C-Possible human data
D-Not classifiable as to human carcinogenicity
Source: U.S. Environmental Protection Agency.
9-22
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DRAFT
arsenic, benzene, and vinyl chloride are the only CWT pollutants that are known carcinogens.
Those designated as Class B are considered probable carcinogens, and those designated as
Class C are considered possible carcinogens. Cancer potency factors for Class B and Class C
carcinogens are based primarily on experimental animal studies and, therefore, are subject to
more uncertainty.6 Furthermore, they cannot be associated with specific types of cancer.
Chemicals are designated as Class D when there is either no data or inadequate evidence of
the carcinogenicity on humans or animals. .
Noncancer Effects. Evidence suggests that several of the pollutants in CWT facility
effluents can lead to noncancer health effects. These noncancer systemic effects include
neurological, immunological, reproductive,' developmental, circulatory, and respiratory
effects. Table 9-7 lists the chemicals and reference concentrations and briefly describes the
target organs and/or health effects associated with each pollutant. Assessing noncancer risk
can be considerably more complex because the health endpoints are typically less clearly
defined and much broader in scope. Furthermore, in contrast to cancer risk, noncancer risk
assessment is based on a threshold concept. At small levels of exposure, the body may
detoxify or compensate for exposures to pollutants, and no adverse health effects are
observed. However, as the level of exposure increases, the body becomes unable to
accommodate the pollutant, and eventually adverse health effects are observed.
Thresholds are determined by the level of exposure at which the adverse health effects
could occur. The lowest dose level at which the critical adverse effect is observed is called
the Lowest Observed Adverse Effect Level (LOAEL). The highest dose at which adverse
effects are not observed is the No Observed Adverse Effects Level (NOAEL). The NOAEL
is usually used to estimate a protective threshold level, while the LOAEL is used to indicate
the levels of exposure at which adverse.effects are likely. Reference doses (RfD) are derived
from the NOAEL and are considered protective thresholds for ingestion. RfD can be defined
as an estimate of daily exposure to a chemical (measured as mg/kg-day) that is likely to be
without deleterious effects during a lifetime. To calculate the RfD, the NOAEL for a chosen
critical effect is divided by the product of a risk factor (typically a factor of 10) and a
6The potency factor is used to measure the dose-response relationship between each substance and the cancer
health effect. Also known as the unit risk factor (URF), it is specifically defined as the probability of a
response (cancer) per unit intake of a chemical over a lifetime. For the oral ingestion of these pollutants, the
unit intake is defined as one milligram per day per kilogram of body mass. A lifetime is assumed to be
70 years.
9-23
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DRAFT
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DRAFT
modifying factor, which account for extrapolation from available data to the conditions under
which normal exposures would occur. Table 9-7 reports the RfDs for each chemical.
Lead-Related Health Effects. Lead is both highly persistent in the environment and
highly toxic for humans and ecosystems. It is associated with a broad range of adverse
human health effects, including hypertension and heart disease in adults and developmental
impairments for children. Table 9-8 lists a more complete accounting of lead-related health
effects. In contrast to other noncarcinogens, many of the specific health effects and risks
from lead exposure can be quantified. Rather than relying on an RfD threshold model, the
magnitude of these health effects can be estimated using dose-response models similar to
those that are used to estimate cancer risks.
Table 9-8. Quantified and Unquantified Health Effects of Lead
Population
Group
Quantified Health Effect
Unquantified Health Effect
Adult male For mean in specified age ranges:
Hypertension
Nonfatal coronary heart disease
Nonfatal strokes
Mortality
Adult female For women in specified age ranges:
Nonfatal coronary heart disease
Nonfatal stroke
Mortality
Children IQ loss effect on lifetime earnings
IQ loss on special educational needs
Neonatal mortality due to low birth
weight caused by maternal exposure to
lead
Quantified health effects of men in
other age ranges
Other cardiovascular diseases
Neurobehavioral function
Quantified health effects of women
in other age ranges
Other cardiovascular diseases
Reproductive effects
Neurobehavioral function
Fetal effects from maternal exposure
(including diminished IQ)
Other neurobehavioral and
physiological effects
Delinquent and antisocial behavior
Source: U.S. Environmental Protection Agency. October 1997 a. The Benefits and Costs of the Clean Air
Act, 1970 to 1990. Research Triangle Park, NC: Office of Air Quality Planning and Standards.
Exceedances of Ambient Water Quality Criteria for Human Health. In addition
to the previously described ambient water quality criteria for aquatic life, EPA has also
established pollutant-specific criteria for the protection of human health. These criteria
9-29
-------
DRAFT
identify maximum allowable in-stream pollutant concentrations to protect human health
through two exposure routes: (1) pollutant ingestion through consumption of contaminated
aquatic organisms and (2) pollutant ingestion through both consumption of contaminated
aquatic organisms and water. Human health is assumed not to be protected if in-stream
concentrations are associated with lifetime cancer risks exceeding 10~6 or with doses
exceeding the RfDs for noncancer toxic effects. A more detailed description of the models
underlying these criteria is provided in the Environmental Assessment of Proposed Effluent
Guidelines for the Centralized Waste Treatment Industry (EPA, 2000).
Table 9-9 reports the number of reaches with exceedances of the AWQC for human
health based on the analysis of 87 potentially affected CWT reaches. Under baseline
condition's, 12 reaches will exceed the AWQC for the consumption of contaminated aquatic
organisms, and 26 reaches will have exceedances for the consumption of contaminated
aquatic organisms and water. Under the proposed regulatory options, the number of
exceedances for each of the subcategories will decrease. Under the Combined Regulatory
Option, the total number of reaches exceeding AWQCs for consumption of organisms will
drop to 6. The number exceeding AWQCs for consumption of water and organisms will drop
to 22.
The AWQC exceedances described in Table 9-9 provide rough indicators of potential
threats to human health. These indicators are used in Section 9.4.3.2 to assess the recreation-
based values of the proposed regulation. More detailed estimates of human health risks from
consumption of contaminated fish are first discussed hi the following sections.
Health Risks from Fish Consumption. The information obtained on chemicals
discussed in the two previous sections that are thought to pose either cancer or noncancer
human health risks can be used to estimate the health risks from fish consumption. Fish
consumption at both baseline levels of contamination and at post-regulatory levels is
considered when approximating the levels of exposure to each chemical at each affected
reach for "typical" individuals (i.e., the recreational and subsistence anglers and the members
of their households that use the affected reaches). To estimate cancer risks, EPA combined
the previously described information about the size of these exposed populations with
information about average individual levels of exposure at each affected reach. The Agency
was then able to estimate the number of cancer cases (i.e., cancer incidence) attributable to
CWT facility pollutants.
9-30
-------
DRAFT
Table 9-9. Number of Reaches with AWQC Exceedances for Human Health
Consumption of
Contaminated Aquatic
Organisms
Consumption or
Contaminated Aquatic
Organisms and Water
Baseline
Metals
Oils
Organics
Combined Baseline3
With Regulation
Metals Option 4
Oils Option 8
Oils Option 9
Organics Option 4
Combined Resnlatorv Option
3
6
5
12
2
5
3
3
6
12
7
12
26
9
6
6
9
22
Some reaches receive discharges from more than one subcategory; therefore, the combined baseline total
may be less than the total of the subcategories. •
By contrast, estimates of noncancer health effects are inherently more limited.
Analysts can observe whether the estimated individual levels of exposure to each chemical
exceed their respective safety thresholds (RfDs); however, without dose-response
information, they cannot estimate the incidence of noncancer health effects in the exposed
population. In other words, the noncancer assessment can indicate whether exposure levels
are likely to cause adverse health effects, but it cannot provide an estimate of the magnitude
of these health effects.
Cancer Risks. As Figure 9-4 illustrates, several steps are required to estimate the
annual cancer incidence that is expected to result from consuming fish from the affected
reaches. The Environmental Assessment of Proposed Effluent Guidelines for the Centralized
Waste Treatment Industry provides methodological details for accomplishing the first three
steps in this figure (EPA, 2000). Below, these three steps, as well as a final step for
estimating annual cancer incidence are summarized.
9-31
-------
DRAFT
D
Instream Concentrations
i
m Concentrations in
Fish Tissue
. i
H Average Annual
Individual Cancer Risk
i
B
Annual Cancer Incidence
h
i
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Pollutant Loadings
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Parameters
Bioconcentration
Factors for Fish
Cancer Slope Factors
Average Annual
Fish Consumption
Size of Populations
at Risk
Figure 9-4. Steps for Assessing Annual Cancer Incidence from Fish Consumption
The first step is to estimate in-stream concentrations for each of the carcinogenic
pollutants listed in Table 9-6. This step is accomplished by combining information on
pollutant loadings with specific characteristics of the receiving streams.7 Most importantly,
EPA assumed that in-waterway pollutant concentrations are inversely proportional to
waterway flow downstream of the discharge. EPA considers the harmonic mean waterway
flow (HMF) to be the appropriate measure for assessing human health effects. EPA assumed
that background concentrations of each of these chemicals are zero, hi other words, EPA
assumed that CWT effluents were the only source of these chemicals in the affected reaches.
'For indirect dischargers, the initial calculation of pollutant loadings must consider not only the concentrations
in the effluent from the CWT facilities, but also the removal efficiencies for each pollutant at the receiving
POTW as well. .
9-32
-------
DRAFT
The second step is to calculate concentrations of each of the pollutants in the tissue of
fish species residing in the affected waterways. This step is accomplished by combining
information from the first step (in-stream concentrations) with an assumed rate of uptake by
the fish species (i.e., bioconcentration factor).
The third step is to calculate the average annual individual cancer risk for the two
categories of exposed populations. Recreational fishing households are assumed to consume
30 grams of fish per day over a 30-year period and 6.5 grams per day over a 40-year period.
This level of consumption translates to an average of approximately 6.05 kilograms, per year.
The analysis assumes that people in subsistence fishing households consume 140 grams per
day of fish over 70 years of exposure, which translates to an average of approximately
51.1 kilograms per year. Using the cancer potency factors listed hi Table 9-6 for each
carcinogen, EPA estimated the lifetime individual cancer risks for recreational and
subsistence fishing households. For each affected reach and individual, this value can be
interpreted as the individual's incremental risk of developing cancer that would result from
consuming an average annual dose of fish from the affected reach over the course of a
70-year lifespan.
Table 9-10 provides the lifetime individual cancer risks for individuals in recreational
and subsistence households. As expected, risks for subsistence households are higher than
those for recreational households by nearly one order of magnitude. These risks are
distinguished for direct and indirect dischargers, as well. The mean individual lifetime
cancer risk for populations affected by direct dischargers is greatest under the oils
subcategory (7.4 x 10"6 for recreational fishermen and 6.2 x 10'5 for subsistence fishermen),
while the organics subcategory has the greatest mean for those populations affected by
indirect dischargers (2.1 x 10'5 for recreational fishermen and 1.8 x 10^ for subsistence
fishermen).
The next step is to calculate the annual cancer incidence for the affected reaches at -
baseline levels and at the proposed post-regulatory levels. The analysis estimates annual
individual cancer risks by dividing these lifetime risks by 70—the assumed number of years
in a lifetime. Annual cancer incidence is then computed by multiplying (1) the individual
annual cancer risk for each population subgroup (sorted by reach and activity—recreational
or subsistence) by (2) the size of each population subgroup. Section 9.4.2.2 details the
procedures used to estimate each of the population subgroups. Table 9-11 reports results for
baseline cancer incidence, This analysis, estimates total baseline annual cancer incidence for
9-33
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DRAFT
Table 9-11. Baseline Annual Cancer Incidence (Fish Consumption by Anglers)
•
Metals
Oils
Organics
Direct
Dischargers
0.005
0.023
0.000
0.028
Indirect
Dischargers
0.008
0.048
0.091
0.147
Total
0.013
0.072
,0.091
0.175
fish consumption from the affected reaches is approximately 0.18 cases per year. Indirect
dischargers account for approximately 84 percent of these cases.
This assessment repeated these four steps for each of the proposed regulatory options
by reestimated in-stream concentrations for each option based on their respective pollutant
loadings and annual cancer incidence at each reach. Table 9-12 reports the reductions in
annual cancer incidence for each subcategory (metals, oils, and organics). This assessment
showed that the regulatory options for the oils subcategory accounted for the largest
reductions in cancer incidence. All of the regulatory options combined will reduce the total
cancer incidence at all affected reaches by approximately 19 percent.
Table 9-12. Reduction in Annual Cancer Incidence (Fis h Consumption by Anglers)
Metals Option 4
Oils Option 8
Oils Option 9
Organics Option 4
Combined Regulatory Option
Direct
Dischargers
0.002
0.000
0.001
0.000
0.003
Indirect
Dischargers
0.002
0.012
0.038
0.016
0.030
Total
0.004
0.012
0.039
0.016
0.033
9-35
-------
DRAFT
Noncancer Risks. Estimating noncancer risks involves the same initial steps as those
outlined above for cancer risks. Using the first two steps described above for cancer risks,
EPA estimated concentrations in fishjtissue for each of the chemicals with noncancer health
effects at each reach. At this stage, rather than estimating cancer risk, the Agency compared
the estimated average daily dose of each chemical with its reference dose (RfD) (see
Table 9-7). The ratio of the estimated dose to the RfD is known as the hazard quotient. If
this expression summed across all pollutants affecting a reach is greater than one, a potential
noncancer health effect may result from exposure.
As shown in Table 9-13, that analysis showed that only reaches in the metals
subcategory are a potential source of noncancer health effects under baseline conditions. For
discharges associated with this subcategory, a total of 3 reaches will have noncancer health
effects and about 1,900 people will be exposed. Under the regulatory options, no reaches
have noncancer health effects. However, it is important to note again that a critical
assumption in the analysis asserts that no background concentrations of these chemicals exist
in the affected reaches. The results could change considerably if background concentrations
do exist. In particular, the current estimates may underestimate noncancer risks.
Unfortunately, evidence is insufficient at this time to determine the accuracy of this
assumption. ,
Lead-Related Health Effects. Based on the loadings estimates for CWT facilities, the
analysis showed a reduction in lead loadings to five reaches that would cause meaningful and
measurable reductions in lead-related health effects from fish consumption. For each of these
reaches, the analysis estimated blood lead levels separately for recreational and subsistence
anglers and for their families under both baseline conditions and with the proposed regulatory
option in place.
To estimate the total exposed populations at each reach, EPA use,d the same
population estimates for anglers and their families that were used for the cancer risk analysis.
To subdivide these populations into the age and gender categories that are relevant for
measuring lead-related health effects, the Agency assumed that the age and gender
distribution of these families is the same as for the U.S. as a whole based on percentages
contained in the Statistical Abstract of the U.S. (USDOC, 1999). EPA estimated the exposed
populations in each gender-age category was estimated by multiplying the total exposed
population for each reach by the corresponding age-gender population percentage. ,
9-36
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9-37
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DRAFT
EPA used the population and blood lead level estimates to assess reductions in six
general categories of health effects associated with lead exposure. As shown in Table 9-14,
these categories include hypertension for adult males, changes in IQ for children exposed
before the age of seven, and neonatal mortality resulting from exposure during pregnancy. In
addition, it includes a number of health effects associated with elevated diastolic blood
pressure levels, an outcome which is also known to result from adult lead exposures. These
health effects include coronary heart disease (CHD), cerebrovascular accidents (CA), brain
infarctions (BI), and mortality.
To estimate changes in these health effects, EPA applied the same methodology that
is used in The Benefits and Costs of the Clean Air Act, 1970 to 1990 (EPA, 1997a-see
Appendix G). This methodology includes the dose-response specifications for each of the
health effects and age-gender categories identified in Table 9-14, and it also specifies the
monetary value of losses associated with each health effect. Table 9-14 summarizes the
. estimated reductions in lead-related health effects for Metals Option 4 (6 affected reaches)
Oils Option 9 (5 affected reaches), and the combined regulatory option (10 affected reaches).
Using Equation (11) from Appendix G of the CAA study, EPA estimated changes in
the probability of hypertension for men ages 20 to 74. The total estimated exposed
population in the group is about 32,100, and the estimated reduced incidence of hypertension
from the combined regulatory option is 1.5 cases per year.
Changes in the probability of CHD, CA, BI, and adult mortality are based on changes
in diastolic blood pressure (DBP) for men and women. First, using Equations (12) and (21)
respectively from Appendix G of the CAA study, the analysis estimated changes in DBP for
males and females. Second, assuming that the regulation would reduce DBP to normal adult
levels (specified to be 80 mm Hg), the (absolute value of the) estimated change in DBP was
added to this to approximate baseline DBP for the exposed populations. Third, applying the
baseline and with-regulation DBP estimates to Equations (13) through (25) from Appendix G
of the CAA study, EPA estimated the change in probability of CHD, CA, BI, and adult
mortality. Fourth, multiplying these values by their respective populations and dividing this
by the number of years in each age category, the Agency estimated the annual reduction in
incidence for each health effect. As shown in Table 9-14, the annual reduction in CHD from
the combined regulatory option is 0.09 cases per year, with the majority of this decline for
males ages 40 to 59. The annual reduction in CA and BI incidence is about 0.006 and 0.004
9-38
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DRAFT
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DRAFT
cases per year, respectively. The annual reduction in mortality is about 0.1 deaths per year,
with the largest decline in males ages 40 to 54.
To estimate reductions in neonatal mortality, EPA first estimated the number of
pregnant women in the exposed population. To do this, the Agency assumed that the
percentage of pregnant women in the exposed population is equal to the birth rate (per
100 individuals) in the U.S. as a whole, which was acquired from the Statistical Abstract of
the U.S. (USDOC, 1999), and multiplied this value by the total exposed population.
Appendix G of the CAA study indicates that the risk of infant mortality decreases by 0.0001
for each 1 ug/dL decrease in maternal blood lead level during pregnancy (p. G-8). Applying
this dose-response relationship, EPA estimates the reduction in the incidence of neonatal
mortality from the combined regulatory option to be approximately 0.01 deaths per year.
Two separate effects related to children's (ages 0 to 6) IQ were measured: (1) the
reduction in IQ points due to elevated blood lead levels and (2) the reduction in the number
of children with IQs less than 70. Using Equation (5) from Appendix G of the CAA study,
EPA estimated that the exposed population of approximately 11,500 children would gain a
total of roughly 54 IQ points from the combined regulatory option. Using Equations (6)
through (10) from Appendix G of the CAA study, EPA estimated the reduction in the
proportion of children with IQs less than 70. To estimate the annual reduction in the number
of children with IQs less than 70, EPA divided this value by the number of years in the age
category (i.e.3 7 years) and then multiplied by the size of the exposed population (i.e.,
11,500 children). EPA estimated that there would be virtually no change (less than 1) in the
number of children with IQs below 70,
Limitations and Uncertainties in the Measurement of Health Impacts. The
preceding analysis has focused largely on the health effects associated with fish consumption
from the CWT. reaches. Estimating these impacts required a number of analytical steps, each
of which required simplifying assumptions and an inevitable degree of uncertainty. This
section addresses some of the limitations and uncertainties of the analysis and discusses how
they may affect the results.
The analysis was restricted to only one reach on each waterway receiving CWT
discharges. For each direct discharger and each affected POTW, EPA analyzed water quality
and related impacts for only a single reach and did not consider impacts downstream from
these reaches. Through dilution, volatilization, and other processes, concentrations of the
pollutants will decline as one moves downstream; therefore, the downstream impacts will be
9-40
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DRAFT
less than in the directly affected reaches. Nevertheless, excluding them from the analysis will
result in underestimates of the health impacts of the proposed regulation. In certain cases the
analysis may not have been captured upstream impacts, for example, if contaminated fish
migrate in that direction. ., • -
The analysis assumed that background concentrations of each pollutant are zero.
This analysis did not explicitly address discharges of the pollutants from sources other than
CWT facilities. Therefore, all modeled concentrations are from CWT discharges. Although
this simplification may understate baseline cancer risks from fish consumption or drinking
water for the affected reaches, it will not alter the estimated reductions in cancer risk due to .
the proposed regulation. In contrast, assessments of ecological and noncancer impacts, which
are based on a threshold model, are very sensitive to the accuracy of this assumption.
Whether the assumption will lead to overstatements or understatements of impacts is
uncertain. Accounting for background concentrations will tend to increase the number of
baseline exceedances of aquatic life and human health thresholds. If these background
concentrations are sufficiently high, however, the number of exceedances eliminated as a
result of the proposed regulation may in fact decrease.
Estimation of the number of anglers using the affected reaches has not considered the
quality of substitute sites. Estimation of the size of the population affected by fish
consumption required a number of simplifying assumptions. A potentially important
omission in the analysis has been the lack of consideration of water quality in other
waterways that may serve as substitute sites for the affected reaches. For example, EPA
assumed that anglers within the designated buffer zones are equally likely to visit each reach
mile within the zone. If water quality at other reaches is distinctly better (worse) than in the
affected reach, then the estimates of the exposed populations are likely to be too high (low).
The impact of fishing advisories is very uncertain. Thirty-eight of the 87 affected
reaches have fish consumption advisories. The analysis accounted for this by adjusting the
exposed population downward by 20 percent. This adjustment, however, is subject to
considerable uncertainty. Studies show that approximately 80 percent of anglers are aware of
fishing advisories and many do not change their fishing behavior. For example, Diana,
Bisogni, and Gall (1993) found that anglers vary in their beliefs about the credibility of
fishing advisories, and Belton, Roundy, and Weinstein (1986) also found-evidence that
individuals tend not to change their behavior. For those who do change locations, many may
simply be switching to other locations where advisories are in place.
9-41
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DRAFT
Other studies further have found that, although fishermen may not substantially
change their fishing behavior in response to fish consumption advisories, they may change
their overall consumption patterns. For example, Diana, Bisogni, and Gall (1993) found that
56 percent of the households that ate the restricted fish did follow the recommended
trimming techniques that significantly reduce the amount of pollutants consumed. Fiore et al.
(1989) also found a high percentage of individuals that change their consumption
patterns—57 percent of fishermen who were aware of the advisories did change their
preparation or cooking habits.
The analysis assumes no behavioral changes as a result of water quality
improvements. The analysis assumes that the number of anglers fishing the affected reaches
and the fish consumption rates and practices of these anglers and their families do not change
from the baseline. For the water quality changes to have an effect on angling or fish
consumption activities they must have an impact that is perceptible to potential users of the
waterbodies. Although the proposed regulation will lower the in-stream concentrations of
several pollutants, these changes may not alter the directly observable qualities of the surface
water, such as its clarity or odor, or the fish that are caught If this is the case, then the
assumption of no behavioral change is appropriate. However, as discussed ha Section 9.4.2.1,
hazards to aquatic life from the pollutants in CWT facility effluents will be reduced as a
result of the proposed regulation, and this may have an impact that is perceptible to anglers.
If the visual characteristics of the aquatic environment improve or if catch rates increase for
anglers, these effects will enhance fishing activities. Current information is inadequate to
determine the extent to which such observable changes occur. In general, the more
perceptible water quality changes are, the more likely it is that this approach will
(1) overestimate baseline exposures (i.e., anglers will avoid observably poor water quality)
and (2) underestimate increases in angling and fish consumption rates.8 hi both cases, the
likelihood that health risk reductions are overestimated is increased. At the same time,
however, this increases the likelihood of nonhealth recreation benefits accruing to* the
improved waterbodies.
'Increases in consumption rates and/or increases in the number of users may have the effect of increasing
exposure to residual levels, of contamination in the surface water. Increased exposure will counteract some
of the improvements in health outcomes.
9-42
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DRAFT
Other Potential Impacts. As mentioned previously, the proposed regulation will
potentially have beneficial impacts in a number of other areas. For market-based activities
such as agriculture and manufacturing that use water as a production input, improvements in
• water quality can lower production costs and improve productivity. This can increase profits
for producers and/or lead to lower prices for consumers. Unfortunately, currently available
data are insufficient to quantify these impacts.
In addition to lowering the health risks to anglers and their families who consume fish
from the affected reaches, improvements in water quality can have beneficial impacts for
anglers in other ways. Clearly individuals gain satisfaction from aspects of fishing
experiences other than those related to the health consequences of consuming their catch. A
number of recreation studies have shown that other aspects of fishing such as being outdoors
and experiencing natural surroundings are the most important contributors to the enjoyment
of fishing experiences (Fedler and Ditton, 1986; Holland and Ditton, 1992). If improvements
in water quality lead to perceptible improvements in fishing experiences, then they will
provide recreation benefits to anglers. Furthermore, if broader ecological impacts occur that,
for example, improve opportunities for viewing other forms of wildlife, this will also
improve recreational experiences. These types of changes are likely to not only positively
affect current users of the affected waterways but to also increase the number of users as well.
Current evidence is insufficient to reliably estimate the magnitude of these behavioral
changes. In the next section, the analysis described assumes that the number of recreational
anglers visiting these reaches remains the. same after the water quality improvements.
However, this analysis does estimate how the recreation benefits to these anglers would
increase if they were able to perceive the estimated water quality improvement resulting from
the proposed regulation.
9.4.3 Valuation of Surface Water Quality Improvements
EPA expects two primary types of benefits to result from surface water quality
improvements under the proposed regulation. The first is improved health benefits from
reduced exposures to toxic substances and the second is increased recreation benefits due to
improvements in the quality of recreational surface water resources. This section describes
the methods used to assess health and recreation values and provides estimates of the
corresponding monetary benefits for the proposed rule.
9-43
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DRAFT
9.4.3.1 Health Benefits
It is now largely accepted in the economics profession that an individual's maximum
WTP for an additional unit of a good represents the benefits of acquiring the extra unit.9
Therefore, WTP is the appropriate welfare measure for assessing benefits, and it can be
applied to valuing improvements in human health in the same way that it is applied to valuing
consumer goods. As discussed in the previous sections, a wide variety of health effects have
been associated with CWT pollutants. However, changes in the incidence (or outcomes) of
disease can only be quantified for a subset of these effects: cancers and lead-related health
effects. This section discusses separately the values associated with avoiding these health
effects.
The Benefits of Avoided Cancer Cases from Fish Consumption. Because cancer
is an often-fatal disease, individuals' WTP for reductions in cancer risk is approximated by
the WTP for reductions in the risk of premature death. The WTP approach for valuing a
statistical life saved (or a statistical death avoided) focuses on the amount individuals are
willing to pay to reduce their risk of premature death or, conversely,, what compensation they
require to increase their risk. Conceptually, once a value is established for a specific unit
change in risk (such as a one in one million change in the probability of premature death), it
is simply a matter of scaling this value so that it corresponds to a change in probability equal
to one.10 For example, if individuals have, on average, a WTP of $5 to avoid a one in one
million chance of premature death, this value aggregates to $5 million to avoid the
probability that one death will occur in a population of 1 million of these individuals. In
other words, it aggregates to $5 million for one statistical death avoided, which, in turn,
represents what is known as the value of a statistical life saved.
There are a number of empirical, studies conducted since the mid-1970s that measure
individuals' valuations of death risk changes. These generally fall into three categories:
The individual's minimum willingness to accept (WTA) compensation for losing or forgoing the opportunity
to acquire a unit of the good is also a valid measure of benefits, and, in principle, it should be approximately
the same as WTP.
'"In other words, one aggregates across individuals so that their independent changes in probability sum to one
(i.e., so that the expected change in premature deaths in that population is equal to one). In this way, the
value of a statistical death avoided is the sum of the individuals' WTP for a risk change.
9-44
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DRAFT
• wage-risk studies, which focus on the wage compensation individuals require to
accept a riskier occupation;
• contingent valuation (CV) studies in which individuals are asked in surveys to
state their WTP for changes in risk; and .
• consumer studies, which focus on individuals' revealed WTP in markets for
goods that influence their risk of death (such as automobiles and smoke
detectors).
Two articles, in particular, have surveyed these empirical studies to establish a range of
values for a statistical life saved. Fisher, Chestnut, and Violette (1989) examined over
30 studies, most of which used a wage-risk approach. They conclude that the "most
defensible" range of estimates is between $2.3 and $12.4 million ($ 1997). More recently,
Viscusi (1993) reexamined and updated the range of studies. He places the most confidence
in the wage-risk studies that produce values in the range of $5.1 to $8.1 million ($ 1993) and
a consumer study of automobile purchases (Atkinson and Halvorsen, 1990) that estimates a
value of approximately $4 million per statistical life saved.
Based on the conclusions of the two survey articles, $5 million is a reasonable point
estimate of a statistical life saved. However, at least two inherent difficulties are associated
with the empirical studies reviewed. The first is the ability to measure accurately the risks
faced by individuals in wage-risk and consumer-risk situations. Wage-risk studies have
tended to rely on observed occupational death rates in broad industry categories.
Second, even in CV studies hi which the investigator establishes the level of risk,
individuals' perceptions of risk may not correspond well with the more objective
probabilities used hi the studies. Slovic, Fischhoff, and Lichtenstein (1979) have shown that
risk perceptions often differ significantly from observed death rates and that individuals have
a tendency to overestimate very small risks and underestimate very high ones. Furthermore,
individuals often have difficulty conceptualizing risk in terms of numerical probabilities,
particularly very small ones.
Despite these limitations, a growing body of research in this area continues to support
estimates in the ranges mentioned above. To account for the uncertainty in the value of a
statistical life and to maintain consistency with other analyses of effluent guidelines (EPA,
1995b), EPA used a range of $2.3 million to $12.4 million to value a cancer case avoided.
Table 9-15 reports the monetized benefits of the reductions in annual cancer incidence
from each of these regulatory options. The combined regulatory option reduces this
9-45
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DRAFT
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incidence by 0.03 cases, and the value of these cancer cases avoided is estimated to be in the
range of approximately $76,000 to $412,000 per year.
The Benefits of Avoided Lead-Related Health Effects from Fish Consumption.
As summarized in Table 9-14, changes in several discrete health effects associated with lead
exposures can be quantified for the proposed rule. Assuming that individuals' WTP to avoid
risks of death do not vary significantly across different types of fatal illness, the mortality
effects related to high blood pressure and to prenatal exposures from lead exposure can be
valued using the same approach applied to value avoided cancer cases—by assuming a range
of $2.3 million to $ 12.4 million per statistical life saved.
To assess the values of avoided morbidity effects associated with lead exposure, EPA
used the same values as reported in Appendix G of the CAA study to estimate individuals'
WTP to avoid each case (or related outcome) of these health effects. Table 9-16 reports these
values as unit values ($ 1997). By and large, these values are based on "cost-of-illness"
(COI) measures, which include estimates of the average medical expenditures and lost
earnings associated with each health outcome. Because these COI estimates do not value the
losses in well-being from pain and suffering due to illness, they are best interpreted as lower-
bound estimates of the total WTP to avoid each health outcome. Table 9-16 reports the
monetized annual benefits of reductions hi each of the lead-related health effects as a result of
the combined regulatory option. EPA estimates the total value to-be in the range of
approximately $0.5 million to $1.6 million per year. As indicated in the table, the majority of
these benefits are attributable to avoided mortality due to prenatal exposures and to high
blood pressure.
Table 9-17 reports estimates of the monetized annual benefits for each of the
regulatory options as well. These estimates are further disaggregated between direct and
indirect dischargers. A majority of the benefits are expected to come from indirect
dischargers in the metals subcategory.
9.4.3.2 Recreation Benefits
In addition to the health benefits of improving water quality in the affected reaches,
individuals will potentially benefit from enhanced recreational opportunities as well. As
previously discussed, these recreational opportunities include a wide range of in-stream and
9-47
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near-stream activities. The values derived 'from these enhanced opportunities, however, are
likely to be largest and can most reliably be estimated for recreational fishing. Studies of
recreational fishing have shown that a number of aspects contribute to the enjoyment of
fishing experiences. In addition to the value received from being able to safely consume their
catch, recreational anglers derive much of their satisfaction from the natural surroundings and
the ecological health of the recreation site (Fedler and Ditton, 1986; Holland and Ditton,
1992). Therefore, to assess the recreation benefits of the proposed rule, EPA used attainment
of the AWQC for human health aquatic life as the primary indicator of where recreation -
benefits would accrue if anglers were aware of water quality improvements.
The Agency used three fundamental steps to measure recreational fishing values.
First, EPA 'determined which of the affected reaches would achieve both aquatic life and
human health AWQCs as a result of the proposed rale. Second, EPA estimated the baseline
annual value of recreational fishing activities at these reaches by combining our previously
estimated measures of fishing participation (i.e., number of recreational anglers using the
site) with estimates of the average number of fishing days per year and the average value of a
fishing day. Third, EPA estimated the increase in annual value from the baseline for the
selected reaches using evidence from a study that measured anglers' WTP for the removal of
contamination from recreational fishing areas (Lyke, 1993). We discuss each of these steps
below.
Step 1: Distinguish Reaches That Achieve A WQCs As a Result of Proposed Regulation.
Section 9.4.2.1 describes the AWQCs for aquatic life. Section 9.4.2.3 describes those for
human health. For purposes of this analysis, a reach achieves "contaminant-free" status, and
thus provide additional recreation benefits, if it exceeds at least one AWQC in the baseline
and would exceed no AWQCs with regulation. As shown in Table 9-18,43 reaches exceed
at least one of the AWQCs under baseline conditions. Under the regulatory options, this
number declines to 21 exceedances for Metals Option 4, 21 exceedances for both Oils
Options 8 and 9, and 9 exceedances for Organics Option 4. Under the Combined Regulatory
Option, there are 38 reaches with exceedances—a reduction of 5 from the combined baseline.
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DRAFT
Table 9-18. Number of Reaches with Exceedances of at Least One of the Four
AWQS
Baseline
Metals
Oils
Organics
Combined Baseline3
With Regulation
Metals Option 4
Oils Option 8
Oils Option 9
Organics Option 4
Combined Regulatory Option
Direct
Dischargers
8
2
1
11
5
2
2
1
8
Indirect
Dischargers
19
19
11,
32
16
19
19
8
30
Total
27
21
12
43
, 21
21
21
9
38
a Some reaches receive discharges from more than one subcategory; therefore, the combined baseline total
may be less than the total of the subcategories.
Step 2: Measure Baseline Annual Value of Recreational Fishing at These Reaches.
Section 9.4.2.2 discusses the estimated fishing populations at the affected reaches. These
estimates are based on
• the population and the total number of miles of stream reaches within a 30-mile
buffer zone around the affected reach,
• fishing participation rates within the state as a whole, and
• the existence of fishing advisories on the affected reach.
The number of recreational anglers at each reach varies from fewer than 40 anglers to more
than 27,000. Using state-level data from the 1996 National Survey of Fishing, Hunting, and
Wildlife Associated Recreation, EPA then estimated the average number of freshwater fishing
days per recreational angler (DOI, 1997). For the 35 states in which these reaches are found,
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the averages vary from roughly 8 to 23 days per year. Multiplying the estimated number of
anglers by the estimated number of trips per angler per year provides an estimate of the total
number of fishing days per year at each reach.
According to economic theory, the value of an angler's fishing day is equal to :the
maximum the angler would have been willing to pay for the fishing day minus the actual
costs, both explicit and implicit costs, of the fishing day. A number of empirical models have
been developed to estimate these recreation values, and they generally fall into two
categories. On the one hand, travel cost models (TCMs) rely on observed recreational
behavior and estimates of the actual costs of a recreation day (most importantly the time and
out-of-pocket expenses associated with the trip) to estimate recreation values. CV models, on
the other hand, are survey-based approaches that rely on respondents' expressed WTP for
recreation to measure their values. Walsh, Johnson, and McKean (1992) conducted a meta-
analysis of TCM and CV studies that measured the per-day values of various types of
recreational activities and found the average value of a warm water fishing day to be
approximately $34 (in 1997 dollars). Smith and Kaoru (1990) conducted a similar study of
only TCM recreation studies and found'per-day fishing values of approximately $34, as well.
Step 3: Estimate Increase in the Annual Value.of Recreational Fishing. Reducing the
level of contaminant concentrations in the affected reaches to meet AWQCs may provide
additional benefits to recreational anglers by reducing health risks and improving aquatic
ecosystems. Research by Lyke (1993) has shown that anglers may place a significantly
higher value on a contaminant-free fishery than a fishery with some level of contamination.
Specifically, Lyke estimated (1) the consumer surplus associated with Wisconsin's
recreational Lake Michigan trout and salmon fishery and (2) the additional value of the
fishery if it were completely free of contaminants affecting aquatic species and human health.
The estimated incremental WTP associated with freeing the fishery of contaminants ranges
from 11.1 percent to 31.3 percent of the value of the fishery under current conditions.
Applying this range of percentage increases to the average value of a fishing day implies an
incremental value per fishing day of $3.70 to $10.40. When these values are applied to the
total number of fishing days at reaches where all AWQC exceedances are estimated to be
eliminated, the range of total annual recreation fishing benefits is $ 1.2 million to
$3.5 million. This range underestimates recreation-based benefits because data were not
available to estimate angler populations for one of the five reaches at which benefits occur.
As Table 9-19 shows, the annual value of reducing AWQC exceedances is greatest under
Organics Option 4. The total value under the Combined Regulatory Option is less than the
9-52
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DRAFT
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DRAFT
sum of the oil option and the organics option because three of the reaches meeting all of the
criteria under the organics option remain in exceedance under the oils option. Therefore, no
benefits are attributed to these three reaches under the Combined Regulatory Option.
Limitations and Uncertainties Associated with the Estimates of Recreational
Fishing Benefits. The previously described approach for estimating recreational fishing
values is an application of benefits transfer. It involves using values for a "commodity"
estimated in one context—fishing days and water quality improvements—and transferring
them to a separate context (i.e'., CWT reaches). Such a transfer allows analysts to estimate
benefits without having to conduct expensive primary data collection and analysis, but it also
inevitably involves uncertainties. Therefore, a number of important caveats should be
considered when interpreting the results.
First, the value of a fishing day from the Walsh, Johnson, and McKean study is more
likely to reflect .waterbodies that are of average (and perhaps above average) quality, whereas,
based on limited available information, the baseline quality of the affected reaches is more
likely to be below average than above average. The affected reaches are primarily located in
urban areas, and, as shown hi Table 3-16, 22 of these reaches have fishing advisories. The
existence of these fishing advisories has been accounted for by adjusting participation rates
by 20 percent. However, because no other adjustment has been made for baseline water
quality, the baseline fishing day values for the affected reaches may be an overestimate.
Second, hi the Lyke study, individuals were asked to value a reduction in
contamination that is complete and for all of the Great Lakes. Although the proposed rule
will almost entirely eliminate pollutant concentrations hi CWT effluents, background levels
may be greater than zero hi some of the reaches. Therefore, contamination may not be
completely eliminated by the proposed rule. Furthermore, the proportionate change in value
from eliminating contamination hi all Great Lakes is likely to be higher than from
eliminating contamination hi the individual CWT reaches,because the CWT reaches are
likely to have more close substitutes. This suggests that transferring Lyke's findings will also
tend to overstate the benefits of the proposed rule.
Third, it is not clear what impacts Lyke's survey respondents associated with
eliminating contamination hi the Great Lakes. As a result, the basis for their expressed
values is somewhat hidetermhiate. It is probably safe to assume that some of these values
reflect reductions hi perceived health risks, but there is no way to know how well these
correspond with the types' and magnitudes of health risk reductions at the CWT reaches. To
9-54
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DRAFT
the extent that the survey respondents implicitly considered cancer risk reductions in their
WTP responses, the estimated recreation benefits in Table 9-18 will at least partially double-
count the estimated value of cancer risk reductions shown in Table 9-15. Without more
information, the degree of double-counting cannot be determined. Because noncancer risk
reductions for the CWT reaches (Table 9-13) cannot be monetized, there is no double-
counting of the value of these risk reductions. Based on the analysis described in
Section 9.4.2.3, however, the proposed rule is not anticipated to provide large noncancer risk
reduction benefits.
These three caveats indicate that adding the estimated recreation benefits to the cancer
risk reduction benefits will tend to overstate benefits from the proposed rule. However,
because EPA did not measure downstream improvements in water quality, these estimates
may also fail to capture important downstream recreation benefits. In addition, using a
threshold model (with the AWQC as the threshold) and assuming zero background
concentrations may either overstate or understate benefits if background concentrations of
affected pollutants do, in fact, exist.
9,4.4 POTW Sludge Disposal Cost Savings
The benefits discussed in this section, POTW sludge disposal cost savings, are
fundamentally different from those discussed in the previous section in one respect: the
benefits to POTWs occur before the CWT pollutants are released into the environment. All
of the benefits discussed in Section 9.4.3 originate from changes in environmental systems,
namely the water quality and ecological impacts on the receiving waterbodies. The cost
savings discussed and quantified in this section are separate from any changes in surface
water quality.
The benefits to POTWs may occur because reduced discharges from CWT facilities
will, in many cases, reduce POTW operating costs. The treatment of wastewater by POTWs
produces a sludge that contains pollutants removed from wastewater. POTWs must use or
dispose of this sludge in compliance with state and federal requirements. These requirements
vary with the pollutant concentration of the sludge. Because the proposed regulatory options
will require reductions in pollutant levels in wastewater from CWTs, the sewage treatment
systems that receive these discharges are expected to generate sewage sludge with reduced
pollutant concentrations. As a result, the POTWs should be able to use or dispose of the
sewage sludge at a lower cost. In some cases, POTWs may be able to dispose of the cleaner
sludge by using it in agricultural applications, which will generate additional agricultural
9-55
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DRAFT
productivity benefits. This section assesses the potential economic benefits resulting from
cleaner sewage sludge and develops a partial estimate of the benefit value. Also, it discusses
in detail the cost savings associated with reduced pollutant contamination of effluent
discharged by CWT facilities to POTWs.
9.4.4.1 Overview of Benefits to POTWs from the Proposed Regulation
Several benefits are expected to result from reduced contamination of sewage sludge.
Eight of the primary benefits are outlined below.
1. POTWs may be able to use or dispose of sewage sludge through less expensive
means. CWA regulations (40 CFR Part 503) contain limits on the concentrations
of pollutants in sewage sludge when used or disposed of through specified means.
As a result of the proposed regulations, sewage sludge from some POTWs may
meet more stringent limits, which, in turn, will permit less expensive use or
disposal of the sewage sludge. In the best case, sewage sludge will meet land
application pollution limits. This sewage sludge may be disposed of via land
application, which in some instances may be substantially less costly than other
use or disposal practices (e.g., incineration or landfilling).
2. Some sewage sludge that currently meets only land application ceiling
concentration limits and pollutant loading rate limits will meet the more stringent
land application pollutant concentration limits as a result of the proposed
regulation. Entities that apply these sewage sludges face fewer recordkeeping
requirements than users of sewage sludge that meets only land application ceiling
concentrations and loading rate limits. Further, POTWs producing sewage sludge
that meets the pollutant concentration limits have no application rate limits other
than the agronomic rate (determined by the nitrogen needs of crops and the plant-
available nitrogen at the application site).
3. By land-applying sewage sludge, POTWs may avoid costly siting negotiations
regarding other sewage sludge use or disposal practices, such as incinerating
sewage sludge.
4. POTWs may use the nitrogen content of the sewage sludge to supplement other
sources of nitrogen. Sewage sludge applied to agricultural land, golf courses, sod
farms, forests, or residential gardens is a-valuable source of fertilizer.
5. The organic matter in land-applied sewage sludge can improve crop yields by
increasing the ability of soil to retain water.
9-56
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DRAFT
6. Nonpoint source nitrogen contamination of water may be reduced if sewage
sludge is used as a substitute for chemical fertilizers on agricultural land.
Compared to nitrogen in most chemical fertilizers, nitrogen in sewage sludge is
relatively insoluble in water. The release of nitrogen from sewage sludge occurs
largely through continuous microbial activity, resulting in greater plant uptake and
less nitrogen runoff compared to conventional chemical fertilizers.
7. Reduced sewage sludge concentrations of pollutants that are not currently subject
to sewage sludge pollutant concentration limits will reduce human health and
environmental risks. Human health risks from exposure to these unregulated
sewage sludge pollutants may occur from inhalation of particulates, dermal
exposure, ingestion of food grown in sewage sludge-amended soils, ingestion of
surface water containing sewage sludge runoff, ingestion offish from surface
water containing sewage sludge runoff, or ingestion of contaminated ground
water.
8.' Land application of sewage sludge satisfies an apparent public preference for this
practice of sludge disposal, apart from considerations of costs and risk.
Although each of these benefits may be substantial, only the first benefit from the
above list—shifts to less expensive sewage sludge use or disposal practices—is quantified in
this report. The remaining benefits categories associated with reduced sewage sludge
contamination were not quantified largely because of data limitations. The next section
monetizes the first benefit listed and discusses each of the steps taken to arrive at a monetary
value for this benefit.
9.4.4.2 Monetization of One of the Primary Benefits to POTWs
The basic concept underlying quantification of shifts to less expensive sewage sludge
use or disposal practices is that POTWs choose the least expensive sewage sludge use or
disposal practice for which their sewage sludge meets pollutant limits. Sewage sludge
applied to agricultural land or placed on a surface disposal site is subject to stricter pollutant
limits than sewage sludge used or disposed of by other practices. However, these use or
disposal practices are, however, also generally less expensive than the alternatives.
Therefore, POTWs with sewage sludge pollutant concentrations that exceed the land
application for surface disposal pollutant limits in the baseline maybe able to reduce sewage
sludge use or disposal costs when pollutant emissions from CWT facilities are reduced. EPA
estimated the number of POTWs and associated quantity of sewage sludge that will meet
land application pollutant limits and surface disposal pollutant limits before and after the
regulation is implemented. From the estimates of the relative costs of sewage sludge or
9-57
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DRAFT
disposal practices, the Agency then estimated the cost savings that would accrue to POTWs
from the quantities of sewage sludge that qualify for land application or surface disposal
practices. The current sludge use and disposal practices and the cost savings methodology
used to monetize the benefits from changing these practices are the focus of this section.
Current Sewage Sludge Generation, Treatment, and Disposal Practices.
Provided below is a brief description of the sewage sludge characteristics and treatment
processes and the methods of sludge use or disposal.
Sewage Sludge Characteristics and Treatment. Sewage sludge contains five classes
of components: organic matter, pathogens, nutrients, inorganic chemicals, and organic
chemicals. The mix and level of these components ultimately determine the public health
and environmental impact of sewage sludge use or disposal and may also dictate the most
appropriate use or disposal practice. • . .
Sewage sludge is generated as a result of the treatment of domestic wastewater in
conjunction with wastewater indirectly discharged to surface water via POTWs. The
chemical and physical characteristics of the sewage sludge will depend on the extent and type
of wastewater treatment used (i.e., primary, secondary, or advanced wastewater treatment).
To reduce the volume of the sewage sludge generated, the sludge may be conditioned,
thickened, stabilized, or dewatered.
Sewage Sludge Use or Disposal Practices. After sewage sludge has been treated, it is
either disposed of or beneficially used. The use or disposal practice chosen depends on
several factors. These factors include the cost of preparing the sewage sludge for the chosen
use or disposal practice, pollutant concentrations, the availability of markets for sewage
sludge, the availability of suitable sites for use or disposal, the costs of transporting sewage
sludge to these sites, state environmental regulations, and public acceptance. Many POTWs
use more than one use or disposal practice to maintain operating flexibility and avoid
capacity limitations of a single practice.
There are four major sewage sludge use or disposal practices:
1. Land Application: the spraying or spreading of sewage sludge onto the land
surface, the injection of sewage sludge below the land surface, or the
incorporation of sewage sludge into the soil so that the sewage sludge can either
condition the soil or fertilize crops or vegetation grown in the soil. Sewage sludge
is applied to agricultural lands (pasture, range land, crops); forest lands
(silviculture); and drastically disturbed lands (land reclamation sites); or may be
9-58
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DRAFT
sold or given away in a bag or other container for application to the land (formerly
known as distribution and marketing).
2. Surface Disposal: placing sewage sludge into an area of land for which only
sewage sludge is placed for final disposal. Surface disposal includes surface
impoundments (also called lagoons) used for final disposal, sewage sludge
monofills (i.e., sludge-only landfills), and land on which sewage sludge is spread
solely for final disposal (referred to as a "dedicated site")..
3. Incineration: the combustion of organic and inorganic matter in sewage sludge by
high temperatures in an enclosed device.
4. Co-disposal: the disposal of sewage sludge hi a municipal solid waste landfill
(MSWLF) or used to cover material at a MSWLF.
Cost Savings Methodology. As mentioned earlier, sewage sludge for some POTWs
will meet more stringent pollutant limits, which, in turn, will permit less expensive use or
disposal of sewage sludge. This section describes the methodology used to estimate the total
annual cost savings for each of the following proposed regulatory subcategories: Metals
Option 4, Oils Option 9, Organics Option 4, and the Combined Regulatory Option.
Determine Cost Differentials for Switching from One Sludge Use or Disposal Method
to Another. The first step in calculating the cost savings for the proposed regulations was to .
determine the appropriate range of cost savings for switching from one disposal method to
another. EPA used the range of annual cost savings reported in the Regulatory Impact
Analysis of Proposed Effluent Limitations Guidelines and Standards for the Metal Products
and Machinery (MP&M) Industry (Phase I) (EPA, 1995b) that were estimated using
information from several sources. This blend of information is important because costs vary
across POTWs; however, the findings of the Regulatory Impact Analysis for MP&M Industry
indicate that, when ranking the sludge use or disposal practices by cost, the general order is
consistent across POTWs. This ranking from least to most expensive is as follows:
1. agricultural land application, surface impoundments, surface disposal to a
dedicated site (all approximately the same);
2. monofills;
3. sale or give away in a bag or other container for application to land;
4. co-disposal at a MSWLF; and
5. incineration.
9-59
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DRAFT
Moreover, EPA judged that the differences in cost between certain combinations of
these use or disposal practices (e.g., the cost savings achieved by switching from incineration
to land application) are relatively stable despite the wide range of use or disposal costs for
given options among individual POTWs (EPA, 1995b).
As mentioned earlier, POTWs may use more than one type of disposal method.
Table 9-20 shows two composite sludge use or disposal practice categories for both baseline
and post-compliance sewage sludge use or disposal practice. Each of these composite
categories assumes a particular mix of sludge use or disposal practices. The first composite
baseline sludge use or disposal practice—surface disposal—applies to POTWs with sludge
concentrations that meet surface disposal pollutant limits but do not meet land application
ceiling pollutant limits. The cost differentials calculated from this baseline are based on the
assumption that the POTWs having sludge concentration levels that meet this criterion will
use a mix of sludge use or disposal practices as follows: 47 percent dedicated site, 28 percent
monofils, and 25 percent surface impoundment. The second composite baseline disposal
practice—incineration and co-disposal—applies to POTWs with sludge concentrations that
do not meet land application or surface disposal pollutant limits. The cost differentials
calculated from this baseline assume that POTWs with sludge concentrations that fit this
criterion will choose a sludge use or disposal practice mix of 32 percent incineration and
68 percent co-disposal. The two post-compliance disposal practice categories are land.
Estimate Baseline Sludge Use or Disposal Method. The next step in determining the
sludge disposal cost savings was to determine, for each POTW receiving discharges from
CWT facilities, which disposal method is used in the baseline based on estimated pollutant
concentrations in their sludge. For each subcategory, EPA calculated the total baseline
sludge concentration for the ten pollutants of concern. Each POTW was then matched to one
of the composite sludge use or disposal practice categories mentioned in the previous
section—land, surface, and incineration/co-disposal—based on exceedahces of the relevant
limits.
To determine which disposal practice category was appropriate, EPA compared the
sewage sludge concentration levels for each POTW with the ceiling limits for land
application and the surface disposal limits published in the "Standards for the Use or
Disposal of Sewage Sludge" (40 CFR Part 503). As mentioned earlier, if the sludge
concentrations met both the land application and surface pollutant limits, the POTW was
assumed to use the land application disposal method. Because EPA is quantifying benefits
9-60
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that arose from cost savings from switching disposal practices, and land application is the
least expensive disposal practice, all POTWs that had sewage sludge concentrations that met
this criterion were dropped from this analysis. Sludge disposal methods were estimated for a
total of 69 POTWs receiving wastes from CWT facilities. Under the combined baseline, all
POTWs were estimated to exceed land application limits for at least one pollutant. Three
POTWs were estimated to also exceed surface disposal limits and were assumed to use the
disposal mix of incineration and co-disposal.
Estimate Post-Compliance Composite Sludge Use or Disposal Method. To calculate
cost savings, the Agency first determined, for each regulatory option, the number of POTWs
that would shift to a new sludge use or disposal .method. This required estimating the post-
compliance sludge use or disposal practice using the same procedure that was implemented to
estimate baseline sludge use or disposal practice. Each POTW's post-compliance sludge
concentration was then compared with the sewage sludge pollutant limits for surface disposal
and land application, and the same assumptions were used as discussed above to match each
POTW to a sludge use or disposal practice category. Finally, EPA compared this
post-regulation sludge use or disposal practice to the baseline sludge use or disposal practice
to determine if the POTW did switch after compliance. As shown in Table 9-21, the
regulation will lead to a shift in disposal from incineration to surface for one POTW under
Metals Option 4. No shifts in disposal practice will take place under Organics Option 4 or
Oils Options 8 or 9. Under the combined regulatory option, two POTWs are estimated to
shift from incineration to surface disposal.
Calculate Cost Savings for Each POTW. The next step in the analysis was to
calculate, for each POTW, the annual cost savings associated with each regulatory option.
To determine the annual cost savings of a POTW, EPA multiplied the cost differential
between baseline and post-compliance sludge use or disposal practices by the quantity of
sewage sludge that shifts into meeting land application or surface disposal limits. The cost
differential used in this estimation is the cost savings found in Table 9-20. For the quantity
of sewage sludge that shifts into meeting new pollutant limits, the Agency used the quantity
of sludge, in metric tons (DMT), generated annually at each POTW.
9-62
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9-63
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DRAFT
Calculate Cost Savings for Each Regulatory Combination. The final step was to
calculate the total annual cost savings for each regulatory option. To calculate the savings for
a particular regulatory option, the Agency summed the cost savings of each of the individual
POTWs for that particular regulatory option. As shown in Table 9-21 these estimates were
then combined to estimate the annual cost savings for the Combined Regulatory Option,
which range from $136,000 to $845,000. The majority of these cost savings can be attributed
to the metals option, which each have an annual cost savings of between $73,000 to
$453,000.
9.5 Comparison of Benefits and Costs
This section compares the costs and benefits projected to be experienced by society as
a result of the CWT effluent limitations guidelines and standards. The social costs of the
regulation, including costs to CWT owners, CWT customers, and government, are estimated
to be approximately $45.3 million. The quantified and valued benefits of the regulation are
projected to range from $1.9 million to $6.3 million. A preliminary comparison of these
values shows that the estimated costs exceed the estimated benefits. However, the estimation
of both costs and benefits is subject to limitations and uncertainties. The limitations and
uncertainties are described in greater detail earlier in this report and are summarized below.
One significant difference in methodology which contributes to estimated costs being greater
than estimated benefits is that estimated costs are scaled up to reflect costs associated with
the estimated population of CWT facilities. EPA believes that it is not appropriate to scale
up the estimated benefits, because the location, reach characteristics, and population
characteristics associated with the plants for which EPA has no data may not be well
represented by those associated with the plants for which EPA has data. Comparing scaled
up costs to benefits which are not scaled up would tend to make the net benefits smaller (or
more negative) than they are in reality.
In general, it is not possible to determine the effect of the limitations and uncertainties
on the magnitude of the estimated costs. However, the quantified and valued benefits of the
regulation represent only a subset of its total benefits, so the benefits are certainly
underestimated.
9.5.1 Uncertainties and Limitations of Analysis of Social Costs
Several areas of uncertainly may affect the estimated costs of the regulation. For
example, CWTs are assumed to offer their services and compete in multistate regional
9-64
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DRAFT
markets, which may be either perfectly competitive, monopolistic, or duopolistic. The
market structure affects the distribution and magnitude of the costs of the regulation. If the
markets for CWT services are larger geographically and more competitive than EPA has
assumed, the model overestimates; the social costs of the regulation and allocates too large a
share to customers and too small a share to CWT owners. If, on the other hand, the markets
are smaller and less competitive, the costs may be understated, and more of the burden may
fall on customers than predicted by the model.
The elasticity of demand assumed in the model also affects how much of the costs
, may be passed on to customers and how much must be absorbed by owners. The model uses
an elasticity of demand in competitive CWT markets (-0.5) that reflects the general range of
estimated elasticities found in the literature for various types of waste management services
(see Appendix E for more detail). The elasticity of demand in imperfectly competitive
markets is assumed to be -1.5. Economic theory dictates that firms with market power
operate in the elastic range of their demand curves. Thus, the elasticity must be above 1 in
absolute value. It may, in fact, be higher or lower than assumed. If the true demand is more
elastic than assumed, more of the costs will be absorbed by the CWTs. If it is less elastic, a
larger share will be passed on to customers.
Because of data limitations, EPA assumes the average or per-unit cost functions for
individual CWT processes is constant up to process capacity, and most facilities are operating
their processes at or near capacity (that is, they do not adjust the quantity of waste treated).
EPA assumes that adjustments in quantity in response to changes in costs and price take place
only at the highest cost facilities. If this is not true, facilities whose CWT processes do not
incur costs as a result of the regulation would be likely to increase production in response to
the higher with-regulation price. Thus, this assumption may overstate both quantity and price
impacts of the regulation (see Appendix D for a more detailed discussion of the cost
functions).
Overall, therefore, it is not possible to determine the direction of influence of the
uncertainties and limitations on the estimated costs. The following section examines the
uncertainties and limitations affecting the .benefits analysis and indicates the expected sign of
the effect of those uncertainties and limitations on the estimated benefits of the regulation.
9-65
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DRAFT
9.5.2 Uncertainties and Limitations of Analysis of Benefits
One general limitation of the benefits analysis, which probably results in an
underestimation of benefits, is that EPA .analyzed water quality and related impacts only for
a single reach adjacent to each discharge point. The impacts of the regulation on reaches
downstream and upstream from the directly affected reaches will most likely be lower than
impacts on directly affected reaches, but not necessarily zero.
Many categories of benefits are not quantified and valued because of data limitations.
For example, benefits of improved water quality through reductions in most noncancer health
effects can only be identified, not quantified or valued, because dose-response functions for
these noncancer health effects do not exist. Thus, analysts can observe whether the estimated
individual levels of exposure to each chemical exceed their respective safety thresholds
(RfDs); however, without dose-response information, they cannot estimate the incidence of
the health effects in the exposed population. Other types of benefits that are not quantified or
valued are nonuse benefits, near-stream recreation benefits, benefits to commercial
fishermen, and benefits to diversionary users of the water, such as industries or municipalities
that use the water for drinking or other uses. In addition, recreation-based benefits are
underestimated because data were not available to estimate the angler population at one of
the reaches where these benefits occur.
77je analysis assumes that background concentrations of each pollutant are zero.
This assumption does not affect the reductions, in cancer risk, but for assessments of
ecological and noncancer impacts, which depend on whether the concentration of the
pollutant falls above or below a threshold level, the results are very sensitive to the accuracy
of the assumption. It is unclear whether the assumption results hi an underestimate or an
overestimate of the impacts.
Estimation of the number of anglers using the affected reaches has not considered the
quality of substitute sites. The analysis assumes anglers in a region are equally likely to fish
any reach mile within the zone. If water quality in substitute sites is distinctly better (worse)
than in the affected reach, then the estimates of the exposed populations are likely to be too
high (low).
Anglers' responses to fish consumption advisories is very uncertain. This analysis
adjusted the exposed pppulation downward by 20 percent in reaches that had fish
consumption advisories. Some studies suggest that fisherman may not change their fish
9-66
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DRAFT
consumption behavior in response to advisories. If this is true, the analysis underestimates
the benefits.
The analysis assumes no behavioral changes as a result of water quality
improvements. If either the perceptible qualities of the water bodies are improved or the
catch improves, anglers are likely to increase their fishing activities (and thus potential
exposures to remaining contaminants) in the affected reaches. If so, health benefits may be
overestimated in EPA's analysis, and recreation benefits may be underestimated.
The transfer of benefit values may have led to an overestimate of values. There are
two reasons for this. First, the estimate of the value of a fishing day for the affected reaches
may be too high, because water quality at these reaches is probably generally worse than the
water quality in the waterbodies for which the benefits were originally estimated Second, the
source of the benefit values used for measuring the increase in the value of a fishing day due
to removal of all contaminants may to an extent double count the reductions in cancer risk.
Also, the CWT reaches have more close substitutes than the waterbodies used in the Lyke
analysis (the Great Lakes), and use of Lyke's estimates may overestimate the increased value
in the CWT reaches.
9.6 Conclusions
This section has presented and compared EPA's estimates of the benefits and costs to
society of the proposed effluent limitations guidelines and standards for the CWT industry.
The estimated costs, approximately $45.3 million, represent EPA's best point estimate of the
costs of the regulation. However, because of limitations and uncertainties of the analysis, the
true costs to society may be higher or lower than the estimated costs. ,
EPA also estimated the values of several types of benefits of the regulation, including
reductions in cancer risk, reductions in risk due to lead exposure, in-stream recreational
benefits, and reduced costs of sludge disposal for POTWs managing CWT wastewater.
EPA's benefits estimates range from approximately $1.9 million to $6.3 million. This
chapter notes several uncertainties and limitations of these quantified and valued benefits
estimates. These might result in the estimated benefits for those categories being either
, higher or lower than the true benefits for those categories. However, because data limitations
prevented the Agency from quantifying or valuing many other categories.of benefits,
including benefits to near-stream recreation, commercial fishing, and diversionary users of
the affected waterbodies, as well as nonuse benefits, the Agency is certain that the quantified
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DRAFT
and valued benefits represent only a subset of total benefits. Thus, EPA is confident that the
costs of the proposed regulation are reasonable given the expected benefits.
9.7 References
Atkinson, Scott E., and Robert Halvorsen. 1990. "The Valuation of Risks to Life: Evidence
from the Market for Automobiles." The Review of Economics and Statistics
72(1):133-136.
Belton, Thomas, Robert Roundy, and Neil Weinstein. 1986. "Urban Fishermen: Managing
the Risks of Toxic Exposure." Environment 28(9): 19-37.
Cable, Ted T., and Edward Udd. 1990. "Effective Communication of Toxic Chemical
Warnings to Anglers." North American Journal of Fisheries Management
10:382-387.
Connelly, Nancy A., and Barbara A. Knuth. February 1993. Great Lakes Fish Consumption
Health Advisories: Angler Response to Advisories and Evaluation of Communication
Techniques. HDRU Series No. 93-3. Ithaca, NY: Cornell University.
Connelly, Nancy A., Barbara A. Knuth, and Carole A. Bisogni. September 1992. Effects of
the Health Advisory and Advisory Changes on Fishing Habits and Fish Consumption
in New York Sport Fisheries. Report prepared for the New York Sea Grant Institute
Project No. R/FHD-2-PD, Series No. 92-9. Ithaca, NY: Cornell University.
Diana, Susanne C., Carole A. Bisogni, and Kenneth L. Gall. 1993. "Understanding Anglers:
Practices Related to Health Advisories for Sport-Caught Fish." Journal of Nutrition
Education 25(6):320-328.
Environmental Systems Research Institute Inc. (ESRI). 1995. ArcView 3a Geographic
Information System software package. Redlands, CA.
Fedler, Anthony J., Robert B. Ditton. 1986. "A Framework for Understanding the
Consumptive Orientation of Recreational Fishermen." Environmental Management
10(2):221-227.
Fiore, Beth Jones, Henry A. Anderson, Lawrence P. Hanrahan, Leon John Olson, and
William C. Sonzogni. 1989. "Sport Fish Consumption and Body Burden Levels of
Chlorinated Hydrocarbons: A Study of Wisconsin Anglers." 'Archives of •
Environmental Health 44(2):82-88.
Fisher, A., L. Chestnut, .and D. Violette. 1989. "The Value of Reducing Risks to Death: A
Note on New Evidence." Journal of Policy Analysis and Management 8:88-100.
Heller, Katherine B. and Tyler J. Fox. 1998. Estimation of social cost under imperfect
competition. Memorandum to the record for the Centralized Waste Treatment
Effluent Limitations Guidelines and Standards.
9-68
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DRAFT
Holland, Stephan M., Robert B. Ditton. 1992. "Fishing Trip Satisfaction: A Typology of
Anglers", North American Journal of 'Fisheries Management 12:28-33.
Lyke, A. 1993! Discrete Choice Models to Value Changes in Environmental Quality: A
Great Lakes Case Study. Thesis submitted in partial fulfillment of the requirements
for the degree of Doctor of Philosophy (Agricultural Economics) at the University of
Wisconsin Madison.
MacDonald, Hugh F., and Kevin J. Boyle. 1997. "Effect of a Statewide Sport Fish
Consumption Advisory on Open-Water Fishing in Maine." North American Journal
of Fisheries Management 17(3):687-695.
May, Helen, and Joanna Burger. 1996. "Fishing in a Polluted Estuary: Fishing Behavior,
Fish Consumption, and Potential Risk." Risk Analysis 16(4):459-471.
Slovic, Paul, BaruchFischhoff, and Sarah Lichtenstein. 1979. "Rating the Risks." In
Readings in Risk, Theodore S. Glickman and Michael Gough, eds., pp. 61-74.
Smith, V. Kerry, and Yoshiaki Kaoru. 1990. "Signals or Noise? Explaining the Variation in
Recreation Benefit Estimates." American Journal of Agricultural Economics
72(2):419-433.
U.S. Department of Commerce, Bureau of the Census. 1999. Statistical Abstract of the
United States. 119thed. Washington, DC.
U.S. Department of the Interior, Fish and Wildlife Service and U.S. Department of
Commerce, Bureau of the Census. March 1993. 1991 National Survey'of Fishing,
Hunting, and Wildlife-Associated Recreation. Washington, DC.
U.S. Department of the Interior, Fish and Wildlife Service and U.S. Department of
Commerce, Bureau of the Census. November 1997. 1996 National Survey of
Fishing, Hunting, and Wildlife-Associated Recreation. Washington, DC.
U.S. Environmental Protection Agency, Office of Water. 1998. Environmental Assessment of
Proposed Effluent Guidelines for the Centralized Waste Treatment Industry.
Washington, DC. EPA Report No. 821-R-95-003.
U.S. Environmental Protection Agency, Office of Water. 1995b. Regulatory Impact
Analysis of Proposed Effluent Limitation Guidelines and Standards for the Metal
Products and Machinery Industry (Phase 1). Washington, DC. EPA Report No. 821-
R-95-023.
U.S. Environmental Protection Agency. October 1997a. The Benefits and Costs of the Clean
Air Act, 1970 to 1990. Research Triangle Park, NC: Office of Air Quality Planning
and Standards.
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DRAFT
Velicer, Christine M., and Barbara A. Knuth. 1994. "Communicating Contaminant Risks
from Sport-Caught Fish: The Importance of Target Audience Assessment." Risk
Analysis 14(5):833-841.
Viscusi, W. Kip. 1993. "The Value of Risks to Life and Health." Journal of Economic
Literature 32(December):1912-1946.
Walsh, Richard G., Donn M. Johnson, and John R. McKean. 1992. "Benefit Transfer of
Outdoor Recreation Demand Studies, 1968-1988." Water Resources Research
28(3):707-713.
9-70
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APPENDIX A
Part B of the Waste Treatment Industry Questionnaire and
Facility Information Sheet Form for NOA Notification
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U.S. ENVIRONMENTAL PROTECTION AGENCY
WASTE TREATMENT INDUSTRY QUESTIONNAIRE
PART 2. ECONOMIC AND FINANCIAL INFORMATION
INTRODUCTION
The U.S. Environmental Protection Agency (EPA) is conducting a survey of the Waste Treatment industry
as pan of its effort to establish national wastewater regulations for this industry. For purposes of this
questionnaire, hazardous and non-hazardous wastes will be covered. The data collected by the
Technical section of the questionnaire will be used to determine the number of facilities in this industry
the number of dischargers to surface waters and publicly-owned treatment works, the characteristics of
these discharges, and the treatment technologies currently used by thte industry. The data collected by
the Economic and Financial section of the questionnaire will be used to characterize the industry and to
estimate the possfcle economic impacts of the regulations.
AUTHORITY — __
This survey is conducted under the authority of Section 308 of the Clean Water Act (the Federal Water
Pollution Control Act. 33 U.S.C. Section 1318). All facilities which receive this questionnaire must
respond. Only if you were instructed in Section A of Part 1 of the questionnaire to stop f illing out the
questionnaire are you not required to complete Part 2. Follow the questionnaire instructions and answer
the questions as accurately as possfcle. PLEASE RETURN THE QUESTIONNAIRE TO EPA WITHIN 60
DAYS. Late filing or failure otherwise .to comply with these instructions may result In criminal lines civil
penalties, and other sanctions as provided by law.
WHO SHOULD COMPLETE THE
ECONOMIC/FINANCIAL SECTION OF THE QUESTIONNAIRE?
Each section of this questionnaire should be completed by the person who is most knowledgeable about
the information ft requests. Nevertheless, verifying each section of the questionnaire and signing the
certification statement located in Part 3 should be a single individual's responsajflity. Accurate responses
will enable EPA to consider the information in future policy decisions.
EPA has prepared this part of the questionnaire ao that X is applicable to a wide variety of waste
management facilities. Therefore, not ail the questions may apply to yourfacffity. Unless instructed
otherwise, you are expected to make an effort to complete every item using available data. However, you
are not required to perform non-routine tests or measurements solely for the purpose of responding to this
questionnaire. If exact measurements are not available but can be estimated, please provide estimates
and note, on the NOTES page at the end of each section, the method used in making the estimation.
Please indicate on the NOTES page all question* for which your responses are estimates.
Note: If you responded "No" to Question A.17 m Part i. you an not required to complete Pan 2.
QUESTIONNAIRE HELPLINE
If you have any questions about the economicflinancial part of the questionnaire or would like to provide
additional information, please contact the Waste Treatment Industry Questionnaire Helpline at 1-800-626-
5767.
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INSTRUCTIONS
PROVISIONS REGARDING DATA CONFIDENTIALITY
Regulations governing the confidentiality of business in "atton are contained In 40 CFR Part 2 Subpart
B. You may assert a business confidentiality claim covering pan or all of the .information you submit in the
manner described in 40 CFR 2.203(b):
*(b) Method and time of asserting business corrfidentiatiry daim. A business which b submitting information
to EPA may assert a business confidentiality dajm covering the information by placing on (or attaching to)
the information, at the time it is submitted ta EPA. a cover sheet stamped or typed ieotnd. or other suitable
form of notice employing language such •»* trade secret.' 'proprietary.' or 'company confidential.' ABegedly
confidential portions of otherwise non-c. rientiaJ cbcumerrtt should be deany identified by the business.
and may be submitted separately to f acuuse identification and handling by EPA. If the business desires
confidential treatment only until a certain date or untM the occurrence erf a certain event, the notice should so
state.*
If no business confidentiality claim accompanies the information when It Is received by EPA, ErA
may make the information available to the public without further notice to you.
Please be specific in indicating whether a claim of confidentiality covers all or only part of the information
on a questionnaire or attachment.
Information co'rered by a claim of confidentiality wffl be disclosed by EPA onfy to the extent, and by
means of the rocedures. s:t forth in 40 CFR Part 2 Subpart B. In general submitted information
protected by a business confidentiality damn may be disclosed to other employees, officers, or authorized
representatives of the United Stales concerned with carrying out the Clean Water Act, or when relevant to
any proceeding under the Act. .
Effluent data are not eligible for confidential treatment, pursuant to Section 308(b) of the Clean Water Act
The information submitted win be made available to EPA contractors in order that the contractors may
carry out the work required by their contract with EPA. AH EPA contracts provide that contractor
employees shall use the information only for the purpose of carrying out the work required by their
contract and shall refrain from disclosing any confidential business information to anyon* other than EPA
without the prior written approval of each affected business or of the EPA legal office. Any comments you
may wish to make on this issue must be: jbrritted in writing at the time of submitting your response.
Please direct any questions regarding confidential business information to the Waste Treatment Industry
Questionnaire Helpline at 1-€00-626-5767.
CHECKLIST
Be sure that the following additional information te included win the completed questionnaire, unless
instructed otherwise: .
Q Question IL22: 1987,1988. and 1989 annual reports for the facffiy (if independently owned) or
. for the business entity that owns and/or controfc the facStty; include income statements and
balance sheets. (Please see definitions of fadfty and business entty, p. M-1.)
Q Question O.2: If the facffity uses a standard contract in arranging wthcfients to accept aqueous
Squid waste, sludge, and/or wastewater generated offste for treatment onstte, please attach a
copy of the standard contract. (Seep. O-T.)
I!
I
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1.
3.
4.
5.
7.
GENERAL INSTRUCTIONS
Read all dBflnftlons. P«ase read all definitions on page M-1 carefully before completing Pan 2 of
the questionnaire. The individual who responds to each section must be familiar with the pertinent
economc and financial aspeas of waste treatment, disposal, and recycling/recovery operations at
Mark responses for each question. Please drde the appropriate response or responses in each
question. More than one response may be circled for some questions. Where appropnate PfcSs?
S^*!*S5^E? ^^ wfB8n resp°nses * P^1"5 Or tt** * «*S»«8 proved If
the space allotted for the answer to any question is not adequate for your conplete response oiease
continue the response in the NOTES area at the end of each section of the questionnaire P
.Reference the comments to the appropriate question. If additional attachments are used to darifv a
221"^ P "?ke C8ftain that the code nurnber f or this questionnaire, which appears at the too
right hand comer of each page, is also placed at the top right hand comer of each page of the
oiioCnnjcIitS* ... , •
Please enter all asset, liability, revenue, and cost information In do/Jars, and price information
In dollars ptr ton. Pi«a» enter quantity Information In short tons (2000 poundssi "™
Indicate Information which should be treated as confidential. Please follow the Instructions
given ,n the PROVISIONS REGARDING DATA CONFIDENTIALITY section on pags itotaoSe
which information in your responses is confidential so that ft may be protected under confidentiality
procedures. • . .
Answer all Items unless Instructed otherwise. Please answer afl fiems unless Instructed to do
otherwise. The purpose of this questionnaire is to gather all available economic and financial
information pertinent to hazardous and non-hazardous waste treatment, disposal and
recyding/recovery operations that produce wastewaters. If a question is not applicable, indicate bv
wrrting N/A. If, after conscientious attempts to obtain requested information, an ttem remains
unknown and cannot be estimated, write "UNK* and explain in the NOTES area at the end of the
appropnate section why such Information is not avaflabte. If an item seems ambiguous, complete it
as fully as possible and state your assumption in doing so in the NOTES area at the end of the
55^,2!? SJai0!U R?*reTOe «*! explanations and assumptions to the 'appropriate questions. If
actual data are not available to answer a question, please estimate and indicate that you have done
so in the NOTES.
Retain a copy of completed questionnaire. EPA will review the information submitted and may
request your cooperation in answering foltow-up clarification questions, H necessary, to complete the
data base. Please retain a copy of the completed questionnaire, including attachments, in case EPA
must contaea you to verify your responses. Abo. please maintain a record of sources used to
complete the financial section. .
If you detached the economic and financial section of the questionnaire, please reattach tt
and return the entire questionnaire to:
Debra S. DiCianna
U.S. EPA (WH-552)
Office of Water
Office of Water Regulations and Standards
Industrial Technology Division
401 M Street, SW
Washington. DC 20460
8.
Call In questions. If you have any questions about the e»nomic/Tinanciai section, please
telephone the Waste Treatment Industry Questionnaire Helpline at 1-800-626-5767.
HI
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INSTRUCTIONS
This page is intentionally
left blank.
Iv
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CONTACT AND FACILITY tNFOHMATinM
PLEASE RETURN THIS PAGE WITH YOUR COMPLETED ECONOMC AND FINANCIAL QUESTIONNAIRE.
1. Provide the name, tttle, and telephone number of the individual who may be contacted to
icsr answer questions concerning information submitted In Pan 2. Economic and Financial
P**ICC.M Information.
P+4|A Name of Contact:
' B Trtle of Contact: _
P*<* / c Telephone Number: ( )
1> What is the most convenient time to cail?
ATTACH
LABEL
HERE
Review the information on the preprinted label above. If any of the information is incorrect.
enter the correct information in the appropriate spaces on this page.
eft? W th* malllnfl address 8nown on tl» preprinted label is not correct, inter the corrections to
the label In the spaces provided below.
. Q N/A
?4
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INSTRUCTIONS
This page is intentionally
(•ft blank.
vt
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SECTION M: BUSINESS ENTITY FINANCIAL INFORMATION
The purpose of Section M is to collect financial information about the business entity directly ownina
and/or controlling your facility. These data will be used to assess impacts of the regulation on
business entities.
For independently-owned and operated facilities and mutti-facility establishments whose primary
business is waste treatment, recycling/recovery, and/or disposal, the business entity is the facility or
establishment. The information requested in Section M is to be based on corporate annual reports.
For muni-facility establishments whose primary business is not waste treatment, recycling/recovery
and/or disposal activity, the business entity is the level of ownership closest to the facility for which'
there exist income statements, balance sheets, market or book value of stock. This may be for
example, the waste management division of a larger company.
Answer the questions, in sequence and do not leave any entry blank unless instructed otherwise
Definitions and specific instructions are provided throughout. Use the NOTES page at the end o'f the
section if you wish to explain your response to any question. Reference each comment with the
appropriate question number. Reminder: Please provide estimates.« possible, of data for which
exact measurements are unavailable. Indicate on the NOTES page at the end of the section which
responses are estimates, and explain the method of estimation.
DEFINITIONS
Financial Statements: balance sheet and income statement that were derived from accounting records
according to generally accepted accounting principles (GAAP).
Business Entity: a proprietorship, partnership, or corporation, or a division or subsidiary of a
proprietorship, partnership, or corporation, tor which financial «tat*mtm» exist.
Facility: the physical location or site where waste is managed.
DUNS Number: a unique nine-digit number assigned by Dun & Bradstreet Corporation to each business
establishment (i.e., to each branch location, headquarters location, and single location
establishment). These identification numbers, based on the Data Universal Numbers System are
referred to as D-U-N-S Numbers (printed here as DUNS).
Commercial Facility: a facility that treats, disposes, or recycles/recovers the wastes of other facilities not
under the same ownership as this facility. Commercial operations are usually made available for
a fee or other remuneration. Commercial waste treatment, disposal, or recycling/recovery does
not have to be the primary activity at a facility for an operation or unit to be considered
"Commercial".
Non-commercial Facility: a facility that provides treatment, disposal, or recycfihg services to other
facilities under the same ownership as this facility, for which no fee is charged. Included in this
definition are intracompany waste treatment facilities, which treat, dispose, or recyde/recover the
wastes generated off-site from facilities under the same corporate ownership. Intra-company
waste treatment facilities may receive remuneration in the form of intra-company funds, services.
etc. ,
Value of Product Manufactured (for non-commercial facilities only): quantity of product manufactured,
valued at market price.
M-1
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FILE
PART 2. SECTION M. BUSINESS ENTTTY FINANCIAL INFORMATION
M.1.
Is this facility Independently owned and operated? (I*., the facility Is the business entity.)
(Circle one number.)
01 Yes (GO TO QUESTION M.10 ON PAGE M-3)
02 No (CONTINUE TO NEXT QUESTION)
NL2. What is the name and mailing address of the business entity that directly owns and/or
controls this facility and for which financial statements exist?
Name of Business Entity:
B Street Address or P.O, Box:
City:
State:
What Is the name and mailing address or ;he corporate parent that owns and/or controls
this business entity?
Q Same as in Question M.2
M44 i A Name of Corporate Parent:
Street Address or P.O. Box:
State:
What Is the business entity's DUNS number?
(If the business entity does not have a 'MS number, circle the response code for "not
applicable.')
DUNS number:
Not applicabie:
! — l I
J J
00
VLS. Please give the month and year when the business entity purchased or took control of the
Month: i_LJ Yean 19LJ-J
com
Does the business entity currently own and/or control any other facilities engaged In
aqueous lio^Jid waste, sludge, and/or wastewater treatment, recycling/recovery, and/or
disposal operations?;
(Circle one number.)
01 Yes (CONTINUE TO NEXT QUESTION)
02 No (GO TO QUESTION M£ ON THE NEXT Pf 3S)
M-2
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.PART 2. SECTON M: BUSNESS ENTTTY F1NANOAI.
' . -nd/or w«ewater
treatment facilities that accept wastt frcxn oflstte do., the businw. emtty own and/or
control?
/vi^tfTConv
* ** T. Number of facilities (including your facility):
MA Does the business entity currently own and/or control any facilities nai engaged in
treatment, recycling/recovery, and/or disposal of aqueous liquid waste, sludge and/or
wastewater from off site? •«««»
(Circle one number.)
01 Yes (CONTINUE TO NEXT QUESTION)
02 No (GO TO QUESTION M.10)
MJ. Give the number of facilities owned and/or controlled by the business entity which are not
A. «<* «i e»M ^aced In treatment of aqueous liquid waste, siudgs, and/or wastewater from offsfte?
/v» 4 <* f\ Number of facilities:
.-.and
Information reported on basis of:
(Circle one number)
(GO TO QUESTION M.12 ON THE NEXT PAGE)
(CONTINUE TO NEXT QUESTION)
01
02 Fiscal year
lflnfonnatlohl« »Port*d on fiscal year basis, what are the start and end months of your
-------
PART 2. SECTION ifc BUSINESS ENTITY IWANdU. NFO RUAT1ON
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-------
PART2.SEtmONU: BUSINESS EKTTTY FINANCIAL INFORMATION
M.17. For the business entity, report the following Amounts for each calendar year.
b.
d.
f.
Sates *4iTfi ?7
Working capital ' " '/»$ 1 7 B ?7
Retained earnings »v * i T e *,7
ft* s
-------
_PART 2: SECTION M: BUSINESS ENTITY FINANCIAL INFORMATION
M.21. What Is the business amity's after-tax rat* of return on equity?
After-tax return on equity rate:
M.22. Include copies of the 1987,1988, and 1989 annual reports and 10K reports for your facility
a c (if Independently owned) or for the business entity that owns and/or controls your facility,
Including Income statement and balance sheet, with your return of the completed
questionnaire. Business entitles owning and/or controlling multiple facilities need send
only one copy of each annual report.
Q
Ir
M-6
-------
FILE
PABT 2, SECTION M: BUSINESS EHTTTY FINANCIAL INFORMATION
AVCA
ccai Question
Number(s)
n
I
.
Lvn*.
Mu.^e>«^, Notes, comments, etc.
i
J-
3 • . • • . • .
'
M-7
-------
PART 2. SECTION M: BUSINESS ENTITY FINANCIAL INFORMATION
This page is intentionally
left blank.
M-8
-------
flLE
SECTION N: FACILITY FINANCIAL INFORMATION
The purpose of Section N is to collect financial information at the facility level This information will be
used to assess impacts of the regulation on facilities.
Answer the questions in sequence and do not leave any entry blank unless instructed otherwise
Definitions and specific instructions are provided throughout. Use the NOTES page at the end of the
section if you wish to explain your response to any question. Reference each comment with the
appropnate question number. Reminder: Ptease provide estimates, if possible, of data for which
exact measurements are unavailable. Indicate on the NOTES page at the end of the section which
responses are estimates, and explain the method of estimation.
N.1.
Com
N ++ i
A com
What is your facility's DUNS number?
(If your facility does not have a DUNS number, circle the response, code for Tat applicable."}
DUNS number
Not applicable: 00
-t t t 1-1 i t i i
What SIC Code besi rePreMnt» you* facility* main operation?
(See ^ list of possible SIC Codes, Table R-2 in Instructions and Reference
SIC Code: i i i »
NJ3.
Do you conduct manufacturing operation* at thla facility?
(Circle one numoer.)
01 Yes (CONTINUE TO NEXT QUESTION)
02 NO (GO TO QUESTION N,10 ON PAGE N-3)
NU. Do your manufacturing operations generate aqueous liquid wast*, siudge, and/or
(Cirde one number.)
01 Yes (CONTINUE TO NEXT QUESTION)
02 No (GO TO QUESTION N.6 ON THE NEXT PAGE)
H-i
-------
PAHTg. SECTION N; FAOLJTY RNANC3AL
What quantity of wastewster was generated by thla facility'* manufacturing operations
durt"8 1987'1986' *** 1983« »nd *"« P««»ntaO* of thla waatawatar waa treated onatte?
Year
Quantity Generated
Percent Treated Qnsite
1987 N+4.rAf1 I'll ITI I I 1T1 it Hans H4<*r-B»7 , , , ,o/a
1988 K44i~Aif? I II ITI II 1,1 il ttans u*4S~ »tf | i ; i%
1989 H**r«^ I I I ITI » < ll • l t ttnns
N.7.
J£6. What was the calendar year during which manufacturing operations begar «t thla facility?
Yean it i i j
Does your facility ship any product manufactured onstta to other facilities under the same
ownership as your facility?
(Circle one number.)
01 Yes (CONTINUE TO NEXT QUESTION)
02 No (GO TO QUESTION N.10 ON THE NEXT PAGE)
What was the total value of shipments or value of product manufactured and shipped to
other facilities under the same ownership in calendar years 1987,1988, and 1989?
(Please include these revenues or cross charges in your responses to Questions N27b, N28o.
and N29b. orNSOb, N3lb, and N32b.)
1987: £ i
1988: S-i
1989: Si
i I
i I
I t t i
» i
TI i i i
How was the transfer price determined for shipments to other facBUes under the same
omai**
(Circle one number.)
01 Mantel price
02 Manuf acturinr cost
03 Other (specify}:
-------
PART 2. SECTION N: FAaUTY FINANCIAL INFORMATION
N.10. What WBS the calendar year during which aqueous liquid wxcta, sludge, and/or wastewater
treatment, recycling/recovery, and/or disposal began at this facility?
Yean ill ii
N.11, What was the calendar year during which the most recent major expansion or renovation
of aqueous liquid waste, sladge, and/or wastewater treatment, recycling/recovery, and/or
disposal capacity was substantially completed at this facility?
(A major expansion or renovation is one which resulted in a production increase of at least 10%
and/or a capital expenditure equal to at least 10% of the accumulated gross investment in plant
and equipment at the time of the investment decision.)
Year. 19L_L_J
N.12. Does your facility have a RCRA Pan B permit?
(Circle one number.)
01 Yes (CONTINUE TO NEXT QUESTION)
02 No (GO TO QUESTION N20 ON PAGE N-7)
N.13. Estimate the cost of obtaining this facility's RCRA Part B permit.
a. Legal fees: Si i f ITI i i IT
N*»3*b. Administrative costs: $L_LJ_J
c. Public relations: & i i ITI i i IT
d. Other (specify): * *> 13 ao & i i ITI i i it
& ill.
u*i3£ e. Total:
& i i ITT < i ir
K */ V
N.1 4. Has this faculty's RCRA Part B permtt evir b*»n modified?
(Circie one number.)
01 Yes (CONTINUE TO NEXT QUESTION)
02 NO (GO TO QUESTION N30 ON PAGE N-7)
N-3
-------
PART 2. SECTION N: FAOIJTY
N.15. How many modification* hav» bMn mad* to tr» fadUty* RCRA Part B permit?
H+wcer
_ Number «3l modifications:
For each modification, complete Questions N. 16 through N. 19 on the next page. If. for example.
three modfications were made to your RCRA Part B permit, photocopy Page N-S (Questions
N. 16 through N.19) two times.. JLlse the original page to report information on the first
modification, and the remaining copies to report on the second and third modifications. Number
each copy in the space provided in the top right comer of the page.
-------
PART 2. SECTION N: FAOUTY FWANCUU.. INFORMATION
MODIFICATION *i_jOFL_;
/t car *16" ^^ was the date of the modlflcatlon to *ne facility's RCRA Part B |»rmtt?
N.17. Estimate the cost of obtaining thit modiftoatton.
a. Legal fees: $L_J_J_JfI I
b. Administrative costs: &. i i it
N*i7C c. Public relations: $l__L_L_Jf
N^n^i d- Other (specify):, iv^>7 j» Q $L_L_i_J,
e e. Total:
N.18. For what purpose was the permK modified?
$L_L_L_J,
Si ! i t.
01 Addition of new tanks for wastewater treatment
02 Addition of new units for other treatment technologies
03 Addition of new treatment technologies
04 Request for increase of storage capacity
05 Request for increase of treatment capacity
03 Request for increase of Subtitle C landfiH capacity
07 Closure of a treatment unit/facility section
08 Other (specify): _ N4fF Q _
N.19. How much time was required for this modification to b« approved?
Months:
N-5
-------
PART 2. SECTION H: FAaLTTY RHANaAL Kf-ORMATON
This page is btenttonally
tettbtank.
N-6
-------
F/L£ NAmE : NS
PART 2. SECTION N: fAOlTTf FINANCUkL XFORUAT1OK
Are your wastewater, sludge, or aqueoua liquid waste treatment operations conducted, at
least in part. In units permitted under RCRA?
(Circle one number.)
01 Yes
02 No
. Does this aqueous liquid waste, sludge, and/or wastawatar treatment facility provide
(Do not include transportation services provided by another division or facility. Include only
transportation services for which the costs and revenues are attributed to this aqueous liquid
waste, sludge, and/or wastewater treatment facility.)
01 Yes (CONTINUE TO NEXT QUESTION)
02 No (GO TO QUESTION N24 ON PAGE N-8)
NJ22. What is trw avaragt distanea ovar which you transport aquaous liquid waste, sludge,
Mies: i iri 1
1
N.23. What la the average cost or price of transportation services?
a. Per loaded mae: $LJj!_JL
b. P«rton: $| ijL-LJLJ
C. Other fsoeciM: N4 ^ 3 c. O $ LJjL_L-LJ
N»7
-------
PART 2. SECTION N: FACILITY k>UNCJAL INFORMATION
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-------
PART 2. SECTION N; FACaUTY F1NANOAL INFORMATION
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PARTS. SECTION i.i: FAaUTY RNANC3AL INFORMATION
Si
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-------
PART 2. SECTION N: FAOUTY HNANOAL INFORMATION
(D
IF THIS FACILITY IS COMMERCIAL (IE. ACCEPTS WASTE FROM OFFSfTE FACILITIES NOT
UNDER THE SAME OWNPRSqiP). CONTINUE TO QUESTION N.27 ON THE NEXT PAGE/"
OTHERWISE, GO TO DIRECTIONS ON PAGE N-15.
(2)
IF YOUR FACILITY IS COMMERCIAL, AND ALSO ACCEPTS WASTE FROM OFFSITE
FACILITIES UNDER THE SAME OWNERSHIP. PLEASE COMPLETE ALL PARTS OF
QUESTIONS N.27 THROUGH N.29.
REPORT AJLL COSTS OF WASTE TREATMENT OPERATIONS
IN PART F OF QUESTIONS N.27 THROUGH N.29. THIS MAY INCLUDE THE COSTS OF
TREATING ANY OR ALL OF THE FOLLOWING:
WASTE FROM OFFSITE FACILITIES NOT UNDER THE SAME OWNERSHIP
WASTE FROM OFFSITE FACILITIES UNDER THE SAME OWNERSHIP,
AND/OR WASTE GENERATED ONSITE.
GIVE REVENUES ASSOCIATED WITH COMMERCIAL WASTE MANAGEMENT SERVICES IN
PART A OF QUESTIONS N.27 THROUGH N.29.
INCLUDE THE TOTAL REVENUES ASSOCIATED WITH MOHCOMMPRriAj WASTE
MANAGEMENT SERVICES UNDER PART C (NET SALES OF OTHER GOODS AND SERVICES
AND OTHER OPERATING REVENUE) OF QUESTIONS N.27 THROUGH N.29.
REPORT FACILITY LEVEL DATA FOR ALL OTHER PARTS OF QUESTIONS
N.27 THROUGH N.29. (PART B AND PARTS D THROUGH O).
THEN, REPORT IN DETAIL THE REVENUES FROM INDIVIDUAL NONCOMMPaetA^ WASTE
TREATMENT OPERATIONS IN PART A OF QUESTIONS N JO THROUGH N.32.
N-11
-------
P*f * ~ SECTION N: FAC3LJTY RMANaAL MFORUAT1ON
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-------
PART 2. SECTION N: FAGOTTY RNANCUL INFORMATION
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-------
PART 2. SECTION N; FACILITY RNANCJAL&-" r*ATK>N
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-------
PART2.SECTONH; FAOUTY FINANCIAL INFORMATION
(D.
IF YOU DID NOT COMPLETE QUESTIONS N.27 THROUGH N.29,
PLEASE RESPOND TO ALL PARTS OF QUESTIONS N.30 THROUGH N.32.
THESE QUESTIONS REQUEST COSTS AND REVENUES, CREDITS, OR
CROSS CHARGES FOR NON.COMMERC1AL FAClLmge.
C2)
IF YOU PJg COMPLETE QUESTIONS N.27 THROUGH N.29. AMP
YOUR FACILITY ALSO ACCEPTS WASTE FROM OFFSITE FACILITIES
UNDER THE SAME OWNERSHIP AS YOUR FACILITY,
PLEASE COMPLETE PART A OF QUESTIONS N.30 THROUGH N.32,
SHOWING THE REVENUES, CREDITS, OR CROSS CHARGES YOUR FACILITY
RECEIVED FOR TREATMENT OF WASTE GENERATED BY FACILITIES
UNDER THE SAME OWNERSHIP AS YOUR FACILITY.
13)
IF YOU DIB COMPLETE QUESTIONS N.27 THROUGH N.29,
AND YOUR FACILITY DOES HOJ ACCEPT WASTE FROM OFFSITE FACILITIES
UNDER THE SAME OWNERSHIP AS YOUR FACILITY,
PLEASE GO TO QUESTION N.33 ON PAGE N-19
M»15
-------
PART 2. SECnON N: .FACHJnf RNANCJAt ^FORMATION
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PART 2. SECTON N: FAOUTY BNANCUU. «FORMA"nOM
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PART 2. SECTION N; FACUJTY BNANCaAL ^FORMATION
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-------
PART 2. SECTION N: FAC3UTY FINANCIAL INFORMATION
N.33. What were the average total number of employee* and the total employee hours worked at
**\\ r*X tn* facility In calendar year 1989 In the categories listed?
H«>}3r—'
Average Total
Employee*
Total
Employee Hours
a. Aqueous liquid waste, sludge,, and/or
wastewater treatment operations
(including maintenance)
i. full-time employees
u. part-time employees
H433*»_i I I 1,1 f < I
,1111
b. Other waste treatment, recycling/
recovery, and/or disposal operations
(including maintenance)
i. full-time employees
B. pan-time employees
c. Production: other
n*33Bi_i
H ^ j j s « _ i
t*33c_i
d. Non-production:
(e.g.. sales, clerical, and administrative)
e. Of the total number of employees and
labor hours worked at this facility in the
categories a-c above, how many were
employees of contractors?
.1 i ; i
.11! I
.1 I t !tl I 1 I ***-=
.1 1 i ITI 1 t <
| I.I I 1 I.I I I 1 H«*3J.
LJ,LJL_LJ,L_LJL_
LJt
11 1
.1 T ! f LJiL_L_LJ,
.» f I t | >,l I t t,l ! > I
»« 3 33>
N-19
-------
PAHT 2. SECTION H; FACaLTTY RMANdAL
What was th« 1989 value of buildings, tend, and *qulpm*m *t this facility?
(Note: We wouti prefer the appraised or assessed value of land, buildings, and equipment, if
that is not available, please give book vatue.)
a. What was the value of land for this facility in 1989?
L appraised or assessed value nf3v»i Si i i ITI i i i,
ii. bookvalue *,*,,.., Si i i ITI i i IT
b. What was the value of buildings al this facility in 1989?
i. appraised or assessed value N«>3«<.6i Si i \ tTi i i ITI i
B. bookvalue M*3V«2. S I i i ITI t i ITI i
c. What was the value of equipment and machinery at this facility in 1 989?
L appraised or assessed value t«*3wc.j S I I I ITI t
5. bookvalue
S i i
ITI
t
d. What was the total 1989 value of land, buildings, equipment, and machinery at this facility?
(Sum items a through c.)
I appraised or assessed value N 4.1^1 Si i I ITI i i 1,1
B. bookvalue UA Si i i 1.1 i i
N.35. Onwhatp«rcintagtofmark»tviiu«isyourtax«ssM«TMmbasMl?
N «• jrc*>m
-------
Wftwf : M C-
PAttT 2. SECTION N: FAOLTTf F!HANCtfl,L
NCftC
NCap.
WS.A
wee
NOTES
Question
Numberfs)
n
I
U'lV*
Notes, commtnts. »tc.
J2.
3~
-------
PART 2. SECTION N: FACILITY FINANCIAL INFORMATION
This page is intentionally
left blank.
N-22
-------
FILE
• 05
SECTION O: COSTS AND REVENUES FROM AQUEOUS LIQUID
WASTE, SLUDGE, AND/OR WASTEWATER TREATMENT
The purpose of Section O is to obtain costs lor aqueous liquid waste, sludge, and/or wastewater
treatment technologies which could form the basis of effluent limitations guidelines. This information
will be used to assess impacts on waste treatment processes.
Answer the questions in sequence and do not leave any entry blank unless instructed otherwise
Definitions and specific instructions are provided throughout. Use the NOTES page at the end of the
section « you wish to explain your response to any question. Reference each comment with the
appropriate question number. Reminder: Please provide estimates, if .possible, of data for which
exact measurements are unavailable. Indicate on the NOTES page at the end of the section which
responses are estimates, and explain the method of estimation.
O.I.
Where are the faculties located which generate the aqueous liquid waste, sludge, and/or
wastewater you accept from off site?
(Circle the number for the largest area that applies.)
01 Within 50 miles of your facility
02 Within your state
03 Within a few adjacent states
04 Nationwide
O.2. Which of the following describes the contractual arrangements under which you accept
*sueous "quid waste, sludge, and/or wastewater from offsfte for treatment?
(Circle all that apply. Include a copy of a standard contract with your completed
questionnaire If one Is available.)
(H Contracts are written and signed on the basis of the individual shipment of aqueous liquid
waste, sludge, and/or wastewater.
- * a. 02 Contracts are signed with customers under which your facility agrees to accapt aO aqueous
Bquid waste, sludge, and/or wastewater generated by the customer and meeting certain '
criteria for a pre-set fee per shipment.
04* i-*3 03 Other (specify):
0-1
-------
j=>ART2. SECTION O: COSTS AND REVENUES FROM AQUEOUS WASTE AND WASTEWATER T^gATMENT
O.3, What warn the total amount of revenue earned by your facility for transportation of aqueous
liquid waste, sludae, and/or wastewater for on-stte treatment during 1987,1988, and 1989?
a. Aqueous iiquid waste, sludge, and/or wastewater
received from orfsite facilities not under the
same ownership:
1987 Si i' lti i t iti i t i
1988 Si ( ! lTt ! l l,l i i i
O4>+3Af »T« < ' 4« i t nans
fa. Aqueous liquid waste, sludge, and/or wastewater
received from off site facilities under the same
ownership: O***&f7i987 i ' < »T' ' ' 'T»
1988 i i t lji t t ij» I i i tons
i > i >t i t i» » t itons
c. Aqueous liquid waste, sludge, and/or wastewater
generated onshe
(estimated value of services): O** v c f 7 1 987 i i « i'tt i i tti i i t tons
198B > i t
t II
t itons
1989 i i t ITI i < ITI i i itons
0-2
-------
PART 2. SECTION O: COSTS AND REVENUES FROM AQU?rOU5 WASTE AND WASTEWATER TREATMENT
O.5.
O.S.
Are any approved or authorized investment projects planned for water pollution control?
(Circle one number.)
01 Yes (CONTINUE TO NEXT QUESTION)
02 No (GO TO QUESTION 0.8)
Describe and give the estimated capital cost of each approved or authorized water
pollution control project.
(If additional space is necessary, complete the description in the NOTES space. Reference the
information by the above question number.)
a. Project 1: S
Describe:
»Ti i ; ITI i i >
044 6B b. Project 2: S i t t ITI ; ; 1,1 ; \ \
Describe: O4«*6 so
c. Projects: Si t t ITI i t ITJ i t i
Describe: 04^6 CO
O.7.
7cs
^^ J J ** £f±H
What to the projected completion date of each approved or authorized water pollution
control project?
(Report the month, date, and year as two-digit numbers: e^ June 1.1389 • 06-01-89.)
• O447A-I O*47Ai O447A3
a. Project 1:
b. Project 2:
<
c. Projects:
O£. Did this facllHy parform aquaous liquid waste, sludge, and/or waatawatar traatmant on a
* »'"m«rc{al»»»'«In 1989
O44?
, did the facility accept for treatment onsfte aqueous liquid
waste, sludge, and/or wastewater that was generated at an offstte facility not under the
tone ownership)!
(Circle one number.)
01 Yes (CONTINUE TO NEXT QUESTION)
02 No (GO TO QUESTION O.10 ON PAGE O-S)
0-3
-------
.PART 2. SECTON O: COSTS AND REVENUES FROM AQUEOUS WASTE AND WS 3TEWATER TREATK.PMT
w Information in the following table for each type of aqueous liquid waste,
0*4 « com *lud9t' •nd/or *»«»water that Is currently treated In wastewater treatment processes
onstte.
Answer for ALL this facility's commercial wastewater treatment operations, rather than for each
ndwdual wastewater treatment process. Base your price information on a typical shipment size
for each waste type. Circle W in the column provided for any waste type that you do not treat
Enter price Information in dollars'and cents.)
Average or Typical
Price (Won)
$ ' '•' ' ' '.» i i
O44161 $J I.I t i i.i t i
$L_J,L
$LJiL
t t t-
Organic Liquids
a. Ofty' liquids
b. Halogenated liquids, including
halogenated solvents
c. Nonhatogenated liquids, including
nonhatogenated solvents O44«*er Si 1.1 \ \ i.\ i
d. Organic water mixtures
Inorganic Liquids
e. Liquids containing toxic organics o 4*« e. \
f. Liquids containing toxic inorganics
(other than cyanide) O*4^ P< $L-J,L_L_L_J.LJLJ
g. Liquids containing cyanide (may contain
toxic metals or inorganics) O44«?firi $LJ,L_L_L_J.L_LJ
h. Liquids containing chromium (may contain
other toxic metals or inorganics) O4*<*«« $( !,l_J_JL_M__LJ
i. Liquids containing toxic metals
(otherthan chromium) O4*i-xi $LJ,LJ_J_J.LJLJ
j. Waste concentrated adds (may contain .
nontoxic metals or inorganics) O44qri $| I,LJL_I_J.L_LJ
k. Waste concantrated bases (may contain
nontoxic metals or inorganics) O44q*i SLJ.I i t u > t
I. Othar aqueous liquids (may contain
nontoxic metals, inorganics, or organics) $| !.i i i 1.1 t t
Organic Sludgts Od«*«? '
m. HaJogenated organic sludges O44«i«i $j 1.1 t i u t i
n. Nonhabgenated organic sludges 04*^^1 $LJ»L_L_L_J.LJ_J
o. OB sludges O4^0l & .,., i i i.. LLJ
p. Dye and paint sludge o^q P, S _ M t » t.i » t
CONTINUED ON THE NEXT PAGE
Not
Applicable
MA
NA
NA
NA
NA 0«><* £.2.
NA
NA
NA
NA
NA
NA 044=1 K2
NA
NA" 04*" O a.
NA
0-4
-------
.PART 2. SECTION O: COSTS AND REVENUES FROM AQUEOUS WASTE ArtD WASTEWATER TREATUCMT
O.9, continued.
Av«rag« or Typical
Prtca ($non)
Inorganic Sludges
q. Sludges containing toxic metals
r. Inorganic process sludges e>4«»«» M $1 1.1 i i 1.1 t i
s. Sludges containing cyanide (may contain
O*<»q <5> i $j j,i
toxic metals or inorganics) 04+*?
t. Sludges containing .toxic inorganics
SLJ.I
(other than cyanide)
u. inorganic sludges containing toxic organics
Other (specify): °^q UI
v. O<» aqueous liquid waste, tludge, and/or wmstew*er trastmtm on a
non
-------
PART 2. SECTION O; COSTS. &ND REVENUES FROM AQUEOUS W,\S'fE AND WASTEWATER TREATMENT
O* i ' co"\
O.11. Enter typical 1989 unit cross charges for aacn typ 3 of aqueous liquid wastt, sludge, and/or
O*n CBJ wastewaier that, is curnntly treated In wastewater treatment procassas onstto.
(jh[S js fag ff mount pgr j0n charged facilities u the same owr -ship lor treatment of each
type of waste. Base your ,,tit cross charge infer, nation on a typi. shipment size for each waste
type. Circle 'NA 'in the column provided for any waste type that you do not treat. Enter price
information in dollars and cents.)
Avaraga or Typical
. Charge ($/ton)
Not
Applicable
$1 'ri ' ' LI i »
O4HCI $L_Jii
$| _ iri i i 1.1 i t
Organic Liquids
a. Oily liquids • O*«AI $i ITI i t 1.1
b. Halogenated liquids, including
halogenated solvents O4»si
c. Nonhalogenated liquic. including
. nonhalogenated solvents
d. Organic water mixtures O 4 n 3> i
Inorganic Liquids
e. Liquids containing toxic organics o 4 « e i & t, t t i
f. juids containing toxic inorganics
totherthan cyanide) O4»FI Si iri ! t 1.1 t i
g. Liquids containing cyanide (may contain
toxir metals or inorganics) o*«/6-1 Si ift t i t.i i t
h. Liquids containing chromium (may contain
other toxic metals or inorganics) o 4 • i
i. Liquids containing toxic metals
(other than chromium) O*»« n $( i f i i 1.1 t i
j. Waste concentrated ?rids (may contain
nontoxic metals or inorganics) O 4 »
k. Waste concentrated bases (may contain
nontoxic metals or inorganics) O 4 "
I. Othe- equeous liquids (may comaui
nor.^xjc metals, inorganics, or organics^
Organic Sludges
m, HaJogenated organic sludges
n. Nonhalogenated organic sludges
o. OH sludges
p. Dye and paint sludge
Si ifi i t 1.1 t t
& itt i ' i.i t i
Si 1,1 t i 1.1 t i
$| _ 1.1 i t 1.1 i t
$| 'fl t > »•» f »
5L_!,LJ_LJ.LJ_J
$L-JiL_L_L_!.LJ_J
NA
NA
NA 04ti C2,
NA O4HD2.
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA O*M
02.
CONTINUED ON THE NEXT PAGE
0-6
-------
.PARTS. SECTOH.O; COSTS AND REVENUES FROM AQUEOUS WASTE AND-WASTEWAt« T^n,^
C.11, continued.
Average or Typical
Charge (S/lon)
Inorganic Sludges
q. Sludges containing toxic metals O*IIG>J & 1.1 ; i 1.1 i t
r. Inorganic process sludges 0411 RI $L_J,L_J_J_J.l
s. Sludges containing cyanide (may contain
toxfc metals or inorganics) O4»Si &• iri L
t Sludges containing toxic inorganics
(other tnan cyanide) O*»TI Si_tTi t » t.i
Not
Applicable
NA
NA
NA O*u Si
u. Inorganic sludges containing toxic organjcs $LJ, L
Other (specify): ^" '
v.
'• ' '-
W.
$L_M
SLJ.I
$LJ,l
j.
_j.
j.
NA
NA
NA
NA
NA
°f *qu*°US "quld Waste«
of the following?
»ndyor w««ew«t«r tr.atm.nt
Aqueous liquid waste, sludge, and/or wastewater received from offsfte faciHties under the
same ownershp: ««o«inu
b. Aqueous liquid waste, sludge, and/or wastewater generated onsite (estimated value of
services):
U 2.
0-7
-------
PART 2. SECTION O: COSTS AND REVENUES S^OM AQUEOUS WASTE AND WASTEWATER TREATMENT
D°*8 thl* tacinty havt th*rmal processes onstte that generate equeous liquid waste,
«'udg«,«nd/orwastewat«r?
(Circle one number.)
01 Yes (CONTINUE TO NEXT QUESTION)
02 No (GO TO QUESTION 0.15)
O* i J'c'ar What quantlty of wastewater *w» flenerated by this facility's thermal processes during
0*/u ODM 1987' 1988' *nd 1989» «nd what P«recntage of this wastewater was traatad onsKa?
Yaar
Quantity G«n«ratad
Parcant Traatad Onsita
1987
1988
1989
I ( I II i i i
ft%I I l I l.l t
JiUJ
l i I I1 i t I
I tons
[tons
itons
LJL_LJ%
I ' I t % O<» Hf
°*1J1* Do*s thlt facility nav* tandn" operations onsfte that generate aqueous liquid waste,
•fudge, and/or wastewater (e.g., leaehate or pumped groundwater)?
(Circle one number.)
01 Yes (CONTINUE TO NEXT QUESTION)
02 No (GO TO PAGED-10)
O^fecBr Wh8t quantlty of wa«tewat»r *»« generated by thla facility's landfill operations during
O+/fcCom 1987' <1988« *nd 1989«and wnal P«rcentage of this wastewatar was treated onstta?
Yaar
Quantity Generated
Parcant Traatad Onstte
1987 O*r4/yrj I t i
1988 O*tA??
1989 O4lf>
; i ift i i Hans
i i f ITI i i ITI i t > torts
i t t ITI t i ITI i » ttons
1111% 0+1 C
LJLJ_J%
0-8
-------
. SECTIOH O: COSTS AND REVENUES fBOM AQUEOUS WASTE AMD WASTEWATER
OC.A
——.»
Question
Humberts)
NOTES
occ.
Notes, comments. «te.
0-9
-------
_PART 2. SECTION O: COSTS AND Rfc f 'r>JES FROM AQUEOUS WASTE AND WASV5WATER "TIEATMeVT
YOU HAVE COMPLETED THE ECONOMIC AND FINANCIAL SECTION OF THIS
QUESTIONNAIRE. PLEASE CHECK TO SEE THAT YOU HAVE ANSWERED ALL RELEVANT
QUESTIONS, AND THAT YOU HAVE ATTACHED ANY ANNUAL REPORTS, 10K REPORTS, OR
STANDARD CONTRACTS AVAILABLE.
0-10
-------
— QJ
"^ tn >~
o QJ ro
QJ -^ E "T3
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*•*— >^ O • —
-E= ^"1 . '
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re o c
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£~ a
*" c^:
a)
|||
II estimates apply to wastes and was
r site. Other operations have not be
facility we did not include an estim
n't value listed below.
re 3 _tn QJ
-d" >*-£M
0 « ™^
f; E E QJ,
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j
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m
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d
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cu
cv
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LU
0.
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%
re
f
c
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en
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.— •
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o3
D.
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L
g recove
_c
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re
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c
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1
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Quantity of oil recovered
ts
OJ
tn
re
^^_
O
"5
Sf
re
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-~/ *^^
'in en
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11
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treatment and recovery o
«
re
t
_0
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re
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re
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c
*o
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^
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*
c:
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re
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^
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if
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-
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QJ
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re
u
o>
-------
APPENDIX B
Waste Generation by SIC Code
-------
-------
TABLE B-l. WASTE GENERATION BY SIC CODE, 1995
SIC
343
347
1446
2011
2013
2015
2020
2022
• 2024
2026
2032
2033
2037
2038
2043
2046
2048
2066
2075
2076
2077
2079
2082
2086
2087
2096
2099
2111
2121
2141
Total Transfers to Recycling
12,814
250
1,330
38,937
14,414
1,352
77,668
25,556
164,287
13,280
9,000
2,658,513
4,400
14,305
500
46,689 '
43,158
Total Transfers to Treatment
18,225
10
250
5,950
• -
132,700
21,500
23,913
33,800
18,330
15,771
12,534
93,267
1,064
2,375
91,733
(
181,800 .
69
750
15,033
8
71,627
1
510
10
(continued)
B-l
-------
TABLE B-l. WASTE GENERATION BY SIC CODE (CONTINUED)
SIC
2221
2231
2252
2257
2259
2261
2262
2269
2271
2273
2295
2296
2297
2298
2299
2329
2353
2389
2390
2393
2399
2421
2426
2430
2431
2434 .
2435
2439
2451
2491
Total Transfers to Recycling
89,643
614
7,500
326,000
. 240
309,541
3,306
65,523
217
2,554
250
7,681
755
202,681
225,840
250
6,263
100,868
Total Transfers to Treatment
4,003
454
45,327
299
1,370
'9,478
36,059
5,693
25,871
484,096
5,024
3,083
5
7,277
225
2,220
1,250
55,600
750
5 -
1,650
250
16,426
133,963
12,550
250
336,851
(continued)
B-2
-------
TABLE B-l. WASTE GENERATION BY SIC CODE (CONTINUED)
SIC
2492
2493
2499
2500
2511
2512
2514
2517
2519
2521
2522
2530 '
2531
2541
2542
2565
2579
2591
2599
2611
2621
2631
2641
2651
2653
2655
2656
2657
2671
2672
Total Transfers to Recycling
16,229
177,743
3,312
1,542,889
10,366
26,250
8,747
4,986
75,239
3,161,164
250
1,195,310
10,082
256,748
89,594
244,776
880
3,522,972
265
142;i34
29,030
17,749
888
861
66,055
401,645
848,621
Total Transfers to Treatment
85
' 1,989
23,751
110,014
25,261
2,240
2,250
300,326
22,397
114,626
750
220,598
100
500
• 1,976
2,991
7,533,628
341,958
30,264
63,011
40,090
.985
3,294
22,294
383,389
849,200
(continued)
B-3
-------
TABLE B-l. WASTE GENERATION BY SIC CODE (CONTINUED)
SIC
2673
2677
2679
2700
2732
2751
2752
2754
2759
2761
2771
2782
2793
2796
2800
2812
2813
2816
2819
2821
2822
2823
2824
2830
2831
2833
2834
2835
2836
2840
Total Transfers to Recycling
14,274
"119,000
18,950
1,553
1,652
2,214,572
2,656,857
108,360
3,265
8,116
577,294
17,765
15,617,381
122,057
884,051
8,459,039
78,202,133
8,097,634
79,025
42,424,350
5,657,556 .
12,118,681
7,496
.
Total Transfers to Treatment
22,200
4,900
1,357
18,595
13,764
2,986
88,527
177,931
30,976
10,062
5
2,958
107,791
1,502
2,088,582
313,530
721,850
8,175,239
29,361,314
5,207,745
1,166,588 .
• 139,320
1,973
51
10,444,156
14,784,821
121,609
21,880
5,580
(continued)
B-4
-------
TABLE B-l. WASTE GENERATION BY SIC CODE (CONTINUED)
SIC
2841
2842
2843
2844
2850
2851
2861
2865
2869
2873
2875
2879
2880
2890
2891
2892
, . 2893
2899
2911
2952'
2977
2992
2999
3000
3011
3021
3041
3050
3052
3053
Total Transfers to Recycling
518,938
16,490
219,215
5,188
685,140
32,401,466
7,226,573
32,094,363
1,014,225
1,500
4,570,376
13,568
580,852
699,134
967,330
1,296,941
5,847,506
9,716
17,911,102
56,138
1,332,699
16,117
56,800
1,837,134
212,672
Total Transfers to Treatment
94,734
315,242
568,083
23,167
44,421
6,222,012
20,300
18,195,149
37,359,370
2,000
15,072
7,631,528
84,000
1,723,779
149,822
457,800
3,251,105
2,871,698
1,029
7,220
150,357
70,750
140,330
247,150
3,613
8,200
1,101
65,167
170,103
(continued)
B-5
-------
TABLE B-l. WASTE GENERATION BY SIC CODE (CONTINUED)
SIC
3061
3066
3069
3070
3079
3081
3082
3083
3084
3085
3086
3087
3088
3089
3111
3131
3142
3143
3149
3174
3179
3211
3221
3229
3231
3237
3241
3251
3253
3255
Total Transfers to Recycling
149,490 '
22,400
801,365
25,345
192,573
8,600,889
82,487
669,073
. 23,310
39,750
1,212,659
81,815
41,356
5,219,941
191,268
15,836
2,206
7,487
2
233,750
35,020'
327,753
1,562,374
316,258
766
193,744
.
115,858
Total Transfers to Treatment
64,085
361,246
2,582
26,462
1,762,040
15,945
166,119
11,480
849,028
119,902
8,035
592,758
144
1,292
500
4,158
500
92
28,727
54,240
463,625
77,508
136,393
10
1,500
(continued)
B-6
-------
TABLE B-l. WASTE GENERATION BY SIC CODE (CONTINUED)
SIC
3261
3262
3264
3269
3272
3274
3281
3291
3292
3293
3295
3296
3297
3299
3300
3312
3313
3315
3316
3317
3320
3321
3322
3324
3325
3331
3334
3339
3340
3341
Total Transfers to Recycling
211,400
40,017
84,575
3,359
122,976
250
10,583
204,585
289,000
1,300
1,883,231
239,964
49,444
2,145
329,290,744
730,866
7,464,555
10,955,839
21,167,079
2,209
10,562,473
3,602,317
4,406,223
6,315,726
24,734,074
2,980,175
13,600,560
1,435,064
36,343,977
Total Transfers to Treatment
58
69,451
3,644
1,000
250
289,295
2,501
937,332
13,334
1,095
229,218
11,676
17,669,827
• 51,388
1,305,611
2,043,387
3,528,872
374
371,507
105,427
31,129
551,452
4,822,340
20,248
72,988
3,378,814
(continued)
B-7
-------
TABLE B-l. WASTE GENERATION BY SIC CODE (CONTINUED)
SIC
3351
3353
3354
3355
3356
3357
3360
3361
3362
3363
3364
3365
3366
3369
3380
3398
3399
3400
3411
3412
3417
3421
3423
3425
3428
3429
3430
3431
3432
3433
Total Transfers to Recycling
67,105,217
6,318,418
4,651,996
45,687
15,070,951
179,304,894
160,427
1,918,433
3,184,852
9,956,634
2,202,706
4,079,204
6,448,566'
8,954,061
43,058
426,456
3,883,529
479,327
12,308,553
209,856
265,101
454,421
327,713
22,900
8,255,968
33,500
359,829
36,439,006
898,402
Total Transfers to Treatment
235,387
226,709
57,404
83,203
457,617
529,176
-
12,757
15,606 .
30,252
7,500
6,089
39,421
117,121
207,300
48,887
148,100
220,310
22,514
9,375
117,176
312,313'
181,137 '
167,774
23,718
(continued)
B-8
-------
TABLE B-l. WASTE GENERATION BY SIC CODE (CONTINUED)
SIC
3440
3441
3442
3443
3444
3446
3448
3449
3450
3451
3452
3460 -
3462
3463
3465
3468
3469
3470
3471
3479
3482
3483
3484
3489
3490
3491
3492
3493
3494
3495
Total Transfers to Recycling
88,000
1,679,592
124,061
5,378,860
• 1,958,765
467,728
93,177
991,175
36,881
44,460,648
879,791
101,269
25,213,311
1,947;844
21,936,104
1,275,503
17,469,642
36,312,074
27,759,664
9,077,583
245,500
538,681
142,984
224,869
5,630,194
3,589,521
79,555
25,683,373
51,399
Total Transfers to Treatment
106,262
.76,297
204,065
268,388
26,426
32,022
4,015
46,023
. 37,946
34,575
342,335
215,188
173,676
320
269,274
2,013
3,022,958
1,607,926
94,114
3,505
36,330
• 64,257
5,681
3,576
34,047
18,089
97,631
5,296
(continued)
B-9
-------
TABLE B-l. WASTE GENERATION BY SIC CODE (CONTINUED)
SIC
3496
3497
3498
3499
3500
3511
3519
3523
3524
3531
3532
3533
3534
3535
3536
3537
3541
3542
3544
3545
3546
3547
3548
3549
3550
3551
3552
3553
3554
3555
Total Transfers to Recycling
4,804,335
7,942,154
3,864,159
28,801,072
5,851
2,794,564
3,349,987
2,667,977
81,082
1,927,996
785,714
1,030,917
377,701
627,680
438,577
1,127,241
695,623
287,008
3,969,636
549,231
386,398
97,955
1,685,401
1,100
36,926
20,380
12,024
1,748,320
277,293
Total Transfers to Treatment
400,156
378,345
451,761
716,689
154,194
193,274
30,941
750
108,996
10,958
795.
3,975
3,002
1,964
27,594
9,400
50,971
95,742
50,120
2
32,612
4,060
-
21,507
53,288
(continued)
B-10
-------
TABLE B-l. WASTE GENERATION BY SIC CODE (CONTINUED)
SIC
3556
3559
3561
3562
3563
3564
3565
3566
3567
3568
3569
3571
3572
3573
3574
• 3577
3579
3580
3581
3582
3583
3585
3586
3589
3592
3593
3594
3596
3599
3600
Total Transfers to Recycling
1,498,811
4,663,816
4,549,118
5,086,542
602,147
118,001
48,335
756,630
299,793
3,148,051
1,402,997
565,925
' 7,100
18,270
35,545
54,121
74,410
1,745
1,305,518
20,052
15,240,370
26,655
299,809
2,619,265
265,540
2,392,749
13,091
768,298
7,810
10,406
84,756
6,689
13,122
2,419
650
750
56,237
97,425
36,041
2,600
5 .
154,366
3,800
16,607
250
2,515
77,603
. ^ 28
122,781
76,188
15,249
37,699
(continued)
B-ll
-------
TABLE B-l. WASTE GENERATION BY SIC CODE (CONTINUED)
SIC
3610
3612
3613
3619
3621
3622
3623
3624
3625
3629
3631
3632
3633
3634
3635
3639
' 3641
3643
3644
3645
3646
3647
3648
3651
3652
3661
3662
3663
3669
3670
Total Transfers to Recycling
250
6,867,955
9,691,397
1,370
15,075,742
55,622
129,562
• 1,763,129
. 915,833
1,606,976
1,053,180
1,454,214
784,485
238,030
49,466
684,728
1,393,941
7,051,631
1,135,232
44,465
587,328
107,914
1,759,875
1,810,188
59,161
2,991,074
322,000
6,136,001
1,926,175
40,000
Total Transfers to Treatment
14,073
582,224
26,722
64,555
5,175
13,950
17,476
3,350
16,087
2,899
7,822
248,226
47,062
31,933
5,050
17,299
134,077
1,250
• 17,815
6,354
13,006
7,947
43,572
(continued)
B-12
-------
TABLE B-l. WASTE GENERATION BY SIC CODE (CONTINUED)
SIC
3671
3672
3674
3675
3676
3677
3678
3679
3691
3692
3694
3695
3699
3700
3710
3711
•3713
3714
3715
3716
3720
3721
3724
3728
. 3731
3732
3743
3744
3751
3761
" Total Transfers to Recycling
5,446,597
26,622,464
1,054,550
2,804,726
240,776
237,736
6,912,007
6,400,800
260,725,363
3,698,528
6,799,919
2,713,816
2,438,326
186,706
1,406,634
42,813,612
4,029,660
101,160,421
4,634,727
126,469
2,900
1,322,085
8,233,990
4,790,125
3,057,662
163,277
4,379,805
3,741,285
66,505
Total Transfers to Treatment
629,263
1,483,939
821,120
1,474,200
14,224
11,901
4,722
165,511
31,951
138,514
14,472
281,006
9,430
1,528
1,277,849
139,190
1,635,088
47,583
2,750
477,964 .
732,439
343,538
147,354
20,982
174,014
4,000
20,491
24,639
(continued)
B-13
-------
TABLE B-l. WASTE GENERATION BY SIC CODE (CONTINUED)
SIC
3764
3769
3771
3792
3795
3799
3812
3821
3822
3823
3824
'3825
3826
3827
3829
3832
3841
3842
3843
3844
3845
3851
3861
3873
3910
3911
3914
3915
3931
3940
3944
Total Transfers to Recycling
486,745
17,100
941
9,870
129,734
186,442
33,025
169,695
8,803,870
367,421
1,831,529
492,339
48,250
11,989
89,562
4,200
1,032,905
1,044,458
143,220
133,082 .
106,201
296,366
6,565,945
60,165
2,654,974
266,634
193,431
2,602,832
23,500
Total Transfers to Treatment
54,961 •
6,283
27,853
82,479
33,984
66,023
159,109
92,683
17,098
595
6,840
103,861
5,037
l',962 .
18,000
256,305
15,495
1,322
29,699
10,570
35,376
3,021,443
5,038
2,168 '
4,756
32,047
39,228
1 1,957
2,600
(continued)
B-14
-------
TABLE B-l. WASTE GENERATION BY SIC CODE (CONTINUED)
SIC
3949
3951
3952
3953
3955 •
3961
3964
3965
3991
3993
3995
3996
3999
4396
4911
4925
4953
5047
5063
5091
5169
5171
5172
7216
7389
7699
8731
8733
8734
9661
9711
Total Transfers to Recycling
750,814
219,891
211,334
6,890
36,000
54,653
509,153
5,584,002
3,800
898,121
1,684,185
64,652
4,743,208
22
345,219
88,700
750
224,287
858
6,400
514,413
32,640
3,000
6,807
29,469
2,041,238
64,432
Total Transfers to Treatment
120,246
4,820
13,677
124,109
1,595
250
61,619
461
40,886 '
1,020
13,471
850,594
2,250
1,000
27,100
202,547
340
. 750
215,243
9,634
139,339
4,511
39,778
12,075
893,292
1,021
Source: Toxics Release Inventory, 1995.
B-15
-------
-------
APPENDIX C
SIC Code Definitions
-------
-------
SIC
Code Industry
SIC
Code Industry
Agricultural Production—Crops
0111 Wheat
0112 Rice
0115 Corn
011.6 Soybeans
0119 Cash grains, nee
0131 Cotton
0132 . Tobacco
0133 Sugar crops
0134 . Irish potatoes
0139 Field crops, except cash grains, nee
0161 Vegetables and melons
0171 Berry crops
0172 Grapes
0173 Tree nuts
0174 Citrus fruits
0175 Deciduous tree fruits
0179 Fruits and tree nuts, nee
0181 Ornamental nursery products
0182 Food crops grown under cover
Oi39 Horticultural specialties, nee
0191 General farms, primarily crops
Agricultural Production—Livestock
0211 Beef cattle feedlots
0212 Beef cattle, except feedlots
0213 Hogs
0214 Sheep and goats
0219 General livestock, nee
0241 Dairy farms
0251 Broiler, fryer, and roaster chickens
0252 Chicken eggs
0253 Turkeys and turkey eggs
0254 Poultry hatcheries
0259 Poultry and eggs, nee
0271 Fur-bearing animals and rabbits
0272 Horses and other equines
.0279 Animal specialties, nee
0291 General farms, primarily livestock
Agricultural Services
0711 Soil preparation services
0721 Crop planting and protection
0722 Crop harvesting
0723 Crop preparation services for market
0724 Cotton ginning
0729 General crop services
0741 Veterinary services, farm livestock
0742 Veterinary services, specialties
0751 Livestock services, except specialties
0752 Animal specialty services
0761 Farm labor contractors
0762 Farm management services
0781 Landscape counseling and planning
0782 Lawn and garden services
0783 Ornamental shrub and tree services
Forestry
0811 Timber tracts
0821 Forest nurseries and seed gathering
0843 Extraction of pine gum
0849 Gathering of forest products, nee
0851 Forestry services
Fishing, Hunting, and Trapping
0912 Finfish
0913 Shellfish
0919 Miscellaneous marine products
0921 Fish hatcheries and preserves
0971 Hunting, trapping, game propagation
Mining - -
1011 Iron ores
1021 Copper ores
1031 Lead and zinc ores
1041 Gold ores
1044 Silver ores
1051 Bauxite and other aluminum ores
1061 Ferroalloy ores, except vanadium
1081 Metal mining services
1092 Mercury ores
1094 Uranium, radium, vanadium ores
1099 Metal ores, nee
1111 Anthracite
1112 Anthracite mining services
1211 Bituminous coal and lignite
1213 Bituminous and lignite services
1311 Crude petroleum and natural gas
1321 Natural gas liquids
1381 Drilling oil and gas wells
1382 Oil and gas exploration services
1389 Oil and gas field services, nee
1411 Dimension stone
1422 Crushed and broken limestone
1423 Crushed and broken granite
1429 Crushed and broken stone, nee
1442 Construction sand and gravel
1446 Industrial sand
1452 Bentonite
1453 Fire clay
1454 Fuller's earth
1455 Kaolin and ball clay
1459 Clay and related minerals, nee
. 1472 Barite
1473 Fluorspar
1474 Potash, soda and borate minerals
Note: nee = not elsewhere classified.
C-l
-------
SIC
Code Industry
1475
1476
1477
1479
1481
1492
1496
1499
Phosphate rock
Rock salt
Sulfur
Chemical and fertilizer mining, nee
Nonmetallic minerals services
Gypsum
Talc, soapstone, and pyrophyllite
Nonmetallic minerals, nee
Construction
1521 Single-family housing construction
1522 Residential construction, nee
Operative builders
Industrial buildings and warehouses
Nonresidential construction, nee
Highway and street construction
Bridge, tunnel, and elevated highway
Water, sewer, and utility lines
Heavy construction, nee
Plumbing, heating, air conditioning
Painting, paper hanging, decorating
Electrical work
Masonry and other stonework
Plastering, drywall, and insulation
Terrazzo, tile, marble, mosaic work
Carpentering
Floor laying and floor work, nee
Roofing and sheet meta! work
Concrete work
Water well drilling
Structural metal erection
Glass and glazing work
Excavating and foundation work
Wrecking and demolition work
Installing building equipment, nee
Special trade contractors, nee
1531
1541
1542
1611
1622
1623
1629
1711
1721
1731
1741
1742
1743
1751
1752
1761
1771
1781
1791
1793
1794
1795
1796
1799
Food Products
2011 Meat packing plants
2013 Sausages and other prepared meats
Poultry dressing plants
Poultry and egg processing
Creamery butter
Cheese, natural and processed
Condensed and evaporated milk
Ice cream and frozen desserts
Fluid milk
Canned specialties
Canned fruits and vegetables
Dehydrated fruits, vegetables, soups
Pickles, sauces, and salad dressings
Frozen fruits and vegetables
Frozen specialties
2016
2017
2021
2022
2023
2024
2026
2032
2033
2034
2035
2037
2038
2041
2043
2044
2045
2046
2047
2048
2051
2052
2061
2062
2063
2065
2066
2067
2074
2075
2076
2077
2079
2082
2083
2084
2085
2086
2087
2091
2092
2095
2097
2098
2099
Flour and other grain mill products
Cereal breakfast foods
Rice milling
Blended and prepared flour
Wet corn milling
Dog, cat, and other pet food
Prepared feeds, nee
Bread, cake, and related products
Cookies and crackers
Raw cane sugar
Cane sugar refining
Beet sugar
Confectionery products
Chocolate and cocoa products
Chewing gum
Cottonseed oil mills
Soybean oil mills
Vegetable oil mills, nee
Animal and marine fats and oils
Shortening and cooking oijs
Malt beverages
Malt
Wines, brandy, and brandy spirits
Distilled liquor, except brandy
Bottled and canned soft drinks
Flavoring extracts and syrups, nee
Canned and cured seafoods
Fresh or frozen packaged fish
Roasted coffee
Manufactured ice
Macaroni and spaghetti
Food preparations, nee
Note: nee « not elsewhere classified.
Tobacco
2111 Cigarettes
2121 Cigars
2131 Chewing and smoking tobacco
2141 Tobacco stemming and redrying
Textile Mill Products
2211 Weaving mills, cotton
Weaving mills, synthetics
Weaving and finishing mills, wool
Narrow fabric mills
Women's hosiery, except socks
Hosiery, nee
Knit outerwear mills
Knit underwear mills
Circular knit fabric mills
Wan? knit fabric mills
Knitting mills, nee
Finishing plants, cotton
Finishing plants, synthetics
2221
2231
2241
2251
2253
2254
2257
2258
2259
2261
2262
C-2
-------
SIC
Code Industry
SIC
Code Industry
2269 Finishing plants, nee
2271 Woven carpets and rugs
2272 Tufted carpets and rugs
2279 Carpets and rugs, nee
2281 Yam mills, except wool
2282 Throwing and winding mills
2283 Wool yarn mills
2284 Thread mills
2291 Felt goods, except woven felts and hats
2292 Lace goods
2293 Paddings and upholstery filling
2294 Processed textile waste
2295 Coated fabrics, not rubberized
2296 Tire cord and fabric' . - -
2297 Nonwoven fabrics
2298 Cordage and twine
2299 Textile goods, nee
Apparel and Related Textiles
Men's and boys' suits and coats
Men's and boy's shirts and nightwear
Men's and boys' underwear
Men's and boys' neckwear
Men's and boys' separate trousers
Men's and boys' work clothing
Men's and boys' clothing, nee
Women's and misses' blouses and waists
Women's and misses' dresses
Women's and misses' suits and coats
Women's and misses' outerwear, nee
Women's and children's underwear
Brassieres and allied garments
Millinery
Hats and caps, except millinery
Children's dresses and blouses
Children's coats and suits
Children's outerwear, nee
Fur goods
Fabric dress and work gloves
Robes and dressing gowns
Waterproof outergarments
Leather and sheep lined clothing
Apparel belts
Apparel and accessories, nee
Curtains and draperies
House furnishings, nee
Textile bags
Canvas and related products
Pleating and stitching"
Lumber and Wood Products
2411 Logging camps and logging contractors
2421 Sawmills and planing mills, general
2426 Hardwood dimension and flooring
2429 Special product sawmills, nee
2431 Miliwork
2434 Wood kitchen cabinets
2435 Hardwood veneer and plywood
2436 Softwood veneer and plywood
2439 Structural wood members, nee
2441 Nailed wood boxes and shook
2448 Wood pallets and skids
2449 Wood containers, nee
2451 Mobile homes
2452 Prefabricated wood buildings
2491 Wood preserving
2492 Particleboard
2499 Wood products, nee
Furniture and Fixtures
2511 Wood household furniture
2512 Upholstered household furniture
2514 Metal household furniture
2515 Mattresses and bedsprings
2517 Wood TV and radio cabinets
2519 Household furniture, nee
2521 Wood office furniture
2522 Metal office furniture
2531 Public building and related furniture
2541 Wood partitions and fixtures
2542 Metal partitions and fixtures
2591 Drapery hardware and blinds and shades
2599 Furniture and fixtures, nee
Paper Products
2611 Pulp mills
2621 Paper mills, except building paper
2631 Paperboard mills
2641 Paper coating and glazing
2642 Envelopes
2643 Bags, except textile bags
2645 Die-cut paper and board
2646 Pressed and molded pulp goods
2647 Sanitary paper products
2648 Stationery products
2649 Convened paper products, nee
2651 Folding paperboard boxes
2652 Set-up paperboard boxes
2653 Corrugated and solid fiber boxes
2654 Sanitary food containers
2655 Fiber cans, drums, and similar products
2661 Building paper and board mills
Note: nee = not elsewhere classified.
C-3
-------
SIC
Code Industry
Printing and Publishing Industries
2711 . Newspapers
2721 Periodicals
2731 Book publishing
2732 Book printing
2741 Miscellaneous publishing
2751 Commercial printing, letterpress
2752 Commercial printing, lithographic
2753 Engraving and plate printing
2754 Commercial printing, gravure
2761 Manifold business forms
2771 Greeting card publishing
2782 Blankbooks and looseleaf binders
2789 Bookbinding and related work
2791 Typesetting
2793 Photoengraving
2794 Electrotyping and stereotyping
2795 Lithographic platemaking services
Chemical Products
2800 General chemical manufacturing
2812 Alkalies and chlorine
2813 Industrial gases
2816 Inorganic pigments
2818 Organic pesticide products
2819 Industrial inorganic chemicals, nee
2821 Plastics materials and resins
2822 Synthetic rubber
2823 Cellulosic man-made fibers
2824 Organic fibers, noncellulosic
2831 Biological products
2833 Medicinals and botanicals
2834 Pharmaceutical preparations
2841 Soap and other detergents
2842 Polishes and sanitation goods
2843 Surface active agents
2844 Toilet preparations
2851 Paints and allied products
2861 Gum and wood chemicals
2865 Cyclic crudes and intermediates
2869 Industrial organic chemicals, nee
2873 Nitrogenous fertilizers
2874 Phosphatic fertilizers
2875 Fertilizers, mixing only
2879 Agricultural chemicals, nee
2891 Adhesives and sealants
2892 Explosives
2893 Printing ink
2895 Carbon black
2899 Chemical preparations, nee
Petroleum and Coal Products
2911 Petroleum refining
SIC
Code
2951
2952
2992
2999
Indus
Pavin
Asphi
Lubri
Petro
Rubber and
3011
3021 .
3031
3041
3069
3079
Leathe
3111
3131
3142
3143
3144 .
3149
3151
3161
3171
3172
3199
Stone,
3211
3221
3229
3231
3241
3251
" 3253
3255
3259
3261
3262
3263
3264
3269
3271
3272
3273
3274
3275
3281
3291
3292
3293
3295
3296
3297
3299
tires
Rubb
Reels
Rubb
Fabri(
Misce
rProc
Leath
Boot
Hous
Men's
Worn*
Footw
Leath
Lugg:
Worm
Perse
Leath
Clay,
Ratg
Glass
Press
Prodi
Ceme
Brick
Cerar
Clayi
Struc
Vitrec
Vitrec
Fme(
Porce
Pottei
Cone
Cone
Read
Gme
Gyps
Cut si
Abras
Asbe:
Gask
Miner
Miner
None
Nome
Paving mixtures and blocks
Asphalt felts and coatings
Lubricating oils and greases
Petroleum and coal products, nee
r and Plastic Products
Tires and inner tubes
Rubber and plastics footwear
Reclaimed rubber
Rubber and plastics hose and belting
Fabricated rubber products, nee
Miscellaneous plastics products
r Products
Leather tanning and finishing
Boot and shoe cut stock and findings
House slippers
Men's footwear, except athletic
Women's footwear, except athletic
Footwear, except rubber, nee
Leather gloves and mittens
Luggage
Women's handbags and purses
Personal leather goods, nee
Clay, and Glass Products
Rat glass
Glass containers.
Pressed and blown glass, nee
Products of purchased glass
Cement, hydraulic
Brick and structural clay tile
Ceramic wall and floor tile
Clay refractories
Structural clay products, nee
Vitreous plumbing fixtures
Vitreous china food utensils
Fine earthenware-food utensils
Porcelain electrical supplies
Pottery products, nee
Concrete block and brick
Concrete products, nee
Ready-mixed concrete
Gme
Gypsum products
Cut stone and stone products
Abrasive products
Asbestos products
Gaskets, packing, and sealing devices
Minerals, ground or treated
Mineral wool
Nonclay refractories
Nometallic mineral products, nee
Note: nee » not elsewhere classified.
C-4
-------
SIC
Code Industry
SIC
Code Industry
Primary Metal Industries
3312 Blast furnaces and steel mills
3313 Electrometallurgical products
3315 Steei wire and related products
3316 Cold finishing of steel shapes •
3317 Steel pipe and tubes
3321 Gray iron foundries
3322 Malleable iron foundries
3324 Steel investment foundries
3325 Steel foundries, nee
3331 Primary copper
3332 Primary lead
3333 Primary zinc
3334 Primary aluminum
3339 Primary nonferrous metals, nee
3341 Secondary nonferrous metals
3351 Copper rolling and drawing
3353 Aluminum sheet, plate, and foil
3354 Aluminum extruded products
3355 Aluminum rolling and drawing, nee
3356 Nonferrous roiling and drawing, nee
3357 Nonferrous wire drawing and insulating
3361 Aluminum foundries
3362 Brass, bronze, and copper foundries
3369 Nonferrous foundries, nee
3398 Metal heat treating
3399 Primary metal products, nee
Metal Fabrications
3411 Metal cans
3412 Metal barrels, drums, and pails
3421 Cutlery
3423 Hand and edge tools, nee
3425 Hand saws and saw blades
3429 Hardware, nee
3431 Metal sanitary ware
3432 Plumbing fittings and brass goods
3433 Heating equipment, except electric
3441 Fabricated structural metal
3442 Metal doors, sash, and trim
3443 Fabricated plate work (boiler shops)
3444 Sheet metal work
3446 Architectural metal work
3448 Prefabricated metal buildings
3449 Miscellaneous metal work
3451 Screw machine products
3452 Bolts, nuts, rivets, and washers
3462 Iron and steel forgings
3463 Nonferrous forgings
3465 Automotive stampings
3466 Crowns and closures
3469 Metal stampings, nee
3471 Plating and polishing
3479 Metal coating and allied services
3482 Small arms ammunition
3483 Ammunition, except for small arms, nee
3484 Small arms
3489 Ordnance and accessories, nee
3493 Steel springs, except wire
3494 Valves and pipe fittings
3495 Wire springs
3496 Miscellaneous fabricated wire products
3497 Metal foil and leaf
3498 Fabricated pipe and fittings
3499 Fabricated metal products, nee
Nonelectrical Machinery
3511 Turbines and turbine generator sets
3519 Internal combustion engines, nee
3523 Farm machinery and equipment
3524 Lawn and garden equipment
3531 Construction machinery
3532 Mining machinery
3533 Oil field machinery
3534 Elevators and moving stairways
3535 Conveyors and conveying machinery
3536 Hoists, cranes, and monorails
3537 Industrial trucks and tractors
3541 Machine tools, metal cutting types
3542 Machine tools, metal forming types
3544 Special dies, tools, jigs, and fixture
3545 Machine tool accessories
3546 Power driven hand tools
3547 Rolling mill machinery
3549 Metalworking machinery, nee
3551 Food products machinery
3552 Textile machinery
3553 Woodworking machinery
3554 Paper industries machinery
3555 Printing trades machinery
3559 Special industry machinery, nee
3561 Pumps and pumping equipment
3562 Ball and roller bearings
3563 Air and gas compressors
3564 Blowers and fans
3565 Industrial patterns
3566 Speed changers, drives, and gears
3567 Industrial furnaces and ovens
3568 Power transmission equipment, nee
3569 General industrial machinery, nee
3572 Typewriters
3573 Electronic computing equipment
3574 Calculating and accounting machines
3576 Scales and balances, except laboratory
3579 Office machines, nee
3581 Automatic merchandising machines
Note: nee = not elsewhere classified.
C-5
-------
SIC
Code Industry
SIC
Code Industry
3582 Commercial laundry equipment
3585 Refrigeration and heating equipment
3586 Measuring and dispensing pumps
3589 Service industry machinery, nee
3592 Carburetors, pistons, rings, valves
3599 Machinery, except electrical, nee
Electrical and Electronic Machinery, Equipment,
and Supplies
3612 Transformers
3613 Switchgear and switchboard apparatus
3621 Motors and generators
3622 Industrial controls ,
3523 Welding apparatus, electrical
3624 Carbon and graphite products
3629 Electrical industrial apparatus, nee
3631 Household cooking equipment
3632 Household refrigerators and freezers
3633 Household laundry equipment
3634 Electric housewares and fans
3635 Household vacuum cleaners
3636 Sewing machines
3639 Household appliances, nee
3641 Electric lamps
3643 Current-carrying wiring devices
3644 Noncurrent-carrying wiring devices
3645 Residential lighting fixtures -
3646 Commerical lighting fixtures
3647 Vehicular lighting equipment
3648 Lighting equipment, nee
3651 Radio and TV receiving sets
3652 Phonograph records
3661 Telephone and telegraph apparatus
3662 Radio and TV communication equipment
3671 Electron tubes, receiving type
3672 Cathode ray television picture tubes
3673 Electron tubes, transmitting
3574 Semiconductors and related devices
3675 Electronic capacitors
3676 Electronic resistors
3677 Electronic coils and transformers
3578 Electronic connectors
3679 Electronic components, nee
3691 Storage batteries
3692 Primary batteries, dry and wet
3693 X-ray apparatus and tubes
3694 Engine electrical equipment
3699 Electrical equipment and supplies, nee
Transportation Equipment
37ii Motor vehicles and car bodies .
3713 Truck and bus bodies
3714 Motor vehicle parts and accessories
3715 Truck trailers
3716 Motor homes on purchased chassis
3721 Aircraft
3724 Aircraft engines and engine parts
3728 Aircraft equipment, nee
3731 Ship building and repairing
3732 Boat building and repairing
3743 Railroad equipment
3751 Motorcycles, bicycles, and parts
3761 Guided missiles and space vehicles
3764 Space propulsion units and parts
3769 Space vehicle equipment, nee
3792 Travel trailers and campers
3795 Tanks and tank components
3799 Transportation equipment, nee
Instruments
3811 Engineering and scientific instruments
3822 Environmental controls
3823 Process control instruments
3824 Ruid meters and counting devices
3825 Instruments to measure electricity
3829 Measuring and controlling devices, nee
3832 Optical instruments and lenses
3841 Surgical and medical instruments
3842 Surgical appliances and supplies
3843 Dental equipment and supplies
3851 Ophthalmic goods
3861 Photographic equipment and supplies
3873 Watches, clocks, and watchcases
Miscellaneous Manufacturing
3911 Jewelry, precious metal .
3914 Silverware and plated ware
3915 Jewelers' materials and lapidary work
3931 Musical instruments
3942 Dolls
3944 Games, toys, and children's vehicles
3949 Sporting and athletic goods, nee
3951 Pens and mechanical pencils
3952 Lead pencils and art goods
3953 Marking devices
3955 Carbon paper and inked ribbons
3961 Costume jewelry
3962 Artificial flowers
3963 Buttons
3964 Needles, pins, and fasteners
3991 Brooms and brushes
3993 Signs and advertising displays
3995 Burial caskets
3996 Hard surface floor coverings
3999 Manufacturing industries, nee
Note: nee = not elsewhere classified.
C-6
-------
Code Industry
SIC
Code Industry
Railroad Transportation
4011 Railroads, line-haul operating
4013 Switching and terminal devices
4041 Railway express service
Local Passenger Transportation
4111 Local and suburban transit
4119 Local passenger transportation, nee
4121 Taxicabs
4131 Intercity highway transportation
4141 Local passenger charter service
4142 Charter service, except local
4151 School buses
4171 Bus terminal facilities
4172 Bus service facilities
Trucking
4212 Local trucking, without s'torage
4213 Trucking, except local
4214 Local trucking and storage
4221 Farm product warehousing and storage
4222 Refrigerated warehousing
4224 Household goods warehousing
4225 General warehousing and storage
4226 Special warehousing and storage, nee
4231 Trucking terminal facilities
4311 U.S. Postal Service
Water Transportation
4411 Deep sea foreign transportation
4421 Noncontiguous area transportation
4422 Coastwise transportation
4423 Intercoastal transportation
4431 Great Lakes transportation
4441 Transportation on rivers and canals
4452 Ferries
4453 Lighterage
4454 Towing and tugboat service
4459 Local water transportation, nee
4463 Marine cargo handling
4464 Canal operation
4469 Water transportation services, nee
Air Transportation
4511 Certified air transportation
4521 Noncertified air transportation
4582 Airports and flying fields
4583 Air terminal services
Pipelines
4612 Crude petroleum pipelines
4613 Refined petroleum pipelines
4619 Pipelines, nee
Transportation Services
4712 Freight forwarding
4722 Passenger transportation arrangement
4723 Freight transportation arrangement
4742 Railroad car rental with service
4743 Railroad car rental without service
4782 Inspection and weighing services
4783 Packing and crating
4784 Fixed facilities for vehicles, nee
4789 Transportation services, nee
Communications
4811 Telephone communication
4821 Telegraph communication
4832 Radio broadcasting
4833 Television broadcasting
4899 Communication services, nee
Electrical, Gas, and Sanitary Services
4911 Electric services
4922 Natural gas transmission
4923 Gas transmission and distribution
4924 Natural gas distribution
4925 Gas production and/or distribution
4931 Electric and other services combined
4932 Gas and other services combined
4939 Combination utility services, nee
4941 Water supply
4952 Sewerage systems
4953 Refuse systems
4959 Sanitary services, nee
4961 Steam supply
4971 Irrigation systems
Wholesale Trade
5012 Automobiles and other motor vehicles
5013 Automotive parts and supplies
5014 Tires and tubes
5021 Furniture
5023 Home furnishings
5031 Lumber, plywood, and millwork
5039 Construction materials, nee
5041 Sporting and recreational goods
5042 Toys and hobby goods and supplies
5043 Photographic equipment and supplies
5051 Metals service centers and offices
5052 Coal and other minerals and ores
5063 Electrical apparatus and equipment
5064 Electrical appliances, TV and radios
5065 Electronic parts and equipment
5072 Hardware
5074 Plumbing and hydronic heating supplies
5075 Warm air heating and air conditioning
Note: nee = not elsewhere classified.
C-7
-------
SIC
Code Industry
SIC
Code Industry
Refrigeration equipment and supplies
Commercial machines and equipment
Construction and mining machinery
Farm machinery and equipment
Industrial machinery and equipment
Industrial supplies
Professional equipment and supplies
Service establishment equipment
Transportation equipment and supplies
Scrap and waste materials
Jewelry, watches, and precious stones
Durable goods, nee
Printing and writing paper
Stationery supplies
Industrial and personal service paper
Drugs, proprietaries, and sundries
Piece goods
Notions and other dry goods
Men's clothing and furnishings
Women's and children's clothing
Footwear
Groceries, general line
Frozen foods
Dairy products
Poultry and poultry products
Confectionery
Fish and seafoods
Meats and meat products
Fresh fruits and vegetables
Groceries and related products, nee
Cotton
Grain
Livestock
Farm-product raw materials, nee
Chemicals and allied products
Petroleum bulk stations and terminals
Petroleum products, nee
Beer and ale
Wines and distilled beverages '
Farm supplies
Tobacco and tobacco products
.Paints, varnishes, and supplies
Nondurable goods, nee
Retail Trade
5211 Lumber and other building materials
5231 Paint, glass, and wallpaper stores
Hardware stores
Retail nurseries and gardens
Mobile home dealers
Department stores
Variety stores
Miscellaneous general merchandise stores
" '
5078
5081
5082
5083
5084
5085
5086
5087
5088
5093
5094
.5099
5111
5112
5113
5122
5133
5134
5136
5137
5139
5141
5142
5143
5144
5145
5146
5147
5148
5149
5152
5153
5154
5159
5161
5171
5172
5181
5182
5191
5194
5198
5199
5251
5261
5271
5311
5331
5399
5411
5422
5423
5431
5441
5451
5462
5463
5499
5511
5521
5531
5541
5551
5561
5571
5599
5611
5621
5631
5641
5651
5661
5681
5699
5712
5713
5714
5719
5722
5732
5733
5812
5813
5912
5921
5931
5941
5942
5943
5944
5945
5946
5947
5948
5949
5961
5962
5963
5982
5983
5984
Grocery stores
Freezer and locker meat provisioners
Meat and fish (seafood) markets
Fruit stores and vegetable markets
Candy, nut, and confectionery stores
Dairy products stores
Retail bakeries, baking and selling
RetaiJ bakeries, selling only
Miscellaneous food stores
New and used car dealers
Used car dealers
Auto and home supply stores
Gasoline service stations
Boat dealers
Recreation and utility trailer dealers
Motorcycle dealers
Automotive dealers, nee
Men's and boys' clothing and furnishings
Women's ready-to-wear stores
Women's accessory and specialty stores
Children's* and infants'wear stores
Family clothing stores
Shoe stores
Furriers and fur shops
Miscellaneous apparel arid accessories
Furniture stores
Floor covering stores
Drapery and upholstery stores
Miscellaneous home furnishings stores
Household appliance stores
Radio and television stores
Music stores
Eating places
Drinking places
Drugstores and proprietary stores
Liquor stores
Used merchandise stores
Sporting goods and bicycle shops
Book stores
Stationery stores
Jewelry stores
Hobby, toy, and game shops
Camera and photographic supply stores
Gift, novelty, and souvenir shops
Luggage and leather goods stores
Sewing, needlework, and piece goods
Mail order houses
Merchandising machine operators
Direct selling organizations
Fuel and ice dealers, nee
Fuel oil dealers
Liquefied petroleum gas dealers
C-8
-------
SIC
Code Industry
SIC
Code Industry
' 5992 Florists
5993 Cigar stores and stands
5994 News dealers and newsstands
5999 Miscellaneous retail stores, nee
Financial
6011 Federal Reserve banks
6022 State banks. Federal Reserve
6023 State banks, not Federal Reserve, FDIC
6024 State banks, not Federal Reserve, not FDIC
6025 National banks, Federal Reserve
6026 National banks, not Federal Reserve, FDIC
6027 National banks, not FDIC
6028 Private banks, not incorporated, not FDIC
6032 Mutual savings banks. Federal Reserve
6033 Mutual savings banks, nee
6034 Mutual savings banks, not FDIC
6042 Nondeposit trusts, Federal Reserve
6044 Nondeposit trusts, not FDIC
6052 Foreign exchange establishments
6054 Safe deposit companies
6055 Clearinghouse associations
6056 Corporations for banking abroad
6059 Functions related to banking, nee
6112 Rediscounting, not for agricultural
6113 Rediscounting, for agricultural
6122 Federal savings and loan associations
6123 State associations, insured
6124 State associations, noninsured, FHLB
6125 State associations, noninsured, nee
6131 Agricultural credit institutions
6142 Federal credit unions
6143 State credit unions
6144 Nondeposit industrial loan companies
6145 Licensed small loan-lenders
6146 Installment sales finance companies
6149 Miscellaneous personal credit institutions
6153 Short-term business credit
6159 Miscellaneous business credit institutions
6162 Mortgage bankers and correspondents
6163 Loan brokers
6211 Security brokers and dealers
6221 Commodity contracts brokers, dealers
6231 Security and commodity exchanges
6281 Security and commodity services
Insurance
6311 Life insurance
6321 Accident and health insurance
6324 Hospital and medical service plans
6331 Rre, marine, and casualty insurance
6351 Surety insurance
6361 Title insurance
6371 Pension, health, and welfare funds
6399 Insurance carriers, nee
6411 Insurance agents, brokers, and service
Real Estate
6512 Nonresidential building operators
6513 Apartment building operators
6514 Dwelling operators, except apartments
6515 Mobile home site operators
6517 Railroad property lessors
6519 Real property lessors, nee
6531 Real estate agents and managers
6541 Title abstract offices
6552 Subdividers and developers, nee
6553 Cemetery subdividers and developers
6611 Combined real estate, insurance, etc.
Holding and Other investment Offices
6711 Holding offices
6722 Management investment, open-end
6723 Management investment, closed-end
6724 Unit investment trusts
6725 Face-amount certificate offices
6732 Educational, religious, etc. trusts
6733 Trusts, nec
6792 Oil royalty traders
6793 Commodity traders
6794 Patent owners and lessors
6798 Real estate investment trusts
6799 Investors, nec
Hotels and Personal Services
7011 Hotels, motels, and tourist courts
7021 Rooming and boarding houses
7032 Sporting and recreational camps
7033 Trailering parks for transients
7041 Membership-basis organization hotels
7211 Power laundries, family and commercial
7212 Garment pressing and cleaners' agents
7213 Unen supply
7214 Diaper service
7215 Coin-operated laundries and cleaning
7216 Dry cleaning plants, except rug
7217 Carpet and upholstery cleaning
7218 Industrial launderers
7219 Laundry and garment services, nec
7221 Photographic studios, portrait
7231. Beauty shops
7241 Barber shops
7251 Shoe repair and hat cleaning shops
7261 Funeral service and crematories
7299 Miscellaneous personal services
Note: nec = not elsewhere classified.
C-9
-------
SIC
Code Industry
SIC
Code industry
Business Services
7311 Advertising agencies ,
7312 Outdoor advertising services
7313 Radio, TV, publisher representatives
7319 Advertising, nee
7321 Credit reporting and collection
7331 Direct mail advertising services
7332 Blueprinting and photocopying
7333 Commerical photography and art
7339 Stenographic and reproduction, nee
7341 Window cleaning
7342 Disinfecting and exterminating
7349 Building maintenance services, nee
7351 News syndicates . . • ;
7361 Employment agencies - .
7362 Temporary help supply services
7369 Personnel supply services, nee
7372 Computer programming and software
7374 Data processing services
7379 Computer related services, nee
7391 Research and development laboratories
7392 Management and public relations
7393 Detective and protective services
7394 Equipment rental and leasing
7395 Photofinishing laboratories
7396 Trading stamp services
7397 Commercial testing laboratories
7399 Business services, nee
Automotive Repair, Services, and Garages
7512 Passenger car rental and leasing
7513 Truck rental and leasing
7519 Utility trailer rental
7523 Parking lots
7525 Parking structures
7531 Top and body repair shops
7534 Tire retreading and repair shops
7535 Paint shops
7538 General automotive repair shops
7539 Automotive repair shops, nee
7542 Car washes
7549 Automotive services, nee
Miscellaneous Repair Services
7622 Radio and television repair
7623 Refrigeration service and repair
7629 Electrical repair shops, nee
7631 Watch, clock, and jewelry repair
7641 Reupholstery and furniture repair
7692 Welding repair-
7694 Armature rewinding shops
7699 Repair services, nee
Entertainment
7813 Motion picture production, except TV
7814 Motion picture production for TV
7819 Services allied to motion pictures
7823 Motion picture film exchanges
7824 Film or tape distribution for TV
7829 Motion picture distribution services
7832 Motion picture theaters except drive-in
7833 Drive-in motion picture theaters
7911 Dance halls, studios, and schools
7922 Theatrical producers and services
7929 Entertainers and entertainment groups
7932 Billiard and pool establishments
7933 Bowling alleys
7941 Sports clubs and promoters
7948 Racing, including track operation
7992 Public golf courses
7993 Coin-operated amusement devices
7996 Amusement parks
7997 Membership sports and recreation clubs
7999 Amusement and recreation, nee
Health Services
8011 Offices of physicians
8021 Offices of dentists
8031 Offices of osteopathic physicians
8041 Offices of chiropractors
8042 Offices of optometrists
8049 Offices of health practitioners, nee
8051 Skilled nurse care facilities
8059 Nursing and personal care, nee
8062 General medical and surgical hospitals
8063 Psychiatric hospitals
8069 Specialty hospitals, except psychiatric
8071 Medical laboratories
8072 Dental laboratories
8081 Outpatient care facilities
8091 Health and allied services, nee
Legal, Educational, and Social Services
8111 Legal services
8211 Elementary and secondary schools
8221 Colleges and universities, nee
8222 Junior colleges
8231 Libraries and information centers
8241 Correspondence schools
8243 Data processing schools
8244 Business and secretarial schools
8249 Vocational schools, nee
8299 Schools and educational services, nee
8321 Individual and family services
8331 Job training and related services .
8351 Child day care services
Note: nee = not elsewhere classified.
C-10
-------
SIC
Code Industry
SIC
Code Industry
8361 Residential care
8399 Social services, nee
8411 Museums and art galleries
8421 Botanical and zoological gardens
Professional Organizations
8611 Business associations
8621 Professional organizations
8631 Labor organizations
8641 Civic and social associations
8651 Political organizations
8661 Religious organizations
8699 Membership organizations, nee
8811 Private households
Miscellaneous Services
8911 Engineering and architectural services
8922 Noncommercial research organizations
8931 Accounting, auditing, and bookkeeping
8999 Services, nee
Government
9111 Executive offices
9121 Legislative bodies
9131 Executive and legislative combined
9199 General government, nee
9211 Courts
9221 Police protection
9222 Legal counsel and prosecution
9223 Correctional institutions
9224 Fire protection
9229 Public order and safety, nee
9311 Finance, taxation, and monetary policy
9411 Administration of educational programs
9431 Administration of public health programs
9441 Administration of social and manpower programs
9451 Administration of veterans' affairs
9511 Air, water, and solid waste management
9512 Land, mineral, wildlife conservation
9531 Housing programs
9532 Urban and community development
9611 Administration of general economic programs
9621 Regulation, administration of transportation
9631 Regulation, administration of utilities
9641 Regulation of agricultural marketing
9651 Regulation miscellaneous commercial sectors
9661 Space research and technology
9711 Nation?! security
9721 International affairs
9999 Nonclassifiable establishment
Note: nee = not elsewhere classified.
C-ll
-------
-------
APPENDIX D
Detailed Description of the Economic Impact Analysis Model
-------
-------
This appendix summarizes in greater detail the economic impact methodology used to
assess impacts of the proposed effluent limitations guidelines and standards on commercial
CWT facilities. The Agency developed a partial-equilibrium market model that simulates
facility responses to the regulatory costs, resulting in changes hi market supply, price,
t
quantity, facility revenues, costs, and employment.
D.I REGIONAL MARKETS FOR CWT SERVICES
Because wastewater is heavy, bulky, and therefore costly to transport, the markets for
CWT services are fairly localized. EPA defined six geographical regions across the
continental U.S., within which CWT services are provided. These regions, described in
Section 3, are. Northeast, Southeast, Upper Midwest, Lower Midwest, Northwest, and
Southwest. Within each region, CWTs may be assigned to one or more of 11 possible
"markets":
• Metals Recovery
- medium cost
— low cost
• Metals Treatment
— high cost
— medium cost
- low cost
D-l
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• Oils Recovery
— high cost . .
— medium cost
#
- low cost
• Oils Treatment
• Organics Treatment
- high cost
- low cost
Each of these specific types of services within a region constitutes a market. These markets
were defined by examining the questionnaire data and comments on the NOA modeling
assumptions. Facilities were assigned to one or more of the markets, based on their reported
or estimated average cost of treatment or recovery. The quantity of waste a facility is said to
accept for treatment or recovery is based on technical questionnaire data or on modeling done
for the NOA, as amended based on comments. For facilities that responded to the
questionnaire, commercial status is based on responses to Question O4, which asks about the
quantities of wastewater accepted on a commercial and noncommercial basis. EPA assumed
that the proportion reported by a facility is accurate for all subcategories and for treatment as
well as recovery. For NOA facilities, EPA assumed all waste was accepted on a commercial
basis.
For each commercial CWT, average (or per-gallon) baseline costs of treatment or
recovery were computed based on responses to the economic section of the questionnaire.
For example, the average cost of metals recovery was computed by dividing the reported cost
of metals recovery by the inflow to metals recovery as reported in the technical section of the
D-2
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questionnaire. Reported dollar values were adjusted to 1997 dollars using the producer's
price index.
D.2 MARKET STRUCTURE
After assigning facilities to markets, EPA determined the appropriate market structure
as either monopoly (one CWT in the market), duopoly (two CWTs in the market), or perfect
competition, (three or more CWTs in the market). The market price is defined as a function
of the maximum average cost within the market. For perfectly competitive markets, market
price is defined as the maximum average cost across all facilities in the market. For the
imperfectly competitive market structures, market price is some fraction higher than the
maximum average cost across facilities in the market, reflecting the fact that under imperfect
competition, facilities have market power.
D.3 FACILITY RESPONSES TO CONTROL OPTIONS DEPEND ON THE
MARKET STRUCTURE
Complying with the regulation increases each affected facility's per-gallon cost of
treatment in each market by the annualized per-gallon cost of the controls on that process.
For example, the per-gallon cost of oils treatment is increased by the cost of implementing
the controls proposed for the oils subcategory. To compute this increase in per-gallon costs,
EPA first estimated the cost, of controls for each subcategory, then annualized the capital and
land costs and added the annualized costs to the annual operating and maintenance (O&M)
and monitoring and recordkeeping (M&R) costs.
Total Annual Cost (TAG) = (Annual O&M and M&R costs) +
(Annualized K and Land costs)
(D.I)
D-3
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Compliance costs were adjusted from 1989 to 1995 dollars using the Construction Cost Index
published in the Engineering News Record (1998). Costs were also adjusted to account for
the tax savings due to depreciation and cost deduction provisions of the tax code. For greater
detail on the controls for each subcategory and the cost adjustments made, see Section 4.
To estimate the per-gallon annual compliance costs, the TAG was then divided by the
quantity of wastewater being processed in that subcategory at that facility. This per-gallon
cost of compliance was added to the facility's baseline average cost to obtain its with-
regulation average cost of treating that subcategory of wastewater. For example, the with-
regulation average cost of oils treatment is the baseline average cost of oils treatment plus the
per-gallon cost for that facility to comply with the oils subcategory guidelines or standards.
Oils and metals recovery operations are indirectly affected by the controls, because
they generate wastewater: For each facility, the Agency has an estimate of the quantity of
wastewater generated for each gallon of oily or metal-bearing waste accepted for recovery.
If, for example, the quantity of wastewater generated by a facility's oils recovery operation is
60 percent of the quantity of oily waste accepted for recovery, the average cost of oils
recovery is increased by 0.6 tunes the per-gallon cost of complying with the oils subcategory
guidelines or standards.
Each facility compares the average with-regulation cost of performing each waste
treatment or recovery operation with the additional revenue it will receive and decides
whether to continue providing the waste treatment or recovery service, and if so, how much
to treat. Facilities choosing to decrease the quantity of waste they treat, aggregated together,
reduce the market supply of the CWT service. Market supply, interacting with market
demand, results in a new, higher market price for the CWT service and a new, lower total
market quantity of waste accepted at CWTs in the market for the treatment or recovery
service. As the price adjusts, facilities evaluate their supply decision. The adjustments
D-4
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continue until a set of prices and quantities is identified that satisfies both suppliers and
demanders.
The precise ways in which facilities interact with the market in adjusting to the new,
higher costs of providing CWT services vary according to the market structure. Monopolies,
duopolies, and competitive facilities respond somewhat differently to the costs of complying
with the effluent limitations guidelines and standards. The rest of this appendix examines the
adjustment to the compliance costs under each of the market structures.
D.3.1 Monopoly
Based on the with-regulation cost of treatment, monopolies identify the most
profitable new price and quantity for their CWT service from the market demand for the
service. Unlike perfectly competitive facilities, monopolists recognize the power they have
to affect the market price. The monopolist chooses a price and output that maximize its
profit. The choice of price and output depends on the behavior of customers as reflected in
the curvature of the demand curve facing the monopolist.
The monopolist's profit-maximizing level of output will be where his marginal
revenue equals marginal cost, or
MR =
l/n}=MC
(D.2)
where P is the market price and n < 0 is the market price elasticity of demand. Note that the
monopolist will, never operate where the demand curve is inelastic, because faced with
inelastic demand, he can always increase his revenues by increasing his price. Thus, the
optimal output will only occur in that part of the demand curve where the elasticity is greater
than or equal to one.
D-5
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Consider a monopolist with constant marginal costs that faces environmental
regulation with a per-gallon compliance cost equal to c. The marginal cost curve shifts up by
the amount of the unit compliance cost to MC = c, and the intersection of marginal revenue
and marginal cost moves to the left, reflecting a reduction in output. The magnitude of the
changes in market price and output will depend on the assumed shape of the demand curve.
The model may specify either a linear demand curve or a constant elasticity demand curve.
EPA has chosen to assume a constant elasticity demand curve of the form q = Cpn. Given
this demand curve, the MR = MC condition can be rewritten
P = (MC + c) / (1 + 1/n)
(D.3)
As indicated by that equation, a monopolist facing a constant elasticity demand curve will
charge a price that is a constant markup on marginal cost given by 1/(1 + 1/n). Given that the
demand elasticity must be elastic (greater than or equal to one in absolute value), the constant
markup is greater than one so that the monopolist passes on more than the amount of the unit
compliance cost to consumers. Thus, to operationalize a monopolist facing a constant
elasticity demand function, the model would specify the parameters of the demand function
(C and n) and determine the new market price using Eq. D.3 and the new market output by
solving the market demand equation given the new market price, q = Cp".
D.3.2 Duopoly
Duopoly exists in markets having two suppliers, and each recognizes its influence
over market price and chooses a level of output to maximize its profit given the output
decision of the other supplier. There are a number of possible duopoly solutions, depending
on the assumed behavior of suppliers as collusive, competitive, or Cournot-Nash. The
Agency has chosen to employ the Coumot-Nash behavioral assumption. Under this
assumption, EPA assumed that cooperation between suppliers is not achieved. Each supplier
D-6
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correctly evaluates the effect of its output choice on market price, and each does the best it
can given the output decision of its competitor. Thus, given any output level chosen by
Supplier 1, there will be a unique optimal output choice for Supplier 2. In essence,
Supplier 2 behaves as a monopolist over the residual demand curve (that portion of demand
not satisfied by Supplier 1). EPA constructed reaction functions for each supplier that define
its optimal output choice given the selected level of output from the other supplier. The
intersection of the reaction curves for each supplier is the Cournot-Nash equilibrium, since
each supplier is at its optimal output level given the decision .of the other.
Consider two suppliers with constant marginal costs facing per-gallon costs of
complying with the CWT effluent limitations guidelines and standards equal to c, and c2,
respectively. The marginal cost curve for each supplier shifts up by the amount of its per-
gallon compliance cost, and the intersection of MR and MC moves to the left, reflecting a
reduction in output. The magnitude of the changes in market price and output will depend on
the shift in the "reaction curve" of each supplier associated with the regulatory costs given a
linear demand curve that is specified p (q) = A — BQ, where Q = q, + qj.
In the case of duopolists facing a linear demand curve, the MR = MC condition for
each supplier becomes
and
MR, = (A - c^) - 2Bq, = MC, + c,
MR2 = (A - q,) - 2Bq2 = MC2 +c2
(D.4)
(D.5)
Equilibrium will be determined by the intersection of these reaction curves. Substituting
Eq. D.4 into D.5 results in an equation for the optimal level of Supplier 1 's output that
depends on the demand parameters (A and B), its marginal cost (MC, + c,), and the marginal
cost of Supplier 2 (MC2 + c2):
D-7
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- 2b) - (MC2 + c2)
c,)] / (1 - 4B2).
(D.6)
Thus, to operationalize duopoly with a linear demand function, the model would specify the
parameters of the demand function, A and B; determine the optimal output level of Supplier 1
using Eq. D.6 based on the unit compliance costs GI and c2; determine the optimal output
level of Supplier 2 using Eq. D.5, given the new optimal output level of Supplier 1 and its
unit compliance cost c2; and then determine the new market output level (q; + qj) and new
market price p = A -
D.3.3 Perfect Competition
Many of the markets in the CWT economic impact analysis model have three or more
suppliers and are treated as perfectly competitive. Facilities offering a CWT treatment or
recovery service hi a perfectly competitive market are unable to affect the market price by
then- actions. Thus, they maximize their profits by producing all units for which P is greater
than or equal to MC + c, where MC is the baseline per-gallon cost of the treatment operation,
and c is the per-gallon cost of complying with the guidelines or standards. Summing all the
quantities supplied by CWTs hi the market yields market supply. Market demand,
characterized by a single constant price-elasticity, determines the quantity demanded at a
given market price. Market price increases if quantity demanded exceeds quantity supplied
or decreases if quantity supplied exceeds quantity demanded. As market price adjusts,
facilities reevaluate their desired supply of CWT services, resulting in further adjustments hi
market supply. Adjustments continue until a price and quantity are found that satisfy both
suppliers and demanders. Figure D-l shows a competitive market with the regulatory costs
included. The costs of complying with the regulation shift each facility's per-gallon cost
upward, resulting in the upward shift in the supply curve. In this example, one facility has
per-gallon with-regulation costs that exceed the original market price; they choose to close
this CWT operation, because it is losing money. The market price adjusts upward to P2, and
D-8 . •
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$/gallon
D
Gallons treated per year
Figure D-l. Adjustment of a Perfectly Competitive Market to the Costs of Complying
with the CWT Regulation
The highest cost facility shuts down- this CWT operation.
total quantity treated falls to Q2, reflecting the closure of one CWT process and a downward
adjustment in the quantity treated by the next most costly CWT operation in the market.
D.4 IMPACT MEASURES ESTIMATED BY THE MODEL
As shown by the examples above, the economic impact analysis model estimates a
variety of impact measures for affected facilities and markets. These measures include
with-regulation market price,
D-9
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• with regulation market quantity of waste treated,
• with-regulation facility quantity treated in each CWT operation,
• with-regulation facility revenues and costs,
• with-regulation facility employment, arid
- closures of CWT operations or entire CWT facilities.
These impact measures serve as starting points for other parts of the economic analysis. For
example, facility changes in employment form the basis for estimated community-wide
changes in employment that form the basis of the community impacts analysis. The facility-
level changes in revenues and costs can be aggregated to the owner-company level to form
the basis for company-level impact measures such as changes in profit margins. Changes in
market prices and quantities are used to estimate the changes in producer and consumer
surplus that are a large part of the measure of social costs.
D.5 REFERENCES
Engineering News Record. Construction Cost Index History (1908-1997).
. Downloaded October 28,1998.
D-10
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APPENDIX E
Detailed Demand Elasticity Discussion
-------
-------
The own-price elasticity of demand is a model parameter that measures the
responsiveness of demand for a commodity to changes in its price. As such, it is a critically
important element in analyzing the extent to which costs incurred by producers are borne by
them or are passed on to their customers in the form of higher market prices for the g9ods or
services they produce. Although there are other types of demand elasticities that measure the
responsiveness of demand to factors other than the price of the commodity itself, the own-
price elasticity of demand is referred to as the elasticity of demand in this appendix. EPA
examined the elasticity of demand for CWT services and used two different elasticities
depending on the market structure. For perfectly competitive markets, EPA assumed that the
elasticity of demand is -0.5. For imperfectly competitive markets, EPA assumed that the
elasticity of demand was -1.5. EPA selected these elasticities as representing the most
reasonable range of price-elasticity values, based on economic reasoning, after examining the
economics literature and analyzing an alternative assumption. This appendix summarizes
EPA's examination of the price elasticity of demand for CWT services.
E.1 THE ECONOMIC THEORY UNDERLYING THE ELASTICITY OF
DEMAND FOR AN INPUT
As explained above, waste treatment is an input into the production of other goods
and services, whose production also creates waste. The demand for the CWT input is derived
from the demand for the other goods and services. In the market model, the change in
quantity demanded of CWT service i is described as a function of the change in the market
price for CWT service i and the elasticity of demand for CWT service i. Thus, the change in
quantity demanded is given by
E-l
-------
(E.I)
where
•Hi
Qi
change in quantity demanded of CWT service i,
elasticity of demand for CWT service i,
change in price of CWT service i,
baseline quantity demanded of CWT service i, and
baseline price of CWT service i.
CWT service markets are characterized as regional markets. Based on information
provided in the CWT survey, the Agency believes that most of a CWT facility's customers
are located within the same state as the CWT facility or within a few adjacent states. For our
market model, the continental United States was divided into six regional markets for CWT
services. All the generators within each region were assumed to send their off-Site waste to a
CWT facility located within the region. Thus, competition for customers was assumed to
occur-essentially within the region, although CWT facilities located outside the region do
offer a (very costly) alternative to CWT facilities within the region. The presence of these
"treaters of last resort" affects the assumptions made about the elasticity of demand for CWT
services.
The elasticity of demand measures the responsiveness of demand for a service to
changes in its price. It is defined as the percentage change in the quantity demanded of a
service divided by the percentage change in its price:
(E:2)
where the right-hand-side variables are defined as above.
E-2
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Economic theory states that the elasticity of the derived demand for an input is a
function of the following:
demand elasticity for the final good it will be used to produce,
the cost share of the input in total production cost,
the elasticity of substitution between this input and other inputs in production, and
the elasticity of supply of other inputs (Hicks, 1961; Hicks, 1966; and Allen,
1938).
Using Hicks' formula,
h = [s(n + e) + Ke(n - s)] / [n = e - K(n - s)]
(E.3)
where
•Hi
s
n
e
K
elasticity of demand for the CWT service i,
elasticity of substitution between CWT service i and all other inputs,
elasticity of demand for final product,
elasticity of supply of other inputs, and
cost share of CWT service i in total production cost.
In the Appendix to The Theory of Wages, Hicks (1966) shows that, if n > s, the
demand for the input is less elastic the smaller its cost share (Levinson, 1997; Sigman, 1998;
Smith and Sims, 1985). If the data were available, this formula could be used to actually
compute the elasticity of demand for each CWT service. As noted above, however, nearly
every production activity generates some waste that is managed off-site. The number of final
products whose elasticity of demand (n) would need to be included is very large, and the
E-3
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elasticities of demand for those products vary widely. Thus, resources do not permit
determination of a value for n. This makes direct computation of the elasticity of demand, t],
impossible. In spite of this, the formula is useful because it identifies factors that influence
the magnitude of the elasticity of derived demand. Knowledge of the general magnitude of
those factors makes it possible to make an educated assumption about the magnitude of TJ..
The elasticity of substitution, s, between a given waste treatment service and other
inputs is low but not zero. This means that waste generators do have some limited options in
the way they produce theu: final goods or services. Some limited substitution is possible
between treatment technologies for a given waste form. In addition, generators may choose
to substitute out-of-region CWT services for within-region CWT services, although
transportation costs would increase greatly. Further, generating facilities may substitute
on-site capital, labor, and/or materials for off-site waste treatment either by choosing to
manage the waste on-site or by undertaking on-site pollution prevention activities. These
options are quite limited, however, so s is expected to be small, and n is likely to be larger
than s.
Thus., the magnitude oft) is proportional to the magnitude of K, the cost share of
CWT in final goods production. Other analyses done on the CWT industry found that the
cost share for waste treatment was historically very small, frequently hundredths of a percent
of total production costs. Recent regulatory changes may have increased the unit cost
somewhat, but it is still expected to be fairly small.
Insufficient data exist to enable the Agency.to estimate the elasticity of demand for
CWT services econometrically. Instead, assumptions were made about the relative
magnitudes of the parameters of the Hicks equation describing the elasticity of demand for
intermediate goods and services. Based on these assumptions, a reasonable assumption was
E-4
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made about the magnitude of the elasticity of demand for CWT services in each regional
market.
Overall, the demand for CWT services is assumed to vary, depending on the structure
of the CWT market. For markets with three or more CWTs (modeled as having a perfectly
competitive market structure), EPA assumes the elasticity of demand to be -0.5—relatively
inelastic. This demand elasticity means that, if the price of CWT services in these markets
increases by 10 percent, the quantity of CWT services demanded will decrease by only
5 percent.
For CWT markets having one or two CWTs, the demand is assumed to be slightly
elastic (-1.5). Demand elasticity in this range means that, when the price of CWT services
increases, the quantity of CWT services demanded will decrease by slightly more, in
percentage terms, than the price has increased. Because the markets being modeled are
regional monopolies or duopolies, the CWT facilities possess market power and can, to an
extent at least, choose the market price they charge for their services. They will always select
prices that are in the elastic range of their demand curves. Elastic demand means that the
percentage change in quantity exceeds the percentage change in price. Inelastic demand
means that percentage change in price exceeds percentage change in quantity. A firm with
market power that is operating in the inelastic range of its demand curve can increase its
revenues by increasing the price it charges (Revenue = price • quantity). Thus, such a firm
will always increase its price until demand becomes at least slightly elastic. In the inelastic
range of the demand curve, therefore, CWT operators with market power have nothing to
lose by increasing the price they charge. Only when the price rises into the elastic range of
the demand curve will further increases in price decrease the firm's CWT revenues.
Imperfectly competitive firms will then select the price they charge by estimating what price
will yield the highest profits.
E-5
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Overall, therefore, the Agency assumed markets for CWT services to be characterized
by demand elasticities that range from -0.5 to -1.5. To further validate that these assumed
values are reasonable, the Agency examined recent articles in the economics literature that
estimate price responsiveness of similar types of services. This survey of the literature is
reported in Section E.2. Finally, in Section E.3, EPA reports the result of a sensitivity
analysis that assumed that CWT facilities are completely unable to increase their prices in
response to a change in the cost of providing their services. This "full-cost-absorption"
scenario represents the highest impacts that could be incurred by CWTs as a result of
complying with the regulation. The costs of affected CWT facilities are assumed to increase
by the amount of the total annualized compliance costs, while their revenues remain
unchanged.
E.2 EVIDENCE FROM THE LITERATURE ON DEMAND ELASTICITIES FOR
SIMILAR SERVICES
Another source of evidence about the probable range of elasticities for CWT services
is articles in the economics literature that estimated the price responsiveness of demand for
waste management services. At proposal, EPA had identified no economics articles that
modeled markets that were similar enough to CWT services for the results to be at all
applicable. During the analysis for this re-proposal, and especially after the SBREFA panel
meetings, EPA conducted additional searches of the literature and identified several articles
whose results might be relevant. None of the articles analyze markets that are precisely the
same as the ones being affected by the CWT effluent limitations guidelines and standards.
Nevertheless, they do reveal something about the influence of price on the demand for
various types of waste management services and therefore indicate the expected sensitivity of
demand for CWT services to changes in price. This section summarizes these articles,
including a discussion of the markets being modeled and the evidence of price responsiveness
of those markets.
E-6
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EPA identified six articles that provide evidence about the price responsiveness of
demand for waste management. Smith and Sims (1985) examine the impact of pollution
charges on productivity growth in the Canadian brewing industry. Mark Eiswerth (1993)
uses dynamic optimization to analyze choices between disposal options for solvent wastes.
Deyle and Bretschneider (1995) examine the effect of New York's hazardous waste
regulatory initiatives on the choice of disposal methods and locations. Arik Levinson (1997)
examines the impact of state "NIMBY" (Not in My Back Yard) taxes on interstate transport
of hazardous waste for disposal in the United States. Anna Alberini (1998) looks at the
determinants of disposal choice for generators of halogenated solvents. Hilary Sigman
(1998) examines the influence of variations in the cost of legal means of disposal of waste oil
on the number of dumping incidents.
Smith and Sims used plant-specific data on responses to a sewer surcharge scheme,
which levies extra fees for the discharge of "extra-strength" waste by indirect dischargers.
The pollutants of concern in this analysis are conventional pollutants, especially BOD and
TSS. The authors collected 10 years of data on shipments, labor, energy, materials, and
capital stock, and environmental regulation were obtained for four breweries, two of which
were subject to sewer surcharges and two of which were unregulated. The authors estimated
a trans-log cost function where the factors were labor, capital, energy, and wastewater
treatment. (A fixed relationship was found to exist between materials and output, so
materials were omitted from estimation.) Own-price and cross-price elasticities of factor
demand were computed at the sample mean, based on the empirical results. The own-price
elasticity of demand for wastewater treatment was found to be -0.48. (A 1 percent increase
in the price of emissions reduces emissions by 0.48 percent.)
Eiswerth examined the choice, over time, between two disposal methods for solvent
waste, using a dynamic optimization model. Because the risks associated with disposing of a
single type of waste can vary significantly over time depending on the disposal method, the
E-7 •' • ' .
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optimal choice of disposal method depends not only on the risks at the time of disposal, but
also on the variation in risk over tune as natural degradation occurs. He illustrates his
optimal control model by analyzing the choice between incineration and landfilling of metal-
bearing solvent wastes, using accepted or assumed values for some of the critical variables.
In this illustration, the optimal choice is shown to be relatively insensitive to changes in the
cost differential between the two management methods. (Because this is an illustration,
incorporating several simplifying assumptions, and because the dependent variable is the
socially optimal quantity of incineration and land disposal, rather than the market quantity,
this article's results may not be as germaine as some of the others cited here.)
Deyle and Bretschneider examine the influence of one state's hazardous waste
regulatory initiatives not only on choices made within that state, but on neighboring states.
They model the impact of New York policy initiatives on intra- and interstate shipments of
hazardous waste to facilities where one of four different management technologies is applied:
land disposal, treatment, incineration, or recycling, hi the 1980s, New York enacted two
initiatives aimed at encouraging generators to move up the waste management hierarchy from
land disposal to treatment, recycling, or source reduction. These initiatives—a state
superfund tax whose rates depended on management method and a ban on land disposal of
certain waste types—also increased the cost of in-state waste management. The authors
estimated 12 regression equations, examining the impact on in-state shipments to each of the
' four types of waste management, exports out-of-state to each of four types of waste
management, and imports into New York for each of the four types of waste management.
The 1985 increase in the state superfund tax had the expected effect of decreasing land
disposal and increasing treatment but had no significant impact on incineration or recycling.
The coefficients on exports were generally significant (as expected), because in-state
generators have to pay the tax wherever they send their waste for management. The tax did,
however, discourage imports from out of state, especially for land disposal. Overall, the
relative increase in the cost of land disposal, compared to other, less-risky waste management
E-8
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methods, has the effect of shifting waste away from land disposal and discourages imports to
land disposal. Insufficient data are presented in the paper to enable the computation of an
elasticity.
Levinson's NBER working paper on NIMBY taxes designed to discourage in-state
disposal of hazardous waste examines the effect of such taxes on interstate shipments of
waste. He estimates the "tax elasticity," the percentage change in quantities of hazardous
waste deposited in the jurisdiction divided by the percentage change in the hazardous waste
tax rate. The estimated elasticities, computed based on average tax rates of $ 15 per ton,
range from 0.15 to 0.26, indicating that the decision to dispose of waste within a jurisdiction
is only slightly responsive to changes in the disposal tax rate. Because the tax is only a small
share of the overall price of waste disposal, the author notes that'these elasticities are really
rather high.
Alberini's paper is an empirical study of the determinants of disposal choices for
halogenated solvents. Alberini collected data on shipments of spent halogenated solvents to
or from California. She also obtained information on prices charged by several hazardous
waste treatment facilities for treatment of these types of waste. Finally, she collected data on
the financial strength of the company owning the treatment facility, and proxied facility waste
management performance by the presence of corrective action at the facility. She estimates
conditional logit models of random utility for the generators, where the independent variables
are the cost of disposal at a facility, a set of proxies for the likelihood that the treatment
facility will become a federal or state Superfund site, variables to measure the facility's
capacity to treat various types of waste, arid a vector of variables for the generator's
likelihood of incurring liability for cleanup at the site. When the wastes are relatively
narrowly defined and the wastes are destined for recycling or transfer to another destination,
the generator's choice of treatment facility is somewhat responsive to cost. However, when
no treatment type is specified (and where the waste may be less homogeneous or more
E-9
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difficult to treat), the coefficient on treatment cost, while negative and significantly different
from zero, is very small.
Finally, Sigman examines the influence of policies that increase the cost of legal
treatment for waste lubricating oil on the number of illegal dumping incidents. She examines
the impact of changes in the salvage value of oil and the existence of disposal bans. The
imposition of a ban on legal disposal increases the cost of legal disposal and increases the
number of dumping incidents. An increase in the salvage price of oil reduces the price of
legal management of waste oil and decreases the number of dumping incidents. A 10 percent
increase in the salvage value of oil is estimated to decrease the number of dumping incidents
by 6 percent.
Together, these studies show that increases in the price or cost of waste treatment
result in, decreases in the quantity of waste treatment demanded. The demand for waste
treatment is shown to be slightly to moderately responsive to changes in its price.
E.3 A FULL-COST ABSORBTION SIMULATION
To analyze the maximum potential impact of the CWT effluent limitations guidelines
and standards on CWT facilities, EPA estimated the impacts on the profitability of facilities'
CWT operations under the assumption that the CWT facilities were completely unable to
pass the costs of compliance on to their customers in the form of increased prices. The
increased costs of each CWT operation reduce its profitability. Under these assumptions, the
with-regulation price (unchanged) is compared to the with-regulation unit cost of the
operation, and operations for which with-regulation unit costs exceed the price are assumed
to shut down. Again, facilities at which all affected CWT operations become unprofitable are
defined as facility closures.
E-10
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Tables E-l and E-2 compare the result of this simulation with the results of the model
using the assumed elasticities of demand. Table E-l compares the number of CWT processes
that are predicted to become unprofitable and shut down under each scenario. Impacts on
direct and zero dischargers are unchanged. Indirect dischargers are predicted to incur
13 additional process closures if they are completely unable to pass along their costs to their
customers. -
TABLE E-l. PROCESS CLOSURES AT CWT FACILITIES, BY DISCHARGE
STATUS3
Process Closures
Discharge Status
Combined Regulatory Option Full-Cost Absorption
Direct dischargers
Indirect dischargers
Zero dischargers
1
16
0
1
29
0
1 Data are scaled up to account for the entire universe of CWT facilities.
TABLE E-2. FACILITY CLOSURES OF CWT FACILITIES, BY DISCHARGE
STATUS3
Facility Closures
Discharge Status
Combined Regulatory Option Full-Cost Absorption
Direct dischargers
Indirect dischargers
Zero dischargers
2
13
0
2
16
0
a Data are scaled up to account for the entire universe of CWT facilities.
Table E-2 shows predicted facility closures under each scenario. Again, the impacts
on direct and zero-discharging CWT facilities are predicted to be the same. Three additional
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indirect discharge facilities are predicted to close if they are completely unable to pass their
costs along to their customers.
While the projected increase in impacts on indirect dischargers under a full-cost
absorption scenario is not insignificant, it understates the costs that would be incurred by the
CWT industry, even if the demand elasticity assumptions do result in greater projected price
increases than would occur in reality. Thus, even if impacts on the CWT industry are more
severe than projected by the model using the assumed relatively low elasticities of demand,
they are expected to be economically achievable.
E.4 REFERENCES
Alberini, Anna. January 1997. "The Determinants of Hazardous Waste Disposal Choice:
An Empirical Analysis of Halogenated Solvent Waste Shipments." Working paper
presented at ASSA meetings.
Allen, R.G.D. 1938. Mathematical Analysis for Economists. New York: St. Martin's Press.
Deyle, Robert E., and Stuart I. Bretschneider. 1995. "Spillovers of State Policy Innovations:
New York's Hazardous Waste Regulatory Initiatives." Journal of Policy Analysis
and Management 14(1):79-106.
Eiswerth, Mark E. 1995. "Using Dynamic Optimization for Integrated Environmental
Management: An Application to Solvent Waste Disposal." Land Economics
69(2):168-80.
Hicks, J.R. 1961. "Marshall's Third Rule: A Further Comment." Oxford Economic Papers
' 13:262-65.
Hicks, J.R. 1966. The Theory of Wages. 2nd Ed. New York: St. Martin's Press.
Levinson, Arik. 1997. "NIMBY Taxes Matter: State Taxes and Interstate Hazardous Waste
Shipments." NBER Working Paper 6314. .
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Sigman, Hilary. 1998. "Midnight Dumping: Public Policies and Illegal Disposal of Used
Oil." RAND Journal of Economics 29(1): 157-178.
Smith, J. B., and W. A. Sims. 1985. 'The Impact of Pollution Charges on Productivity
Growth in Canadian Brewing." RAND Journal of Economics 16(3):410-423.
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