United States Office of Water (4303) EPA-821-R-97-012
Environmental Protection October 1997
Agency
Economic Analysis for the National
Emission Standards for Hazardous
Air Pollutants for Source Category;
Pulp and Paper Production;
Effluent Limitations Guidelines,
Pretreatment Standards, and New
Source Performance Standards:
Pulp, Paper, and Paperboard
Category - Phase 1
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Economic Analysis for the National
Emission Standards for Hazardous Air
Pollutants for Source Category: Pulp
and Paper Production; Effluent
Limitations Guidelines, Pretreatment
Standards, and New Source
Performance Standards: Pulp, Paper,
and Paperboard Category—Phase 1
EPA Contract No. 68-C3-0302
October 27, 1997
Prepared for:
U.S. Environmental Protection Agency
Office of Air and Radiation
Office of Air Quality Planning and Standards
Innovative Strategies and Economics Group
Research Triangle Park, NC 27711
and
Office of Water
Office of Science and Technology
Engineering and Analysis Division
Washington, DC 20460
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CONTENTS
Page
TABLES x
FIGURES xvii
CHAPTER ONE INTRODUCTION 1-1
1.1 Scope and Purpose 1-1
1.2 Report Organization 1-2
1.3 Rulemaking History 1-4
1.3.1 Integrated Rulemaking Effort by the
Office of Air and the Office of Water 1-4
1.3.2 December 1993 Proposal 1-5
1.3.3 Changes From Proposal 1-6
1.3.3.1 Mills and Subcategories Considered 1-6
1.3.3.2 Options 1-7
1.3.3.3 Methodology 1-9
1.4 References 1-11
CHAPTER TWO INDUSTRY PROFILE 2-1
2.1 Subcategories Regulated Under This Rule 2-2
2.2 Products and Markets 2-4
2.2.1 Pulp, Paper, and Paperboard Shipments 2-4
2.2.2 Value of Pulp, Paper, and Paperboard Shipments 2-7
2.2.3 Exports 2-9
2.3 Facility-Level Information 2-12
2.3.1 Geographic Distribution of Facilities 2-12
2.3.2 Facility Size 2-12
2.3.2.1 Assets 2-12
2.3.2.2 Employees 2-18
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CONTENTS (continued) Page
2.3.3 Facility Age 2-20
2.3.4 Capital Investment 2-20
2.3.5 Level of Integration 2-27
2.4 Company-Level Information 2-29
2.4.1 Number of Facilities and Ownership 2-29
2.4.2 Small Business Entities 2-32
2.4.3 Concentration Ratios 2-32
2.5 Financial Patterns for the Industry 1985-1995 2-33
2.6 International Competitiveness of the Pulp and Paper Industry 2-40
2.6.1 Foreign Trade Statistics 2-42
2.6.2 Global Competitiveness of U.S. Paper Industry 2-45
2.7 Related Chemical Supplier Industries 2-46
2.8 References 2-47
CHAPTER THREE ECONOMIC IMPACT AND REGULATORY
FLEXIBILITY ANALYSIS METHODOLOGY 3-1
3.1 Compliance Cost Model 3-2
3.2 Market Impact Analysis Methodology 3-3
3.3 Financial Impact Analysis Methodology 3-4
3.3.1 Closure Model 3-4
3.3.1.1 Present Value of Forecasted Earnings 3-4
3.3.1.2 Market Price Increase 3-11
3.3.1.3 Sample Closure Analysis 3-17
3.3.1.4 Baseline Closures 3-23
3.3.2 Associated Impacts 3-24
3.3.3 Facility-Level Ratio Analysis 3-26
3.3.4 Company-Level Bankruptcy/Financial Ratio Analysis 3-27
3.4 Regulatory Flexibility Analysis Methodology 3-28
3.5 References 3-28
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CONTENTS (continued) Page
CHAPTER FOUR BENEFITS AND ENVIRONMENTAL JUSTICE
METHODOLOGY 4-1
4.1 Air Benefits 4-1
4.1.1 Hazardous Air Pollutants 4-2
4.1.2 Volatile Organic Compounds 4-2
4.1.3 Total Reduced Sulfur 4-7
4.1.4 Other Criteria Air Pollutants 4-7
4.1.5 Limitations 4-10
4.2 Water Benefits 4-11
4.2.1 Revised Estimates of Baseline Pollutant Loadings 4-11
4.2.2 Human Health Risk Assessment 4-14
4.2.3 Fish Consumption Advisory Analysis 4-17
4.2.4 Limitations and Uncertainties 4-17
4.3 Case Study Evaluation of Benefits 4-19
4.3.1 Representativeness 4-19
4.3.1.1 General Characteristics and New Case Studies 4-19
4.3.1.2 Receiving Water Characteristics and Representativeness .. 4-20
4.3.2 Development of New Case Studies 4-22
4.3.3 Extrapolation to National Water Benefits 4-22
4.4 Present Values and Alternative Discount Rates 4-23
4.5 Environmental Justice 4-24
4.6 References 4-25
CHAPTER FIVE REGULATORY ALTERNATIVES
DESCRIPTION, COSTS, POLLUTANT
REMOVALS AND COST-EFFECTIVENESS 5-1
5.1 Air Pollution Control Compliance Components 5-1
5.1.1 Air Pollution Compliance Components—Description 5-2
5.1.2 Air Pollution Compliance Control Costs 5-4
5.1.3 Air Emission Reductions and Cost Effectiveness 5-14
in
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CONTENTS (continued) Page
5.2 Water Pollution Compliance Components 5-14
5.2.1 Water Pollution Control Compliance
Components—Description 5-14
5.2.2 Water Pollution Compliance Control Costs 5-16
5.2.3 Pollutant Removals and Cost-effectiveness
of CWA Final Rule 5-20
5.2.4 Sensitivity Analysis of Cost-effectiveness
of CWA Final Rule 5-24
5.3 Costs of Combined Proposed and Final Air and Final
Water Requirements 5-24
5.3.1 BAT/PSES Options 5-24
5.3.2 Sensitivity Analysis—TCP 5-26
5.4 References 5-29
CHAPTER SIX ECONOMIC IMPACT RESULTS 6-1
6.1 New Source Performance Standards and Pretreatment
Standards For New Sources 6-2
6.1.1 Papergrade Sulfite 6-2
6.1.2 Bleached Papergrade Kraft and Soda—Elemental
Chlorine Free (ECF) Technology 6-2
6.1.3 Bleached Papergrade Kraft and Soda—Totally
Chlorine Free (TCP) Technology 6-3
6.2 Industry-Level Impacts 6-3
6.2.1 Company Failures 6-3
6.2.
6.2.
6.2.
6.2.
6.2.
. 1 CAA Requirements 6-5
.2 CWA Requirements 6-5
.3 Combined Final CAA (MACT I) and CWA
(BAT/PSES) Requirements (Cluster Rule) 6-6
.4 Combined Cluster Rule and Proposed MACT II 6-6
.5 Ramifications of Company Bankruptcy 6-6
6.2.2 Facility Closures and Related Direct Impacts 6-10
6.2.2.1 CAA Requirements 6-11
6.2.2.2 CWA Requirements 6-12
IV
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CONTENTS (continued) Page
6.2.2.3 Combined Final CAA (MACT I) and CWA
(BAT/PSES) Requirements (Cluster Rule) 6-16
6.2.2.4 Combined Cluster Rule and Proposed MACT II 6-18
6.2.3 Price Increases 6-18
6.2.3.1 CAA Requirements 6-21
6.2.3.2 CWA Requirements 6-21
6.2.3.3 Combined Final CAA (MACT I) and CWA
(BAT/PSES) Requirements (Cluster Rule) 6-22
6.2.3.4 Combined Cluster Rule and Proposed MACT II 6-22
6.3 Regional Employment Impacts Based on Projected Closures 6-22
6.3.1 CAA Requirements 6-23
6.3.2 CWA Requirements 6-26
6.3.3 Combined Final CAA (MACT I) and CW6
(BAT/PSES) Requirements (Cluster Rule) 6-26
6.3.4 Combined Cluster Rule and Proposed MACT II 6-29
6.4 National-Level Employment and Output Impacts
Based on Projected Closures 6-29
6.4.1 CAA Requirements 6-31
6.4.2 CWA Requirements 6-33
6.4.3 Combined Final CAA (MACT I) and CWA
(BAT/PSES) Requirements (Cluster Rule) 6-33
6.4.4 Combined Cluster Rule and Proposed MACT II 6-36
6.5 Sensitivity Analyses 6-36
6.5.1 Discount Rate Analysis 6-38
6.5.2 Delayed Implementation Compliance Schedule 6-40
6.5.3 Increased Pulp Costs to Non-Integrated Mills 6-41
6.5.4 Sensitivity Analysis of Impacts from TCP Costs 6-43
6.6 References 6-45
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CONTENTS (continued) Page
CHAPTER SEVEN REGULATORY FLEXIBILITY ANALYSIS AND
UNFUNDED MANDATES REFORM ACT 7-1
7.1 Impacts From Air and Water Pollution Control Requirements 7-1
7.1.1 Closures 7-2
7.1.2 Bankruptcy Analysis (Airman's Z) 7-2
7.1.3 Compliance Costs as a Percentage of Annual Sales 7-3
7.2 Unfunded Mandates 7-5
7.3 References 7-7
CHAPTER EIGHT NATIONAL LEVEL BENEFITS ANALYSIS 8-1
8.1 Air Benefits 8-1
8.2 Water Benefits 8-6
8.2.1 Revisions to Quantitative Benefits 8-6
8.2.1.1 Compliance with Ambient Water
Quality Concentrations 8-6
8.2.1.2 Human Health Risk Assessment 8-8
8.2.1.3 National Recreational Angling Benefits 8-18
8.2.1.4 Benefits from Land Disposal of Sludge 8-24
8.2.1.5 Summary of Water-Related Benefits 8-25
8.3 Combined Monetized Benefits 8-25
8.4 Case Study Representativeness and Alternative
Aggregate Water Benefits 8-25
8.4.1 Representativeness from a Benefits Perspective 8-28
8.4.1.1 Receiving Water Characteristics 8-28
8.4.1.2 Sociodemographic Characteristic 8-30
8.4.1.3 Overall Representativeness from a
Benefits Perspective 8-30
8.4.2 Alternative Aggregate Water Benefits 8-30
8.5 Environmental Justice 8-35
8.5.1 Native American Subsistence Anglers 8-35
8.5.2 Racial and Income Characteristics of Affected Counties and States .... 8-37
VI
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CONTENTS (continued) Page
8.5.3 Price Effects on Low Income Consumers 8-43
8.5.4 Environmental Justice Summary 8-44
8.6 Totally Chlorine Free Technology 8-44
8.7 References 8-45
CHAPTER NINE BENEFIT-COST CASE STUDIES 9-1
9.1 Lower Tombigbee and Mobile River Case Study 9-3
9.1.1 Location of Bleached Kraft Mills in Alabama 9-3
9.1.2 Water Quality Problems Associated with the Mills 9-3
9.1.3 Alabama DEM Actions 9-6
9.1.4 Mill Improvements 9-7
9.1.5 Reduced Fish Tissue Dioxin Concentrations 9-7
9.1.6 Assessment of Benefits 9-7
9.1.7 Summary of Water Quality Based Benefits 9-26
9.1.8 Air Benefits 9-29
9.1.9 Comparison of Air Benefits and Costs 9-29
9.1.10 Conclusions 9-32
9.2 Pigeon River Case Study 9-34
9.2.1 Water Quality Issues on the Pigeon River 9-36
9.2.2 Modernization of the Champion International Mill 9-37
9.2.3 Water Quality Improvements 9-38
9.2.4 Qualitative Assessment of Benefits 9-44
9.2.5 Quantitative Assessment of Benefits 9-47
9.2.6 Summary of Water-Related Benefits 9-55
9.2.7 Distributional Impacts 9-55
9.2.8 Air Benefits 9-59
9.2.9 Comparison of Benefits to Costs 9-59
9.2.10 Conclusions 9-64
9.3 Upper Columbia River/Lake Roosevelt Case Study 9-65
9.3.1 Description of the Site 9-65
9.3.2 Water Quality Issues 9-67
9.3.3 Improvements at the Mill 9-69
9.3.4 Assessment of Benefits 9-72
9.3.5 Summary of Benefits 9-82
9.3.6 Comparison of Benefits and Costs 9-82
9.3.7 Conclusions 9-86
vii
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CONTENTS (continued) Page
9.4 Samoa Peninsula Case Study 9-87
9.4.1 Water Quality Issues near the Samoa Peninsula 9-87
9.4.2 Modernization of the Louisiana-Pacific Samoa Pulp Mill 9-90
9.4.3 Water Quality Improvements 9-93
9.4.4 Qualitative Assessment of Benefits 9-93
9.4.5 Quantitative Assessment of Benefits 9-96
9.4.6 Air Benefits 9-101
9.4.7 Conclusions 9-109
9.5 Penobscott River Case Study 9-110
9.5.1 Human Health Results 9-110
9.5.1.1 Risk Assessment for Native Americans 9-110
9.5.2 Recreational Angling Benefits 9-114
9.5.3 Subsistence Use Benefits 9-115
9.5.4 Passive Use Benefits 9-116
9.5.5 Summary of Water-Related Benefits 9-116
9.5.6 Air Benefits 9-118
9.5.7 Comparison of Benefits and Costs 9-118
9.6 Wisconsin River Case Study 9-121
9.6.1 Revised Costs 9-121
9.6.2 Human Health Benefits 9-121
9.6.3 Summary of Water-Related Benefits 9-123
9.6.4 Air Benefits 9-123
9.6.5 Comparison of Benefits and Costs 9-123
9.7 Lower Columbia River Case Study 9-127
9.7.1 Revised Costs 9-127
9.7.2 Human Health Benefits 9-127
9.7.2.1 Risk Assessment for Native Americans 9-129
9.7.3 Summary of Water-Related Benefits 9-132
9.7.4 Air Benefits 9-132
9.7.5 Comparison of Benefits and Costs 9-135
9.8 Conclusions 9-135
9.9 References 9-140
viii
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CHAPTER TEN
CONTENTS (continued) Page
COMPARISON OF MONETIZED BENEFITS AND COSTS 10-1
10.1 Summary of National Monetized Benefits and Costs 10-1
10.2 Summary of Case Study Benefits and Costs 10-3
10.3 Conclusions 10-6
APPENDIX A PRICE INCREASE METHODOLOGY A-l
APPENDIX B POLLUTANT REMOVALS B-l
APPENDIX C SUBCATEGORY POLLUTANT LOADS AND BENEFITS C-l
APPENDIX D BASELINE FISHERY VALUES D-l
APPENDIX E HUMAN HEALTH BENEFITS CALCULATION E-l
APPENDIX F ENVIRONMENTAL JUSTICE ANALYSIS OF THE
PULP AND PAPER INTEGRATED RULE F-l
IX
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TABLES
Table Page
2-1W Pulp, Paper, and Paperboard Shipment Tonnage
Statistics from EPA Survey and AF&PA Statistics:
BAT/PSES-Regulated Mills 2-5
2-1A Pulp, Paper, and Paperboard Shipment Tonnage
Statistics From EPA Survey and AF&PA Statistics:
MACT-Regulated Mills 2-6
2-2 Value of Pulp, Paper, and Paperboard Shipments 2-8
2-3 Value of Pulp, Paper, and Paperboard Shipments, 1989 Data 2-10
2-4 Value of Pulp, Paper, and Paperboard Exports 2-11
2-5 Facility Assets 2-17
2-6 Number of Employees by Facility, 1989 2-19
2-7 1989 Capital Investments Before and After Depreciation 2-25
2-8 Expenditures on New Environmental Protection Plant
and Equipment: Industry Totals 2-26
2-9 Level of Production Integration at U.S. Pulp and Paper Mills 2-28
2-10W Business Entities with Mills in the Bleached Papergrade Kraft
and Papergrade Sulfite BAT/PSES-Regulated Subcategories 2-30
2-10A Business entities with Mills in the Kraft, Sulfite,
and Semichemical MACT-Regulated Subcategories 2-31
2-11 1995 Concentration Ratios for Market Pulp 2-34
2-12 1995 Concentration Ratios For Bleached Paperboard 2-35
2-13 1995 Concentration Ratios For Coated Free Sheet 2-36
2-14 1995 Concentration Ratios For Uncoated Free Sheet 2-37
2-15 Pulp and Paper Industry Data, 1985-1995 2-38
2-16 Pulp, Paper, and Paperboard Imports and Exports, 1990-1995 2-43
3-1 Inflation Rate, 1981-1995 3-6
3-2 Pulp and Paper Industry Data, 1985-1995 3-7
3-3 Developed and Forecasted Earnings, 1990-2011 3-8
3-4 Summary of Forecasted Earnings 3-12
3-5 Price Percentage Increase Components 3-14
3-6 RIMS II Multipliers for the Pulp, Paper, and Paperboard Industries 3-25
4-1 Models Used To Estimate Baseline Pollutant Loads 4-13
4-2 Baseline and Post-Regulation Water Pollution Loadings 4-13
4-3 Bioaccumulation Factors and Health-Based AWQCs 4-16
5-1 Summary of MACT I and III Emission Control Requirements 5-3
5-2 MACT II Control Options by Pollutant 5-5
5-3 Summary of MACT II Regulatory Options for
Kraft and Soda Combustion Sources 5-7
5-4 Proposed MACT II Alternatives 5-8
5-5 Summary of Costs by Mill Category—MACT I Only 5-9
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Table TABLES (continued) Page
5-6 Summary of Proposed MACT II Alternative Costs 5-11
5-7A Summary of Final MACT IA and Proposed
MACT II Alternative Costs 5-12
5-7B Summary of Final MACT IB and Proposed
MACT II Alternative Costs 5-13
5-8 Pulp and Paper Nationwide Air Emission and
MACT Cost Impacts for Affected MACT Mills 5-15
5-9 CWA BAT/PSES Options Considered by EPA for the
Bleached Papergrade Kraft and Soda Subcategory 5-17
5-10 CWA BAT/PSES Options Considered By EPA for the
Papergrade Sulfite Subcategory 5-18
5-11 BAT/PSES Costs 5-19
5-12 Cost-Effectiveness of CWA Pollution Control Options: Bleached
Papergrade Kraft and Soda Subcategory, Direct Dischargers 5-21
5-13 Cost-Effectiveness of CWA Pollution Control Options:
Bleached Papergrade Kraft and Soda Subcategory,
Indirect Dischargers 5-21
5-14 Cost-Effectiveness of CWA Pollution Control Options,
Papergrade Sulfite Subcategory, Direct Dischargers 5-22
5-15 Cost-Effectiveness of CWA Pollution Control Options,
Pulp, Paper, and Paperboard Industry 5-23
5-16 Summary of Final BAT/PSES, Final MACT I, and
Proposed MACT II Costs for Bleached Papergrade
Kraft and Soda and Papergrade Sulfite Mills 5-25
5-17 Summary of Final MACT I and Proposed MACT II Alternative
Costs For Kraft, Sulfite, Soda, and Semichemical Mills and
Final BAT/PSES Costs for Bleached Papergrade Kraft and
Soda and Papergrade Sulfite Mills 5-27
5-18 Bleached Papergrade Kraft and Soda Subcategory
Comparison of Option B and TCP Costs 5-28
6-1 Summary of Airman's Z Score Bankruptcy Analysis 6-7
6-2 Summary of Closures and Related Impacts—Combined
Final MACT I and Proposed MACT II Costs: All Subcategories 6-13
6-3 Summary of Closures and Related Impacts—Combined
Final MACT I and Proposed MACT II Costs: All Subcategories 6-14
6-4 Summary of Closures and Related Impacts—BAT/PSES
Costs: Bleached Papergrade Kraft and Soda Subcategory 6-15
6-5 Summary of Closures and Related Impacts—Final
BAT/PSES and Final MACT I Costs: Bleached Papergrade
Kraft and Soda and Papergrade Sulfite Subcategories 6-17
6-6 Summary of Closures and Related Impacts—Final BAT/PSES,
Final MACT I, and Proposed MACT II Costs: Bleached
Papergrade Kraft and Soda and Papergrade Sulfite Subcategories 6-19
XI
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Table TABLES (continued) Page
6-7 Summary of Closures and Related Impacts—BAT/PSES
Option B, Final MACT I, and Proposed MACTII Costs:
Bleached Papergrade Kraft and Soda and Papergrade
Sulfite Subcategories 6-20
6-8 Increase in Regional Unemployment Rates—MACT-Related Costs 6-24
6-9 Increase in Regional Unemployment Rates—MACT-Related Costs 6-25
6-10 Increase in Regional Unemployment Rates—BAT/PSES Costs 6-27
6-11 Increase in Regional Unemployment Rates—Cluster Rule Costs 6-28
6-12 Increase in Regional Unemployment Rates—Cluster Rule and
Proposed MACT II Costs 6-30
6-13 Direct and Indirect Impacts—MACT I and MACT II
Alternative Costs: All Subcategories 6-32
6-14 Direct and Indirect Impacts—BAT/PSES Costs:
Bleached Papergrade Kraft and Soda and Papergrade
Sulfite Subcategories 6-34
6-15 Direct and Indirect Impacts—Final BAT/PSES and
Final MACT I Costs: Bleached Papergrade Kraft
and Soda and Papergrade Sulfite Subcategories 6-35
6-16 Direct and Indirect Impacts—Final BAT/PSES,
Final MACT I, and Proposed MACT II Costs:
Bleached Papergrade Kraft and Soda and
Papergrade Sulfite Subcategories 6-37
6-17 Summary of Costs, Closures, and Related Impacts
for 7% Real Discount Rate and Company-Specific
Discount Rates: Bleached Papergrade Kraft and Soda
and Papergrade Sulfite Subcategories 6-39
6-18a Summary of Closures: Bleached Papergrade Kraft and
Soda and Papergrade Sulfite Subcategories, No Price Increase 6-42
6-18b Summary of Closures: Bleached Papergrade Kraft and
Soda and Papergrade Sulfite Subcategories, With Price Increase 6-42
6-19 Summary of Closures and Related Impacts—BAT/PSES
Costs: Bleached Papergrade Kraft and Soda Subcategory 6-44
7-1 Number of Small Businesses Adversely Affected
By Regulatory Compliance Costs—BAT/PSES, Final
MACT I, and Proposed MACT II Alternatives 7-4
8-1 Air Pollutant Emission Reductions for MACT I and MACT II 8-3
8-2 Total Monetized Air Benefits of MACT I and MACT II 8-4
8-3 Total Monetized Air Benefits: MACT I and MACT II Combined 8-5
8-4 Average Individual Lifetime Cancer Risks for Exposed
Recreational and Subsistence Angler Populations Under
Conditions and BAT Options 8-10
xn
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Table TABLES (continued) Page
8-5 Statistical Cancer Cases Per Year Due To Dioxin For
Potentially Exposed Recreational and Subsistence
Angler Populations Under Baseline Conditions and BAT Options 8-11
8-6 Potential National Human Health Benefits of BAT/PSES
Options to Licensed Angles 8-12
8-7 Average Individual Lifetime Cancer Risks Due to Dioxin for
Exposed Native American Angler Populations Under Baseline
Conditions and BAT/PSES Options 8-13
8-8 Average Individual Lifetime Cancer Risks and Annual Increased
Incidence of Gander Due to Dioxin/Furan and All Other Pollutants
for Exposed Native American Angler Populations with Treaty-Ceded
Fishing Rights under Baseline Conditions and BAT/PSES Options 8-15
8-9 Number of Mills with Estimated Exposures Posing a Potential
Noncancer Hazard for Exposed Recreational and Subsistence
Angler Populations 8-17
8-10 Mills Exceeding Background Exposures of Dioxin/Furan from Fish
Tissue Consumption for Native Americans with Treaty-Ceded
Fishing Rights 8-19
8-11 Water Bodies with Dioxin-Related Fish Consumption
Advisories Associated with Pulp and Paper Mills 8-21
8-12 Potential Annual Benefits of the Regulatory Options 8-26
8-13 Potential Annual Monetized Benefits of the Selected Regulatory Options 8-27
8-14 Receiving Water Potential Benefits Ranking Distributions 8-29
8-15 Sociodemographic Potential Benefits Ranking Distributions 8-31
8-16 Comparison of Overall Rankings of Water Benefits Potential for All
Facilities and Case Study Facilities 8-32
8-17 Annualized Water-Related Costs of the Selected Option (Option A)
for Case Study Facilities and All Facilities 8-33
8-18 Assignment of Annual Benefits Ranges to Overall Benefits Categories 8-34
8-19 Potential National-Level Annual Benefits of the Final BAT/PSES,
MACTI and Proposed MACTII Based on Extrapolation of the
Case Study Results 8-36
8-20 Race and Income Characteristics in States and Counties with
Bleached Kraft Mills 8-38
8-21 Potential Monetized Benefits of Implementing Totally Chlorine
Free Technology 8-46
9-1 Bleached Kraft Mills in Alabama 9-4
9-2 Dioxin Reduction Efforts by Bleached Kraft Mills in Alabama 9-8
9-3 Dioxin Concentration in Fish Tissue Samples Taken below the
Alabama River Pulp, Boise Cascade Corp., and Hammermill
Papers Mills in Alabama 9-10
9-4 Behavioral Responses of Anglers to Fish Consumption Advisories 9-15
9-5 Warm Water Recreational Fishing Studies 9-16
9-6 Nonconsumptive Recreation Studies 9-19
xiii
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Table TABLES (continued) Page
9-7 Contingent Valuation Studies of Total Values for Local
Households Associated with Water Quality Improvements 9-25
9-8 Summary of Annual Water Benefits from Process Changes at
Bleached Kraft Pulp and Paper Mills on the Lower
Tombigbee and Mobile Rivers 9-27
9-9 Key Omissions, Biases, and Uncertainties in the Benefits
Analysis for the Lower Tombigbee and Mobile Rivers 9-28
9-10 Potential Annual Air-Related Benefits of the Selected
Options for Bleached Kraft Pulp and Paper Mills on
the Lower Tombigbee and Mobile Rivers 9-30
9-11 Benefits and Costs of the Water Quality Process Changes
Implemented at the Mills on the Lower Tombigbee and Mobile Rivers 9-31
9-12 Annual Benefits and Costs Comparable to the Final Pulp and
Paper Regulation for the Lower Tombigbee and Mobile Rivers 9-33
9-13 Fish Consumption Advisories Issued for the Pigeon
River below the Champion International Pulp and Paper Mill 9-39
9-14 Average Fish Tissue Dioxin Concentrations in
Waterville Reservoir, North Carolina 9-40
9-15 Average Fish Tissue Dioxin Concentrations in
the North Carolina Portion of the Pigeon River 9-42
9-16 Average Fish Tissue Dioxin Concentrations in the
Tennessee Portion of the Pigeon River 9-43
9-17 Nonmotorized Boating Studies 9-50
9-18 Boating Benefit Estimates forthe Pigeon River 9-51
9-19 Annual Monetized Retrospective Benefits of the Champion
International Mill Process Changes 9-56
9-20 Key Omissions, Biases, and Uncertainties in the
Benefit-Cost Analysis forthe Pigeon River 9-57
9-21 Potential Annual Air-Related Benefits of the Selected
Options for the Champion Mill on the Pigeon River 9-60
9-22 Annual Monetized Benefits and Costs of the Process Changes
at the Champion International Mill on the Pigeon River 9-61
9-23 Annual Monetized Benefits and Costs Comparable to the
Final Pulp and Paper Regulation for the Pigeon River 9-63
9-24 TCDD TEQ Fish Tissue Concentrations of
Columbia River Mountain Whitefish, 1989-1994 9-71
9-25 Nonconsumptive Recreation Studies 9-79
9-26 Annual Monetized Retrospective Benefits for the Upper
Columbia River and Lake Roosevelt 9-83
9-27 Key Omissions, Biases, and Uncertainties in the Benefits
Analysis for the Upper Columbia River and Lake Roosevelt 9-84
9-28 Annual Monetized Benefits and Costs Comparable to
the Water Controls of the Final Pulp and Paper
Regulation for the Upper Columbia River and Lake Roosevelt 9-85
9-29 Values for Water-Based Recreational Activities 9-98
xiv
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Table TABLES (continued) Page
9-30 Contingent Valuation Studies of Values for Beach Use 9-100
9-31 Annual Monetized Benefits of Water Quality
and Recreational Facility Improvements at the Somoa
Peninsula for Louisiana Pacific Process Changes 9-102
9-32 Key Omissions, Biases, and Uncertainties in the
Benefit-Cost Analysis for the Pacific Ocean 9-103
9-33 Potential Annual Air-Related Benefits of the Selected Options
for the Louisiana-Pacific Mill Located on the Samoa Peninsula 9-104
9-34 Retrospective Benefits and Costs of the Process Changes Implemented
at the Louisiana-Pacific Mill Located on the Samoa Peninsula 9-106
9-35 Annual Benefits and Costs Comparable to the Final Pulp and
Paper Regulation for the Samoa Peninsula 9-107
9-36 Potential Human Health Benefits of Option A to Licensed
Anglers in the Penobscot River Area 9-111
9-37 Potential Annual Water-Related Benefits of the Pulp and
Paper Regulation for the Penobscot River Case Study 9-117
9-38 Potential Annual Air-Related Benefits of the Selected Options
for the Mills on the Penobscot River 9-119
9-39 Annual Monetized Benefits and Costs of Option A for the
Final Pulp and Paper Regulation: Penobscot River Case Study 9-120
9-40 Potential Human Health Benefits of Option A to Licensed
Anglers in the Wisconsin River Case Study Area 9-122
9-41 Potential Annual Monetized Water-Related Benefits of the Pulp
and Paper Regulation for the Wisconsin River Case Study 9-124
9-42 Potential Annual Air-Related Benefits of the Selected Options
for Bleached Kraft Pulp and Paper Mills on the Wisconsin River 9-125
9-43 Annual Case Study Monetized Benefits and Costs of Option A for
the Final Pulp and Paper Regulation: Wisconsin River Case Study 9-126
9-44 Potential Human Health Benefits of Option A to Licensed Anglers
in the Lower Columbia River Case Study Area 9-128
9-45 Potential Annual Monetized Water-Related Benefits of the Pulp and
Paper Regulation for the Lower Columbia River Case Study 9-133
9-46 Potential Annual Air-Related Benefits of the Selected Options for the
Bleached Kraft Pulp and Paper Mills on the Lower Columbia River 9-134
9-47 Annual Case Study Benefits and Costs of Option A for the Final
Pulp and Paper Regulation: Lower Columbia River Case Study 9-136
9-48 Summary of Retrospective Case Study Evaluations of Annual
Monetized Benefits and Costs of the Selected Option for
the Final Pulp and Paper Regulation 9-137
9-49 Summary of Revised Prospective Case Study Evaluations of
Annual Monetized Benefits and Costs of the Selected Option for
the Final Pulp and Paper Regulation 9-139
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Table TABLES (continued) Page
10-1 Annual Benefits and Costs of the Selected Regulatory Options 10-2
10-2 Annual and Present Values of Benefits and Costs for the Selected
Regulatory Options for the Final Pulp and Paper Regulation 10-4
10-3 Annual Monetized Benefits and Annualized Costs of the Selected
Regulatory Options for the Final Pulp and Paper Rule 10-5
A-l Price Percentage Increase Components A-4
B-l Pollutant Removals: Papergrade Kraft Subcategory, Direct Dischargers B-2
B-2 Pollutant Removals: Papergrade Kraft Subcategory, Indirect Dischargers B-3
B-3 Pollutant Removals: Papergrade Sulfite Subcategory, Direct Dischargers B-4
B-4 Pollutant Removals: Papergrade Sulfite Subcategory, Indirect Dischargers B-5
B-5 Pollutant Discharges: Pulp, Paper, and Paperboard Industry B-6
B-6 Industry Comparison of BAT Cost-Effectiveness for Direct Dischargers B-7
B-7 Industry Comparison of PSES Cost-Effectiveness for Indirect Dischargers B-8
B-8 Cost Effectiveness of CWA Pollution Control Options: Bleached
Papergrade Kraft and Soda Subcategory, Direct Dischargers B-9
B-9 Cost Effectiveness of CWA Pollution Control Options: Bleached
Papergrade Kraft and Soda Subcategory, Indirect Dischargers B-9
B-10 Cost Effectiveness of CWA Pollution Control Options:
Papergrade Sulfite Subcategory, Direct Dischargers B-10
B-l 1 Cost Effectiveness of CWA Pollution Control Options:
Pulp, Paper and Paperboard Industry B-l 1
D-l Baseline Fishery Values at Sites with a Fish Consumption
Advisory for Dioxin D-2
D-2 Baseline Fishery Values at Sites with a Fish Consumption
Advisory for Dioxin D-3
D-3 Potential Recreational Angling Benefits from Increased Participation D-4
D-4 Potential Recreational Angling Benefits from Increased Participation D-5
F-l Process Options for Each Subcategory F-3
F-2 Average Individual Increased Lifetime Cancer Risks
from Dioxin for Exposed Native American Angler
Populations under Baseline Conditions and BAT/PSES Options F-9
F-3 Average Individual Increased Cancer Risks and Annual
Increased Incidence of Cancer from Dioxin/Furan and
All Other Pollutants for Exposed Native American Angler
Populations with Treaty-Ceded Fishing Rights under
Baseline Conditions and BAT/PSES Options F-l 1
F-4 Mills Exceeding Background Exposures of Dioxin/Furan
from Fish Tissue Consumption for Native Americans with
Treaty-Ceded Fishing Rights F-12
F-5 Race and Income Characteristics in States and Counties
with Bleached Kraft Mills F-19
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FIGURES
Figure Page
1-1 Relationship between MACT- and BAT/PSES-Regulated Subcategories 1-8
2-1 Pulp, Paper, and Paperboard Mills by State, 1995:
MACT-Regulated Mills and BAT/PSES-Regulated Mills 2-13
2-2W Distribution of Pulp, Paper, and Paperboard Mills by
State: BAT/PSES-Regulated Mills 2-14
2-2A Distribution of Pulp, Paper, and Paperboard Mills by
State: MACT-Regulated Mills 2-15
2-3W Age of pulp and Paper Operations Histogram:
BAT/PSES-Regulated Mills 2-21
2-3A Age of Pulp and Paper Operations Histogram:
MACT-Regulated Mills 2-22
2-4W Histogram of Expansion and Renovation Years:
BAT/PSES-Regulated Mills 2-23
2-4A Histogram of Expansion and Renovation Years:
MACT-Regulated Mills 2-24
2-5 Capacity and Production: Paper and Paperboard, 1982-1998 2-39
2-6 Utilization Rate: Paper and Paperboard, 1982-1995 2-39
2-7 Apparent Per Person Consumption: Paper and Paperboard, 1960-1995 2-41
2-8 Pulp, Paper, and Paperboard Import/Export Tonnage, 1989-1995 2-44
3-1 Forecasting Methods 3-10
3-2 The Effect of Differences in Supply and Demand
Elasticities on Changes in Output and Prices 3-15
3-3 a Closure Analysis Model—Inputs and Salvage
Value Using Hypothetical Data 3-18
3-3b Forecasted Earnings and Closure Score Using Hypothetical Data 3-19
9-1 Map of Bleached Kraft Mills in Alabama 9-5
9-2 Map of Public Boat Landings on the Wheeler
Reservoir and the Tennessee River 9-11
9-3 Map of Public Boat Landings on the Tombigbee and Alabama Rivers 9-12
9-4 Map of Pigeon River 9-35
9-5 Upper Columbia River and Lake Roosevelt Case Study Area 9-66
9-6 Map of the Samoa Peninsula in Humboldt County, California 9-88
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CHAPTER 1
INTRODUCTION
1.1 SCOPE AND PURPOSE
The U.S. Environmental Protection Agency (EPA) promulgates water effluent discharge limits
(effluent limitations guidelines and standards or "effluent guidelines") and air emissions standards for
industrial sectors. This Economic Analysis (EA) evaluates the costs and economic impacts of technologies
that form the bases for setting these limits and standards for the pulp, paper, and paperboard industry. The
report also examines and estimates the qualitative, quantitative, and monetized benefits from reduced
pollution, and compares the benefits and costs of the promulgated rules. The report also describes the
relative cost-effectiveness of the pollution control technologies and evaluates the costs and impacts of the
regulations that significantly impact a substantial number of small businesses. Because EPA considered the
air and water requirements jointly, they are known as the "Cluster or Integrated Rules."
The Federal Water Pollution Control Act (commonly known as the Clean Water Act [CWA, 33
U.S.C. § 1251 et seq.]) establishes a comprehensive program to "restore and maintain the chemical, physical,
and biological integrity of the Nation's waters" (section 101(a)). EPA is authorized under sections 301, 304,
306, and 307 of the CWA to establish effluent limitations guidelines and standards of performance for
industrial dischargers. In part, EPA establishes:
Best Available Technology Economically Achievable (BAT). Required under section
304(b)(2), these rules control the discharge of toxic and non-conventional pollutants and
apply to existing industrial direct dischargers.
Pretreatment Standards for Existing Sources (PSES). Analogous to BAT controls, these
rules apply to existing indirect dischargers (whose discharges flow to publicly owned
treatment works, or POTWs).
New Source Performance Standards (NSPS). Required under section 306(b), these rules
control the discharge of toxic and non-conventional pollutants and apply to new source
industrial direct dischargers.
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Pretreatment Standards for New Sources (PSNS). Analogous to NSPS controls, these rules
apply to new source indirect dischargers (whose discharges flow to publicly owned treatment
works, or POTWs).
The Clean Air Act's (CAA, 42 U.S.C. §§7401 to 7671q) purpose is "to protect and enhance the
quality of the Nation's air resources" (Section 101(b)). Section 112 of the CAA as amended in 1990
establishes EPA's authority to set national emission standards for 189 hazardous air pollutants (NESHAP).
NESHAPs are industry-specific. For air pollutants, EPA establishes:
Maximum Achievable Control Technology (MACT). MACT standards are set by the
NESHAP. The term "MACT floor" refers to minimum control technology on which MACT
can be based. For existing sources, the MACT floor is the average emissions limits achieved
by the best performing 12 percent of sources (if there are 30 or more sources in the category
or subcategory), or best performing 5 sources (if there are fewer than 30 sources in the
category or subcategory). MACT can be more stringent than the floor considering costs,
non-air-quality health and environmental impacts, and energy requirements.
1.2 REPORT ORGANIZATION
This EA encompasses economic information formerly presented in three separate documents at
proposal,1 presents analyses for final effluent guidelines and air pollution control requirements for
noncombustion sources, and includes analyses for proposed air pollution controls on combustion sources. To
clarify the roles served by the different analyses, the report is organized as follows:
• Chapter 2—Industry Profile
Provides background information on the facilities and companies affected by this regulation.
The information is presented for two sets of mills: (1) the 158 mills to which final MACT I
and proposed MACT II apply2 and (2) the subset of 96 mills to which final effluent
Economic impact analysis, cost-effectiveness analysis, and regulatory impact analysis; EPA 1993a,
EPA1993b, and EPA 1993c.
2EPA, 1993b identifies 158 mills with kraft, soda, sulfite, or semichemical pulping processes. Of
these, 155 mills are anticipated to bear costs under final MACT I and/or proposed MACT II. The counts are
caveated because mills may change processes or close operations over time.
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limitations guidelines and standards apply. The chapter examines recent industry financial
trends, foreign trade, and related industries.
Chapter 3—Economic Methodology
Summarizes the economic methodology by which EPA examines incremental pollution
control costs and their associated impacts on the industry.
Chapter 4—Benefits Methodology
Summarizes the methodology by which EPA identifies, qualifies, quantifies, and—where
possible—monetizes the benefits associated with reduced pollution.
Chapter 5—Regulatory Alternatives: Description, Costs, Pollutant Removals and Cost-
effectiveness
Presents short descriptions of the regulatory alternatives considered by EPA3. EPA presents
annualized costs reflecting the capital and annual operating and maintenance costs that are
associated with more stringent pollution control. EPA summarizes the pollutant reductions
associated with the regulatory alternatives. EPA also calculates and presents cost-
effectiveness of the regulatory alternatives.
Chapter 6—Economic Impact Results
Using the methodology described in Chapter 3, EPA presents the economic impacts
associated with the regulatory alternative costs on companies, facilities, regions, and
nationwide direct and indirect impacts on employment and output. For example, EPA
examines company failures; facility closures; losses in direct employment, production, and
exports; increased regional unemployment rates; and total impacts on employment and
output. EPA examines these impacts for the two sets of mills described in Chapter 2. In
other words, this section presents the findings on which EPA made its determination of
economic achievability under the CWA. EPA also examines and presents the findings for
the combined costs for promulgated and proposed requirements and various sensitivity
analyses.
Chapter 7—Regulatory Flexibility Analysis and Unfunded Mandates Reform Act
Pursuant to the Regulatory Flexibility Act as amended by the Small Business Regulatory
Enforcement Fairness Act, EPA examines whether the regulatory options have a significant
3More detail is given in the Office of Water Development Document (EPA, 1997a) and the Office of
Air Background Information Document (EPA, 1997b).
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adverse impact on a substantial number of small entities. Chapter 7 also addresses the
Unfunded Mandates Reform Act of 1995 (UMRA) requirements. EPA considers the
reduction in property tax collection from projected mill closures and the impacts of potential
revenue losses at the city/town and county levels.
Chapter 8—Nationwide Benefits Analysis Results
Using the methodology described in Chapter 4, EPA prepares an assessment of the
nationwide benefits of the regulation pursuant to Executive Order 12866 and UMRA. EPA
also presents its environmental justice analysis in Chapter 8 and Appendix F.
Chapter 9—Benefit-Cost Case Studies
Using the methodology described in Chapter 4, EPA prepares an assessment of the benefits
of increased pollution control for specific regions and mills as part of the cost-benefit
analysis of the regulation pursuant to Executive Order 12866 and UMRA.
Chapter 10—Comparison of Benefits and Costs
EPA summarizes the costs and benefits of the regulation based on the information in
Chapters 5, 8, and 9.
1.3 RULEMAKING HISTORY
1.3.1 Integrated Rulemaking Effort by the Office of Air and the Office of Water
The rulemaking for the pulp, paper, and paperboard industry is an integrated effort coordinated by
the Office of Air and Radiation and the Office of Water. The EPA Administrator is authorized by law to set
pollution control requirements for this industry. A lawsuit filed by the Environmental Defense Fund and the
National Wildlife Federation required the EPA to propose water regulations by 1993, which it did. The CAA
Amendments of 1990 require EPA to set MACT standards for the pulp, paper, and paperboard industry by
1997. EPA decided to integrate or cluster the rulemaking efforts, because with the comprehensive
perspective afforded by considering both CAA and CWA requirements:
EPA can encourage pollution prevention approaches that reduce the formation of pollutants,
consistent with the Pollution Prevention Act of 1990.
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• EPA can reduce the possibility of cross-media pollutant transfers.
• EPA can select controls that optimize pollutant reduction.
• EPA can fully assess the combined economic impact of separate EPA regulations on an
industry, more clearly representing real-world conditions.
Industry benefits from the integrated rulemaking through compliance savings by knowing the requirements
for all rules in advance of investment. Industry can select the best combination of controls to meet all rules,
thus potentially reducing capital equipment costs.
This rulemaking emphasizes pollution prevention. The control technologies considered by EPA
include process changes that avoid or minimize the formation of pollutants, as well as "end-of-pipe" control
technologies that remove pollutants before their release to air or water. For example, a process change that
prevents chloroform formation might also prevent or minimize the formation of dioxin and chlorinated
organics. The same process change, however, could affect the amount and type of volatile contaminants sent
to the air pollution control equipment. The engineering analysis evaluates the interactions among process
changes, the amount and type of contaminants sent to water and air pollution control treatment, and the final
releases. This systems-analysis approach evaluates the many interactions of pulping and papermaking
operations.
1.3.2 December 1993 Proposal
EPA proposed regulations for the pulp, paper, and paperboard industry on 17 December 1993. Five
documents supporting the proposed regulations provide detailed information regarding the proposed rule:
• Economic Impact Analysis (EPA, 1993a).
• Office of Water Development Document (EPA, 1993d).
• Office of Air Quality Planning and Standards Background Information Document (EPA,
1993e).
• Regulatory Impact Analysis (EPA, 1993c).
• Cost-effectiveness Analysis (EPA, 1993b).
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1.3.3 Changes From Proposal
EPA published two Notices of Data Availability (NOA, FR, 1996a and FR, 1996b) describing
changes from the proposal considered for the rule. These changes include updating mill-specific data to
reflect the technology in place as of mid-1995, particularly technology installed after proposal. The updated
technology in place has a direct effect on the costs and pollutant removals (both emissions and effluent) that
form the basis for the economic, cost-effectiveness, and benefits analyses, see the Development Document for
more details (EPA, 1997a). At this time, the following requirements are being promulgated:
MACT I (non-combustion sources) for the kraft, sulfite, soda, and semichemical
subcategories.
MACT III for mechanical pulping, secondary fiber pulping, and non-wood pulping mills.
effluent limitations guidelines, new source performance standards, and pretreatment
standards for two subcategories—papergrade sulfite and bleached papergrade kraft and soda
("effluent guidelines").
EPA is also proposing MACT II (combustion sources) for the kraft, sulfite, soda, and semichemical
subcategories at this time. EPA analyzed the costs and impacts of each separate requirement, the combined
promulgated requirements, and the combined promulgated and proposed requirements.
1.3.3.1 Mills and Subcategories Considered
At proposal, the Cluster Rule addressed the entire pulp and paper manufacturing industry. At that
time, EPA did not propose subcategories for mills falling under CAA MACT I requirements while—for
facilities regulated under the CWA—EPA proposed 12 subcategories to replace the existing
subcategorization scheme.
Since proposal, EPA published a notice stating it planned to subcategorize the pulping and
associated wastewater components in order to develop different MACT requirements (FR, 1996a). The
industry subcategories under MACT I and MACT II are kraft, sulfite, soda, and semichemical. MACT III
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applies to facilities with mechanical, secondary fiber, and non-wood pulping processes. At this time, MACT
I (non-combustion) and MACT III requirements are being promulgated, while MACT II (combustion)
requirements are being proposed.
Also since proposal, the EPA published a notice announcing the Agency's intent to develop final
effluent guidelines for the bleached papergrade kraft and soda and papergrade sulfite subcategories, and to
defer final rules on the other 10 subcategories for up to two years (FR, 1996b). The CAA kraft subcategory
is a broader subcategory that includes all mills that use a kraft pulping process. The CWA subcategories
make distinctions within the group of mills that use a kraft pulping process; that is, mills in the CWA
bleached papergrade kraft, unbleached kraft and dissolving kraft subcategories are all subsumed under the
CAA kraft subcategory. The CAA soda subcategory is distinct from the MACT kraft subcategory, but is part
of the CWA bleached papergrade kraft and soda subcategory. The CAA sulfite subcategory is a broader
category that includes mills that are included in the CWA dissolving sulfite and papergrade sulfite
subcategories. In other words, the set of mills covered by today's final effluent guidelines is a subset of the
mills covered by the final MACT I and proposed MACT II limitations, see Figure 1-1.
1.3.3.2 Options
MACT
Only one MACT I option is considered in the economic analysis. MACT II air standards are being
proposed for the pulp and paper mills previously noted. The control options for pulp and paper combustion
sources include: (1) two control options for particulate matter (PM) hazardous air pollutant (HAP) emissions
from kraft and soda recovery furnaces, lime kilns, and smelt dissolving tanks (SDTs); (2) one control option
for total gaseous organic HAP (TGOHAP) emissions from kraft and soda non-direct contact evaporator
(NDCE) recovery furnaces; and (3) two control options for TGOHAP emissions from kraft and soda direct
contact evaporator (DCE) recovery furnace systems (i.e., control of black liquor oxidation [BLO] vent
emissions [kraft only] and conversion to an NDCE recovery furnace).
The control options also include two PM control options for sulfite combustion sources and two
TGOHAP control options for semichemical combustion sources. Option one for semichemical combustion
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MACT
Kraft Subcategory
Bleached Papergrade
MACT
Sulfite Subcategory
MACT
Semichemical Subcategory
BAT/PS ES
Bleached Papergrade
Kraft and Soda
Subcategory
BAT/PS ES
Papergrade
Sulfite Subcategory
MACT
Soda Subcategory
Cluster Rule Mills
Figure 1-1. Relationship between MACT- and BAT/PSES-Regulated Subcategories
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sources is the floor control option that involves no add-on controls or control costs. Only MACT II option
two for semichemical combustion sources, an above the floor option, is considered in the EA analyses.
The operations addressed in the MACT III standard also have been noted previously. A Presumptive
MACT was completed in September 1995 for MACT III. There was very little data available on HAP
emissions from MACT III mills and the available data indicated that there are no air pollution control devices
in place on MACT III sources except for possibly chlorine bleaching. Based on the Presumptive MACT,
MACT III was proposed with the MACT I announcement of availability of supplemental information on
March 8, 1996. The final MACT for MACT III sources is no add-on control.
Effluent Guidelines
For the final rule, as discussed in the July 15, 1996, NOA, EPA has examined an additional option
for BAT/PSES and NSPS/PSNS for the bleached papergrade kraft and soda subcategory (Option A) - 100
percent substitution of chlorine dioxide for elemental chlorine. The second option (Option B) described in
this economic assessment is the technology basis from proposal, which includes 100 percent substitution of
chlorine dioxide for chlorine plus oxygen delignification or extended cooking. EPA also examined totally
chlorine free (TCP) technology as a basis for BAT/PSES and NSPS/PSNS for the bleached papergrade kraft
and soda subcategory.
For three segments of the papergrade sulfite subcategory, EPA examined TCP and elemental chlorine
free (ECF) technologies as bases for BAT/PSES and NSPS/PSNS. The promulgated requirements differ by
subcategory segment.
1.3.3.3 Methodology
EPA revised components of the economic methodology to account for recent changes that have
occurred in the pulp and paper industry, including: (1) a revised discount rate, (2) integration of market
effects (such as the ability to pass on pollution control costs through price increases) to the financial closure
model, (3) incorporating new industry cycle data into the forecasting methodology, (4) moving the starting
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year for the analysis to 1996, (5) incorporating updated mill ownership data in the Airman's Z model
(bankruptcy analysis based on a weighted average of financial ratios), and (6) revising the calculation of
annual costs.
EPA uses a 7-percent real discount rate in the analysis to reflect the drop in interest rates that has
occurred since 1989; the Office of Management and Budget also recommends this discount rate to evaluate
the social costs of federal regulations (OMB, 1992). EPA investigates the effects of a different cost of
capital to provide a sensitivity analysis (see Chapter 6). EPA used both a financial model and a
comprehensive market model to assess economic effects at proposal. Much of the information used in the
market model was derived from the 1989 Section 308 survey. A number of substantial changes have
occurred in pulp and paper markets since 1989 that this model does not reflect. EPA decided not to update
the market model because an update would have required a new survey of all mills and product lines. This
would have been unnecessarily costly and burdensome to mill operators and not likely to produce analytical
results significantly different from the financial model. Instead, EPA modified the financial model to
incorporate product supply and demand elasticities, which are estimates of changes in supply or demand in
response to price changes.
Between 1988 and 1995, the pulp and paper industry completed a full industry revenue cycle with
revenues peaking in 1988, falling through 1992, and reaching new heights in 1995. This information was
incorporated into the forecasting methods within the facility closure model. EPA obtained updated financial
facility information for publicly held companies for the Airman's Z (financial ratio, also called the company
failure or bankruptcy analysis) analysis. The inability to update facility-level financial information for all
facilities, including privately held firms, without a new survey led to EPA discontinuing the facility financial
ratio analysis. While the facility financial analysis provided some useful information, it did not provide the
basis for making determinations of economic achievability at proposal.
EPA considers general and variable annual costs in the cost annualization calculation. At proposal,
the economic impact analysis calculated general annual costs (GAC) as 4 percent of capital costs plus 60
percent of variable annual costs. Subsequent analysis indicated that the cost estimates for effluent control
provided in the Development Document already included the 60 percent of variable annual costs. To remove
this double-counting, GAC is now calculated as 4 percent of capital costs for effluent control (CIRT, 1994)
GAC is added in the economic impact analysis after the engineering estimates and prior to cost annualization;
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this explains any differences between engineering and economic estimates of operating and maintenance
costs.
In sum, EPA has made a number of changes in response to:
• comments;
• new options;
• changes in the industry; and
• new financial and economic information.
As a result of these changes, both analytical methods and results have changed from proposal. More details
on these changes are found in Chapter 2— Industry Profile and Chapter 3—Economic Impact and Regulatory
Flexibility Analysis Methodology.
1.4 REFERENCES
Reference material supporting Chapter 1 is located in the Pulp and Paper Water Docket.
CIRT. 1994. Pulp & Paper Cost Issues Review Team (CIRT). Telephone summary of conference call. 30
March 1994. Water Docket, DCN 14,086.
FR. 1996a. National emission standards for hazardous air pollutants for source category: pulp and paper.
Environmental Protection Agency. Notice of Availability. Federal Register 61(47):9383-9399. March 8.
Water Docket, DCN 13,212.
FR. 1996b. Effluent limitations guidelines, pretreatment standards, and new source performance standards:
pulp, paper, and paperboard category; national emission standards for hazardous air pollutants for source
category: pulp and paper production. Environmental Protection Agency. Notice of Availability. Federal
/tegwter61(136):36835-36858. July 15. Water Docket, DCN 13,471.
OMB. 1992. Guideline and discount rates for benefit-cost analysis of Federal programs. Washington, DC:
Office of Management and Budget. Revised circular No. A-94. Water Docket, DCN 14,301.
U.S. EPA. 1993 a. Economic impact and regulatory flexibility analysis of proposed effluent guidelines and
NESHAP for the pulp, paper, and paperboard industry. EPA/821/R-93/021. Washington, DC: Office of
Water. Water Docket, DCN 8,590.
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U.S. EPA. 1993b. Cost-effectiveness analysis of proposed effluent limitations guidelines for the pulp,
paper, and paperboard industry. EPA/821/R-93/018. Washington, DC: Office of Water. Water Docket,
DCN 33,595.
U.S. EPA. 1993c. Regulatory impact assessment of proposed effluent limitations guidelines and NESHAP
for the pulp, paper, and paperboard industry. EPA/821/R-93/020. Washington, DC: Office of Water. Water
Docket, DCN 8,587.
U.S. EPA. 1993d. Development document for proposed effluent limitations guidelines for the pulp, paper,
and paperboard point source category. EPA/821/R-93/019. Washington, DC: Office of Water. Water
Docket, DCN 8,517.
U.S. EPA. 1993e. Pulp, paper, and paperboard industry background information for proposed air emission
standards. EPA/453/R-93/050a. Washington, DC: Office of Air Quality Planning and Standards. Water
Docket, DCN 8,586.
U.S. EPA. 1997a. Supplemental development document for effluent limitations guidelines and standards for
the for the pulp, paper, and paperboard category subpart B (bleached papergrade kraft and soda) and subpart
E (papergrade sulfite). Washington, DC: Office of Water. Water Docket, DCN 14,487.
U.S. EPA. 1997b. Pulp, paper, and paperboard industry—background information for promulgated air
emission standards, manufacturing processes at kraft, sulfite, soda, semi-chemical, mechanical and secondary
and non-wood fiber mills, final EIS. EPA-453/R-93-050b. Washington, DC: Office of Air Quality Planning
and Standards. Water Docket, DCN 14,319.
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CHAPTER 2
INDUSTRY PROFILE
The U.S. pulp, paper, paperboard and allied products industry is the eleventh largest contributor of
all U.S. manufacturing industries to the U.S. gross domestic product (GDP), with aggregate shipments
totaling $169 billion in 1995. In addition, the U.S. industry currently enjoys a dominant position in the
international pulp, paper, and paperboard market because of its low per-unit labor costs, high-quality
production, and favorable exchange rates. Historically, the pulp and paper industry has represented one of
the nation's most heavily capitalized economic sectors. Capital expenditures by the industry in 1993 totaled
approximately $8.24 billion (Stanley, 1996).
The industry profile for the proposed Cluster Rule (FR, 1993) encompassed the entire industry. The
data used in the profile were based on over 500 mills in all subcategories, including 325 mills potentially
affected by both the proposed air and water regulations. The industry profile associated with this report
describes two interrelated sets of mills:
the 1581 mills covered by the final MACT I (non-combustion) and proposed MACT II
(combustion) requirements. These mills are called MACT-regulated mills throughout the
rest of the chapter.
the 96 mills covered by final effluent guidelines. These 96 mills are a subset of the of the
158 mills covered by the MACT requirements and are called BAT/PSES-regulated mills
throughout the rest of the chapter. Because these mills are covered by both BAT/PSES and
MACT requirements, they are also called Cluster Rule mills.
The industry profile has two foci:
To describe the mills affected by the final Cluster Rule (final effluent guidelines and
MACT I) and proposed MACT II.
To describe industry-wide changes and trends since the rule's proposal, which EPA
discussed in the Notice of Availability 61 FR 36835-36858 (July 15, 1996).
, 1993b identifies 158 mills with kraft, soda, sulfite, or semichemical pulping processes. Of these,
155 mills are anticipated to bear costs under final MACT I and/or proposed MACT II. The counts are
caveated because mills may change processes or close operations over time.
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As such, the profile describes the baseline against which economic impacts are measured. The reader is
directed to three documents supporting the proposed regulations for more detailed information:
• Economic Impact Analysis (EPA, 1993a).
• Office of Water Development Document (EPA, 1993b).
• Office of Air Quality Planning and Standards Background Information Document (EPA,
1993c).
These documents present information on the raw materials, industry processes, alternative technologies,
emissions, effluents, other environmental issues (i.e., recycling, chlorine-free products, and pollution
prevention), and environmental regulations affecting foreign competitors.
This chapter describes factors that affect the economic impact analysis. Section 2.1 identifies the
subcategories being regulated under this rule and briefly explains how the Clean Air Act (CAA) and Clean
Water Act (CWA) subcategories relate to each other. Sections 2.2 and 2.3 present information regarding
these groups of facilities on an aggregated basis. Company information is presented in Section 2.4, while
business patterns for the industry are described in Section 2.5. Section 2.6 discusses issues on international
competitiveness and Section 2.7 describes related industries potentially affected by the proposed MACT II
and the final Cluster Rule.
2.1 SUBCATEGORIES REGULATED UNDER THIS RULE
As mentioned above, the proposed Cluster Rule addressed the entire industry (FR, 1993). At that
time, the CAA proposal did not differentiate MACT I requirements by subcategory while the CWA proposal
contained 12 subcategories to replace the existing subcategorization scheme.
Since proposal, EPA published a notice stating it planned to subcategorize the pulping and
associated wastewater components to develop different MACT requirements. The subcategories being
considered are kraft, sulfite, soda, and semichemical. More details are given in FR 1996a and the preamble
supported by this study. At this time, EPA is promulgating MACT I (non-combustion) and MACT III
requirements and proposing MACT II (combustion) requirements. The MACT III rule contains National
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Emission Standards for Hazardous Air Pollutants (NESHAP) for mechanical pulping, secondary fiber
pulping, and non-wood pulping mills. No emission reductions or control costs, however, are associated with
the MACT III rule and mills to which only MACT III applies are not discussed further in the industry profile.
At this time, the economic analysis presents results for several sets of analyses:
• 96 mills subject to BAT/PSES
• combined costs for the clustered regulations (also called the Cluster Rule) for the group of
96 mills covered by the promulgated effluent guidelines and promulgated MACT I.
• combined costs for the 96 mills for effluent guidelines, MACT I, and MACT II alternatives.
• costs for the 155 mills covered by MACT I and MACT II. Three sets of costs are
presented: MACT I only, MACT II only, and combined MACT I and MACT II.
• combined costs for the 155 mills: BAT/PSES, MACT I, and MACT II.
The industry profile presented in support of the 1993 Proposal reflected all mills in operation as of
February 1993. Facility-specific data from EPA's industry survey (EPA, 1991), also called the 308 survey
because the data were collected under the authority of Section 308 of the CWA, are presented here for both
sets of mills to provide the basis for evaluating the economic impacts. The most recent year for the survey
data is 1989, but it is still the only source of facility-specific data available without repeating the survey. The
profile of mills has been updated to reflect ownership and type of production as of the end of 1995. There are
96 and 158 mills affected by the final effluent guidelines and MACT requirements, respectively. Data for 94
and 156 mills (effluent guideline and MACT requirements, respectively) are available from the survey.2 The
data in Sections 2.2 and 2.3 are presented twice, once for each set of mills. For simplicity, mills affected by
the final effluent guidelines are called "BAT/PSES-regulated" mills in the following sections while those
regulated under MACT are called "MACT-regulated" mills. Figure and table numbers ending in "W" and
"A" present data for the BAT/PSES- and MACT-regulated mills, respectively.
2Two mills went into operation after the survey (1989 data). They are included in the mill counts, cost
estimates, and all other facets of the industry profile and economic analysis with the exception of the survey
data.
2-3
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2.2 PRODUCTS AND MARKETS
If clarification is needed, the reader is referred to the EIA for Proposal where Tables 2-2, 2-8, and 2-
14 cross-reference the codes used in the EPA survey with the American Forest and Paper Association's
(AF&PA's) statistical categories (EPA, 1993a).
2.2.1 Pulp, Paper, and Paperboard Shipments
Table 2-1 lists pulp, paper, and paperboard shipments in tons. Two sources are shown for 1989
data. The first is EPA data collected via the 308 survey. Facility-specific information is aggregated over all
facilities to obtain the industry totals shown in the first column of Table 2-1. The second column contains the
1989 industry totals as published by the American Forest & Paper Association (AF&PA; AF&PA 1996a).
The AF&PA data are available only on an industry-wide basis. As such, they are useful for examining
industry trends but not for facility-specific analyses. A comparison of the first and second columns, shown in
the third column, illustrates the relationship between the EPA subset of mills and AF&PA industry-wide data
for the same year. Some variations between the two sets of data should be expected because the EPA data are
from a census while industry data are based on a sample.3 Industry shipment data for 1995, shown in the
fourth column, are taken from AF&PA 1996a. A comparison of AF&PA industry data for 1989 and 1995
(i.e., columns 2 and 4) is shown in the fifth column which indicates the industry-wide changes since 1989.
Table 2-1W lists the shipments for the BAT/PSES-regulated mills while Table 2-1A lists the
shipments for the larger group of MACT-regulated mills. An examination of Table 2-1W highlights several
features of the BAT/PSES-regulated mills. As expected, they account for all of the U.S. market bleached
kraft (sulfate) pulp production reported in the AF&PA statistics.4 The mills account for a substantial portion
of the market unbleached kraft pulp and some nonchemical pulps as well. The reported market bleached
sulfite pulp, however, is only about 10 percent of that reported in AF&PA, indicating substantial sulfite pulp
3The relationship between the product codes used in the EPA survey and AF&PA's statistical categories is
summarized in Tables 2-2, 2-8, and 2-14 in the EIA for proposal (EPA, 1993a).
4The EPA data show a larger tonnage than the AF&PA data. Some variations between the two data
sources should be expected because one is based on a census while the other is based on a sample.
2-4
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TABLE 2-1W
PULP, PAPER, AND PAPERBOARD SHIPMENT TONNAGE STATISTICS
FROM EPA SURVEY AND AF&PA STATISTICS
BAT/PSES-REGULATED MILLS
Product Name
Shipments (tons)
EPA Survey
BAT/PSES-
Regulated
Mills
1989
Industry Totals
AF&PA Statistics
1989
Percent*
Industry Totals
AF&PA Statistics
1995
Percent
Change From
1989 to 1995
AF&PA Statistics
Pulp
Sulfate-bleached 8,905,844 6,842,000 130% 8,534,000
Sulfate-unbleached 94,085 161,000 58% 254,000
Sulfite-bleached 21,103 237,000 9% 213,000
Groundwood 166,932 n/a n/a n/a
Thermomechanical ND n/a n/a n/a
Defibrated 53,045 n/a n/a n/a
Total Pulp 9,241,009 7,240,000 128% 9,001,000
Paper
Newsprint 2,993,712 6,088,000 49% 7,001,800
Uncoated groundwood 496,621 1,742,700 28% 2,129,600
Clay coated printing and converted 4,652,437 7,215,400 64% 8,795,400
Uncoated free sheet 8,337,376 11,080,700 75% 12,996,500
Bleached bristols 1,080,538 1,163,100 93% 1,360,700
Cotton fiber writing 245,705 160,800 153% 123,000
Unbleached kraft packaging 1,302,851 2,682,100 49% 2,006,800
Special industrial and packaging 90,645 1,767,200 5% 1,870,000
Tissue 1,927,663 5,636,500 34% 6,210,300
Wrapping 59,360 28,200 210% 26,500
Shipping sack 333,875 102,000 327% 115,100
Bag and sack 70,896 256,000 28% 170,400
Other bag and sack paper for conversion 77,860 81,800 95% 74,600
Total Paper 21,669,539 38,004,500 57% 42,880,700
Paperboard
Unbleached kraft packaging and industrial 2,925,138 19,490,100 15% 22,697,600
Semichemical, including corrugated medium 564,901 5,656,000 10% 5,661,900
Recycled paperboard ND 8,851,900 0% 12,976,700
Linerboard 362,620 177,700 204% 151,600
Folding carton 2,099,734 1,965,800 107% 2,067,700
Milk carton 1,120,306 565,600 198% 626,900
Heavyweight cup and round nested food container 425,541 452,400 94% 724,800
Plate, dish, and tray stock 216,543 362,100 60% 458,800
Bleached paperboard for miscellaneous packaging 54,853 930,000 6% 1,207,300
Other bleached, incl. board for moist, oily, & liquid food 531,817 n/a n/a n/a
Total Paperboard 8,301,453 38,451,600 22% 46,573,300
25%
58%
-10%
n/a
n/a
n/a
24%
15%
22%
22%
17%
17%
-24%
-25%
6%
10%
-6%
13%
-33%
-9%
13%
16%
0%
47%
-15%
5%
11%
60%
27%
30%
n/a
21%
*Column measures percentage of 1989 BPK and PS mill production from the EPA survey with respect to total industry production from AF&PA statistics.
ND: Data not disclosed due to confidentiality.
Totals for pulp and paperboard exclude nondisclosed figures.
n/a: not available.
Sources: AF&PA. 1996a. 1996 Statistics; Paper, Paperboard, and Wood Pulp. American Forest and Paper Association, Washington, DC.;
U.S. EPA. 1991. 1990 National Census of Pulp, Paper, and Paperboard Manufacturing Facilities. Washington, DC. October, 1991.
2-5
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TABLE 2- 1A
PULP, PAPER, AND PAPERBOARD SHIPMENT TONNAGE STATISTICS
FROM EPA SURVEY AND AF&PA STATISTICS
MACT-REGULATED MILLS
Product Name
Shipments (tons)
EPA Survey
MACT-Regulated
Mills
1989
Industry Totals
AF&PA Statistics
1989
Percent*
Industry Totals
AF&PA Statistics
1995
Percent
Change From
1989 to 1995
AF&PA Statistics
Pulp
Special alpha and dissolving woodpulp 1,413,751 1,423,000 99% n/a n/a
Sulfate-bleached 9,438,949 6,842,000 138% 8,534,000 25%
Sulfate-unbleached 109,825 161,000 68% 254,000 58%
Sulfite-bleached 218,538 237,000 92% 213,000 -10%
Groundwood ND n/a n/a n/a n/a
Thermomechanical ND n/a n/a n/a n/a
Defibrated ND n/a n/a n/a n/a
Total Pulp 11,234,438 7,240,000 155% 9,001,000 24%
Paper
Newsprint 3,277,154 6,088,000 54% 7,001,800 15%
Uncoated groundwood 496,621 1,742,700 28% 2,129,600 22%
Clay coated printing and converted 4,652,437 7,215,400 64% 8,795,400 22%
Uncoated free sheet 8,494,061 11,080,700 77% 12,996,500 17%
Bleached bristols 1,080,538 1,163,100 93% 1,360,700 17%
Cotton fiber writing 278,211 160,800 173% 123,000 -24%
Unbleached kraft packaging 2,876,155 2,682,100 107% 2,006,800 -25%
Special industrial and packaging 345,651 1,767,200 20% 1,870,000 6%
Tissue 2,030,063 5,636,400 36% 6,210,300 10%
Wrapping 59,360 28,200 210% 26,500 -6%
Shipping sack 333,875 102,000 327% 115,100 13%
Other shipping sack, incl. rope and kraft/rope ND n/a n/a n/a n/a
Bag and sack 70,896 256,000 28% 170,400 -33%
Other bag and sack paper for conversion 10,548 81,800 13% 74,600 -9%
Total Paper 24,005,570 38,004,400 63% 42,880,700 13%
Paperboard
Unbleached kraft packaging and industrial 18,688,142 19,490,100 96% 22,697,600 16%
Semichemical, including corrugated medium 5,542,883 5,656,000 98% 5,661,900 0%
Recycled paperboard ND 8,851,900 0% 12,976,700 47%
Linerboard 362,833 177,700 204% 151,600 -15%
Folding carton 2,099,734 1,965,800 107% 2,067,700 5%
Milk carton 1,120,306 565,600 198% 626,900 11%
Heavyweight cup and round nested food container 425,541 452,400 94% 724,800 60%
Plate, dish, and tray stock 216,543 362,100 60% 458,800 27%
Bleached paperboard for miscellaneous packaging 54,853 930,000 6% 1,207,300 30%
Other bleached, incl. board for moist, oily, & liquid food 531,817 n/a n/a n/a n/a
Total Paperboard 29,042,652 38,451,600 76% 46,573,300 21%
*Column measures percentage of 1989 BPK and PS mill production from EPA survey with respect to total industry production from AF&PA statistics.
ND: Data not disclosed due to confidentiality.
Total for pulp includes nondisclosed figures. Totals for paper and paperboard exclude nondisclosed figures.
n/a: not available.
Sources: AF&PA. 1996a. 1996 Statistics; Paper, Paperboard, and Wood Pulp. American Forest and Paper Association, Washington, DC.;
U.S. EPA. 1991. 1990 National Census of Pulp, Paper, and Paperboard Manufacturing Facilities. Washington, DC. October, 1991.
2-6
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production from mills not being regulated in this rulemaking. The same set of BAT/PSES-regulated mills
accounts for nearly 60 percent of the paper products (in tons), indicating a high level of integration at mills
with these chemical pulping and bleaching operations.
Table 2-1A highlights the more extensive nature of the MACT-regulated mill population. The group
accounts for all dissolving pulp and over 90 percent of the bleached sulfite pulp reported by AF&PA. The
variation among the pulp types reported in the EPA survey and estimated by AF&PA may reflect small
differences in categorization of particular pulps between the two sources. The MACT-regulated mills also
show a high level of integration, accounting for nearly all of the unbleached and semichemical paperboard
production. In general, the MACT-regulated mills represent nearly two-thirds of paper production and three-
quarters of paperboard production tonnage.
From 1989 to 1995, the industry showed an 25 percent increase in bleached kraft pulp shipments but
a 10 percent decrease in bleached sulfite pulp shipments. During the same period, paper shipments increased
by 4.9 million tons (13 percent) while paperboard shipments increased by 8.1 million tons (21 percent).
2.2.2 Value of Pulp, Paper, and Paperboard Shipments
Table 2-2 lists the value of product shipments in thousands of current dollars. The BAT/PSES-
regulated mills (top half of the table) account for 71, 54, and 31 percent of the 1989 pulp, paper, and
paperboard shipments, respectively. Although the BAT/PSES-regulated mills are less than 20 percent of the
mill population, they account for about half of the industry pulp, paper, and paperboard production. The
MACT-regulated mills (bottom half of the table) account for 90, 59, and 80 percent of the 1989 industry
shipments for pulp, paper, and paperboard, respectively,5 or nearly 70 percent of all industry production.
During 1989, the industry entered a cyclical slump. Table 2-1 indicates how shipments increased
from 1989 to 1995 while Table 2-2 indicates how the values of those shipments decreased from 1989 to
1994 (the most recent year available in AF&PA, 1996a) due to falling pulp prices. Shipments for SICs 261,
5The BAT/PSES-regulated mills are a subset of the MACT-regulated mills; the percentages are not
additive.
2-7
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TABLE 2-2
VALUE OF PULP, PAPER, AND PAPERBOARD SHIPMENTS
Product Category
Shipments (thousands of current dollars)
EPA Survey
1989
Industry Totals
AF&PA Statistics
1989
Percentage*
Industry Totals
AF&PA Statistics
1994
Percent
Change From
1989 to 1994
AF&PA Statistics
BAT/PSES-REGULATED MILLS
Pulp
Paper
Paperboard
Total
MACT-REGULATED MILLS
Pulp
Paper
Paperboard
Total
$5,468,222
$18,027,340
$5,120,793
$28,616,355
$6,959,710
$19,513,018
$13,119,784
$39,592,512
$7,719,000
$33,293,000
$16,352,000
$57,364,000
$7,719,000
$33,293,000
$16,352,000
$57,364,000
70.84%
54.15%
31.32%
49.89%
90.16%
58.61%
80.23%
69.02%
$5,941,000
$32,440,000
$18,444,000
$56,825,000
$5,941,000
$32,440,000
$18,444,000
$56,825,000
-23.03%
-2.56%
12.79%
-0.94%
-23.03%
-2.56%
12.79%
-0.94%
"Column measures percentage of 1989 BAT/PSES-regulated or MACT-regulated mill shipment value from the EPA survey
with respect to total industry shipment value from AF&PA statistics.
Sources: AF&PA. 1996a. 1996 Statistics; Paper, Paperboard, and Wood Pulp. American Forest and Paper Association,
Washington, DC.; U.S. EPA. 1991. 1990 National Census of Pulp, Paper, and Paperboard Manufacturing Facilities.
Washington, DC. October, 1991.
-------
262, and 263 totalled $57 million in 1989, $52 million in 1993, $57 million in 1994, and $75 million in 1995
(AFPA, 1996a and Stanley, 1996).
Table 2-3 presents statistics relevant to the value of 1989 shipments by facility. The range is from
$0 to $367 million in pulp shipments for both BAT/PSES and MACT-regulated mills.6 A typical
BAT/PSES-regulated mill ships $58 million while a typical MACT-regulated mill ships $44 million in pulp.
Loss in shipments is a direct impact of either the BAT/PSES or MACT regulations, which is calculated by
examining the value of shipments from facilities that are projected to close under increased pollution control
costs. Facility-specific information on shipments, exports, and employment is available only from the 308
survey. Impacts, therefore, are calculated based on 1989 data from the survey.
2.2.3 Exports
Table 2-4 summarizes the value of pulp, paper, and paperboard exports for BAT/PSES-regulated
and MACT-regulated mills. Table 2-4 follows the same 5-column pattern described for Table 2-1; 1989 data
from EPA and AF&PA in the first and second columns, a comparison of the 1989 data in the third column,
AF&PA 1995 data in the fourth column, and a 1989 to 1995 comparison of AF&PA data in the fifth column.
Table 2-4 indicates that the BAT/PSES-regulated mills represented approximately two-thirds of the
industry's 1989 pulp exports and about one-third of the paper and paperboard exports. The MACT-regulated
mills accounted for over 90 percent of the pulp exports and 77 percent of the paperboard exports. Loss in
exports is a direct impact of the rule calculated by examining the tonnage exported from facilities projected to
close under increased pollution control costs (see Chapter Six). For reasons given in Section 2.2.2, data from
1989 are used to assess impacts in Chapter Six.
While pulp, paper, and paperboard exports, in general, increased by $4.6 billion from 1989 to 1995
in current dollars, the mix of products changed. Annual pulp, paper, and paperboard exports all increased in
value. Annual pulp exports increased by 30 percent from $3.5 billion to $4.5 billion. Annual paper exports
more than doubled from $1.2 billion in 1989 to $3.1 billion in 1995. Paperboard exports also more than
doubled from $1.7 billion in 1989 to $3.5 billion in 1995. It should be noted that exports increased during a
6A mill with $0 shipments reflects data not held at the facility level.
2-9
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TABLE 2-3
VALUE OF PULP, PAPER, AND PAPERBOARD SHIPMENTS
1989 DATA
Statistic
Facility Value of Shipments (thousands of 1989 dollars)
Pulp
Paper
Paperboard
BAT/PSES-REGULATED MILLS
Observations
Minimum
Maximum
Median
Average
Total
94
$0
$364,738
$10,647
$58,173
$5,468,222
94
$0
$718,702
$171,605
$191,780
$18,027,340
94
$0
$497,031
$0
$54,477
$5,120,793
MACT-REGULATED MILLS
Observations
Minimum
Maximum
Median
Average
Total
158
$0
$366,918
$0
$44,049
$6,959,710
158
$0
$718,702
$69,710
$123,500
$19,513,018
158
$0
$497,031
$47
$83,037
$13,119,784
Source: U.S. EPA. 1991. 1990 National Census of Pulp, Paper, and Paperboard
Manufacturing Facilities. Washington, DC. October, 1991.
2-10
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TABLE 2-4
VALUE OF PULP, PAPER, AND PAPERBOARD EXPORTS
Product Category
Exports (thousands of current dollars)
EPA Survey
1989
Industry Totals
AF&PA Statistics
1989
Percent*
Industry Totals
AF&PA Statistics
1995
Percent
Change From
1989 to 1995
AF&PA Statistics
BAT/PSES-REGULATED MILLS
Pulp
Paper
Paperboard
Total
MACT-REGULATED MILLS
Pulp
Paper
Paperboard
Total
$2,321,690
$375,437
$638,088
$3,335,215
$3,185,916
$438,846
$1,332,836
$4,957,598
$3,512,604
$1,233,526
$1,734,402
$6,480,532
$3,512,604
$1,233,526
$1,734,402
$6,480,532
66.10%
30.44%
36.79%
51.47%
90.70%
35.58%
76.85%
76.50%
$4,536,523
$3,112,293
$3,456,711
$11,105,527
$4,536,523
$3,112,293
$3,456,711
$11,105,527
29.15%
152.31%
99.30%
71.37%
29.15%
152.31%
99.30%
71.37%
*Column measures percentage of 1989 BAT/PSES-regulated or MACT-regulated mill export value from the EPA survey
with respect to total industry export value from AF&PA statistics.
Sources: AF&PA. 1996a. 1996 Statistics; Paper, Paperboard, and Wood Pulp. American Forest and Paper Association.
Washington, DC.; U.S. EPA. 1991. 1990 National Census of Pulp, Paper, and Paperboard Manufacturing Facilities.
Washington, DC. October, 1991.
2-11
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period when industry was not only combating an industry downturn but increasing investments in
environmental controls as well.
2.3 FACILITY-LEVEL INFORMATION
2.3.1 Geographic Distribution of Facilities
Figures 2-1 and 2-2 illustrate the geographic distribution of facilities. Figure 2-1 illustrates the
predominance of facilities along the eastern portion of the country. Figures 2-2W and 2-2A are histograms
where the states are rank-ordered by the number of facilities. Twenty-seven states are home to facilities
affected by the effluent guidelines. Alabama has the most mills (11 BAT/PSES and 15 MACT-regulated
mills); Maine, Washington, and Wisconsin each have seven to eight BAT/PSES-regulated mills. Georgia,
Wisconsin, Washington, and Louisiana each have 10 to 12 MACT-regulated mills. As of 1995, no additional
mills have opened in the regulated subcategories since 1993. Of the mills to be affected by the final rule, one
mill has closed and one has changed subcategory since 1993.7
2.3.2 Facility Size
2.3.2.1 Assets
Facility-level asset value information is an integral part of the closure analysis (Chapter 6) because
asset value determines salvage value and closure is determined when salvage value exceeds the present value
of forecasted earnings. The EPA survey is the only source of such data; there are no publicly available
sources with which to update it. The asset determination for a mill, therefore, does not reflect additions after
1989, while the costing database for the engineering estimates incorporates the technology installed as of
1995. The lack of additional assets has two counterbalancing effects for calculating salvage value for the
closure model—equipment installed after 1989 is not considered but neither is the additional cumulative
7An additional mill closed in 1997.
2-12
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FIGURE 2-1
PULP, PAPER, AND PAPERBOARD MILLS BY STATE, 1995
MACT-Regulated Mills and BAT/PSES-Regulated Mills
o/s/g/n/8297/map2.ppt
Numbers in large font show the number of MACT-regulated mills in the state.
Numbers in parenthesis show number of mills that are both BAT/PSES- and MACT- regulated.
2-13
-------
FIGURE 2-2W
DISTRIBUTION OF PULP, PAPER, AND PAPERBOARD MILLS BY STATE
BAT/PSES-Regulated Mills
20
15 -
10 -
g
I
AL WA ME WI PA TX GA SC LA FL NC VA OR MS AR MI TN NY CA MN KY MT MD ID OH NH AK
States
Source: U.S. EPA. 1991. 1990 National Census of Pulp, Paper, and Paperboard Manufacturing Facilities. Washington, DC. October, 1991.
2-14
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FIGURE 2-2A
DISTRIBUTION OF PULP, PAPER, AND PAPERBOARD MILLS BY STATE
MACT-Regulated Mills
20
15
10
AL GA WI WA LA FL OR ME AR SC VA MI MS TX PA NC TN NY KY OH MN CA NH ID IN IA MD MT AZ OK AK
States
Source: U.S. EPA. 1991. 1990 National Census of Pulp, Paper, and Paperboard Manufacturing Facilities. Washington, DC.
October, 1991.
2-15
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depreciation. EPA assumes these effects offset each other with the incremental closure analysis remaining
relatively unaffected.
As mentioned in Section 2.1, the EPA database contains information on 94 mills affected by the final
effluent guidelines and 156 mills affected by MACT requirements. 1989 facility-level asset data are
available for 82 and 138 of these mills, respectively. A mill may not have facility-level asset information for
several reasons, including: the company does not record assets at the facility level, the company keeps
records for some facilities on combined basis, or the mill changed ownership between 1989 to 1990 (when
the survey was performed). The continuity of the asset data is an indication of the fluidity of mill ownership
during 1985 to 1990 (when the survey was performed). In most cases, if a mill was sold to a new owner, the
new owner had technical but not financial information for earlier years. Data from 1989 were not available
for slightly over 5 percent of the 1989 BAT/PSES-regulated mill population. Since 1989, two new bleached
papergrade kraft facilities have opened, and approximately 10 existing facilities have changed ownership. In
other words, there is a fair amount of fluidity in mill ownership; a mill may have been operating for decades
but may have had several owners during that time.8
Table 2-5 summarizes the minimum, maximum, mean, and total facility-level assets for 1985, 1988,
and 1989. These assets are the total of current and noncurrent assets and are listed in thousands of current
dollars (i.e., data for 1985 are in terms of 1985 dollars, while data for 1989 are in terms of 1989 dollars).9
The average BAT/PSES-regulated mill had assets of $249 million in 1985, $307 million in 1988, and $352
million in 1989. Assets for the BAT/PSES-regulated mill population totaled $19 billion in 1985, $25 billion
in 1988, and $29 billion in 1989. The average MACT-regulated mill had assets of $194 million in 1985,
$239 million in 1988, and $268 million in 1989. Assets for the MACT-regulated mill population totaled $25
8No 1989 data were available for mills that changed ownership after 1989, began operations after 1989, or
combined their financial information with that of another facility. When a mill is purchased, the purchase
price reflects the mill's value plus goodwill (the excess cost paid over liquidation value). Old financial
records on asset value are generally not transferred to the new owners because they are not relevant to the new
financial basis for the facility.
'According to survey data, facilities that are part of a multifacility organization frequently keep an
intercompany account as a current asset. This intercompany account can have a negative value if, for
example, the books close after the payroll has been written but the check from corporate headquarters to
cover the payroll has not been received. In other words, negative current assets are a legitimate survey
response at the facility level.
2-16
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TABLE 2-5
FACILITY ASSETS
w
Year Inf
BAT/PSES-REGULATED MILLS
1985
1988
1989
MACT-REGULATED MILLS
1985
1988
1989
"acilities Facility Assets*
ith Asset
ormation Minimum Maximum
77 $28,108 $987
82 $31,392 $852
82 $41,432 $995
131 $9,594 $987
138 $1,950 $852
138 $16,119 $995
,764
,194
,129
,764
,194
,129
(thousands of current dollars)
Median
$181,070
$240,944
$273,728
$147,864
$175,996
$201,001
Mean
$248,750
$307,284
$352,445
$193,526
$238,541
$267,537
Total
$19,153,754
$25,197,326
$28,900,507
$25,351,847
$32,918,655
$36,920,065
* Total of current and noncurrent (e.g., land, buildings, equipment) assets.
Notes: For BAT/PSES-regulated mills, 82 kept asset information at the facility level and five changed ownership or opened between 1985 and
1988.
For MACT-regulated mills, 138 kept asset information at the facility level and seven changed ownership or opened between 1985 and
1988.
Source: U.S. EPA. 1991. 1990 National Census of Pulp, Paper, and Paperboard Manufacturing Facilities. Washington, DC. October, 1991.
2-17
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billion in 1985, $33 billion in 1988, and $37 billion in 1989. In comparison, the total assets reported for all
facilities in the industry survey totaled $55 billion in 1989. AF&PA reports data for SIC 26, paper and allied
products, a larger scope than considered in the rulemaking because SIC 26 includes converting operations,
such as boxmaking plants, as well as building paper and paperboard operations. For comparison, AF&PA
lists 1989 industry assets at $109 billion and 1994 assets at $150 billion.
2.3.2.2 Employees
The census requested the average number of employees engaged in:
• Pulp, paper, or paperboard operations
• Other production operations
• Nonproduction operations
Data were provided for 1989 and are summarized in Table 2-6. In one independent facility, whose workers
are all "contract labor," the facility's books show zero employees.10 A typical BAT/PSES-regulated mill has
approximately 900 to 1,000 employees, with 20 percent engaged in nonproduction activities. Some mills also
have a small number of employees engaged in production of non-pulp, -paper, and -paperboard products.
Total employment for the BAT/PSES-regulated mills is about 97,000. A typical MACT-regulated mill is
slightly smaller with approximately 800 to 850 employees. Some mills also have a small number of
employees engaged in production of nonpulp, -paper, and -paperboard products. Total employment is about
129,000 for MACT-regulated mills.
When the economic methodology projects a mill to close due to increased costs for pollution control,
all employment at the mill is considered lost. The total population figures are a measure against which to
compare the magnitude of the direct impacts of the regulation. The data also indicate that a typical mill
exceeds the 750-employee criterion for a large business for this set of SIC codes.
10Zero employees for a nonindependent mill can occur when the mill 1) started operations after 1989, or 2)
has information combined with that of another mill. In the last case, both mills are kept in the count, but the
number of employees for one mill is set to zero.
2-18
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TABLE 2-6
NUMBER OF EMPLOYEES BY FACILITY, 1989
Type of Employee Minimum
BAT/PSES-REGULATED MILLS
Production
Non-production
Other
Total Employment
MACT-REGULATED MILLS
Production
Non-production
Other
Total Employment
0
0
0
0
0
0
0
0
Maximum
2,583
715
265
3,050
2,583
715
473
3,050
Mean
806
206
20
1,032
638
165
23
827
Median
698
165
0
928
511
126
0
635
Total
75,737
19,320
1,909
96,966
99,591
25,809
3,639
129,039
Note: Zero employees may result when a facility 1) uses contract labor, 2) started operations
after 1989, or 3) has information combined with that of another mill. In the last case, both mills
are included, but the number of employees for one mill is set to zero.
Source: U.S. EPA. 1991. 1990 National Census of Pulp, Paper, and Paperboard Manufacturing
Facilities. Washington, DC. October, 1991.
2-19
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2.3.3 Facility Age
Figures 2-3W and 2-3A show the age of the pulp and paper operations for the BAT/PSES- and
MACT-regulated mills, respectively. (In some cases, a facility built for one purpose was later transformed
into a pulp and paper operation.) The paper industry has a long history in this country; several operations
date back to the Colonial period. The kraft pulping process was developed about 100 years ago, immediately
followed by a large increase in the number of facilities. The number of BPK and papergrade sulfite facilities
declined during World War II, and a new influx of facilities came in the postwar phase.
The histograms (Figures 2-3W and 2-3A) do not tell the industry's whole story, however. After
establishing pulp and paper operations, the majority of mills continue to update, upgrade, and expand their
operations. The EPA census asked for the date of the most recent renovation or expansion for the facility,
defined as the renovation or expansion of at least 10 percent of the value of the plant's accumulated gross
investment. The renovation and expansion dates are shown in Figures 2-4W and 2-4A. While a portion of
the population functions with decades-old equipment, more than half the mills renovated or expanded
between 1985 and 1990.
2.3.4 Capital Investment
At the end of 1989, BAT/PSES- and MACT-regulated mills showed original investments of $39
billion and $51 billion, respectively, in land, timberlands, buildings, equipment, and other assets (Table 2-7).
Even after depreciation, these investments totaled $25 billion and $32 billion. In 1989, there were
approximately 76,000 pulp, paper, and paperboard production workers in BAT/PSES-regulated mills, and
129,000 production workers in MACT-regulated mills (Table 2-6). The original investment per employee,
then, was approximately $400,000 to $510,000, indicating the capital-intensive nature of the industry.
Capital investment is a continuing process in this industry. Table 2-8 lists the expenditures on new
plants and equipment from 1980 to 1994 (AF&PA, 1996a). Investments range from $3.5 to $8.3 billion,
including a dramatic increase in 1988 which began to decline in 1991. In 1989, the industry invested about
$47,000 per employee in new plants and equipment. Table 2-8 also lists the expenditures for environmental
protection. Pollution control accounted for between 6 and 20 percent of new investment during this period.
2-20
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FIGURE 2-3W
AGE OF PULP AND PAPER OPERATIONS HISTOGRAM
BAT/PSES-Regulated Mills
10
Number of Mills
1840-1849 1860-1869 1880-1889 1900-1909 1920-1929 1940-1949
Start Year of Pulp and Paper Operations
1960-1969
1980-1989
Source: U.S. EPA. 1991. 1990 National Census of Pulp, Paper, and Paperboard Manufacturing Facilities. Washington, DC. October, 1991.
2-21
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FIGURE 2-3A
AGE OF PULP AND PAPER OPERATIONS HISTOGRAM
MACT-Regulated Mills
40
30
20
a
I
10
Number of Mills
1840-49 1850-59 1860-69 1870-79 1880-89 1890-99 1900-09 1910-19 1920-29 1930-39 1940-49 1950-59 1960-69 1970-79 1980-89
Start Year of Pulp and Paper Operations
Source: U.S. EPA. 1991. 1990 National Census of Pulp, Paper, and Paperboard Manufacturing Facilities. Washington, DC. October, 1991.
2-22
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FIGURE 2-4W
HISTOGRAM OF EXPANSION AND RENOVATION YEARS
BAT/PSES-Regulated Mills
30
20
10
1960
Number of Mills
1965
1970 1975 1980
Year of Latest Expansion or Renovation
1985
1990
Source: U.S. EPA. 1991. 1990 National Census of Pulp, Paper, and Paperboard Manufacturing Facilities. Washington, DC. October, 1991.
-------
FIGURE 2-4A
HISTOGRAM OF EXPANSION AND RENOVATION YEARS
MACT-Regulated Mills
30
25 —
20 —
15 —
10 —
1950
1955
1960
1965 1970 1975
Year of Latest Expansion or Renovation
1980
1985
1990
Source: U.S. EPA. 1991. 1990 National Census of Pulp, Paper, and Paperboard Manufacturing Facilities. Washington, DC. October, 1991.
2-24
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TABLE 2-7
1989 CAPITAL INVESTMENTS BEFORE AND AFTER DEPRECIATION
Capital Investment
Type of Investment (thousands of dollars)
BAT/PSES-REGULATED MILLS
Land $399,440
Timberlands $626,279
Buildings $2,474,849
Equipment and machinery $33,626,587
Other assets $1,903,942
Total capital $39,031,097
Value after depletion and depreciation $25,069,696
MACT-REGULATED MILLS
Land $502,425
Timberlands $963,600
Buildings $3,270,099
Equipment and machinery $43,841,755
Other assets $2,227,985
Total capital $50,805,864
Value after depletion and depreciation $31,947,329
Source: U.S. EPA. 1991. 1990 National Census of Pulp, Paper, and Paperboard
Manufacturing Facilities. Washington, DC. October, 1991.
2-25
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TABLE 2-8
EXPENDITURES ON NEW ENVIRONMENTAL PROTECTION PLANT AND EQUIPMENT
Industry Totals
Expenditures on Expenditures on Environmental Expenditures
New Plants and Equipment Environmental Protection Investment
• Year (thousands of dollars) (thousands of dollars) Percent of Total
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
$3,726,000
$3,957,000
$3,820,000
$3,497,000
$3,713,000
$4,290,000
$4,038,000
$3,764,000
$5,126,000
$7,587,000
$8,307,000
$6,781,000
$5,725,000
$4,933,000
$4,829,000
$368,000
$260,000
$318,000
$327,000
$226,000
$342,000
$237,000
$403,000
$572,000
$1,039,000
$1,292,000
$1,343,000
$1,048,000
$737,000
$721,000
9.88%
6.57%
8.32%
9.35%
6.09%
7.97%
5.87%
10.71%
11.16%
13.69%
15.55%
19.81%
18.31%
14.94%
14.93%
Source: AF&PA. 1996a. 19% Statistics; Paper, Paperboard, and Wood Pulp. American Forest and Paper
Association, Washington, DC.
2-26
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However, the AF&PA data on environmental expenditures do not specify whether these expenditures are for
SIC 26 (paper and allied products, e.g., converting mills) or SICs 2611, 2621, and 2631 (pulp, paper, and
paperboard mills).
2.3.5 Level of Integration
A facility that both produces pulp and uses it to manufacture paper and/or paperboard products is
considered an integrated mill. The technical and financial sections of the census categorize mills differently;
only products that are sold appear in the census's financial portion. If a facility manufactures pulp but
consumes it all in the manufacture of paper, that facility will appear as a integrated facility in the technical
portion but not in the financial portion of the survey. If that facility sells some of its pulp in addition to its
paper products, it would appear as an integrated facility in both the technical and financial portions of the
census.
Table 2-9 presents data on the number of mills by type of production derived from the financial
portion of the census. In 1989, eight BAT/PSES-regulated mills sold only pulp, 15 sold only paper, and three
sold just paperboard. The remainder of the mills sold a mixture of products. Some of these facilities might
be integrated, but data from the survey's financial portion do not identify them. The MACT-regulated mills
show a similar level of integration.
Mills that exist to serve other facilities under the same ownership also can be considered integrated
with respect to company operations. During 1985 to 1989, 72 of 94 BAT/PSES-regulated mills indicated
that they transferred pulp, paper, and/or paperboard to other facilities under the same ownership. Depending
on the year, between one and 10 of the BAT/PSES-regulated mills indicated that 90 percent or more of their
revenues from a single product (pulp, paper, or paperboard) came from such transfers. Between five and six
mills reported that over 90 percent of all pulp, paper, and paperboard revenues were from transfers to other
facilities under the same ownership. For MACT-regulated mills, between seven and nine mills reported that
over 90 percent of all pulp, paper, and paperboard revenues were from transfers to other facilities under the
same ownership. These mills are considered captive (i.e., they exist to serve other parts of the organization).
The majority of transfers for both BAT/PSES- and MACT-regulated mills were completed using the market
price as the transfer price.
2-27
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TABLE 2-9
LEVEL OF PRODUCTION INTEGRATION AT U.S. PULP AND
PAPER MILLS
Type of Production Number of Mills
BAT/PSES-REGULATED MILLS
Pulp, paper, and paperboard 19
Pulp and paper 38
Pulp and paperboard 5
Paper and paperboard 6
Pulp 8
Paper 15
Paperboard 3
Total 94
MACT-REGULATED MILLS
Pulp, paper, and paperboard 20
Pulp and paper 38
Pulp and paperboard 6
Paper and paperboard 16
Pulp 14
Paper 20
Paperboard 42
Total 156
Source: U.S. EPA. 1991. 1990 National Census of Pulp, Paper, and
Paperboard Manufacturing Facilities. Washington, DC. October, 1991.
2-28
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This information affects the baseline closure analysis. Those captive mills that make transfers at
cost will appear to earn little or no revenues in the census's financial portion. If captive mills have any
salvage value, they could be deemed as closures in the economic analysis (i.e., the salvage value exceeds the
expected stream of earnings; EPA 1993a, Section 3) even before the addition of incremental pollution control
costs. Because of this phenomenon, the closure analysis removes this type of baseline closure from
consideration as an incremental closure when evaluating the facility-level impacts of the regulatory options.
Instead, EPA considers the economic impact on such facilities by including them in the estimation of
company-level impacts.
2.4 COMPANY-LEVEL INFORMATION
2.4.1 Number of Facilities and Ownership
The number of companies in the pulp and paper industry remains in flux as new companies enter the
market and others go out of business or merge with other entities. Table 2-10W lists 37 companies with
BAT/PSES-regulated mills in 1995; Table 2-10A lists 52 companies with MACT-regulated mills. Since the
proposal, Sappi acquired the S.D. Warren mills from Scott Paper, while Kimberly-Clark acquired the
remaining parts of the Scott Paper company. ITT spun off Rayonier, which it had acquired in 1968. Proctor
and Gamble spun off Buckeye Cellulose and James River spun off Crown Paper. In 1997, James River
merged with Fort Howard to form Fort James.
The companies listed in Table 2-10W own the 96 mills in the BPK and PS subcategories. Seventeen
companies own only one BPK or PS facility, while the largest number of facilities owned by a single company
is 12. The average number of facilities owned by the companies is 2.6 mills. Table 2-10A lists companies
with mills in the MACT-regulated subcategories. Two companies account for 37 mills while 26 companies
have one mill each.
Approximately 79 percent of the companies owning BAT/PSES-regulated mills are publicly held,
with the remaining 21 percent privately held. For the entire industry, ownership is closer to 28 percent
public, and 64 percent private; the remaining 8 percent includes partnerships, wholly-owned subsidiaries,
joint ownership, and foreign ownership with no stock holdings. Thus the 308 survey data are important for
2-29
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TABLE 2-10W
BUSINESS ENTITIES WITH MILLS IN THE BLEACHED PAPERGRADE KRAFT AND
PAPERGRADE SULFITE BAT/PSES-REGULATED SUBCATEGORIES
APPLETON PAPERS, INC.
BADGER PAPER MILLS, INC.
BOISE CASCADE CORPORATION
BOWATER INCORPORATED
CHAMPION INTERNATIONAL CORP.
CHESAPEAKE PAPER PRODUCTS CO.
CONSOLIDATED PAPERS, INC.
CROWN PAPER CO.
FINCH PRUYN & CO., INC.
GEORGIA-PACIFIC CORPORATION
OILMAN PAPER COMPANY
GULF STATES PAPER CORPORATION
INTERNATIONAL PAPER COMPANY
JAMES RIVER CORPORATION
JEFFERSON SMURFIT CORPORATION
KIMBERLY-CLARK CORPORATION
LINCOLN PULP & PAPER CO., INC.
LONG VIEW FIBRE CO.
LOUISIANA-PACIFIC CORPORATION
MEAD CORPORATION
NORANDA FOREST
P. H. GLATFELTER COMPANY
PARSONS & WHITTEMORE
POPE & TALBOT, INC.
PORT TOWNSEND PAPER CORPORATION
POTLATCH CORPORATION
PROCTER & GAMBLE
SAPPI (S.D. WARREN CO.)
SIMPSON PAPER COMPANY
ST. JOE FOREST PRODUCTS COMPANY
STONE CONTAINER CORPORATION
TEMPLE-INLAND, INC.
UNION CAMP CORPORATION
WAUSAU PAPER MILLS, INC.
WESTVACO CORPORATION
WEYERHAEUSER COMPANY
WILLAMETTE INDUSTRIES, INC.
2-30
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TABLE 2-10A
BUSINESS ENTITIES WITH MILLS IN THE KRAFT, SULFITE, AND SEMICHEMICAL MACT-
REGULATED SUBCATEGORIES
APPLETON PAPERS, INC.
BADGER PAPER MILLS, INC.
BOISE CASCADE CORPORATION
BOWATER INCORPORATED
BUCKEYE FLORIDA, L.P.
CHAMPION INTERNATIONAL CORP.
CHESAPEAKE PAPER PRODUCTS CO.
CONSOLIDATED PAPERS, INC.
CROWN PAPER CO.
FINCH PRUYN & CO., INC.
FOUR M PAPER CORPORATION
GAYLORD CONTAINER CORPORATION
GEORGIA-PACIFIC CORPORATION
OILMAN PAPER COMPANY
GREEN BAY PACKAGING INC.
GULF STATES PAPER CORPORATION
INTERNATIONAL PAPER COMPANY
INTERSTATE PAPER CORPORATION
JAMES RIVER CORPORATION
JEFFERSON SMURFIT CORPORATION
KIMBERLY-CLARK CORPORATION
LINCOLN PULP & PAPER CO., INC.
LONG VIEW FIBRE CO.
LOUISIANA-PACIFIC CORPORATION
LYONS FALLS PULP AND PAPER, INC.
MACMILLANBLOEDEL LTD.
MEAD CORPORATION
MENASHA CORPORATION
MOSINEE PAPER CORPORATION
NORANDA FOREST
P. H. GLATFELTER COMPANY
PARSONS & WHITTEMORE
POPE & TALBOT, INC.
PORT TOWNSEND PAPER CORPORATION
POTLATCH CORPORATION
PROCTER & GAMBLE
RAYONIER, INC.
RIVERWOOD INTERNATIONAL CORP.
SAPPI (S.D. WARREN CO.)
SIMPSON PAPER COMPANY
SONOCO PRODUCTS COMPANY
ST. JOE FOREST PRODUCTS COMPANY
STONE CONTAINER CORPORATION
TEMPLE-INLAND, INC.
TENNECO, INC.
UNION CAMP CORPORATION
VIRGINIA FIBRE CORPORATION
WAUSAU PAPER MILLS, INC.
THE WESTON PAPER AND
MANUFACTURING COMPANY
WESTVACO CORPORATION
WEYERHAEUSER COMPANY
WILLAMETTE INDUSTRIES, INC.
Note: Ownership based on 1995 Lockwood-Post's Directory of the Pulp, Paper, and Allied Trades.
2-31
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examining privately-held mills. Of the 17 companies that own only one BPK or PS mill, two are independent
facilities that have no other facilities under the same ownership and no other components in the corporate
hierarchy, eight own mills in other subcategories, and seven either own other facilities outside of the pulp and
paper industry or are owned by another entity. S corporations can be identified only if the financial
information submitted with the census includes this information. The income from an S corporation would be
taxed at the rate for the individuals to whom the income is distributed. None of the corporations owning BPK
or PS mills were identified as S corporations.
2.4.2 Small Business Entities
Companies in the paper industry span a wide range in sizes. The Small Business Administration
(SBA) specifies definitions of "small businesses" in 13 CFR Part 121. The SBA defines small business in
terms of the number of persons employed and, in some cases, by annual revenues. For pulp, paper, and
paperboard companies (SIC 2611, 2621, and 2631, respectively), the size cutoff for defining small business
is 750 employees. The Regulatory Flexibility Act (RFA) came into effect on January 1, 1981 (5 U.S.C. 601
et seq.). A goal of the act is to provide policymakers with information about how regulatory options affect
small entities, including small businesses. The purpose of the RFA is to ensure, if possible, that agencies
identify and consider ways of tailoring regulations to the size of the regulated entities to minimize any rule's
significant economic impact on a substantial number of small entities (see Chapter 7). The Small Business
Regulatory Enforcement Fairness Act of 1996 (SBREFA; P.L. 104-121, March 29, 1996) amended RFA.
Four of the companies listed in Table 2-10W and 11 of the companies listed in Table 2-10A are small
businesses.
2.4.3 Concentration Ratios
The concentration of ownership in an industry influences how costs are passed through to the
consumers (e.g., price increases) and therefore whether firms or customers bear the burden of cost-increasing
regulation. One method of examining the extent to which an industry is concentrated in a few companies is to
examine the ratio of production for the top five or 10 firms to industrywide production. To reflect ownership
2-32
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changes, capacity expansions of individual mills, and other changes since the 1989 census data, concentration
ratio information is taken from industry data for North America.
Table 2-11 examines the market share distribution for market pulp. The data reflect bleached and
unbleached sulfate (kraft) and sulfite pulps in North America. With this inclusive definition, the
concentration ratios are not high. The top five producers account for slightly over 38 percent of the capacity,
while the next five producers account for only an additional 20 percent of capacity (Pulp and Paper, 1995a).
Much pulp is consumed on site in integrated mills or shipped to other mills under the same
ownership. Looking at bleached paperboard (Table 2-12), the top five companies account for nearly 70
percent of capacity, while the top 10 companies account for nearly 90 percent of capacity (Pulp and Paper,
1995b). For coated free sheet, the concentration ratios are 63 and 90 percent for the top five and 10
companies, respectively (Table 2-13) (Pulp and Paper, 1995c). Uncoated free sheet is less concentrated.
Market share for the top five and top 10 companies is 37.8 percent and 61.2 percent, respectively (Table 2-
14) (Pulp and Paper, 1995d).
2.5 FINANCIAL PATTERNS FOR THE INDUSTRY 1985-1995
The pulp and paper industry is highly cyclical in nature. Table 2-15 presents industry net profits
from 1985 to 1995. A full cycle is seen, with peak years in 1988 and 1995. Earnings actually peaked in the
third quarter of 1989, but the fourth quarter downturn was strong enough to pull the entire year's financial
performance below that of 1988. The most recent cycle peaked in 1995. Data from the first three quarters of
1996 indicate that paper and paperboard production was down 1.8 percent compared to the first 9 months in
1995. However, when comparing third-quarters, 1996 shows a 3.8 percent production increase over 1995
(AF&PA, 1996b). By April 1996, pulp prices were down 40 percent from 1995's peak and some paper
grades prices had dropped over 30 percent, but newsprint held steady due to negligible capacity growth (Pulp
and Paper, 1995e, 1996a, 1996b).
Figure 2-5 illustrates the U.S. capacity to produce paper and paperboard and actual U.S. production
of paper and paperboard. Figure 2-6 presents U.S. utilization (percentage of production capacity in
production) rates for paper and paperboard production. Dips in 1985 and again in 1991 coincide with low
2-33
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TABLE 2-11
1995 CONCENTRATION RATIOS FOR MARKET PULP
Company
Weyerhaeuser1 aA5
Georgia-Pacific1'2'4'5
Parsons & Whittemore1'2
Stone Container1'2
Champion International1'2'3'5
Avenor1'2
International Paper
Fletcher Challenge1'3
Daishowa-Marubeni1 -2
Canfor1'3
Annual Capacity (000 tons)
2,100
1,685
1,055
905a
785b
775
750
660
610C
590d
Market Share (%)
12.3
9.9
6.2
5.3
4.6
4.5
4.4
3.9
3.6
3.5
Market share of top five companies: 38.3%
Market share of top ten companies : 58.1%
Total North American capacity (1995): 17,069 million metric tons
Bleached softwood kraft.
2Bleached hardwood kraft.
3Unbleached kraft.
4Bleached sulfite.
5Fluff.
Capacity shown on equity ownership basis.
"Includes 45% of Celgar Pulp and 100% of Stone Savannah River.
blncludes 84.6% of Weldwood, which owns 50% of Cariboo Pulp.
"Includes 100% of Peace River and 50% of Cariboo Pulp.
Includes 50% of Howe Sound.
Source: Pulp & Paper. 1995a. Grade profile. August, 1995, p. 13.
2-34
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TABLE 2-12
1995 CONCENTRATION RATIOS FOR BLEACHED PAPERBOARD
Company
International Paper Co.
Federal Paper Board Co.
Westvaco Corp.
Temple-Inland, Inc.
Potlatch Corp.
Georgia-Pacific Corp.
Champion International
James River Corp.
Gulf States Paper Corp.
Weyerhaeuser Co.
Oilman Paper Co.
Jefferson-Smurfit/CCA
Union Camp Corp.
Annual Capacity1 (000 tons)
1,450
1,030
925
750
554
370
284
270
250
230
200
185
140
Market Share (%)
21.2
15.1
13.5
11.0
8.1
5.4
4.2
3.9
3.7
3.4
2.9
2.7
2.0
Capacity share of top five companies: 68.9%
Capacity share of top ten companies: 89.5%
Total U.S. capacity, 1995: 6.841 million tons
Capacity includes bleached packaging board and bleached bristols.
Source: Pulp & Paper. 1995b. Grade profile. July, 1995, p. 13.
2-35
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TABLE 2-13
1995 CONCENTRATION RATIOS FOR COATED FREE SHEET
Company
S.D. Warren
Westvaco
Champion International
Simpson
Consolidated Papers
Repap
Mead
Potlatch
Boise Cascade
Appleton Papers
Annual Capacity1 (000 tons)
1,045
680
574
495
450
405
375
333
140
130
Market Share (%)
20.8
13.6
11.4
9.9
9.0
8.1
7.5
6.6
2.8
2.6
Capacity share of top five companies: 63.0%
Capacity share of top ten companies : 90. 0%
North American capacity: 5,166,000 tons
(U.S.: 4,826,000 tons;
Canada: 340,000 tons)
'As of 1995.
Source: Pulp & Paper. 1995c. Grade profile. March, 1995, p. 13.
2-36
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TABLE 2-14
1995 CONCENTRATION RATIOS FOR UNCOATED FREE SHEET
Company
Georgia-Pacific Corp.
International Paper Co.
Champion International1
Boise Cascade Corp.
Union Camp Corp.
Willamette, Inc.
James River Corp.2
Weyerhaeuser Co.3
Domtar, Inc.
Appleton Papers, Inc.4
Annual Capacity (tpy)*
2,100
2,040
1,495
1,265
1,100
818
800
790
665
575
Market Share (%)
13.4
13.1
9.6
8.1
7.0
5.2
5.1
5.1
4.3
3.7
Market share of top five companies: 37.8%
Market share of top ten companies : 61. 2%
Total North American capacity/yr : 15.614 million
(U.S.: 14.030 million;
Canada: 1.584 million)
*A11 tons are short tons.
Company data. Also has 373,000 tons per year capacity in Brazil.
2Company data.
Includes Prince Albert, Saskatchewan.
4Includes carbonless basestock.
Source: Pulp & Paper. 1995d. Grade profile. April, 1995, p. 13.
2-37
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TABLE 2-15
PULP AND PAPER INDUSTRY DATA, 1985-1995
(MILLIONS OF DOLLARS)
Net Profit
After Tax
Year (Current Dollars)
1985
1986
1987
1988
1989
1990
1991
1992
1993*
1994
1995
$2,880
$3,280
$5,522
$8,081
$7,047
$4,883
$2,164
$1,197
$1,778
$5,264
$11,982
CPI
107.6
109.6
113.6
118.3
124.0
130.7
136.2
140.3
144.5
148.2
152.4
Net Profit
After Tax
(1989 Dollars)
$3,319
$3,711
$6,028
$8,470
$7,047
$4,633
$1,970
$1,058
$1,526
$4,404
$9,749
* 1993 data are adjusted for Fort Howard write-down of goodwill. In acquisition accounting,
goodwill is the difference between purchase prices and what the asset would yield in a
liquidation. Goodwill is generally amortized over a period of years, but in this case, Fort
Howard subtracted the entire value of remaining goodwill from 1993 operating income.
Sources: AF&PA. 1996a. 1996 Statistics; Paper, Paperboard, and Wood
Pulp. American Forest and Paper Association, Washington, DC.;
CEA. 1996. Economic report of the president. Council of Economic
Advisors, Washington, DC.; DOC. 1995. Quarterly Financial Report for
Manufacturing, Mining, and Trade Corporation, Fourth Quarter 1995.
Washington, DC: Economics and Statistics Administration, Bureau of the
Census.
2-38
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FIGURE 2-5
CAPACITY AND PRODUCTION, PAPER AND PAPERBOARD, 1982-1998
110
100
C 90
£
o 80
2 70
60
50
o o °
o
- o ° 1 ° ^^^
^ """^
— a-""^
1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
M Production
O Capacity
Year
Source: AF&PA. 1996a. 1996 Statistics; Paper, Paperboard, and Wood Pulp. American Forest and Paper Association, Washington, DC.
FIGURE 2-6
UTILIZATION RATE, PAPER AND PAPERBOARD, 1982-1995
0.98
0.96
H 0.94
&,
I °'92
I 0.90
5 0.88
0.86
0.84
Utilization
1982 1983 1984 1985 1986 1987
1989 1990 1991 1992 1993 1994 1995
Year
Source: AF&PA. 1996a. 1996 Statistics; Paper, Paperboard, and Wood Pulp. American Forest and Paper Association, Washington, DC.
2-39
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points in the business cycle. During the last cycle's peak in 1988, utilization rates were up to 95 percent
(Figure 2-6). Utilization rates averaged 96 percent in 1994 and 1995 (Rooks, 1995). An AF&PA survey
predicts only 2 percent per year growth in capacity for the next 3 years (Stanley, 1996). At the same time,
consumption is expected to grow 2.5 to 3 percent yearly (Rooks, 1995). Limited growth in capacity with
increased consumption should help to keep prices stable and avoid a slump like that of the early 1990s.
Another factor influencing industry financial patterns is consumer consumption. Figure 2-7 is a
graph of the per capita consumption from 1960 through 1995. New supply is defined as production plus
imports minus exports. The per capita supply may be interpreted as the per person apparent consumption of
paper and paperboard. It appears that paper usage leveled out from the mid- to late-1980s, averaging 680
pounds per year, but since 1991 usage has steadily increased to reach new highs of over 700 pounds per year
in 1995.
Capital spending is expected to remain high throughout 1997. Unlike capital spending in the late
1980s and early 1990s, which focused primarily on restructuring and expansion, spending will focus on
improving recycling and environmental protection operations (Stanley, 1996). Although capital expenditures
for the industry are expected to reach $13.5 billion in 1996, this figure is still 20 percent less than the 1989
and 1990 spending levels of $16 billion per year. With such high profits, the industry is decreasing its debt
and in some cases increasing shareholder dividends. In an interview with TAPPIJournal, Bruce Kirk, an
investment consultant with SBC Capital Markets, Inc., said he did not expect the Cluster Rule to have a
"marked effect" on capital spending (Rooks, 1995).
2.6 INTERNATIONAL COMPETITIVENESS OF THE PULP AND PAPER INDUSTRY
While the global dominance the U.S. industrial sector enjoyed in the 1980s eroded in the face of
increased international competition from Europe and Asia, the U.S. pulp and paper industry succeeded in
maintaining and enhancing its international performance level. The industry's continued dominance is a result
of both of the general capital and labor structure of U.S. pulp and paper mills, and of favorable economic
conditions. This section reviews the pulp and paper industry's present position and predicted future in the
global market.
2-40
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FIGURE 2-7
APPARENT PER PERSON CONSUMPTION, PAPER AND PAPERBOARD, 1960-1995
800
700
I
GO
I
t 500
c3
o
^H
1)
PH
400
300
1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994
Year
Source: AF&PA. 1996a. 1996 Statistics; Paper, Paperboard, and Wood Pulp. American Forest and Paper Association, Washington, DC.
2-41
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2.6.1 Foreign Trade Statistics
According to the U.S. Industrial Outlook: 1994, published by the U.S. Department of Commerce
International Trade Administration, the trade deficit for the pulp and paper industry declined for 4 years, from
1988 to 1992, to $302 million. In 1993, however, the deficit jumped to $1.5 billion. These figures do not
include U.S. exports of recovered paper, which far exceed imports of recovered paper. By adding exports of
recovered paper to 1992's trade balance, the figure changes to a $260 million surplus. 1993's trade deficit
declines from $1.5 to $1 billion when trade of recovered paper is added into the equation (ITA, 1994). In
1995, total exports, including $110 million in recovered paper, were valued at approximately $15.9 billion.
Import value is approximated at $16.2 billion, which includes $12 million in recovered paper, leaving a trade
deficit of $300 million.
Table 2-16 presents the value of exports for pulp, paper, and paperboard products from 1990 to
1995. Each year the U.S. shows a net surplus of exports in pulp and paperboard but a trade deficit in paper.
Table 2-16 does not include many of the products contained in industry figures, such as wastepaper, which
explains the difference in the net deficits seen in the table and the statistics quoted above.
Exports accounted for nearly 8 percent of U.S. paper shipments in 1993, compared to 7 percent in
1990 (ITA, 1994). Since 1990, exports have accounted for about one-third of paper and paperboard
production growth (AF&PA, 1995). As seen in Figure 2-8, exports of pulp, paper, and paperboard, in tons,
have increased steadily except for a slight decline in 1993.
In 1993, Canada purchased the largest amount of U.S. exports, buying 21 percent of the total. The
European Community purchased 19 percent, Mexico 15 percent, and Japan 12 percent of U.S. pulp, paper,
and paperboard (ITA, 1994). In that same year, over three-quarters of the paper imported to the United
States came from Canada, which ships a significant but diminishing amount of newsprint to this country.
Finland, Germany, Japan, the United Kingdom, and Brazil were the other main suppliers (ITA, 1994).
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TABLE 2-16
PULP, PAPER, AND PAPERBOARD IMPORTS AND EXPORTS, 1990-1995
(THOUSANDS OF CURRENT DOLLARS)
Year
1990
1991
1992
1993
1994
1995
Product
Pulp
Paper
Paperboard
Total
Pulp
Paper
Paperboard
Total
Pulp
Paper
Paperboard
Total
Pulp
Paper
Paperboard
Total
Pulp
Paper
Paperboard
Total
Pulp
Paper
Paperboard
Total
Exports
$3,155,671
$1,455,104
$1,988,145
$6,598,920
$2,799,620
$1,809,482
$2,246,552
$6,855,654
$3,114,419
$2,061,389
$2,231,226
$7,407,034
$2,369,414
$2,066,657
$2,157,308
$6,593,379
$2,833,433
$2,429,696
$2,454,477
$7,717,606
$4,536,523
$3,112,293
$3,456,771
$11,105,587
Imports
$2,831,327
$7,077,036
$307,261
$10,215,624
$2,131,711
$6,587,222
$335,367
$9,054,300
$2,094,235
$6,296,038
$414,388
$8,804,661
$1,860,163
$6,753,642
$448,268
$9,062,073
$2,271,544
$6,825,677
$544,440
$9,641,661
$3,727,941
$9,543,974
$810,268
$14,082,183
Net Trade Balance
$324,344
($5,621,932)
$1,680,884
($3,616,704)
$667,909
($4,777,740)
$1,911,185
($2,198,646)
$1,020,184
($4,234,649)
$1,816,838
($1,397,627)
$509,251
($4,686,985)
$1,709,040
($2,468,694)
$561,889
($4,395,981)
$1,910,037
($1,924,055)
$808,582
($6,431,681)
$2,646,503
($2,976,596)
Note: Wastepaper is not included in these figures.
Source: AF&PA. 1996a. 1996 Statistics; Paper, Paperboard, and Wood Pulp.
American Forest and Paper Association, Washington, DC.
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FIGURE 2-8
PULP, PAPER, AND PAPERBOARD IMPORT/EXPORT TONNAGE, 1989-1995
24
22
20
l8
16
14
12
10
Imports
Exports
1989
1990
1991
1992
Year
1993
1994
1995
Note: Figures do not include tons of recovered paper traded.
Sources: AF&PA. 1996a. 1996 Statistics; Paper, Paperboard, and Wood Pulp. American Forest and Paper Association,
Washington, DC.; AF&PA. 1995. 1995 Statistics; Paper, Paperboard, and Wood Pulp. American Forest and
Paper Association, Washington, DC.
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2.6.2 Global Competitiveness of U.S. Paper Industry
According to Fortune magazine, a leading U.S. business journal, the pulp and paper industry is a
domestic industry capable of competing well in an international market (Kupfer, 1992). Fortune supports its
argument with statistics released by the Organization for Economic Cooperation and Development, which
indicate that U.S. forest products manufacturers' share of total production among facilities in Japan, Europe,
and the United States rose from 46 percent in 1980 to 49.3 percent in 1989 (Kupfer, 1992; OECD, 1992).
The U.S. share of total world pulp and paper production points to similar dominance: in 1995, the United
States produced 28.5 percent of the world's paper and paperboard and 31.3 percent of the world's wood pulp
(Stanley, 1996). U.S. production levels exceed the total pulp and paper output of the next four largest pulp-
and paper-producing nations combined—Japan, Canada, Germany, and China (Storat, 1992).
The continuing success of U.S. pulp and paper manufacturers in the global marketplace can be
attributed to a series of industry and market factors. First, the United States possesses vast natural reserves
of trees and highly developed tree farming practices, resulting in steady and relatively inexpensive fiber
sources. More importantly, however, the pulp and paper industry has managed to maintain a well-trained
workforce by investing billions of dollars since 1980 to boost productivity (Kupfer, 1992). This high
productivity, along with an industry operating rate that exceeds 90 percent, has resulted in low unit labor
costs. In addition, by generating over 50 percent of its own energy through incineration of manufacturing
byproducts, the pulp and paper industry has relatively low energy costs.
On the market side, a favorable foreign currency exchange rate has buoyed U.S. exports of pulp and
paper in recent years (Stanley, 1996). In addition, trade agreements (e.g., NAFTA, US-Canada, GATT, and
Japan-US) have improved the export market for U.S. pulp, paper, and paperboard. As a result, U.S. exports
have increased nearly 130 percent from 1989. U.S. imports have also increased. With an increased focus on
global markets among U.S. producers and continued economic growth in developing nations, U.S. pulp and
paper exports should continue to increase throughout the 1990s (Stanley, 1996).
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2.7 RELATED CHEMICAL SUPPLIER INDUSTRIES
The pulp and paper industry has historically consumed large amounts of chlorine for bleaching
operations. Chlorine is produced by the chloralkali process that generates chlorine (CL2) and NaOH in a
fixed ratio from table salt (NaCl) and water. The pulp and paper industry is a major consumer of both
chloralkali products (The Chlorine Institute, 1996).
Facing regulations and demand for dioxin-free products, pulp and paper manufacturers have been
shifting away from chlorine in their bleaching sequences since the mid-to-late 1980s. For example, chlorine
use was 1.6 million short tons in 1987 and dropped to 1.1 million short tons in 1992 (AF&PA, 1992;
AF&PA, 1995). The chlorine industry has adjusted to these changes without severe dislocations. Other
chemicals that use chlorine include glycerine and glycols (in manufacture, not the final products), vinyl
chloride, chlorinated solvents, refrigerants, and antiknock compounds. Decreases in chlorine use by the pulp
and paper industry are offset by the growth in other uses of chlorine.
At present, Pulp & Paper estimates that approximately 50 percent of bleached chemical pulp mills
have converted to elemental chlorine free (ECF) bleaching practices (Finchem, 1996). Chemical industry
experts note that long-term growth is on track for key paper chemicals. Ed Michalowski, chlorine marketing
manager at Occidental Chemical notes that, "From a chlorine perspective, the volume will be much steadier
over the next five years than we thought." Price increases instituted in the peak year of 1995 are holding in
1996 (Thurston, 1996). EPA considers it likely that the remainder of the transition to ECF practices will be
managed by the chemical industry as smoothly as the first part.
Second, the chlorine industry is part of a larger chemical industry serving the pulp and paper
industry. Suppliers that see reduced chlorine demand are predominantly those that see increased demand in
other chemicals. As noted above, these companies have managed the first part of the transition to ECF
without major dislocation. This has not had a major effect on the chloralkali industry. In 1994, the price of
NaOH increased tenfold from 1993 prices ($30 to $300 per short ton) while the price of chlorine held steady
at $170 to $220 per short ton. Operating rates remained close to 94 percent (Young, 1994).
The increased use of alternative bleaching chemicals and processes is leading to the increased use of
other chemicals by the pulp, paper, and paperboard industry. These chemicals include:
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Chlorine dioxide—usually produced from sodium chlorate at the mill.
Oxygen—used in oxygen delignification and bleaching extraction stages. Traditionally
supplied in liquid form, some mills are installing onsite oxygen production units.
Ozone—still relatively new to full-scale operations, it has the potential to eliminate the need
for chlorine compounds in the bleaching sequence.
Hydrogen peroxide—used as a brightener for mechanical and sulfite pulps for many years, it
is now used in the alkaline extraction stage for kraft pulps
Demand for these chemicals shows long-term growth even with the brief industry downturn seen in early
1996 (Ducey, 1989; Thurston, 1996; Young, 1991; Young, 1994).
2.8 REFERENCES
Reference material supporting Chapter 2 is located in the Pulp and Paper Water Docket.
AF&PA. 1996a. 1996 statistics; paper, paperboard, and wood pulp. American Forest and Paper
Association, Washington, DC. Water Docket, DCN 14,295.
AF&PA. 1996b. Paper, paperboard, and wood pulp. Vol. 74, No. 10. American Forest and Paper
Association, Washington, DC. Water Docket, DCN 14,297.
AF&PA. 1995. 1995 statistics; paper, paperboard, and wood pulp. American Forest and Paper Association,
Washington, DC. Water Docket, DCN 14,293.
AF&PA. 1992. 1992 statistics; paper, paperboard, and wood pulp. American Forest and Paper Association,
Washington, DC. Water Docket, DCN 30,017 and 14,292.
CEA. 1996. Economic report of the president. Council of Economic Advisers, Washington, DC Table B-
56. Water Docket, DCN 14,299.
The Chlorine Institute. 1996. North american chlor-alkali industry plants and production data report-1995.
Pamphlet 10. Washington, DC. Water Docket, DCN 14,302.
DOC. 1995. Quarterly financial report for manufacturing, mining, and trade corporation, fourth quarter
1995. Washington, DC: Economics and Statistics Administration, Bureau of the Census. Water Docket,
DCN 14,294.
Ducey, M. 1989. Chlorate, oxygen leap forward in pulp bleaching operations. Pulp and Paper 63(7):43.
Water Docket, DCN 30,048.
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Finchem, K. 1996. Chemical markets stabilized with continued paper industry upturn. Pulp & Paper
70(10):79-81. Water Docket, DCN 14,282.
FR. 1996a. National emission standards for hazardous air pollutants for source category: pulp and paper.
Environmental Protection Agency. Notice of Availability. Federal Register 61(47):9383-9399. March 8,
1996. Water Docket, DCN 13,212.
FR. 1996b. Effluent limitations guidelines, pretreatment standards, and new source performance standards:
pulp, paper, and paperboard category; national emission standards for hazardous air pollutants for source
category: pulp and paper production. Environmental Protection Agency. Notice of Availability. Federal
/tegwter61(136):36835-36858. July 15, 1996. Water Docket, DCN 13,471.
FR. 1993. Effluent limitations guidelines, pretreatment standards, and new source performance standards:
pulp, paper, and paperboard category; national emission standards for hazardous air pollutants for source
category: pulp and paper production; proposed rule. Federal Register 58(241):66077-66216. December
17, 1993. Water Docket, DCN 8,533.
ITA. 1994. U.S. industrial outlook: 1994. Washington, DC: U.S. Department of Commerce, International
Trade Administration. Water Docket, DCN 14,296.
Kupfer,A. 1992. How American industry stacks up. Fortune 9:30-46. Water Docket, DCN 30,009.
OECD. 1992. The pulp and paper industry in 1989. Organization for Economic Cooperation and
Development. Paris, France. Water Docket, DCN 30,031.
Pulp and Paper. 1995a. Grade profile. Miller Freeman, Inc., San Francisco, CA. August 1995: p. 13.
Water Docket, DCN 14,208.
Pulp and Paper. 1995b. Grade profile. Miller Freeman, Inc., San Francisco, CA. July 1995:
p. 13. Water Docket, DCN 14,285.
Pulp and Paper. 1995c. Grade profile. Miller Freeman, Inc., San Francisco, CA. March 1995: p. 13. Water
Docket, DCN 14,286.
Pulp and Paper. 1995d. Grade profile. Miller Freeman, Inc., San Francisco, CA. April 1995:
p. 13. Water Docket, DCN 14,287.
Pulp and Paper. 1995e. Grade profile. Miller Freeman, Inc., San Francisco, CA. December 1995:p. 13.
Water Docket, DCN 14,289.
Pulp and Paper. 1996a. Grade profile. Miller Freeman, Inc., San Francisco, CA. August 1996: p . 13.
Water Docket, DCN 14,284.
Pulp and Paper. 1996b. Grade profile. Miller Freeman, Inc., San Francisco, CA. November 1996:p. 13.
Water Docket, DCN 14,290.
Rooks, A. 1995. Review and outlook: The recovery rolls on. PIMA Magazine. December 1995:pp. 34-37.
Water Docket, DCN 14,283.
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Stanley, G.L. 1996. Third year of record sales expected for U.S. paper and related industries in 1996.
TAPPI Journal 79(l):pp. 37-42. Water Docket, DCN 14,311.
Storat, R. 1992. A profile of the U.S. pulp, paper, and paperboard industry. Presented at the International
Symposium on Pollution Prevention in the Manufacture of Pulp and Paper: Opportunities and Barriers.
Washington, DC. February 1993. Water Docket, DCN 30,015.
Thurston, C.W. 1996. A brief downturn. Paper Chemicals'96. CMR Special Report. Chemical Marketing
Reporter. August 16, 1996. pp. SR3-SR14. Water Docket, DCN 14,291.
U.S. EPA. 1993 a. Economic impact and regulatory flexibility analysis of proposed effluent guidelines and
NESHAP for the pulp, paper, and paperboard industry. EPA/821/R-93/021. Washington, DC: Office of
Water. Water Docket, DCN 8,590.
U.S. EPA. 1993b. Development document for proposed effluent limitations guidelines for the pulp, paper,
and paperboard point source category. EPA/821/R-93/019. Washington, DC: Office of Water. Water
Docket, DCN 8,517.
U.S. EPA. 1993c. Pulp, paper, and paperboard industry background information for proposed air emission
standards. EPA/453/R-93/050a. Washington, DC: Office of Air Quality Planning and Standards. Water
Docket, DCN 8,586.
U.S. EPA. 1991. 1990 National Census of Pulp, Paper, and Paperboard Manufacturing Facilities.
Washington, DC. October. Water Docket, DCN 8,702.
Young, J. 1994. Improved economy, new products boost pulping/bleaching activity. Pulp and Paper
68(ll):pp. 75-76. Water Docket, DCN 14,281.
Young, J. 1991. Pulping and bleaching chemicals accelerate enviro-driven shift. Pulp and Paper 65(1 l):pp.
62-64. Water Docket, DCN 30,016.
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CHAPTER 3
ECONOMIC IMPACT AND REGULATORY
FLEXIBILITY ANALYSIS METHODOLOGY
EPA is promulgating effluent limitations guidelines for the bleached papergrade kraft and papergrade
sulfite subcategories of the pulp, paper, and paperboard industry, and maximum achievable control
technology (MACT) standards for mills that chemically pulp wood fiber (using kraft, soda, sulfite, and semi-
chemical methods) and for the following operations located at any mill: mechanical pulping, (e.g.,
groundwood, thermomechanical, pressurized); pulping of secondary fibers (deinked and nondeinked); and
nonwood pulping. EPA is also proposing NESHAP for recovery area combustion sources. Since the
economic impact and regulatory flexibility analysis methodology was explained in detail for the proposed
regulations in Economic Impact and Regulatory Flexibility Analysis of Proposed Effluent Guidelines and
NESHAP for the Pulp, Paper, and Paperboard Industry (EPA, 1993), this chapter focuses on the revisions
and updates in the compliance cost model data and methodology since proposal, including:
• Updated and revised data
• Revised calculation of annual costs
• Adjustment to discount rate
• Discontinued use of the market model
• Revision of the financial closure model
forecasting methods
industry cycle
start year is 1996
price change parameter
• Discontinued use of the facility financial ratio analysis
• Update of mill ownership in Airman's Z model
These changes were discussed or referenced in EPA's Notice of Availability (NOA), 61 FR 36835
(July 15, 1996). Data updates include the mill population and options considered. The set of mills to which
the final Cluster Rule will apply is a subset of the population for which EPA proposed regulations, see
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Chapter 2, Industry Profile, for a more detailed explanation. As discussed in EPA's NOA, EPA is
promulgating a different BAT/PSES option for the effluent guidelines than was initially proposed while
MACT I requirements now differ by subcategory. Chapter Five summarizes the compliance options and
regulatory alternatives evaluated by EPA. These changes, however, affect the model inputs rather than the
methodology.
3.1 COMPLIANCE COST MODEL
The compliance cost model, also called the cost annualization model, estimates the cost incurred by
each facility to upgrade its pollution controls. Compliance costs include both capital costs (such as
equipment) and annual operating costs (such as labor and chemicals). Capital costs are one-time
expenditures while incremental operating costs are incurred each year. Both types of costs generally increase
the cost of production. Two revisions since proposal affect the compliance cost model: the calculation of one
annual cost component (general and administrative cost, GAC), and the discount rate used in the model.
EPA has revised its estimate of annual GAC—which captures annual non-capital indirect costs
associated with carrying additional capital equipment at the plant. These indirect costs are incurred
regardless of how much the additional equipment is used and include overhead, property taxes, insurance, and
administrative costs. In the EIA for proposal, EPA calculated GAC as 4 percent of capital costs plus 60
percent of operating expenses, supervisory and maintenance labor, and maintenance materials (EPA, 1993).
Upon further examination, and as discussed in EPA's NOA, EPA determined that EPA had already included
the 60-percent component in engineering estimates for the annual cost for the effluent guideline requirements
(Docket Item 14,086) and thus the GAC calculated in the EIA at proposal had "double-counted" 60 percent
of operating expenses in determining annual GAC. Therefore, for the EA for the final rule, EPA no longer
added 60 percent of operating expenses (already taken into account in the engineering cost estimates) in
estimating annual GAC. EPA did, however, add 4 percent of capital costs in estimating annual GAC. GAC
is added to the engineering annual costs after the engineering estimates and prior to running the cost
annualization model. The annual costs presented in the Development Document and Background Information
Document are the engineering costs. They do not include GAC and are therefore lower than the annual costs
presented in this report.
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For proposal, the discount rate (also called the cost of money) used in the cost annualization model
was taken from the facility-specific data supplied in the 1990 survey;1 it averaged about 9 percent in real
terms (EPA, 1991). The Office of Management and Budget (OMB) released guidance on the use of discount
rates to estimate the social cost of regulations (OMB, 1992). For final analyses, EPA used the OMB-
recommended real discount rate of 7 percent in all cost annualizations as a lower bound of real interest rates.
To provide a sensitivity analysis, EPA has scaled facility-specific borrowing costs by the change in prime
lending rates and corporate bond rates from 1989 to 1995 to reflect the reductions in interest rates that have
occurred since 1989. The prime rate has dropped from 10.87 percent in 1989 to 8.83 percent in 1995, while
inflation dropped from 4.8 percent in 1989 to approximately 2.8 percent in 1995 (CEA, 1996). The real cost
of capital, as measured by the prime rate, hovered around 6 percent from 1989 to 1995. Industry's cost of
capital, however, will reflect its borrowing ability and its debt/equity mix. The after-tax costs (also called
industry compliance costs) are used to evaluate impacts and cost effectiveness (i.e., closure). The pre-tax
annualized costs are considered the social costs of the regulation and are also used to compare costs and
benefits as another cost-effectiveness measure.
3.2 MARKET IMPACT ANALYSIS METHODOLOGY
Due to the changes in the industry, a new survey would be required for all mills and product lines in
order to update the partial equilibrium market model used at proposal. This is because the market model
depends for its validity on having a complete set of data on each facility as an input to the model. Because
doing this would be an extremely burdensome task for industry, and not likely to provide substantially
different analytical results than the financial model alone, EPA did not repeat the industry survey to estimate
market model results. Instead, EPA revised the financial model and incorporated relevant features of the
market model (e.g., elasticities to estimate market price increases) into the financial and economic analysis
presented in Chapter Six.
JThe EPA survey, performed under the authority of the Clean Water Act, was run during 1990 in order to
collect complete 1985, 1988, and 1989 data. Hence, the text may list the 1990 survey but 1989 survey data.
3-3
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3.3 FINANCIAL IMPACT ANALYSIS METHODOLOGY
The financial model methodology provides analysis of two major economic impacts that result from
the final rule:
Analysis of facility closure through the comparison of estimated salvage value, projected
earnings, and regulatory costs using both a 0 percent price increase and a product-specific
price increase (Section 3.3.1).
Identification of employment and output impacts resulting from potential closures.
The closure analysis is based, in part, on facility-specific information gathered in the 1990 National Census
of Pulp, Paper, and Paperboard Manufacturing Facilities, PartB: Financial Information (EPA, 1991).
3.3.1 Closure Model
As discussed in the NOA, EPA has made three revisions to the financial closure model since
proposal:
EPA revised the forecasting model to incorporate the entire industry cycle based on 1989-
1995 data.
EPA moved the initial year for projections to 1996.
EPA incorporated a price increase parameter reflecting product supply and demand
elasticities.
3.3.1.1 Present Value of Forecasted Earnings
As for proposal, EPA uses three methods to forecast future earnings. The details, however, have
been revised to reflect new information. Facility-specific 1989 census data, industry data, and the same
general set of assumptions and procedures as used at proposal form the basis for all three methods:
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• No growth. EPA assumes the mill to be running at or near capacity and significant growth is
considered unlikely without a major capacity addition. This is conservative because it does
not assume a facility can increase its earnings via increased production (and therefore lessen
impacts) without incurring costs of expansion (which may not be the case).
• Constant 1989 dollars. Data are deflated using the change in the Consumer Price Index (see
Table 3-1).
• After-tax earnings. EPA applied corporate tax rates, if necessary, to obtain after-tax
earnings. For facilities that are part of multiple-facility companies, EPA estimates earnings
as revenues minus costs. These amounts are adjusted to after-tax earnings using tax rates
for corporate income shown in Section Two of the questionnaire for the business entity. For
independent facilities, net income is taken from the income statement and does not need to
be adjusted.2
Earnings data for 1990-1995 used in the closure model are developed using 1989 data from the EPA
survey modified by 1990-1995 industry earnings data. 1988 and 1995 are peaks in the industry's earnings
cycle with downturns beginning in the last quarter of 1989 and 1995, respectively (see Section 2.5).
Earnings data for facilities from 1990 to 1995 are based on the industry earnings cycle from 1990-1995.
Table 3-2 shows industry earnings as a percent of 1989 industry earnings. Earnings data are estimated by
multiplying the 1989 earnings3 for each facility by the percentage of industry earnings with respect to 1989
earnings for 1990 through 1995, shown on Table 3-2. The earnings developed for 1990 through 1995 are
then used in the forecasting methods to predict data from 1996 to 2011. Table 3-3 presents an example of
the developed and forecasted earnings for a hypothetical mill for the years 1990 through 2011.
The three forecasting methods used can be summarized as follows:
• Simple Cycle
Data from 1989 to 1995 are repeated to provide a 7-year cycle.
Advantage: retains cyclical nature of industry.
2A facility's operating losses, like all costs, are reduced by the tax shield. The owner may use the operating
loss to offset income from another facility or carry the loss forward to offset income generated in the future. For
mills owned by multi-facility companies, the closure model selects a federal tax rate based on the parent
company's marginal income tax rate. The closure model uses a marginal federal tax rate of 34 percent for mills
whose parent company shows a net loss. The 34 percent bracket was the most representative for companies in
the closure analysis.
31989 is the most recent year for which facility-specific data are available from the survey.
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TABLE 3-1
INFLATION RATE 1981-1995
Consumer
Price Percent
Year Index Change
1981 90.9
1982 96.5 6.2%
1983 99.6 3.2%
1984 103.9 4.3%
1985 107.6 3.6%
1986 109.6 1.9%
1987 113.6 3.6%
1988 118.3 4.1%
1989 124.0 4.8%
1990 130.7 5.4%
1991 136.2 4.2%
1992 140.3 3.0%
1993 144.5 3.0%
1994 148.2 2.6%
1995 152.4 2.8%
Average Inflation Rate 3.8%
Source: CEA. 1996. Economic report of the president.
Council of Economic Advisers, Washington, DC.
Table B-56.
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TABLE 3-2
PULP AND PAPER INDUSTRY DATA, 1985-1995
(MILLIONS OF DOLLARS)
Net Profit
After Tax
Year (Current Dollars)
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
$2,880
$3,280
$5,522
$8,081
$7,047
$4,883
$2,164
$1,197
$1,778
$5,264
$11,982
CPI
107.6
109.6
113.6
118.3
124.0
130.7
136.2
140.3
144.5
148.2
152.4
Net Profit Percent of
After Tax Industry Earnings
(1989 Dollars) 1989 Base Year
$3,319
$3,711
$6,028
$8,470
$7,047
$4,633
$1,970
$1,058
$1,526
$4,404
$9,749
47%
53%
86%
120%
100%
66%
28%
15%
22%
63%
138%
* 1993 data are adjusted for Fort Howard write-down of goodwill. In acquisition accounting, goodwill
is the difference between purchase prices and what the asset would yield in a liquidation.
Goodwill is generally amortized over a period of years, but in this case, Fort Howard subtracted
the entire value of remaining goodwill from 1993 operating income.
Sources: AF&PA. 1995. 1995 Statistics; Paper, Paperboard, and Wood Pulp. American Forest and
Paper Association, Washington, DC.; CEA. 1996. Economic report of the president. Council of
Economic Advisers, Washington, DC.; DOC. 1995. Quarterly Financial Report for Manufacturing,
Mining, and Trade Corporation, Fourth Quarter 1995. Washington, DC: Economics and Statistics
Administration, Bureau of the Census.
3-7
-------
TABLE 3-3
DEVELOPED AND FORECASTED EARNINGS, 1990-2011
Example based on hypothetical mill using three forecasting methods
Year
Survey Data
Developed Data
Forecasted Data
Survey ID
1989 Earnings
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Percent of
Industry Earnings
1989 Base Year
66%
28%
15%
22%
63%
138%
Simple Cycle
$100,000
$66,000
$28,000
$15,000
$22,000
$63,000
$138,000
$100,000
$66,000
$28,000
$15,000
$22,000
$63,000
$138,000
$100,000
$66,000
Revenues
Thousands
1989 Dollars
99999
$100,000
$66,000
$28,000
$15,000
$22,000
$63,000
$138,000
Modified Cycle
$138,000
$100,000
$66,000
$28,000
$15,000
$22,000
$63,000
$138,000
$100,000
$66,000
$28,000
$15,000
$22,000
$63,000
$138,000
$100,000
Moving Average
$61,714
$56,245
$54,851
$58,687
$64,928
$71,061
$72,212
$62,814
$62,971
$63,932
$65,229
$66,164
$66,341
$65,666
$64,731
$65,005
Present Value
1996-2011
7% real discount rate
$633,976
$708,145
$638,918
3-8
-------
• Modified Cycle
Data are offset 1 year from the simple cycle with the developed data for 1995 being
repeated in 1996. This method is based on a forecast in Pulp & Paper (DeKing et
al., 1996) that papermakers will try to hold prices stable in 1996.
Advantage: retains cyclical nature of industry.
• Moving Average
Data for 1996 to 2011 are generated as a 7-year moving average.
Advantage: traditional forecasting method
Disadvantage: moving average dampens industry cycle.
These forecasting methods reflect alternative approaches to modeling the cyclical nature of the paper
and pulp industry.4 Table 3-3 and Figure 3-1 illustrate the developed data and the three forecasting methods.
The survey datum is the point shown for 1989. The data for 1990 through 1995 are obtained by the process
described above of scaling the survey data to industry earnings.
For the simple cycle, the value for 1989 is repeated for 1996, 2003, and 2010. The forecasted
sequence has two peaks, 2002 and 2009, and two low points, 1999 and 2006. The modified cycle has a 1-
year timing difference from the simplified cycle—there are three peaks, 1996, 2003, and 2010, and two low
points, 2000 and 2007. The moving average approach rapidly smooths the fluctuations of the business cycle
to a near-horizontal line (see Proposal EIA Chapter 3 for derivation). While Figure 3-1 illustrates a typical
pattern seen in the survey data, a wide range of possible patterns exist. Because of the potential range in
estimated earnings resulting from three different forecasting methodologies, the same scoring methodology
developed for proposal was used in the final analyses (described in Section 3.3.1.3).
4Other parameters, such as gross domestic product and population, are not included in the forecasting model
because they are measured on a national basis, while the forecasts are done on a facility basis. For example, a
population increase may lead to increased paper demand, but the mill cannot increase its output beyond its
capacity.
3-9
-------
FIGURE 3-1
FORECASTING METHODS
150
100
Q
<+H
O
a
50
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 20
Year
2009 2010 2011
» Survey Data Modified Cycle
O Developed Data ^ Moving Average
A Simple Cycle
3-10
-------
The Agency estimated the present value of forecasted future earnings for 94 mills for which 1989
census data were collected (EPA, 1991).5 Table 3-4 summarizes the results. The moving average method
results in the highest average present value and, in 98 percent of the cases, the highest present value for an
individual mill. The modified cycle and simple cycle each result in the highest present value for only one mill.
The simple cycle method has the lowest average present value.
The three forecasting methods produce average present values of future industry earnings that are
within 15 percent of each other. For specific facilities, however, the estimates can show a wider variation.
Since the determination of whether a facility is likely to close results from a comparison of the salvage value6
and value of future earnings, the choice of a forecasting method may affect whether or not a facility is
projected to close, particularly where there is very little difference between the salvage value and post-
regulatory future earnings. For these reasons, the closure analysis incorporates all three forecasting methods
in the evaluation of facility closure.
3.3.1.2 Market Price Increase
As mentioned above, EPA is examining the closure analysis in two ways—first, by assuming a 0
percent price increase from pulp producers to pulp consumers and, second, by incorporating a price increase.
The first method is consistent with an assumption that producers cannot increase prices in response to cost
increases because foreign competition would flood the market with lower priced goods. The second method
assumes manufacturers will be able to pass on a percentage of the compliance costs to their customers by
increasing product prices. The exact amount of the price increase is dependent upon both the demand and
supply elasticities of the product being sold.7
5Ninety-six mills are estimated to bear BAT/PSES regulatory costs but two of these mills started operations
after the 1990 census was taken (although prior to 1993).
6Salvage value is the value of the mill if the owner decides to liquidate it. EPA estimates salvage value as 100
percent cash, 40 percent of inventories, and 20 percent of fixed assets. EPA uses two methods for estimating
fixed assets based on the book value or the tax assessment value of the assets (EPA, 1993). Section 3.2.1.1
provides a more detailed description of how EPA estimates salvage value.
7A mill that would incur no incremental costs to meet pollution control requirements would benefit from higher
consumer prices. This effect is described as a "price increase" rather than a "cost pass-through."
3-11
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TABLE 3-4
SUMMARY OF FORECASTED EARNINGS
Percent of Time
Present Value of Forecasted Earnings Forecasting
(Thousands, 1989 Dollars) Method Produced
Parameter
Simple Cycle:
Moving Average:
Modified Cycle:
Mill
Average
$211,141
$229,173
$247,679
Mill
Total
$20,058,417
$21,771,403
$23,529,523
Highest
Estimate
1.06%
1.06%
97.87%
Note: Based upon 94 BPK and PS mills.
Sources: U.S. EPA. 1991. 1990 National Census of Pulp, Paper, and Paperboard Manufacturing Facilities.
Washington, DC. October.; U.S. EPA. 1993. Economic impact and regulatory flexibility analysis of
proposed effluent guidelines and NESHAP for the pulp, paper, and paperboard industry.
EPA/821/R-93/021. Washington, DC: Office of Water.
3-12
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Supply elasticity is calculated as the percentage change in quantity supplied divided by the
percentage change in price. An upward sloping supply curve has a positive elasticity since price and quantity
move in the same direction. If the supply curve has an elasticity greater than one (i.e. the percentage change
in quantity supplied that results from a price increase is greater than the percentage change in price, see Table
3-5), then supply is considered elastic; a small price increase will lead to a relatively large increase in quantity
supplied. A supply curve with elasticity less than one is considered inelastic (i.e. the percentage change in
quantity supplied is less than the percentage change in price); an increase in price will cause little change in
quantity supplied. In the long-run, when producers have sufficient time to completely adjust their production
to a change in price, the price elasticity of supply is usually greater than one. The difference between a
relatively elastic and a relatively inelastic supply curve is illustrated in Figures 3-2a and 3-2b. The elastic
supply curve in Figure 3-2a is much flatter than the inelastic supply curve in Figure 3-2b. This represents a
much greater responsiveness on the part of suppliers to changes in price.
Demand elasticity is calculated as the percentage change in the quantity of a product demanded
divided by the percentage change in price. An increase in price causes a decrease in the quantity demanded,
hence the negative values seen in Table 3-5.8 Figures 3-2c and 3-2d illustrate the difference between elastic
and inelastic demand. In Figure 3-2c, the relatively flat demand curve means that a small price increase will
cause a large decrease in quantity demanded while in Figure 3-2d, the steep demand curve means that a large
increase in price has very little effect on the quantity demanded. Demand is considered elastic if demand
elasticity exceeds 1.0 in absolute value (i.e., the percentage change in quantity exceeds the percentage change
in price). The quantity demanded, then, is very sensitive to price increases. Demand is considered inelastic if
demand elasticity is less than 1.0 in absolute value (i.e., the percentage change in quantity is less than the
percentage change in price). Inelastic demand implies that the quantity demanded changes very little in
response to price changes.
The significance of these elasticities is that they determine the percentage of pollution control costs
that producers can pass on to consumers in the form of higher prices, as illustrated in Figure 3-2. The
imposition of pollution control costs on mills causes an upward shift in the supply curve (an increase in
product costs) measured by A; for the purposes of this illustration, the upward shift in the supply curve is
Economists frequently drop the minus sign on the price elasticity of demand with the understanding that price
and quantity always move in different directions.
3-13
-------
TABLE 3-5
PRICE PERCENTAGE INCREASE COMPONENTS
Variable
Supply Elasticity (e)
Demand Elasticity (6)
Equilibrium Price ($/ton)
Equilibrium Quantity
(off-machine tons)
Total Annualized Pre-tax
Compliance Costs ($)
Bleached Papergrade
Kraft Pulp
0.186
-0.413
$646.49
9,207,000
depends on specific
option
Papergrade Sulfite
Pulp
0.232
-1.051
$556.77
359,000
depends on specific
option
Dissolving
Pulps
0.201
-0.750
$735.33
1,470,000
depends on specific
option
Unbleached Kraft
Pulp
0.267
-0.913
$384.37
320,000
depends on specific
option
Semichemical
0.276
-0.353
$361.50
5,927,000
depends on specific
option
Source: U.S. EPA. 1993. Economic impact and regulatory flexibility analysis of proposed effluent guidelines and NESHAP for the pulp, paper, and
paperboard industry. EPA/82 l/R-93/021. Washington, DC: Office of Water.
3-14
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Figure 3-2
The Effect of Differences in Supply and Demand Elasticities
on Changes in Output and Prices
AP-C
Demand
Supply'
Supply
Demand
AQ
(a) Relatively Elastic Supply
AQ
(b) Relatively Inelastic Supply
Q
(c) Relatively Elastic Demand
AQ
(d) Relatively Inelastic Demand
5-15
-------
identical in all four figures. In Figures 3-2a and 3-2b, a relatively elastic supply curve and a relatively
inelastic supply curve are shifted upward against the same demand curve. In Figure 3-2a the portion of the
cost increase that can be passed on to the consumer in the form of higher prices, A?, is much larger than that
which can be passed on if supply is inelastic (compare Figure 3-2b).
Figures 3-2c and 3-2d illustrate the same point for demand curves with different elasticities; in this
case the supply curve is identical in both graphs. The demand curve in Figure 3-2d is much less elastic than
the demand curve in Figure 3-2c. Because consumers decrease purchases of a good very little when demand
is inelastic, producers are able to pass on much more of the pollution control costs as higher prices. The
increase in price, A?, is much larger in Figure 3-2d than Figure 3-2c. In the end, the ability of mills to pass
on costs depends on both the elasticity of supply and demand; the effects of these elasticities may either offset
or reinforce each other in determining the net effect on price. The details of this calculation are found in
Appendix A: Price Increase Methodology.
Table 3-5 displays the components used to calculate the percentage price increase for various
subcategories. At this time, clustered air and water pollution rules are being promulgated only for the
bleached papergrade kraft and papergrade sulfite subcategories. Table 3-5 contains data for dissolving pulps,
unbleached kraft pulp, and semichemical products to address the larger number of mills covered by the
promulgated MACT I and proposed MACTII requirements. Supply and demand elasticities were taken from
EPA, 1993, Table A-14. Equilibrium price ($1989) and equilibrium quantity—calculated as 1989 domestic
production— were taken from EPA, 1993, Table A-16.
The values shown in Table 3-5 indicate that the supply for these pulp products is very inelastic. This
implies that even significant price increases result in very little additional supply. This is consistent with
mills running near capacity, when only a very substantial increase in supply would warrant expansion at
existing facilities or new mills, because both are capital-intensive options. The values in Table 3-5 indicate
inelastic demands for most products listed. The conditions described in Table 3-5 indicate that the
percentage price increases will tend to be small with unbleached kraft showing the largest percentage price
increase for a given cost.
The overall percentage increase in earnings due to a price increase will be less at integrated mills than
at mills that produce and sell only pulp. Given that the percentage price increase is generally small, and
3-16
-------
obtaining up-to-date information on all of the variables in Equation 3.4 for all mills is difficult, the price
increase calculated for each mill's primary product (Equation 3.1 and Table 3-5) is used in the initial closure
analysis. The zero percent price increase and the pulp-specific price increase provide an upper and lower
bound of the percentage of compliance costs that mills can pass onto their consumers. If a particular mill
showed sensitivity to a price increase, EPA re-examined the production mix at the mill to determine whether a
more precise estimate would affect the results. Price increases will vary by the cost of the selected option and
are reported in Chapter Six.
3.3.1.3 Sample Closure Analysis
Figures 3-3a and 3-3b show an annotated printout of the closure model based on hypothetical data.
Actual closure model output contains facility-specific confidential information. The inputs and summary
outputs from the closure model are contained in the Confidential Business Information (CBI) record for the
rule. A non-confidential version of the closure model is included in the record for the rule.
In Figure 3-3a, the section labeled "A" contains input variables for the mill closure calculation.
EPA's analysis used both the OMB-recommended real discount rate of 7 percent (OMB, 1992) and a mill-
specific cost of capital adjusted to 1995. The top two lines in the model (inflation and nominal discount rate)
have been retained for the sensitivity analysis on facility-specific discount rates. Recovery factors (i.e., the
fraction of assets value recovered in the liquidation process) for inventories and fixed assets are given as 40
and 20 percent, respectively.9 The company tax structure is used to identify which set of tax rates should be
used to calculate after-tax income. In the example, the facility's tax rate is based on the income level of the
company that owns the mill. For an independent facility, the net income does not need to be adjusted for
taxes. For an S Corporation, personal income tax rates are used (CCH, 1991). The average state tax rate is
added to federal tax rate to provide the combined effective tax rate for the mill.
Figure 3-3a, Section B, lists the calculation of the two salvage value estimates—the value of a mill if
liquidated—used in the closure decision. In this analysis, salvage value has three components:
9EPA based this on conservative financial judgement. No commenters on the proposed rule suggested an
alternative approach for this estimate.
3-17
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FIGURE 3-3a
CLOSURE ANALYSIS MODEL-INPUTS AND SALVAGE VALUE USING HYPOTHETICAL DATA
CONFIDENTIAL BUSINESS INFORMATION
CLOSURE MODEL Survey ID#: 12345 Class:
ALL FIGURES IN THOUSANDS OF DOLLARS
BAT
ran date: 27-Jun-9
INPUT VARIABLES:
Inflation Rate (1990-2011):
Nominal Discount Rate:
Real Discount Rate:
Inventory Recovery Factor:
Fixed Asset Recovery Factor:
Company Tax Structure:
Taxable Income (Corp. Parent):
Federal Income Tax Rate:
Avg. State Income Tax Rate:
Combined Eff. Income Tax Rate:
4.0%
11.0%
7.0%
40.0%
20.0%
1
520,000
34.0%
7.0%
41.0%
Federal Corp. Tax Table:
Taxable
Income
($000)
$0
$50
$75
$100
$335
Average
Effective
Tax Rate
15.0%
16.7%
20.4%
28.3%
34.0%
Federal Personal Tax Table:
Taxable
Income
($000)
$0
$20
$47
$98
Average
Effective
Tax Rate
15.0%
21.5%
30.5%
31.0%
(l=Multi; 2=Independent; 3=S-Corp.)
B SALVAGE VALUE:
CURRENT ASSETS:
1989 Cash: 20,000
1989 Inventories: 25,000
Total: $30,000
FIXED ASSETS:
Tax Assessed Value:
Total (b077D):
Book Value:
1989 Land:
1989 Buildings:
1989 Equipment:
Less Cum. Deprec.:
Total:
Recoverable Value:
Assessed
Value
135,000
8,000
35,000
410,000
100,000
$353,000
$70,600
Assessment
Rate
50%
Market Recoverable
Value Value
$270,000 $54,000
TOTAL SALVAGE VALUE OF MILL:
Using Tax Assessments: $84,000
Using Book Value: $100,600
Need to examine notes sections to see if assessment rates vary for real assets vs. fixed assets.
3-18
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FIGURE 3-3b
FORECASTED EARNINGS AND CLOSURE SCORE USING HYPOTHETICAL DATA
C PRESENT VALUE:
PAST EARNINGS ($1989):
Corporate Tax Structure:
Earnings 1989
FORECASTED EARNINGS:
Year
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
BASELINE PRESENT VALUE:
D SUMMARY:
Regulatory Option
Baseline
Option 1
Option 2
Option 3
Option 4
Option 5
Option 1 with PI
Option 2 with PI
Option 3 with PI
Option 4 with PI
Option 5 with PI
PVof
Incremental
Reg. Costs
$0
$25,000
$40,000
$85,000
$110,000
$120,000
$25,000
$40,000
$85,000
$110,000
$120,000
Multi-Facility Co.
Pre-Tax
55,000
Cycle
$21,417
$9,086
$4,868
$7,139
$20,444
$44,781
$21,417
$9,086
$4,868
$7,139
$20,444
$44,781
$21,417
$9,086
$4,868
$7,139
$20,444
$44,781
$21,417
$9,086
$4,868
$7,139
$163,580
Assessment:
Cycle
$163,580
0
0
0
1
1
1
0
0
1
1
1
Post-Tax
$32,450
ModCycle
$44,781
$21,417
$9,086
$4,868
$7,139
$20,444
$44,781
$21,417
$9,086
$4,868
$7,139
$20,444
$44,781
$21,417
$9,086
$4,868
$195,241
$84,000
Mod Cycle
$195,241
0
0
0
0
0
1
0
0
0
0
1
MovAvg
$20,026
$18,251
$17,799
$19,044
$21,069
$23,059
$23,433
$20,383
$20,434
$20,746
$21,167
$21,470
$21,528
$21,309
$21,005
$21,094
$207,329
Salvage Value:
Bleached Papergrade Kraft Regulatory
Percentage Price Increase (PI)
Book:
Present Value:
Mov. Avg.
$207,329
0
0
0
0
0
0
0
0
0
0
0
Cycle
$163,580
0
0
0
1
1
1
0
0
1
1
1
OPTTON1
OPTTON2
OPTIONS
OPTTON4
OPTIONS
$100,600
Mod Cycle
$195,241
0
0
0
0
1
1
0
0
0
1
1
2.58%
2.59%
2.57%
2.62%
2.68%
Mov. Avg.
$207,329 Closures
0
0
0
0
1
1
0
0
0
0
1
0
0
0
2
4
5
0
0
2
3
5
3-19
-------
• Cash (salvage value is 100 percent of book value)
• Inventories (salvage value is 40 percent of book value)
• Fixed assets (e.g., land, buildings, and equipment; salvage value is 20 percent of book or tax
assessment value)
Book value refers to the value of the assets as recorded on the facility's books or financial records. For fixed
assets, the book value is the original purchase price of the asset minus the accumulated depreciation. The
industry profile indicates that several facilities started pulp and papermaking operations as long as 50 to 100
years ago. Under these circumstances, some fixed assets, such as buildings, may have been completely
depreciated (i.e., a book value of zero) but still have value to the facility. For this reason, EPA developed a
second method to estimate the value of fixed assets, calculated as the tax assessment value of the fixed assets
divided by the percentage of market value on which the tax assessment value is based. Because there are two
methods of estimating the value of fixed assets, there are two estimates for the total salvage value of a mill.
The total salvage value for a mill is the sum of the salvage values for cash, inventory, and fixed assets. For
brevity, the two estimates are named after the method of calculating the value of fixed assets, i.e., book or tax
assessment.
Salvage values for the example mill are calculated in Figure 3-3a, Section B. (Note that all values
are expressed in thousands of dollars.) In this example, the salvage value of cash is $20,000 while the
salvage value of inventories is $10,000 ($25,000 x 40 percent recovery factor). The salvage value of current
assets is $30,000 (i.e., cash plus the salvage value of inventories). The value of fixed assets is either:
$270,000 (based on a tax assessment of $ 135,000 and an assessment rate or market value
rate of 50 percent), or
$353,000 (based on book value for the individual components minus the cumulative
depreciation, i.e., $8,000 + $35,000 + $410,000 - $100,000 = $353,000)
Salvage value for fixed assets is estimated as 20 percent of the book or tax assessment value. In this
example, the salvage value for fixed assets is $54,000 (tax assessment, 20 percent * $270,000) or $70,600
(book value, 20 percent * $353,000). The total salvage value for the mill is:
3-20
-------
• Tax assessment = $54,000 + $30,000 = $84,000
• Book value = $70,600 + $30,000 = $100,600
Forecasted earnings are shown in Section C of Figure 3-3b. The first part reports the earnings for
1989 as taken from the survey. This value along with industry data (Table 3-2) is used to estimate 1990-
1995 data as described in Section 3.3.1.2 above. The data are then used in the three forecasting methods to
predict earnings through 2011. Because the example mill is part of a multifacility company, the earnings
(revenues minus costs) must be adjusted to post-tax earnings. The present value of earnings from each
method is calculated as 1996 earnings plus the stream of earnings from 1997 to 2011 discounted at 7
percent/year.
The percentage price increase for each specific option is also calculated in Section C. The method of
calculating the percentage of compliance cost that can be passed onto the consumer is described in Appendix
A. The sample closure analysis considers five options with price increases ranging from 2.57 percent to 2.68
percent.
Section D of Figure 3-3b summarizes the results of the closure analysis. Each row, beginning with
the one entitled "Baseline," represents a regulatory alternative or option. The present value of the incremental
regulatory cost for each option is calculated with the cost annualization model. Five options are considered in
the sample closure analysis. Figure 3-3b, Section D lists 11 comparisons—a baseline analysis, five options
with no price increase, and five options with a price increase. Because Figure 3-3 is an illustrative example,
the five options and their associated costs and price increases bear no relationship to any of the options under
consideration for promulgation. The costs were chosen to illustrate a range of costs and an increasing
severity of the impact of those costs. The price increases were selected to illustrate how the ability of a
facility to raise prices could mitigate the cost impacts. Note that the costs do not change for options with
price increases, but the number of closures may change depending on the price increase.
A facility is projected to close if the salvage value exceeds the present value of future earnings after
increased pollution control costs. The present value of future earnings for the options that incorporate the
price increase are calculated as: present value of expected earnings multiplied by (1 + option X's percentage
price increase). The post-regulatory earnings are calculated by subtracting the present value of incremental
regulatory costs from the present value of projected earnings.
3-21
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With two methods of estimating salvage value (book and tax assessment) and three methods of
estimating the present value of future earnings (simple cycle, moving average, and modified cycle), there are
six ways to evaluate facility closure. A mill that is determined not to close under a particular
earnings/salvage value combination is given a score of 0 for that combination. A mill that is determined to
close under a particular combination is given a score of 1 for that combination. The scores are then totaled
for all combinations, creating a range from 0 (no closure under any combination) to 6 (closures under all
combinations).
The last step in the closure analysis is to evaluate when a mill would be considered a closure.
Closure is the most severe impact that can occur at the facility level and represents a final, irreversible
decision in the analysis. The decision to close a mill is not made lightly; the business is aware of and
concerned with the turmoil introduced into its worker's lives, community impacts, and how the action might
be interpreted by stockholders. The business will likely investigate several business forecasts and several
methods of valuing their assets. Not only all data, assumptions, and projections of future market behavior
would be weighed in the corporate decision to close a mill, but the uncertainties associated with the
projections would be evaluated. When examining the results of several analyses, the results are likely to be
mixed. Some indicators may be negative while others indicate that the facility can weather the current
difficult situation. A decision to close a facility is likely to be made only when the weight of evidence
indicates that this is the appropriate path for the company to take.
EPA emulated corporate decisionmaking patterns when determining when a facility would close. A
score of 3 means that half of the comparisons indicate a financially viable concern.10 A business is unlikely to
close a facility when the uncertainty in the data means there is a 50-50 chance of it being viable. EPA
selected a score of 4 or higher to indicate closure because it meant that the majority of the comparisons (i.e.,
at least 4 of 6) now indicate poor financial health. EPA believes that this scoring approach represents a
reasonable and conservative method for determining closure.
10For mills with no tax assessment salvage value, however, a score of 3 predicts closure. A mill with a score
of 3 would have scored 1 for every combination of forecasting method and book value for salvage value estimate,
and EPA reasoned that, if a tax assessment were available, the mill would be likely to close under at least one
forecasting method/tax assessment for salvage value combination.
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Returning to the sample closure analysis in Figure 3-3b, the present value of earnings under Option 1
with the price increase using the simple cycle forecasting method would be: $163,580 (1 + 0.0258) =
$167,800 (in thousands of dollars). Post-regulatory earnings would then be: $167,800 - $25,000 =
$142,800. This figure is larger than either of the salvage estimates, therefore a score of 0 is given for both.
The same regulatory options are being evaluated when the price increase is incorporated, therefore the present
value of incremental regulatory costs remain the same whether the option has a price increase or not. Only
the present value of forecasted earnings change—each increasing by the specific option's percentage price
increase.
Under Option 4, the present value of the post-regulatory earning is $195,241 - $110,000 = $85,241
for the modified cycle method of projecting earnings. This value is greater than the salvage value as
calculated by the tax assessment method ($84,000) but lower than the salvage value as calculated by book
value ($100,600). Under Option 4, the modified cycle/tax assessment combination has a score of 0, while
the modified cycle/book value combination has a score of 1. The right-hand column sums the entries for all
six earnings projections/salvage value combinations to provide a closure score.
In the example, the mill experiences adverse financial impacts beginning with Option 3. Whether it
is projected to be a closure in Option 4 depends on whether a price increase is incorporated. Under Option 5,
however, the mill is projected to close even with the estimated price increase.
3.3.1.4 Baseline Closures
A baseline closure is a mill that fails the salvage value test before the addition of incremental
pollution control costs. The industry profile identified a category of mills that is likely to appear as baseline
closures. These are "captive" mills—mills that exist to serve other facilities under the same ownership. Over
75 percent of the bleached papergrade kraft (BPK) and papergrade sulfite (PS) mills indicated they
transferred some product to other facilities under the same ownership during the survey period. Between 5
and 6 mills indicated that 90 percent or more of their revenues from one product (pulp, paper, or paperboard)
were from transfers to other facilities under the same ownership. Finally, between 1 and 10 mills reported
that over 90 percent of all pulp, paper, and paperboard revenues were from transfers to other facilities under
the same ownership (captive mills).
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If the transfers are done at cost, these captive and near-captive mills would show little, if any, profit.
If the captive mills have any salvage value, they could be deemed closures before the addition of incremental
pollution control costs. In actuality, these mills would not necessarily close but could raise the transfer prices
for their products to meet the incremental costs of pollution control; they should not be considered as
incremental closures.
Of the 96 mills estimated to bear incremental costs in this rulemaking, data were available to perform
the closure analysis on 94. About 9 of these 94 mills are considered baseline closures. Fifty-five percent of
the baseline closures (5 mills) show anywhere from 1 to 3 years of losses. One mill shows only minimal
profits. (The earnings for this mill might be more favorable if cash flow rather than net income were the
basis for the analysis.) Two mills are considered "captive" mills. One mill had high salvage values because
of its large amounts of cash. (Current assets, other than inventory, are valued at 100 percent while all other
components in the salvage value are reduced by a recovery factor.) This mill is unlikely to close even though
the salvage value exceeds the present value of future earnings because the owner already has access to the
cash and would not have to liquidate a profitable business to gain access to it.
Given the widespread practice of transferring product to other mills under the same ownership, low
earnings may be a frequent phenomenon in the census data. The methodological choice of analyzing net
income rather than cash flow for projected earnings also results in low earnings projections. In summary, a
mill could be a baseline closure for a wide range of reasons. The objective of the closure analysis, however, is
to examine the impacts of additional pollution control costs on the pulp and paper industry. To examine
impacts, only the incremental closures (i.e., beyond baseline) are counted because only these closures can be
attributed to the incremental costs of compliance. For mills that are determined to be baseline closures, the
economic analysis defaults to the company-level analysis to evaluate the impacts of incremental costs.
3.3.2 Associated Impacts
There are no changes to the methodology used to calculate associated impacts. Direct impacts (such
as employment, production, and export losses) are calculated by aggregating the facility-specific data from
mills projected to close. Secondary impacts are calculated by multiplying the direct losses by the U.S.
Department of Commerce's Regional Input-Output Modeling System (RIMS II); see Table 3-6 (DOC, 1992,
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TABLE 3-6
RIMS II MULTIPLIERS FOR THE PULP, PAPER, AND PAPERBOARD INDUSTRIES
Industrial Category
Pulp Mills
Paper Mills
Paperboard Mills
Final-demand multipliers
Output
(dollars per dollar)
2.9711
2.9017
2.9017
Employment
(Full-time equivalents [FTEs]
per $1,000,000
in output, $1992)
23.2
22.9
22.9
Source: DOC. 1996. U.S. Department of Commerce. Bureau of Economic Analysis. Regional Input-Output
Modeling System (RIMS II). Total Multipliers by Industry aggregation for output, earnings, and
employment. Washington, DC: Bureau of Economic Analysis, U.S. DOC. Table A-2.4.
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and DOC, 1996). Impacts on the pulp and paper industry are known as direct effects, impacts that continue
to resonate through the economy are known as indirect effects (effects on input industries), and effects on
consumer demand are known as induced effects. These effects are tracked both nationally and regionally in
massive "input-output" (I-O) tables prepared by the U.S. Department of Commerce's Bureau of Economic
Analysis (BEA). For every dollar spent in a "spending industry," these tables identify the portion spent in
contributing or vendor industries.
For example, as a result of this rule, a pulp and paper company might purchase equipment to meet
BAT standards. One piece of this equipment could be a tank to hold chlorine dioxide. To make the tank, the
manufacturer might purchase stainless steel. The steel manufacturer would purchase iron ore, coke, energy
sources, and other commodities, etc. Thus a portion of a dollar spent by the pulp and paper industry becomes
a smaller portion of a dollar spent by the tank manufacturer, and a smaller portion of a dollar spent by the
steel manufacturer, and so on. These iterations are captured in the BEA's I-O tables and summarized as
regional and national multipliers for output (revenues). BEA also has determined average wages and the
proportion of output in each industry that goes to employee earnings and, as a result, the number of
employees or full-time equivalents (FTEs)11 associated with each $1 million change in output. I-O analysis
provides a straightforward framework as long as the direct effects to the industry are small and certain
limiting assumptions about technology are valid (e.g., constant returns to scale, fixed input ratios).
3.3.3 Facility-Level Ratio Analysis
A facility-level ratio analysis was not performed for several reasons. First, the facility-level financial
ratio analysis performed for the EIA for proposal (EPA, 1993) provided only limited information because
certain items, such as long-term debt, are frequently not held on a facility's books. These items are held at the
company-level only. As a result, the resultant financial ratios were frequently incomplete and difficult to
interpret because the values differed so much from those generated with company-level data. Second, a
number of facilities have changed ownership since 1989. When mill ownership changes, the assets and
liabilities for a mill are changed to reflect the purchase price and debt acquisition for the new owner. Because
updating the information would have required another survey effort, which would have been burdensome to
11 One FTE = 2,080 labor hours = 1 person-year of employment.
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both EPA and industry, and the information gathered would have limited usefulness for this part of the
analysis because only some items necessary for a ratio analysis are carried at the facility-level, EPA decided
not to perform a facility-level financial ratio analysis. At proposal the facility-level ratio analysis was not a
determinant of findings of economic achievability.
3.3.4 Company-Level Bankruptcy/Financial Ratio Analysis
There is no change to the methodology presented in the EIA for Proposal, EPA, 1993, Section
3.5.4.2. Impacts at the company level, e.g. bankruptcy, are based upon a composite of financial ratios termed
Airman's Z score (Altman, 1993).
Public financial information for fiscal 1995 was gathered for the 29 public companies that own BPK
and/or PS mills. The remaining eight companies (11 percent) that own BPK and PS mills are privately held
and were therefore not included in the bankruptcy analysis. EPA chose not to use the 1989 survey
information because it is no longer current enough for purposes of the Airman's Z score analysis.
The results of a baseline Altman's Z analysis are compared to an Airman's Z analysis that
incorporates costs incurred by each company due to the final pollution control regulations. EPA also
examined changes in the Airman's Z score due to the costs of final and proposed pollution control
regulations. The changes made for calculation of the post-regulation analysis are:
• Total Assets = Total Assets + Compliance Capital Costs
• Total Liabilities = Total Liabilities + Compliance Capital Costs
• Earnings Before Interest and Taxes (EBIT) = EBIT - Pre-tax Annualized Compliance Cost
The results of the Altman's Z analysis are presented in Chapter Six.
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3.4 REGULATORY FLEXIBILITY ANALYSIS METHODOLOGY
The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) as amended by the Small Business
Regulatory Enforcement Fairness Act of 1996 (SBREFA) (Public Law 104-121) requires agencies to analyze
how a regulation will affect small entities. The purpose of this legislation is to ensure, if possible, that
agencies identify and consider ways of tailoring regulations to the size of regulated entities to minimize any
rule's significant economic impact on a substantial number of small entities. The U.S. Small Business
Administration issues definitions of "small businesses" in the 13 CFR 121. For the pulp, paper, and
paperboard industry (SIC codes 2611, 2621, and 2631, respectively), the standard is 750 employees. The
definition used in this analysis will therefore be any business entity (e.g., company) with less than 750
employees. The ancillary categories used in the proposed rule EIA, 1993 (e.g., very small entities with less
than 126 employees and very small/small/large facilities) have been dropped to focus the analysis on meeting
the requirements of the RFA.
A set of analyses, identical to those run for the entire BPK and PS subcategory population, is run on
only small companies. Summary statistics, facility closure analysis results, and Airman's Z analysis results
(using small publicly-owned businesses) are presented in Chapter Seven.
3.5 REFERENCES
Reference material supporting Chapter 3 is located in the Pulp and Paper Water Docket.
AF&PA. 1995. 1995 statistics; paper, paperboard & wood pulp. American Forest and Paper Association,
Washington, DC. Water Docket, DCN 14,293.
Altaian, Edward. 1993. Corporate financial distress and bankruptcy. New York: John Wiley and Sons.
Water Docket, DCN 14,300.
CCH. 1991. Commerce Clearing House, Inc. State tax handbook. Chicago, IL. Water Docket, DCN
30,019.
CEA. 1996. Council of Economic Advisers. Economic report of the president. Washington, DC. Tables B-
56 and B-69. Water Docket, DCN 14,299.
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DeKing, Noel, Debra Garcia, Andrew Miller, Joyce K. Routson, Carolyn Marshall, James McLaren, Diane
Keaton, and Will Mies. 1996. Challenging year ahead for the U.S. paper and forest industry. Pulp & Paper.
January, p. 77. Water Docket, DCN 14,312.
DOC. 1996. U.S. Department of Commerce. Bureau of Economic Analysis. Regional input-output
modeling system (RIMS II). Total multipliers by industry aggregation for output, earnings, and employment.
Washington, DC. Table A-2.4. Water Docket, DCN 14,298.
DOC. 1995. Quarterly financial report for manufacturing, mining, and trade corporations, fourth quarter
1995. Washington, DC: Economics and Statistics Administration, Bureau of the Census. Water Docket,
DCN 14,294.
DOC. 1992. U.S. Department of Commerce. Regional multipliers: A user handbook for the regional input-
output modeling system (RIMS II). Washington, DC: Bureau of Economic Analysis, U.S. DOC. Water
Docket, DCN 30,025.
FR. 1996. Effluent limitations guidelines, pretreatment standards, and new source performance standards:
Pulp, paper, and paperboard category. National emission standards for hazardous air pollutants for source
category: Pulp and paper production; notice of availability. Federal Register 61(136):36835-36858. July
15,1996. Water Docket, DCN 13,471.
OMB. 1992. Guideline and discount rates for benefit-cost analysis of Federal programs. Washington, DC:
Office of Management and Budget. Revised circular No. A-94. Water Docket, DCN 14,301.
U. S. EPA. 1991. U.S. Environmental Protection Agency. 1990 National Census of Pulp, Paper, and
Paperboard Manufacturing Facilities. Washington, DC. October 31, 1991. Water Docket, DCN 8,702.
U.S. EPA. 1993. Economic impact and regulatory flexibility analysis of proposed effluent guidelines and
NESHAP for the pulp, paper, and paperboard industry. EPA/821/R-93/021. Washington, DC: Office of
Water. November, 1993. Water Docket, DCN 8,590.
U.S. EPA. 1994. Office of Water, Pulp, Paper, and Paperboard Project. Pulp & paper cost issues review
team. Telephone summary. March 30, 1994. Water Docket, DCN 14,086.
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CHAPTER 4
BENEFITS AND ENVIRONMENTAL JUSTICE METHODOLOGY
This chapter presents revisions and updates to the benefits methodology implemented since proposal.
The Regulatory Impact Analysis from proposal (EPA, 1993) provides additional detail regarding benefits
estimation methodologies. The methodology presented below supports the evaluation of potential air benefits
associated with the final MACTI rule and each of the regulatory alternatives under consideration for MACT
II (both separately and combined) at 155 affected mills, as well as the evaluation of potential water benefits
associated with the BAT/PSES requirements at 96 mills covered by the final effluent guidelines. As with
costs, the baseline for estimating benefits has been revised since proposal to reflect emissions and discharges
resulting from technology in place as of mid-1995. Sections 4.1 and 4.2 present revisions to the methods for
estimating quantitative and monetized benefits for air and water benefits, respectively (EPA did not revise the
methodology for qualitatively assessing benefits). Section 4.3 presents the methodology to evaluate benefits
through case studies. Section 4.4 presents an alternative way to evaluate total benefits through the use of
present value of the stream of benefits over a 30-year period. Lastly, Section 4.5 discusses the methodology
for an Environmental Justice analysis.
4.1 AIR BENEFITS
Changes in the methodology used to quantify and monetize the potential health and welfare impacts
of reduced air pollution emissions resulting from the integrated regulation are discussed below. The
methodology described in this section and the analysis that follows in Chapter 8 represent the combined
analysis of the final rule for MACT I, and the proposed rule for MACT II, along with their interactions with
BAT/PSES requirements.
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4.1.1 Hazardous Air Pollutants
The regulatory impact analysis (RIA) for the proposed MACTI standard evaluated the effect of
reduced hazardous air pollutant (HAP) emissions (EPA, 1993). The findings of that analysis showed a
nationwide reduction in the annual cancer incidence rate that is less than half of a statistical life, which
resulted in an average monetized value that is less than $3 million. Although the final MACT I standard
achieves slightly greater HAP emission reductions, it is not expected that these changes will influence the
outcome of the benefit analysis conducted for the proposed standard by a significant amount. Likewise, the
HAP emission reductions associated with MACT II are an order of magnitude lower than MACT I and are
unlikely to reduce the annual cancer incidence by a measurable amount. In addition, other air-related benefits
(i.e., from volatile organic compound [VOC] emission reductions) that are quantified in the RIA to the
proposed rule range in total value from $88 million to $552 million (1992 dollars), as compared to the $3
million associated with HAP reductions. Due to this difference in magnitude, this analysis quantifies HAP
emission reductions, but does not present a monetized value for these benefits.
4.1.2 Volatile Organic Compounds
VOC emissions are known precursors to the formation of ozone. Due to the inaccessibility of an air
quality model, the analysis for the proposed rule in 1993 assumed a linear relationship for the transformation
of total nationwide VOC emissions into ambient ozone. The analysis was based on data obtained for health
and welfare effects by a study conducted by the Office of Technology Assessment (OTA, 1989), which
examined the benefits of reducing ambient ozone concentrations. VOC benefits were derived based on
average dollar per megagram (Mg) values from the OTA study. While the basic premise that a relationship
exists between the transformation of nationwide VOC emissions into ambient ozone is unchanged, the
present analysis alters two factors to monetize the VOC benefits (see Chapter 8 of this EA). First, we replace
the average dollar per Mg values from the OTA report with monetary values obtained from the recently
promulgated ozone National Ambient Air Quality Standard (NAAQS). The revised ozone NAAQS (0.08
parts per million, 8-hour, 4th highest concentration) provides recent scientific evidence of the health and
welfare effects of acute and long term exposure to ozone concentrations below the current ozone standard
(0.12 parts per million, 1-hour, 1 expected exceedance). The RIA for the revised ozone NAAQS (EPA,
1997a) presents monetized benefit estimates associated with the promulgated ozone standard, from which the
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EPA obtains an updated range of average dollar per Mg values for a combination of health and welfare
effects that are included in the analysis. Secondly, this analysis uses two approaches for monetizing VOC
emission reductions: (1) apply the dollar per Mg value only to VOC emission reductions that would occur in
areas with ozone concentrations exceeding either the current or the promulgated ozone NAAQS, and (2)
apply the dollar per Mg benefit value to all VOC emission reductions expected to be achieved.
In addition, due to several limitations of the "cost avoidance approach" to value VOC benefits (as is
discussed in the RIA for the proposed rule), EPA does not employ this method in the present analysis. Below
is a summary of information from the ozone NAAQS RIA and the resulting range of values to be used in
Chapter 8 to monetize VOC benefits.
The value of reducing VOC emissions is based on the health and welfare effects attributed to
lowering ambient ozone concentrations. Adverse health effects include: transient changes in pulmonary
function, transient respiratory symptoms and effects on exercise performance, increased airway
responsiveness, transient pulmonary inflammation, increased susceptibility to respiratory infection, increased
hospital admissions and emergency room visits, and possibly, premature mortality. The ozone RIA states
that all of these effects have been attributed to short-term (1 to 3 hours), prolonged (6 to 8 hours), and long-
term (months to years) exposures to ozone (EPA, 1997a). However, the ozone analysis was not able to
quantify and monetize all of the health effects listed above. The benefit categories included in the estimated
range of monetized values for health effects include: hospital admissions for all respiratory illnesses (e.g.,
pneumonia or chronic obstructive pulmonary disease), the presence of any of 19 acute respiratory symptoms,
and—for the upper-end of the range—mortality (EPA, 1997a). .
Reductions in ambient ozone also produce welfare (non-human health) benefits. The effects of ozone
on crops, ornamentals, tree seedlings, mature trees, and forested ecosystems have been studied extensively.
Elevated ozone levels can inhibit growth and yield, create leaf damage, increase susceptibility to pests and
disease, and affect long term survival (EPA, 1997a). Monetized benefits are valued in the ozone RIA for
increased yields in commodity crops (e.g., wheat, corn), fruits and vegetables (e.g., citrus, tomatoes), and
commercial forests. Additionally, the welfare benefits analysis includes monetized benefits associated with
increased worker productivity.
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There are two considerations given when selecting a benefit transfer value from the NAAQS RIA.
First, the RIA presents analyses of full- and partial-attainment of the regulatory alternatives considered in that
document. The VOC benefit transfer is derived from the most representative scenario presented in the RIA.
The full-attainment scenario analyzes total air quality changes from VOC and NOX reductions that are needed
to achieve the regulatory alternatives, regardless of control technology available. The analysis of the partial
attainment scenario estimates achieved emission reductions based on known control technology. The full
attainment scenario incorporates achieved emission reductions with an estimate of "residual" emission
reductions (i.e., those that remain after known control technology is applied) based on several assumptions of
future control technology. Because the partial attainment scenario provides a more certain estimate of
emission reductions and related benefits for each of the ozone regulatory alternatives, this scenario is used to
calculate a transfer value for VOC to be applied in the pulp and paper analysis.
Secondly, this analysis utilizes the benefits results associated with the promulgated ozone NAAQS
although other regulatory alternatives are examined in the RIA. The promulgated ozone NAAQS appears to
be an appropriate scenario because all areas in the U.S. must now strive to meet this new air quality standard.
Additionally, the VOC benefits estimates presented in this analysis are calculated by including all
effects categories reasonably believed to be associated with ozone exposure. The health benefits categories
included in the estimated range of monetized VOC benefit calculations consist of: reduced premature
mortality (for the upper-end of the range), reduced cancer risk from hazardous air pollutants in the VOC
stream, reduced numbers of hospital admissions for all respiratory illnesses, and reduced incidences of acute
respiratory symptoms. These benefits categories were included in the benefits analysis for the promulgated
NAAQS for ozone, which serves as the basis of the monetized values used in this pulp and paper analysis.
A review of the ozone health effects literature in the 1995 Air Quality Criteria Document for Ozone
and Related Photochemical Oxidants concluded that although an association between high ozone levels and
mortality has been suggested, the strength of any such association remained unclear (EPA, 1996a). Since
that Criteria Document review, a significant number of new studies have been published that provides more
support (i.e., statistically significant) for an association between ozone exposure and premature mortality
(although there are also some new studies that fail to find a statistically significant relationship). The ozone
NAAQS benefits analysis (and this pulp and paper benefits analysis) uses data from the new scientific studies
to quantify the association between ozone exposure and premature mortality. In an effort to respond to
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concerns regarding the range of results and limited review of the new ozone literature thus far, the VOC
benefits estimates provided in the ozone NAAQS RIA and for this pulp and paper analysis reflects a range of
VOC benefits estimates that includes a lower-range estimate (assuming zero mortality effects associated with
ozone exposure) and an upper-range estimate (based on a meta-analysis of existing studies). The Agency will
continue to evaluate the new data on ozone-related premature mortality.
The resulting values obtained from the NAAQS RIA reflect benefits of achieving the promulgated
ozone NAAQS incremental from the 2010 baseline established in the RIA. VOC emission reductions that are
expected to be achieved for the promulgated ozone NAAQS are 369,296 tons (EPA, 1997b). The total
value of the ozone (health and welfare) benefits is estimated to range from approximately $270 million to
$1,200 million1 (1990 dollars).
To determine the transfer values for VOC reductions, it is necessary to apportion the ozone benefits
to the VOC emission reductions. Ozone is created from the interaction of two gases, VOCs and nitrogen
oxides (NOX). The benefits value presented above represents the value associated with reducing ozone
through controlling both VOC and NOX emissions. Dividing the total monetized ozone benefits by only the
VOC emission reductions would inappropriately ignore the contributions of NOX emission reductions to
reducing ozone. Without additional air quality modeling, this analysis assumes that the monetized ozone
benefits are proportionally related to the VOC and NOX emissions. To apportion the monetized benefits to
only to the VOC emission reductions, a ratio of VOC to the total emission reductions (VOC and NOX) is
calculated from the ozone NAAQS data. This calculation yields a ratio of 61%. This ratio is applied to the
range of national monetized ozone benefits to arrive at the total value attributed to VOCs. The adjusted
monetized values are then divided by the VOC emission reductions to yield a range of benefit per ton values
from $444 to $2007 (in 1990 dollars).
Before the VOC benefit per ton value can be applied to the VOC emission reductions estimated for
the pulp and paper rulemaking, the issue of geographical correlation must be considered. The ozone NAAQS
control strategy analysis (the portion of the RIA that generates emission reduction estimates) was prepared
for a specific set of geographical areas; areas that would potentially violate the new ozone air quality standard
1 These values exclude monetized benefits attributed primarily to NOX emission reductions (e.g.,
ancillary PM benefits).
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in the year 2010. The ozone NAAQS benefits analysis reflects ozone air quality changes based on projected
emission reductions in these areas. Area-specific factors such as population and air quality distributions can
significantly influence the benefits results. Although the ozone NAAQS benefits analysis attempted to
estimate "transport" effects (the effect that reducing emission reductions within the boundaries of a
potentially violating area would have on ozone air quality outside of those boundaries), it is recognized that
the majority of the national monetized benefits are estimated for counties within the violating area
boundaries.
Given the dependence of the benefits estimates on specific geographical factors, the issue of
geographical correlation should be considered when these transfer values are applied to VOC emission
reductions estimated for the pulp and paper rules. Two methods are employed to apply the benefit transfer
values to pulp and paper reductions. The first method considers only VOC emission reductions estimated for
pulp and paper mills located in areas that violate either the current or promulgated ozone NAAQS. This
method ignores pulp and paper emission reductions estimated for mills that are not located in these areas and,
in effect, would not assign a value to these VOC emission reductions. This method is only possible when
VOC emission reduction estimates are available on a mill-by-mill basis. For this analysis, this method
provides a lower-bound estimate of the potential monetized benefits associated with the VOC emission
reductions. The second method for valuing VOC emission reductions is to apply the benefit transfer values
to all VOC emission reductions estimated for all pulp and paper mills, regardless of location. Although this
method ignores the issue of geographic location, it accounts for reduced ozone concentrations (even below the
promulgated ozone standard) that yield reduced adverse health and welfare effects. For this analysis, this
method provides an upper-bound estimate of the potential monetized benefits associated with VOC emission
reductions. The actual value placed on VOC emission reductions is likely to be between this range.
To transfer these NAAQS RIA results to the pulp and paper rule, EPA converts the benefit per ton
values to benefit per Mg values and escalate the values to 1995 dollars using the Consumer Price Index for
all urban areas (BLS, 1997). The resulting value from this conversion is a range from $571 to $2580 (in
1995 dollars).
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4.1.3 Total Reduced Sulfur
EPA did not revise the methodology used to assess the benefit of reductions in total reduced sulfur
(TRS). No new information is available to monetize the effects of reducing the odor associated with paper
mills.
4.1.4 Other Criteria Air Pollutants
For the proposed rule, EPA estimated that there would be an increase in emissions (i.e., negative
benefits) of PM, sulfur dioxide (SO2), nitrous oxides (NOX), and carbon monoxide (CO) with the
implementation of the MACTI standard. For the proposal analysis, data were not available to monetize the
effects of these increased emissions. Although the final MACT I standard will still have negative benefits
for these criteria air pollutants, MACT II produces positive benefits for PM and SO2. The net effect of these
combined MACT standards on PM, and CO are to reduce emissions, while NOX and SO2 continues to show
an increase in emissions. While the analysis for the proposed rule was unable to monetize any of the
benefits associated with criteria air pollutants, below is a discussion of the health and welfare effects as are
discussed in the recently promulgated PM NAAQS (EPA, 1997a).
A variety of activities contribute significantly to PM concentrations. Course particles of PM (i.e.,
those greater than 10 micrograms in diameter) typically come from sources such as: construction and
demolition activities, industrial operations, wind blown dust, and road dust. Fine particles (i.e., those smaller
than 2.5 micrograms in diameter) are created by fuel combustion, residential fireplaces, agricultural and
silvicultural burning, and atmospheric formation from gaseous precursors such as sulfur, nitrogen oxides and
volatile organic chemicals.
The difference in chemical and physical composition between the two fractions of PM have
significant implications for the relative health risk. The key health effects categories associated with PM
include: premature mortality; increased hospital admissions and emergency room visits; increased respiratory
symptoms such as shortness of breath; diseases such as asthma or chronic bronchitis; decreased lung
function; and alterations in lung tissue and in respiratory tract defense mechanisms (EPA, 1997a). Welfare
effects from elevated PM concentrations include changes in visibility and household soiling.
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Several studies have evaluated the benefits associated with reduced PM concentrations in the ambient
air, including a 1985 study of New Source Performance Standards (NSPS) for PM (EPA, 1985), a report to
Congress of the benefits and costs under section 812 of the Clean Air Act (EPA, 1996b), and National
Ambient Air Quality Standards for PM (EPA, 1997a). The report to Congress and the recently promulgated
PM NAAQS provide the latest scientific evidence of the magnitude of benefits associated with particulate
matter. However, the report to Congress provides data in a format that makes it difficult to derive a benefit
transfer value ($/Mg).
The NAAQS RIA includes analyses of a number of PM regulatory alternatives. In addition to
providing an analysis of the promulgated PM25 standard, the RIA includes an analysis of the current PM10
standard. Given that the PM emission reductions measured for these pulp and paper MACT standards are
primary particles, it may be more appropriate to use the benefits results associated with the current PM10
standard (an annual standard set at 50 ug/m3 and a 24-hour standard set at 150 ug/m3). As with the VOC
benefits transfer analysis, the PM benefits transfer analysis uses the NAAQS data associated with the PM10
partial attainment scenario (see Appendix C of the NAAQS RIA).
The national monetized benefits (health and welfare) estimated for the PM10 NAAQS is
approximately $5.4 billion (EPA, 1997b). The annual PM10 emission reduction estimated for this scenario is
approximately 374,000 tons. However, as with the VOC valuation, PM10 is not the only pollutant reduced in
order to achieve estimated benefits. The air quality model used in the PM NAAQS analysis identifies four
major pollutants ~ VOC, NOX, sulfur dioxide (SO2) and PM10 ~ that are reduced through controls adopted to
attain the PM10 standard. Once again, an assumption of proportionality must be used to apportion the
benefits to the PM10, SO2, NOX, and VOC is calculated. This calculation yields a ratio of 68%. This ratio is
applied to the national monetized PM10 NAAQS benefits range. The adjusted monetized benefit estimate is
then divided by the PM10 emission reduction estimate to yield a PM benefit per ton value (in 1990 dollars) of
$9,818.
To transfer these PM10 NAAQS results to the pulp and paper rules, the benefit per ton value is
converted to a benefit per Mg value and escalated to 1995 dollars using the same method as described for the
VOC analysis. The final conversion yields a PM10 benefit value of $12,619/Mg (1995 dollars). This value is
applied to all PM emission changes estimated for the pulp and paper rules.
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The PM analysis in the NAAQS RIA also includes data that makes it possible to estimate SO2
benefits. The RIA includes an analysis of a national SO2 strategy for utilities and examines the benefits
associated with reducing ambient PM concentrations through this SO2 control strategy. As mentioned in the
PM benefits transfer analysis, SO2 is one of the major pollutants contributing to PM formation. Therefore,
this SO2 benefits transfer analysis examines the PM-related benefits associated with changing SO2 emissions,
but does not consider additional health and welfare effects directly associated with SO2
An examination of the national SO2 strategy reveals that SO2 emission reductions in the eastern half
of the continental United States have a much larger effect in reducing ambient concentrations when compared
to the western U.S.2 Therefore, this benefits transfer analysis calculates an eastern SO2 benefit value and a
western SO2 benefit value. The monetized benefits estimated for SO2 reductions in the East ranges from
approximately $21 billion to $46 billion. The monetized benefits estimated for SO2 reductions in the West
ranges from approximately $1.2 billion to $1.5 billion. SO2 emission reductions estimated for the East is
approximately 4.433 million tons, while SO2 emission reductions estimated for the West is approximately
77,000 tons.
As with the VOC and PM analysis, the issue of apportionment applies. Even with a control strategy
aimed at reducing SO2 emissions, reductions of the other pollutants are also achieved. Once again, an
assumption of proportionality is used to apportion the benefits to the SO2 emission reductions. A ratio of
SO2 emission reductions to the sum of SO2, NOX, VOC, PM10 emission reductions, yielding a ratio of 94% in
the East and 20% in the West. This ratio is applied to the appropriate monetized benefits for each region.
The adjusted monetized benefit estimates are then divided by the appropriate regional SO2 emission
reductions to yield a range of SO2 benefits per ton (in 1990 dollars) in the East from $4,409 to $9,764, and in
the West the values are from $3,190 to $3,805.
To transfer these SO2 NAAQS results to the pulp and paper rules, the benefit per ton value is
converted to a benefit per Mg value in 1995 dollars, using the same method as described for the VOC and
PM analysis. The final conversion yields an SO2 benefit value ranging from $5,667/Mg to $12,550/Mg for
the East and a range of $4,100/Mg to $4,891/Mg for the West.
2Figure 6.2 of the NAAQS RIA presents a map of 6 regions that are considered in the PM analysis. For
this analysis, the "East" is defined as the Midwest/Northeast, Southeast, and South Central regions, while the
"West" is defined as the Rocky Mountain, Northwest, and West regions.
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Before the benefit per Mg values can be applied to the SO2 emission increases, an issue of certainty
in estimating emissions must be addressed. The estimation of SO2 emission increases is less certain than the
estimation of VOC and PM emission changes. The estimation of SO2 emission increases is based on the
assumptions that mills will not be able to prevent or mitigate all potential SO2 increases when complying with
MACT I, when in fact, it is likely that some mitigation will occur through the proper selection of control
technologies or pollution prevention activities. EPA also recognizes that the adoption of alternate control
measures and pollution prevention activities may entail additional costs that have not been included in the
cost estimates for the rule.
Therefore, this analysis uses two approaches for valuing the SO2 emission increases: (1) apply the
regional SO2 benefit per Mg values to the appropriate regional SO2 emission increases to derive a lower-
bound (negative) monetized benefit estimate, and (2) assume a zero SO2 emission increase to derive an
upper-bound (zero) monetized benefit estimate.
4.1.5 Limitations
The use of benefit transfer values is not without limitations. First, use of benefit transfer values to
calculate benefits associated with VOC, PM, and SO2 emission changes relies on the assumption that values
obtained from previous studies are applicable to the pulp and paper rule. Concentrations of criteria air
pollutants are affected by the interactions of multiple pollutants, and geographic and meteorological
conditions. Models exist to determine how the reduction of VOCs and PM would impact concentrations of
the criteria air pollutants, however, they would require specific air quality information such as appropriately
projected ambient levels of VOC, NOX, PM, and SO2 for each affected pulp and paper mill location. In
addition to being information-intensive, these models are also time-intensive. The NAAQS RIA presents
benefit calculations based on expected reductions in ambient ozone and PM concentrations resulting from
reductions in emissions (in tons) of VOC, NOX, PM and SO2. It is assumed that the relationship of these
emission changes with the health and welfare effects associated with the NAAQS-estimated ozone and PM
concentrations would correspond to projected changes in emissions from the pulp and paper mills.
A second concern with the benefit transfer method is the failure to adjust for differences in exposure.
Without time- and information-intensive evaluations of the exposed populations around pulp and paper mills,
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it is assumed that the distributions of exposed populations from these ozone and PM studies are similar.
Although baseline concentrations and population densities from previous studies will occur in a multitude of
combinations, the aggregate affect is expected to create a balancing out of variations in the true benefits per
Mg ratio across areas. Thus, the transferred ratio, on average, is assumed to be representative.
4.2 WATER BENEFITS
For the proposed rule, EPA evaluated the potential benefits associated with implementation of the
BAT/PSES requirements at 93 bleached papergrade kraft and soda and papergrade sulfite mills covered by
the final rule for which EPA had discharge data. EPA quantified and monetized two categories of potential
water-related benefits at the national level: human health risk reductions from recreational and subsistence
fish consumption and recreational angling benefits. This section describes the revisions or modifications that
EPA made to the methodologies for estimating these benefits since proposal. In Section 4.3, EPA also
presents the methodology used to conduct an alternative sensitivity analysis of national benefits based on case
study results.
4.2.1 Revised Estimates of Baseline Pollutant Loadings
To determine potential reductions and benefits achieved by BAT/PSES requirements, EPA modified
its estimates of baseline pollutant loadings. EPA revised and simplified the methodology used to estimate
baseline loadings in two ways: updating the data used, and simplifying the estimation procedure. In support
of the 1993 proposal, EPA developed a procedure for estimating the baseline bleach plant and final effluent
pollutant mass loadings for each mill. The procedure used all available data from each mill, and a model to
estimate loads where data were not available. The model was used to estimate the average pollutant loadings
achieved by mills using several combinations of pulping and bleaching technologies. The procedure was
complicated and labor intensive; however, EPA received few public comments on the baseline estimation
procedure.
Commenters objected to EPA's use of data from the 1988 104-Mill Study to characterize the
industry's 1993 pollutant discharges on the grounds that the information was out of date. EPA addressed
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these comments by updating the estimate of the baseline pollutant loadings to mid-1995. Changes to the
baseline estimate include:
• Updated data collected by EPA, NCASI, and individual facilities.
• Limited use of self-monitoring data from 1985-1992.
• Incorporation of results from NCASFs 1994 Dioxin Survey into the analysis (see
Development Document).
EPA also simplified the methodology to estimate baseline loadings. The revised procedure uses three
different industry models to estimate the baseline loadings for three pollutant groups at all mills. These
models replace the complicated procedure of developing an industry model for most mills and using actual
sampling data for some mills. The three pollutant groups modeled are:
• AOX, chlorinated phenolic compounds, TCDD, and TCDF
• Chloroform
• COD and color.
Three separate models are required because, for each group of pollutants, different process criteria
are most predictive of pollutant loadings. For example, for final effluent AOX loads, the furnish pulped, use
of extended pulping technologies, and percent chlorine dioxide substitution are strongly correlated to the
pollutant loading. The criteria for the three models and associated groups of pollutants are summarized in
Table 4-1. A detailed description of the methodology can be found in ERG, 1996.
The pollutant reductions calculated using the revised methodology for the regulatory alternatives are
summarized in Appendix C. Table 4-2 presents a summary of the pollutant loadings and loadings reductions
for the final BAT/PSES. EPA uses the conservative assumption of estimating pollutant loadings of dioxins
and furans at one-half the detection limit for mills where chlorine-based bleaching compounds are used and
quantities of dioxins and furans in discharges (if any) are below the detection limit.
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TABLE 4-1
MODELS USED TO ESTIMATE BASELINE POLLUTANT LOADS
Model
1
2
3
Pollutants
AOX, chlorinated phenolic
compounds, TCDD, TCDF
Chloroform
COD, color
Process Criteria Predictive of Pollutant Loadings
furnish pulped;
extended pulping status; percent C1O2 substitution
hypochlorite use;
percent C1O2 substitution
screen room status;
pre-bleaching kappa number
TABLE 4-2
BASELINE AND POST-REGULATION WATER POLLUTION LOADINGS
Pollutant
TCDD (g/yr)
TCDF (g/yr)
AOX (kkg/yr)
Chloroform (kg/yr)
COD (kkg/yr)
Color (kkg/yr)
All 12 Chlorophenolics (kg/yr)
Baseline
16
98
38,000
51,000
1,200,000
2,100,000
29,000
Final Rule
4.3
4.7
10,000
9,000
1,100,000
2,100,000
10,000
Percent change
from baseline
(73%)
(95%)
(74%)
(82%)
(8%)
(0.0%)
(66%)
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4.2.2 Human Health Risk Assessment
EPA updated the human health risk assessment to reflect four primary revisions to the methodology
since proposal. EPA revised 1) the approach used to estimate fish tissue concentrations, 2) the estimates of
fish tissue consumption, 3) the approach used to estimate the exposed population, and 4) the input
parameters for four chemicals. In addition, EPA conducted an assessment of individual cancer and non-
cancer risk avoided by the BAT/PSES options to Native Americans.
For the proposed rule, EPA used the Office of Research and Development's Dioxin Reassessment
Evaluation (DRE) model as well as a simple dilution model to estimate baseline and post-regulation fish
tissue concentrations of 2,3,7,8-TCDD and 2,3,7,8-TCDF. EPA received comments that the use of the
simple dilution model was inappropriate because EPA's DRE model provided more reliable information
regarding the partitioning of TCDD and TCDF between sediment and the water column, and thus their
bioavailability to fish. After analyzing the relevant research regarding the draft DRE model, EPA concurred.
For the final rule, EPA used only the DRE model to estimate the cancer and non-cancer risks from these
contaminants, and used the simple dilution model to estimate predicted exceedences of human health AWQCs
for all other contaminants of concern.
EPA also revised its estimates of fish consumption. For the proposed rule, EPA estimated that
recreational anglers consume 25 g/day and subsistence anglers consume 145 g/day. The ingestion rate of 25
g/day represented the midpoint of the reported range of average ingestion rates for recreational anglers of
approximately 20 g/day to 30 g/day, as reported by Connelly (1990), Pierce et al. (1981), and West, et al.
(1989). The average daily ingestion rate of 145 g/day for subsistence anglers was based on the assumption
that a subsistence angler eats one average size fish meal per day, and is supported by a study conducted Pao,
et al (1982). For the final rule, EPA assumed a fish consumption rate of 21 g/day for recreational anglers,
and 48 g/day for subsistence anglers based on updated USDA food survey information. These consumption
rates are based on the data provided by the "Continuing Survey of Food Intake by Individuals" (CSFII),
conducted nationally by the U.S. Department of Agriculture (USDA, 1991).
EPA estimates individual cancer and systemic risks to Native Americans, and an upper bound
estimate of exposure risks at the national level to tribes downstream from pulp and paper mills. To assess
individual cancer and systemic risk to Native Americans for the final rule, EPA used fish tissue consumption
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rates of 70 g/day, which represents an average fish consumption rate for Native Americans, based on two
studies on Native American subsistence fishing (CRITFC, 1994; Wolfe and Walker, 1989).
Native Americans fishing on (and frequently off) reservations are not required to obtain a license, so
records of the number of Native Americans on reservations who are subsistence anglers are not available. To
estimate an upper bound increased annual incidence of cancer for Native Americans from consuming
TCDD/TCDF contaminated fish, EPA considered the total population of the eight tribes with treaty fishing
rights near pulp and paper mills and, using the average consumption rates above, where effluent data were
available, estimated the total potential baseline cancer cases and cancer cases avoided by the final
BAT/PSES. Additionally, at the case study level, EPA used site-specific data to estimate risks and risk
reductions for Native Americans at two sites (Penobscot River and the Lower Columbia River) which
represent five of the eight subsistence angler tribes downstream from pulp and paper mills (see Sections 8.2
and 8.4).
At proposal, EPA assumed that 29 percent of all licensed anglers in counties adjacent to receiving
streams of pulp and paper mill effluent discharges regularly use those streams for their fishing activities. For
the final rule, EPA used a range of percentages to estimate the size of the exposed population. Since
proposal, EPA considered additional creel survey and other supporting information (Alabama Department of
Conservation and Natural Resources, 1994; Boucher, 1996; FIMS and FAA, 1993; James and Hale, 1995;
Melcher and Watts, 1995; Tucker, 1987; and U.S. DOI, Fish and Wildlife Service, and U.S. Department of
Commerce, Bureau of Census, 1993) and determined that a range of 10 percent to 33 percent of adjacent
county licensed anglers would be a more appropriate estimate. The surveys that EPA examined implied
results ranging from 2 percent to 54 percent, but the range EPA selected provides practical upper and lower
bounds to the fishing effort expected on most affected stream segments. These percentages were applied only
to the general angler population.
Finally, EPA revised input parameters for four chemicals. EPA compared the modeled in-stream
pollutant concentrations to human health water quality criteria or other toxic effect values referred to as
health-based ambient water quality concentrations (AWQCs). EPA changed the bioaccumulation factors
(BCFs) and health-based AWQCs for 2,4,5-trichlorophenol and 2,4,6-trichlorophenol based on comments
(and supporting information) received on the RIA for the proposed rule. The old and revised values are
presented in Table 4-3.
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TABLE 4-3
BIOACCUMULATION FACTORS AND HEALTH-BASED AWQCS
Measurement
Parameter
BCF
AWQC-Organisms
AWQC-Organisms & Water
2,4,5-Trichlorophenol
Old
1.91 x 103
4.9 x 102
5.65 x 102
New1
1.77 x 102
2.23 x 103
6.10 x 103
2,4,6-Trichlorophenol
Old
3.1 x 102
1.6 x 10°
3.2 x 10°
New1
1.06 x 102
2.37 x 10°
9.24 x 10°
'Versar, 1996.
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In addition, the biota/sediment accumulation factor (BSAF) for 2,3,7,8-TCDD and 2,3,7,8-TCDF
used in the estimates of human health risk has changed from 0.09 to 0.2 based on data developed for EPA's
dioxin reassessment (U.S. EPA, 1994).
4.2.3 Fish Consumption Advisory Analysis
For the proposed rule, EPA investigated the effect of reduced pollutant loadings on the status of
then-current fish consumption advisories. At that time, EPA evaluated fish consumption advisories
associated with effluent discharges from 20 bleaching pulp and paper mills. The advisories evaluated
included those in place as of June 1993. Since then, the status of some fish consumption advisories has
changed. For the final rule, EPA evaluated the effect of the rule on the status offish consumption advisories
in place as of December 1995 (as reported by EPA in June 1996). Discharges from 18 pulp and paper mills
are associated with these fish consumption advisories. In addition, for the final rule, EPA evaluated fish
consumption advisories that are in place farther downstream from some pulp and paper mill effluent
discharges, but that can be associated with those discharges (i.e., in addition to the advisories in place on the
stream segments where actual discharges occur). For these mills, the size of the potentially exposed
population has increased to include populations of anglers in counties that were not included in the
assessment for the proposed rule.
4.2.4 Limitations and Uncertainties
The methodologies EPA used to assess human health and recreational angling benefits for the final
rule are subject to certain limitations and uncertainties. Some of the problems encountered in the analyses
result from lack of available data or lack of research to evaluate methodological assumptions. Although EPA
uses standard methods and approaches, some assumptions are still required. For example, for the evaluation
of combined noncarcinogenic hazards from exposure to a chemical mixture, limited data are available for
actually quantifying the potential synergistic and/or antagonistic relationships between chemicals in a
chemical mixture.
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Under baseline conditions and the BAT/PSES options, over 99 percent of the estimated cancer and
non-cancer risks calculated in this study can be attributed to 2,3,7,8-TCDD and 2,3,7,8-TCDF (U.S. EPA
1997c). Therefore, the assumptions and methods used to analyze the dioxin and furan data affect the
interpretation of the results of the regulatory impact analysis and comparisons. Areas of uncertainty relative
to the dioxin and furan risk assessment include:
• Biota-sediment accumulation factors;
• Use of one-half the EPA-designated detection limit to estimate pollutant discharge loadings
for all nondetect congeners;
• Use of aquatic life toxic effect values, cancer slope factors, and toxic equivalency factors,
which are currently under review by EPA; and
• Use of fish tissue consumption rates.
Also, the methodology used to estimate fish advisory-related benefits assumes that the bleaching
pulp and paper mills are the only source of the dioxin in the stream segment and does not incorporate
background contributions either from contaminated sediments (due to previous discharge practices), other
upstream sources, or air deposition (with the exception of case studies in Chapter 9). Furthermore, although
the discharge of these contaminants might cease or be minimized, sediment contamination and subsequent
accumulation of dioxin in aquatic organisms might continue for years. Actual improvements can be
determined only by site-specific biological monitoring to assess the appropriateness of eliminating fish
consumption advisories.
Based on the record, EPA has determined that all dioxin advisories associated with mills will be
lifted some time after the selected BAT/PSES technology is installed. Recent evidence indicates that dioxin
fish tissue concentrations decline within several years of removing dioxin discharges, more rapidly than
previously thought (see Chapter 9). EPA conservatively accounts for potential latent dioxin contributions
from sediment to fish tissue by assuming a three-year lag before cancers from fish tissue consumption are
reduced, or dioxin/furan fish advisories are lifted. In the case studies EPA has observed an average of two
years following 100 percent substitution before advisories were lifted. These lags are incorporated into the
present value of benefits presented in Chapter 10.
An additional area of uncertainty involves the estimates of populations exposed to contaminated fish
tissue. EPA bases angler population estimates on data extrapolated from the number of fishing licenses sold
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in counties bordering receiving stream reaches and creel survey data. The actual number of people who
actually use these receiving streams for their fishing activities is not known, nor is the proportion of time they
fish in these streams. In addition, the estimated number of recreational anglers who change their fishing
habits as a result of a fish consumption advisory is based on a few studies with relatively few data.
4.3 CASE STUDY EVALUATION OF BENEFITS
For the proposed rule, EPA presented three quantitative case studies to provide an alternative
analysis of the potential benefits of the regulation. The case study approach was chosen because water
quality-related benefits tend to be highly site-specific.
Public comments on the November 1993 RIA stated that the case studies, as an attempt to illustrate
how the rule will yield benefits, seriously overestimate the locally available benefits. While EPA did not
agree with this comment, it conducted more detailed case study analyses to ensure an accurate representation
of reality. To expand on and strengthen the case study analysis for the final rule, EPA updates the
representativeness criteria, selects four additional case studies, and presents new methodology to extrapolate
aggregate case study benefits to the national level. The methodology to estimate air benefits for the case
studies does not differ from that of Section 4.1. Therefore, Sections 4.3.1 through 4.3.3 discuss water
benefits methodology for the case studies.
4.3.1 Representativeness
4.3.1.1 General Characteristics and New Case Studies
For the proposed rule, EPA analyzed the representativeness of the case study sites in terms of how
well they mirror the universe of regulated sites. EPA evaluated representativeness by developing profiles of
receiving water characteristics and user population (socioeconomic) characteristics for each mill, similar to
the approach used by Naughton and Desvousges (1985) in the analysis of BCT regulations for the pulp and
paper industry.
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Receiving water characteristics included mean flow and low flow, percent reduction of regulated
contaminants, exceedences of AWQCs eliminated by the rule, and consideration of water body type (river or
bay). User population characteristics included population size and density, and personal income in the
counties bordering the river reach. The analysis also considered whether any relatively prominent recreation
areas or ecosystems are located within the region (indicating potentially higher recreation or existence values
or above average recreation levels at a given site).
For user population characteristics, EPA ranked the mills according to their potential for benefits
(low, medium, high, and very high). For example, high population in counties bordering the river reach is
indicative of a high potential for benefits. EPA then compared the distribution of case study mills across each
category with the distribution for all facilities. For receiving water characteristics, each attribute was
evaluated individually. The RIA for the proposal offers a detailed description of the methodology.
For the final rule, EPA has updated its representativeness analysis to include two of the four new
case studies (the Upper Columbia River/Lake Roosevelt case study was not included because some of the
necessary information for the Celgar mill, which is located in Canada, is unknown; and the Lower Tombigbee
and Mobile River case study was not included because, in general, although the Alabama mills have upgraded
their pollution control, the facilities still require extensive upgrades to comply with the regulation (i.e., it is
not a true retrospective case study). However, these two case studies do provide useful estimates of the
benefits that may be expected at other sites around the country. In addition, exceedences of AWQCs
eliminated by the rule have been dropped as a receiving water characteristic, and reduction in individual
cancer risk has been added. With the addition of the two new case studies, the analysis of representativeness
considers 13 of the 96 bleached papergrade kraft and papergrade sulfite mills affected by the regulation.
4.3.1.2 Receiving Water Characteristics and Representativeness
EPA uses two groups of characteristics to model the TCDD-reduction benefits resulting from the
regulation: attributes of the receiving water, and sociodemographic characteristics of the surrounding
population. EPA uses a combination of these two groups to develop "benefits profiles" for each facility
affected by the regulation and to rank the facilities according to degree of benefits potential. The rankings are
used to determine the degree to which the sites selected as case studies are representative of all mills, and to
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transfer benefits from the case studies to the universe of facilities. More detail on this methodology is
contained in the proposal RIA (EPA, 1993).
EPA uses three receiving water characteristics to indicate benefits potential: (1) dilution of effluent
upon entering the receiving waterway under low and mean flow conditions, (2) reduced loadings of TCDD
and TCDF as a result of the regulation, and (3) the associated decrease in individual cancer risk. Dilution
indicates the relationship between effluent and stream flow and determines the concentrations of TCDD and
TCDF in the stream. In general, the lower the pollutant concentration, the lower the risk to human and
environmental health. Other things equal, facilities with greater reductions will accrue greater benefits.
Finally, EPA also ranks facilities based on the reduction in individual cancer risk levels due to TCDD and
TCDF reductions. EPA assigns scores for each of these characteristics and combines them to obtain a total
rank indicative of each facility's benefits potential from a receiving water quality perspective. Facilities that
receive a combined score of 1-4 are ranked "low" in terms of benefits potential, facilities that receive a
combined score of 5-8 are ranked "medium," and facilities that receive a combined score of 9-12 are ranked
"high." (See Chapter 8 for results; for further details, see RIA for proposal [EPA, 1993]).
On the sociodemographic scale, EPA uses three population characteristics to develop profiles:
population, population density, and average personal income. As each of these increases, the benefits
potential also increases. EPA has developed scores for each of these characteristics and then has aggregated
these scores to provide a site's overall sociodemographic rating. EPA also has made quantitative adjustments
in ratings to account for the presence of unique features that will tend to increase benefits, such as a National
Wildlife Reserve. EPA then combines the water body and sociodemographic scales to provide an overall
score for each site.
EPA has assessed the representativeness of the case studies benefits by comparing the distribution of
benefits potential for the case studies to the benefits potential distribution for the universe of affected
facilities. Similarly, EPA has used the rankings of benefits potential to assign benefits to facilities for which
case studies have not been conducted in order to develop approximations of expected national-level water
quality benefits.
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4.3.2 Development of New Case Studies
The new case studies describe the water quality-related benefits that have occurred at sites where one
to several mills have already implemented controls similar to those required by the final regulations. As such,
the case studies provide a retrospective look at the benefits actually realized at four locations. To the extent
that the controls implemented achieve the limits set by the final regulation, the resulting benefits may be
illustrative of those that can be expected at sites that will be affected by the rule. EPA estimates the potential
benefits of both the selected BAT/PSES (Option A) and Option B for the new case studies, but only the
selected BAT/PSES technology benefits for the three old case studies (see Chapter 9).
The new case study benefit-cost analyses are presented in Chapter 9, and cover 8 mills at the
following sites:
• The Lower Tombigbee and Mobile rivers, in Alabama (5 mills)
• The Pigeon River, in North Carolina and Tennessee (1 mill)
• The Upper Columbia River and Lake Roosevelt, in British Columbia, Canada and
Washington State in the United States (1 mill)
• The Samoa Peninsula, on the Pacific Ocean in California (1 mill)
4.3.3 Extrapolation to National Water Benefits
EPA also develops an alternative sensitivity analysis estimate of national water benefits, based on
results from the case studies. The case study approach includes a number of site-specific benefit categories
that are expected to improve as a result of the rule, and which cannot be included in EPA's national level
estimate. Therefore, for the final rule, EPA uses the analysis of case study representativeness to gain
additional insight into the potential range of national-level water quality benefits. Specifically, EPA
characterizes the benefits potential associated with each regulated mill, based on how it compared to the
characteristics noted above, classified according to the potential for low, medium, and high benefits. A
comparable index was developed for water quality characteristics in the receiving waters. A combined
measure of these two indices was used to assign a benefits potential level to every facility affected by the
regulation, and the results from the case study facilities were then extrapolated to the universe of facilities
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based on how their benefits potential levels compared to benefits potential levels at facilities not included in
the case studies. In this manner, benefits results from the case study mills were assigned to all facilities.3
EPA uses this case study basis only as a sensitivity analysis. The ability to generalize the case study
benefits is more limited than the health effects and recreational fishing benefits used in the national benefits
assessment because of the great diversity in receiving waters affected by this rule. For example, white water
boating and surfing benefits are not available near many mills, but account for a large share of the benefits at
two case study mills that have conditions conducive to these activities (see Chapter 9).
4.4 PRESENT VALUES AND ALTERNATIVE DISCOUNT RATES
For the proposed rule, EPA compared annual steady-state benefits to annualized costs. There are
some instances in which the installation of control equipment or the implementation of process changes does
not result in an immediate accrual of benefits. For example, for the final effluent guidelines, EPA assumes
that it may take two to three years for improved water quality to result in reduced concentrations of dioxin in
fish tissue and therefore improved angling benefits. Therefore, as an alternative way to evaluate benefits,
EPA also evaluates the present value of benefits and costs using a 30 year period, a real discount rate of
seven percent, and an alternative social rate of time preference of three percent (real). EPA assumed that
some categories of benefits will phase in gradually, assuming an immediate realization of air benefits4, a 2-
year phase-in period for angling benefits (i.e., benefits are at their full level in the third year) and a 5-year
phase-in period for human health and nonuse benefits. Since the expected capital lifetime is 20 years, EPA
counted capital costs in years 1 and 21. EPA assumed O&M costs are incurred years 2 through 30. Present
values are presented along with annual values in Chapter 10.
3Benefits estimates for the two mills represented by the Pigeon River and Samoa Peninsula case studies
are not included in the aggregated national-level benefits total because process changes that are comparable
to the regulation have already been implemented at these sites, and benefits and costs already have been
realized. The benefits and costs from these mills are considered in the baseline, not as a result of this rule.
However, EPA used the already-realized benefits estimated for these mills, along with results from the other
case studies, to model the benefits at mills located in areas with similar user population and receiving water
characteristics that have not yet implemented the changes required to meet the limits set by the rule.
4It is assumed that the installation of control equipment or the implementation of process changes will
result in the immediate improvement of air quality.
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4.5 ENVIRONMENTAL JUSTICE
Executive Order 12898 established a presidential policy for incorporating environmental justice into
Federal agency missions by directing agencies to identify and address, as appropriate, disproportionately high
and adverse human health or environmental effects of its programs, policies, and activities on minority and
low-income populations. For example, to assist in identifying the need for ensuring protection of populations
who rely principally on fish and/or wildlife for subsistence, the E.O. directs agencies, whenever practicable
and appropriate, to collect, maintain, and analyze information on the consumption patterns of those
populations, and to communicate to the public the risks of those consumption patterns.
For the proposed rule, EPA analyzed the risks to subsistence anglers fishing in the vicinity of
bleached kraft mills from the consumption of dioxin-contaminated fish. Subsistence anglers may include
both minority and low-income populations. In further keeping with the intent of E.O. 12898, EPA expanded
on its assessment of risks to subsistence anglers to include Native American populations that were not
captured in the original analysis. At the national level, EPA assessed individual cancer and non-cancer risk
to Native Americans assuming fish tissue consumption rates of 70 g/day (see Section 4.2.2). EPA also
estimated an upper limit to the exposed Native American subsistence population that will be affected by the
pulp and paper rules. EPA assumed that the total population of the tribes with treaty-ceded fishing rights
near pulp and paper mills consumed an average of 70 g/day of TCDD/TCDF contaminated fish.
Additionally, in two case studies (Penobscot River and the Lower Columbia River)5, EPA used site-specific
data to estimate risks and risk reductions for five of the eight Native American tribes whose subsistence
fishing is affected by pulp and paper mill discharges. EPA also examined county-level race and income data
to assess whether bleached kraft mills have a disproportionate effect on minority and low income populations
nationwide. Finally, EPA evaluated the effects on low income populations of paper price increases that may
result from the increased compliance costs of the integrated pulp and paper rule. The individual cancer and
systemic risk assessments for Native Americans, the nationwide summary of race and income data, and the
effects of price increases are presented in Chapter 8. The case study level risk assessments for Native
Americans are presented in Chapter 9.
5The assessment of risks for the Penobscot tribe on the Penobscot River utilized consumption levels of 11
g/day and 48 g/day for the central and high estimates, respectively, based on the 1991 Penobscot Nation
Survey. The central assumption of 11 g/day may underestimate potential risk reductions since tribal
members that practice a traditional lifestyle are probably under represented in the survey.
4-24
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4.6 REFERENCES
Reference material supporting Chapter 4 is located in both the Pulp and Paper Air and Water
Dockets.
Alabama Department of Conservation and Natural Resources. 1994. 1993-1994 annual license report.
License Unit, Game and Fish Division, Department of Conservation and Natural Resources, Montgomery,
AL. Water Docket, DCN 14,785.
Boucher, D. 1996. Androscoggin River Smallmouth Bass. Fishery Interim Summary Report Series No. 96-
4, Maine Department of Inland Fisheries and Wildlife, Division of Fisheries and Hatcheries, Augusta, ME.
Water Docket, DCN 14,725.
BLS. 1997. Consumer price index—all urban consumers. Bureau of Labor Statistics, Washington, DC.
September. Air Docket, DCN A-92-40 Subcategory IV-J-203.
CRITFC. 1994. A fish consumption survey of the Umatilla, Nez Perce, Yakama, and Warm Springs tribes
of the Columbia River Basin. Technical Report 94-3. Columbia River Intertribal Fish Commission.
October. Water Docket, DCN 14,735.
Connelly, N.A., T.L. Brown, and B.A. Knuth. 1990. New York statewide angler survey, 1988. Prepared for
the New York State Department of Environmental Conservation, Albany, NY. Water Docket, DCN 14,682.
ERG. 1996. Methodology for determining BAT pollutant loadings and industries for the revision of the pulp
and paper effluent limitations guidelines. Prepared by Eastern Research Group, Inc. for U.S. Environmental
Protection Agency, Engineering and Analysis Division. June. Water Docket, DCN 13,952.
FIMS and FAA. 1993. Estimation of daily per capita freshwater fish consumption of Alabama anglers.
Prepared by Fishery Information Management Systems, Inc. and Department of Fisheries and Allied
Aquaculture for Alabama Department of Environmental Management, Montgomery, AL. Water Docket,
DCN 14,741.
James, B.W. and D.A. Hale. 1995. Recreational fisheries between Bonneville and Priest Rapids Dams on
the Columbia River and downstream from Ice Harbor Dam on the Snake River, 1994. Washington
Department of Fish and Wildlife, Anadromous Fish Division, Columbia River, Battle Ground, WA. Water
Docket, DCN 14,745.
Melcher, C.E. and J.W. Watts. 1995. The 1994 Lower Columbia River and Buoy 10 recreational fisheries.
Oregon Department of Fish and Wildlife, Fish Division, Columbia River Management. Water Docket, DCN
14,810.
Naughton, M.C. and W.H. Desvousges. 1985. Water quality benefits of the BCT regulations for the pulp
and paper industry. Draft Report. Prepared for U.S. Environmental Protection Agency, Economic Studies
Branch, Washington, DC. Water Docket, DCN 14,729.
4-25
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OTA. 1989. Catching our breath: next steps for reducing urban ozone, OTA-O-412. Office of Technology
Assessment, U.S. Congress. U.S. Government Printing Office, Washington, DC. July. Water Docket, DCN 14,826.
Pao, E.M., K.H. Fleming, P.M. Guenther, and S.J. Mickle. 1982. Foods commonly eaten by individuals:
amount per day and per eating occassion. Home Economics Research Report No. 44. U.S. Department of
Agriculture, Hyattsville, MD. Water Docket, DCN 80,039.
Pierce, R.S., D.T. Noviello, and S.H. Rogers. 1981. Commencement bay seafood consumption study.
Preliminary Report. Tacoma-Pierce County Health Department, Tacoma, WA. Water Docket, DCN 14,816.
Terra Tech. 1993. Water quality assessment of proposed effluent guidelines for the pulp, paper and
paperboard industry. Prepared for U.S. Environmental Protection Agency, Office of Science and
Technology. November. Water Docket, DCN 8,588.
Tucker, W.H. 1987. Alabama angler survey. Department of Conservation and Natural Resources,
Montgomery, AL. Water Docket, DCN 14,744.
USDA. 1991. Continuing survey of food intake by individuals. U.S. Department of Agriculture. Water
Docket, DCN 60,018.
U.S. DOI. 1993. 1991 national survey of fishing, hunting, and wildlife-associated recreation: Washington
and Oregon. Prepared by U.S. Department of Interior, Fish and Wildlife Service, and U.S. Department of
Commerce, Bureau of Census. U.S. Government Printing Office, Washington, DC. Water Docket, DCN
14,675 and 14,676.
U.S. EPA. 1997a. Regulatory impact analysis for the particulate matter and ozone national ambientair
quality standards and proposed regional haze rule. Office of Air Quality Planning and Standards, U.S.
Environmental Protection Agency, Washington, DC. July. Air Docket, DCN A-92-40 Subcategory IV-A-20.
U.S. EPA. 1997b. Benefits transfer analysis for pulp and paper. Memorandum from Michele McKeever,
OAQPS, to Lisa Conner, OAQPS. Innovative Strategies and Economics Group, Office of Air Quality
Planning and Standards, U.S. Environmental Protection Agency, Washington, DC. October. Air Docket,
DCN A-92-40 Subcategory IV-A-34.
U.S. EPA. 1997c. Water quality assessment of final effluent guidelines for the papergrade sulfite and
papergrade kraft/soda subcategories of the pulp, paper, and paperboard industry. Standards and Applied
Science Division, Office of Science and Technology, U.S. Environmental Protection Agency, Washington,
DC. July. Water Docket, DCN 14,815.
U.S. EPA. 1996a. Air quality criteria for ozone and related photochemical oxidants. EPA report number
EPA/600/P-93-004aF-cF. Office of Research and Development, Office of Health and Environmental
Assessment, U.S. Environmental Protection Agency, Research Triangle Park, NC. Air Docket, DCN A-92-
40 Subcategory IV-A-19.
U.S. EPA. 1996b. Benefit and cost of the Clean Air Act, 1970 to 1990. Draft. U.S. Environmental
Protection Agency, Washington, DC. October. Water Docket, DCN 6,352.
4-26
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U.S. EPA. 1994. Estimating exposures to dioxin-like compounds—Volume III: site-specific assessment
procedures. Draft. Office of Research and Development, U.S. Environmental Protection Agency,
Washington, DC. Water Docket, DCN 80,118.
U.S. EPA. 1993. Regulatory impact assessment of proposed effluent limitations guidelines and NESHAP
for the pulp, paper, and paperboard industry. EPA/82 l/R-93/020. Office of Water, U.S. Environmental
Protection Agency, Washington, DC. Water Docket, DCN 8,587.
U.S. EPA. 1985. Benefit-cost analysis of selected new source performance standards for particulate matter.
Office of Air Quality Planning and Standards, U.S. Environmental Protection Agency, Washington, DC.
July. Water Docket, DCN 14,785.
West, P.C., J.M. Fly, R. Marans, and F. Larkin. 1989. Michigan sports anglers fish consumption survey—
Supplement I: non-response bias and consumption suppression effect adjustment. Natural Resource
Sociology Research Lab. Technical report no. 2. School of Natural Resources, University of Michigan, Ann
Arbor. Water Docket, DCN 14,819.
Wolfe, R.J. and R.J. Walker. 1987. Subsistence economics in Alaska: productivity, geography, and
development impacts. Arctic Anthropology 24(2): 56-81. Water Docket, DCN 14,820.
4-27
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CHAPTER 5
REGULATORY ALTERNATIVES
DESCRIPTION, COSTS, POLLUTANT REMOVALS
AND COST-EFFECTIVENESS
Effluent limitations guidelines and standards (EGLs) and Maximum Achievable Control Technology
(MACT) emission standards are technology-based regulations. While the facility that is the source of the
discharge or emission need not install any specific pollution control technology, the regulatory requirements
(i.e., maximum emission or effluent limits) are based on a technology that can achieve the specified limits.
The Development Document (EPA, 1997a) and Background Information Document (EPA, 1997b) detail the
technology bases for the EGLs and MACT standards, respectively.
Section 5.1 discusses air pollution controls and Section 5.2 presents water pollution control options
considered by EPA. Each section briefly describes technology options and their associated costs, emission
reductions, pollutant removals, and cost-effectiveness. Section 5.3 describes the regulatory alternatives and
costs for the set of mills subject to final effluent guidelines, final MACT I standards, and proposed MACT II
standards. As mentioned in the Introduction, the chapter focuses primarily on changes in outcomes since the
1993 proposal.
All supporting computer printouts for this chapter (both CWA and CAA analyses) are located in the
Pulp and Paper Water Docket, Section 27.4, "Cost and Impact Analysis." Almost all of this material is
confidential.
5.1 AIR POLLUTION CONTROL COMPLIANCE COMPONENTS
There are three sets of control for hazardous air pollutants (HAPs) for the pulp and paper industry:
• MACT I—noncombustion sources
Proposed in 1993 and promulgated in this rule, these requirements apply to vents, open
processes, and condensate wastewaters located in either the pulping area or the bleaching
areas.
5-1
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MACT II—combustion sources
Proposed in this rulemaking, these requirements apply to recovery furnaces, lime kilns, smelt
dissolving tanks, and other combustion sources associated with pulping operations.
MACT III
Promulgated in this rule, the requirements apply to mechanical pulping, non-chemical
secondary fiber pulping, non-wood pulping, and paper machine additives.
The compliance components are described in Section 5.1.1 while associated costs are presented in Section
5.1.2.
5.1.1 Air Pollution Compliance Components—Description
At proposal, the Office of Air did not propose subcategories for mills subject to MACT I
requirements. Since proposal, the Office of Air published a notice stating it planned to subcategorize the
pulping and associated wastewater components to develop different MACT requirements (EPA, 1996a). The
MACT I air standards would regulate all HAPs emitted from the 155 pulp and paper mills that chemically
pulp wood fiber using kraft, sulfite, soda, or semichemical methods. The pulp and paper industry is
subcategorized by these four chemical pulping processes for the purpose of selecting MACT technologies.
Table 5-1 summarizes the air pollution control levels by subcategory. Where more than one subcategory is
located within the same mill sharing the same piece of equipment, the more stringent standard applies.
MACT II standards are being proposed in this rulemaking. MACT II standards differ for each
chemical pulping process subcategory: kraft and soda, sulfite, and semichemical. The control options for
pulp and paper combustion sources include:
two control options for particulate matter (PM) hazardous air pollutant (HAP) emissions
from kraft and soda
recovery furnaces
lime kilns
smelt dissolving tanks (SDTs)
one control option for total gaseous organic HAP (TGOHAP) emissions from kraft and soda
non-direct contact evaporator (NDCE) recovery furnaces
5-2
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TABLE 5-1
SUMMARY OF MACT I AND III EMISSION CONTROL REQUIREMENTS
Existing Source Requirements I New Source Requirements
KRAFT: 1) Reduce HAP emissions by 98% (or specified equivalent means) from:
LVHC systems1 /2
Specified Knotter and Screen systems All Knotter and Screen systems
Pulp Washing systems ./
Specified Decker systems All Decker systems
Oxygen Delignification systems ./
Weak Liquor Storage Tanks
KRAFT: 2) Reduce HAP emissions by 92% (or specified equivalent means) from condensates from:
Digester systems ./
Turpentine recovery systems ./
Evaporator Systems ./
Closed vent collection systems ./
SODA AND SEMI-CHEMICAL: Reduce HAP emissions by 98% (or specified equivalent means) from:
LVHC systems /
Pulp Washing systems
SULFITE: Reduce total HAP emissions to specified mass limit or percent reduction from:
LVHC systems /
Pulp Washing systems ./
Weak and Strong Liquor Storage Tanks
Acid Condensate Storage Tanks
BLEACH PLANTS AT KRAFT, SODA, SEMI-CHEMICAL, SULFITE, MECHANICAL, AND SECONDARY AND NON-
WOOD FIBER MILLS:
HAP emissions from bleaching stages where chlorinated compounds are ./
introduced must be controlled by 98% or to 10 ppm.
Comply with BAT as defined in the effluent guidelines. ./
1 Low Volume High Concentration systems include, but are not limited to, the digester, turpentine recovery, and evaporator
systems and the steam stripper vents.
2 ./ means same requirement as existing source system to be controlled
5-3
-------
• two control options for TGOHAP emissions from kraft and soda direct contact evaporator
(DCE) recovery furnace systems (i.e., control of black liquor oxidation [BLO] vent
emissions [kraft only] and conversion to an NDCE recovery furnace).
• two PM control options for sulfite combustion sources
• two TGOHAP control option for semichemical combustion sources.
MACTII controls are summarized in Table 5-2. The kraft and soda combustion source controls have been
combined into four regulatory options (see Table 5-3). There are four options for kraft and soda, two for
sulfite and two for semichemical. Only one option has been considered in the economic analysis for
semichemical sources because the floor option is no control with no associated costs. Each kraft and soda
option can be combined with one of two sulfite options to create eight possible cost configurations, called
alternatives, for MACT II. Table 5-4 lists Alternatives A through H that reflect different combinations of
these options.
MACT III standards cover mechanical pulping (e.g., groundwood, thermomechanical, and
pressurized groundwood pulps), de-inked and non-deinked secondary fiber pulps, non-wood pulps, and paper
machine additives. The final MACT III for these operations is "no add-on controls." As such, there are no
associated costs or impacts with MACT III and it will not be discussed further in this report.
5.1.2 Air Pollution Compliance Control Costs
The costs for MACT I requirements for 155 mills are shown in Table 5-5. MACT I costs differ
according to the BAT/PSES option selected for the 86 mills in the bleached papergrade kraft and soda
subcategory because of the increased boiler capacity and emissions for oxygen delignification (OD) found in
BAT/PSES Option B. With the selected BAT/PSES option, capital costs1 are $501 million and annual
JThe MACT I capital costs coincide with those presented in the Background Information Document (BID).
The BID, however, presents an annual cost based on a capital recovery factor whose value depends on the
equipment lifetime and interest rate. It is similar to, but not the same as, the annualized cost presented in this
document. The costs used here incorporate the 7 percent real discount rate recommended by OMB (OMB,
1992) with a 16-year time period in the cost annualization model discussed in detail in EPA, 1993 a. The cost
model was developed to calculate the pre- and post-tax annualized costs on the same basis, taking into account
the timing effects of tax shields and depreciation as well as a clearly specified discount rate. The pre-tax annualized
costs presented in Table 5-5 are most comparable to the annual costs presented in the BID and the values are
within 13 percent of each other, with differences due to distinction in discount rates and equipment lifetimes.
5-4
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TABLE 5-2
MACT II CONTROL OPTIONS BY POLLUTANT
Options
P articulate matter
(PM) Option I
(MACT floor)
Participate Matter
(PM) Option II
(Tighter PM)
Kraft and Soda Combustion Sources
NDCE Recovery
Furnaces
NSPS PM level of
0.044 gr/dscf
OR
Metals level of
1.82E-031b/ton
BLS
Monitoring protocol
for ESP will be
developed by mill
PM level of 0.01
gr/dscf
OR
Metals level of
4.14E-041b/ton
BLS
Monitoring protocol
for ESP will be
developed by mill
DCE Recovery
Furnaces
NSPS PM level of
0.044 gr/dscf
OR
Metals level of
1.82E-031b/ton
BLS
Monitoring protocol
for ESP will be
developed by mill
PM level of 0.01
gr/dscf
OR
Metals level of
4.14E-041b/ton
BLS
Monitoring protocol
for ESP will be
developed by mill
Lime Kilns
NSPS PM level of
0.067 gr/dscf
OR
Metals level of
1.25E-021b/ton
BLS
Monitoring protocol
for ESP will be
developed by mill
PM level of 0.01
gr/dscf
OR
Metals level of
1.89E-031b/ton
BLS
Monitoring protocol
for ESP will be
developed by mill
Smelt Dissolving
Tanks
NSPS PM level of
0.020 gr/dscf
OR
Metals level of
3.14E-041b/ton
BLS
Monitoring of wet
scrubber operating
parameters
PM level of 0.1 2
gr/dscf
OR
Metals level of
1.88E-041b/ton
BLS
Monitoring of wet
scrubber operating
parameters
Sulfite Recovery
Furnaces
PM level of 0.04
gr/dscf
Monitoring protocol
for fiber-bed
demister will be
developed by mill
PM level of 0.02
gr/dscf
Monitoring protocol
for fiber-bed
demister plus
reverse-jet scrubber
will be developed
by mill
Semichemical
Combustion
Sources
NDCE: non-direct contact evaporator
DCE: direct contact evaporator
gr/dscf: grains per dry standard cubic foot
BLO: black liquid oxidation
BLS: black liquid solids
THC: total hydrocarbons
RTO: regenerative thermal oxidizer
ESP: electrostatic precipitator
5-5
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TABLE 5-2 (continued)
MACT II CONTROL OPTIONS BY POLLUTANT
Options
Total Gaseous
Organic Hazardous
Air Pollutant
(TGOHAP)
Option I
(MACT floor)
Total Gaseous
Organic Hazardous
Air Pollutant
(TGOHAP)
Option II
(Wet to dry ESP
system conversion
forNDCEs;BLO
control for DCEs;
RTO for
semichemical
sources)
Total Gaseous
Organic Hazardous
Air Pollutant
(TGOHAP)
Option III (low-odor
conversion for
DCEs)
Kraft and Soda Combustion Sources
NDCE Recovery
Furnaces
No control
No monitoring
Methanol level of
0.025 Ib/ton of BLS
Equipment in place
—
DCE Recovery
Furnaces
No control
No monitoring
98 percent reduction
in BLO vent
emissions or
methanol level of
0.1 8 Ib/ton of BLS
for BLO vent
Methanol level of
0.025 Ib/ton of BLS
Equipment in place
Lime Kilns
—
—
—
Smelt Dissolving
Tanks
—
—
—
Sulfite Recovery
Furnaces
—
—
—
Semichemical
Combustion
Sources
No control
No monitoring
90 percent reduction
in THC emissions or
THC level of 2.76
Ib/ton BLS
Combustion
temperature
monitor
—
NDCE: non-direct contact evaporator
DCE: direct contact evaporator
gr/dscf: grains per dry standard cubic foot
BLO: black liquid oxidation
BLS: black liquid solids
THC: total hydrocarbons
RTO: regenerative thermal oxidizer
ESP: electrostatic precipitator
5-6
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TABLE 5-3
SUMMARY OF MACTII REGULATORY OPTIONS FOR KRAFT
AND SODA COMBUSTION SOURCES
Regulatory Alternatives
ROI
(MACT floor + RTO)
ROII
(MACT floor + BLO
control + RTO)
ROIII
(MACT floor + low-odor
conversion + wet to dry
ESP system conversion +
RTO)
ROIV
(Tighter PM + low-odor
conversion + wet to dry
ESP system conversion +
RTO)
Kraft and Soda Combustion Sources
NDCE Recovery
Furnaces
PM Option I &
TGOHAP Option I
PM Option I &
TGOHAP Option I
PM Option I &
TGOHAP Option II
PM Option II &
TGOHAP Option II
DCE Recovery
Furnaces
PM Option I &
TGOHAP Option I
PM Option I &
TGOHAP Option II
PM Option I &
TGOHAP Option
III
PM Option II &
TGOHAP Option
III
Lime Kilns
PM Option I
PM Option I
PM Option I
PM Option II
Smelt
Dissolving
Tanks
PM Option I
PM Option I
PM Option I
PM Option
II
NDCE: non-direct contact evaporator
DCE: direct contact evaporator
ESP: electrostatic precipitator
BLO: black liquid oxidation
BLS: black liquid solids
THC: total hydrocarbons
RTO: regenerative thermal oxidizer
5-7
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TABLE 5-4
PROPOSED MACT II ALTERNATIVES
MACT II
Alternative
A
B
C
D
E
F
G
H
Subcategory Option Number
Kraft and Soda
1
1
2
2
3
3
4
4
Sulfite
1
2
1
2
1
2
1
2
Semichemical1
2
2
2
2
2
2
2
2
1 Two control options are considered for semi-chemical sources. The floor level of control (Option 1)
involves no add-on controls or control costs. This option has not been evaluated in the EA. Only the above-
the-floor regulatory option (Option 2) that involves add-on controls and emission control costs is evaluated in
theEA.
5-S
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TABLE 5-5
SUMMARY OF COSTS BY MILL CATEGORY-MACT I ONLY
THOUSANDS OF 1995 DOLLARS
SUBCATEGORY COST TYPE
NUMBER
OF MILLS
COSTED
REGULATORY ALTERNATIVE
Selected BAT/PSES Option B
Kraft and Soda
125
Sulfite
Semichemical
TOTAL
CAPITAL COST
O&M EXPENSE
ANNUALIZED COST
ANNUALIZED PRETAX
CAPITAL COST
O&M EXPENSE
ANNUALIZED COST
PRETAX COST
CAPITAL COST
O&M EXPENSE
ANNUALIZED COST
ANNUALIZED PRETAX
CAPITAL COST
O&M EXPENSE
ANNUALIZED COST
ANNUALIZED PRETAX
14
16
155
$463,866
$71,889
$77,272
$118,415
$25,148
$2,808
$3,567
$5,369
$11,744
$22
$929
$1,264
$500,758
$74,718
$81,767
$125,048
$601,706
$88,175
$97,334
$148,708
$25,148
$2,808
$3,567
$5,369
$11,744
$22
$929
$1,264
$638,598
$91,004
$101,829
$155,342
Notes: Factor for Converting $1989 to $1995: 1.1855, based on change in Engineering News Record Construction
Cost Index from 1989 to 1995.
The annualized costs include cost savings that may be generated at some mills.
S:\ECON\PULP2\EIA\CHAP_5\TAB5_5.WK4
05/27/97
5-9
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operating and maintenance costs are $75 million. With BAT/PSES Option B, capital costs are $639 million
and annual operating and maintenance costs are $91 million. The post-tax annualized costs are $82 million
or $102 million, assuming implementation of the final BAT/PSES and Option B respectively, while the pre-
tax annualized costs are estimated at either $125 million or $155 million.
Costs for proposed MACT II requirements are shown in Table 5-6. Capital costs associated with
MACT II alternatives A to H range from approximately $258 million to $2.1 billion. Annual operating and
maintenance costs range from an annual cost savings of $75 million to an annual expenditure of $24 million.
The post-tax annualized cost range is approximately $23 million to $135 million, depending on the
alternative considered. The pre-tax annualized cost ranges from $32 million to $173 million. The capital and
annual operating and maintenance costs for the selected option (Alternative A) are $258 million and $5.2
million, respectively while the post-tax annualized cost is $23 million. The cost estimates for the MACT II
alternatives do not include reporting and recordkeeping costs.
Combined costs for installing both final MACT I and proposed MACT II requirements at all
facilities are shown in Table 5-7A for MACT I, assuming implementation of the selected BAT/PSES (Option
A) (shown as MACT IA in Table 5-7A) and Table 5-7B for MACT I assuming implementation of
BAT/PSES Option B (shown as MACT IB in Table 5-7B). Capital costs range from approximately $759
million to $2.7 billion for MACT IA and MACT II combined, depending on the MACT II alternative
selected, while annual operating and maintenance costs range from $211 thousand to $99 million. The post-
tax annualized cost is approximately $105 million to $217 million, depending on the MACT II alternative
considered. The pre-tax annualized costs range from $157 million to $297 million. For MACT IB and
MACT II combined costs, depending on the MACT II alternative selected, capital costs range from
approximately $897 million to $2.8 billion while annual operating and maintenance costs range from $16.5
million to $115 million. The post-tax annualized cost is approximately $125 million to $237 million,
depending on the alternative considered. The pre-tax annualized costs range from $188 million to $328
million. In the preferred scenario, if Alternative A is the selected MACT II option, the combined air pollution
control costs for final MACT IA and proposed MACT II are: $759 million in capital costs, $80 million in
annual operating and maintenance costs, $157 million in pre-tax annualized costs, and $105 million in post-
tax annualized costs - i.e., the lowest combination of costs considered.
5-10
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TABLE 5-6
SUMMARY OF PROPOSED MACT II ALTERNATIVE COSTS
THOUSANDS OF 1995 DOLLARS
MACT II ALTERNATIVE COSTS*
SUBCATEGORY COST TYPE
Kraft and Soda Capital
O&M
Posttax Annualized
Pretax Annualized
Sulfite Capital
O&M
Posttax Annualized
Pretax Annualized
Semichemical Capital
O&M
Posttax Annualized
Pretax Annualized
Total Capital
O&M
Posttax Annualized
Pretax Annualized
A B
$218,893 $218,893
($1,696) ($1,696)
$16,116 $16,116
$21,537 $21,537
$11,400 $19,580
$4,043 $6,926
$3,199 $5,485
$5,105 $8,750
$28,096 $28,096
$2,855 $2,855
$3,824 $3,824
$5,727 $5,727
$258,389 $266,569
$5,202 $8,085
$23,139 $25,424
$32,368 $36,014
C
$343,307
$14,496
$35,076
$50,318
$11,400
$4,043
$3,199
$5,105
$28,096
$2,855
$3,824
$5,727
$382,803
$21,394
$42,099
$61,150
D
$343,307
$14,496
$35,076
$50,318
$19,580
$6,926
$5,485
$8,750
$28,096
$2,855
$3,824
$5,727
$390,983
$24,277
$44,385
$64,795
E
$1,454,893
($81,405)
$67,051
$75,526
$11,400
$4,043
$3,199
$5,105
$28,096
$2,855
$3,824
$5,727
$1,494,389
($74,507)
$74,075
$86,357
F
$1,454,893
($81,405)
$67,051
$75,526
$19,580
$6,926
$5,485
$8,750
$28,096
$2,855
$3,824
$5,727
$1,502,569
($71,624)
$76,360
$90,003
G
$2,079,197
($64,298)
$125,551
$158,107
$11,400
$4,043
$3,199
$5,105
$28,096
$2,855
$3,824
$5,727
$2,118,693
($57,400)
$132,574
$168,938
H
$2,079,197
($64,298)
$125,551
$158,107
$19,580
$6,926
$5,485
$8,750
$28,096
$2,855
$3,824
$5,727
$2,126,873
($54,517)
$134,859
$172,584
*See Tables 5-3 and 5-4 for descriptions of alternatives.
5-11
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TABLE 5-7A
SUMMARY OF FINAL MACT IA & PROPOSED MACT H ALTERNATIVE COSTS
THOUSANDS OF 1995 DOLLARS
SUBCATEGORY COST TYPE
Kraft and Soda Capital
O&M
Posttax Annualized
Pretax Annualized
Sulfite Capital
O&M
Posttax Annualized
Pretax Annualized
Semichemical Capital
O&M
Posttax Annualized
Pretax Annualized
Total Capital
O&M
Posttax Annualized
Pretax Annualized
A
$682,759
$70,193
$93,387
$139,951
$36,548
$6,851
$6,766
$10,474
$39,840
$2,877
$4,753
$6,991
$759,147
$79,921
$104,906
$157,416
B
$682,759
$70,193
$93,387
$139,951
$44,728
$9,734
$9,051
$14,119
$39,840
$2,877
$4,753
$6,991
$767,327
$82,803
$107,192
$161,062
MACTIA
C
$807,173
$86,385
$112,348
$168,733
$36,548
$6,851
$6,766
$10,474
$39,840
$2,877
$4,753
$6,991
$883,561
$96,113
$123,867
$186,198
AND MACT II ALTERNATIVE COSTS
D
$807,173
$86,385
$112,348
$168,733
$44,728
$9,734
$9,051
$14,119
$39,840
$2,877
$4,753
$6,991
$891,741
$98,995
$126,152
$189,843
E
$1,918,758
($9,516)
$144,323
$193,940
$36,548
$6,851
$6,766
$10,474
$39,840
$2,877
$4,753
$6,991
$1,995,146
$211
$155,842
$211,405
F
$1,918,758
($9,516)
$144,323
$193,940
$44,728
$9,734
$9,051
$14,119
$39,840
$2,877
$4,753
$6,991
$2,003,326
$3,094
$158,127
$215,051
G
$2,543,063
$7,591
$202,822
$276,521
$36,548
$6,851
$6,766
$10,474
$39,840
$2,877
$4,753
$6,991
$2,619,451
$17,318
$214,341
$293,986
H
$2,543,063
$7,591
$202,822
$276,521
$44,728
$9,734
$9,051
$14,119
$39,840
$2,877
$4,753
$6,991
$2,627,631
$20,201
$216,627
$297,632
5-12
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TABLE 5-7B
SUMMARY OF FINAL MACT IB & PROPOSED MACT II ALTERNATIVE COSTS
THOUSANDS OF 1995 DOLLARS
SUBCATEGORY COST TYPE
Kraft and Soda Capital
O&M
Posttax Annualized
Pretax Annualized
Sulfite Capital
O&M
Posttax Annualized
Pretax Annualized
Semichemical Capital
O&M
Posttax Annualized
Pretax Annualized
Total Capital
O&M
Posttax Annualized
Pretax Annualized
A
$820,599
$86,479
$113,449
$170,245
$36,548
$6,851
$6,766
$10,474
$39,840
$2,877
$4,753
$6,991
$896,987
$96,207
$124,968
$187,710
B
$820,599
$86,479
$113,449
$170,245
$44,728
$9,734
$9,051
$14,119
$39,840
$2,877
$4,753
$6,991
$905,167
$99,090
$127,254
$191,355
MACT IB
C
$945,013
$102,671
$132,410
$199,027
$36,548
$6,851
$6,766
$10,474
$39,840
$2,877
$4,753
$6,991
$1,021,401
$112,399
$143,929
$216,492
AND MACT II ALTERNATIVE COSTS
D
$945,013
$102,671
$132,410
$199,027
$44,728
$9,734
$9,051
$14,119
$39,840
$2,877
$4,753
$6,991
$1,029,581
$115,281
$146,214
$220,137
E
$2,056,598
$6,770
$164,385
$224,234
$36,548
$6,851
$6,766
$10,474
$39,840
$2,877
$4,753
$6,991
$2,132,986
$16,498
$175,904
$241,699
F
$2,056,598
$6,770
$164,385
$224,234
$44,728
$9,734
$9,051
$14,119
$39,840
$2,877
$4,753
$6,991
$2,141,166
$19,380
$178,189
$245,344
G
$2,680,903
$23,877
$222,884
$306,815
$36,548
$6,851
$6,766
$10,474
$39,840
$2,877
$4,753
$6,991
$2,757,291
$33,605
$234,403
$324,280
H
$2,680,903
$23,877
$222,884
$306,815
$44,728
$9,734
$9,051
$14,119
$39,840
$2,877
$4,753
$6,991
$2,765,471
$36,487
$236,689
$327,925
5-13
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5.1.3 Air Emission Reductions and Cost Effectiveness
The baseline emissions, emissions after MACTI is applied, and cost effectiveness for the MACTI
final rule, the MACT II proposed rule (Alternative A), and the combined air rules are shown in Table 5-8.
Total HAP reductions are estimated to be approximately 139,300 for MACT IA or 138,400 Megagrams per
year for MACT IB. MACT I VOC reductions are 409,000 for MACT IA or 407,000 Megagrams per year
for MACT IB. MACT I HAP cost-effectiveness is either $1,020 or $1,000 per Megagram (MACT IA or
MACT IB, respectively) while MACT I VOC cost-effectiveness is either $330 or $360 per Megagram, again
depending on the BAT/PSES option.
Under the proposed MACT II (Alternative A), HAP reductions are approximately 2,550 Megagrams
with a cost-effectiveness of $16,400 per Megagram. VOC reductions are approximately 32,600 Megagrams
with a cost-effectiveness of $1,300 per Megagram. (Note the MACT I and MACT II cost-effectiveness
estimates include reporting and recordkeeping costs.)
For the combined final MACT I and proposed MACT II Alternative A, HAP and VOC reductions
are 141,800 and 441,200 Megagrams, respectively, under the selected BAT/PSES. HAP cost-effectiveness is
$1,300 per Megagram and VOC cost-effectiveness is $400 per Megagram. For example, VOC baseline
emissions for combined MACT I and MACT II are 897,200 Megagrams, i.e., the sum of the first and fourth
columns of numbers in Table 5-8. VOC emissions remaining after MACT I and MACT II are 456,000
Megagrams for a reduction of 441,200 Megagrams. If BAT/PSES Option B were to be selected, HAP and
VOC reductions would be 140,900 and 439,200 Megagrams, respectively, and related HAP cost-
effectiveness would be $1,200 per Megagram and VOC cost-effectiveness would be $420 per Megagram.
5.2 WATER POLLUTION COMPLIANCE COMPONENTS
5.2.1 Water Pollution Control Compliance Components—Description
Facilities are characterized not only by subcategory, but also by discharge status, i.e., direct (to water
bodies) or indirect (through POTWs or sewage treatment plants). BAT and NSPS apply to direct
dischargers; PSES and PSNS apply to indirect dischargers. BAT and PSES apply to existing dischargers,
while NSPS and PSNS apply to new sources. In this rule, EPA is promulgating BAT/PSES and NSPS/PSNS
5-14
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TABLE 5-8
PULP AND PAPER NATIONWIDE AIR EMISSION AND MACT COST IMPACTS FOR AFFECTED MACT MILLS
IMPACTS
MACT BASELINE EMISSIONS
(Before MACT is Applied)
MACT I & III
Current
(for affected
sources)
After OW
Opt. Aac
After OW
Opt. Bac
MACT II
Current
(for affected
sources)
EMISSIONS After MACT Is Applied
Each MACT
MACT I & III"
With OW Opt.
With OW Opt.
B
MACT II
Combined MACTs
With OW
Opt. A
With OW
Opt. B
ENVIRONMENTAL (Megagrams per Year):
Hazardous Air Pollutants:
- Gaseous HAP
- Particulate HAP
- Total HAP
Volatile Organic Compounds
Particulate
Total Reduce Sulfur
Carbon monoxide
Nitrogen oxides
Sulfur dioxides
209,000
209,000
826,000
145,000
198,000
198,000
814,000
(9)
142,000
(840)
500
860
ENERGY
(MMBtu/Yr):
2,710,000
232,000
232,000
872,000
(10)
144,000
(1,100)
(1,820)
(3,800)
(11,050,000)
32,200
220
32,400
71,200
64,400
4,040
248,400
120,100
102,600
69,700
69,700
417,000
83
66,100
8,660
5,230
94,500
33,250,000
70,600
70,600
419,000
84
66,100
8,610
3,030
92,300
21,300,000
29,700
147
29,850
38,600
40,600
4,040
190,700
120,600
102,500
(158,000)
99,400
147
99,600
456,000
40,700
70,140
199,400
126,000
197,000
33,100,000
100,300
147
100,500
458,000
40,700
70,140
199,300
124,000
195,000
21,100,000
Cost effectiveness:
- $/MgofHAP
$/MgofVOC
1,020
330
1,000
360
16,400
1,300
1,300
400
1,200
420
a Particulate, carbon monoxide, nitrogen oxide, and sulfur dioxide emissions are from secondary impacts of OW options.
b Particulate, carbon monoxide, nitrogen oxide, and sulfur dioxide emissions are increases from baseline due to OW options and after MACT is applied.
c Number in parenthesis indicates a decrease in pollutant or energy use.
5-15
-------
for two subcategories: bleached papergrade kraft and soda (BPK) and papergrade sulfite (PS). EPA analyzed
process change (pollution prevention) technologies as the keystone components common to both BAT and
PSES technology options. These common process technology components serve as the basis for BAT
limitations and PSES applied at the bleach plant for both direct and indirect discharging mills. End-of-pipe
biological treatment already exists both at direct discharging mills and at POTWs receiving wastewaters from
indirect discharging mills. Therefore, while existing end-of-pipe biological treatment is a necessary
component for direct dischargers to achieve end-of-pipe BAT limitations (e.g., AOX), costs are not included
as part of BAT. PSES limitations are applied at the bleach plant prior to discharge to the POTW sewer and
therefore end-of-pipe biological treatment and associated costs are not a component of PSES technology for
indirect discharging mills. Table 5-9 describes the two options considered for the bleached papergrade kraft
and soda subcategory (EPA, 1996b).
EPA has segmented the papergrade sulfite subcategory (EPA, 1996b). The three segments are:
• calcium- and magnesium-based processes (6 mills)
• ammonium-based process (4 mills)
• specialty grade pulps (1 mill)
Specialty mills are those papergrade mills producing specialty grade pulp characterized by a high percentage
of alpha cellulose and high brightness. The specialty grade segment also includes those mills where a major
portion of production is in excess of 91 ISO brightness. Totally chlorine free (TCP) technology is the
BAT/PSES basis for the calcium and magnesium segment. Elemental Chlorine Free (ECF; 100 percent
chlorine dioxide substitution with peroxide enhanced extraction, and elimination of hypochlorite) is the
BAT/PSES technology basis for the ammonium and specialty grade segments (see Table 5-10).
5.2.2 Water Pollution Compliance Control Costs
Table 5-11 summarizes the capital, O&M, post-tax, and pre-tax annualized costs for the bleached
papergrade kraft and soda and papergrade sulfite subcategories. BAT/PSES applies to 86 mills in the
bleached papergrade kraft and soda subcategory and to 11 mills in the papergrade sulfite category. (One mill
produces in both subcategories.)
5-16
-------
TABLE 5-9
CWA BAT/PSES OPTIONS CONSIDERED BY EPA FOR THE
BLEACHED PAPERGRADE KRAFT AND SODA SUBCATEGORY
Option1
A
B
Abbreviated Description
100% C1O2
OD or Ext. Cook + 100% C1O2
Description
Complete (100%) substitution of chlorine
dioxide for chlorine
Oxygen delignification or extended
delignification achieving a kappa number <20
for softwood and < 13 for hardwood, and
complete (100%) substitution of chlorine
dioxide for chlorine
1 Both options in Table 5-9 include:
Effective brownstock washing
Elimination of hypochlorite
Oxygen and peroxide enhanced extraction
Closed brownstock pulp screen room operation
High shear mixing of pulp and chlorine dioxide in the first bleaching stage
Adequate wood chip size control, and elimination of defoamers containing dioxin precursors
5-17
-------
TABLE 5-10
CWA BAT/PSES OPTIONS CONSIDERED BY EPA FOR THE
PAPERGRADE SULFITE SUBCATEGORY
Segment
Abbreviated Description
Description
Calcium- and magnesium-
based
TCP
Oxygen- and peroxide-enhanced extraction
followed by peroxide bleaching, improved
pulp cleaning, and elimination of
hypochlorite
Ammonium-based
ECF
Complete (100%) substitution of chlorine
dioxide for chlorine, peroxide-enhanced
extraction, and elimination of hypochlorite
Specialty grade pulp
ECF
Complete (100%) substitution of chlorine
dioxide for chlorine, oxygen- and peroxide-
enhanced extraction, and elimination of
hypochlorite
5-18
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TABLE 5-11
BAT/PSES COSTS
THOUSANDS OF 1995 DOLLARS
Cost Type
Capital
O&M
Post-tax Annualized
Pre-tax Annualized
Subcategory
Bleached Papergrade Kraft and Soda
Selected
BAT/PSES
$965,610
$151,421
$161,866
$248,208
Option B
$2,129,056
$87,185
$215,978
$309,436
Papergrade Sulfite
Selected
BAT/PSES
$73,778
$6,992
$9,753
$14,551
5-19
-------
For the bleached papergrade kraft and soda subcategory, capital costs for the selected option (100
percent substitution) are $966 million, O&M costs are $151 million, and after-tax annualized costs are $162
million. The capital costs for Option B (100 percent substitution with oxygen delignification or extended
cooking) are $2.1 billion, O&M costs are $87 million, and after-tax annualized costs are $216 million.
For the papergrade sulfite subcategory, capital costs for BAT are $74 million, O&M costs are $7.0
million, and after-tax annualized costs are $9.8 million.
5.2.3 Pollutant Removals and Cost-effectiveness of CWA Final Rule
There have been no changes to the cost-effectiveness methodology or calculation of toxic weighting
factors described in EPA, 1993b. Cost-effectiveness (c-e) ratios are used by EPA to distinguish among
options and to reject options that cost significantly more per quantity of pollutants removed. C-E is not used
as a basis for determining economic achievability. Detailed tables of pollutant pounds to toxic pound-
equivalent conversions are provided in Appendix B. Table 5-12 summarizes the incremental cost-
effectiveness for direct dischargers in the bleached papergrade kraft and soda subcategory. By convention,
the industry comparisons are presented in 1981 dollars (1995 dollar values are given in parentheses). The
selected option and Option B incremental c-e values in 1981 dollars are $14/pe and $36/pe, respectively
($21/pe and $55/pe, respectively). Average c-e values are $14/pe for the selected option and $15/pe for
Option B ($21/pe and $24/pe, respectively). For indirect dischargers (Table 5-13), the average c-e values
range from $14/pe to $21/pe ($21/pe to $32/pe), with incremental c-e values of $14 for the selected option
and $115 for Option B ($22/pe and $178/pe, respectively).
Table 5-14 summarizes the c-e analysis for the direct dischargers in the papergrade sulfite
subcategory. Because only one option was examined, the average and incremental c-e values are the same,
$13/pe ($20/pe). For direct and indirect dischargers combined, the average and incremental c-e values are
$13/pe ($21/pe).
Table 5-15 combines the results for the two subcategories to provide the cost-effectiveness for the
industry. Industry cost-effectiveness is $14/pe for both BAT and PSES. Appendix B contains the industry-
wide pollutant-specific data for pounds and pounds-equivalents currently discharged. Tables B-6 and B-7 are
5-20
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TABLE 5-12
COST-EFFECTIVENESS OF CWA POLLUTION CONTROL OPTIONS
BLEACHED PAPERGRADE KRAFT AND SODA SUBCATEGORY
DIRECT DISCHARGERS
Option
Total Annual
Pound
Equivalents
Removed
(PE)
Pre-tax
Annualized
Cost
($000, 1981)
Incremental
Pound
Equivalents
Removed
(PE)
Pre-tax
Annualized
Cost
($000, 1981)
Incremental
Cost
Effectiveness
($1981/PE)
Average
Cost
Effectiveness
($1981/PE)
Baseline
A
B
0
10,755,545
11,641,298
$0
$146,306
$177,781
N/A
10,755,545
885,754
N/A
$146,306
$31,475
N/A
$13.60
$35.53
N/A
$13.60
$15.27
TABLE 5-13
COST-EFFECTIVENESS OF CWA POLLUTION CONTROL OPTIONS
BLEACHED PAPERGRADE KRAFT AND SODA SUBCATEGORY
INDIRECT DISCHARGERS
Option
Total Annual
Pound
Equivalents
Removed
(PE)
Pre-tax
Annualized
Cost
($000, 1981)
Incremental
Pound
Equivalents
Removed
(PE)
Pre-tax
Annualized
Cost
($000, 1981)
Incremental
Cost
Effectiveness
($1981/PE)
Average
Cost
Effectiveness
($1981/PE)
Baseline
A
B
0
1,000,467
1,070,965
$0
$14,070
$22,156
N/A
1,000,467
70,498
N/A
$14,070
$8,086
N/A
$14.06
$114.70
N/A
$14.06
$20.69
5-21
-------
TABLE 5-14
COST-EFFECTIVENESS OF CWA POLLUTION CONTROL OPTIONS
PAPERGRADE SULFITE SUBCATEGORY
DIRECT DISCHARGERS
Option
Total Annual
Pound
Equivalents
Removed
(PE)
Pre-tax
Annualized
Cost
($000, 1981)
Incremental
Pound
Equivalents
Removed
(PE)
Pre-tax
Annualized
Cost
($000, 1981)
Incremental
Cost
Effectiveness
($1981/PE)
Average
Cost
Effectiveness
($1981/PE)
Baseline
A
0
699,061
$0
$9,008
N/A
699,061
N/A
$9,008
N/A
$12.89
N/A
$12.89
5-22
-------
TABLE 5-15
COST-EFFECTIVENESS OF CWA POLLUTION CONTROL OPTIONS
PULP, PAPER, AND PAPERBOARD INDUSTRY
Subcategory
Total Annual
Pound
Equivalents
Removed
(PE)
Pre-tax
Annualized
Cost
($000, 1981)
Incremental
Pound
Equivalents
Removed
(PE)
Pre-tax
Annualized
Cost
($000, 1981)
Incremental
Cost
Effectiveness
($1981/PE)
Average
Cost
Effectiveness
(S1981/PE)
BAT
Bleached Papergrade Kraft and Soda 10,755,545
Papergrade Sulfite 699,061
Industry Total 11,454,605
$146,307
$9,008
10,755,545
699,061
$155,314 11,454,605
$146,307
$9,008
$155,314
$13.60
$12.89
$13.56
$13.60
$12.89
$13.56
PSES
Bleached Papergrade Kraft and Soda 1,000,467 $14,070 1,000,467 $14,070 $14.06 $14.06
Papergrade Sulfite ND ND ND ND ND ND
Industry Total
ND ND ND ND $14.33 $14.33
ND: not disclosed for reasons of confidentiality.
Note: Incremental costs and removals are calculated from the selected option and the preceding option in the
subcategory cost-effectiveness analysis.
-------
the industry comparisons for BAT and PSES, respectively. The pound-equivalents remaining, which is
reported on Tables B-6 and B-7, is the difference between baseline loadings and removals.
5.2.4 Sensitivity Analysis of Cost-effectiveness of CWA Final Rule
EPA examined the c-e values based on after-tax (i.e., industry compliance) costs for BAT and PSES.
Summary tables are located in Appendix B (Tables B-8 through B-l 1). In 1981 dollars, the incremental c-e
values for bleached papergrade kraft and soda direct dischargers are $9/pe ($14/pe)and $32/pe ($50/pe) for
the selected option and Option B, respectively. The average c-e values for the same set of mills are $9/pe
($14/pe) and $11/pe ($16/pe) for the selected option and Option B, respectively. For indirect dischargers in
the bleached papergrade kraft and soda subcategory, the average and incremental c-e values for the selected
option are both $9/pe ($15/pe). The average and incremental c-e values for Option B for the same set of
mills are $15/pe ($23/pe) and $92/pe ($142/pe), respectively.
For the papergrade sulfite subcategory, average and incremental c-e values are $9/pe ($13/pe) for
direct dischargers and $9/pe ($14/pe) for direct and indirect dischargers combined. For the pulp, paper, and
paperboard industry, the selected options have a c-e value of $9/pe ($14/pe) for BAT and $10/pe ($15/pe)
for PSES.
5.3 COSTS OF COMBINED PROPOSED AND FINAL AIR AND FINAL WATER
REQUIREMENTS
5.3.1 BAT/PSES Options
Table 5-16 summarizes different cost combinations for the 96 mills for which BAT/PSES
requirements are promulgated at this time (i.e., the bleached papergrade kraft and soda and papergrade
sulfite2 subcategories). Three sets of cost combinations are given:
2Although there are two proposed MACT II options for sulfite mills, the costs for papergrade sulfite mills do
not vary between the options; hence there is only one set of costs to reflect the combination of effluent
guideline, MACT I, and proposed MACT II costs for this group of mills.
5-24
-------
TABLE 5-16
SUMMARY OF FINAL BAT/PSES, FINAL MACT I, t
THOUSANDS OF 1995 DOLLARS
Subcategory Cost Type
Column Number
BAT/PSES Only
Selected
Option
1
Option B
2
BAT/PSES and MACT I
Selected
Option
3
Option B
4
BAT/PSES and MACT I: Selected Option
MACT II A,B
5
MACT II C,D
6
MACT II E,F
7
MACT II G,H
8
BAT/PSES and MACT I: Option B
MACT II A,B
9
MACT II C,D
10
MACT II E,F
11
MACT II G,H
12
Bleached Papergrade Kraft and Soda
Capital Cost
O&M Expense
Post-tax Annualized Cost
Pre-tax Annualized Cost
Papergrade Sulfite
Capital Cost
O&M Expense
Post-tax Annualized Cost
Pre-tax Annualized Cost
Total
Capital Cost
O&M Expense
Post-tax Annualized Cost
Pre-tax Annualized Cost
$965,610
$151,421
$161,866
$248,208
$73,778
$6,992
$9,753
$14,551
$1,039,388
$158,413
$171,618
$262,760
$2,129,056
$87,185
$215,978
$309,436
$73,778
$6,992
$9,753
$14,551
$2,202,835
$94,177
$225,731
$323,987
$1,305,760
$202,429
$217,553
$333,395
$87,836
$8,762
$11,861
$17,745
$1,393,596
$211,190
$229,414
$351,140
$2,606,038
$154,269
$291,528
$424,606
$87,836
$8,762
$11,861
$17,745
$2,693,874
$163,030
$303,389
$442,352
$1,428,156
$200,709
$226,124
$344,693
$95,936
$11,665
$14,151
$21,402
$1,524,091
$212,374
$240,275
$366,095
$1,495,447
$209,533
$236,417
$360,325
$95,936
$11,665
$14,151
$21,402
$1,591,383
$221,198
$250,568
$381,727
$2,224,759
$150,578
$259,661
$380,686
$95,936
$11,665
$14,151
$21,402
$2,320,695
$162,243
$273,812
$402,089
$2,662,837
$160,385
$299,455
$436,515
$95,936
$11,665
$14,151
$21,402
$2,758,773
$172,050
$313,606
$457,918
$2,728,434
$152,549
$300,099
$435,905
$95,936
$11,665
$14,151
$21,402
$2,824,369
$164,214
$314,250
$457,307
$2,795,725
$161,374
$310,392
$451,536
$95,936
$11,665
$14,151
$21,402
$2,891,661
$173,038
$324,543
$472,938
$3,525,038
$102,418
$333,636
$471,898
$95,936
$11,665
$14,151
$21,402
$3,620,973
$114,083
$347,788
$493,300
$3,963,115
$112,225
$373,430
$527,727
$95,936
$11,665
$14,151
$21,402
$4,059,051
$123,890
$387,582
$549,129
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• BAT/PSES (combined costs for bleached papergrade kraft and soda and papergrade sulfite
subcategories: see Table 5-11 for costs by subcategory).
• BAT/PSES and MACT I (i.e., promulgated requirements).
• BAT/PSES, MACT I, and proposed MACT II.
For example, the combined costs for the selected BAT/PSES option and MACT I are in the third column of
numbers from the left. The combined or total cost is $1.4 billion in capital costs, $211 million in O&M
expenses, and $229 million in post-tax annualized expenses. The combined costs for the selected BAT/PSES
option, MACT I, and the proposed MACT II Alternative A are in the fifth column. This combined total cost
is $1.5 billion in capital costs, $212 million in O&M expenses, and $240 million in post-tax annualized
expenses.
Table 5-17 summarizes different cost combinations for the 155 mills to which final MACT I and
proposed MACT II apply. (The 96 mills for which costs are presented in Table 5-16 are a subset of the 155
mills for which costs are presented in Table 5-17. As a result, the figures in Table 5-17 are greater than the
comparable figures in Table 5-16.) As noted in Section 5.1.2, MACT I costs differ by BAT/PSES option for
the bleached papergrade kraft and soda subcategory. Costs associated with the final BAT/PSES (Option A)
are in the top part of the table while those associated with BAT/PSES Option B are in the bottom part of the
table. The first column of numbers is the MACT I costs and the second column is for the proposed MACT II
alternative (Alternative A) costs. These costs reflect total compliance costs for all 155 mills to which MACT
applies. The third column is the BAT/PSES costs for the 96 mills in the bleached papergrade kraft and soda
and papergrade sulfite categories for which BAT/PSES is promulgated at this time. For example, costs for
final MACT I, proposed MACT II (Alternative A), and the selected BAT/PSES option for bleached
papergrade kraft and soda and papergrade sulfite mills are $1.8 billion in capital costs, $238 million in annual
O&M expenses, and $277 million in post-tax annualized costs.
5.3.2 Sensitivity Analysis—TCF
EPA compared the costs of Option B and TCF for the bleached papergrade kraft and soda
subcategory (Table 5-18). Capital costs are approximately $956 million (about 45 percent) greater for TCF
than for Option B. The annual operating and maintenance costs of $783 million, however, are nearly 9 times
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TABLE 5-17
SUMMARY OF FINAL MACT I AND PROPOSED MACT II ALTERNATIVE COSTS FOR KRAFT, SULFITE,
SODA, AND SEMICHEMICAL MILLS AND FINAL BAT/PSES COSTS FOR BLEACHED PAPERGRADE
KRAFT AND SODA AND PAPERGRADE SULFITE MILLS
THOUSANDS OF 1995 DOLLARS
SUBCATEGORY COST TYPE
REGULATION
MACT IA
MACT II, ALT. A
SELECTED
BAT/PSES OPTION*
TOTAL
Kraft and Soda
Sulfite
Semichemical
Total
Capital
O&M
Posttax Annualized
Pretax Annualized
Capital
O&M
Posttax Annualized
Pretax Annualized
Capital
O&M
Posttax Annualized
Pretax Annualized
Capital
O&M
Posttax Annualized
Pretax Annualized
$463,866
$71,889
$77,272
$118,415
$25,148
$2,808
$3,567
$5,369
$11,744
$22
$929
$1,264
$500,758
$74,718
$81,767
$125,048
$218,893
($1,696)
$16,116
$21,537
$11,400
$4,043
$3,199
$5,105
$28,096
$2,855
$3,824
$5,727
$258,389
$5,202
$23,139
$32,368
$965,610
$151,421
$161,866
$248,208
$73,778
$6,992
$9,753
$14,551
n/a
n/a
n/a
n/a
$1,039,388
$158,413
$171,619
$262,759
$1,648,369
$221,614
$255,253
$388,159
$110,326
$13,843
$16,519
$25,025
$39,840
$2,877
$4,753
$6,991
$1,798,535
$238,334
$276,525
$420,175
REGULATION
SUBCATEGORY
Kraft and Soda
Sulfite
Semichemical
Total
COST TYPE MACT IB
Capital $601,706
O&M $88,175
Posttax Annualized $97,334
Pretax Annualized $148,708
Capital $25,148
O&M $2,808
Posttax Annualized $3,567
Pretax Annualized $5,369
Capital $11,744
O&M $22
Posttax Annualized $929
Pretax Annualized $1,264
Capital $638,598
O&M $91,004
Posttax Annualized $101,829
Pretax Annualized $155,342
MACT II, ALT. A BAT/PSES, OPT. B*
$218,893 $2,129,056
($1,696) $87,185
$16,116 $215,978
$21,537 $309,436
$11,400 $73,778
$4,043 $6,992
$3,199 $9,753
$5,105 $14,551
$28,096 n/a
$2,855 n/a
$3,824 n/a
$5,727 n/a
$258,389 $2,202,834
$5,202 $94,177
$23,139 $225,731
$32,368 $323,987
TOTAL
$2,949,655
$173,664
$329,427
$479,681
$110,326
$13,843
$16,519
$25,025
$39,840
$2,877
$4,753
$6,991
$3,099,821
$190,384
$350,699
$511,697
*BATYPSES costs incurred only by mills in bleached papergrade kraft and papergrade sulfite subcategories only.
'n/a' = not applicable
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TABLE 5-18
BLEACHED PAPERGRADE KRAFT AND SODA SUBCATEGORY
COMPARISON OF OPTION B AND TCF COSTS
THOUSANDS OF 1995 DOLLARS
Cost Type
BAT/PSES Only
Option B
TCF
BAT/PSES and
MACTI
Option B
TCF
BAT/PSES,
MACT I, and
MACT
Option B
IIA,B
TCF
Capital Cost
O&M Expense
Post-tax Annualized Cost
Pre-tax Annualized Cost
$2,129,056
$87,185
$215,978
$309,436
$3,084,873
$783,460
$688,330
$1,081,925
$2,606,038
$154,269
$291,528
$424,606
$3,561,854
$850,544
$763,880
$1,197,095
$2,728,434
$152,549
$300,099
$435,905
$3,684,250
$848,824
$772,450
$1,208,393
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greater. On a post-tax annualized basis, the TCP costs are more than 3.1 times the costs for Option B for
BAT/PSES. The air pollution control (MACT I) costs are assumed to be the same for TCP as for Option B
because boiler control requirements are likely to be the same. The post-tax annualized costs for TCF/MACT
I/MACTIIA are about 2.6 times greater than for Option B/MACTI/MACTII A.
5.4 REFERENCES
Reference material supporting Chapter 5 is located in the Pulp and Paper Water Docket.
OMB. 1992. Guideline and discount rates for benefit-cost analysis of Federal programs. Washington, DC:
Office of Management and Budget. Revised circular No. A-94. Water Docket, DCN 14,301.
U.S. EPA. 1993 a. Economic impact and regulatory flexibility analysis of proposed effluent guidelines and
NESHAP for the pulp, paper, and paperboard industry. EPA/821/R-93/021. Washington, DC: Office of
Water. Water Docket, DCN 8,590.
U.S. EPA. 1993b. Cost effectiveness analysis of proposed effluent limitations guidelines for the pulp, paper,
and paperboard industry. EPA/821/R-93/018. Washington, DC: Office of Water. Water Docket, DCN
33,595.
U.S. EPA. 1996a. National emission standards for hazardous air pollutants for source category: pulp and
paper. Environmental Protection Agency. Notice of Availability. Federal Register 61(47):9383-9399.
March 8, 1996. Water Docket, DCN 13,212.
U.S. EPA. 1996b. Effluent limitations guidelines, pretreatment standards, and new source performance
standards: pulp, paper, and paperboard category; national emission standards for hazardous air pollutants for
source category: pulp and paper production. Environmental Protection Agency. Notice of Availability.
Federa/tfeg/ster61(136):36835-36858. July 15, 1996. Water Docket, DCN 13,471.
U.S. EPA. 1997a. Supplemental development document for effluent limitations guidelines and standards for
the for the pulp, paper, and paperboard category subpart B (bleached papergrade kraft and soda) and subpart
E (papergrade sulfite). Washington, DC: Office of Water. Water Docket, DCN 14,487.
U.S. EPA. 1997b. Pulp, paper, and paperboard industry—background information for promulgated air
emission standards, manufacturing processes at kraft, sulfite, soda, semi-chemical, mechanical and secondary
and non-wood fiber mills, final EIS. EPA-453/R-93-050b. Washington, DC: Office of Air Quality Planning
and Standards. Water Docket, DCN 14,319.
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CHAPTER 6
ECONOMIC IMPACT RESULTS
This chapter describes the economic effects resulting from compliance with the Cluster Rule on the
pulp and paper industry, regions of the country where the industry is located, and the national economy. The
economic impacts result from the pollution control costs discussed in Chapter Five. In this chapter, EPA
evaluates the impacts of these costs using the models presented in Chapter Three. All supporting computer
printouts are located in Section 27.4 "Cost and Impact Analysis" in the Pulp and Paper Water Docket. (DCN
14,340 through DCN 14,400). Almost all of the material is confidential.
Section 6.1 discusses New Source Performance Standards (NSPS) and Pretreatment Standards for
New Sources (PSNS) under the Clean Water Act (CWA). Each of the remaining sections in the chapter
contains a different level or type of analysis (industry, regional, national, or sensitivity). Within each section,
the findings are ordered in the following sequence:
• Clean Air Act (CAA) Requirements (MACT)
• CWA Requirements (BAT/PSES)
• Combined CAA and CWA Requirements
final MACT I and BAT/PSES (Cluster Rule)
final MACT I, final BAT/PSES, and proposed MACT II
Section 6.2 presents the industry-level impacts (company failures, facility closures and direct impacts, see
Section 3.3 for details). Section 6.3 discusses regional impacts and Section 6.4 summarizes the national-level
impacts (more information is located in Section 3.3.2). With the exception of the company failure
(bankruptcy) analysis, the impacts discussed in this chapter are based on the projected facility closures.
EPA examined the impacts under two scenarios: once under the assumption that the facility must
absorb all the costs of incremental pollution control, and second, under the assumption that market conditions
will allow a facility to pass on some of the additional costs to consumers in the form of a price increase.
(Section 3.3.1.2 and Appendix A describe the price increase methodology.) This sensitivity analysis was
performed throughout the various cost configurations considered; most tables have "No Price Increase" and
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"Price Increase" divisions. Section 6.5 presents a summary of the sensitivity of closures to changes in the
discount rate, changes in the timing of compliance implementation, increases in pulp prices for non-integrated
mills due to mill closures, and totally chlorine free (TCP) costs for the bleached papergrade kraft and soda
subcategory.
MACT III promulgates NESHAP for mechanical pulping, secondary fiber pulping, and non-wood
pulping. MACT III has no costs; hence there are no impacts to discuss in Chapter 6.
6.1 NEW SOURCE PERFORMANCE STANDARDS AND PRETREATMENT STANDARDS
FOR NEW SOURCES
6.1.1 Papergrade Sulfite
For NSPS/PSNS, EPA has chosen the following technologies: TCP for the calcium/magnesium
sulfite segment, ECF for the ammonium sulfite segment, and bleach plant limits for the specialty grade
segment. EPA considered the cost of NSPS/PSNS technology for new source mills and concluded that such
costs were not sufficient to present a barrier to entry, because the cost of the NSPS/PSNS technology is an
insignificant fraction of the capital cost of a new mill (less than 1 percent) and, therefore, if a mill is able to
start up, it will have sufficient capital to meet these costs. Further, the costs of including the selected
NSPS/PSNS technology are substantially less on a per ton basis than the costs of retrofitting existing mills
and this technology is already being employed. Moreover, the increased chemical recovery and reduced
operating costs for the NSPS/PSNS option allow firms to recover any increased capital cost associated with
the NSPS/PSNS technology.
6.1.2 Bleached Papergrade Kraft and Soda—Elemental Chlorine Free (ECF) Technology
The Notice of Data Availability (61 FR 36835-36858) discussed an additional NSPS/PSNS option.
This option is ECF including extended delignification (oxygen delignification or extended cooking) to
produce softwood pulps with a kappa number of 20 or less (13 or less for hardwoods), followed by complete
(100 percent) substitution of chlorine dioxide for chlorine (Option B). ERG and McCubbin, 1997 estimate
the start-up costs (in 1995 dollars) for two new ECF 1,000 unbleached air-dried tons per day (UBADt/day)
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fiberlines. The capital and annual costs with complete substitution (100 percent) of chlorine dioxide for
chlorine (i.e., the selected BAT technology) are $201 million and $39.2 million, respectively. The capital and
annual costs for a new fiberline with Option B technology are $202 million and $35.6 million, respectively.
The capital cost to start-up an Option B fiberline is only 0.5 percent more than for an Option A fiberline.
Therefore, if a mill is able to start-up, it will have sufficient capital to meet these costs. The annual operating
and maintenance costs are 9 percent lower for Option B than Option A. EPA therefore perceives no barrier to
entry for Option B as the selected NSPS/PSNS for the bleached papergrade kraft and soda subcategory.
6.1.3 Bleached Papergrade Kraft and Soda—Totally Chlorine Free (TCF) Technology
EPA considered a TCF option for the bleached papergrade kraft and soda subcategory at proposal
(FR, 1993) but concluded that TCF was not an available pollution prevention technology at that time for the
reasons discussed in the preamble and elsewhere in the record to the rule. ERG and McCubbin, 1997
estimates costs for a new 1,000 UBADt/day TCF fiberline. The capital cost is $190.3 million; lower than
either of the ECF fiberlines primarily because the TCF fiberline avoids the cost of manufacturing chlorine
dioxide at the site, and requires only normal grades of stainless steel while ECF equipment requires more
expensive alloys and plastics that can withstand the corrosive action of chlorine dioxide (ERG and
McCubbin, 1997). Annual costs for the TCF fiberline are estimated at $33.9 million; lower than either ECF
fiberline. Should TCF technology develop to the point where it produces full brightness pulps at domestic
plants, and should the market provide sufficient demand for full brightness TCF pulps to warrant investment
in new fiberlines, cost would not be considered a barrier to entry.
6.2 INDUSTRY-LEVEL IMPACTS
6.2.1 Company Failures
Many of the companies considered in the analysis own more than one pulp and paper facility. In the
company failure analysis, EPA has identified conditions where it could make economic sense to upgrade each
facility (i.e., the facility could absorb the costs of additional control and still remain profitable), but the
company could not afford the total cost of upgrading all of the facilities that it owns. The larger the number
6-3
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of facilities that a company must upgrade, the greater the possibility of overextending the company's financial
resources,1 and pushing it into bankruptcy.
The company-level analysis is a bankruptcy analysis based on 1995 data. It examines publicly-held
companies for which 1995 data are available: 36 companies for CAA requirements and 29 companies for
CWA requirements. A number of pulp and paper firms affected by the integrated rules are privately
held—for which no data were available. These were, therefore, not evaluated in the company failure analysis.
EPA uses a standard and widely accepted measure— a weighted average of financial ratios called the
Airman's Z score—as a predictor of company financial distress and failure (see Section 3.3.4; Altman, 1993;
Brealy and Meyers, 1984; and Brigham, 1982). The Airman's Z score places a company into one of three
categories:
• bankruptcy unlikely
• no prediction made
• bankruptcy likely
For each affected company, the company failure analysis evaluates the Airman's Z score both before and after
the incurrence of compliance costs. If a company's Z-score drops below 1.81 (Airman's empirical estimate
of the point at which bankruptcy becomes likely), as a result of the costs of compliance, EPA considers the
company bankruptcy a result of the rule combination being evaluated.
Depending on the financial items carried on a facility's books, it is possible for a company that must
upgrade one facility to appear as a company failure but not as a facility closure. For example, a company
with a high debt load may have difficulty making periodic interest payments. If interest payments or long-
term debt are not carried at the facility level, it could appear that the facility could recoup the costs of a
pollution control upgrade while, in truth, the company could not afford to make the upgrade.
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6.2.1.1 CAA Requirements
There are 36 public companies with facilities to which final and proposed MACT apply.
Final MACT I
No companies move to the "bankruptcy likely" category as a result of final MACT I costs.
Proposed MACT II
Section 5.1 describes the eight alternatives (Alternatives A through H) evaluated for MACT II.
Alternative A is the proposed MACT II. EPA projects no incremental business failures under Alternatives A
through D. Under Alternatives E through H, one or more companies move into the "bankruptcy likely"
category. Section 6.2.1.5 describes some of the ramifications of this shift.
Combined Final MACT I and Proposed MACT II Alternatives
EPA examined the combined cost of final MACT I and the alternatives considered for MACT II.
EPA projects no additional bankruptcies for the combined cost of final MACT I and the proposed MACT II
(Alternative A) or final MACT I and MACT II Alternatives B through D. Under final MACT I and MACT II
Alternatives E through H, one or more companies move into the "bankruptcy likely" category, the same as
with the MACT II alternatives alone.
6.2.1.2 CWA Requirements
A company may own facilities in more than one subcategory. The purpose of the company failure
analysis is to identify the potential impacts of a rule for all costs, i.e. all subcategories, borne by a company.
As such, the company failure analysis is not a subcategory-specific analysis. EPA, however, evaluated
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achievability for both the papergrade sulfite and bleached papergrade kraft and soda subcategories. EPA
found the selected options for each subcategory to be economically achievable.
For the 29 public companies with facilities regulated by BAT/PSES, the final BAT/PSES option
results in no additional bankruptcies. One or more companies move into the "bankruptcy likely" category
with BAT/PSES Option B (100 percent substitution and either oxygen delignification or extended cooking).
6.2.1.3 Combined Final CAA (MACT I) andCWA (BAT/PSES) Requirements (Cluster Rule)
EPA estimates that the costs of the final BAT/PSES and final MACT I rules are not likely to cause
any bankruptcies. As with BAT/PSES alone, one or more companies move into the "bankruptcy likely"
category with BAT/PSES Option B combined with the final MACT I rule costs.
6.2.1.4 Combined Cluster Rule and Proposed MA CTII
For the 29 public companies with facilities to which final BAT/PSES, final MACT I, and proposed
MACT II apply, the combined costs for final BAT/PSES, final MACT I, and proposed MACT II Alternative
(A) result in no additional failures. Final BAT/PSES, final MACT I, and MACT II Alternatives B-D costs
also result in no additional failures. One or more companies move into the "bankruptcy likely" category
when final BAT/PSES and final MACT I are combined with MACT II Alternatives E-H, or with BAT/PSES
Option B and any MACT I or MACT II requirements.
6.2.1.5 Ramifications of Company Bankruptcy
Table 6-1 summarizes the cost configurations that lead to one or more companies moving into the
"bankruptcy likely" category. The firms potentially affected—those whose Z-scores drop below 1.81 as a
result of incurring compliance costs—represent a significant portion of the employment and facilities in the
bleached papergrade kraft and soda and papergrade sulfite subcategories.
6-6
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TABLE 6-1
SUMMARY OF ALTMAN'S Z SCORE BANKRUPTCY ANALYSIS
No Change
Final MACT I
Proposed MACT II Alternative (A)
MACT II Alternatives B-D
Combined Final MACT I and
Proposed MACT II Alternative (A)
Combined Final MACT I and
MACT II Alternatives B-D
Combined Final BAT/PSES for Papergrade Sulfite
and BAT/PSES for Bleached Papergrade Kraft and
Soda
Combined Final BAT/PSES for Papergrade Sulfite,
BAT/PSES for Bleached Papergrade Kraft and
Soda, and MACT I
Combined Final BAT/PSES for Papergrade Sulfite,
BAT/PSES for Bleached Papergrade Kraft and
Soda, MACT I, and Proposed MACT II
One or More Companies Move Into the
"Bankruptcy Likely" Category
MACT II Alternatives E-H
Combined Final MACT I and
MACT II Alternatives E-H
Option B Bleached Papergrade Kraft and Soda
with any combination of BAT/PSES for
Papergrade Sulfite, MACT I, or MACT II
alternatives
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The magnitude of the effects that may arise from large firm bankruptcies is a substantial indicator of
economic unachievability. The negative effects are somewhat indefinite and unquantifiable but range from
stock price turmoil2 to reduced workforces to nonproductive use of social resources. Which impacts occur
would depend on the responses of the potentially affected firm(s) to the increased costs.
Companies that enter bankruptcy or near-bankruptcy are more likely to see their stock prices fall. In
a study of 274 publicly-held companies that filed for bankruptcy between 1979 and 1989, Lawless et al.,
1996 notes that the bankrupt firms experienced an average decline of 20 percent in stock value from the day
before filing through the day of filing.
A company sells stock to raise capital. After stock has been issued to an investor, the shares may be
sold and resold many times to subsequent owners. These transfers are private transactions between the buyer
and seller and do not affect the existing capital of the firm. Stock price fluctuations, then, affect the current
owners of the stock and price declines may cause substantial loss of investor value. The current owners of the
stock may include:
• retirement funds
• mutual funds
• individuals, some of whom may be living on a fixed income and depend on stock dividends
as income.
The number of people affected by a stock price decline is unknown, but has the potential to be in the
thousands to millions of investors.
A decline in stock value, however, affects a company's ability to raise additional capital, which might
be needed to address additional investment requirements (including pollution control) at all of its mills. New
stock issues would reflect the lower market prices. To raise a certain amount of capital, a company would
have to issue a larger-than-originally-planned amount of new stock; a move that could dilute and possibly
further depress the value of outstanding stock. In addition to limiting its ability to raise capital by issuing
2An example of these effects includes Thomas, 1994 which shows a plot of Georgia-Pacific's stock price
which peaked in 1989 just before the Great Northern Nekoosa hostile takeover, plummeted under the
combined effects of increased debt load from the takeover and industry slowdown, and recovered since 1991.
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stock, a company that enters bankruptcy or near-bankruptcy will have difficulty obtaining credit. A company
that has difficulty paying its current obligations will have even more difficulty paying larger obligations.
Even if a company finds a willing lender, the lender will be able to command a higher interest rate to offset
the increased risk of default. So an affected company will have to pay more for the money it borrows, further
constraining its ability to emerge from bankruptcy.
Bankruptcy affects not only the stock value of the company announcing but that of companies in the
same industry. These effects may be positive (i.e., customers stop doing business with the bankrupt firm and
therefore its competitors see an increase in business) or negative (e.g., if one company fails, the industry is
presumed to be in a downturn and the remaining firms are expected to do poorly). Cheng and McDonald,
1996 and Rasmussen and Skeel, 1995 describe various interpretations for such "contagious" or "ripple"
effects. For EPA's purpose, however, it may suffice to note that a corporate bankruptcy contributes to stock
market turmoil and stock price fluctuations.
Creditors and vendors are also affected by a company's bankrupt or near-bankrupt state. The
inability of a company to pay its current obligations means that creditors may receive only partial payments,
thereby disrupting their income stream. Vendors run the risk of not being paid or not being paid in full for
sales already concluded . Should a firm cease operations, i.e. vendors would also lose future sales to the
company, thereby reducing their sales and revenues.
Low stock prices may make a company vulnerable to a hostile takeover by a domestic or foreign
firm. Takeovers and mergers frequently result in employee layoffs as the new company tries to reduce costs
through economies of scale (e.g., rather than 200 sales personnel in each of two offices, the company may
consolidate operations into 300 sales personnel in one office for a net loss of 100 jobs). For example,
Kimberly-Clark announced plans to cut 8,000 jobs after acquiring Scott Paper in 1995 (Byrne and Weber,
1996).
Some companies may downsize some operations without closing mills, thus potentially causing some
job losses in communities that depend on the mill directly and/or indirectly for their economic well-being.
Weaker companies might be forced to sell off blocks of assets to raise funds needed to preserve their
corporate existence. Companies may choose to close marginal plants to avoid the cost of upgrade or to sell
off mills both to avoid the costs of upgrade and to raise capital to upgrade the remaining mills. For example,
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Scott Paper's restructuring plan involved reducing staff by 34 percent or 11,000 jobs and selling the
S.D.Warren mills to South Africa's Sappi, Ltd. These job losses were incurred prior to the sale of the
remainder of Scott Paper to Kimberly-Clark (Pulp & Paper, 1994).
Finally, the bankruptcy proceeding itself has costs. Societal resources consumed in a bankruptcy
proceeding are unavailable for other purposes. Rasmussen and Skeel, 1995 considers the costs of a Chapter
11 proceeding to be a major problem of the current Bankruptcy code, stating:
"Thus, not only does the current system fail..., but it also consumes a good bit of a firm's assets in the process."
Examples cited include $770 million in professional fees in Southern District of New York Bankruptcies
between 1989 and 1992, and combined attorney fees exceeding $250 million of the Eastern Airlines, Pan
American Airlines, and LTV bankruptcies.
Although EPA cannot determine with certainty what the impacts would be if one or more large firms
experience bankruptcy, EPA has reason to believe that they would likely be significant. The recent history of
the pulp and paper industry in the U.S. indicates the kinds of results that could occur. In the last few years,
financially weak companies have been acquired—through both friendly and hostile takeovers—by companies
with stronger equity/cash positions relative to debt. The acquiring companies subsequently divested
themselves of unproductive assets, closed a number of mills, and eliminated more than 15,000 jobs (Pulp and
Paper, 1994; Byrne and Weber, 1996; and Pulp and Paper, 1995). Domestic owners have sold a number of
mills to foreign companies (Auchard, 1994).
6.2.2 Facility Closures and Related Direct Impacts
As discussed in Chapter 3, the closure analysis focuses on individual facilities. It evaluates whether
the present value of post-compliance net earnings is less than the salvage value of the mill. If this happens,
the mill is projected to close because closure is more economically advantageous to the owner. The closure
analysis does not evaluate whether the company that owns the facility has sufficient cash or credit to purchase
and install the incremental pollution control. When the closure analysis projects a facility closure, all
employment, production, and exports reported for the facility are considered lost. These are considered to be
6-10
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direct impacts of facility closure. The data for the direct impacts calculated from the closure analysis are
taken from the 1990 survey with the value of output inflated to 1995 dollars.
EPA uses two approaches to protect confidential business information from disclosure in this report:
1) certain mill specific findings are not presented, and 2) results are presented for combined subcategories.
The results for each subcategory and each mill, however, are located in the confidential portion of Pulp and
Paper Water Docket, Section 27.4 "Cost and Impact Analysis."
6.2.2.1 CAA Requirements
EPA estimate that 155 mills will incur costs under MACT requirements.
Final MACT I
EPA projects no facility closures as a result of final MACT I costs. Therefore, there are no estimated
losses in employment or output.
Proposed MACT II
Section 5.1 describes the eight alternatives (Alternatives A through H) evaluated for MACT II. EPA
projects no facility closures solely as a result of the costs of any MACT II alternative. Therefore, there are no
estimated losses in employment or output.
Combined Final MACT I and Proposed MACT II Alternatives
In response to comments and based on additional information in the record, EPA examined the
combined compliance costs of final MACT I and the alternatives considered for MACT II. MACT I
requirements have different costs depending on the water pollution control technology installed at the facility
6-11
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(see Table 5-5). Table 6-2 summarizes the closure analysis based on the combined costs of the final MACTI
rule and eight proposed MACT II alternatives, with MACT I costs based on the assumption that the final
BAT/PSES technology is in place at each facility. While EPA estimates that no mills close when either final
MACT I or proposed MACT II costs are examined individually, at least one mill closes with the combined
costs, with or without the assumption of a price increase. EPA projects a second mill closure under the
combined costs of final MACT I and the most expensive MACT II option evaluated for the kraft and soda
subcategory, and then only when the Agency assumes no price increase. The impacts of these two closures
include up to 1,200 jobs lost, up to $386 million in lost shipments, and up to $2 million in lost exports.
EPA also examined the impacts of the final MACT I rule costs and proposed MACT II alternatives
assuming that the Option B technology basis was selected for BAT/PSES, and more expensive MACT I
controls were required. Table 6-3 summarizes the results. The results for final MACT I and MACT II
Alternatives A-F are the same as those shown in Table 6-2. With Alternatives G and H, however, EPA
projects two mills to close with a price increase and three without a price increase. The impacts include up to
1,600 jobs lost, up to $535 million in lost shipments, and up to $21 million in lost exports.
6.2.2.2 CWA Requirements
A subset of 96 of the 155 mills evaluated for MACT I and MACT II costs—those in the bleached
papergrade kraft and soda and papergrade sulfite subcategories—will also experience water pollution control
costs (see Figure 1-1 for the relationship between MACT- and BAT/PSES-regulated subcategories). EPA
examined two3 water pollution control options for the bleached papergrade kraft and soda subcategory and
one water pollution control option for each of the three papergrade sulfite subcategory segments (see
Development Document). These three papergrade sulfite segments are combined here and evaluated as one
subcategory.
Table 6-4 summarizes the range in impacts for the bleached papergrade kraft and soda subcategory
for the final CWA BAT/PSES and BAT/PSES Option B only. Under the selected option, EPA projects one
incremental mill closure, whether or not prices increase. When the facility closes, approximately 400 jobs are
3The impacts projected for retrofitting existing facilities to TCP technology are discussed in Section 6.5.4.
6-12
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TABLE 6-2
SUMMARY OF CLOSURES AND RELATED IMPACTS
COMBINED FINAL MACT I AND PROPOSED MACT II COSTS (WITH SELECTED BAT/PSES IN PLACE)
ALL SUBCATEGORIES
MILLIONS OF 1995 DOLLARS
CLOSURES AND RELATED IMPACTS
MACT I AND MACT II ALTERNATIVES A-H
A B C D E
No Price Increase
Closures 11111
F G H
1 2 2
Shipments
pulp
paper
paperboard
total
Exports
pulp
paper
paperboard
total
(millions)
$6,288
$20,202
$6,145
$32,635
$0
$206
$0
$206
$0
$206
$0
$206
$0
$206
$0
$206
$0
$206
$0
$206
$0
$206
$0
$206
$0
$206
$0
$206
$0
$206
$180
$386
$0
$206
$180
$386
(millions)
$2,715
$298
$758
$3,771
$0
$2
$0
$2
$0
$2
$0
$2
$0
$2
$0
$2
$0
$2
$0
$2
$0
$2
$0
$2
$0
$2
$0
$2
$0
$2
$0
$2
$0
$2
$0
$2
Employment
90,840
(millions)
Revenues $33,013
700
$209
700
$209
700
$209
700
$209
700
$209
700
$209
1,200
$392
1,200
$392
Price Increase
Closures
Shipments (millions)
pulp $6,288
paper $20,202
paperboard $6,145
total $32,635
$0
$206
$0
$206
$0
$206
$0
$206
$0
$206
$0
$206
$0
$206
$0
$206
$0
$206
$0
$206
$0
$206
$0
$206
$0
$206
$0
$206
$0
$206
$0
$206
Exports (millions)
pulp $2,715 $0 $0 $0 $0 $0 $0 $0 $0
paper $298 $2 $2 $2 $2 $2 $2 $2 $2
paperboard $758 $0 $0 $0 $0 $0 $0 $0 $0
total $3,771 $2 $2 $2 $2 $2 $2 $2 $2
Employment
90,840
(millions)
Revenues $33,013
700
$209
700
$209
700
$209
700
$209
700
$209
700
$209
700
$209
700
$209
Notes: Employment rounded to nearest hundred. Shipment tonnage rounded to nearest thousand.
Supporting computer printout is located in Section 27.4 "Cost and Impact Results" in the confidential portion of the Pulp
and Paper Water Docket.
6-13
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TABLE 6-3
SUMMARY OF CLOSURES AND RELATED IMPACTS
COMBINED FINAL MACT I AND PROPOSED MACT II COSTS (WITH OPTION B BAT/PSES IN PLACE)
ALL SUBCATEGORIES
MILLIONS OF 1995 DOLLARS
CLOSU
MACT I Al
ABC
No Price Increase
Closures 111
Shipments (millions)
pulp $6,288 $0 $0 $0
paper $20,202 $206 $206 $206
paperboard $6,145 $0 $0 $0
total $32,635 $206 $206 $206
Exports (millions)
pulp $2,715 $0 $0 $0
paper $298 $2 $2 $2
paperboard $758 $0 $0 $0
total $3,771 $2 $2 $2
Employment 90,840 700 700 700
(millions)
Revenues $33,013 $209 $209 $209
Price Increase
Closures 111
Shipments (millions)
pulp $6,288 $0 $0 $0
paper $20,202 $206 $206 $206
paperboard $6,145 $0 $0 $0
total $32,635 $206 $206 $206
Exports (millions)
pulp $2,715 $0 $0 $0
paper $298 $2 $2 $2
paperboard $758 $0 $0 $0
total $3,771 $2 $2 $2
RES AND RELATED IMPACTS
"TO MACT II ALTERNATIVES A-H
D E F G H
11133
$0 $0 $0 $0 $0
$206 $206 $206 $206 $206
$0 $0 $0 $328 $328
$206 $206 $206 $535 $535
$0 $0 $0 $0 $0
$2 $2 $2 $2 $2
$0 $0 $0 $19 $19
$2 $2 $2 $21 $21
700 700 700 1,600 1,600
$209 $209 $209 $545 $545
11122
$0 $0 $0 $0 $0
$206 $206 $206 $206 $206
$0 $0 $0 $148 $148
$206 $206 $206 $354 $354
$0 $0 $0 $0 $0
$2 $2 $2 $2 $2
$0 $0 $0 $19 $19
$2 $2 $2 $21 $21
Employment 90,840 700 700 700 700 700 700 1,100 1,100
(millions)
Revenues
$33,013 $209 $209 $209 $209 $209 $209 $362 $362
Notes: Employment rounded to nearest hundred. Shipment tonnage rounded to nearest thousand.
Supporting computer printout is located in Section 27.4 "Cost and Impact Results" in the confidential portion of the Pulp
and Paper Water Docket.
6-14
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TABLE 6-4
SUMMARY OF CLOSURES AND RELATED IMPACTS - BAT/PSES COSTS
BLEACHED PAPERGRADE KRAFT AND SODA SUBCATEGORY
MILLIONS OF 1995 DOLLARS
Baseline
Closures and Related Impacts
BAT/PSES Costs Only
Final BAT/PSES
BAT/PSES Option B
No Price Increase
Closures
Shipments (millions)
total $32,635
Exports (millions)
total $3,771
Employment
90,840
Revenues (millions)
$33,013
Price Increase
Closures
total
$32,635
Exports (millions)
total $3,771
Employment
90,840
Revenues (millions)
$33,013
1
$150
$19
400
$153
1
$150
$19
400
$153
$273
$19
900
$278
2
$273
$19
900
$278
Notes: Employment rounded to nearest hundred.
Supporting computer printout is located in Section 27.4 "Cost and Impact Results" in the
confidential portion of the Pulp and Paper Water Docket.
6-15
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lost, $150 million in shipments are no longer shipped, and $19 million in exports are lost. No further details
are provided due to reasons of confidentiality.
The number of facility closures and related direct impacts (other than firm failure) are roughly twice
as large under BAT/PSES Option B than under the selected option. Under BAT/PSES Option B, EPA
projects an additional mill closure (for a total of two), also without regard to a price increase. Approximately
900 jobs are lost between the two closed mills. About $273 million worth of shipments is no longer made,
and exports are reduced by $19 million.
EPA projects no closures or related economic impacts as a result of the compliance costs for the final
BAT/PSES basis for the papergrade sulfite subcategory.
6.2.2.3 Combined Final CAA (MACTI) and CWA (BAT/PSES) Requirements (Cluster Rule)
EPA estimates that 96 mills in the bleached papergrade kraft and soda and papergrade sulfite
subcategories will incur costs to comply with final BAT/PSES as well as to comply with final MACT I
requirements. Table 6-5 summarizes the range of impacts resulting from projected mill closures. Impacts
vary by the option selected for BAT/PSES and by whether or not a price increase is assumed.
As a result of combined final BAT/PSES and final MACT I costs, EPA projects two mill closures
regardless of whether or not a price increase is assumed. These closures result in direct losses of 900 jobs,
$273 million in shipments, and $19 million in exports.
Impacts are consistently higher as a result of the combined costs of under BAT/PSES Option B and
final MACT I. EPA projects three to four mill closures (an assumed price increase allows one mill to remain
open) under the combined costs. Assuming no price increase, the estimated impacts of Option B include up
to 4,800 lost jobs, that is, approximately five times more jobs lost than under the selected option. EPA
estimates lost shipments up to $1.3 billion; again, the losses are five times higher under BAT/PSES Option
B than under the selected option. The Agency estimates lost exports up to $24 million under BAT/PSES
Option B.
6-16
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TABLE 6-5
SUMMARY OF CLOSURES AND RELATED IMPACTS
FINAL BAT/PSES AND FINAL MACT I COSTS
BLEACHED PAPERGRADE KRAFT AND SODA AND PAPERGRADE
SULFITE SUBCATEGORIES
MILLIONS OF 1995 DOLLARS
Closures and Related Impacts
BAT/PSES and MACT I
Final BAT/PSES
Option B
No Price Increase
Closures
Shipments
pulp
paper
paperboard
total
$6,288
$20,202
$6,145
$32,635
$27
$98
$148
$273
$28
$1,150
$148
$1,327
Exports
pulp
paper
paperboard
total
Employment
Revenues
Price Increase
Closures
$2,715
$298
$758
$3,771
90,840
$33,013
$19
$19
900
$278
$4
$19
$24
4,800
$1,338
Shipments
pulp
paper
paperboard
total
$6,288
$20,202
$6,145
$32,635
$27
$98
$148
$273
nd
nd
nd
nd
Exports
pulp
paper
paperboard
total
Employment
$2,715
$298
$758
$3,771
90,840
$19
$19
900
nd
nd
nd
nd
nd
Revenues
$33,013
$278
nd
'nd' not disclosed due to confidentiality
Notes: Employment rounded to nearest hundred.
Supporting computer printout is located in Section 27.4 "Cost and Impact Results"
in the confidential portion of the Pulp and Paper Water Docket.
6-17
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6.2.2.4 Combined Cluster Rule and ProposedMACTII
EPA examined the combined compliance cost impacts of final BAT/PSES, final MACT I, and all
proposed MACT II alternatives (Table 6-6). EPA projects a third mill closure, with or without a price
increase. Under these scenarios, EPA projects the loss of 1,700 jobs, reduced shipments of $479 million, and
reduced exports of $22 million.
EPA also examined the impacts of final MACT I and proposed MACT II alternatives as costed in
configuration with the compliance costs of the BAT/PSES Option B technology basis. Table 6-7 summarizes
the results. Compared to Table 6-6, the impacts of BAT/PSES Option B are consistently greater than for the
final BAT/PSES. With BAT/PSES Option B, EPA projects four to five mill closures. The number of
closures varies based on whether a price increase is assumed, and which MACT II alternative is considered.
These closures have estimated direct losses of up to 5,600 jobs, up to $1.5 billion in shipments, and up to
$27 million in exports.
6.2.3 Price Increases
This section explains what price increases would result from the rule based on the supply and
demand curves developed for the industry, as explained in Chapter 3, Section 3.3.1.2 above. Although the
mills may stay open with a price increase, consumers pay the price increase. If paper goods form a
substantially larger portion of a low-income family's purchases than a high-income family's purchases, the
increased prices might create a greater burden for the low-income family than for the high-income family.
Thus, price increases may involve questions of environmental justice.
6-18
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TABLE 6-6
SUMMARY OF CLOSURES AND RELATED IMPACTS
FINAL BAT/PSES, FINAL MACT I, AND PROPOSED MACT II COSTS
BLEACHED PAPERGRADE KRAFT AND SODA AND PAPERGRADE
SULFITE SUBCATEGORIES
MILLIONS OF 1995 DOLLARS
MACT II A,B
No Price Increase
Closures 3
Shipments
pulp $6,288 $27
paper $20,202 $304
paperboard $6,145 $148
total $32,635 $479
Exports
pulp $2,715 $0
paper $298 $3
paperboard $758 $19
total $3,771 $22
Employment
90,840 1,700
Revenues $33,013 $486
Price Increase
Closures 3
Shipments
pulp $6,288 $27
paper $20,202 $304
paperboard $6,145 $148
total $32,635 $479
Exports
pulp $2,715 $0
paper $298 $3
paperboard $758 $19
total $3,771 $22
Employment
90,840 1,700
Revenues $33,013 $486
Closures and Related Impacts
Final BAT/PSES and MACT I
MACT II C,D MACT II E,F MACT II G,H
333
$27 $27 $27
$304 $304 $304
$148 $148 $148
$479 $479 $479
$0 $0 $0
$3 $3 $3
$19 $19 $19
$22 $22 $22
1,700 1,700 1,700
$486 $486 $486
333
$27 $27 $27
$304 $304 $304
$148 $148 $148
$479 $479 $479
$0 $0 $0
$3 $3 $3
$19 $19 $19
$22 $22 $22
1,700 1,700 1,700
$486 $486 $486
'nd' not disclosed due to confidentiality
Notes: Employment rounded to nearest hundred.
Supporting computer printout is located in Section 27.4 "Cost and Impact Results" in the confidential portion of the
Pulp and Paper Water Docket.
6-19
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TABLE 6-7
SUMMARY OF CLOSURES AND RELATED IMPACTS
BAT/PSES OPTION B, FINAL MACT I, AND PROPOSED MACT II COSTS
BLEACHED PAPERGRADE KRAFT AND SODA AND PAPERGRADE
SULFITE SUBCATEGORIES
MILLIONS OF 1995 DOLLARS
Closures and Related Impacts
BAT/PSES Option B and MACT I
MACT II A,B MACT II C,D
No Price Increase
Closures 5 5
MACT II E,F
5
MACT II G,H
5
Shipments
pulp
paper
paperboard
total
$6,288
$20,202
$6,145
$32,635
$28
$1,356
$148
$1,533
$28
$1,356
$148
$1,533
$28
$1,356
$148
$1,533
$28
$1,356
$148
$1,533
Exports
pulp
paper
paperboard
total
Employment
Revenues
Price Increase
Closures
$2,715
$298
$758
$3,771
90,840
$33,013
$0
$7
$19
$27
5,600
$1,546
$0
$7
$19
$27
5,600
$1,546
$0
$7
$19
$27
5,600
$1,546
$0
$7
$19
$27
5,600
$1,546
Shipments
pulp
paper
paperboard
total
$6,288
$20,202
$6,145
$32,635
nd
nd
nd
nd
nd
nd
nd
nd
$28
$1,356
$148
$1,533
$28
$1,356
$148
$1,533
Exports
pulp
paper
paperboard
total
Employment
$2,715
$298
$758
$3,771
90,840
nd
nd
nd
nd
nd
nd
nd
nd
nd
nd
$0
$7
$19
$27
5,600
$0
$7
$19
$27
5,600
Revenues
$33,013
nd
nd
$1,546
$1,546
'nd' not disclosed due to confidentiality
Notes: Employment rounded to nearest hundred.
Supporting computer printout is located in Section 27.4 "Cost and Impact Results" in the confidential portion of the
Pulp and Paper Water Docket.
6-20
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6.2.3.1 CAA Requirements
Final MACT I
Estimated price increases as a result of final MACT I costs are less than 0.5 percent for bleached
papergrade kraft and soda, dissolving kraft, dissolving sulfite, papergrade sulfite, and semichemical pulps
and products. The estimated price increase for unbleached kraft pulp is almost 5 percent.
Proposed MACT II
Estimated price increases as a result of the costs of proposed MACT II alternatives are less than 0.5
percent for bleached papergrade kraft and soda, dissolving kraft, dissolving sulfite, papergrade sulfite, and
semichemical pulps and products regardless of the alternative considered. The estimated price increase for
unbleached kraft pulp ranges from 1.4 percent to 7.4 percent depending on the proposed MACT II alternative
considered.
Combined Final MACT I and Proposed MACT II Alternatives
EPA estimates price increases as a result of combined final MACT I and MACT II compliance costs
at less than 0.5 percent for dissolving kraft, dissolving sulfite, and semichemical pulps and products.
Bleached papergrade kraft and soda and papergrade sulfite pulps show less than a 1.0 percent price increase
for any of the cost combinations examined. Unbleached kraft pulps show the greatest sensitivity to increased
costs; estimated price increases range from 6 percent under the proposed MACT II Alternative to 12 percent
under Alternatives G and H.
6.2.3.2 CWA Requirements
The price increases estimated for the final BAT/PSES technology option are approximately 1.1
percent for both bleached papergrade kraft and soda pulps and papergrade sulfite pulps. The price increase
6-21
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estimated for BAT/PSES Option B for the bleached papergrade kraft and soda subcategory is 1.4 percent.
The price increase for TCP for the bleached papergrade kraft and soda subcategory is 5 percent, i.e., more
than four times larger than the increase projected for the selected option.
6.2.3.3 Combined Final CAA (MACTI) and CWA (BAT/PSES) Requirements (Cluster Rule)
EPA estimates that the price increases resulting from the integrated rule costs (final BAT/PSES and
MACT I) are approximately 1.5 percent for both bleached papergrade kraft and soda pulps and papergrade
sulfite pulps. The price increase estimated for BAT/PSES Option B for bleached papergrade kraft and soda
is 1.9 percent when combined with MACT I. When TCP costs are combined with MACT I, bleached pulp
prices increase by 5.5 percent.
6.2.3.4 Combined Cluster Rule and Proposed MACT II
EPA examined the combined impacts of final BAT/PSES, final MACT I, and proposed MACT II
alternative compliance costs. The price increase resulting from the imposition of these costs for bleached
papergrade kraft and soda pulps ranges from 1.5 to 1.9 percent. The price increase for papergrade sulfite is
1.6 percent.
EPA also examined the impacts of final MACT I and MACT II costs combined with the costs of
BAT/PSES Option B. The price increase for bleached papergrade kraft and soda pulps is consistently higher
than with the final BAT/PSES and ranges from 1.9 to 2.3 percent depending on the MACT II alternative
analyzed. When TCP costs are combined with MACT I and the proposed MACT II alternative, bleached
pulp prices increase by 5.5 to 6.0 percent.
6.3 REGIONAL EMPLOYMENT IMPACTS BASED ON PROJECTED CLOSURES
When a mill closes, all employment at the facility is considered lost. EPA examined the effect of mill
closures on county unemployment rates. EPA obtained the 1991 employment count and unemployment rates
6-22
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for those counties for which EPA projected possible mill closures (Bureau of the Census, 1996). This
analysis does not include regional impacts resulting from bankruptcy, discussed in Section 6.2.1, because
EPA cannot predict whether there might be closures associated with corporate bankruptcy or which mills
might close if such closures do occur as a result of bankruptcy. Thus, the impacts presented in Section 6.3
are likely to be underestimates of the impacts where company failures result in mill closures.
6.3.1 CAA Requirements
Tables 6-8 and 6-9 summarize the regional impacts that would result from mills incurring CAA
compliance costs. Table 6-8 reflects the final MACTI costs and impacts if final BAT/PSES technology is in
place at the facility, while Table 6-9 reflects the final MACT I costs and impacts if BAT/PSES Option B
technology is in place at the facility. The closures in Table 6-8 correspond to those listed in Table 6-2. EPA
projects no closures and thus no regional impacts as a result of final MACT I or proposed MACT II costs,
when the regulations are considered separately. EPA estimates that the combined costs for final MACT I and
proposed MACT II alternatives—assuming the final BAT/PSES technology is in place—might lead to 1 to 2
mill closures. The unemployment rates for the one to two counties affected by potential mill closures would
increase from 5.9 percent to 7.0 percent (an absolute increase of 1.1 percentage points) and from 7.8 percent
to 10.1 percent (an absolute increase of 2.3 percentage points), respectively.
EPA also examined the impacts of final MACT I and proposed MACT II requirements based on
MACT costs that assumed BAT/PSES Option B technology is in place at each facility (see Table 6-9). The
resulting closures listed in Table 6-9 correspond to those listed in Table 6-3. In addition to the two closures
noted above, under certain proposed MACT II alternatives EPA projects a third mill may close when final
MACT I costs are considered with the costs of MACT II Alternatives G and H, with or without a price
increase. The unemployment rate for the additional county affected would increase from 4.3 percent to 4.7
percent (an absolute increase of 0.4 percentage points).
6-23
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TABLE 6-8
INCREASE IN REGIONAL UNEMPLOYMENT RATES
MACT-RELATED COSTS1
Options/Regulatory Alternatives
MACT I Only
MACT II Only
Combined MACT I/MACT II
A through F, no price increase
A through G, price increase
Combined MACT I/MACT II
G and H, no price increase
Number of
Projected
Closures/
Counties
Affected
0
0
1
2
Absolute
Increase in
Unemployment
Rate2
0%
0%
1.1%
1.1%
2.3%
Relative
Increase in
Unemployment
Rate
none
none
19%
19%
29%
Assuming BAT/PSES Option A technology is in place at each facility.
2In counties where mills close.
6-24
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TABLE 6-9
INCREASE IN REGIONAL UNEMPLOYMENT RATES
MACT-RELATED COSTS1
Options/Regulatory Alternatives
MACT I Only
MACT II Only
Combined MACT I/MACT II
A through F, no price increase
A through F, price increase
Combined MACT I/MACT II
G and H, price increase
Combined MACT I/MACT II
G and H, no price increase
Number of
Projected
Closures Affected
Counties
0
0
1
2
3
Absolute
Increase in
Unemployment
Rate2
0%
0%
1.1%
1.1%
0.4%
1.1%
0.4%
2.3%
Relative
Increase in
Unemployment
Rate
none
none
19%
19%
9%
19%
9%
29%
Assuming BAT/PSES Option B technology is in place at each facility.
2In counties where mills close.
6-25
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6.3.2 CWA Requirements
Table 6-10 summarizes the regional impacts under CWA requirements. Each row in the table
reflects unemployment impacts in specific counties. The first row of the table presents the impacts of the
final BAT/PSES option without taking final MACT I or MACT II requirements into account. The closures in
Table 6-10 correspond to those listed in Table 6-4. Under the final BAT/PSES option, EPA projects one
facility to close. The unemployment rate of the county affected would increase from 4.3 percent to 4.7
percent (an absolute increase of 0.4 percentage points).
EPA also examined the impacts of BAT/PSES Option B compliance costs as presented in the second
row of Table 6-10. In addition to the closure noted above, EPA projects a second facility closure under
BAT/PSES Option B requirements. The unemployment rate for the county affected would increase from 8.0
percent to 8.7 percent (an absolute increase of 0.7 percentage points).
6.3.3 Combined Final CAA (MACT I) and CWA (BAT/PSES) Requirements (Cluster Rule)
Table 6-11 summarizes the regional impacts under Cluster Rule requirements. The first row of the
table presents the impacts of the final BAT/PSES option; the second and third rows of the table present the
impacts of BAT/PSES Option B. The closures correspond to those listed in Table 6-5. Under the final
BAT/PSES option, EPA projects two facility closures. The unemployment rates for the two counties affected
by potential mill closures would increase from 8.0 percent to 8.7 percent (an absolute increase of 0.7
percentage points) and from 4.3 percent to 4.7 percent (an absolute increase of 0.4 percentage points),
respectively.
EPA also examined the impacts if BAT/PSES Option B were in place at each facility. In addition to
the two closures noted above, EPA projects one or two additional closures under BAT/PSES Option B,
depending on whether a price increase is assumed. The unemployment rate for the counties affected would
increase from 9.0 percent to 18.6 percent (an absolute increase of 9.6 percentage points) and from 7.2 percent
to 8.9 percent (an absolute increase of 1.7 percentage points).
6-26
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TABLE 6-10
INCREASE IN REGIONAL UNEMPLOYMENT RATES
BAT/PSES COSTS
Options/Regulatory Alternatives
Final BAT/PSES
BAT/PSES Option B
Number of
Projected
Closures/
Counties
Affected
1
2
Absolute
Increase in
Unemploy-
ment Rate1
0.4%
0.4%
0.7%
Relative
Increase in
Unemploy-
ment Rate
9%
9%
9%
In counties where mills close.
6-27
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TABLE 6-11
INCREASE IN REGIONAL UNEMPLOYMENT RATES
CLUSTER RULE COSTS
Options/Regulatory Alternatives
Final BAT/PSES and Final MACT I
BAT/PSES Option B and Final MACT I
price increase
BAT/PSES Option B and Final MACT I
no price increase
Number of
Projected
Closures/
Counties
Affected
2
3
4
Absolute
Increase in
Unemploy-
ment Rate1
0.7%
0.4%
0.7%
0.4%
9.6%
0.7%
0.4%
9.6%
1.7%
Relative
Increase in
Unemploy-
ment Rate
9%
9%
9%
9%
106%
9%
9%
106%
24%
1 In counties where mills close.
6-28
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6.3.4 Combined Cluster Rule and Proposed MACTII
EPA examined the regional impacts of final BAT/PSES, final MACT I, and proposed MACT II
alternatives. Table 6-12 summarizes the regional impacts under combined Cluster Rule and MACT II
requirements. The first row of the table presents the impacts of the final BAT/PSES option; the second and
third rows of the table present the impacts of BAT/PSES Option B. The closures correspond to those listed
in Tables 6-6 and 6-7. Under the final BAT/PSES option, EPA projects three facility closures. The
unemployment rates for the three counties affected by potential mill closures would increase from 8.0 percent
to 8.7 percent (an absolute increase of 0.7 percentage points), from 4.3 percent to 4.7 percent (an absolute
increase of 0.4 percentage points), and from 5.9 percent to 7.0 percent (an absolute increase of 1.1 percentage
points).
EPA also examined the impacts if BAT/PSES Option B is in place at the facility. In addition to the
three closures noted above, EPA projects one to two more closures under BAT/PSES Option B. The
unemployment rate for the counties affected would increase from 9.0 percent to 18.6 percent (an absolute
increase of 9.6 percentage points) and from 7.2 percent to 8.9 percent (an absolute increase of 1.7 percentage
points).
6.4 NATIONAL-LEVEL EMPLOYMENT AND OUTPUT IMPACTS BASED ON PROJECTED
CLOSURES
EPA examined national-level annual impacts on employment and output from facility closure both
directly (employment and output lost at the closed facility) and indirectly (employment and output lost from
outside sources that had provided goods or services to the closed facility)4. As described in Section 3.3.2,
direct effects are impacts on the pulp and paper industry, indirect effects are impacts that continue to resonate
through the economy (effects on input industries), and induced effects are impacts on consumer demand. The
U.S. Department of Commerce's Bureau of Economic Analysis (BEA) tracks these effects both nationally and
regionally in massive "input-output" (I-O) tables. For every dollar spent in a "spending industry," these
tables identify the portion spent in contributing or vendor industries (see Section 3.3.2 for examples). Total
4Employment is considered in terms of "full-time-equivalents" (FTEs), that is, an FTE is equal to 2,080
hours/year.
6-29
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TABLE 6-12
INCREASE IN REGIONAL UNEMPLOYMENT RATES
CLUSTER RULE AND PROPOSED MACT II COSTS
Options/Regulatory Alternatives
Final BAT/PSES, Final MACT I, plus all MACT II
alternatives
BAT/PSES Option B, Final MACT I, and
MACT II A through D, price increase
BAT/PSES Option B, Final MACT I, and
MACT II E through H, price increase
BAT/PSES Option B, Final MACT I, and
MACT II A through H, no price increase
Number of
Projected
Closures/
Counties
Affected
3
4
5
Absolute
Increase in
Unemploy-
ment Rate1
0.7%
0.4%
1.1%
0.7%
0.4%
1.1%
9.6%
0.7%
0.4%
1.1%
9.6%
1.7%
Relative
Increase in
Unemploy-
ment Rate
9%
9%
19%
9%
9%
19%
106%
9%
9%
19%
106%
24%
In counties where mills close.
6-30
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impacts, both direct and indirect, were estimated with final demand national-level input-output multipliers
from the U.S. Department of Commerce's Regional Input-Output Modeling System (RIMS II) (DOC, 1996;
DOC, 1992). These are presented in Table 3-6 and appear in the left-hand column in Table 6-13 and related
tables.
This analysis does not include national impacts resulting from bankruptcy, discussed in Section 6.2.1
above, because EPA cannot predict whether there would be closures associated with corporate bankruptcy or
which mills would close if such closures occur as a result. Thus, the impacts presented in Section 6.4 would
be underestimates of regional impacts of closures where company failures result in additional mill closures.
6.4.1 CAA Requirements
There are no closures estimated for final MACT I or proposed MACT II requirements when
considered independently, hence there are no direct or indirect impacts estimated for these requirements.
Table 6-13 summarizes the RIMS II-derived direct and indirect impacts of combined final MACT I and
proposed MACT II requirements. MACT I costs differ according to the BAT/PSES technology in place at
the facility. Assuming final BAT/PSES technology (100 percent substitution) in place at each mill, the
combination of final MACT I and proposed MACT II costs result in 1 to 2 facility closures, depending on the
MACT II alternative selected and whether a price increase is assumed. The total (direct and indirect)
reduction in output resulting from these closures ranges from $599 million to $1.1 billion and the total loss in
employment ranges from 4,300 to 8,100 (Table 6-13, middle two columns). Under final MACT I and the
proposed MACT II alternative (Alternative A), one facility is projected to close (i.e., the lower estimate of
national impacts). Table 6-2 provides a more complete analysis of direct impacts alone.
Assuming BAT/PSES Option B technology is in place at each mill, the combination of final MACT I
and proposed MACT II costs result in an additional mill closure under MACT II Alternatives G through H
with no price increase. Table 6-13 (right-hand columns) lists these closures and estimated direct impacts.
Total direct and indirect impacts under BAT/PSES Option B range from $599 million to $1.6 billion in lost
output and 4,300 to 11,200 in lost employment.
6-31
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TABLE 6-13
DIRECT AND INDIRECT IMPACTS
MACT I AND MACT II ALTERNATIVE COSTS
ALL SUBCATEGORIES
Final BAT/PSES in Place
MACT I**
MACTn
ALTERNATIVES A-F,
no price increase
ALTERNATIVES A-H,
price increase
MACT I
MACTH
ALTERNATIVES G-H,
no price increase
BAT/PSES Option B in Place
MACT I
MACTH
ALTERNATIVES A-F,
no price increase
ALTERNATIVES A-F,
price increase
MACT I
MACTH
ALTERNATIVES G-H,
price increase
MACT I
MACTH
ALTERNATIVES G-H,
no price increase
Direct Impacts
Closures
Loss in Shipments (millions, $1995)
pulp
paper
paperboard
total
Loss in Shipments (millions, $1992)
pulp
paper
paperboard
total
Direct and Indirect Impacts
Loss in Output (millions, $1995)
pulp
paper
paperboard
total
Loss in Employment
pulp
paper
paperboard
total
$0
$206
$0
$206
$0
$188
$0
$188
$0
$599
$0
$599
0
4,304
0
4,304
$0
$206
$180
$386
$0
$188
$164
$352
$0
$599
$523
$1,121
0
4,304
3,760
8,064
$0
$206
$0
$206
$0
$188
$0
$188
$0
$599
$0
$599
0
4,304
0
4,304
$0
$206
$148
$354
$0
$188
$135
$323
$0
$599
$430
$1,029
0
4,304
3,092
7,396
$0
$206
$328
$535
$0
$188
$299
$487
$0
$599
$953
$1,551
0
4,304
6,852
11,156
* Multiplier for loss in employment is FTEs per million dollars.
** MACT I costs differ according to BAT/PSES technology in place at facility.
Notes: Employment multipliers are based on 1992 data, hence the loss in output needs to be in 1992 dollars.
Supporting computer printout is located in Section 27.4 "Cost and Impact Results" in the confidential portion of the Pulp and Paper Water Docket.
6-32
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6.4.2 CWA Requirements
Total direct and indirect employment and output impacts estimated for CWA requirements are
presented in Table 6-14 for both the final BAT/PSES and BAT/PSES Option B. The closures in Table 6-14
correspond to those listed in Table 6-4; the latter table describes direct impacts alone in more detail. The
final BAT/PSES option alone, without accounting for final MACT I requirements, results in the closure of
one facility, with estimated total losses of $430 million in output and 3,100 in direct and indirect FTEs.
EPA also examined the total impacts estimated for BAT/PSES Option B. The impacts on total
employment and output are almost double those estimated for the final BAT/PSES option. Under
BAT/PSES Option B, EPA projects two facility closures. Total annual output is reduced by $795 million
and total employment is reduced by 5,700 FTEs.
6.4.3 Combined Final CAA (MACT I) and CWA (BAT/PSES) Requirements (Cluster Rule)
Total direct and indirect employment and output impacts estimated for Cluster Rule requirements are
presented in Table 6-15 for both the final BAT/PSES and BAT/PSES Option B. The closures correspond to
those listed in Table 6-5, which presents a more complete analysis of direct impacts alone. The final Cluster
Rule option results in the closure of two facilities. The estimated total direct and indirect losses are $795
million in output and 5,700 FTEs.
EPA also examined the total impacts estimated for BAT/PSES Option B and final MACT I costs. In
addition to the two facility closures projected under the final Cluster Rule option, EPA projects one to two
more mill closures under BAT/PSES Option B, depending upon the assumption of a price increase (one mill
closure with a price increase, two mill closures without a price increase). The total reduction in output
estimated for BAT/PSES Option B and final MACT I ranges from $1.4 billion to $3.9 billion, while the total
reduction in FTEs ranges from 9,900 to 27,700.
6-33
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TABLE 6-14
DIRECT AND INDIRECT IMPACTS
BAT/PSES COSTS
BLEACHED PAPERGRADE KRAFT AND SODA AND PAPERGRADE
SULFITE SUBCATEGORIES
Final
BAT/PSES
BAT/PSES
Option B
Direct Impacts
Closures
Loss in Shipments (millions, $1995)
Total
$150
$273
Loss in Shipments (millions, $1992)
Total
$135
$249
Direct and Indirect Impacts
Loss in Output (millions, $1995)
Total
$430
$795
Loss in Employment
Total
3,094
5,711
* Multiplier for loss in employment is FTEs per million dollars.
Notes: Employment multipliers are based on 1992 data, hence the loss in output needs to
be in 1992 dollars.
Supporting computer printout is located in Section 27.4 "Cost and Impact Results" in
the confidential portion of the Pulp and Paper Water Docket.
6-34
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TABLE 6-15
DIRECT AND INDIRECT IMPACTS
FINAL BAT/PSES AND FINAL MACT I COSTS
BLEACHED PAPERGRADE KRAFT AND SODA AND PAPERGRADE SULFITE SUBCATEGORIES
Final BAT/PSES
no price increase
Final BAT/PSES
price increase
BAT/PSES Option B
price increase
BAT/PSES Option B
no price increase
Direct Impacts
Closures
Loss in Shipments (millions, $1995)
pulp
paper
paperboard
total
$27
$98
$148
$273
nd
nd
nd
nd
$28
$1,150
$148
$1,327
Loss in Shipments (millions, $1992)
pulp
paper
paperboard
total
$25
$89
$135
$249
nd
nd
nd
nd
$26
$1,048
$135
$1,209
Direct and Indirect Impacts
Loss in Output (millions, $1995)
pulp
paper
paperboard
total
Loss in Employment
pulp
paper
paperboard
total
$284
$430
$795
571
2,046
3,094
5,711
nd
nd
nd
$1,376
nd
nd
nd
9,887
$85
$3,337
$430
$3,852
601
23,999
3,094
27,695
* Multiplier for loss in employment is FTEs per million dollars.
'nd' not disclosed due to confidentiality
Notes: Employment multipliers are based on 1992 data, hence the loss in output needs to be in 1992 dollars.
Supporting computer printout is located in Section 27.4 "Cost and Impact Results" in the confidential portion of the
Pulp and Paper Water Docket.
6-35
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6.4.4 Combined Cluster Rule and Proposed MACTII
EPA examined the national-level impacts of final BAT/PSES, final MACT I, and proposed MACT II
alternatives. Table 6-16 presents the total direct and indirect impacts estimated for combined Cluster Rule
and MACT II alternative costs for both the final BAT/PSES and BAT/PSES Option B. The closures
correspond to those listed in Tables 6-6 and 6-7, which present a more complete analysis of direct impacts
alone. The final Cluster Rule option combined with any MACT II alternative results in the closure of three
facilities. The estimated total direct and indirect losses are $1.4 billion in output and 10,000 FTEs annually.
EPA also examined the total impacts estimated for BAT/PSES Option B and final MACT I costs
combined with MACT II alternatives. In addition to the three facility closures projected under the final
Cluster Rule option combined with MACT II alternatives, EPA projects one to two more mill closures when
MACT II alternatives are combined with BAT/PSES Option B. The total reduction in output estimated for
BAT/PSES Option B and final MACT I combined with MACT II alternatives ranges from $2.0 billion to
$4.5 billion, while the total reduction in employment ranges from 14,200 to 32,000.
6.5 SENSITIVITY ANALYSES
EPA performed four types of analyses to test the sensitivity of closures occurring under the Cluster
Rule:
• company-specific vs. OMB-approved (7 percent real) discount rates,
• delayed implementation of air and water pollution control compliance costs (e.g., grace
periods) and savings (discounted costs) which may accrue during those periods, and
• increased pulp costs for non-integrated mills (i.e., mills with only papermaking operations).
• TCP retrofit costs for the bleached papergrade kraft and soda subcategory
6-36
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TABLE 6-16
DIRECT AND INDIRECT IMPACTS
FINAL BAT/PSES, FINAL MACT I, AND PROPOSED MACT II COSTS
BLEACHED PAPERGRADE KRAFT AND SODA AND PAPERGRADE SULFITE SUBCATEGORIES
Final BAT/PSES
MACT II A-H
no price increase
Final BAT/PSES
MACT II A-H
price increase
BAT/PSES Option B
MACT II A-D
price increase
BAT/PSES Option B
MACT II A-H
no price increase
BAT/PSES Option B
MACT II E-H
price increase
Direct Impacts
Closures
Loss in Shipments (millions, $1995)
pulp
paper
paperboard
total
Loss in Shipments (millions, $1992)
pulp
paper
paperboard
total
$27
$304
$148
$479
$25
$277
$135
$437
$27
$504
$148
$679
$25
$459
$135
$619
$28
$1,356
$148
$1,533
$26
$1,236
$135
$1,397
Direct and Indirect Impacts
Loss in Output (millions, $1995)
pulp
paper
paperboard
total
Loss in Employment
pulp
paper
paperboard
total
$430
$1,393
571
6,344
3,094
$10,010
$1,463
$430
$1,974
571
10,520
3,094
14,185
$3,935
$430
$4,450
601
28,298
3,094
31,993
* Multiplier for loss in employment is FTEs per million dollars.
Notes: Employment multipliers are based on 1992 data, hence the loss in output needs to be in 1992 dollars.
Supporting computer printout is located in Section 27.4 "Cost and Impact Results" in the confidential portion of the
Pulp and Paper Water Docket.
6-37
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6.5.1 Discount Rate Analysis
EPA examined the sensitivity of closures in the bleached papergrade kraft and soda and papergrade
sulfite subcategories to different discount rates. EPA used two different measures: (1) OMB-recommended 7
percent real discount rate (OMB, 1992) and (2) company-specific discount rates supplied in the survey and
modified to reflect the 19 percent decline in the prime rate and corporate bond rates from 1989 to 1995 from
10.87 to 8.83 percent and from 10.18 to 8.20 percent, respectively.5
Table 6-17 summarizes costs, closures, and related impacts resulting from both types of discount
rates for both the final BAT/PSES and BAT/PSES Option B combined with final MACTI and the proposed
MACTII alternative. The discount rate makes no difference in the number of closures when no price increase
is assumed. The final BAT/PSES/MACTI/MACTIIA option results in three closures, with an estimated
reduction of $479 million in shipments, $22 million in exports, and 1,700 in employment. The BAT/PSES
Option B/MACT II MACT II A option results in five closures, with an estimated reduction of $1.5 billion in
shipments, $27 million in exports, and 5,600 FTEs annually.
With a price increase, impacts differ under each discount rate scenario. Under the final
BAT/PSES/MACT I/MACT II A option, the number of closures remains at 3 with the 7 percent discount
rate, but drops to 2 with the company-specific discount rate. The related impacts drop accordingly with
losses of $273 million in shipments, $19 million in exports, and 900 FTEs annually.
Under the BAT/PSES Option B/MACT II MACT IIA option, four mills close when a price increase
is assumed. However, a different set of mills closes with each discount rate. With the 7 percent discount rate,
the four closures result in related losses of $679 million in shipments, $25 million in exports, and 2,500 in
employment. With the company-specific discount rate, the four closures result in related losses of $1.3
billion in shipments, $24 million in exports, and 4,800 FTEs annually.
5The discount rates submitted with the EPA survey (EPA, 1991) reflected each company's mix of debt and
equity as well as rates for each of them. EPA did not request, nor did the companies supply, more detailed
information on the relative proportions of debt and equity. Where a facility did not submit a discount rate in
the survey, EPA annualized the costs using the industry average discount rate, see the EIA for proposal,
Section 2.7 (EPA, 1993). For the sensitivity analysis, EPA assumes that the mix of debt and equity reflected
in the survey data remained the same from 1989 to 1995. These company-specific rates were decreased by
19 percent for the sensitivity analysis.
6-38
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TABLE 6-17
SUMMARY OF COSTS, CLOSURES, AND RELATED IMPACTS FOR 7% REAL DISCOUNT RATE AND COMPANY-SPECIFIC
1995 DOLLARS
FINAL BAT/PSES, FINAL MACT I, AND PROPOSED MACT II ALTERNATIVE A,B COSTS
7% REAL DISCOUNT RATE
MACT II A,B
MACT I
Final BAT/PSES
MACT I
BAT/PSES Option B
COMPANY-SPECIFIC DISCOUNT RATE
MACT II A,B
MACT I
Final BAT/PSES
MACT I
BAT/PSES Option B
Costs (thousands, $1995)
Capital Cost
O&M Expense
Post-tax Annualized Cost
Pre-tax Annualized Cost
No Price Increase
Closures
Shipments (millions)
pulp $6,288
paper $20,202
paperboard $6,145
total $32,635
Exports (millions)
pulp $2,715
paper $298
paperboard $758
total $3,771
Employment
90,840
(millions)
Revenues $33,013
Price Increase
Closures
Shipments (millions)
pulp $6,288
paper $20,202
paperboard $6,145
total $32,635
Exports (millions)
pulp $2,715
paper $298
paperboard $758
total $3,771
Employment
90,840
(millions)
Revenues $33,013
$1,524,091
$212,374
$240,275
$366,095
3
$27
$304
$148
$479
$0
$3
$19
$22
1,700
$486
3
$27
$304
$148
$479
$0
$3
$19
$22
1,700
$486
$2,824,369
$164,214
$314,250
$457,307
5
$28
$1,356
$148
$1,533
$0
$7
$19
$27
5,600
$1,546
4
$27
$504
$148
$679
$0
$6
$19
$25
2,500
$689
$1,524,091
$212,374
$251,275
$377,773
3
$27
$304
$148
$479
$0
$3
$19
$22
1,700
$486
2
$27
$98
$148
$273
$0
$0
$19
$19
900
$278
$2,824,369
$164,214
$338,636
$482,878
5
$28
$1,356
$148
$1,533
$0
$7
$19
$27
5,600
$1,546
4
$28
$1,150
$148
$1,327
$0
$4
$19
$24
4,800
$1,338
Notes: Employment rounded to nearest hundred.
Supporting computer printout is located in Section 27.4 "Cost and Impact Results" in the confidential portion of the Pulp and Paper
Water Docket.
6-39
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6.5.2 Delayed Implementation Compliance Schedule
EPA also examined the sensitivity of closures in the bleached papergrade kraft and soda and
papergrade sulfite subcategories to different compliance implementation schedules. EPA used the same
closure model and adjusted the costs for each mill according to the scenario investigated. EPA evaluated:
• 1996 start year for costs (original analysis)
• 1999 start year for costs (3-year delay, without discounting costs)
• 1999 start year for costs (3-year delay, discounting costs)
• 2001 start year for costs (5-year delay, without discounting costs)
• 2001 start year for costs (5-year delay, discounting costs)
To model interim potential savings to industry during the grace period, EPA discounted the present value of
total costs by the 7 percent real discount rate to represent the time value of money. That is, EPA calculates
the cost in the closure analysis (see Chapter Three) as:
present value of costs = present value of costs *
where:
K = discount rate (7 percent)
n = number of years in grace period
For a 3-year grace period, the present value of costs will be 82 percent of the present value of costs for
immediate implementation. For a 5-year grace period, the present value of costs will be 71 percent of the
present value of costs for immediate implementation. If a company chooses to delay implementation costs, it
could invest the money during the delay period at the discount rate assumed in the analysis (i.e., savings) or
use it for other purposes (i.e., its value is the opportunity cost of that money).
6-40
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Tables 6-ISA and B summarize the results of the analysis for the bleached papergrade kraft and soda
and papergrade sulfite subcategories. In general, a three-year grace period resulted in more severe impacts
because the costs began during a projected downturn in the industry cycle. Cost savings, if assumed, mitigate
the severity of the incurred impacts. (Cost savings are represented through discounting). During an industry
downturn, however, cost savings may be less important to a company than meeting short-term obligations.
For example, a company may pay the current portion of long-term debt rather than save the money or invest it
elsewhere in the company.
A five-year grace period—assuming the company does not save the funds that would otherwise need
to be spent on pollution control—generally had an indeterminate impact on closures for the bleached
papergrade kraft and soda and papergrade sulfite subcategories (Table 6-18). In general, the number of
closures is similar to the original analysis. Under a five-year grace period, no interim savings and no price
increase, no change is seen from the original analysis (Table 6-ISA). The five-year grace period with a
savings assumption is the only scenario that generally shows smaller impacts than the original analysis. The
number of closures with the final BAT/PSES and final MACT I costs combined with the proposed MACT II
alternative (A) drops from 3 to 2. EPA still projects 3 mills to close with BAT/PSES Option B and final
MACT I costs combined with the proposed MACT II alternative (A).
6.5.3 Increased Pulp Costs to Non-integrated Mills
Section 6.2.2 presents the closure analysis for Cluster Rule mills under two assumptions, with and
without a price increase. If prices do not increase for market pulp, then there will be no impacts from the rule
on non-integrated mills, i.e., those with only papermaking operations. EPA performed a sensitivity analysis
to evaluate the potential impacts of higher market pulp prices on non-integrated mills. The analysis
incorporated several conservative assumptions:
• The analysis incorporated price increase percentages for the bleached papergrade kraft and
soda clustered alternatives because they were higher than those for papergrade sulfite.
• The only cost for the mill is market pulp.
• Price increases were not reduced by the tax shield on O&M costs.
6-41
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TABLE 6-18A
SUMMARY OF CLOSURES
BLEACHED PAPERGRADE KRAFT AND SODA AND PAPERGRADE SULFITE SUBCATEGORIES
NO PRICE INCREASE
Year of
Implementation
BAT/PSES Only
Final
Option B
BAT/PSES and MACT I
Final
Option B
Final BAT/PSES
MACT II A,B
MACT II C,D
MACT II E,F
MACT II G,H
BAT/PSES Option B
MACT II A,B
MACT II C,D
MACT II E,F
MACT II G,H
1996
1999
1999 w/ savings
2001
2001 w/ savings
2
2
1
1
4
2
2
1
3
2
2
1
4
4
4
2
3 3
2 2
3 3
2 2
3
2
3
2
3
2
3
2
4
4
5
3
4
4
5
3
4
4
5
3
4
4
5
3
TABLE 6-18B
SUMMARY OF CLOSURES
BLEACHED PAPERGRADE KRAFT AND SODA AND PAPERGRADE SULFITE SUBCATEGORIES
WITH PRICE INCREASE
Year of
Implementation
BAT/PSES Only
Final
Option B
BAT/PSES and MACT I
Final
Option B
Final BAT/PSES
MACT II A,B
MACT II C,D
MACT II E,F
MACT II G,H
BAT/PSES Option B
MACT II A,B
MACT II C,D
MACT II E,F
MACT II G,H
1996
1999 2
1999 w/ savings 2
2001 1
2001 w/ savings 1
4
2
2
1
2
2
1
1
4
4
4
2
2
2
2
1
2
2
2
1
3
2
2
1
3
2
3
1
4
4
5
2
4
4
5
2
4
4
5
2
4
4
5
2
Note: Supporting computer printout is located in Section 27.4 "Cost and Impact Results" in the confidential portion of the Pulp and Paper Water Docket.
6-42
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In reality, the overall percentage increase in a mill's costs would be lower because pulp is only one of several
cost components (such as labor and chemicals), and the tax shield on operating costs offset the increased pulp
prices. EPA reduced the present value of forecasted earnings for each mill by the percentage price increase
for each Cluster Rule alternative (e.g., from 1.5 to 1.9 percent, see Section 6.2.3.3). No incremental closures
resulted from the reduced earnings. In sum, the impacts presented in Section 6.2 are a fair and complete
representation of the industry-wide impacts resulting from increased pollution control costs estimated for
MACT and BAT/PSES requirements.
6.5.4 Sensitivity Analysis of Impacts from TCF Costs
Table 5-18 in Section 5.3.2 compares the costs for BAT/PSES Option B with those for retrofitting
bleached papergrade kraft and soda mills with TCF technology. Table 6-19 summarizes the impacts. When
BAT/PSES costs only are considered, 7 mills are projected to close under TCF requirements compared with 2
mills projected to close under BAT/PSES Option B requirements (i.e., 3.5 times the number of mills). The
losses in shipments, employment, and revenues, however, are about 8 times higher under TCF than under
BAT/PSES Option B. The loss in exports is more than 16 times higher under TCF than under BAT/PSES
Option B.
When air pollution controls are included, 4 mills are projected to close under BAT/PSES Option B
while 9 mills are projected to close under TCF. The losses in shipments, employment, and revenues are more
than twice as large under TCF as they are under BAT/PSES Option B. The loss in exports is approximately
13 times as large under TCF as they are under BAT/PSES Option B.
When price increases are included, 7 mills are projected to close under BAT/PSES TCF costs and
under BAT/PSES/MACTI TCF costs. The losses in shipments, exports, and employment are the same as
those under BAT/PSES TCF costs without a price increase.
6-43
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TABLE 6-19
SUMMARY OF CLOSURES AND RELATED IMPACTS -- BAT/PSES COSTS
BLEACHED PAPERGRADE KRAFT AND SODA SUBCATEGORY
MILLIONS OF 1995 DOLLARS
ECF: O
BAT/
Baseline BAT/PSES MA
No Price Increase
Closures 2
Shipments (millions)
pulp $6,288 $27
paper $20,202 $98
paperboard $6,145 $148
total $32,635 $273
Exports (millions)
pulp $2,715 $0
paper $298 $0
paperboard $3,013 $19
total $6,026 $19
Employment
90,840 900
(millions)
Revenues $33,013 $278
Price Increase
Closures 2
Shipments (millions)
pulp $6,288 $27
paper $20,202 $98
paperboard $6,145 $148
total $32,635 $273
Exports (millions)
pulp $2,715 $0
paper $298 $0
paperboard $3,013 $19
total $6,026 $19
Employment
90,840 900
(millions)
Revenues $33,013 $278
ption B TCF
BAT/PSES BAT/PSES
PSES MACTI BAT/PSES MACT I
3TI MACTIIA,B BAT/PSES MACTI MACT II A,B
4 nd 7 9 9
$28 nd $535 $619 $619
$1,150 nd $1,619 $2,417 $2,417
$148 nd $148 $148 $148
$1,327 nd $2,302 $3,184 $3,184
$0 nd $278 $278 $278
$4 nd $11 $12 $12
$19 nd $19 $19 $19
$24 nd $308 $310 $310
4,800 nd 7,100 10,200 10,200
$1,338 nd $2,329 $3,211 $3,211
33777
nd nd $535 $535 $535
nd nd $1,619 $1,619 $1,619
nd nd $148 $148 $148
nd nd $2,302 $2,302 $2,302
nd nd $278 $278 $278
nd nd $11 $11 $11
nd nd $19 $19 $19
nd nd $308 $308 $308
nd nd 7,100 7,100 7,100
nd nd $2,329 $2,329 $2,329
'nd' not disclosed due to confidentiality
Notes: Employment rounded to nearest hundred.
Supporting computer printout is located in Section 27.4 "Cost and Impact Results" in the confidential portion of the Pulp and Paper Water Docket.
6-44
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6.6 REFERENCES
Reference material supporting Chapter 6 is located in the Pulp and Paper Water Docket.
Airman, Edward. 1993. Corporate Financial Distress and Bankruptcy. New York: John Wiley and Sons.
Second Edition. Water Docket, DCN 14,300.
Auchard, Eric. 1994. Scott paper sells S.D. Warren to Sappi, Ltd.-led group for $1.6b. Boston Globe.
October 11, 1994. pp. 47. Water Docket, DCN 14,306.
Brealy, R. and S. Myers. 1984. Principles of Corporate Finance. New York: McGraw-Hill Book
Company. Second Edition. Water Docket, DCN 14,304.
Brigham, E.F. 1982. Financial Management: Theory and Practice. New York: The Dryden Press. Water
Docket, DCN 14,305.
Bureau of the Census. 1996. Bureau of the Census, Bureau of Labor Statistics. U.S.A. Counties General
Profile, at http://blue.census.gov/datamap/www/index.html on 15 October 1996. Water Docket, DCN
14,307.
Byrne, J.A. and J. Weber. 1996. The shredder: did CEO Dunlap save Scott Paper—or just pretty it up?
BusinessWeek. January 15, 1996. pp. 56-61. Water Docket, DCN 14,308.
Cheng, Louis T. and James E. McDonald. 1996. Industry structure and ripple effects of bankruptcy
announcements. The Financial Review. Volume 31. pp. 783-803. Water Docket, DCN 14,309.
DOC. 1996. U.S. Department of Commerce. Bureau of Economic Analysis. Regional Input-Output
Modeling System (RIMS II). Total Multipliers by Industry aggregation for output, earnings, and
employment. Washington, DC: Bureau of Economic Analysis, U.S. DOC. Table A-2.4. Water Docket,
DCN 14,298.
DOC. 1992. U.S. Department of Commerce. Bureau of Economic Analysis. Regional multipliers: a user
handbook for the regional input-output modeling system (RIMS II). Washington, DC: Bureau of Economic
Analysis, U.S. DOC. Water Docket, DCN 30,025.
ERG and McCubbin. 1997. Estimated costs for implementing TCP technology in new fiberlines and in
retrofit situations in the bleached papergrade kraft sub-category. Eastern Research Group, Inc., and N.
McCubbin Consultants, Inc. Prepared for U.S. Environmental Protection Agency, Office of Water. First
draft, May 2, 1997. Water Docket, DCN 14,310.
FR. 1993. Effluent limitations guidelines, pretreatment standards, and new source performance standards:
pulp, paper, and paperboard category; national emission standards for hazardous air pollutants for source
category: pulp and paper production; proposed rule. Federal Register 58(241):66077-66216. December
17, 1993. Water Docket, DCN 8,533.
6-45
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Lawless, Robert M., Stephen P. Ferris, Narayan Jayaraman, and Anil K. Makija. 1996. Industry-wide effects
of corporate bankruptcy announcements. Bankruptcy Development Journal. Volume 12. pp. 293-317.
Water Docket, DCN 14,313.
OMB. 1992. Guideline and discount rates for benefit-cost analysis of Federal programs. Washington, DC:
Office of Management and Budget. Revised circular No. A-94. Water Docket, DCN 14,301.
Pulp and Paper. 1995. Pulp and Paper 1995 North American Factbook. Miller-Freeman. San Francisco,
CA. 1995. Water Docket, DCN 14,314.
Pulp & Paper. 1994. Company Profile. Scott Paper Co.: Four-step program restructures operations. Pulp
& Paper. December 1994. pp. 34-35. Water Docket, DCN 14,315.
Rasmussen, Robert K. and David A. Skeel. 1995. The economic analysis of corporate bankruptcy law.
American Bankruptcy Institute Law Review. Volume 3. pp. 85-115. Water Docket, DCN 14,316.
Thomas, E. 1994. Georgia-Pacific may embark on a spending spree: Nekoosa is digested as prices are
surging, so cash becomes plentiful. Wall Street Journal. December 12, 1994. p. B4. Water Docket, DCN
14,317.
U.S. EPA. 1993. Economic impact and regulatory flexibility analysis of proposed effluent guidelines and
NESHAP for the pulp, paper, and paperboard industry. EPA/821/R-93/021. Washington, DC: Office of
Water. Water Docket, DCN 8,590.
U.S. EPA. 1991. 1990 National Census of Pulp, Paper, and Paperboard Manufacturing Facilities.
Washington, DC. October. Water Docket, DCN 8,702.
6-46
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CHAPTER 7
REGULATORY FLEXIBILITY ANALYSIS AND
UNFUNDED MANDATES REFORM ACT
This chapter examines the projected effects of the costs of the Cluster Rule on small entities as
required by the Regulatory Flexibility Act (RFA, 5 U.S.C. 601 et seq., Public Law 96-354) as amended by
the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA, Public Law 104-121). The
purpose of this legislation is to ensure, if possible, that agencies identify and consider ways of tailoring
regulations to the size of regulated entities to minimize any rule's significant economic impact on a
substantial number of small entities. The potential impacts from final MACT I, proposed MACTII, and
final BAT/PSES are examined in Section 7.1. Section 7.2 discusses the requirements of and EPA's
compliance with the Unfunded Mandates Reform Act.
The RFA and SBREFA both define a "small business" as having the same meaning as the term
"small business concern" under Section 3 of the Small Business Act (unless an alternative definition has been
approved). The U.S. Small Business Administration issues definitions of "small businesses" in 13 CFR
121. Businesses directly affected by the clustered rules fall into SIC codes 2611, 2621, and 2631 for which
the small business maximum size standard is 750 employees. The analysis, then, focuses on companies (not
facilities) with fewer than 750 employees.
7.1 IMPACTS FROM AIR AND WATER POLLUTION CONTROL REQUIREMENTS
The industry profile identified 11 companies in the kraft, soda, sulfite, and semichemical
subcategories subject to final MACT I and proposed MACT II requirements with fewer than 750 employees.
Four of these companies are subject to the final MACT I, proposed MACT II, and final BAT/PSES
requirements. EPA examined economic impacts on the 11 small entities in three ways:
7-1
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• Closures
• Altaian's Z (bankruptcy analysis)
• Compliance costs as a percentage of annual sales
7.1.1 Closures
Among these small firms, there are no closures under:
• final MACT I-only
• proposed MACT II-only
• combined final MACT I and any proposed MACT II alternative
• final BAT/PSES
Among these small businesses, there is one closure under each of the following cost combinations:
• Option B
• final BAT/PSES and final MACT I
• final BAT/PSES, final MACT I, and any proposed MACT II alternative
• Option B and final MACT I
• Option B, final MACT I, and any proposed MACT II alternative.
7.1.2 Bankruptcy Analysis (Altman's Z)
Because the Altman's Z analysis was restricted to 1995 data for public companies, only one small
business was included in the data set. That business does not move into the "bankruptcy likely" category
under any cost combination—final MACT I-only, proposed MACT II-only, combined final MACT
I/proposed MACT II, final BAT/PSES, Option B, final BAT/PSES and final MACT I, Option B and final
7-2
-------
MACT I, final BAT/PSES and final MACT I plus any proposed MACTII alternative, and Option B and
final MACT I plus any proposed MACT II alternative.
7.1.3 Compliance Costs as a Percentage of Annual Sales
EPA compared the pre-tax annualized compliance cost (in 1989 dollars) to the 1989 net sales for the
small businesses to determine whether such cost exceeds either 1 percent or 3 percent of sales. EPA, 1997
provides interim guidance for implementing SBREFA and related provision of the RFA. The annualized
compliance cost as a percentage of sales (EPA, 1997, Table 1, B. 1 "Sales Test") is the preferred qualitative
criteria for evaluating the economic impact of a rule on small businesses. No small business fails either the 1
percent or the 3 percent test under final MACT I costs, any proposed MACT II alternative costs, or combined
final MACT I and the proposed MACT II alternative (Alternative A).
One small business fails the 1 percent test under either final BAT/PSES or Option B. No small
business, however, fails the 3 percent test under final BAT/PSES or Option B costs.
One small business fails the 1 percent test under either final BAT/PSES and final MACT I, or
Option B and final MACT I costs. No small business fails the 3 percent test under final BAT/PSES and final
MACT I. One small business fails the 3 percent test under Option B and final MACT I.
Table 7-1 shows the results of the one and three percent of sales tests for the four small businesses
that incur costs for combined BAT/PSES, final MACT I and proposed MACT II costs. Two to three small
companies are affected at the one percent of sales level when costs are considered on a pre-tax basis. When
the basis is changed to post-tax costs, only one company is affected. One business is affected at the three
percent level on a pre-tax basis but only with Option B/MACT I/MACT II costs. It is not affected when
costs are considered on a post-tax basis. Because MACT II is only proposed at this time, these are not
impacts of the final Cluster Rule.
The analyses indicate that none of the regulatory requirements, either singly or in combination,
significantly impact a substantial number of small entities in the pulp and paper industry. Because there are
7-3
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TABLE 7-1
NUMBER OF SMALL BUSINESSES ADVERSELY AFFECTED BY REGULATORY COMPLIANCE COSTS
BAT/PSES, FINAL MACT I, AND PROPOSED MACT II ALTERNATIVES
FINAL BAT/PSES
FINAL MACT I
MACT H A3 MACTIICJJ MACTHE,F MACTIIG,H
OPTION B
FINAL MACT I
MACT n A3 MACTIICJJ MACTHE,F MACTIIG,H
1% of Annual Sales Test
Pre-tax Annualized Costs
Post-tax Annualized costs
3% of Annual Sales Test
Pre-tax Annualized Costs
Post-tax Annualized costs
0
0
0
0
0
0
0
0
1
0
1
0
1
0
1
0
Note: Four small entities are anticipated to incur costs of the integrated rule finalized at this time.
7-4
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only 4 small businesses subject to CWA requirements under this rulemaking (11 for CAA requirements),
there is not a substantial number of small entities.
7.2 UNFUNDED MANDATES
Title II of the Unfunded Mandates Reform Act of 1995 (Public Law 104-4; UMRA) establishes
requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal
governments as well as the private sector. Under Section 202(a)(l) of UMRA, EPA must generally prepare a
written statement, including a cost-benefit analysis, for proposed and final regulations that "includes any
Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate or
by the private sector" of annual costs in excess of $100 million.1 As a general matter, a federal mandate
includes Federal Regulations that impose enforceable duties on State, local, and tribal governments, or on the
private sector (Katzen, 1995). Significant regulatory actions require Office of Management and Budget
review and the preparation of a Regulatory Impact Assessment that compares the costs and benefits of the
action.
The clustered rules are not an unfunded mandate on state, local, or tribal governments because the
cost of the regulation is borne by industry. EPA, however, is responsive to all required provisions of UMRA.
The clustered rules are anticipated to cost the private sector in excess of $100 million/year for the time period
analyzed. In particular, the Economic Analysis (EA) addresses:
• Section 202(a)(l)—authorizing legislation (see EA Chapter 1 and the preamble to the rule)
• Section 202(a)(2)—a qualitative and quantitative assessment of the anticipated costs and
benefits of the regulation (see EA Chapters 4 and 8 through 10)
• Section 202(a)(3)(A)—accurate estimates of future compliance costs (as reasonably
feasible; see EA Chapter 5)
• Section 202(a)(3)(B)—disproportionate effects on particular regions or segments of the
private sector (see this chapter)
JThe $100 million in annual costs is the same threshold that identifies a "significant regulatory action" in
Executive Order 12866.
7-5
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• Section 202(a)(3)(B)—disproportionate effects on local communities (see
Chapter 6)
• Section 202(a)(4)—estimated effects on the national economy (see EA Chapter 6)
• Section 205(a)—least burdensome option or explanation required (see this chapter)
The preamble to the final rule summarizes the extent of EPA's consultation with stakeholders including
industry, environmental groups, states, local, and tribal governments. The preamble and comment response
document contains responses to their comments collected during the public comment periods for the proposal
and two subsequent Notices of Data Availability (UMRA, sections 202(a)(5) and 204). Because this rule
does not "significantly or uniquely" affect small governments, section 203 of UMRA does not apply.
EPA estimated the reduction in property tax collection from projected mill closures and examined the
impacts of the potential revenue losses at the city/town and county levels. The analysis is performed on the
set of five potential Cluster Rule mills and a sixth mill that is regulated by MACT I and MACTII but not
BAT/PSES for the bleached papergrade kraft and soda and papergrade sulfite subcategories. Of the six
mills, financial data are available for only one city/town. While the mill closure may account for as much as
one-third of the property tax collection for the city/town, it accounts for approximately 2 percent of all taxes
and 1 percent of all government revenue for the city/town. At the county level, for the other five locations,
reduced property tax collection from the potential mill closures are less than 4 percent of property taxes, less
than 1.7 percent of all taxes, and less than 1.2 percent of all government revenue.
Pursuant to section 205(a)(l)-(2), EPA has selected the "least costly, most cost-effective or least
burdensome alternative" consistent with the requirements of the CAA and CWA for the reasons discussed in
the preamble to the rule. Under the CWA, EPA is required under BAT/PSES to require effluent limitations
guidelines and standards based on Best Available Technology economically achievable considering factors
listed in section 304 of the CWA and under NSPS/PSNS based on Best Available Demonstrated Technology
considering factors listed in section 306 of the CWA. EPA determined that the rule constitutes the least
burdensome alternative consistent with the CWA.
7-6
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7.3 REFERENCES
Reference material supporting Chapter 7 is located in the Pulp and Paper Water Docket.
Katzen, Sally. 1995. Guidance for implementing Title II of S.I., Memorandum for the Heads of Executive
Departments and Agencies from Sally Katzen, Ad, OIRA. March 31, 1995. Water Docket, DCN 14,798.
U.S. EPA. 1997. EPA interim guidance for implementing the Small Business Regulatory Enforcement
Fairness Act and related provisions of the Regulatory Flexibility Act. EPA SBREFA Task Force. February
5, 1997. Water Docket, DCN 14,318.
7-7
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CHAPTER 8
NATIONAL LEVEL BENEFITS RESULTS
This chapter presents the potential national level annual benefits of the final pulp and paper
regulation. The benefits have been revised to reflect new information and comments received since proposal.
The description of benefits generally follows the November 1993 RIA that accompanied the rule at proposal,
focusing on changes since proposal. Potential annual air-related benefits are described in Section 8.1,
potential water-related benefits are described in Section 8.2, and the combined estimates for air and water are
presented in Section 8.3. Section 8.4 presents the results of analyses related to environmental justice,
Section 8.5 presents the results of an analysis of case study representativeness and an alternative analysis of
aggregate water benefits, and Section 8.6 describes potential benefits from implementation of totally chlorine
free (TCP) technology. The annual benefits presented are at the levels that will be achieved when the benefits
are fully realized (i.e., the maximum level where EPA expects a ramp-up or delay in benefits after compliance
with the rule).
8.1 AIR BENEFITS
This section provides data on the quantified emission reductions1 of air pollutants that will result
from the implementation of MACT I and MACT II in combination with the water-related options. As noted
in Chapter 5, MACT I costs and benefits differ depending on which BAT/PSES technology option is selected
as the basis for setting water pollution control limits. The benefits that result from the integrated rule include
both the primary impacts from application of control technologies or changes in operations and processes,
and the secondary effects of the controls. Primary air impacts refer to the reduction in emissions directly
attributable to the control option (i.e., the reduction of emissions due to the use of air pollution control
devices or process modifications). Primary air pollutants include: particulate matter (PM), gaseous organic
hazardous air pollutants (HAPs), PM HAPs, hydrochloric acid, volatile organic compounds (VOC), and total
Detailed information on the method to calculate emission reductions is contained in the Background
Information Document (BID) that accompanies the MACT rules (EPA, 1997a). Valuation methodology is
described in Chapter 4 of this document.
8-1
-------
reduced sulfur (TRS). The gaseous organic HAPs include HAP compounds such as acetaldehyde, benzene,
formaldehyde, methanol, methyl ethyl ketone, methyl isobutyl ketone, phenol, styrene, toluene, and xylenes.
The PM HAPs include HAP metals such as antimony, beryllium, cadmium, chromium, cobalt, lead,
manganese, mercury, nickel, and selenium. Secondary air impacts refer to the indirect or induced impacts
resulting from implementing a control option. These indirect or induced impacts result from changes in
power boiler emissions of criteria pollutants such as PM, SO2, NOX, and CO. Some of the air pollutant
reductions, therefore, are categorized as both primary and secondary impacts. The discussion below provides
the net effect of both primary and secondary impacts.
Table 8-1 below shows emission reductions for MACTI and MACTII, respectively. The selection
of regulatory options for the control of water pollutants affects the level of emission reductions achieved by
the MACT I standard. As a result, MACT I emission reductions are delineated between Option A and
Option B. The MACT II emission reductions are presented for each of the regulatory alternatives under
consideration for proposal.
Not all of the emission reductions that are quantified in Table 8-1 can be monetized. Based on the
methodologies discussed in Chapter 4, the following tables provide monetized benefits for VOCs, PM, and
SO2. Table 8-2 presents monetized benefits in 1995 dollars for MACT I and MACT II, respectively. As the
table indicates, benefits associated with the final rule for MACT I are expected to range from negative
benefits of $1,040 million to positive benefits of $1,054 million under Option A, and from ($1015) million to
$1,049 million under Option B. For MACT II, air benefits of the selected alternative (A) range from $302
million to $384 million per year.
Combining the benefits of MACT I with the selected option for MACT II in Table 8-3 yields total
monetized air benefits (disbenefits) of the final rule ranging from ($739) million to $1,438 million under the
BAT/PSES Option A and from ($713) million to $1,433 million when considered with BAT/PSES Option B.
8-2
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TABLE 8-1
AIR POLLUTANT EMISSION REDUCTIONS FOR MACT I AND MACT II (Mg/Yr)
MACT I with:
Option A
Option B
MACT II
Alternatives:
A
B
C
D
E
F
G
H
HAPs
139,300
138,400
2,556
2,556
7,000
7,001
18,893
18,893
18,990
18,990
VOCs
(Total)
409,000
407,000
32,600
32,600
37,045
37,045
48,937
48,937
48,937
48,937
VOCs
(Selected
Areas)
42,220
50,500
3,365
3,365
3,824
3,824
5,051
5,051
5,051
5,051
PM
(83)
(84)
23,760
24,201
23,737
24,178
24,624
25,064
43,899
44,340
TRS
78,900
78,900
0
0
644
644
3,680
3,680
3,680
3,680
CO
(8,660)
(8,610)
57,729
57,728
56,738
57,644
57,975
57,974
57,863
57,862
NOX
(5,230)
(3,200)
(466)
(466)
(511)
(511)
(337)
(210)
(396)
(396)
SO2 East
(78,500)
(77,000)
25
24
(422)
(422)
314
313
29,751
29,751
SO2 West
(16,000)
(15,600)
5
5
(86)
(87)
64
64
6,093
6,093
SO2
Total
(94,500)
(92,600)
30
29
(508)
(509)
378
377
35,844
35,844
Note: Emission increases shown in parentheses.
8-3
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TABLE 8-2
TOTAL MONETIZED AIR BENEFITS OF MACT I AND MACT II
(Millions of 1995 Dollars per Year)
MACT I with:
Option A:
Option B:
MACT II
Alternatives:
A
B
C
D
E
F
G
H
VOCs
Low
$24.1
$28.8
$1.9
$1.9
$2.2
$2.2
$2.9
$2.9
$2.9
$2.9
High
$1,055.2
$1,050.1
$84.1
$84.1
$95.6
$95.6
$126.3
$126.3
$126.3
$126.3
PM
($1.0)
($1.1)
$299.8
$305.4
$299.5
$305.1
$310.7
$316.3
$554.0
$559.5
SO2 - East
Low
($985.2)
($966.4)
$0.1
$0.1
($5.3)
($5.3)
$1.8
$1.8
$168.6
$168.6
High
$0.0
$0.0
$0.3
$0.3
($2.4)
($2.4)
$3.9
$3.9
$373.4
$373.4
SO2 - West
Low
($78.3)
($76.3)
$0.0
$0.0
($0.4)
($0.4)
$0.3
$0.3
$25.0
$25.0
High
$0.0
$0.0
$0.0
$0.0
($0.4)
($0.4)
$0.3
$0.3
$29.8
$29.8
Total Value
Low
($1,040.4)
($1,014.9)
$301.9
$307.5
$296.0
$301.6
$315.7
$321.2
$750.4
$756.0
High
$1,054.2
$1,049.0
$384.3
$389.8
$392.4
$397.9
$441.2
$446.8
$1,083.4
$1,089.0
8-4
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TABLE 8-3
TOTAL MONETIZED AIR BENEFITS: MACT I AND MACT II COMBINED
(Millions of 1995 Dollars)
MACT II
Alternatives:
A
B
C
D
E
F
G
H
MACT I with OW Option A
Low Estimate
($738.5)
($732.9)
($744.4)
($738.8)
($724.7)
($719.2)
($289.9)
($284.4)
High Estimate
$1,438.4
$1,444.0
$1,446.5
$1,452.1
$1,495.4
$1,501.0
$2,137.6
$2,143.1
MACT I with OW Option B
Low Estimate
($713.0)
($707.4)
($718.9)
($713.3)
($699.2)
($693.7)
($264.4)
($258.9)
High Estimate
$1,433.3
$1,438.8
$1,441.4
$1,446.9
$1,490.2
$1,495.8
$2,132.4
$2,138.0
8-5
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8.2 WATER BENEFITS
For the proposed rule, EPA described the potential water related-benefits of the regulation both
qualitatively and quantitatively. The qualitative assessment has not changed for the final rule and is not
repeated here. Revised quantitative estimates of annual benefits expected from the rules are presented below.
8.2.1 Revisions to Quantitative Benefits
The water-related benefits that have been quantified at the national level are those that result from
compliance with ambient water quality concentrations and human health standards, as well as national
recreational angling benefits.
8.2.1.1 Compliance with Ambient Water Quality Concentrations
EPA compared the modeled in-stream pollutant concentrations to aquatic life and human health
water quality criteria or other toxic effect values referred to as aquatic life and health-based ambient water
quality concentrations (AWQCs). Exceedences of AWQCs indicate the potential of aquatic life or human
health water quality problems. EPA quantified the reduction in exceedences of contaminant-specific AWQCs
that would be attributable to the final regulation, but did not monetize these benefits because at present EPA
is not able to translate exceedences into specific aquatic life impacts or types and durations of illness, and can
therefore not monetize such effects.
Aquatic Life Benefits
EPA used the simple dilution approach to estimate exceedences of aquatic life AWQCs. This is a
conservative approach that assumes all pollutants (including dioxin and furan) discharged to receiving
streams are available to the biota. This analysis is also conservative because it uses one-half of the detection
limit to estimate pollutant discharge loadings for all non-detectable congeners. Although hydrophobic
chemicals such as dioxin and furan will be associated primarily with sediments, some residual concentrations
8-6
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will be found in the water column near the discharge point. This is particularly true if discharges are assumed
to be continuous because even though the pollutants might become associated with suspended solids and
sediment, they will also always be present in the water column in the vicinity of the discharge. Therefore,
although it is conservative, EPA believes that the simple dilution approach provides a reasonable estimate of
impacts to aquatic life.
EPA estimated that, under baseline conditions, none of the acute aquatic life AWQCs are exceeded at
potentially regulated mills, and that chronic aquatic life AWQCs are exceeded at 19 mills. EPA also
estimated that the number of exceedences would be reduced to six with the implementation of Option A, and
to three with the implementation of Option B. All of the exceedences remaining after implementation are
associated with 2,3,7,8,-TCDD.
Human Health Benefits
For the final rule, EPA used the simple dilution model to predict water column concentrations of
human health contaminants, except dioxin and furan. EPA compared the modeled in-stream pollutant
concentrations to human health water quality criteria or other toxic effect values referred to as health-based
AWQCs. EPA has analyzed the health-based AWQCs for the ingestion of organisms and the ingestion of
water and organisms. EPA estimates that, for ingestion of organisms only, no mills exceed the health-based
AWQCs under baseline conditions or under the final rule. With respect to the ingestion of water and
organisms, at baseline, three mills exceed AWQCs for two pollutants, chloroform and pentachlorophenol (a
total of four exceedences). Under the rule, only one mill would exceed AWQCs and only for
pentachlorophenol. These analyses are based on the conservative assumption that non-detectable pollutant
discharges are represented as one-half of the EPA-designated detection limit.
For the final rule, EPA used the Dioxin Reassessment Evaluation (DRE) model to predict fish tissue
concentrations of dioxin and furan in order to estimate cancer and non-cancer human health risks from these
contaminants. This DRE analysis was used instead of the simple dilution approach because dioxin and furan
are known to be hydrophobic and settle out of the water column into sediments.
3-7
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8.2.1.2 Human Health Risk Assessment
EPA estimated the cancer and non-cancer human health risk reductions associated with the final
regulation. To reflect differences in fish tissue consumption rates, EPA estimated individual lifetime risks
and risk reductions for recreational, subsistence, and Native American anglers. In addition, EPA estimated
the national-level benefits attributable to the final rule as a result of reductions in risks to recreational and
subsistence anglers.
EPA only evaluated the human health benefits derived from reduced contaminant concentrations in
fish caught by recreational/subsistence anglers. Commercially captured fish were not evaluated. Very few
pulp mills discharge to commercial fisheries. Additionally, because commercially captured fish are distributed
widely throughout a region or even the country, non-angling consumers eat fish taken from a wide variety of
water bodies, contaminated and uncontaminated. Therefore, consumers of commercially captured fish taken
from pulp and paper mill receiving streams will also consume a large portion offish taken from
uncontaminated receiving streams and ocean waters. They do not restrict their diet primarily to fish taken
from a single water body. The levels of contaminants in fish taken from pulp and paper mill receiving
streams will, therefore, be diluted by the consumption of uncontaminated fish, thereby reducing risk to
consumers of commercially captured fish. Recreational/subsistence anglers on the other hand can reasonably
be expected to regularly use the same receiving stream for their fishing activities. These individuals,
therefore, would be regularly exposed to contaminants found in that receiving stream and would be at the
greatest risk.
Cancer Risk Reductions
EPA based the cancer risk reductions on estimates offish tissue concentrations of five carcinogens:
chloroform; pentachlorophenol; 2,3,7,8-TCDD; 2,3,7,8-TCDF; and 2,4,6-trichlorophenol.
-------
Recreational and Subsistence Angler Populations
Average individual lifetime cancer risks for recreational and subsistence angler populations at
baseline and after implementation of the final regulation are shown in Table 8-4. The estimates of statistical
cancer cases per year related to dioxin contamination in receiving water bodies are shown in Table 8-5. EPA
estimated that for both recreational and subsistence anglers, combined implementation of Option A would
eliminate between 0.73 and 2.41 statistical cancer cases per year and Option B would eliminate between 0.75
and 2.50 statistical cancer cases per year. The range in values is based on low and high estimates of the
exposed population (10 percent to 33 percent of licensed anglers in adjacent counties). The estimated
reduction in annual cancer cases is associated with reductions in dioxin/furan contamination. There would be
no increased incidence of dioxin/furan-related cancer cases under TCP. EPA estimated that the baseline
number of cancer cases per year related to all analyzed contaminants except dioxin/furan is zero.
Based on an estimated value of a statistical life of $2.5 million to $9.0 million (American Lung
Association, 1995) and assuming all cancers are fatal2 EjPA estimated that the potential human health
benefits from implementation of Option A on a national basis are between $1.8 and $21.7 million per year.
This estimate is for recreational and subsistence anglers and does not include nonlicensed anglers such as
Native Americans with treaty-ceded fishing rights. These benefits are summarized in Table 8-6.
Native American Angler Population
Estimated average individual lifetime cancer risks for subsistence anglers in Native American
populations nationwide under baseline conditions and after the implementation of Option A, Option B, and
TCP are shown in Table 8-7. With the implementation of either Option A or Option B at papergrade
kraft/soda facilities, EPA estimates that dioxin-related cancer risks to exposed Native American subsistence
anglers nationwide would be reduced from the 1 "4 tbvel to the 10~5 level. The difference between Option A
and Option B is insignificant. Under TCP, there would be no risk associated with dioxin/furan. For
papergrade sulfite mills, EPA estimates that the reduction in risk to Native American subsistence anglers
2A11 cancers may not be fatal. Also, research indicates that the value of a statistical life is lower for
the population aged 65 years and older (approximately $1.9 to $6.8 million) (American Lung Association,
1995). Thus, EPA's assumptions may result in an overestimate of benefits.
8-9
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TABLE 8-4
AVERAGE INDIVIDUAL LIFETIME CANCER RISKS FOR EXPOSED RECREATIONAL AND SUBSISTENCE
ANGLER POPULATIONS UNDER BASELINE CONDITIONS AND BAT OPTIONS3
Subcategory
Papergrade
Kraft/Soda
Papergrade
Sulfite
Recreational Anglers'5
Dioxind | All Other Contaminants
Baseline
6.8xlQ-5
3.9xlQ-5
Options
A
1.3 xlO'5
3.5xlQ-6
B
l.OxlQ-5
NA
Baseline
3.0xlO-8
4.2xlQ-9
Options
A
6.3xiQ-9
7.9xlQ-10
B
S.lxlO'9
NA
Subsistence Anglers0
Dioxind | All Other Contaminants
Baseline
3.6xlQ-4
2.1X10'4
Options
A
6.8xlQ-5
1.9xlQ-5
B
5.3xiQ-5
NA
Baseline
1.6xlQ-7
2.2xlQ-8
Options
A
3.4xlQ-8
4.2xlQ-9
B
2.7xlQ-8
NA
EPA, 1997b
aDoes not include nonlicensed anglers such as Native American anglers with treaty-ceded fishing rights.
bBased on a fish tissue consumption rate of 21 g/day.
cBased on a fish tissue consumption rate of 48 g/day.
dUnder TCP, there would be no risk associated with current discharges from pulp and paper mills due to dioxin/furan.
NA: not applicable.
8-10
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TABLE 8-5
STATISTICAL CANCER CASES PER YEAR DUE TO DIOXIN FOR POTENTIALLY EXPOSED
RECREATIONAL AND SUBSISTENCE ANGLER POPULATIONS UNDER BASELINE
CONDITIONS AND BAT OPTIONS3
Subcategory
Papergrade
Kraft/Soda
Papergrade Sulfite
Total
Recreational Anglers'"
Baseline
0.59-1.94
0.05-0.16
0.64-2.10
Options
A
0.08-0.26
0.00-0.01
0.08-0.27
B
0.06-0.19
NA
0.06-0.20d
Subsistence Anglers0
Baseline
0.18-0.62
0.01-0.04
0.19-0.66
Options
A
0.02-0.08
0.00-0.00
0.02-0.08
B
0.02-0.06
NA
0.02-0.06d
EPA, 1997b
aDoes not include nonlicensed anglers such as Native Americans with treaty-ceded fishing rights. Range is
based on low and high estimates of exposed population (10% to 33% of licensed anglers in counties adjacent
to receiving streams).
bBased on a fish tissue consumption rate of 21 g/day.
°Based on a fish tissue consumption rate of 48 g/day.
dCancer cases associated with selected papergrade sulfite options added to cancer cases associated with
papergrade kraft/soda Option B.
8-11
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TABLE 8-6
POTENTIAL NATIONAL HUMAN HEALTH BENEFITS
OF BAT/PSES OPTIONS TO LICENSED ANGLERS3
Angler Group
Recreational Anglers
Subsistence Anglers0
Total
Annual Reduction
in Cancer Cases
Option A
0.56-1.83
0.17-0.58
0.73-2.41
Option B
0.58-1.90
0.17-0.60
0.75-2.50
Annual Monetized Benefits'"
(millions of 1995 dollars)
Option A
$1.4-$16.5
$0.4-$5.2
$1.8-$21.7
Option B
$1.5-$17.1
$0.4-$5.4
$1.9-$22.5
Source: EPA, 1997b
Note: Detail may not add to total due to rounding.
"Benefits reflect reductions in cancer risk resulting from reduced levels of 2,3,7,8-TCDD and 2,3,7,8-TCDF
in fish tissue. Range is based on low and high estimates of exposed population (10% to 33% of licensed
anglers in counties adjacent to receiving streams).
bBased on an estimated value of a statistical life of $2.5 million to $9.0 million ($1995).
°Does not include nonlicensed anglers such as Native Americans with treaty-ceded fishing rights.
8-12
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TABLE 8-7
AVERAGE INDIVIDUAL LIFETIME CANCER RISKS DUE TO DIOXIN FOR EXPOSED
NATIVE AMERICAN ANGLER POULATIONS (NATIONWIDE) UNDER BASELINE
CONDITIONS AND BAT/PSES OPTIONS a
Subcategory
Papaergrade Kraft/Soda
Papergrade Sulfite
Average Individual Lifetime Cancer Risk
Dioxin b
Baseline
5.3 xlQ-4
3.0 xlO-4
Options
A
9.9 xlO'5
2.8 xlO-5
B
7.7 xlO-5
NA
All Other Contaminants
Baseline
2.3 xlQ-7
3.3 xlQ-8
Options
A
4.9 xlO-8
6.1 xlQ-9
B
3.9 xlO-8
NA
Note: a 10"5 risk means the risk of one cancer case out of 100,000 individuals exposed to a
given level, a 10"6 risk means the risk of one cancer case out of 1,000,000 individuals
exposed, etc.
a Based on modeled fish tissue levels below 92 mills and a fish tissue consumption rate of 70
g/day.
b Under TCP, there would be no risk associated with dioxin/furan.
NA: not applicable.
8-13
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nationwide would also be from the 10~4 level to the 10~5 level. For all pollutants other than dioxin/furan, EPA
estimates that baseline risks to exposed Native American subsistence anglers nationally are at the 10~7 level
for papergrade kraft/soda mills anand at the 10-8 level for papergrade sulfite mills. These risks would decrease
to the 10-8 level for papergrade kraft/soda mills and the 10-9 level for papergrade sulfite mills. EPA does not
consider these risk levels to be of significant concern.
EPA did not have accurate estimates of the population of Native American anglers or their families
nationwide who would actually be exposed to contamination from pulp and paper mills by eating fish. To
estimate the maximum number of potential annual cancer cases for Native Americans, EPA considered the
entire population of tribes with treaty fishing rights downstream from pulp and paper mills and assumed
every tribal member would consume 70 grams/day of dioxin-contaminated fish. EPA estimates that the
dioxin/furan-related cancer risks for Native American subsistence anglers with treaty-ceded fishing rights
would be at the 1CH level under baseline conditions, would be reduced to the 10-5 level under Options A and
B (Table 8-8), and would be reduced to zero under TCP. EPA estimates that a maximum of approximately
23,000 Native Americans would be exposed at this level. This would represent a baseline cancer risk of 0.14
cancer cases per year, which would decline to 0.008 cases per year with Option A and 0.007 cases per year
with Option B, a reduction of about 95 percent for either option. Under a totally chlorine-free option, the
residual number of cancer cases per year would be 0.0.
For all pollutants other than dioxin/furan, EPA estimates that baseline risks to Native American
subsistence anglers with treaty-ceded fishing rights would be reduced from the 10-8 level under baseline
conditions to the 10"9 level under Options A and B.
Non-Cancer Hazard Reductions
EPA based the non-cancer hazard reductions on estimates of fish tissue concentrations of six
toxicants: chloroform; pentachlorophenol; 2,3,7,8-TCDD; 2,3,7,8,-TCDF; 2,3,4,6-tetrachlorophenol; and
2,4,5-trichlorophenol. EPA did not monetize these benefits because accurate translation of risk into cases of
illness, and subsequently dollars, is not possible at present.
8-14
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TABLE 8-8
AVERAGE INDIVIDUAL LIFETIME CANCER RISKS AND ANNUAL INCREASED
INCIDENCE OF CANCER DUE TO DIOXIN/FURAN AND ALL OTHER POLLUTANTS FOR
EXPOSED NATIVE AMERICAN ANGLER POPULATIONS WITH TREATY-CEDED FISHING
RIGHTS UNDER BASELINE CONDITIONS AND BAT/PSES OPTIONS
Cancer Risk
Annual Increased
Incidence of Cancer
Dioxin/Furan a
Baseline
3.5 xlQ-4
0.14
Options
A
2.3 xlQ-5
0.008
B
1.9 xlQ-5
0.007
All Other Contaminants
Baseline
5.6 xlQ-8
0
Options
A
7.3 xlQ-9
0
B
6.3 xlQ-9
0
Note: a 10~5 risk means the risk of one cancer case out of 100,000 individuals exposed to a given level, a 10"'
risk means the risk of one cancer case out of 1,000,000 individuals exposed, etc.
a Under TCP, dioxin/furan risk and annual incidence of cancer would be zero.
8-15
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Recreational and Subsistence Angler Populations
EPA examined the current discharge of four pollutants that have reference doses (RfDs) contained in
EPA's Integrated Risk Information System (IRIS) (chloroform, pentachlorophenol, 2,3,4,6-tetrochlorophenol,
and 2,4,5-trichlorophenol) to determine if any chemical-specific non-cancer hazard quotient exceeds 1.0
under baseline conditions or under options A or B. None of the four pollutants with RfDs in IRIS are
estimated to exceed a non-cancer hazard quotient of 1.0 under either baseline or BAT/PSES conditions for
recreational, subsistence or Native American subsistence anglers.
EPA did not use the reference dose approach to evaluate potential non-cancer effects associated with
dioxin/furan. The use of a RfD for dioxin/furan presents special problems. If EPA were to establish a RfD
for dioxin/furan using the standard conventions of uncertainty, the RfD value would likely be one to two
orders of magnitude below average background population exposure (Farland, 1997). The RfD is a level that
is likely to be without an appreciable risk; it is not an "action level" or exposure level where non-cancer
effects are predicted. Where the RfD is below background levels, and where effects are not readily apparent
at background levels, it is not appropriate to use the RfD for quantifying benefits.
As an alternative to using the RfD, EPA evaluated potential non-cancer effects of dioxin/furan by
comparing the modeled incremental exposure of dioxin/furan from fish consumption (based on results from
the DRE model) to ambient background levels (i.e., 120 picograms of toxic equivalents/day [pgTEQ/day]).
EPA estimates that adverse impacts associated with dioxin/furan exposures may occur at or within one order
of magnitude of average background exposures. As exposures increase within and above this range, the
probability and severity of human non-cancer effects most likely will increase. EPA's analysis shows that the
estimated incremental exposure at baseline exceeds ambient background exposure by an order of magnitude
for two mills, with the size of the exposed population ranging from 4,910 to 16,205 recreational and
subsistence anglers (Table 8-9). The selected BAT/PSES reduced incremental exposure from fish
consumption to a level that was not significantly different from ambient background exposure. The size of
the recreational and subsistence angler population exposed to dioxin/furan doses exceeding one order of
magnitude greater than the background level would be zero under the BAT/PSES options.
Assuming 10 percent to 33 percent of licensed anglers in adjacent counties regularly use pulp and
paper mill effluent receiving streams for their fishing activities, EPA estimated that as many as 4,910 to
8-16
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TABLE 8-9
NUMBER OF MILLS WITH ESTIMATED EXPOSURES POSING A POTENTIAL
NONCANCER HAZARD FOR EXPOSED RECREATIONAL AND SUBSISTENCE ANGLER
POPULATIONS
Option
Baseline
Option A
Option B
TCP
Maximum
Estimated Dose
(pg/day)
0
Rec
1,004
92
62
0
0
Sub
2,387
212
143
0
# Mills Exceeding
Background Dose
By An Order of
Magnitude
0
Rec
~1
0
0
0
1
Sub
2
0
0
0
Size of the Population Exposed to Doses Exceeding
Background Doses By An Order of Magnitude
Recreational
10%a
4,491
—
—
—
33%b
14,820
—
—
—
Subsistence
10%a
419
—
—
—
33%b
1,385
—
—
—
Total
10%a
4,910
—
—
—
33%b
16,205
—
—
—
^Assumes 10%
bAssumes 33%
of licensed anglers in counties adjacent to receiving stream regularly use the receiving stream for fishing
of licensed anglers in counties adjacent to receiving stream regularly use the receiving stream for fishing
8-17
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16,205 recreational and subsistence anglers are exposed to dioxin/furan levels that could result in a non-
cancer effect under baseline conditions. This number is reduced to zero under Option A, Option B, or TCP
(Table 8-9).
Native American Angler Populations
For Native American subsistence anglers nationally, EPA estimates that no mills will exceed the oral
RfDs for any of the four contaminants with EPA-approved RfDs contained in IRIS (under either baseline
conditions or any BAT/PSES option). EPA also estimates nationally, potential Native American dioxin/furan
exposures from consumption of contaminated fish associated with three mills (all papergrade kraft/soda
mills) exceed ambient background exposures by an order of magnitude under baseline conditions. Under
Option A, Option B, and TCP, no mills are associated with dioxin/furan exposures greater than an order of
magnitude above background exposures.
For Native American subsistence anglers with treaty-ceded fishing rights, the maximum dioxin/furan
exposure under baseline conditions is projected to be 803 pg TEQ/day, which is less than one order of
magnitude above the background exposure, 120 pg TEQ/day (Table 8-10). Under the selected BAT/PSES
option, the maximum incremental dioxin/furan exposure is reduced to 39 pg TEQ/day, which is less than one
order of magnitude above background exposure. EPA estimates that no Native American subsistence anglers
with treaty-ceded fishing rights would receive a maximum dioxin/furan exposure greater than one order of
magnitude above background under baseline conditions or the selected BAT/PSES option (i.e., exposures are
less than the level of concern).
8.2.1.3 National Recreational Angling Benefits
For proposal, EPA analyzed the lifting offish consumption advisories and estimated the number of
anglers affected by such advisories. EPA used these results to estimate monetized recreational angling
benefits on a national basis. This section presents the results of the fish consumption advisory analysis for
the final rule.
8-18
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TABLE 8-10
MILLS EXCEEDING BACKGROUND EXPOSURES OF DIOXIN/FURAN (TEQ: 120 pg/DAY)
FROM FISH TISSUE CONSUMPTION FOR NATIVE AMERICANS WITH TREATY-CEDED
FISHING RIGHTS
Option
Baseline
Option A
Option B
TCP
Maximum Estimated Exposure
(pg/day)
803
39
39
0
Number of Mills Exceeding Background
Exposure by an Order of Magnitude
0
0
0
0
8-19
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Typically, much of the water-related benefits from environmental controls are derived from
recreational uses of a water body. However, these types of benefits are also highly site specific, making them
difficult to estimate on a national or regional scale. EPA conducted detailed case studies of water-related
benefits at a number of sites, but it is difficult to extrapolate from case study results to aggregate estimates
(see Section 8.2.3 below for further discussion).
As EPA described in the RIA for the proposed rule, the methodology used to estimate recreational
angling benefits at the national level relies on wide generalizations such as assumptions about the number of
recreational anglers using affected water bodies, and does not consider the site-specific characteristics of the
receiving streams that will influence recreational use (e.g., substitute sites). EPA derived estimates for this
category of benefits to present a more complete picture of potential benefits at the national level. Therefore,
the results are intended to provide only a rough approximation of the potential magnitude of recreational
angling benefits that can be expected to result from the regulation.
Fish Consumption Advisory Analysis
As of December 1995, dioxin-related fish consumption advisories were in place near or downstream
from 18 pulp and paper mills affected by the final effluent guideline rule (as reported in EPA's June 1996
National Listing of Fish Consumption Advisories). These 18 chlorine-bleaching pulp and paper mills affect
17 different receiving water bodies (seventeen water bodies are under advisories, but 2 of these water bodies
have advisories in 2 states for a total of 19 advisories; see Table 8-11). These facilities were analyzed to
assess the impact of the final regulation on existing fish consumption advisories by comparing modeled
2,3,7,8-TCDD and 2,3,7,8-TCDF fish tissue (fillet) concentrations for each BAT option to state-specific fish
consumption advisory threshold levels.
EPA used the DRE model to project the effect of the final rule on existing dioxin-related fish
consumption advisories. The results of this analysis indicate that the dioxin-related fish consumption
advisories associated with all 18 facilities could potentially be lifted after implementation of Options A or B.
However, three of the streams for which dioxin-related advisories are projected to be lifted will still have
advisories in place for other contaminants. Consequently, EPA estimated that the number of recreational
anglers on these streams will not increase.
8-20
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TABLE 8-11
WATER BODIES WITH DIOXIN-RELATED FISH CONSUMPTION
ADVISORIES ASSOCIATED WITH PULP AND PAPER MILLS
Water Body
Androscoggin River
Androscoggin River
Bayou LaFourch
Wham Brake
Lake Irwin
Blackwater River
Chowan River
Escatawpa River
Houston Ship Channel
Kennebec River
Menominee River
Niches River
Penobscot River
Pigeon River
Pigeon River
Roanoke River
Albemarle Sound
Welch Creek
Wisconsin River
State(s)
NH
ME
LA
LA
LA
VA
TN
MS
TX
ME
MI
TX
ME
NC
TN
NC
NC
NC
WI
# Mill(s)
1
2
1
1
1
2
1
1
1
2
1
1
3
Name of Mill
James River Corp.
Boise Cascade
Intern. Paper Co.
Intern. Paper Co.
Union Camp Corp.
Intern. Paper Co.
Simpson Pasadena Paper Co .
Champion Intern.
Scott Paper Co.
Champion Intern.
Temple-Inland Forest Prod.
Lincoln Pulp & Paper
James River Corp.
Champion Intern.
Weyerhaeuser Paper
Nekoosa Papers
Nekoosa Papers
Consolidated Paper
City
Berlin
Rumford
Jay
Bastrop
Franklin
Moss Point
Pasadena
Houston
Hinckley
Quinnesec
Evadale
Lincoln
Old Town
Canton
Plymouth
Nekoosa
Port Edwards
Wisconsin Rapids
Type of Advisory
fish
fish
crappie, fish
fish
buffalo-small mouth
bottom fish
all fish except herring, shad, and shellfish
buffalo, catfish
catfish, blue crab
fish
carp
fish
fish
carp, catfish, fish
fish
all fish except herring, shad, and shellfish
all fish except herring, shad, and shellfish
fish
white bass, carp
Other
Chemicals
mercury
PCBs
mercury
mercury
Total # of Water Bodies with Advisories =17
Total # of Advisories = 19
Total # of Facilities Associated with Advisories =
8-21
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Based on this analysis and assuming 10 percent to 33 percent of licensed anglers in adjacent counties
regularly use these streams for their fishing activities, EPA estimated that after implementation of the final
rule, the number of recreational anglers could increase from 35,932 to 118,529 anglers currently fishing these
streams to 43,742 to 144,349 anglers.
EPA assumes that dioxin-related fish consumption advisories will be lifted three years after dioxin
discharges from pulp and paper mills are reduced as a result of implementation of the final rule. In support of
this assumption, several examples exist offish consumption advisories that have been rescinded as a result of
reduced concentrations of dioxins in fish taken from pulp and paper mill effluent receiving streams. Within
the last few years, dioxin-related fish consumption advisories have been lifted on a number of receiving
streams after pulp and paper mills instituted chlorine bleaching changes. These include the Sacramento River
in California, the Ouichita River and Red River in Arkansas, the North Branch of the Potomac River in
Maryland, the Escanaba River in Michigan, the Leaf River in Mississippi, Codorus Creek in Pennsylvania,
and several water bodies in Alabama (see Chapter 9). Most recently, the fish consumption advisories on
Lake Irwin in Louisiana and the Neches River in Texas were rescinded in 1997 due to reduced levels of
dioxin in fish taken from these pulp and paper mill receiving streams. The physical, chemical, and biological
conditions of a water body will determine how long dioxins will persist in the sediments and in fish tissue
from that water body. However, EPA believes that implementation of the final rule will virtually eliminate
the discharges of dioxins to pulp and paper mill receiving streams and will result in the lifting of dioxin-
related fish consumption advisories, as has already been demonstrated by the removal of advisories at a
number of mills that have implemented technologies similar to those required under the final rule.
Benefits Derived From Lifting of Fish Consumption Advisories
The lifting offish consumption advisories may generate benefits by increasing both angling
participation and the value of existing angling trips. As for the proposal, EPA estimated the increase in value
of the fishery to the angler based on research conducted by Lyke (1993). EPA also derived estimates of a
potential increase in angling activity; however, there is no way to determine what portion of these benefits
would reflect merely a distributional shift in national-level angling activity.
8-22
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Value of a Contaminant-Free Fishery
EPA estimated that the baseline value of fisheries at sites that currently have a fish consumption
advisory for dioxin (and no other advisories) is $18.8 million to $61.9 million per year (with the range based
on low and high estimates of anglers affected by fish consumption advisories). As in the proposal, EPA
calculated the baseline value by multiplying the number of recreational anglers at each site (U.S. EPA,
1997b) by the average number of angling days per angler in each state (U.S. DOI, 1993) and by the average
consumer surplus per day of fishing (Walsh et al., 1990) (see Appendix D).
For this analysis, Lyke's results were used to estimate benefits at those sites where advisories are
expected to be lifted. Lyke (1993) estimated that if Wisconsin's Great Lakes trout and salmon fishery were
completely free of contaminants that may threaten human health, the increase in consumer surplus for current
users would be between 11.1 percent and 31.3 percent of the value of the fishery under current conditions.
Such a scenario may be equated by anglers with the lifting of consumption advisories. Given a baseline value
of the fisheries of $18.8 million to $61.9 million per year, EPA estimated potential benefits (11.1 percent to
31.3 percent of baseline value) of $2.1 million to $19.4 million per year. In reality, this method provides only
a general sense of the magnitude of the recreational angling benefits that may arise from the regulation
nationwide. Applying benefits transfer in this broad fashion is likely to underestimate benefits for some areas
and overestimate them at others (e.g., many of the sites evaluated in this analysis differ greatly from the Great
Lakes trout and salmon fishery; and the analysis excluded nonlicensed anglers such as Native Americans with
treaty-ceded fishing rights).
Benefits from Increased Angling Participation
Recision offish consumption advisories may also have a positive impact on the level of angling
effort. In calculating recreational angling populations for the final rule, EPA assumed (based on the
literature) that fish consumption advisories reduced potential anglers at a site by 20 percent (U.S. EPA,
1997b). For those sites where the regulation is expected to result in a lifting of the advisory, angling
participation can be assumed to increase by this proportion. EPA estimated that benefits associated with a 20
percent increase in anglers on fishing days total $4.7 million to $15.5 million per year (range based on low
and high estimates of anglers affected by fish consumption advisories) (see Appendix D). In theory, these
8-23
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benefits could be added to the monetized benefits estimated above. However, as described above, no attempt
has been made to account for substitute sites or to discern the extent to which these benefits reflect merely a
shift in fishing activity from reaches unaffected by pulp and paper mill effluent to the reaches adjoining mills.
Some gain in anglers' consumer surplus would be expected in any case, or the transfers would not occur.
However, EPA is not able to estimate this increase precisely.
Summary of National-Level Recreational Angling Benefits
Based on a transfer of benefits estimated for a contaminant-free Great Lakes fishery (Lyke, 1993),
EPA estimated that potential national-level recreational angling benefits from the regulation may be in the
range of $2.1 million to $19.4 million per year. These benefits may be conservative in that they reflect only
values for current licensed anglers at sites with advisories in place. Also, benefits from potential increases in
angling are not included since it was not possible to account for substitute sites. EPA estimated national-
level benefits to ensure that this important benefit category was not omitted from a comparison of benefits
and costs. However, because of the wide range of assumptions necessary to produce national-level estimates
(the assumptions, and the expected impact on the benefits estimates, were summarized in the RIA for the
proposed rule), these results are intended to provide only a general indication of the potential magnitude of
angling benefits.
8.2.1.4 Benefits from Land Disposal of Sludge
At proposal, EPA estimated that facilities could save approximately $56 million ($1992) annually in
sludge disposal costs as a result of the pulp and paper rule. Because of dioxin removals, sludge from pulp
and paper mills may be disposed of through land application, instead of more costly landfilling or
incineration. EPA received comments that this estimate was too high due to changes implemented by the
industry. When EPA updated its baseline to 1995, potential dioxin removals were far lower than at proposal,
because dioxin discharges had decreased in the interim. At proposal (1992 baseline) EPA estimated that the
industry discharged 70 grams per year of TCDD and 341 grams per year of TCDF. For the mid-1995
baseline, EPA estimates that the industry discharges 16 grams per year of TCDD and 122 grams per year of
TCDF. As a result, EPA estimates that revised mill sludge disposal cost savings, compared to the new
8-24
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baseline (in terms of dioxin-equivalents), is a maximum of 28 percent of the 1992 value, or approximately
$14 million in $1992 or $16 million in $1995 (EPA notes that these benefits are based on dioxin loadings to
wastewater and are consistent with, but not identical to, reductions in contaminated sludge presented in
Section 11 of the Supplemental Technical Development Document). EPA estimates these values based on
the reduced tonnage of expected dioxin-contaminated sludge, which in turn is based on the same proportional
reduction of dioxin in effluent to dioxin in sludge that was used at proposal (Kaplan, 1996). To address
uncertainty, EPA uses a value of one-half of this estimated discharge to identify a range of $8 million to $16
million ($1995) in potential sludge disposal benefits.
8.2.1.5 Summary of Water-Related Benefits
Table 8-12 provides a summary of the estimated water-related benefits for the regulatory options in
the final rule. EPA estimates that total water-related benefits from Option A range from $11.9 million to
$57.1 million per year and that the water-related benefits from Option B range from $12.0 to $57.9 million
per year.
8.3 COMBINED MONETIZED BENEFITS
Table 8-13 presents combined water- and air-related benefits associated with implementation of the
selected regulatory options. EPA estimates that total benefits from the selected regulatory options range from
($727) million to $1,496 million per year.
8.4 CASE STUDY REPRESENTATIVENESS AND ALTERNATIVE AGGREGATE WATER
BENEFITS
The results of EPA's analysis of case study representativeness, and the interpretation of the
representativeness analysis to develop an alternative estimate of aggregate water quality benefits, are
presented below. EPA did no such comparable estimate of air quality representativeness, so the results
described in this section are generalizable only for water; that is, extrapolation of air-related benefits for the
8-25
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TABLE 8-12
POTENTIAL ANNUAL BENEFITS OF THE REGULATORY OPTIONS
(Millions of 1995 Dollars)
Benefit Category
Water-Related Benefits3
Human healthb
Recreational angling
"Contaminant-free" fishery
Increased participation0
Sludge
Total Water-Related Benefits'1
Option A
$1.8-$21.7
$2.1-$19.4
+
$8.0-$16.0
$11.9-$57.1
Option B
$1.9-$22.5
$2.1-$19.4
+
$8.0-$16.0
$12.0-$57.9
+Positive benefits expected but not estimated.
"Option A is the selected water option.
bDoes not include reductions in noncancer health effects and risk reductions (cancer and noncancer) to unlicensed
anglers such as Native Americans with treaty-ceded fishing rights.
Tor example, an increase in participation of 20% would generate benefits on the order of $5 million to $15 million
annually.
dNational-level water benefits are not inclusive of all categories of benefits that can be expected to result from the
regulation.
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TABLE 8-13
POTENTIAL ANNUAL MONETIZED BENEFITS OF THE SELECTED REGULATORY
OPTIONS3
Benefit Category
Water-Related Benefits'3
Air-Related Benefits
Total Combined Benefits
(Millions of 1995 dollars)
$11.9-$57.1
($738.5)41,438.4
($726.8)41,495.5
aOption A, MACT I, and MACTII.
bNeither national-level water nor air benefits are inclusive of all categories of benefits that can be expected
to result from the regulation.
8-27
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case study areas to all mills is less meaningful than extrapolation of water-related benefits. Estimates of case
study air quality benefits are derived using the same methods used in Section 8.1. The alternative benefits
estimate is presented to provide an alternative picture of the potential magnitude of national-level benefits,
for comparison with the estimates presented in Section 8.3. However, EPA notes that there is no precise
methodology for extrapolating from case study estimates of water quality benefits to national-level estimates,
and there are serious limitations to the generalizability of EPA's case study results to all mill sites.
Therefore, the results should be considered only as order-of magnitude approximations.
8.4.1 Representativeness from a Benefits Perspective
EPA uses water-related site characteristics to categorize mill sites by degree of expected benefits.
The results of assessing representativeness in the receiving water dimension, the sociodemographic
dimension, and overall are presented in the following sections.
8.4.1.1 Receiving Water Characteristics
Table 8-14 shows the distribution of the total rankings for receiving water attributes for all facilities
and for the case studies alone. Total benefits ranked in the sum of water characteristics. The first row shows
this distribution for all facilities. The second row shows the distribution for the Penobscot River, Wisconsin
River, Lower Columbia River, Pigeon River, and Samoa Peninsula case study facilities (the five case study
areas have a total of 13 facilities3). The case studies are representative of all facilities in the sense that they
cover the range of benefits potential. However, a greater percentage of the case studies fall into the "low"
category compared to all facilities. As a result, the case studies may under represent the universe of facilities
in terms of potential benefits from a receiving water characteristic perspective.
3The Upper Columbia/Lower Roosevelt case study was not included because the facility is in
Canada, and the Lower Tombigbee/Mobile River case study was not included because the facilities still
require extensive upgrades to comply with the regulation.
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TABLE 8-14
RECEIVING WATER POTENTIAL BENEFITS RANKING
DISTRIBUTIONS
All Facilities (91)
Case Study Facilities (13)
Benefits Category
Low
31
(34. 1%)
8
(61.5%)
Medium
38
(41.8%)
2
(15.4%)
High
22
(24.2%)
3
(23.1%)
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8.4.1.2 Sociodemographic Characteristics
Table 8-15 shows the distribution of the total rankings for sociodemographic characteristics for all
91 facilities and for the case studies alone. Again, the first row shows this distribution for all 91 facilities,
and the second row shows the distribution for the Penobscot River, Wisconsin River, Lower Columbia River,
Pigeon River, and Samoa Peninsula case study facilities. The percentage of case study facilities in the low
and high categories is less than the percentage of all facilities in each of these categories. As a result, the case
studies underrepresent the universe of facilities on the low and high end in terms of benefits potential from a
sociodemographic perspective.
8.4.1.3 Overall Representativeness From a Benefits Perspective
Using the overall ranking system, EPA then ranked each facility based on its individual receiving
water and sociodemographic rankings. Table 8-16 compares the distribution of the overall rankings for all
facilities and the case study facilities alone. Based on these results, the benefits at the case study facilities
may underrepresent the aggregate potential benefits of the regulation.
8.4.2 Alternative Aggregate Water Benefits
EPA developed an alternative estimate of aggregate water benefits by transferring benefits levels
estimated in the case studies to facilities not included in the case studies and then aggregating across all
affected facilities. To perform this transfer, benefits for the "low," "medium," and "high" rank categories
were estimated using the case study estimated benefits. First, the rankings for each site in a case study were
combined to arrive at an overall rank for each case study. Table 8-18 displays how benefits ranges were
assigned to each overall benefits category. In the overall ranking, the Samoa Peninsula and Wisconsin River
sites received a "low," the Columbia River and Penobscot River sites received a "medium," and the Pigeon
River sites received a "high." The estimated benefits for the Samoa Peninsula and the Wisconsin River case
studies were averaged to arrive at a benefits range for "low" ranked sites. Similarly, the estimated benefits
for the Penobscot River and the Columbia River case studies were averaged to arrive at a benefits range for
the "medium" ranked sites.
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TABLE 8-15
SOCIODEMOGRAPHIC POTENTIAL BENEFITS RANKING
DISTRIBUTIONS
All Facilities
Case Study Facilities
Benefits Category
Low
13
(14.3%)
0
(0.0%)
Medium
60
(66.0%)
12
(92.3%)
High
18
(19.8%)
1
(7.7%)
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TABLE 8-16
COMPARISON OF OVERALL RANKINGS OF WATER
BENEFITS POTENTIAL FOR ALL FACILITIES AND CASE
STUDY FACILITIES3
Rank
Low
Medium
High
Case Study Facilities
8
(61.5%)
2
(15.4%)
3
(23.1%)
All Facilities
26
(28.5%)
45
(49.5%)
20
(22.0%)
"Number of facilities in each category are reported in the cells.
Percentage of facilities is reported in parentheses.
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TABLE 8-17
ANNUALIZED WATER-RELATED COSTS OF THE SELECTED
OPTION (OPTION A)
FOR CASE STUDY FACILITIES AND ALL FACILITIES
Site
Wisconsin River
Columbia River
Penobscot River3
Pigeon River
Samoa Peninsula
Total for Case Studies
All Facilities
Annualized Cost ($1995 Millions)
$5.8
$7.0
-
$5.8
$3.9
$22.5
$258
""Confidentiality agreements preclude disclosure of total costs for this site.
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TABLE 8-18
ASSIGNMENT OF ANNUAL BENEFITS RANGES TO OVERALL BENEFITS CATEGORIES
($1995)
Benefits Category
Low
Medium
High
Case Studies Included
Samoa Peninsula
Wisconsin River
Penobscot River
Columbia River
Pigeon River
Estimated Annual
Benefits (Million $)
$0.1-$1.4
$0.1-$1.5
$0.7-$2.3
$1.5-$8.6
$2.7-$8.7
Averaged Annual Benefits
Range (Million $)
$0.1-$1.5
$l.l-$5.5
$2.7-$8.7
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EPA then transferred these ranges of benefits to each of the affected facilities based on their overall
rank. The benefits were then summed over all of the facilities (including those in the Lower
Tombigbee/Mobile case study) to arrive at an alternative aggregate range of water benefits. Table 8-19
shows that aggregate annual water benefits for all facilities affected by the regulation, estimated using this
alternative method, range from $91 to $451 million ($1995).
8.5 ENVIRONMENTAL JUSTICE
In this section, EPA evaluates the environmental justice aspects of the integrated pulp and paper
rules. EPA considers three aspects of environmental justice:
an assessment of the effects of the integrated pulp and paper rules on Native American
subsistence anglers;
a comparison of county and state-level demographic (race, income and employment)
information; and
an evaluation of the effects of pulp and paper compliance costs on paper price increases, and
the resulting impacts on low income consumers.
8.5.1 Native American Subsistence Anglers
EPA assessed the individual-level risk to Native Americans from the consumption of fish
contaminated with dioxin and other contaminants (Section 8.2.1.2). The results of this assessment indicate
that the dioxin- related individual cancer risk to Native Americans will be reduced by an order of magnitude
for average and upper end consumption anglers. For Native American subsistence anglers with treaty-ceded
fishing rights, the rule will reduce the upper bound annual cancer risk by 0.13 cancer cases, out of a baseline
exposure from pulp and paper mills of 0.14 annual cancer cases.
EPA also investigated the fishing habits of 48 Native Americans tribes located downstream from
pulp mills in 15 states and determined that eight of these—the Flathead (Montana), Micmac (Maine), Tulalip
(Washington-Puget Sound), Nez Perce, Umatilla, Warm Springs, Yakama (all Lower Columbia River in
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TABLE 8-19
POTENTIAL NATIONAL-LEVEL ANNUAL BENEFITS OF THE FINAL BAT/PSES, MACT I
AND PROPOSED MACT II BASED ON EXTRAPOLATION OF THE CASE STUDY RESULTS
(Millions of 1995 Dollars)
Overall Rank
Low
Medium
High
Total Water
Air Benefits
Total
Number of Facilities
in Rank
25
45
19
89 a
155
Benefits Range by Category
$0.1-$1. 5 million
$1.1 -$5.5 million
$2.0-$8.7 million
-
Total Benefits by Category
$3-$38
$50-$248
$38-$165
$91-$451
($739)-$l,438
($648) -$1,889
""Benefits are aggregated for only 89 facilities since the Samoa Peninsula and Pigeon River sites are
excluded.
8-36
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Oregon and Washington), and Penobscot (Maine)—have treaty-ceded fishing rights and engage in
subsistence fishing in waters potentially affected by pulp and paper mill effluent. The Flathead, Micmac, and
Tulalip tribes have very limited information on fish consumption in mill-affected waters. The Lower
Columbia River and Penobscot River tribes are considered in detail in two case studies EPA conducted for
this rule. The results of the case studies are reported in Chapter 9. EPA has determined that members of
these tribes have elevated health risks from consuming contaminated fish due to higher consumption levels.
EPA expects that the rule will reduce cancer risks by an order of magnitude (i.e., tenfold) for members of the
Penobscot Nation, and by slightly less for the Lower Columbia River tribes, who consume greater quantities
of fish. EPA makes the assumption that Native American populations from tribes other than those with
treaty fishing rights are similar to either recreational or non-Native American subsistence anglers, and are
addressed in risk estimates for those groups.
8.5.2 Racial and Income Characteristics of Affected Counties and States
EPA also compares the racial and income makeup of counties with pulp and paper mills to the racial
and income makeup of the state as a whole. EPA uses county-based data to estimate all exposed risk for
anglers in its water quality benefit analysis; as a result, county-level data are also the most appropriate for
evaluating race and income considerations. EPA has determined that within-state comparisons were the most
accurate means to account for inter-regional demographic differences. The results are reported in Table 8-20.
The results indicate that, of the twenty six (26) states with bleached papergrade kraft mills:
Fifteen states had a minority (i.e., nonwhite) mill county population percentage that was less
than the state in which they were located, while 11 states had a minority mill county
population that was greater than the state;
Sixteen states had mill counties with an African-American population percentage that was
less than or equal to the state, while 10 states had mill county populations that were greater
than the state average. Seven of these ten states had mill counties with an African American
population at least 3 percentage points greater than the state (in Arkansas, the African
American population was 22 percentage points greater in counties with mills than the state
as a whole);
Five states had mill counties with an American Indian population percentage that was double
the American Indian population percentage for the state.
8-37
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TABLE 8-20
RACE AND INCOME CHARACTERISTICS IN STATES AND COUNTIES
WITH BLEACHED KRAFT MILLS1
State
%
White
%
Black
%
American
Indian
%
Asian
%
Other
Median
Income2
% Below
Poverty
Level
%
Unemployed2
Alabama
Total in Counties
with Mills
Total in State
64.5%
73.6%
33.9%
25.2%
0.9%
0.5%
0.6%
0.5%
0.1%
0.1%
$21,373
$23,597
23.66%
18.34%
8.99%
6.87%
Arkansas
Total in Counties
with Mills
Total in State
61.0%
82.7%
38.0%
15.9%
0.5%
0.6%
0.3%
0.5%
0.2%
0.3%
$20,576
$21,147
24.13%
19.07%
9.49%
6.76%
California
Total in Counties
with Mills
Total in State
92.6%
69.1%
0.7%
7.4%
3.9%
0.8%
1.9%
9.6%
0.9%
13.1%
$24,688
$35,798
15.46%
12.51%
8.68%
6.65%
Florida
Total in Counties
with Mills
Total in State
79.9%
83.1%
17.2%
13.6%
0.8%
0.3%
1.6%
1.2%
0.5%
1.8%
$24,250
$27,483
16.74%
12.69%
Georgia
Total in Counties
with Mills
Total in State
63.4%
71.1%
34.5%
26.9%
0.3%
0.2%
1.4%
1.1%
0.5%
0.6%
$27,551
$29,021
16.15%
14.65%
Idaho
Total in Counties
with Mills
Total in State
93.9%
94.4%
0.2%
0.4%
4.9%
1.5%
0.6%
0.9%
0.5%
2.8%
$25,219
$25,257
12.03%
13.25%
Kentucky
Total in Counties
with Mills
Total in State
97.5%
92.1%
2.3%
7.1%
0.1%
0.2%
0.0%
0.5%
0.1%
0.2%
$22,717
$22,534
17.66%
19.03%%
Louisiana
Total in Counties
with Mills
Total in State
65.3%
67.3%
32.7%
30.8%
0.3%
0.5%
1.3%
0.9%
0.5%
0.5%
$25,037
$21,949
20.64%
23.58%
7.01%
5.78%
6.13%
5.74%
7.31%
6.15%
11.56%
7.37%
9.07%
9.65%
8-38
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Table 8-20 (continued)
State
%
White
%
Black
%
American
Indian
%
Asian
%
Other
Median
Income2
% Below
Poverty
Level
%
Unemployed2
Maine
Total in Counties
with Mills
Total in State
98. 1%
98.4%
0.4%
0.4%
0.7%
0.5%
0.6%
0.6%
0.1%
0.1%
$28,028
$27,854
11.26%
10.80%
6.64%
6.65%
Maryland
Total in Counties
with Mills
Total in State
97.3%
71.0%
2.1%
24.9%
0.0%
0.3%
0.4%
2.9%
0.1%
0.9%
$21,546
$39,386
16.50%
8.27%
8.16%
4.30%
Michigan
Total in Counties
with Mills
Total in State
88.2%
83.5%
9.7%
13.9%
1.1%
0.6%
0.4%
1.1%
0.6%
0.9%
$25,043
$31,020
14.49%
13.12%
8.35%
8.24%
Minnesota
Total in Counties
with Mills
Total in State
95.5%
94.5%
0.2%
2.2%
3.6%
1.1%
0.3%
1.8%
0.4%
0.5%
$24,367
$30,909
12.50%
10.22%
7.75%
5.15%
Mississippi
Total in Counties
with Mills
Total in State
73.0%
63.5%
26.0%
35.6%
0.2%
0.3%
0.7%
0.5%
0.2%
0.1%
$24,739
$20,136
18.83%
25.21%
8.21%
8.43%
Montana
Total in Counties
with Mills
Total in State
96.2%
92.8%
0.2%
0.3%
2.3%
6.0%
1.0%
0.5%
0.3%
0.5%
$23,388
$22,988
16.99%
16.07%
7.22%
6.96%
New Hampshire
Total in Counties
with Mills
Total in State
99.3%
98.0%
0.1%
0.6%
0.2%
0.2%
0.2%
0.8%
0.2%
0.3%
$25,897
$36,329
10.12%
6.42%
8.56%
6.22%
New York
Total in Counties
with Mills
Total in State
97.5%
74 5%
1.4%
1 5 9%
0.3%
03%
0.5%
3 8%
0.3%
5 5%
$28,340
$3? 965
10.32%
1 3 03%
7.63%
6 88%
8-39
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Table 8-20 (continued)
State
%
White
%
Black
%
American
Indian
%
Asian
%
Other
Median
Income2
% Below
Poverty
Level
%
Unemployed2
North Carolina
Total in Counties
with Mills
Total in State
75.4%
75.6%
22.5%
22.0%
1.2%
1.2%
0.4%
0.8%
0.5%
0.4%
$22,727
$26,647
16.59%
12.97%
6.67%
4.79%
Ohio
Total in Counties
with Mills
Total in State
92.6%
87.8%
6.5%
10.6%
0.2%
0.2%
0.5%
0.8%
0.1%
0.5%
$24,286
$28,706
17.75%
12.54%
Oregon
Total in Counties
with Mills
Total in State
96.9%
92.8%
0.2%
1.6%
1.3%
1.5%
0.7%
2.4%
0.8%
1.8%
$26,462
$27,250
12.56%
12.42%
9.71%
6.60%
7.18%
6.20%
Pennsylvania
Total in Counties
with Mills
Total in State
95.6%
88.6%
3.3%
9.2%
0.1%
0.1%
0.5%
1.1%
0.5%
1.0%
$28,524
$29,069
10.11%
11.13%
5.56%
5.97%
South Carolina
Total in Counties
with Mills
Total in State
64.0%
69. 1%
34.4%
29.8%
0.4%
0.3%
0.8%
0.6%
0.4%
0.3%
$28,548
$26,256
14.29%
15.37%
5.47%
5.58%
Tennessee
Total in Counties
with Mills
Total in State
97.1%
83.0%
2.2%
15.9%
0.3%
0.3%
0.3%
0.6%
0.0%
0.2%
$23,898
$24,807
15.09%
15.70%
6.64%
6.41%
Texas
Total in Counties
with Mills
Total in State
67. 1%
75.3%
18.5%
11.9%
0.3%
0.4%
3.6%
1.9%
10.6%
10.6%
$31,210
$27,016
15.25%
18.10%
6.78%
7.11%
Virginia
Total in Counties
with Mills
Total in State
71.4%
77 5%
27.7%
1 8 8%
0.6%
03%
0.2%
7 6%
0.1%
09%
$28,324
$33 378
12.60%
1075%
5.87%
4 48%
8-40
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Table 8-20 (continued)
State
%
White
%
Black
%
American
Indian
%
Asian
%
Other
Medain
Income2
% Below
Poverty
Level
%
Unemployed2
Washington
Total in Counties
with Mills
Total in State
90.5%
88.6%
3.3%
3.0%
1.5%
1.7%
3.6%
4.3%
1.1%
2.3%
$32,069
$31,183
9.92%
10.92%
5.53%
5.72%
Wisconsin
Total in Counties
with Mills
Total in State
98. 1%
92.3%
0.1%
5.0%
0.4%
0.8%
1.3%
1.1%
0.1%
0.8%
$28,263
$29,442
8.90%
10.70%
5.21%
5.20%
JData is from 1990 Census of Population and Housing and may not be representative of current
employment conditions.
2For "Total Counties with Mills," medium income is calculated as a weighted average across counties
using median income and population.
Source: Census of Population and Housing. 1990. Summary Tape File 3 on CD-ROM. Prepared by the
Bureau of the Census, Washington: The Bureau, 1992.
8-41
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• In 14 states, there is no statistically significant difference in ethnic makeup between the
counties with mills and the state as a whole, while in several other states, the percentage of
minorities in counties with mills is significantly less than the percentage of minorities in the
state;
• Fifteen states had a percent of the mill county population below the poverty line that was
greater than the state. However, for all mill counties, the average percent of the population
below the poverty line was 15 percent, while the average for all mill states was 14.1 percent.
EPA has determined that this difference is not statistically significant;
• In 19 of the 26 states with bleached kraft mills, there is no statistically significant difference
between the percentage of the population below the poverty level in counties where bleached
kraft mills are located compared to the state as a whole. In several states, the percentage of
the population below the poverty level is less in counties where bleached kraft mills are
located;
• Eighteen states had average unemployment rates in mill counties that were higher than the
state unemployment rate;
• The average median income for all mill counties is $25,657, compared to $28,157 for the
states.
These data show no persuasive trends regarding low income or minority populations of mill counties
compared to their respective states. The differences shown vary from state to state, which makes it difficult
to conclude that minority and low-income populations are disproportionately affected by pulp and paper
discharges and emissions and would therefore disproportionately benefit from regulations. The differences in
income levels may be correlated with urban and rural distinctions, and pulp mills are often located near wood
supplies in lower income rural areas.
Low income populations may also be the most adversely affected economically if mills close as a
result of the pulp and paper integrated rules. EPA notes that the implementation of BAT Option B
technology would be likely to increase the number of individuals below the poverty line in up to five counties
where mills are projected to close, compared to three for the final and proposed rules. The cost of totally
chlorine free technology would likely increase the number of individuals below the poverty level in up to nine
counties where mills would be predicted to close.
8-42
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8.5.3 Price Effects on Low Income Consumers
As shown in Chapter 6, the compliance costs associated with the various air and water pollution
control options will have some effect on increasing prices as a result of increasing supply costs. In Chapter 6,
EPA estimates that the price effect will benefit the regulated community, i.e., one or more mills may remain
open that would otherwise close if they could not pass on some of their increased compliance costs.
However, consumers must ultimately pay these increased prices, with the burden falling most heavily on
those consumers who use the most paper on a per capita basis, or for whom paper products consume a
disproportionate share of income. EPA evaluated the price effects on low income consumers by identifying:
• price increases associated with various combinations of MACT and BAT/PSES technology
options,
• average paper consumption for low income people (Census, 1995a); and
• the effects of price increases on low income populations, both in absolute ($) and relative
(percent of income) terms.
For the bleached papergrade kraft and soda subcategory, the pulp and paper price increase associated
with the final rules (BAT/PSES and MACT I) combined with the proposed MACT II rule is 1.5 percent (see
Section 6.2.3). With Option B, MACT I and MACT II, prices would increase 1.9 percent. Were TCP to be
selected as BAT, EPA predicts pulp prices would increase by 5.3 percent when combined with final MACT I
and proposed MACT II. Paper price increases would be expected to be somewhat less, since pulp is only one
factor of paper production.
EPA estimates that low income consumers (those with incomes under $10,000) spend an average of
2.09 percent of their pre-tax income on paper products (Census, 1995b). The pulp and paper rule will
increase this to 2.13 percent of pre-tax income, while TCP would increase this to 2.2 percent of income. The
aggregate effect on low income consumers would be increased annual expenditures of up to $26.1 million for
the selected rules, $33.0 million for Option B and $91.7 million for TCP. Clearly, selecting very stringent
pollution control technologies such as TCP may significantly affect low income consumers, who seldom have
discretionary income to spend and must make trade offs with other necessities to sustain paper price
increases. More detail is provided in Appendix P.
8-43
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8.5.4 Environmental Justice Summary
Individual Native Americans (from tribes without treaty fishing rights) that engage in subsistence
fishing downstream from pulp mills have elevated individual cancer risks from pulp and paper discharges
compared to the general population or non-native anglers. The rule will lower dioxin-related cancer risks by
an order of magnitude for anyone consuming fish at average and upper end consumption rates. Native
American tribes located on the Lower Columbia and Penobscot Rivers have treaty-ceded fishing rights and
engage in subsistence fishing in waters located downstream from bleached kraft pulp and paper mills. Based
on case studies of these tribes, EPA estimates that the rule will reduce individual cancer risks by a factor of
ten for the Penobscot Nation (from 3.5 x 10"5 to 3.09 x 10~6), and somewhat less for the Lower Columbia
River Tribes (from 1.15 x 10'4 to 1.03 x 10'4).
Demographic and income data show no persuasive trends regarding low income or minority
populations of mill counties compared to their respective states. Observed differences vary from state to
state, which makes it difficult to conclude that minority and low-income populations are disproportionately
affected by pulp and paper discharges and emissions and would therefore disproportionately benefit from
regulations. Unemployment rates in mill counties generally exceed the related state unemployment rates.
Mill closures have the potential to increase the unemployment rates as well as the number of people below the
poverty level in these areas.
Low income people are adversely affected by paper price increases caused by the pulp and paper
rules, particularly for technology options with very high costs, such as TCP.
8.6 TOTALLY CHLORINE FREE TECHNOLOGY
EPA conducted a sensitivity analysis estimate of the benefits of implementing TCP bleaching
technology. For this analysis, EPA assumes that the air benefits of TCP technology would be the same as for
Option B because similar technology is used. However, a detailed air pollution control technology
assessment was not conducted for TCP. EPA assumes that the only difference between TCP and Option B is
related to the expected water benefits.
8-44
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For both recreational and subsistence anglers, EPA estimated that implementation of TCP would
eliminate between 0.8 and 2.8 cancer cases per year, compared to the baseline. This is based on the
assumption that the estimated number of baseline cancer cases would be reduced to zero because all potential
TCDD and TCDF would be eliminated. Based on an estimated value of a statistical life of $2.5 million to
$9.0 million (American Lung Association, 1995), EPA estimated that potential human health benefits would
range from $2.0 million to $25.2 million per year. EPA also estimated that implementation of TCP would
reduce the number of mills with exposures posing a potential non-cancer hazard for exposed recreational and
subsistence anglers from 20 and 31 respectively, to zero. For recreational angling and sludge disposal, EPA
estimates that benefits are the same as under options A and B, due to the removal of all fish advisories and
restrictions on sludge disposal, respectively (see Section 8.2).
Table 8-21 provides a summary of the estimated water-related benefits for the regulatory options in
the final rule. EPA estimates that the total water-related benefits from the implementation of TCP would
range from $12.1 million to $60.6 million per year. As noted in Section 8.4, implementation of TCP would
reduce cancer and non-cancer risk among recreational, subsistence and Native American anglers, but would
increase unemployment in some counties with unemployment rates already above state and national averages,
and may disproportionately adversely affect low-income consumers.
8.7 REFERENCES
Reference material supporting Chapter 8 is located in the Pulp and Paper Water Docket.
American Lung Association. 1995. Dollars and cents: the economic and health benefits of potential
particulate matter reductions in the United States. Prepared by L.G. Chestnut, Hagler Bailly Consulting,
Boulder, CO. June. Water Docket, DCN 14,719.
Census. 1995a. Poverty thresholds: 1995. Internet search at http://www.census.gov/ftp/pub/hhes/
poverty/threshld/thresh95.html on 21 June 1997. U.S. Bureau of the Census, Housing and Household
Economic Statistics, Washington, DC. Water Docket, DCN 14,821.
Census. 1995b. Consumer expenditure survey, 1995. U.S. Bureau of the Census, Bureau of Labor
Statistics, Washington, DC. Table 1201. Water Docket, DCN 14,822.
Farland, W. 1997. Letter from William Farland, U.S. EPA, Office of Research Development, to Andrew
Smith, State Toxicologist, State of Maine. January 24. Water Docket, DCN 14,817.
8-45
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TABLE 8-21
POTENTIAL MONETIZED BENEFITS OF IMPLEMENTING TOTALLY CHLORINE FREE
TECHNOLOGY
(Millions of 1995 Dollars per Year)
Benefit Category
Water-Related Benefits3
Human health13
Recreational angling
"Contaminant-free" fishery
Increased participation0
Sludge
Total Water-Related Benefits'1
Annual Value
$2.0-$25.2
$2.1-$19.4
$8.0-$16.0
$12.1-$60.6
+Positive benefits expected but not estimated.
"Does not include reductions in noncancer health effects and risk reductions (cancer and noncancer) to
unlicensed anglers such as Native Americans with treaty-ceded fishing rights.
bFor example, an increase in participation of 20% would generate benefits on the order of $5 million to $15
million annually.
'National-level water benefits are not inclusive of all categories of benefits that can be expected to result from
the regulation.
8-46
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Kaplan. 1996. Revised sludge benefits with updated baseline information. Memorandum to Matthew Clark,
U.S. EPA from Maureen F. Kaplan, Eastern Research Group. December 26. Water Docket, DCN 14,399.
Lyke, A.J. 1993. Discrete choice models to value changes in environmental quality: a Great Lakes case
study. Dissertation. University of Wisconsin, Madison. Water Docket, DCN 14,768.
U.S. DOI. 1993. 1991 national survey of fishing, hunting, and wildlife-associated recreation. Prepared by
U.S. Department of Interior, Fish and Wildlife Service, and U.S. Department of Commerce, Bureau of
Census. U.S. Government Printing Office, Washington, DC. Water Docket, DCN 14,675, 14,676, and
14,715.
U.S. EPA. 1997a. Pulp, paper, and paperboard industry—background information for promulgated air
emission standards, manufacturing processes at kraft, sulfite, soda, semi-chemical, mechanical and secondary
and non-wood fiber mills, final EIS. EPA-453/R-93-050b. U.S. Environmental Protection Agency, Office of
Air Quality Planning and Standards, Washington, DC. Water Docket, DCN 14,319.
U.S. EPA. 1997b. Water quality assessment for the final effluent guidelines for the papergrade sulfite and
bleached papergrade kraft and soda subcategories of the pulp, paper and paperboard industry. Final Draft.
July. U.S. Environmental Protection Agency, Washington, DC. Water Docket, DCN 14,815.
Walsh, R.G., D.M. Johnson, and J.R. McKean. 1990. Nonmarket values from two decades of research on
recreation demand. Advances in Applied Micro-Economics. 5:167-193. Water Docket, DCN 14,699.
8-47
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CHAPTER 9
BENEFIT-COST CASE STUDIES
This chapter presents case studies of the potential benefits and costs of the final pulp and paper
regulation. EPA developed four new case studies since proposal, which this chapter provides in entirety.
The RIA for the proposed rulemaking included three case studies, which are not repeated here. However, the
chapter does present revisions to the old case studies.
The new case studies include:
• the Lower Tombigbee and Mobile rivers in Alabama (Section 9.1)
• the Pigeon River in North Carolina and Tennessee (Section 9.2)
• the Upper Columbia River and Lake Roosevelt in British Columbia, Canada, and
Washington State (Section 9.3)
• the Samoa Peninsula on the Pacific Ocean in California (Section 9.4).
These case studies provide a retrospective look at the benefits and costs of process controls
associated with water pollution control requirements that the selected bleached kraft mills have already
implemented over the past 6 to 8 years. To the extent that the controls implemented reflect selected
regulatory technologies and the receiving water in those streams are comparable to those of facilities affected
by the rule, the case studies illustrate the benefits and costs that may be expected at sites where the regulation
will mandate comparable treatment performance. EPA estimated potential benefits both from the selected
BAT/PSES (Option A, 100 percent substitution) and Option B (100 percent substitution and oxygen
delignification) for the new (retrospective) case studies.
The original RIA case studies include:
• the Penobscot River in Maine (Section 9.5)
• the Wisconsin River in Wisconsin (Section 9.6)
9-1
-------
• the Lower Columbia River in Washington (Section 9.7).
The revised benefits estimates for the old case studies are in 1995 dollars. EPA estimated benefits
for these case studies only for Option A. Original baseline values come from the November 1993 RIA and
were updated using the Consumer Price Index.
This chapter presents revisions to the water-related benefits (human health benefits only),1 air-related
benefits, and costs for these case studies.2 In response to comments that environmental justice issues were
not adequately considered, this chapter also presents two new analyses — human health risk assessments for
tribal populations in the Penobscot River and Columbia River case studies. Additionally, EPA incorporated
changes to address comments received on the Penobscot River case study.
The same methodology used to quantify air benefits in Chapter 8 are employed here to value the air
benefits of each case study. The air benefits are the result of reductions that will be achieved from the
implementation of the final MACTI rule and the proposed regulatory alternative for MACTII. The estimate
of VOC reductions are applicable to MACT I as a result of mill-specific information. EPA is unable to
reasonably extrapolate estimated VOC reductions associated with MACT II to these cases studies, however,
it is likely that the VOC reductions associated with MACT II would be low and not influence the case study
analysis significantly. The PM emission changes incorporate both minimal emission increases from MACT I
(i.e., usually less than one ton) and emission decreases estimated for MACT II.
the proposal, potential benefits in categories other than human health were estimated to result
from a lifting of fish consumption advisories issued for the case study areas. Because the regulation is still
expected to result in a lifting of the advisories, these benefits are not revised for analysis of the final
regulation.
Subsequent to revising case study analyses, EPA made final revisions to estimated reductions in
loadings expected to result from the rule. These changes are reflected in the national level results but have
not been incorporated at the case study level. The changes are expected to have a minor impact on the case
study results.
9-2
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9.1 LOWER TOMBIGBEE AND MOBILE RIVER CASE STUDY
Ten bleached kraft pulp and paper mills discharge to Alabama waters. In 1990, the Alabama
Department of Environmental Management (ADEM) revised the discharge permits for all 10 mills to require
reduced discharges of dioxin. The mills implemented a number of process changes to reduce the
concentrations of dioxin in their effluent (water). Since that time, concentrations of dioxin in fish tissue
samples collected near the mills have declined and the Alabama Department of Public Health (ADPH) has
lifted fish consumption advisories (FCAs) associated with the mills.
This case study provides estimates of the benefits resulting from the process changes implemented at
the Alabama mills on the Lower Tombigbee and Mobile rivers. To the extent that these changes reflect the
requirements of the current CWA regulation and that the receiving waters in the case studies reflect water
quality conditions nationwide, the estimated benefits may indicate the potential for benefits at sites
nationwide where similar process changes have not yet been made. This section compares the estimated
benefits associated with process changes at mills on the Lower Tombigbee and Mobile rivers to the potential
benefits associated with the rulemaking. Since the process changes relate to water discharges, this case study
focuses primarily on water-related benefits.
9.1.1 Location of Bleached Kraft Mills in Alabama
Alabama's bleached kraft mills are in the western and central regions of the state. Table 9-1 lists the
mills' locations and receiving water bodies, and Figure 9-1 shows these graphically.
9.1.2 Water Quality Problems Associated with the Mills
Fish tissue samples collected below the mills in 1990 and prior years contained elevated
concentrations of dioxin. For example, in 1984, a bass fillet below the Alabama River Pulp mill contained 12
ppt dioxin, a predator species below the International Paper and Scott Paper mills in 1990 contained 20.3 ppt
dioxin, and a channel catfish fillet near the Boise Cascade mill in 1990 contained 39.4 ppt dioxin. Alabama
9-3
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TABLE 9-1
BLEACHED KRAFT MILLS IN ALABAMA
Mill
Alabama River Pulp
Boise Cascade Corporation
Champion International Corporation
Container Corporation of America
Gulf States Paper Corporation
Hammermill Papers
International Paper Company
James River Corporation
Kimberly-Clark Corporation
Kimberly-Clark Corporation
Location
Claiborne
Jackson
Court! and
Brewton
Demopolis
Selma
Mobile
Butler
Coosa Pines
Mobile
Receiving Water Body
Alabama River
Tombigbee River
Tennessee River
Conecuh River
Tombigbee River
Alabama River
Mobile River
Tombigbee River
Coosa River
Mobile River
9-4
-------
Figure 9-1
Map of Bleached Kraft MiUs in Alabama
_ Bleached Kraft
9-5
-------
uses an EPA-recommended dioxin concentration of 7 ppt in issuing fish consumption advisories (C. Lamar,
ADEM, personal communication, 1995).
The ADPH issued an FCA for the Coosa River below the Kimberly-Clark mill in September 1990
for largemouth bass and carp; it was optional for other species (Alabama Department of Public Health,
1990). The FCA advised children (under 15 years), pregnant or breast-feeding women, and women of
reproductive ages likely to become pregnant to avoid consumption. Other consumers were advised to limit
consumption to once per week or less.
In May 1991, the ADPH issued advisories for the Tombigbee River below the Boise Cascade mill,
and for the Mobile River below the International Paper and Scott Paper mills (Alabama Department of Public
Health, 1991). The Tombigbee River advisory was for channel catfish. The Mobile River advisory, which
was for Alabama shad, covered the area below the two mills to Mobile Bay. Both FCAs advised that children
(under 15 years), pregnant or breast-feeding women, and women of reproductive ages likely to become
pregnant avoid consumption. Other consumers were advised to limit consumption to no more than once per
month.
9.1.3 Alabama DEM Actions
In 1990, ADEM revised the permits for all 10 mills to require reductions in dioxin production by
1993 to achieve Alabama's instream standard of 1.2 parts per quadrillion (ppq) and required fish tissue
sampling each fall (ADEM, 1994). All of the mills achieved compliance with the permit limits in 1991
(ADEM, 1994).
In July 1994, ADEM amended Alabama's state water quality regulations to increase the fish
consumption rate used in formulas to establish human health water quality standards (ADEM, 1995a). Based
on a recent study offish consumption in Alabama (FIMS and FAA, 1993),3 the state increased the estimated
fish consumption rate from 6.5 grams per day (gpd) to 30 gpd. This change resulted in a 70 percent
3FIMS is Fishery Information Management System, Inc., and FAA is the Alabama Department of
Fisheries and Allied Aquaculture.
9-6
-------
reduction in the allowable instream concentration limits of dioxin and about 100 other toxic pollutants
(ADEM, 1995a).
9.1.4 Mill Improvements
All of the mills implemented chlorine substitution or changes that will improve the mills' ability to
use chlorine substitution. Two of the mills, Alabama River Pulp and Champion International Corporation,
also implemented oxygen delignification. Table 9-2 describes the process changes implemented and planned
at the 10 mills, as of May 1992, to meet the revised permit limits. The aggregate costs of these changes were
not publicized. EPA estimated these costs for this analysis as shown in Section 9.1.8.
9.1.5 Reduced Fish Tissue Dioxin Concentrations
Following the revision of the mills' permit limits, ADEM observed reduced concentrations of dioxin
in fish tissue samples collected below the mills. Table 9-3 shows the fish tissue sampling results for bass and
catfish at Alabama River Pulp, Boise Cascade, and Hammermill Papers. The samples were collected by
independent consultants hired by the mills and shipped to private labs for analysis (ADEM, 1995a). As
shown by the graphs, dioxin concentrations show a downward trend during the 1990s, and many of the
samples indicate dioxin concentrations below detection levels in recent years.
9.1.6 Assessment of Benefits
The receiving waters for bleached kraft mill effluent in Alabama support diverse lake and river sport
and commercial warm water fisheries, including popular tournament fisheries (e.g., Wheeler Reservoir).
Game or sport species include bass, smallmouth bass, crappie, bluegill, blue catfish, channel catfish, flathead
catfish, bream, spotted bass, striped bass, and hybrid striped bass. State, federal, and municipal boat
landings provide public access to these fishing locations. For example, Figure 9-2 shows public boat
landings on the Wheeler Reservoir and the Tennessee River; Figure 9-3 shows public boat landings on the
9-7
-------
TABLE 9-2
DIOXIN REDUCTION EFFORTS BY BLEACHED KRAFT MILLS IN ALABAMA
(status as of May 26,1992)
Mill
Alabama River Pulp
Boise Cascade Corporation
Champion International Corporation*
Container Corporation of America*
Gulf States Paper Corporation*
Completed Projects
- 100% chlorine dioxide substitution capability
- Dual reactor oxygen delignification system
- Two stage pressure diffuser washing
- Extended modified continuous cooking Kamyr digester
for maximum pulp strength at a minimum Kappa
number
- Capability for hydrogen peroxide addition for
brightness adjustment
- Chlorine stage modification to reduce amount of
chlorine used by increasing efficiency
- Chlorine dioxide generator to increase ability to
substitute chlorine dioxide for chlorine
- Brown stock washer to decrease bleaching required (in
progress, estimated completion June 1992)
- Use of less reactive defoamer
- Decreased organic content of hardwood pulp prior to
bleaching
- Partial chlorine substitution
- Oxygen delignification
- Partial chlorine substitution
- Use of less reactive defoamer
- Chlorine dioxide substitution for chlorine (in progress)
Planned Projects
- Increase chlorine substitution
- Decrease organic content of pulp
prior to bleaching
- Hydrogen peroxide substitution
for chlorine
-------
TABLE 9-2 (continued)
Mill
Hammermill Papers
International Paper Company
James River Corporation
Kimberly-Clark Corporation
Scott Paper Company
Completed Projects
- Partial substitution of chlorine dioxide, peroxide, and
oxygen for chlorine
- Extended delignification prior to bleaching
- Elimination of defoamers containing high
concentrations of dioxin precursors
- Use of oxygen and hydrogen peroxide to augment
bleaching process
- Elimination of the use of chlorine hypochlorite
- Conversion of the chlorine dioxide generator to the R8
process in order to obtain enough chlorine free chlorine
dioxide to sustain a high substitution rate of chlorine
dioxide for chlorine
- Substitution of chlorine dioxide for chlorine
- New brown stock washers to decrease organic content
of pulp prior to bleaching
- Modification to bleach plants
- New "broke system"
- 50% substitution of chlorine dioxide for chlorine
- Use of nonreactive defoamer
- Improved effluent suspended solids removal —
reduction from about 50 mg/L to less than 15 mg/L
- Modification and upgrade of bleaching process
Planned Projects
- Increase production of chlorine
dioxide to increase ability to
substitute for chlorine
- 100% substitution of chlorine
dioxide for chlorine
* Did not submit update in response to April 1992 request.
Source: ADEM, 1992.
-------
TABLE 9-3
DIOXIN CONCENTRATIONS IN FISH TISSUE SAMPLES TAKEN BELOW THE ALABAMA
RIVER PULP, BOISE CASCADE CORP., AND HAMMERMILL PAPERS MILLS
IN ALABAMA
(parts per trillion)
1984
1986
1990
1991
1992
1993
1994
Bass1
Alabama River
Pulp
Boise Cascade
Corp.
Hammermill
Papers
12.0
—
—
3.4-5.3
4.3
2.2
0.8-1.2
1.5-1.8
3.9-7.72
0.8-2.1
0.3-1.8
0.9-2.83
<0.3
0.4-0.6
0.3-1.2
<0.3
<0. 1-0.7
<0.5
<0.2
<0. 1-0.4
0.4-0.8
Catfish1
Alabama River
Pulp
Boise Cascade
Corp.4
Hammermill
Papers
—
—
—
—
—
—
—
ND4-39.45
3.6-6.S7
3-3.7
2-5.3
0.7-0.96
0.8-1.0
0.7-1.46
0.2-0.38
<0.4-1
<0. 1-0.4
O.5-0.66
<0.3-<0.4
0.5-0.6
—
JData from 1984-1990 represent fillets. Data from 1991-1994 represent composite fillets of fillets from six
fish. Ranges represent different samples and may represent different sites.
2Data are for largemouth bass.
3Data for July 1991 show an average dioxin level of 2.2 ppt based on 17 samples. Four samples from July
1991 showed no detection of dioxin, however, the detection limit was not reported and these samples could
not be included in the average.
4Nondetect.
5Upstream samples had concentrations ranging from ND to 1.2 ppt.
6Blue catfish.
7Flathead catfish.
8Yellow catfish.
9-10
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Figure 9-2
Map of Public Boat Landings on the Wheeler Reservoir and the Tennessee River
TENNESSEE
LEGEND
• BOAT LANDINGS STATE
• BOAT LANDINGS FEDERAL
• BOAT LANDINGS MUNICIPAL
• DISTRICT OFFICE
STATE LAKES
Source: Alabama Department of Conservation and Natural Resources, 1990.
-------
Figure 9-3
Map of Public Boat Landings on the Tombigbee and Alabama Rivers
tillimm B.
Oa**'"r
'.esctYftt
J
• BOAT LANDINGS STATE
• BOAT LANDINGS FEDERAL
• BOAT LANDINGS MUNICIPAL
• DISTRICT OFFICE
STATE LAKES
C«K Shir..
OF MEXICO
Source; Alabama Department of Conservation and Natural Resources, 1990.
9-12
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Tombigbee and Alabama rivers and in the Mobile area. Public access exists near all of the mill sites
(Alabama Department of Conservation and Natural Resources, 1990).
Mill process changes reduced instream and fish tissue dioxin concentrations, and ended the FCAs in
these waters, which most likely resulted in benefits in a variety of categories, including sportfishing,
nonconsumptive use such as observing wildlife and feeding birds, human health benefits, and passive use
benefits such as preserving resources for current and future use. The following sections describe estimated
benefits to the extent feasible. However, because benefits are highly site specific and data are limited, these
sections focus on a subregion of the state encompassing the Lower (south of Demopolis) Tombigbee River
and Mobile River. Five mills are located in, and angler trip data are available for, this subregion.
Recreational Angling Benefits
Sportfishing is a popular activity in Alabama. A telephone survey of 1,000 Alabama households
indicated that 72 percent of the respondents have been freshwater fishing, and 58 percent of the respondents
own fishing equipment (Alabama Department of Conservation and Natural Resources, date unknown). In
fiscal year 1993-1994, 560,229 residents and nonresidents bought Alabama fishing licenses (Alabama
Department of Conservation and Natural Resources, 1994). According to Tucker (1987), bass is the most
sought-after species, followed by crappie, bream, catfish, and striped bass. A recent study of freshwater fish
consumption in Alabama found that fishing occurs near pulp and paper mill outfalls (FIMS and FAA, 1993).
Toxicity reductions from pulp and paper mills may result in significant benefits to recreational
fishing, although limited data on the interrelated effects of reducing toxicity, recreational use, and site-
specific economic values create uncertainty in the estimation of those benefits. From 1988 to 1991, the
dioxin contamination from mills on the lower Tombigbee River and the Mobile River was widely publicized,
and FCAs that advised limited or no fish consumption from these rivers were issued in 1991. Concerns about
the health effects of eating contaminated fish may have reduced the value of the recreational fishery because
the desirability of consuming fish may be an important attribute of the overall fishing experience (Knuth and
Connelly, 1992; Vena, 1992; FIMS and FAA, 1993; West et al., 1993). The reduction in value may consist
of two components: fewer fishing trips taken because of the FCAs, and the reduced value of trips that
continue to be taken.
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EPA estimated the recreational fishing benefits associated with the process changes at the pulp and
paper mills on the Lower Tombigbee River and the Mobile River based on improvements resulting from the
lifting of the FCAs: The estimates presented here include only the value of the increased number of fishing
trips that may have resulted from removal of the FCAs. There is insufficient information in the literature to
conduct a benefit transfer of the increased value of existing fishing trips. Only one study indicates the
potential magnitude of reduction in quality resulting from toxic contaminants in a fishery (Lyke, 1993). This
study showed an 11 percent to 31 percent increase in baseline value to Great Lakes trout and salmon anglers
for a fishery that is "free of contaminants that may threaten human health." EPA did not use the Lyke study
to estimate benefits for this case study because Great Lakes trout and salmon angling is appreciably different
from warm water river fishing in Alabama. However, Lyke's results suggest that the recreational fishing
benefits of a "contaminant-free" fishery may be substantial.
Table 9-4 presents evidence regarding the behavioral responses of anglers to FCAs. Another
Wisconsin study provides supporting evidence: it asked anglers about the relative importance of various
factors that played a part in choosing not to fish in the Great Lakes (Bishop et al., 1994). Roughly 55 percent
of the respondents identified "PCB and other contamination in the fish" as a "somewhat important" or "very
important" factor (no specific values were associated with these factors). No other single factor was cited by
a higher proportion of respondents.
The studies cited in Table 9-4 suggest that between 10 percent and 37 percent of anglers take fewer
trips in response to fish consumption advisories. However, these anglers may not eliminate trips to
contaminated waters. Therefore, EPA conservatively assumed a 5 percent to 10 percent reduction in trips
results from FCAs on the Lower Tombigbee River and in Mobile River Delta. The most recent data available
show that recreational anglers took 542,000 trips to the Lower Tombigbee River and in Mobile River Delta in
1981 (FAA, 1983). EPA used this estimate as the number of trips before the publicity and FCAs since angler
license sales in Alabama were relatively constant from 1981 through 1987. Thus, between 27,000 and
54,000 trips per year may have been lost as a result of the FCAs (542,000 x 0.05; 542,000 x 0.10).
Table 9-5 shows estimated values for warm water fishing from the literature that may be appropriate
for valuing fishing in Alabama. These studies show very similar values per day, and suggest a range of $21-
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TABLE 9-4
BEHAVIORAL RESPONSES OF ANGLERS TO FISH CONSUMPTION ADVISORIES1
Study
Fioreetal. (1989)
Knuth, Connelly and
Shapiro (1993)
Vena (1992)
Silver-man (1990)
Knuth and Connelly
(1992)
West etal. (1993)
Location
Lake Michigan and
Green Bay, Wisconsin
Ohio River
Lake Ontario, New
York
Lake St. Clair
Detroit River
Lake Erie
New York
Michigan
Reported Behavioral Response
57%
37%
26%
26%
22%
17%
13%
53%
31%
30%
20%
16%
16%
56%
56%
41%
31%
31%
28%
21%
10%
70%
17%
40%
86%
80%
75%
46%
27%
Reported changing fishing habits and/or
fish consumption habits
Took fewer trips
Changed fishing locations
Changed species sought
Changed cleaning methods
Changed size of fish consumed
Changed cooking methods
Ate less fish
Changed preparation methods
Changed fishing locations
Changed species sought
No longer ate fish
Took fewer trips
Ate less fish
Changed cleaning methods
Ate smaller fish
Changed fishing locations
Ate different species
Changed cooking methods
Fished for different species
Took fewer fishing trips
Ate less fish
No longer ate sport caught fish
Cooked fish differently
Cooked fish differently (Great Lakes
anglers)
Ate less fish (Great Lakes anglers)
Cleaned fish differently
Ate less fish (overall)
Cooked fish differently (overall)
JIn addition to the studies reporting changes in behavior, in a study of Alabama anglers (FIMS and FAA,
1993), 83% reported that they would not eat fish from their fishing location if there were a health advisory
warning against consuming fish caught at the site (James Mclndoe, ADEM, personal communication,
August, 1996). About 4% of Alabama recreational anglers do not eat their catch for fear of contamination of
fish (FIMS and FAA, 1993). This behavior may stem in part from the FCAs and publicity in recent years.
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TABLE 9-5
WARM WATER RECREATIONAL FISHING STUDIES
Study
Palm and
Malvestuto (1983)
Hay (1988)
McCollum et al.
(1990)
Ziemeretal. (1980)
Alabama Power Co.
(1993)
Walsh etal. (1990)
Location
Georgia and
Alabama
All U.S. (bass)
Southeast U.S.
(incl. Alabama)
Georgia
Coosa River,
Alabama
All U.S.
Unit
Valued
Day
User day
Day
Fishing
occasion
Hour
User day
Mean
Reported Value1
8.90 ($1978)
$13 ($1985)
($10-$16, 95%
confidence interval)
$10.93 ($1986)
$26.46 ($1980)
$4.192($1993)
$23.55 ($1987)
Mean Reported
Value1
(1995 Dollars)
$20.80
$18
($14-$23)
$15.20
$48.94
$4.422
$31.59
Consumer surplus.
2A 4-hour fishing day would imply a value of $17-$18.
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$314 for warm water fishing in Alabama [this range reflects Palm and Malvestuto's (1983) study of Alabama
on the low end, and Walsh et al. (1990) on the high end]. Multiplying by the estimated reduction in trips
provides potential benefits of between $567,000 and $1.7 million per year. As described above, this result
may be conservative because it does not consider increases in the value of existing trips with improved water
quality; it values only the new trips taken following the lifting of the FCAs.
Nonconsumptive Use Benefits
In 1991, Alabama residents spent approximately 2.5 million days involved in nonconsumptive
recreational activities such as observing wildlife, visiting public areas, feeding wild birds or other wildlife,
and photographing wildlife (U.S. DOI, Fish and Wildlife Service, and U.S. Department of Commerce, 1993).
The activity days took place at locations greater than one mile from the recreationist's home. Thus, these
days provide a conservative estimate of nonconsumptive use levels in Alabama since they do not include
activities within one mile of the recreationist's home, or activities by nonresidents. A breakdown of activity
level for the Lower Tombigbee River and Mobile River Delta is not available, however.
Reduced toxicity from pulp and paper mills, changes in the perceptions of contamination, and the
removal of FCAs may result in nonconsumptive recreation benefits. Recreators often take fishing and
nonconsumptive recreational trips together, and make decisions about what sites to visit depending on how
attractive sites are for both types of recreation. Individuals who participate in nature viewing might
accompany anglers on a fishing trip, but do not fish themselves. For example, in a recent study conducted at
rivers and streams in southwestern Montana, nonfishing recreationists accompanied about 20 percent of all
anglers (Morey et al., 1995). This finding from Montana suggests that increases in fishing trips to a site
would be accompanied by increases in nonconsumptive recreational trips.
The increase in nonconsumptive recreation trips from reduced toxicity in Alabama rivers and streams
will probably be smaller than the increase in recreational angling trips because of the direct effect of the
removal of FCAs on angler trip-taking behavior. The effect on nonanglers is not expected to be so direct
4A11 values in 1995 dollars unless otherwise noted. Value inflated to 1995 dollars using the
Consumer Price Index.
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because the issue of consumption of contaminated fish is not involved. In the Montana study, which
estimated the effect on trip taking when a site contaminated with heavy metals from mining waste was
returned to "no-injury" conditions, the estimated ratio of the increase in nonconsumptive recreational use to
the increase in fishing was about 0.2. Multiplying the estimated reduction in fishing trips to the Lower
Tombigbee River and the Mobile River Delta as a result of FCAs (27,000 to 54,000) by 0.2 gives an estimate
of the potential increase in nonconsumptive recreation with the stricter toxicity limitations: Between 5,400 to
10,800 additional nonconsumptive recreation days each year in the Lower Tombigbee and Mobile River
Delta region.
Table 9-6 shows nonconsumptive recreation studies from the literature that may be appropriate for
valuing nonconsumptive recreation in Alabama. The studies in Table 9-6 focus on the southeastern United
States, and consistently reflect values in the range of $15-$30 per day. Transferring this range of values to
the Lower Tombigbee and Mobile River area, and multiplying by the additional number of nonconsumptive
recreation days, produces an estimate of potential benefits of between $81,000 to $324,000 per year.
Human Health Benefits
The ADEM observed significant decreases in fish tissue dioxin levels following the implementation
of process changes at the Alabama bleached kraft mills. These reductions have benefited Alabama anglers
who consume fish caught near the mills by reducing their risk of dioxin-related health effects. A recent study
of freshwater fish consumption in Alabama found anglers and their family members consume fish caught in
proximity to the mills' outfalls (FIMS and FAA, 1993). This section describes the data and assumptions
used to estimate the cancer risk reduction benefits that accrued in the Lower Tombigbee-Mobile River as a
result of the lower fish tissue dioxin concentrations. The methodology employed below assumes that the pre-
process change levels of dioxin in fish tissue would have continued without the controls.
Exposed Population. EPA used data on fishing license sales to residents to estimate the number of
resident recreational anglers on the Lower Tombigbee and Mobile rivers (Alabama Department of
Conservation and Natural Resources, 1994). Work by Tucker (1987) shows that approximately 5 percent of
fishing trips by licensed anglers were to areas of the Lower Tombigbee and Mobile rivers. A fish
consumption survey of Alabama freshwater anglers conducted from August 1992 to July 1993 found that the
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TABLE 9-6
NONCONSUMPTIVE RECREATION STUDIES
Study
Bell (1981)
Loomisetal. (1995)
McCollum et al.
(1990)
Walsh etal. (1990)
Location
Atchafalaya River
Basin, Louisiana
Nashville,
Tennessee region
Southeast U.S.
(incl. Alabama)
All U.S.
Unit
Valued
Day
Day-use
Day
User day
Reported Values1
$11. 10 ($1975)
$7.96-$12.96 ($1980)
$19.75 ($1986)
$22.20 ($1987)
1995 Value1
$31.44
$14.72-$23.91
$27.46
$29.78
Consumer surplus.
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mean number of people eating fish at each meal was 3.9 (FIMS and FAA, 1993). Thus, the exposed
population from the Lower Tombigbee and Mobile River area was estimated as 89,660 (421,906 anglers
x 0.054 x 3.9 persons per meal).
Sport-Caught Fish Consumption. In the freshwater fish consumption survey conducted for the
Alabama Department of Environmental Management from August 1992 to July 1993 to estimate the daily
per capita consumption of fish from all Alabama rivers and reservoirs, anglers were interviewed at 23 tail-
water sites and 6 reservoir sites. Consumption estimates were derived using two methods: (1) a harvest
method, in which anglers identified the fish from their current catch to be consumed and the dressing method
to be used, and (2) a 4-oz serving method, in which the palm of the hand was used as visual representation of
the portion size. The study estimated consumption of all Alabama sport fish at 43 grams per person per day
(gpd) and 46 gpd for the harvest and 4-oz serving methods, respectively (FIMS and FAA, 1993). For meals
from fish harvested at only the study sites, the consumption estimates were 33 and 30 gpd for the harvest and
4-oz serving methods, respectively (FIMS and FAA, 1993).
Daily per capita consumption offish harvested at study sites near bleached kraft mills was higher
than daily per capita consumption offish harvested at the other study sites. Consumption estimates based on
seven study sites near bleached kraft mills were 45.1 and 38.3 gpd for the harvest and 4-oz serving methods,
respectively (FIMS and FAA, 1993; E. Meredith, FIMS, personal communication, 1995). For the mill sites
on the Lower Tombigbee and Mobile rivers, the study obtained higher estimates of 66.6 and 40.8 gpd for the
harvest and 4-oz serving methods, respectively. Because the harvest method result (66.6 gpd) reflects a small
sample size and may misrepresent consumption, EPA used the lower, statewide harvest method estimate in
the calculation of risk in this area.
Fish Tissue Dioxin Levels. EPA calculated health risks based on exposure to dioxin (2,3,7,8-
TCDD). ADEM (1995b) provided fish tissue contamination data. For the Lower Tombigbee and Mobile
rivers area, the average dioxin level in 1990 fillet samples was 6.03 ppt. This average value includes samples
from all five bleached kraft mills in the area. After the 1991 process changes, the average dioxin level in
fillet samples from 1992 to 1994 was 0.30 ppt, which represents a 95 percent reduction from the 1990
average, and includes samples from all five area mills with nondetects set equal to one-half the detection
limit.
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Exposure Assumptions. Human health risks were calculated using the bleached kraft mill
consumption estimates described above. Standard EPA assumptions were used regarding length of exposure
(70 years) and body weight (70 kilograms) (U.S. EPA, 1989b).
Estimated Risk Reduction Benefits. Estimated risk reduction benefits resulting from the process
changes implemented by the bleached kraft mills are estimated under the assumption that the mills cause the
dioxin levels in fish near the mills. An appendix to this chapter provides the benefits calculations. The
observed 95 percent reduction in fish tissue dioxin levels at the Lower Tombigbee and Mobile River sites
would reduce excess cancer cases among area anglers and their families by between 0.040 and 0.044 cases
per year. Based on the estimated value of a statistical life of $2.5 million to $9.0 million (American Lung
Association, 1995), this reduction in cancer cases represents annual benefits from the process changes of
between $93,000 and $370,000.
Uncertainties in the Estimation of Risk. There are numerous sources of uncertainties in the
estimate of baseline risks, and in the estimated reduction in risks from implementation of the regulation.
Variations in health risks may occur, depending upon the following factors:
Type and Size of Fish Consumed. Bottom-feeding fish or older, larger fish are generally
more contaminated than sport fish or young, small fish.
Type of Fish Processing and Cooking Techniques Used. The estimate of baseline human
health risks and the estimated reduction in risks from implementation of the regulation may
vary because the analyses do not account for fish processing (such as removing the skin) and
cooking techniques. For example, Stachiw et al. (1988) found that cooking to well done or
applying high heat substantially reduced TCDD levels in fish fillets. Stachiw et al. (1988)
examined the reductions of TCDD residue resulting from roasting and charbroiling
restructured carp fillets (deboned carp fish parts) prepared from fish taken from Saginaw
Bay. The reductions in TCDD residue ranged from 34 percent to 67 percent, depending on
the method and temperature of cooking. In addition, a preliminary study using charbroiling
of three carp fillets from Michigan rivers reported losses of TCDD ranging from 30 percent
to 70 percent (Kaczmar, 1983, as cited in Stachiw et al., 1988).
Other studies report substantial decreases in toxic residues from cooking and processing. For
example, Puffer and Gossett (1983, as cited in Stachiw et al., 1988) reported that panfrying white croaker
reduced DDT compounds by 74 percent and 39 percent for fish caught from Santa Monica Bay and in Orange
County, respectively. Zabik et al. (1993) reported percentage reductions of pesticides and total PCBs of
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approximately one third attributable to cooking and processing carp, chinook salmon, lake trout, walleye, and
white bass caught from the Great Lakes. Removing the skin significantly reduced the level of pesticides in
carp and chinook salmon.
The reduction in dioxin residues associated with cooking fish may vary by species, size of fish, and
cooking methods. There is insufficient information to estimate the effect of cooking methods on risks to
Alabama anglers; however, the studies mentioned above suggest that baseline risks and the risks associated
with fish consumption after implementation of the regulation may be lower than estimated here.
• Other Contaminants in Fish. Baseline risks are calculated for dioxin only, since that is the
focus of the benefits analysis for the regulation. Other contaminants that are not reduced by
the regulation may be present in fish tissue. The presence of such contaminants would
increase the baseline of cancer risk, but would not alter the marginal risk reduction.
• Age. Risks are calculated using total reservation populations; however, risks to children and
elderly persons may not be accurately represented by these estimates.
• Pregnant and Nursing Mothers. Risks to unborn children and infants may result from the
consumption of contaminated fish by pregnant and nursing mothers, and these risks may
occur at lower levels than those posing risks to adults. Risks to fetuses and infants may not
be accurately represented by these estimates.
• Genetic Differences. Genetic differences in the exposed population may affect
susceptibility to carcinogens.
• Availability of Health Care. It is possible that quality health care is not as readily available
for minority or lower income populations, which might result in increased health risks to
these populations from exposure to contaminants.
• Other Modes of Toxicity. Other modes of toxicity such as endocrine disruption may not be
addressed by the cancer slope factors and oral reference doses used in this analysis.
Passive Use Benefits
Passive use values may include bequest values for the availability of resources for use by others now
and in the future, and existence values for the protection of resources even if they are never used. The
literature (e.g., Boyle and Bishop, 1987; Bowker and Stoll, 1988) documents the values held by nonusers for
the preservation of species. These values are most likely more significant for unique resources such as
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threatened and endangered species. In the case study area, Alabama households may value the reduced risk to
piscivorous wildlife, including threatened and endangered species, resulting from the reduced concentrations
of dioxin in fish near the mills.
The levels of dioxin in fish in Alabama rivers prior to the change in Alabama permits and the
institution of controls listed in Table 9-2 may have posed some risk to wildlife. Dioxin concentrations of 6
pg/g (equivalent to ppt) in whole body fish are associated with low risk to avian wildlife, and concentrations
of 60 pg/g are associated with high risk to avian species (U.S. EPA, 1993). Avian species in the Lower
Tombigbee and Mobile rivers area include threatened and endangered species such as the bald eagle, which is
listed as endangered in Alabama (U.S. Fish and Wildlife Service, 1994). For mammalian species,
concentrations of 0.7 pg/g and 7 pg/g in fish are associated with low and high risk, respectively (U.S. EPA,
1993). As shown in Table 9-3, fillet concentrations, which tend to be lower than whole body concentrations,
have been reported at levels that may pose risk to wildlife.
Without carefully designed and executed primary research, passive use values are difficult to
estimate. Contingent valuation is the only method available for measuring passive use benefits. EPA is not
aware of any studies of the potential magnitude of passive use values held by Alabama households for
reduced dioxin contamination. However, research shows that passive use values may be substantial, and that
leaving them out of benefit-cost analyses may cause a significant underestimation of benefits and
misallocation of resources based on such estimates (Fisher and Raucher, 1984).
Fisher and Raucher found that passive use benefits are generally at least half as large as recreational
fishing benefits, and that if these values are applicable to a policy action, using a 50 percent approximation
with proper caveats is preferred to omitting passive use values from a benefit-cost analysis. This rule of
thumb suggests that the potential magnitude of passive use values in the Lower Tombigbee and Mobile River
Delta associated with reduced dioxin toxicity and removal of the FCAs is between $0.3 million to $0.9
million per year. Using this approach may provide a conservative estimate of benefits: studies in the
literature have found a ratio of passive use values to use values of approximately 2.0 or greater (Sanders et
al., 1990; Sutherland and Walsh, 1985).
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Total Value Approach
Total values for the water quality improvements resulting from the stricter effluent limitations
include both active uses and passive uses. The previous sections evaluated active and passive uses
separately. This section addresses values associated with total use. The total use value is simply the value
placed on natural resources by the public regardless of the motivation for the value. For active users of a
resource, the total value may consist of both active use values and passive use values. For those holding only
a passive use value, the total value is equal to the passive use value.
Although a theoretical distinction can be made between values arising from active uses and values
arising from passive uses, separating these values is difficult both in theory and practice. Instead, a total value
is often measured. Because total value estimates can include both active and passive use values, they should
not be added to active use values. Because the number of passive users may greatly exceed the active users,
even very small values per passive user can result in total values that substantially exceed active use values.
Table 9-7 describes studies measuring total use values that may be useful for a benefits transfer.
Although there are no studies specifically for Alabama, the nature of the contamination and cleanup is similar
to the water quality improvements experienced in Alabama. Perhaps the most similar are Devousges et al.
(1987) and Croke et al. (1986). Devousges et al. measured willingness to pay to improve water quality
conditions from beatable to fishable on a portion of the Monongahela River in Pennsylvania. Croke et al.
estimated the value of improving all Chicago-area rivers to fishable conditions, and sampled users and
nonusers living in the Chicago area. The water quality improvements valued in both of these studies are
similar to the lifting of the FCAs on the Lower Tombigbee and Mobile rivers such that the rivers obtain
"fishable" status . Devousges et al. and Croke et al. found values ranging from $27 to $64 per year for these
improvements. Other relevant studies in Table 9-7 estimate even higher values.
Both active and passive use values for many environmental resources can be expected to be highest
for people living near a site, and to decrease with distance. For direct use, this occurs because the probability
of visiting a site decreases with distance, and the number of substitute sites increases with distance. Similar
reasoning holds for passive use. Those closer to a site are more likely to be concerned about passing on the
site to future generations and are more likely to be concerned with local environmental quality. Those farther
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TABLE 9-7
CONTINGENT VALUATION STUDIES OF TOTAL VALUES
FOR LOCAL HOUSEHOLDS ASSOCIATED WITH WATER QUALITY IMPROVEMENTS
Study
Desvousges et
al. (1987)
Croke et al.
(1986)
Schulze et al.
(1995)
Rowe et al.
(1985, 1986)
Resource Valued
Improvement in water quality from
beatable conditions to fishable
conditions along the Pennsylvania
portion of the Monongahela River.
Improvement in the water quality at
Chicago area rivers to fishable
conditions.
Complete cleanup of fourNPL sites
in Clark Fork, Montana where
injuries have resulted in 80%
reductions in trout stocks along 140
miles of river.
Cleanup of hazardous waste sites in
Colorado, including small mountain
mines contaminating rivers.
Households
Identified
Households in PA
Monongahela River
counties
Households in the
Chicago area
Montana households
within approx. 100
driving miles from the
site
Households in county
of or city near site
Mean Values
Reported in
Study
(1995 Dollars)
$27 to $62 per
year
$64 per year
$77 per year for
ten years
$25 to $99 each
year for ten years
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from the sites may still hold appreciable values for the natural resources at the site, but may be more
concerned with environmental (and other) issues closer to where they live.
To capture this effect, a range of values of $20-$60 per household per year based on Devousges et al.
and Croke et al. is transferred to the approximately 200,000 households in counties adjacent to the Lower
Tombigbee and Mobile River Delta. This results in estimated total benefits of the reduced toxicity levels and
lifting of FCAs in the Lower Tombigbee and Mobile River Delta of between $4 million and $12 million.
This estimate may be conservative because it does not account for values held by nonlocal residents. For
example, Schulze et al. (1995) found that Montana households approximately 500 driving miles from the
Clark Fork River were willing to pay $17 per year (1995 dollars) for 10 years to clean up National Priority
List sites that had reduced river trout stocks. Rowe et al. (1985, 1986) found nonlocal households in
Colorado were willing to pay $15 to $26 per year (1995 dollars) for 10 years to clean up mountain mines that
contaminated rivers. Nonlocal values may be smaller but can also be significant because they may be held by
a greater number of people.
The estimated total benefits range ($4 million to $12 million) can be expected to be higher than the
sum of the direct use categories ($1 million to $3 million) estimated above. This is because there are
categories of benefits that EPA did not explicitly estimate because of a lack of data and information (e.g.,
swimming, hunting, increased value of existing recreational trips, commercial fishing, noncarcinogenic
human health risk reductions, agricultural and commercial/industrial uses). Also, as described above, EPA
may have underestimated passive use values.
9.1.7 Summary of Water Quality Based Benefits
Table 9-8 provides a summary of the estimated water quality based benefits from the implementation
of process changes at Alabama's bleached kraft pulp and paper mills. Benefits for the Lower Tombigbee and
Mobile rivers region, which includes 5 of the 10 bleached kraft mills in the state, may be between $1 million
and $12 million per year.
Table 9-9 shows key omissions, biases, and uncertainties associated with the benefits analysis. It is
difficult to assess the overall impact of the omissions, biases, and uncertainties on the benefits estimates
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TABLE 9-8
SUMMARY OF ANNUAL WATER BENEFITS FROM PROCESS CHANGES
AT BLEACHED KRAFT PULP AND PAPER MILLS ON THE LOWER
TOMBIGBEE AND MOBILE RIVERS
(Millions of 1995 Dollars)
Benefit Category
Recreational Angling
Nonconsumptive Recreation
Human Health (cancer risk)
Passive Use
Omitted Benefits1
Total Explicitly Estimated Benefits Categories
Alternative Total Value Approach
Annual Value
$0.6-$1.7
$0.1-$0.3
$0.140.4
$0.340.9
+
$1.143.3
$4.0412.0
Benefits not quantified or monetized in this case study include systemic health risk reductions and the
increased value of existing recreational angling trips from reductions in contaminant levels.
+ Positive benefits expected but not monetized.
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TABLE 9-9
KEY OMISSIONS, BIASES, AND UNCERTAINTIES IN THE BENEFITS ANALYSIS
FOR THE LOWER TOMBIGBEE AND MOBILE RIVERS
Omissions/Biases/Uncertainties
Direction of Impact on
Benefit/Cost Estimates
Comments
The estimation of benefits by
category omitted some categories
(e.g., increased value of existing
recreation trips)
v >
The omission of potential
benefit categories will
cause benefits to be
underestimated.
Insufficient data and
information to evaluate the
potential magnitude of these
benefits. Lyke (1993) found
increase in value to Great
Lakes anglers from a toxic-
free fishery to be significant
(between 11% and 31% of
the value of existing trips).
Benefits were estimated using
benefits transfer.
It is unknown what bias the
selected studies have on
benefits.
Studies of Alabama or the
south eastern U.S. were used
if available. Transferred
values are supported by a
number of studies.
The estimation of human health
benefits assumes all cancers are fatal.
Assuming all cancers are
fatal may cause an
overestimate of benefits.
The "statistical value of a
life" may not be appropriate
for cancers that are survived
for a number of years.
Passive use values are estimated as
50% of recreational angling benefits.
The omission of the
increased value of existing
recreational angling trips
may result in an
underestimate. Use of the
50% figure may also result
in a conservative estimate.
The increase in value of
existing trips may be
significant (see above). The
ratio of passive use values to
use values may be as high as
2.0 or greater (Sanders et al.,
1990; Sutherland and Walsh,
1985).
Overall Impact on Benefits
Estimates
The omission of potential
benefit categories may result
in an underestimate of
benefits.
+ Potential overestimate.
- Potential underestimate.
? Uncertain impact.
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because the direction and magnitude of bias is not known. However, omitting potential recreational angling
benefits (increased value of existing trips), and basing passive use benefits on recreational angling values that
do not include these values, may result in an underestimate of benefits.
9.1.8 Air Benefits
Table 9-10 provides a summary of the estimated emissions reductions and air-related benefits at
Alabama's bleached kraft pulp and paper mills. These results were derived by using the national estimates
methodology to model the Alabama mills. Annual air-related benefits for MACT I for the Lower Tombigbee
and Mobile rivers region, which includes 5 of the 10 bleached kraft mills in the state, range from a disbenefit
of $136.8 million to a benefit of $113.2 million under Option A and from a disbenefit of $135.3 million to a
benefit of $133.4 million under Option B. Benefits of the proposed MACT II standard resulting from
particulate matter reductions are valued at $81.7 million per year.
9.1.9 Comparison of Benefits and Costs
Retrospective Benefits and Costs
Table 9-11 provides a summary of the retrospective benefits from implementation of process
changes at the mills on the Lower Tombigbee and Mobile rivers, and the estimated cost of these controls.
EPA estimated a reduction in operating costs as a result of the process changes. Estimated capital costs of
$26.3 million and operating and maintenance cost savings of $4.6 million per year for 30 years combine to
result in net annualized cost savings of $ 1.8 million per year (ERG, 1996a) compared to annualized costs
prior to the process changes.
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TABLE 9-10
POTENTIAL ANNUAL AIR-RELATED BENEFITS OF THE SELECTED OPTIONS
FOR BLEACHED KRAFT PULP AND PAPER MILLS
ON THE LOWER TOMBIGBEE AND MOBILE RIVERS
Regulatory Option
Option A and MACT I
VOC
Participate Matter
SO2
TOTAL Monetized Benefits
Option A and MACT II
Participate Matter
Option B and MACT I
VOC
Participate Matter
SO2
TOTAL Monetized Benefits
Option B and MACT II
Particulate Matter
Emission Reductions
(Mg/yr)
0-43,897
(1.24)2
(10,898)2-0
NA
6,472
0-51,707
(3.83)2
(10,776)2-0
NA
6,472
Annual Value1
(Millions of $1995)
$0-$113.2
$03
($136.8)-$0
($136.8)-$113.2
$81.7
$0-$133.4
$04
($135.3)-$0
($135.3)-$133.4
$81.7
1 Benefits may not add due to rounding.
2 Numbers in parentheses represent emissions increases and related increased social costs.
3 Disbenefits of $15,648 per year.
4 Disbenefits of $48,331 per year.
NA = Not applicable.
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TABLE 9-11
BENEFITS AND COSTS OF THE WATER QUALITY PROCESS CHANGES
IMPLEMENTED AT THE MILLS ON THE LOWER TOMBIGBEE AND MOBILE RIVERS
Annual Monetized Benefits Associated with Water
Quality Improvements1
Annualized Costs for Improvements2
TOTAL Monetized Net Benefits3
Millions of 1995 Dollars
$1.1-$12.0
savings of $1.8
$2.9-$13.8
JNot all benefits categories have been quantified and monetized.
2Based on annualized present value of pretax compliance costs, reflecting a 7% real discount rate and a 16
year accounting period.
Retrospective benefits plus cost savings.
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Benefits and Costs Comparable to the Regulation
All but one of the Alabama mills will still require extensive upgrading to comply with Option A
guidelines5, and assumed additional air controls will be required by the rule. At sites nationwide where
effluent treatment systems resemble those in place at the Alabama mills before the changes in the 1990s, the
regulatory benefits and costs that can be expected would include those that mills have already incurred (as
described above), plus the costs and benefits of additional required upgrades. Table 9-12 shows the benefits
and costs for the case study mills that are comparable to the current rulemaking. EPA has estimated the costs
of the additional necessary upgrades for water treatment; however, it is not known what additional benefits
would result from these further upgrades. The estimated costs and benefits for the air controls required by
the rule are also shown in Table 9-12 (any associated costs and benefits potentially associated with upgrades
in the early 1990s are not estimated).
9.1.10 Conclusions
In the early 1990s bleached kraft mills in Alabama implemented process changes to reduce the
concentrations of dioxin in their effluents. All of the mills implemented chlorine substitution or changes that
improved the mill's ability to use chlorine substitution. Two of the mills also implemented oxygen
delignification. EPA estimates that the total annual benefits for the Lower Tombigbee and Mobile rivers
region, which includes 5 bleached kraft mills, range from a disbenefit of $54.0 million to a benefit of $206.9
million under the selected regulatory options (Option A, final MACT I, and proposed MACTII Alternative
A). This range of monetized benefits does not include all benefit categories and EPA anticipates that
additional water-related benefits could be achieved from implementation of the rule. Associated annualized
costs are estimated to be $32.5 million.
5Option B is a Tier 1 incentive. The reader is directed to the preamble published in the Federal
Register accompanying this rule for a discussion on incentives.
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TABLE 9-12
ANNUAL BENEFITS AND COSTS COMPARABLE TO THE
FINAL PULP AND PAPER REGULATION
FOR THE LOWER TOMBIGBEE AND MOBILE RIVERS1
(Millions of 1995 Dollars)
Annual Monetized Benefits
Water2 (retrospective)
Air3 (MACT I)
Air (MACT II)
Water and MACT I
Water, MACT I, and MACT II
Annualized Costs4'5
Water
Water and MACT I
Water, MACT I, and MACT II
Compliance with
Option A
$1.1-$12.0
$(136.8)-$113.2
$81.7
($135.7)-$125.2
($54.0)-$206.9
$22.4
$32.0
$32.5
Compliance with
Option B
$1.1-$12.0
($135.3)-$133.4
$81.7
($134.2)-$145.4
($52.5)-$227.1
$28.3
$37.9
$38.4
1 Option A is the Agency's selected BAT/PSES option.
2 Steady state benefit levels omitting nonmonetizable benefits and potential benefits from additional upgrades
to meet compliance with rule.
3 Estimated air benefits do not include any benefits that may have occurred as a result of past upgrades.
4 Based on annualized pretax compliance costs, reflecting a 7% real discount rate and a 16 year accounting
period.
5 Includes retrospective and forthcoming water costs and forthcoming air costs.
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9.2 PIGEON RIVER CASE STUDY
The Champion International pulp and paper mill in Canton, North Carolina, covers 200 acres on the
banks of the Pigeon River. Operations at the bleached papergrade kraft mill include pulping, bleaching, and
converting hardwood and softwood into uncoated business paper and bleached paper board for the liquid
packaging industry. The mill has been discharging effluent to the Pigeon River since 1907.
The Pigeon River flows from the mountainous region of western North Carolina and crosses into
eastern Tennessee approximately 38 miles downstream from the Champion International mill (see Figure 9-
4). In the past, water quality and aesthetic problems limited recreation on and in the Pigeon River, as did a
lack of predictable flow levels because of unscheduled hydroelectric project releases. EPA's National Dioxin
Survey first documented dioxin contamination of the Pigeon River in 1988. As a result, both Tennessee and
North Carolina issued FCAs for all species offish.
In the early 1990s, Champion International initiated a large modernization project at the mill,
including installation of oxygen delignification and chlorine dioxide substitution to 100 percent (actually
surpassing the BAT option considered in this rule). Since the modernization, the water quality of the Pigeon
River has improved and beneficial uses of the river have increased. The North Carolina Department of
Environment, Health, and Natural Resources (DEHNR) and the Tennessee Wildlife Resources Agency
(TWRA) have noted an increase in the diversity offish species populating the river downstream from the
mill, and the FCAs on the river have been partially lifted (advisories for carp and catfish remain in effect). In
addition, there has been increased use of the river for Whitewater boating, and decreased complaints about
color and odor (U.S. EPA, 1994).
This case study provides estimates of the benefits realized from the process changes implemented at
the Champion International mill. To the extent that these process changes reflect the final rule Tier 1
incentives (Option B), the costs of the process changes and the associated benefits may indicate the potential
benefits at facilities where similar processes have not yet been implemented.
9-34
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Figure 9-4
Map of Pigeon River
Champion
International
9-35
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9.2.1 Water Quality Issues on the Pigeon River
As early as the 1940s, water quality studies conducted on the Pigeon River indicated that discharges
from the Champion International mill severely degraded the river. In 1988, sampling of the Pigeon River
found dioxin at a level of 22.1 ppt in the whole body of a carp.
Additional furan isomers increased the relative concentration to 25.2 ppt in carp, according to the
Tennessee Department of Environment and Conservation (TN DEC, 1992). Further sampling confirmed that
dioxin presented a potential health problem from the consumption of Pigeon River fish, and by 1989 both
Tennessee and North Carolina issued "no consumption" advisories for all fish from the Pigeon River.
In addition to the dioxin studies, fish community structure sampling, performed by the DEHNR in
1987, indicated that the Pigeon River's fish community below Champion International was severely degraded
to the North Carolina border (rated Fair-Poor, Poor, or Very Poor). Species diversity and fish abundance
levels were greatly below expectations, and darter and intolerant species were absent. Many fish were
diseased (from 8 percent to 66 percent), a clear indication of toxic substances in the water. DEHNR also
sampled the Pigeon River at two locations above the Champion mill, and both of these sites were rated as
Good (North Carolina DEHNR, undated).
In addition, color, odor, and foam have historically been significant problems on the Pigeon River
and have detracted from recreation in the area. North Carolina rated the river downstream from Canton as
Class C water, which indicates that immersion should be infrequent. In Tennessee, the river has historically
failed to meet state requirements for aquatic life or recreational uses (Kask and Shogren, 1994).
These water quality problems are attributed largely to the discharges from the Champion
International mill. No other industries discharge to the Pigeon River. Two municipal wastewater treatment
plants (WWTPs) and the Dayco Corporation discharge to tributaries of the Pigeon River; however, the
contribution of these tributaries to the degradation of the Pigeon River is limited. In a benthic study these
tributaries were rated as Good-Fair and Good (NC DEHNR, undated). Pollutants originating from nonpoint
source runoff may contribute to the detriment of the Pigeon River, but there is no evidence that they are
significant compared to the effects of Champion's discharge in Canton (Saylor et al., 1993).
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In the late 1980s, water quality and aesthetic problems severely limited recreational use of the Pigeon
River. Unofficial estimates indicate that fewer than 200 recreational boaters (rafts, kayaks, and canoes) used
the river annually (M. Fagg, Tennessee Wildlife Resources Agency, personal communication, 1995). The
FCAs, low species diversity, and low catch rates limited the use of the river for fishing. In addition, the odor,
color, and foam limited enjoyment of activities along the river banks.
9.2.2 Modernization of the Champion International Mill
The Champion International mill in Canton has been upgraded on numerous occasions. However,
Champion's most recent modernization, completed in 1994, addressed citizen concerns about pollution of the
river and complied with a revised NPDES permit issued in October 1989 (U.S. EPA, 1994). Concern about
pollution of the Pigeon River resulted from BOD and color discharges as well as dioxin contamination.
The Champion International mill upgrade included:
• installation of medium consistency oxygen delignification (OD)
• new compaction baffle washers for the pine bleach line
• closed screen room (with pressure-type screens)
• upgrade of pulping area condensate stripping (installation of stripper)
• increase in chlorine dioxide substitution to 100 percent
• elimination of the use of elemental chlorine and calcium hypochlorite
• oxygen and peroxide (for pine) enhanced extraction
• improved spill control
• redesign of activated sludge treatment plant
• maintenance work on the recovery boilers, including replacing lower windboxes and, for one
boiler, replacing the screen tubes.
9-37
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The mill spent approximately $52.2 million in capital costs for the environmentally important parts
of the upgrade and annual operating costs increased by approximately $1.8 million (1995 dollars)(ERG,
1996a). These upgrades exceed EPA's Option A because the mill installed oxygen delignification in both
fiber lines, but correspond quite closely with (and supersedes) EPA's Option B. The only additional costs
that the mill will incur as a result of the regulation (under either Option A or Option B) will be for effluent
monitoring.
9.2.3 Water Quality Improvements
Champion International and the Carolina Power & Light Company report that the dioxin
concentration of mill effluent has been below the detection limit since 1989, when the mill began using
chlorine substitution (NC DEHNR, undated). However, sediment contamination can persist, and pollutants
can continue to accumulate in organisms; therefore, it is important to evaluate actual fish tissue
concentrations of dioxin.
Sampling of dioxin concentrations of Pigeon River fish has been limited. However, sampling
conducted by Champion International and the Carolina Power & Light Company indicates that fish tissue
concentrations improved every year between 1990 and 1995 (NC DEM, unpublished). The improvements in
the river reach above Waterville Reservoir have resulted in a lifting of the North Carolina fish consumption
advisory for all species except carp and catfish taken from the Pigeon River (Table 9-13).
Table 9-14 illustrates the decline in dioxin concentration at a sampling points in Waterville
Reservoir. Dioxin concentrations in fillet tissue of middle feeding group fish (such as redbreast sunfish and
smallmouth buffalo) declined from an average of 7.7 ppt (total TEQ) in 1988 to an average of 0.2 ppt in
1995, and average dioxin concentrations in tissue of predator feeding group fish (such as smallmouth bass)
declined from an average of 21.0 ppt in 1988 to an average of 0.9 ppt in 1995. For bottom feeding fish, such
as carp and catfish, dioxin concentrations in fish tissue remain above North Carolina's action level of 3 ppt
for fish consumption advisories. Fish taken from the Pigeon River upstream of Waterville Reservoir (closer
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TABLE 9-13
FISH CONSUMPTION ADVISORIES ISSUED FOR THE PIGEON RIVER
BELOW THE CHAMPION INTERNATIONAL PULP AND PAPER MILL
Tennessee
North Carolina
Action Level
7 ppt (no consumption)
0.7 ppt (partial advisory)
30 ppt (no consumption)
3 ppt (partial advisory)
FCA Status 1988
No consumption all
species
No consumption
all species
FCA Status 1996
Limited consumption
carp, catfish, and
redbreasted sunfish
No consumption carp
and catfish
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TABLE 9-14
AVERAGE FISH TISSUE DIOXIN CONCENTRATIONS
IN WATERVILLE RESERVOIR, NORTH CAROLINA1
Total TEQ
2,3,7,8-TCDD
2,3,7,8-TCDF
Bottom Feeding Group
1988
1989
1990
1991
1992
1993
1994
1995
8.6
—
—
13.8
8.7
6.8
7.8
4.2
8.6
—
—
13.7
8.6
6.1
7.7
4.0
—
—
1.2
0.8
0.7
1.0
0.8
Middle Feeding Group
1988
1989
1990
1991
1992
1993
1994
1995
7.7
—
—
0.3
0.2
0.2
0.1
0.2
6.8
—
—
0.3
0.2
0.1
0.1
0.1
8.0
—
—
0.6
0.2
0.6
0.1
0.3
Predator Feeding Group
1988
1989
1990
1991
1992
1993
1994
1995
21.0
—
—
0.9
0.3
0.6
0.2
0.9
19.7
—
—
0.9
0.3
0.7
0.1
0.7
9.4
—
—
0.4
0.1
0.5
0.2
0.4
Source: NC DEM, unpublished.
JNo data available for 1989 or 1990. Based on 77 samples in the bottom feeding group, 44 samples in the
middle feeding group, and 30 samples in the predator feeding group.
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to the Champion mill) showed similar reductions in dioxin concentrations, although the concentrations in
bottom feeding fish were not as high as in fish from Waterville Reservoir6 (Table 9-15).
The Pigeon River crosses the state line into Tennessee just below the reservoir, and Tennessee
applies a more stringent action level for FCAs (see Table 9-13). As with the data for the portion of the
Pigeon River in North Carolina, data from the Tennessee Department of Environment and Conservation (TN
DEC) indicate that dioxin concentrations in fish tissue from samples taken between the Waterville Reservoir
and Newport, Tennessee, declined between 1988 and 1994. As a result, the TN DEC lifted the FCA for all
species offish, except for carp and catfish. The advisory for carp and catfish, has been relaxed to an advisory
to limit consumption of carp, catfish, and red breasted sunfish to 1.2 pounds per month (children and
pregnant or nursing women should not consume these species) (TN DEC, 1996).
As shown in Table 9-16, dioxin concentrations in the tissue of middle feeding group fish such as
redbreast sunfish and smallmouth buffalo declined from 3.9 ppt (total TEQ) in 1988 to 0.2 ppt in 1995.
Dioxin concentrations in the tissue of predator feeding group fish such as smallmouth bass declined from 4.0
ppt in 1988 to 0.4 ppt in 1995. For bottom feeding fish such as carp and catfish, dioxin concentrations in
fish tissue declined from 19.6 ppt in 1988 to 0.8 ppt in 1995 (TN DEC, unpublished).
Champion International's oxygen delignification process reduces the color of the effluent, the
instream concentrations of BOD and TSS, and conductivity (NC DEHNR, 1994). The mill renovation
resulted in a 65 percent to 70 percent reduction in color discharged from the bleach plant (U.S. EPA, 1994).
Before the upgrade, BOD discharges from the mill averaged 4,500 pounds per day. In 1994, the mill
discharged 1,500 pounds per day, and the need to supplement the river with oxygen was greatly reduced (U.S.
EPA, 1994).
The North Carolina DEHNR used benthic macroinvertebrate information to assess the water quality
improvements due to the process changes at the Champion. Between 1988 and 1994, the measures of biotic
health improved at monitoring sites downstream of the mill, while remaining relatively constant at monitoring
6The higher concentrations in bottom feeding fish in the reservoir as compared to the river may
reflect a longer retention time of dioxin in the reservoir and the dependence of the fish in the reservoir on
these contaminated waters for their food supply (B. Tracey, North Carolina Department of Environmental
Management, personal communication, 1996).
9-41
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TABLE 9-15
AVERAGE FISH TISSUE DIOXIN CONCENTRATIONS IN THE
NORTH CAROLINA PORTION OF THE PIGEON RIVER1
Total TEQ
2,3,7,8-TCDD
2,3,7,8-TCDF
Bottom Feeding Group
1987
1988
1989
1990
1991
1992
1993
1994
1995
5.8
6.1
4.2
1.5
1.9
5.2
6.1
3.3
1.5
1.5
5.6
1.2
Middle Feeding Group
1987
1988
1989
1990
1991
1992
1993
1994
1995
10.2
0.7
0.3
0.1
0.2
9.9
0.7
0.1
0.1
0.1
Source: NC DEM, unpublished.
JNo data available for 1988, 1989, 1990, and 1992, and for 1993 and 1994 for 2,3,7,8-TCDD.
Based on 11 samples in the bottom feeding group and 18 samples in the middle feeding group.
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TABLE 9-16
AVERAGE FISH TISSUE DIOXIN CONCENTRATIONS IN THE
TENNESSEE PORTION OF THE PIGEON RIVER1
Total TEQ
Bottom Feeding Group
1988
1989
1990
1991
1992
1993
1994
1995
19.6
—
—
6.2
3.6
2.9
2.1
0.8
Middle Feeding Group
1988
1989
1990
1991
1992
1993
1994
1995
3.9
—
—
1.3
1.5
0.8
0.1
0.2
Predator Feeding Group
1988
1989
1990
1991
1992
1993
1994
1995
4.0
—
—
0.5
0.5
0.3
0.1
0.4
Source: TN DEC, unpublished.
JNo data available for 1989 and 1990. Based on 24 samples in the bottom feeding group, 25
samples in the middle feeding group, and 13 samples in the predator feeding group.
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sites above the mill. "A marked improvement in the biological integrity of the Pigeon River was noted at the
Hepco Bridge location (just above Waterville Reservoir) relative to a survey conducted there in 1988" (NC
DEHNR, 1994). As a result, the portions of river reach below the mill were upgraded from "Poor" or "Fair"
bioclassifications to "Fair" or "Good/Fair" bioclassifications. Given the consistently "Good"
bioclassifications above the mill, the modernization project at Champion International appears to have
improved water quality conditions on the Pigeon River (NC DEHNR, 1994). Tennessee has also seen
improvements in species diversity (G. Denton, Tennessee Water Pollution Control, personal communication,
1996).
9.2.4 Qualitative Assessment of Benefits
The modernization project resulted in aesthetic improvements in water quality and reductions in both
instream and fish tissue dioxin contamination. These improvements increase the opportunities for
recreational uses of the river such as boating, angling, and noncontact uses (wildlife viewing, picnicking).
This discussion includes benefits that are quantified, as well as other, qualitative benefits that are difficult to
value.
Recreational Boating
The increased use of the river for rafting, kayaking, and canoeing is the principal benefit of the
Champion mill modernization. The river downstream of the hydroelectric project has Class III and IV
Whitewater rapids, which are in high demand in the area.7 Many of the nearby controlled-release rivers with
7The International Standard for classifying the difficulty of rivers and rapids is as follows:
Class I: Easy. Waves small and regular.
Class II: Rapids of medium difficulty.
Class III: Waves numerous, high, irregular; rocks, narrow passages.
Class IV: Long rapids; powerful, irregular waves; dangerous rocks; boiling eddies.
Classes V & VI: Suitable for kayaks and decked canoes only. Not suitable for rubber rafts. (Wheat, 1983).
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comparable Whitewater opportunities, such as the Ocoee8 and the Nantahala, have significant overcrowding
problems. The Ocoee and the Nantahala rivers each had more than 180,000 users in 1992 (Manuel, 1993).
Boating activity on the Pigeon River increased because of both the water quality improvements
resulting from Champion International's modernization project and a newly implemented schedule of
predictable releases from the hydroelectric project, which is controlled by Carolina Power & Light Company.
Here the benefits associated with the increase in recreational boating will be attributed equally to both the
modernization project and the release schedule.
In the past, poor water quality was a significant deterrent to recreational boating on the Pigeon River.
Frequent water contact and occasional swimming occur during Whitewater rafting, kayaking, or canoeing, and
North Carolina's recreational rating of the river recommended that users avoid frequent immersion in the
Pigeon River.
In conjunction with Champion's efforts to improve the water, the Tennessee Wildlife Resources
Agency (TWRA) used the FERC licensing process to create a schedule of releases that would provide greater
certainty for users planning recreational activities on the river. During the 1994 boating season, Carolina
Power & Light voluntarily operated a toll-free telephone number that identified when releases would be
made; beginning in 1995, the hydroelectric project scheduled releases on a regular basis during the boating
season (FERC, 1994).
As a result of the water quality improvements and the availability of release information, recreational
boating use of the river increased from approximately 200 annual users in 1993 to 24,600 and 42,000 annual
users in 1994 and 1995, respectively. Recreational use of the river will increase to approximately 55,000 to
60,000 annual users in 1996 (P. Lucas, Carolina Power & Light Company, personal communication, 1996).
This estimate is conservative because it does not include rafting on a 10-mile stretch of river in North
Carolina that is considered a good "brown" (slow moving) water rafting run (Kask and Shogren, 1994).
8Site of the 1996 Olympic kayaking events.
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Recreational Angling
Because of its length and topography, the river reach below the Champion mill has the potential of
supporting significant smallmouth bass and redbreast sunfish fisheries (J. Borawa, North Carolina Wildlife
Resources Department, Boating and Inland Fisheries, personal communication, 1996). Unlike many of the
smallmouth bass fisheries in the area, much of the Pigeon River below the Champion mill is suitable for
wading or canoeing-based angling (J. Borawa, North Carolina Wildlife Resources Department, Boating and
Inland Fisheries, personal communication, 1996). In addition, the tributaries to the Pigeon River are trout
streams and, in periods of cool weather, trout can be found in the Pigeon River.
Angling activity increased after the lifting in August 1994 of the FCA on the North Carolina portion
of the river for all species except carp and catfish, and in January 1996 of the FCA on the Tennessee portion
of the river for all species except carp and catfish. The increased angling activity can be attributed to the
process changes at the Champion mill and, in the Tennessee portion of the river, the minimum flow
requirements in the Carolina Power & Light Company FERC license. In the Tennessee portion of the river,
fluctuation in flow is one of the dominant factors adversely influencing the structure of benthic communities
(EA Engineering, Science, and Technology, Inc., 1988).
Noncontact Recreational Activities
Improved aesthetic conditions of the Pigeon River may also increase noncontact use of the area. The
river has the potential to be an attractive recreational site with easy access from Interstate 40 and proximity to
the Pisgah National Forest and the Great Smoky Mountains National Park, which is the most frequently
visited national park in the country (I. McMann, Newport Tourism Department, personal communication,
1996). A National Park Service campground is located within 3.2 km of the major access point for boating
activities, just below the hydroelectric plant (Bach and Barnett, 1987).
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Ecological and Passive Use Benefits
The decreased concentrations of dioxin in plant effluent and in fish tissue most likely resulted in
reduced risks to piscivorous avian and mammalian species, and individuals may value this ecologic benefit
apart from any values associated with their direct or indirect use of the Pigeon River. Dioxin has been found
to pose a risk to aquatic-associated wildlife, and the most sensitive ecologically important endpoints for
mammals and birds are reproductive effects (U.S. EPA, 1993). Before the Champion modernization project,
dioxin concentrations in whole body fish samples from the Pigeon River were as high as 92.1 ppt (NC DEM,
unpublished).
Fish tissue concentrations at this level pose a high risk to both avian and mammalian piscivorous
species. For piscivorous avian species, consumption offish with dioxin concentrations above 6 ppt is low
risk, and consumption offish with concentrations above 60 ppt is high risk (U.S. EPA, 1993). For
piscivorous mammalian species, risks occur at much lower concentrations: above 0.7 ppt is low risk and
above 7 ppt is high risk (U.S. EPA, 1993).9
Piscivorous avian species in the area surrounding the Pigeon River include federally threatened and
endangered species such as the bald eagle (C. McGrath, North Carolina Wildlife Resources Commission,
Nongame & Endangered Wildlife Program, personal communication, 1996). In addition, two otters were
sighted below Waterville Reservoir after a project to reintroduce the otter in the area (J. Borawa, North
Carolina Wildlife Resources Department, Boating and Inland Fisheries, personal communication, 1996).
9.2.5 Quantitative Assessment of Benefits
The following analysis provides a quantitative assessment of those types of benefits that can be
readily valued in the case study area. The benefits are generally estimated as a range of values in order to
provide a credible estimate of potential benefits and to allow for an order of magnitude comparison to costs.
9The high bioaccumulation potential and toxicity of TCDD result in water concentrations of concern
that are below ordinary analytical detection limits; therefore, the effects of dioxin are often expressed in terms
of concentrations in the diet rather than environmental concentrations (U.S. EPA, 1993).
9-47
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Recreational Boating Benefits
In 1994 and 1995, Carolina Power & Light Company documented approximately 24,600 and 42,000
annual users of the river, respectively; this is in contrast to fewer than 200 annual users in previous years.
Additionally, based on use to date, Carolina Power & Light is estimating 55,000 to 60,000 users in 1996.
This dramatic increase in use has led to concern about overcrowding on the river. The Tennessee
Legislature passed a law in the 1995 session allowing Cocke County to issue permits for commercial
outfitters on the river. The legislation allows the county to control the use of the river and to prevent the type
of overcrowding problems that are common on other Tennessee Whitewater rivers such as the Ocoee (I.
McMann, Newport Department of Tourism, personal communication, 1996).
In addition, the TWRA has negotiated with other interested parties to ensure, through the
hydroelectric project's FERC license, that releases are scheduled to provide greater certainty for individuals
planning to use the river for recreational boating and to ensure that the number of scheduled releases increase
to accommodate greater use of the river. The FERC license requires that when the number of rafters and
boaters who use the Pigeon River exceeds 50,000 annually during the hours of scheduled releases, the
hydroelectric project will schedule a release during one additional weekday of each week (FERC, 1994). The
number of release days was negotiated between all interested parties to meet the varied demands on the river
(e.g., maintaining levels in Waterville Reservoir, alleviating overcrowding on the river).
The capacity of the launch site constrains the carrying capacity of the river for Whitewater recreation.
Based on the physical capacity of the launch site, the estimated carrying capacity of the Pigeon River is
approximately 288 users per hour (Kleinschmidt Associates, 1995). Using this estimate and the number of
hours of scheduled releases required by the plant's FERC license, the carrying capacity of the river is
calculated to be 110,392 annual users. The estimate of carrying capacity is based on four release days per
week, the maximum number of scheduled release days required by the current FERC license. This is a
conservative estimate because it does not account for releases that are not required by the FERC license but
are announced through the toll-free telephone line and that attract additional commercial and noncommercial
users. Carolina Power & Light estimates that in a typical year, they will be able to announce frequent
releases through their toll-free telephone number. For much of the 1995 season, the hydroelectric project was
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able to announce six scheduled release days per week (P. Lucas, Carolina Power & Light Company, personal
communication, 1996).
EPA developed two scenarios for the growth in recreational boating use of the river to provide a
range of estimated benefits associated with improvement in water quality. In the low growth scenario, use
increases at a 5 percent annual rate. This growth rate is moderate, reflecting local efforts to prevent
overcrowding; it is probably conservative in light of the increase in recreational activity from 1994 to 1996.
At a 5 percent rate of growth, total annual users will reach 109,985 in 2010. It is assumed that river use in
subsequent years will be limited to 110,392 by the carrying capacity of the river.
In the high growth scenario, use levels reach the carrying capacity of the river (110,392 annual
boating days) in three years (by 1999), and total annual users will be restricted to this level in subsequent
years.
Table 9-17 shows user day value estimates in the literature for nonmotorized boating. No studies on
North Carolina or Tennessee Whitewater rafting are available, and only one study in the southeastern part of
the United States was identified. A range of values from $20 to $34 is used to estimate benefits in this
analysis. This excludes the value from Bishop et al. (1989) and the value from Alabama Power Company
(1993). Bishop et al. (1989) may be considered a high-end estimate because of the unique character of the
Colorado River, and Alabama Power Company (1993) was not used because the activity occasion is valued
per hour rather than per trip.
Combining the use level pattern and the range of user day values ($21-$34) results in a range of
estimates for the value of recreational boating use of the Pigeon River over a 20 year period (Table 9-18).
Because it is unlikely that the estimated boating benefits would have occurred without both the improvement
in water quality and the certainty of sufficient water levels for recreation, these benefits are attributed 50
percent to the process changes at the mill and 50 percent to the scheduling of releases.
As shown in Table 9-18, estimated annual benefits attributable to the process changes at the mill in
1996 are between $0.58 million and $0.94 million. At peak capacity, annual recreational boating benefits
may be between $1.16 million and $1.88 million.
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TABLE 9-17
NONMOTORIZED BOATING STUDIES
Study
Bishop et al.
(1989)
Alabama Power
Co. (1993)
Rosenthal et al.
(1984)
Walsh et al.
(1990)
Location
Colorado R.
below Glen
Canyon Dam
Coosa R.,
Alabama
Upper
Delaware
River
U.S.
Type of
Boating
Commercial,
Whitewater
rafting
Whitewater
rafting
Kayaking and
canoeing
All types
Unit
Valued
Day
Hour
Day
Day
Mean Reported
Value1
$30.00(1985)
$6.19 2 (1993)
$13.68(1983)
$25.36 (1987)3
1995 Value1
$42.00
$6.52 2
$20.93
$34.02 3
Consumer surplus.
2A trip down the Pigeon River is approximately 1.5 hours (Big Pigeon River Council, personal
communication), which would imply a value of $9.29 (1993) or $9.78 (1995).
3Adjusted for different methodological and empirical approaches and study dates. The median is reported here
because of the notable difference between the mean and the median (suggesting that the frequency
distribution is skewed such that relatively few extremely high estimates substantially increase the mean).
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TABLE 9-18
BOATING BENEFIT ESTIMATES FOR THE PIGEON RIVER
Year
Growth in Users1
Stream of Annual Benefits2
Joint Benefits3
(Millions $1995)
Process Change
Benefits4
(Millions $1995)
Use Increase Based on River Counts
1994
1995
1996
24,400
41,800
55,550
$0.51-$0.83
$0.88-$1.42
$1.17-$1.89
$0.27-$0.41
$0.44-$0.71
$0.58-$0.94
Projected Use Increase
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
58,328-72,215
61,244-93,880
64,306-110,392
67,521-110,392
70,897-110,392
74,442-110,392
78,164-110,392
82,073-110,392
86,176-110,392
90,485-110,392
95,009-110,392
99,760-110,392
104,748-110,392
109,985-110,392
110,392
110,392
110,392
$1.22-$2.46
$1.29-$3.19
$1.35-$3.75
$1.42-$3.75
$1.49-$3.75
$1.56-$3.75
$1.64-$3.75
$1.72-$3.75
$1.81-$3.75
$1.90-$3.75
$2.00-$3.75
$2.01-$3.75
$2.20-$3.75
$2.31-$3.75
$2.32-$3.75
$2.32-$3.75
$2.32-$3.75
$0.61-$1.23
$0.64-$1.60
$0.68-$1.88
$0.71-$1.88
$0.74-$1.88
$0.78-$1.88
$0.82-$1.88
$0.86-$1.88
$0.90-$1.88
$0.95-$1.88
$1.00-$1.88
$1.05-$1.88
$1.10-$1.88
$1.15-$1.88
$1.16-$1.88
$1.16-$1.88
$1.16-$1.88
1 Range based on a low estimate of a 5% annual rate of growth capped at carrying capacity and a high
estimate of a 30% annual rate of growth capped at carrying capacity.
2Based on range of user day values $21-$34.
3Benefits due to both pulp and paper mill process changes and scheduling of dam releases.
4Pulp and paper process change benefits assumed to be 50% of total "joint" benefits.
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Recreational Angling Benefits
The water quality improvements in the Pigeon River have created new opportunities for recreational
angling in both the North Carolina and Tennessee portions of the river.
Angling on the North Carolina Portion of the River. It is estimated that lifting the fish
consumption advisory on the North Carolina portion of the Pigeon River for all species offish except carp
and catfish affected approximately 21.8 river miles and the 340 acres of Waterville Reservoir (the bypass for
the Carolina Power & Light Company's hydroelectric project not included )(NC DEHNR, undated). No
studies of angler use have been completed since the lifting of the advisory.
The demand for freshwater fishing in North Carolina appears to be high. The 1990 North Carolina
Anglers Opinion Survey reported that 26 percent of respondents indicated that crowding limited the quality of
their fishing experience, and 23 percent indicated that "too few places to fish" limited the quality of their
experience (NCWRC, 1993).
No historical studies of angler activity on the Pigeon River are available. However, because of the
documented degradation of the fish population and the advisory against consumption of all Pigeon River fish,
it is estimated that the angling effort on the river before the lifting of the advisory was insignificant. Because
there are no applicable data to indicate the current (or future) use levels on these river miles, EPA used
recreation planning standards for Georgia to estimate the potential number of angler days on the North
Carolina portion of the Pigeon River. The river reach in North Carolina below the Champion mill and above
Waterville Reservoir would optimally support 191,339 angler days per year, and Waterville Reservoir would
optimally support 28,900 angler days per year.10 Because planning standards estimate angler use days based
on use at peak capacity, the optimal number of angler days is a high end estimate of use. Therefore, EPA
uses a conservative estimate of actual use to account for less than peak demand of the fishing site (i.e., due to
angler concerns about fish toxicity, limited access, or use of alternative sites). If actual angling effort on the
Pigeon River after the partial lifting of the FCA would be 10 percent to 40 percent of the estimated optimal
10These use estimates are based on the Georgia Outdoor Recreation Assessment and Policy Plan's
(1984) planning standards, which estimate a carrying capacity of 8,777 fishing trips per mile per year for cold
water fishing in rivers and 85 fishing trips per acre per year warm water fishing in lakes and reservoir
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number of users per year, the estimated range of additional angler use associated with the Champion mill
modernization would be between 22,024 and 88,096 user days per year.
Table 9-5 shows estimated values for warm water fishing from the literature that may be appropriate
for valuing fishing from the Pigeon River. These studies primarily address locations in the southeastern part
of the United States. In addition to the values for warm water recreational fishing represented in Table 9-5,
Whitehead (1991) estimated the value for fishing on the Tar-Palmico River in North Carolina to be $16.
These studies show very similar values per day, and suggest a range of $21-$31 for warm water fishing in the
North Carolina portion of the Pigeon River [this range reflects Palm and Malvestuto's (1983) study of
Alabama on the low end, and Walsh et al. (1990) on the high end]. Applying these unit values to the
potential use of the river for fishing, angling benefits associated with the process changes at the Champion
mill are estimated to be between $0.46 million and $2.73 million per year.
An analysis of the current trend in fish tissue dioxin data indicates that concentrations in carp and
catfish may drop below the action level of 3 ppt in the near future. If the FCA for carp and catfish is lifted
and the angler effort at that time increases to between 25 percent and 55 percent of optimal use, then the
estimated range of additional angler use on the North Carolina portion of the Pigeon River associated with the
Champion mill modernization will increase to between 55,060 and 121,131 user days per year, and estimated
annual benefits would increase to between $1.16 and $3.76 million.
Angling on the Tennessee Portion of the River. The precautionary advisory still in effect after
January 1996 for carp, catfish, and redbreast sunfish advises individuals to limit consumption of these
species to 1.2 pounds per month (TN DEC, 1996). Because of improvements in species diversity and other
ecological indicators, fishing opportunities have already improved, and Cocke County officials submitted a
request to the Tennessee Wildlife Resources Agency to consider stocking the river with trout (G. Denton,
Tennessee Water Pollution Control, personal communication, 1996). Again, these improvements can be
attributed to both the improvements in water quality and the minimum flow requirements.
Lifting the FCA affected approximately 25.9 river miles (EA Engineering, Science, and Technology,
Inc., 1988). Applying Georgia's recreational planning standards to estimate the potential number of angler
days on the Tennessee portion of the Pigeon River indicates that the river reach would optimally support
227,324 anglers per year. The angling effort is assumed to be less than optimal due to limitations in access
9-53
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(there are approximately 5 miles of Whitewater descending through a scenic gorge between the dam and
Hartford, Tennessee) and a relatively small population base from which to draw anglers. If it is assumed that
actual angling effort on the Tennessee portion of the Pigeon River increased to between 10 percent and 40
percent of optimal use, then the estimated range of additional anglers will be between 22,732 and 90,930
users per year, and annual benefits are estimated to be between $0.48 million and $2.82 million (based on a
value of $21-$31 for a day of warm water fishing). Because it is unlikely that the estimated angling benefits
to the Tennessee portion of the river would have occurred without both the water quality improvement and
the certainty of sufficient water levels, these benefits are attributed 50 percent to the process changes at the
mill and 50 percent to the scheduling of releases. Therefore, the angling benefits in Tennessee attributable to
the process changes at the Champion mill are estimated to be between $0.24 million and $1.41 million per
year.
If the FCA for carp, catfish, and redbreasted sunfish is lifted in the future and angler effort then
increases to between 25 percent and 55 percent of optimal use, the estimated range of additional angler use on
the Tennessee portion of the Pigeon River will increase to between 56,831 and 125,028 users per year, and
estimated annual benefits will increase to between $1.19 million and $3.88 million. The angling benefits for
the Tennessee portion of the Pigeon River attributable to the process changes at the Champion mill would be
between $0.60 million and $1.94 million per year.
Passive Use or Ecological Benefits
As noted earlier, Fisher and Raucher (1984) estimate that passive use benefits are generally half as
large as recreational fishing benefits. Using a 50 percent approximation suggests that the potential
magnitude of passive use values associated with improvements in water quality and partial removal of the
FCAs on the Pigeon River is between $0.35 million and $2.07 million per year. With complete removal of
the FCAs in the future, these estimated benefits would increase to between $0.88 million and $2.85 million
per year.
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9.2.6 Summary of Water-Related Benefits
Table 9-19 provides a summary of the estimated benefits from implementation of process changes at
the Champion International mill on the Pigeon River. Table 9-20 describes key omissions, biases, and
uncertainties in the estimation of benefits. Because the direction of many of these uncertainties is unknown,
the overall impact on the estimated benefits is unknown.
9.2.7 Distributional Impacts
Benefits may also accrue to local economies through secondary spending impacts. Secondary
benefits may be of interest to policy makers because of distributional impacts. As shown below, the town of
Newport, Tennessee, a relatively low-income community for the region, is expected to benefit substantially
from water quality improvements in the Pigeon River.
Business opportunities related to boating, lodging, dining, and other retail may be significant in
Newport. The town has a tourism plan centered on the renewed recreational opportunities on the Pigeon
River, and recently hired a tourism director. Local economic stimulation (secondary) benefits are generated
when there is an increase in expenditures by visitors from outside the region, and an increase in expenditures
made by local residents, which without the water quality improvements would have gone to other areas. A
portion of this increase in expenditures for goods and services will remain in the area and generate additional
or secondary employment and income benefits for the region.
The Pigeon River is likely to draw many Whitewater recreational visitors from outside the region. A
recent study of five Whitewater recreation areas across the country indicated that 71 percent to 95 percent of
commercial Whitewater rafters were from out of state (English and Bowker, 1996). Since unemployment in
Cocke County averaged 11.4 percent in 1993 and 11.6 percent over the past five years, well above the
national average of 6.7 percent in 1993 and 6.5 percent over the past five years, secondary impacts could be
substantial (Newport/Cocke County Economic Development Commission, personal communication, 1996;
U.S. Bureau of the Census, 1995). Thus, nonresident expenditures are likely to yield real net gains in local
income and employment.
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TABLE 9-19
ANNUAL MONETIZED RETROSPECTIVE BENEFITS OF THE CHAMPION
INTERNATIONAL MILL PROCESS CHANGES
(Millions of 1995 Dollars)
Benefits Category
Boating
Recreational Angling
Noncontact Recreation
Ecological and Passive Use2
Total
1996
$0.6-$0.9
$0.7-$4.1
+
$0.4-$2.1
$1.7-$7.1+
Future Years1
$1.2-$1.9
$1.845.7
+
$0.942.9
$3.9410.5+
+ Positive benefits expected but not estimated.
1 Annual value estimated based on boating use at peak capacity and full lifting of FCAs.
2Based on a range across the estimates from both approaches applied.
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TABLE 9-20
KEY OMISSIONS, BIASES, AND UNCERTAINTIES IN THE
BENEFIT-COST ANALYSIS FOR THE PIGEON RIVER
Omissions/Biases/
Uncertainties
Direction of Impact on
Benefit/Cost Estimates
Comments
The estimation of benefits by
category omitted some
categories (e.g., wildlife
viewing, picnicking, and
swimming or wading).
The omission of potential benefit
categories will cause benefits to
be underestimated.
Insufficient data and information
to evaluate the potential
magnitude of these benefits.
Benefits were estimated using
benefits transfer.
It is unknown what bias the
selected studies have on benefits.
Studies of the southeast U.S.
were used if available.
Transferred values are supported
by a number of studies.
Boating benefits in future
years were estimated based on
two scenarios of growth in
boating use.
It is unknown what bias the
growth scenarios have on
benefits.
The use of both a low and a high
growth scenario provides a range
of potential benefits.
Increased angling was
estimated based on planning
standards.
It is unknown what bias the
estimates of increased angling
effort have on benefits.
No studies on angler use since the
mill implemented process
changes are available.
One approach used to estimate
passive use values is based on
recreational angling values.
It is unknown what bias
estimating passive use values
based on recreational angling
values has on benefits.
The uncertainties in estimating
recreational angling benefits are
inherent in the estimation of
passive use benefits in this
manner.
One approach used estimates
passive use values as 50% of
recreational angling benefits.
Passive use benefits may be
underestimated.
The ratio of passive use values to
use values may be as high as 2.0
or greater (Sanders et al., 1990;
Sutherland and Walsh, 1985).
Overall Impact on Benefits
Estimates
The direction of bias of many of
the uncertainties is unknown.
+ Potential overestimate.
Potential underestimate.
? Uncertain impact.
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Secondary spending impacts are measured by multipliers derived from economic models. Estimates
of income multipliers for tourism-related industry in small, rural regions of Tennessee are typically low, in the
range of 1.1 to 2.0 (M. Murray, University of Tennessee; J. Gonzalez, Tennessee Valley Authority, personal
communication, 1996). A study of the economic impact of commercial river outfitters indicates that typical
income multipliers in economies with river recreation rafting are between 2.1 for the Chattooga in Georgia
and South Carolina and 2.4 for the Kennebec in Maine (English and Bowker, 1996).n Both rivers offer
challenging trips to a regional audience.
EPA used the income multipliers from the English and Bowker study to estimate local income gains
resulting from water quality improvements on the Pigeon River. The three locations studied by English and
Bowker that are most similar to the Pigeon River in terms of the challenge of the Whitewater, length of trip,
and ease of access are the Nantahala, the Kennebec, and the Chattooga. A review of the results for these
three rivers indicates that the direct income impact per person is between $24 and $88. Updating these values
to 1995 dollars results in an estimated direct expenditure per person of between $26 and $96. This
represents the direct income impacts from spending for the trip to the river and within the state where the
river outfitter is located. It does not include expenditures made while visiting other sites on the same trip
(English and Bowker, 1996).
Nonresidential commercial use of the Pigeon River can be estimated by multiplying the proportion of
nonresidential outfitter use on the three comparable rivers (74 percent; English and Bowker, 1996) by the
total outfitter use on the Pigeon River (Kleinschmidt Associates, 1995). This approach results in an estimate
of 37,000 annual nonresident commercial users in 1996 and 73,500 at peak capacity. Applying the values for
direct expenditures to the estimated annual number of nonresident commercial user days, annual direct
expenditures associated with Whitewater recreation on the Pigeon River in 1996 will be between $1.0 million
and $3.6 million. When the river reaches its carrying capacity, it is estimated that annual direct expenditures
will be between $1.9 million and $7.1 million.
Applying a range of income multipliers estimated for the Nantahala, Chattooga, and Kennebec
Rivers [(2.1 to 2.4) English and Bowker, 1996] to the anticipated level of use on the Pigeon River results in
1 Response rates for the surveys about trip length, number of other sites visited, group demographics,
and expenditures ranged from about 45 percent for the Middle Fork of the Snake River to about 25 percent
on the Nantahala River (English and Bowker, 1996).
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an estimated income effect of $2.1 million to $8.6 million in 1996, and $4.0 million to $17.0 million at peak
capacity.
9.2.8 Air Benefits
Table 9-21 presents the estimated emission reductions and air-related benefits of the selected options
for the Champion mill on the Pigeon River. The Champion mill is in an area with the potential to violate the
current or newly promulgated ozone standards. Therefore, EPA estimated that VOC emissions would be
reduced by 2,200 Mg/yr under both the low and high end estimates of emission reductions (for location
without a potential violation of the ozone standards, EPA estimates a range of VOC emission reductions with
the upper bound set at zero). Annual air-related benefits for MACTI range from a disbenefit of $5.8 million
to a benefit of $5.7 million under Option A and from a disbenefit of $5.5 million to a benefit of $5.7 under
Option B. Benefits of the proposed MACT II standard resulting from particulate matter reductions are valued
at $2.1 million per year.
9.2.9 Comparison of Benefits to Costs
Retrospective Benefits and Costs
Table 9-22 provides a summary of the retrospective benefits from the process changes at the
Champion mill, and the estimated cost of these controls. The mill currently corresponds quite closely to
Option B of the final pulp and paper regulation, and has gone beyond what is required in Option A.
Additional benefits and costs for air controls, and any additional upgrades for water treatment to meet the
regulatory options, are described below.
Benefits and Costs Comparable to the Regulation
The benefits and costs in Table 9-22 reflect effluent controls that are more stringent than required
under Option A, but similar to Option B. Therefore, the total annualized costs that would correspond to
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TABLE 9-21
POTENTIAL ANNUAL AIR-RELATED BENEFITS OF THE SELECTED OPTIONS
FOR THE CHAMPION MILL ON THE PIGEON RIVER
Regulatory Option
Option A and MACT I
VOC
Participate Matter
SO2
TOTAL Monetized Benefits
Option A and MACT II
Participate Matter
Option B and MACT I
VOC
Participate Matter
SO2
TOTAL Monetized Benefits
Option B and MACT II
Particulate Matter
Emission Reductions
(Mg/yr)
2,200
(0.04)2
(559)2-0
NA
165
2,200
(0.04)2
(536)2-0
NA
165
Annual Value1
(Millions of $1995)
$1.3-$5.7
$03
($7.0)-$0
($5.8)-$5.7
$2.1
$1.3 -$5.7
($0)3
($6.7)-$0
($5.5)-$5.7
$2.1
1 Benefits may not add due to rounding.
2 Numbers in parentheses represent emissions increases and related increased social costs.
3 Disbenefits of $505 per year.
NA = Not applicable.
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TABLE 9-22
ANNUAL MONETIZED BENEFITS AND COSTS OF THE PROCESS CHANGES
AT THE CHAMPION INTERNATIONAL MILL ON THE PIGEON RIVER
(Millions of 1995 Dollars)
Annual Monetized Benefits Associated with Water
Quality Improvements1
Annualized Costs for Mill Upgrade2
Annual Value
in 1996
$1.7-$7.1 +
$7.3
Annual Value
Future Years
$3.9-$10.5 +
$7.3
+ Positive benefits expected but not estimated.
Includes boating and recreational angling benefits associated with an increase in participation, and ecological
and passive use benefits.
2Based on annualized present value of pretax compliance costs, reflecting a 7% real discount rate and a 16
year accounting period.
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Option A are less than what has already been spent for upgrades at the mill, and the total annualized costs
that would correspond to Option B are only slightly more than what has already been spent.
Costs and benefits of the regulation that are not shown in Table 9-22 relate to air controls. Table 9-
23 shows the estimated costs and benefits for both water and air controls (any air-related costs and benefits
associated with upgrades implemented in the early 1990s not estimated).
Benefits and Costs for Option B. The only additional costs that the mill will incur for compliance
with Option B are for effluent monitoring ($610,000 in capital costs and $200,000 in annual operating costs)
(ERG, 1996a). Therefore, the benefits estimated for the retrospective case study represent the benefits to be
expected under Option B.
Benefits and Costs for Option A. The mill exceeded Option A by installing oxygen delignification
in both fiber lines. Consequently, the benefits and costs estimated above and associated with oxygen
delignification cannot be attributed to Option A. EPA estimated that to upgrade from the pre-1990 status to
Option A, the mill would incur capital costs of approximately $22.6 million, and operating costs at the mill
would increase by approximately $3.4 million per year for an annualized total cost of $5.8 million per year
(W. Grome, ERG, personal communication, 1996).
Under the final rule, both options are expected to result in lifting of the FCA associated with the
Champion mill (U.S. EPA, 1997). Therefore, the estimated recreational angling and passive use benefits,
which are based on lifting of the FCA, are the same for both Option A and Option B.
To estimate the proportion of boating benefits attributable to Option A and Option B, EPA used the
national-level estimates of the reductions in color expected for all kraft mills under the two options.12 For
kraft mills, the reductions in color under Option A are estimated to be 8 percent of the reductions in color
under Option B (ERG, 1996b). Based on reports from rafting companies, on-site color is a determinant of
boating quality. EPA assumed there is a linear relationship between color and boating benefits. However,
changes in color may not fully explain boating improvements. For example, the Champion mill
modernization virtually eliminated toxic discharges which may have kept people from using the river. Option
12Color is a major contributor to the achieved boating benefits.
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TABLE 9-23
ANNUAL MONETIZED BENEFITS AND COSTS COMPARABLE
TO THE FINAL PULP AND PAPER REGULATION FOR THE PIGEON RIVER1
(Millions of 1995 Dollars)
Benefits and Costs
Annual Monetized Benefits
Water2
Air3 (MACT I)
Air (MACT II)
Water and MACT I
Water, MACT I, and MACT II
Annualized Costs4
Water
Water and MACT I7
Water, MACT I, and MACT II7
Compliance with
Option A
$2.7-$8.7
($5.8)-$5.7
$2.1
($3.1)-$14.4
($1.0)-$16.5
$5.85
$6.7
$7.1
Compliance with
Option B
$3.9-$10.5
($5.5)-$5.7
$2.1
($1.6)-$16.2
$0.5-$18.3
$7.66
$8.5
$8.9
Option A is the Agency's selected option.
2Steady state benefit levels omitting nonmonetizable benefits and based on future years when benefits of past
improvements in water quality are fully realized.
3Estimated air benefits do not include any benefits that may have occurred as a result of past upgrades.
4Based on annualized pretax compliance costs, reflecting a 7% real discount rate and a 16 year accounting
period.
5Estimated cost to upgrade from pre-1990 status to compliance with Option A.
6Cost of controls already implemented plus additional cost for effluent monitoring.
Includes retrospective costs and forthcoming costs. Estimated air costs do not include any costs for air
controls that may have been incurred in past upgrades.
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A would also eliminate these discharges. These differences should be interpreted as the maximum potential
value of Option B compared to Option A. Applying this percentage to the 50 percent of boating benefits
estimated under Option B results in estimated annual boating benefits under Option A of $0.09 to $0.15
million in future years. Adding these boating benefits to the estimates shown above for the other benefit
categories results in estimated total benefits attributable to Option A of between $2.7 and $8.7 million per
year.
9.2.10 Conclusions
In the early 1990s, the Champion International mill on the Pigeon River initiated a large
modernization project, including installation of oxygen delignification and chlorine dioxide substitution to
100 percent. The process changes at the mill currently exceed those that would be required under either
Option A or Option B. Therefore, in this case study the water-related benefits that may be illustrative of the
benefits of the rule may be somewhat less than the benefits already achieved. EPA estimates that the total
annual benefits for the Pigeon River range from a disbenefit of $1.0 million to a benefit of $16.5 million
under the selected regulatory options (Option A, final MACT I, and proposed MACTII Alternative A). This
range of monetized benefits does not include all benefit categories (e.g., wildlife viewing, picnicking, and
swimming or wading). Associated annualized costs are estimated to be $7.1 million.
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9.3 UPPER COLUMBIA RIVER/LAKE ROOSEVELT CASE STUDY
The Celgar Pulp Mill, a Canadian bleached kraft pulp and paper mill, is located on the Columbia
River just north of the U.S. border. Studies initiated in 1988 found high concentrations of dioxins in fish
tissue below the mill and as far downstream as Lake Roosevelt, Washington. Fish consumption advisories
and the perceived taste and odor of captured fish discouraged fishing in the vicinity of the mill. Although the
mill is not the sole source of water quality problems on the river, it may have been a major deterrent in the
development of a world-class trout fishery.
The Celgar mill began implementing process changes to reduce dioxin concentrations in its effluent
in 1988, and modernization of the mill was completed in 1993. Although the mill is not subject to EPA
effluent limitations, the water quality improvements and resulting benefits of the modernization illustrate the
water quality benefits that may accrue throughout the United States from the final rule. This case study
provides monetary estimates of those benefits (to the extent feasible) for comparison to available cost
estimates.
9.3.1 Description of the Site
The Celgar Pulp Mill is about 50 miles upstream from the U.S. border (Figure 9-5). The town of
Castlegar, British Columbia (population 7,400), is just below the mill, and the remainder of the river stretch
to the border flows through primarily forested area. This stretch is one of the few remaining free-flowing
stretches of the river. Just below the U.S. border, the river flows into Lake Roosevelt, a 151-mile-long
reservoir in northeastern Washington formed by the construction of Grand Coulee Dam in 1941 (Serdar,
1993). The lake is bounded by the Colville and Spokane Indian Reservations and Douglas, Ferry, Stevens,
Lincoln, and Okanogan counties.
Both the Columbia River stretch and Lake Roosevelt provide water-based recreation opportunities in
a region that has few other large water bodies. Local residents enjoy the Upper Columbia River, which
supported an estimated 150,000 visitor days in 1991 (Portland Interagency Team, 1994). Furthermore, given
its natural conditions and large instream flows, it is potentially a world-class trout fishery (G. Mallette,
Frasier Basin Management Program, personal communication, 1995; F. Mah, Environment Canada, personal
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Figure 9-5
Upper Columbia River and Lake Roosevelt Case Study Area
Oi
Oi
30
I
60
_J KM
SCALE
AREA OF DETAIL-
BRITISH COLUMBIA
IDAHO
Lower Arrow iako
BRITISH COLUMBIA
Castlegar
Trail B
Caminco Smeller
HughKeenlyside
Dam
Celgar Pulp
MSI
WASHINGTON
Kefl/p River
Northporl
\
Keltle Falls
Colvllle River
'Chief Joseph
Dam
Grand Coulee
Dam
Seven Bays
Spokane
-------
communication, 1995). Lake Roosevelt is one of the largest reservoirs in the United States, supporting
considerable recreational activity levels for local and destination recreators.
The Portland Interagency Team (1994) estimates total visitor days to Lake Roosevelt to be almost
1.8 million in 1993. The Columbia River system is also an important source of water and hydropower in the
region.
9.3.2 Water Quality Issues
The mill's effluent originally contained a number of contaminants that affected water quality in the
Columbia River, including BOD, liquor, adsorbable organic halogens (AOX), and polychlorinated dioxins
(PCDD) and furans (PCDF). Beginning in 1988, studies conducted by the British Columbia Ministry of
Environment, Celgar Pulp Mill, Washington State Department of Ecology, and others found high
concentrations of 2,3,7,8-tetrachlorodibenzo-p-dioxin (TCDD) in sediments and fish tissue directly below the
mill. They also detected other PCDD and PCDF congeners. Early studies showed dioxin toxic equivalent
measurements (TEQs) were the highest in lake whitefish and mountain whitefish.13 Environment Canada
(1988, as cited in Serdar, 1993) reported TEQs for lake whitefish ranging from 71.3 ppt to 101.3 ppt;
Crozier (1990, as cited in Serdar, 1993) found concentrations in mountain whitefish ranging from 5.5 ppt to
30.4 ppt.
Additional studies confirmed the elevated concentrations in Canadian fisheries, and detected elevated
concentrations in Lake Roosevelt fisheries. In 1990, lake whitefish TEQs were between 9.0 ppt and 17.7 ppt
in the upper portion of the lake (Kettle Falls); TEQs in rainbow trout at Northport ranged from 3.2 ppt to 6.3
ppt; and TEQs in white sturgeon in the Kettle Falls area ranged from 8.0 ppt to 24.8 ppt (Johnson et al.,
1991, as cited in Serdar, 1993).
13The toxicity of individual PCDD and PCDF congeners is described relative to the toxicity of
TCDD, the most toxic of the PCDD congeners, in terms of toxicity equivalency factors (TEFs) (WDOH,
1991; Serder, 1993). TCDF has a TEF of 0.1, which means that it is estimated to be l/10th as toxic as
TCDD (Barnes et al., 1989, as cited in WDOH, 1991). TEFs are then added together to derive the TCDD
toxicity equivalent measurement (TEQ) (WDOH, 1991).
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Fish Consumption Advisories
The dioxin levels in lake and mountain whitefish led to Canadian consumption advisories in 1989
and 1990, which were reissued in 1992 (Jolly and Leckrone, 1993). Canadian consumption advisories are
based on Health and Welfare Canada's legal limit of 20 ppt TCDD, applied to TEQs, and B.C. Ministry of
Environment's more restrictive limit of 11.4 ppt TEQ (Kirkpatrick, 1989, as cited in Serdar, 1993). The
advisories for the Columbia River recommended limiting consumption of mountain whitefish caught in the
vicinity of the Hugh Keenleyside Dam to the American border to one meal (7 oz) per week (B.C.
Environment Ministry of Health, 1995). Consumption of lake whitefish was advised to be limited to 1.4 oz
per week (B.C. Environment Ministry of Health, undated).
The State of Washington Department of Health (WDOH) issued an advisory in 1990 suggesting that
young children should not eat lake whitefish from Lake Roosevelt. However, WDOH revised the warning in
1991 to advise that children and adults could eat fish but should follow several steps to reduce exposure,
including removing fat and skin from fish before eating; allowing fat to drip off during cooking; using smaller
fish, which are less contaminated; reducing the size of portions consumed; and reducing the number offish
meals consumed per month (WDOH, 1991).14
Aesthetic Impacts
BOD discharges from the mill did not adversely affect downstream dissolved oxygen levels because
the river flows were usually very high (i.e., averaging 40,000 cfs) (Celgar Pulp Company, 1995). However,
BOD discharges caused a layer of scum to form on top of the river, which discouraged water contact
recreation activities (G. Mallette, Frasier Basin Management Program, personal communication, 1995).
Furthermore, discharges of black liquor into the river produced a visible plume of discolored water
downstream. This discoloration, coupled with an odor, also discouraged recreation on the river downstream
from the mill.
14The Washington Department of Health's position regarding the health risk of consuming fish from
Lake Roosevelt was based on its conclusion that the toxicity equivalent factor for dioxin of 0.1 may be too
high (stating that a value of 0.03 to 0.05 should be considered) and because of uncertainties regarding
adverse effects (WDOH, 1991).
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Other Water Quality Issues
Factors other than the Celgar mill also affect the Columbia River and Lake Roosevelt. High
concentrations of lead, zinc, cadmium, and mercury have been found in sediments and fish in the Upper
Columbia River and Lake Roosevelt. The primary source is believed to be the Cominco Ltd. lead/zinc
smelter located in Trail, British Columbia, which discharged an average of 360 metric tons per day of slag
into the Columbia River (Serdar, 1993). Smelter discharges were discontinued in 1995. Other potential
sources of the metals are the mining operations in the Coeur d'Alene basin (Serdar, 1993).
The hydroelectric dams located along the Upper Columbia River in both Canada and the United
States also affect the river and lake. The Hugh Keenleyside Dam is located a few miles upstream from the
pulp mill in British Columbia. Discharges from the dam affect instream flows in the Canadian portion of the
Upper Columbia River. For example, low dam releases in July 1991 dewatered downstream spawning beds,
after which the Canadian government instituted minimum flow requirements (G. Mallette, Frasier Basin
Management Program, personal communication, 1995). Similarly, Grand Coulee Dam in northeastern
Washington regulates the pool elevation and water retention time in Lake Roosevelt.
9.3.3 Improvements at the Mill
The Celgar Pulp Mill was built in 1961 to produce fully bleached kraft pulp from softwood chips
generated by sawmills throughout the southwestern Canada and northwestern U.S. region. The original mill
produced up to 560 air-dry tonnes per day (Adt/d), and from 1961 until 1991 discharged minimally treated
effluent into the Columbia River; existing treatment primarily controlled particulates and fiber content in the
effluent.
Between 1989 and 1991, process changes instituted at the original mill to reduce PCDD/PCDF
concentrations in the effluent included the following (Serdar, 1993):
• stopped using defoamers that contain PCDD/PCDF precursors
• substituted partial (20 percent-40 percent) chlorine dioxide for chlorine in the bleaching
process
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• began using high shear mixers in the chlorination stages
• used hydrogen peroxide in the delignification process.
The process changes greatly reduced TCDF discharges to the river by 1992, and TCDD discharges
remained below the measurable concentration prescribed by the Canadian government (Celgar Pulp
Company, 1993).
In 1993, a new mill roughly doubled output by increasing production capacity to 1,200 Adt/d. The
modernization cost an estimated $700 million (Canadian dollars) and incorporated recently adopted
provincial and federal regulations pertaining to effluent treatment and air emission controls. Thus, despite the
production increase, regional water and air quality improved markedly since the new mill began production in
mid-1993.
Process upgrades at the new mill include (Celgar Pulp Company, 1995):
• extended cooking and oxygen delignification of pulp
• 70 percent-100 percent chlorine dioxide substitution for chlorine in bleaching process
• chemical and fiber spill diversion to spill ponds
• secondary (biological) treatment of mill effluent.
As a result of these upgrades, no TCDD or TCDF has been detected in the new mill's effluent since
operations began. These upgrades are roughly equivalent to EPA's BAT/PSES Option B, which would have
required 100 percent chlorine dioxide substitution and spent liquor controls.
Improvements in Fish Tissue Dioxin Levels
Data for lake and mountain whitefish show that TCDD/TCDF levels in fish tissue below the mill
declined following the process changes. This downward trend is shown in Table 9-24. As a result of the
lower concentrations found below the mill in 1994, Canadian authorities removed the consumption advisory
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TABLE 9-24
TCDD TEQ FISH TISSUE CONCENTRATIONS
OF COLUMBIA RIVER MOUNTAIN WHITEFISH, 1989-1994
Celgar Discharge Area
Upstream from Trail, B.C. 5
Colville River Area
1989
12.7 1
—
1990
23.9 2
22.2 6
14.5 w
1991
50.8 7
—
1992
10.3 8
6.9 n
1993
73
—
1994
5.5 4
3.3 9
2.5 12
Average of 5 BCMOE samples (BCMOE, 1990, as cited in Sedar, 1993).
2Average of 9 Celgar and BCMOE samples (E.V.S. Consultants, Ltd., 1990 and Crozier, 1991, as cited in
Serdar, 1993).
3Average of 6 BCMOE samples (Liebe et al, 1994).
4One Celgar sample (Axys Analytical Services, Ltd., 1994).
5From Genelle to Murphy Creek.
6Average of 7 BCMOE samples (Crozier, 1991, as cited in Serdar, 1993).
'Average of 6 Department of Fisheries and Oceans samples (Boyles et al., 1992, as cited in Serdar, 1993).
8Average of 14 Department of Fisheries and Oceans samples (Liebe et al., 1994).
9One Celgar sample (AXYS Analytical Services, Ltd., 1994).
10Average of 6 Washington Department of Ecology samples (Johnson et al, 1991, as cited in Serdar, 1993).
"Average of 6 Washington Department of Ecology samples (Serdar et al., 1993, as cited in Serdar, 1993).
12Average of 21 U.S. EPA samples (Tetra Tech, 1995).
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for mountain whitefish in March 1995 (B.C. Environment Ministry of Health, 1995). The Washington
Department of Health recommendations on whitefish consumption for Lake Roosevelt are still in force.
Other Improvements
Because of biological treatment, average daily loads of BOD declined from 15-20 tonnes per day to
less than the permit level of 6 tonnes per day (Celgar Pulp Company, 1995). As a result, the scum often
found downstream from the mill disappeared. AOX loads declined from about 3 kg/tonne to less than 0.5
kg/tonne; the permit monthly average is 1.5 kg/tonne (Celgar Pulp Company, 1995). Discharges of
suspended solids also changed. The lime mud and fiber discharges from the old mill caused a fiber mat to
form on the river bed downstream from the mill. "Bugs" or biological solids from the biological treatment
process, which tend to remain suspended and be consumed in the river as part of the food chain, replaced
these effluent constituents, and the fiber mat disappeared.
9.3.4 Assessment of Benefits
The reduced instream and fish tissue dioxin concentrations along with the other water quality
improvements (e.g., aesthetic) from the process changes most likely resulted in benefits to recreational
anglers and consumers of fish caught downstream from the mill. In addition, benefits probably accrued to
nonconsumptive users and nonusers of the Upper Columbia River and Lake Roosevelt. This section derives
monetary estimates of benefits to the extent feasible given limited data availability. The water quality
benefits from Celgar's upgrades may indicate the potential benefits at similar sites in the United States as a
result of the effluent limitation guidelines. The Celgar mill would fall between Options A and B; although it
has not achieved 100 percent substitution, it has installed oxygen delignification.
Recreational Angling Benefits
The recreational resources of the Upper Columbia River are unique in the Columbia River Basin, and
include a unique sport fishery (Portland Interagency Team, 1994). The Upper Columbia reach is one of the
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last large river habitats with abundant rainbow trout in western North America (Mallette, 1992, as cited in
Portland Interagency Team, 1994). It is a potentially world-class trout fishery. However, pollution from the
pulp mill (and from the smelter farther downstream) prevented recreation development, and local residents
accounted for most of the past recreation use. Thus, a potentially large benefit of process changes at the pulp
mill is the future development of this river segment as a destination fishery, which includes primary recreation
benefits and secondary benefits of regional economic growth.15
Benefits may also accrue to recreational anglers who use Lake Roosevelt. Important target species in
the lake are rainbow trout, walleye, kokanee, and sturgeon (Peone et al., 1990). Less important species are
the lake and mountain whitefish species affected by the consumption advisories. However, given the
importance of the Lake Roosevelt fishery, even small changes in fishing effort may produce substantial
benefits. Furthermore, anecdotal evidence indicates that health concerns led to less fishing effort for the more
popular sportfishing species in the area (the Upper Columbia River), which showed concentrations below
advisory limits (G. Mallette, Frasier Basin Management Program, personal communication, 1995). The
potential magnitude of recreational angling benefits for the Upper Columbia River and Lake Roosevelt is
estimated below.
Recreational Angling Benefits for the Upper Columbia River. As mentioned above, the segment
of the river below the mill is a potentially world-class trout and walleye fishery, comparable to the Kootenai
River in northwestern Montana. The relevant segment of the Kootenai River is downstream from Libby
Dam, which developed into a rainbow trout fishery with success rates similar to the top blue-ribbon streams
in Montana (Portland Interagency Team, 1994). The Kootenai River is in a forested, sparsely populated
region similar to the Upper Columbia River, but it is a popular fishing site . Creel census data indicate 33,000
visitor days to the Kootenai River downstream from Libby Dam in 1989 (Portland Interagency Team, 1994).
The 33,000 angler days for the popular Kootenai River compare to the 6,811-14,850 angler days
estimated for the Upper Columbia River (ARA Consulting Group, Inc., 1992; Portland Interagency Team,
15Secondary benefits are typically not considered in a national benefits analysis because they often
represent a transfer or redistribution of resources rather than real economic gains or losses. Secondary
benefits are not estimated here.
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1994).16 If reduced contaminant levels on the Columbia River result in the development of a destination
fishery, fishing effort might reasonably be expected to double from current levels.17 Valuing the additional
days by the range of estimated consumer surplus per trip for the Kootenai River of between $52 and $79
(Duffield, 1990; updated to 1995 dollars)18 results in benefits of between $0.35 million and $1.17 million per
year. Annual benefits in earlier years would be less as the fishery develops.
The estimated benefits for the Upper Columbia River may be conservative in that they do not
account for increased satisfaction from the fishing experience for current anglers. A 1991 telephone survey
of area anglers found that not only had approximately one-third of anglers (including 15 percent of anglers
currently fishing the Columbia River) reduced their frequency of fishing the Columbia River due to pollution
concerns, but approximately 50 percent of Columbia River anglers refused to eat or restricted their
consumption offish caught in the river (ARA Consulting Group Inc., 1992). The Celgar Pulp Mill was cited
by approximately 62 percent of Columbia River anglers as the industrial development or source of pollution
that most affected their fishing activity. Thus, the reduced contaminant levels may result in an added value of
current trips that may be substantial.
There are no similar findings to those of Lyke (1993) for Great Lakes trout and salmon anglers
(described in Section 9.2). However, Lyke's estimates suggest that the increased value of a "contaminant-
free" fishery to current anglers may be between $39,000 and $364,000. EPA obtained this range by first
valuing the 6,811 to 14,850 current angling days by a range of estimated consumer surplus per trip for the
Kootenai River of $52 to $79 (Duffield, 1990; updated to 1995 dollars), and then multiplying by 11 percent
to 31 percent.
16Pertains to activity on the Upper Columbia from the northern tip of Lake Roosevelt to Hugh
Keenleyside Dam, which is just above the Celgar mill (Portland Interagency Team, 1994).
17This level of increased use (from 6,811-14,850 days to 13,622-29,700 days) places the lower end
estimate below the current upper end estimate, and results in a high end estimate that is below the use on the
Kootenai River. This estimate appears reasonable since the Upper Columbia River may suffer from lingering
perception problems regarding contamination from the mill.
18The lower end of the range reflects estimation using the contingent valuation method, and the upper
end of the range reflects the results of a travel cost model.
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Approximately 60 percent of the angling effort on the Upper Columbia River occurs between the mill
and Trail, the location of the Cominco smelter (ARA Consulting Group, 1992). Since the improvements at
the Celgar mill resulted in a lifting of B.C. 's fish consumption advisory, the mill may be credited with
achieving the "contaminant free" status on this stretch of the river. The mill may also be credited with
approximately 50 percent of the benefits associated with achieving a contaminant-free fishery on the stretch
of the Upper Columbia River below Trail, which accounts for the remaining 40 percent of angling effort.
This is because two advisories affected this river segment, only one of which was lifted as a result of
improvements at the mill; a second advisory for mercury is associated with discharges from the smelter.
Therefore, the mill may be attributed with benefits to current anglers of between $31,000 to $291,000 per
year.19
Recreational Benefits for Lake Roosevelt. Lake Roosevelt is an important recreational resource.
In 1990, anglers made an estimated 171,765 fishing trips to the lake (Griffith and Scholz, 1990). Important
species in terms of total annual harvest on the lake in 1990 included rainbow trout, walleye, kokanee salmon,
yellow perch, and smallmouth bass. In comparison, the more contaminated lake whitefish comprise less than
one-tenth of one percent of total catch (Peone et al., 1990). Nonetheless, as mentioned above, there is some
indication that concerns over contamination caused reduced effort for the popular sport species in the Upper
Columbia River. Thus, the reduced contaminant levels are likely to increase effort on Lake Roosevelt as well
as increase satisfaction from the fishing experience.
Because there were no consumption advisories issued for target species in Lake Roosevelt, the
change in angler effort may be small. However, even a small increase in fishing effort can have sizable
benefits because of the importance of the fishery. For example, a 1 percent to 5 percent increase in angler
trips would result in an additional 1,718 to 8,588 trips per year. Valuing these trips by a range of estimated
consumer surplus per trip for the Kootenai River at between $52 and $79 (Duffield, 1990; updated to 1995
dollars) results in annual benefits of between $89,000 and $678,000.
19The calculation for the low end of the range is equal to the estimated increased value for a
contaminant free fishery for the stretch of river between the mill and the Cominco smelter, which is
approximately 60 percent of the total estimated value, plus half of the value for the remaining 40 percent of
the river use [(0.60 x $39,000) + 0.5(0.40 x $39,000)]. The same calculation was used to develop the high
end of the range [(0.60 x $364,000) + 0.5(0.40 x $364,000)]. The range in values reflects different
estimation techniques.
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Finally, concerns have been raised about the viability of the white sturgeon fishery in Lake
Roosevelt. White sturgeon are important target species for sport anglers; approximately 11 percent of fishing
effort in 1990 was targeted at sturgeon (Griffith and Scholz, 1990). However, fishing restrictions have
gradually moved toward the current requirement of strict catch-and-release fishing (B. Merritt, National Park
Service, personal communication, 1995). Existing pressures on the fishery include habitat changes (e.g.,
dams) and over-harvesting. Average dioxin and furan TEQs of 17 ppt were found in white sturgeon in the
upper portion of Lake Roosevelt in 1990 (Johnson et al., 1991, as cited in Serdar, 1993). Although reduced
dioxin levels in sturgeon may have recreational benefits, because the sturgeon population are constrained by
the dams and overfishing. EPA did not estimate sturgeon-related recreational benefits.
Recreational Boating Benefits
The Columbia River downstream from the Celgar mill provides one of the few accessible river
boating opportunities in the Upper Columbia Basin (Portland Interagency Team, 1994). Boating is also
popular on Lake Roosevelt. Numerous facilities around the lake support boating, including facilities operated
by the Colville and Spokane tribes. Houseboat rentals are increasingly popular on Lake Roosevelt, as is
boating upstream from the lake to the reservoirs in Canada.
The scum on the Columbia River directly below the mill discouraged all types of boating activity in
that area. Since its disappearance, and the concurrent improvement in air quality near the mill, anecdotal
evidence suggests that boating activity has increased (G. Mallette, Frasier Basin Management Program,
personal communication, 1995). It is not clear that the pulp mill's effluent has had an appreciable effect on
pleasure boating activities on Lake Roosevelt. However, anecdotal evidence reveals that recreators canceled
reservations for houseboats operated by the Colville Tribe following announcements of elevated
concentrations of dioxins and furans in fish (G. Pismire, Environmental Trust, personal communication,
1995). These boats are primarily used for pleasure boating rather than fishing. Data on the potential increase
in nonfishing boating days for the Upper Columbia River and Lake Roosevelt are not available; therefore,
boating benefits are quantified here.
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Noncomumptive Use Benefits
Sightseeing and picnicking are the most popular form of near-stream recreation use of the Upper
Columbia River area (Portland Interagency Team, 1994). Visitors made approximately 119,150 trips for
picnicking and sightseeing (including from vehicles) to the area in 1991 (Portland Interagency Team, 1994).
Nonconsumptive use of Lake Roosevelt is greater. For example, based on total visitation and historical
breakdowns of visitation by activity, visitors took approximately 443,700 trips for picnicking near Lake
Roosevelt.20 This activity level does not include nonconsumptive activities such as wildlife viewing that are
not conducted along with picnicking.
Reduced toxicity and aesthetic improvements (including air quality) from the pulp and paper mill
should result in nonconsumptive recreation benefits. Cleaner and clearer water, changes in the perceptions of
contamination, the removal of FCAs, and improved aesthetics all can be expected to yield benefits on the
Upper Columbia. Additionally, many studies have shown that fishing and nonconsumptive recreational trips
are taken together, and decisions about what sites to visit are made jointly, depending on how attractive sites
are for both types of recreation. Individuals who participate in nature viewing might accompany anglers on a
fishing trip, but do not fish themselves. For example, the Montana study (Morey et al., 1995) described in
Section 9.2 suggests that, generally, increases in nonconsumptive recreational trips would accompany
increases in fishing trips to a site.
The percentage increase in nonconsumptive recreation trips from reduced toxicity in the Upper
Columbia River and Lake Roosevelt is expected to be smaller than the percentage increase in recreational
angling trips because of the direct effect of the removal of FCAs on angler trip-taking behavior and the
potential development of a world-class fishery on the Upper Columbia. If non-consumptive trips increase
20This results from the multiplication of the 5-year average total visitation to Grand Coulee/Lake
Roosevelt (1837.94 thousand days) by the proportion of 50-year average picnicking activity to 50-year
average total recreation days (283393.1/1173994.7) for a base case operating strategy for the dam. The data
are from Portland Interagency Team (1994).
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commensurately,21 the air and water quality improvements results in an additional 1,706 to 4,688
nonconsumptive recreation days each year on the Upper Columbia River and Lake Roosevelt.
Table 9-25 shows nonconsumptive recreation studies from the literature that may be appropriate for
valuing nonconsumptive recreation in Washington. These studies focus on the northwestern United States,
and reflect values in the range of $20-$40 per day [omitting the high end estimate in Butkay (1989)].
Valuing the 1,706 to 4,688 additional days by a range of estimated consumer surplus per day for
nonconsumptive recreational activity of $20-$40 results in incremental nonconsumptive recreation benefits
from water and air quality improvements of $34,000 to $188,000 per year.
Human Health Benefits
The process changes at the Celgar mill led to significant decreases in dioxin levels in fish tissues.
These reductions benefit Upper Columbia River and Lake Roosevelt anglers who consume fish caught
downstream from the mill by reducing their risk of dioxin-related health effects. This section describes the
data and assumptions used to estimate the cancer risk reduction benefits that accrued in the case study area as
a result of the lower fish tissue dioxin concentrations. The methodology employed below assumes that the
pre-process change levels of dioxin in fish tissue would have continued without the controls.
Exposed Population. The exposed population estimates come from creel census data and recreation
survey data from several sources. The estimated population exposed to Upper Columbia River fish (from
Celgar to the border) was 1,061 [6,811 angler days/13.3 days per angler x 2.9 persons per household/1.4
anglers per household (ARA Consulting Group, 1992)]. The estimated population exposed to Lake
Roosevelt fish was 80,199 (171,765 angler days/5.6 days per angler * 2.6 persons per household/1 angler per
household). These reflect Griffith and Scholz's (1990) estimate of angling days and data on days per angler,
persons per household, and anglers per household reported in Hagler Bailly (1995).
21Non-consumptive trip increases are estimated by multiplying the 0.2 ratio from the Montana study
by the estimated increase in fishing trips (8,529 to 23,438 days, for both the Upper Columbia and Lake
Roosevelt.
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TABLE 9-25
NONCONSUMPTIVE RECREATION STUDIES
Study
Butkay (1989)
Hay (1988)
McCollum
etal. (1990)
Wade et al.
(1989)
Walsh et al.
(1990)
Location
Bitterroot River, Montana
Washington
Oregon and Washington
Reservoirs, lakes, and river
delta areas, California
All U.S.
Unit Valued
User day
User day
User day
User day
User day
Reported Values1
$89.00 ($1989)
$20.00 ($1985)
$14.20 ($1990)
$16-$29($1985)
$22.20 ($1987)2
1995 Value1
$109.38
$28.33
$19.74
$22.66-$41.07
$29.782
Consumer surplus.
2Adjusted for different methodological and empirical approaches and study dates.
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Angler Fish Consumption. No studies offish consumption rates among Upper Columbia River and
Lake Roosevelt anglers are currently available. The State of Washington is conducting a consumption survey
for Lake Roosevelt; however, results will not be available until the end of 1996. Because of the lack of case
study site-specific information, lower and upper bound estimates [20.0 and 58.7 grams per person per day
(gpd), respectively] come from the available literature. EPA (1989a) reports estimated consumption for sport
fishing populations of 20 gpd. A survey offish consumption among Native Americans fishing the Lower
Columbia River found an average fish consumption rate for adults of 58.7 gpd (Columbia River Intertribal
Fish Commission, 1994).
Fish Tissue Dioxin Levels. Health risks were calculated based on exposure to 2,3,7,8-TCDD. Fish
tissue contamination data for the Upper Columbia River came from Serdar (1993) and Celgar (Axys
Analytical Services, Ltd., 1994). The average 2,3,7,8-TCDD TEQ level in fillet samples in 1990 (the
baseline year) was 17.1 ppt. This average value includes the values measured in 57 samples collected from
the Celgar discharge area to the border, with nondetects set equal to one-half the detection limit. Following
the process changes implemented by the mill, the average 2,3,7,8-TCDD TEQ level in fillet samples from
1994 was 2.3 ppt. The 1994 average value represents a 87 percent reduction from the 1990 average, and
includes two samples from the discharge area and two samples taken just upstream from the city of Trail,
with nondetects set equal to one-half the detection limit.
Fish tissue contamination data for Lake Roosevelt came from Serdar (1993) and EPA (Tetra Tech,
1995). For Lake Roosevelt, the average 2,3,7,8-TCDD TEQ level in 1990 fillet samples was 7.1 ppt. This
average includes 44 Washington Department of Ecology samples from the Northport area to the Seven Bays
area (as cited in Serdar, 1993). Following the process changes, the average 2,3,7,8-TCDD TEQ level in fillet
samples from 1994 was 1.1 ppt. The 1994 average value represents a 85 percent reduction from the 1990
average, and includes 99 samples from the upper, middle, and lower sections of the lake with nondetects set
equal to one-half the detection limit.
Other Exposure Assumptions. Standard EPA assumptions were used regarding length of residence
(70 years) and body weight (70 kilograms) (U.S. EPA, 1989b).
Estimated Risk Reduction Benefits. The estimates of risk reduction benefits resulting from the
process changes at the Celgar mill assume that dioxin levels in fish downstream from the mill are entirely
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attributable to the mill. Appendix C provides the benefits calculations. The observed 87 percent reduction in
fish tissue dioxin levels in fish from the Upper Columbia River is estimated to reduce excess cancer cases
among area anglers and their families by between 0.010 and 0.028 cases per year. Based on the estimated
value of a statistical life of $2.5 million to $9.0 million (American Lung Association, 1995), this reduction in
cancer cases represents annual benefits from the process changes of between $24,083 and $254,464. For
Lake Roosevelt, the observed 85 percent reduction in fish tissue dioxin levels would reduce excess cancer
cases among anglers and their families by between 0.294 and 0.862 cases per year. Valuing these reductions
using the value of a statistical life results in annual benefits of between $734,577 and $7.76 million.
Combined health risk reduction benefits for the Upper Columbia River and Lake Roosevelt range from $0.8
million to $8.0 million per year and, based on the bounding estimates of consumption utilized, should be
considered lower and upper bounds on potential benefits.
Uncertainties in the Estimation of Risk. There are numerous sources of uncertainties in the
estimate of baseline risks, and in the estimated reduction in risks from implementation of the regulation.
Variations in health risks may occur, depending upon the factors described in Section 9.1.6.
Passive Use Benefits
Passive use values reflect the values individuals place on reducing toxic concentrations in the Upper
Columbia River and Lake Roosevelt apart from any values associated with their direct or indirect use of the
resource. The reduced concentrations of dioxin in fish near the mills have potential implications for reducing
the risk to piscivorous wildlife. In addition, the contamination of fishery resources in Lake Roosevelt may
have affected cultural values among the Native American tribes in the region.
There are no studies of the passive use values associated with reducing the levels of dioxin in the
Upper Columbia River and Lake Roosevelt. Using Fisher and Raucher's (1984) 50 percent approach (see
Section 9.1.6) implies passive use values from the process controls of between $235,000 and $1.07 million
per year.
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9.3.5 Summary of Benefits
Table 9-26 provides a summary of the estimated benefits. Annual monetized benefits range from
$1.5 million to $11.5 million. Table 9-27 lists key omissions, biases, and uncertainties in the estimation of
benefits. Because the direction of bias of many of these uncertainties is unknown, the overall impact on the
benefits estimates is unknown.
9.3.6 Comparison of Benefits and Costs
The total costs associated with upgrading the old mill to comply with Option A should be compared
to the portion of benefits estimated above that would have resulted from implementation of Option A.
However, the costs of upgrading the old mill are unavailable. Therefore, the average cost for bleached
papergrade kraft mills is used to provide a rough comparison of the costs and benefits associated with the
final rule. EPA estimates that the average cost for bleached papergrade kraft mills to upgrade to Option A is
$11.5 million in capital and an increase of approximately $1.3 million in annual O&M for an annualized cost
of $3.0 million. For Option B, EPA estimates that the average cost is $25.3 million in capital and $24,000 in
annual O&M for an annualized cost of $3.7 million22 (W. Grome, ERG, personal communication, 1996).
The benefits estimated above reflect improvements resulting from the construction of the new mill,
which corresponds more closely to Option B. Therefore, the benefits should be compared to the cost of
Option B. Table 9-28 shows the benefits and costs for the case study that are comparable to Option B of the
current rulemaking. It is not possible to estimate the benefits for the case study that are comparable to
Option A.
Finally, the costs and benefits of the cluster rule will also reflect MACTI and MACTII technologies.
The mill modernization included reductions in air emissions, reportedly resulting in dramatic improvements in
air quality. The costs and benefit of these improvements, and their similarity to MACT I and MACT II
controls, were not estimated.
22Annualized cost includes GAC at 4 percent of annual capital cost.
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TABLE 9-26
ANNUAL MONETIZED RETROSPECTIVE BENEFITS FOR THE UPPER COLUMBIA RIVER
AND LAKE ROOSEVELT
(Millions of 1995 Dollars)
Benefit Category
Recreational Angling
*• Upper Columbia River Destination Fishery1
— New anglers
— Current anglers
*• Lake Roosevelt
*• Lake Roosevelt White Sturgeon Fishery
Recreational Boating
*• Upper Columbia River
*• Lake Roosevelt
Nonconsumptive Use
Human Health2
Passive Use
Total Monetized Benefits
Annual Benefits
$0.4-$1.2
$0.0-$0.4
$0.140.7
+
+
+
$0.040.2
$0.848.0
$0.241.1
$1.5411.6
1 Annual benefits in early years will be less as the development of the fishery occurs.
2Lower and upper bound benefits estimates.
+ Positive benefits expected but not estimated.
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TABLE 9-27
KEY OMISSIONS, BIASES, AND UNCERTAINTIES IN THE
BENEFITS ANALYSIS FOR
THE UPPER COLUMBIA RIVER AND LAKE ROOSEVELT
Omissions/Biases/
Uncertainties
Direction of Impact on
Benefit/Cost Estimates
Comments
The estimation of benefits by
category omitted some categories
(e.g., the Lake Roosevelt white
sturgeon fishery, recreational
boating).
The omission of potential benefit
categories will cause benefits to be
underestimated.
Insufficient data and information to
evaluate the potential magnitude of
these benefits.
Benefits were estimated using
benefits transfer.
It is unknown what bias the selected
studies have on benefits.
Studies of the northwest U.S. were
used if available. Transferred values
are supported by a number of
studies.
The increase in nonconsumptive
benefits was estimated based a
ratio of nonconsumptive
recreational use to recreational
angling use.
It is unknown what bias estimating
nonconsumptive use based on
recreational angling use has on
benefits.
The uncertainties in estimating
recreational angling benefits are
inherent in the estimation of
nonconsumptive benefits in this
manner.
The estimation of human health
benefits assumes all cancers are
fatal.
Assuming all cancers are fatal may
cause an overestimate of benefits.
The "statistical value of a life" may
not be appropriate for cancers that
are survived for a number of years.
Human health benefits are based
on fish consumption estimates from
available literature, rather than
case study-specific estimates.
It is unknown what bias the use of
estimates from the literature has on
benefits.
Case study-specific estimates for fish
consumption are not available.
Passive use values are based on
recreational angling values.
It is unknown what bias estimating
passive use values based on
recreational angling values has on
benefits.
The uncertainties in estimating
recreational angling benefits are
inherent in the estimation of passive
use benefits in this manner.
Passive use values are estimated as
50% of recreational angling
benefits.
Passive use benefits may be
underestimated.
The ratio of passive use values to use
values may be as high as 2.0 or
greater (Sanders et al, 1990;
Sutherland and Walsh, 1985).
Overall Impact on Benefits
Estimates
The direction of bias of many of the
uncertainties is unknown.
+ Potential overestimate.
Potential underestimate.
? Uncertain impact.
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TABLE 9-28
ANNUAL MONETIZED BENEFITS AND COSTS COMPARABLE TO
THE WATER CONTROLS OF THE FINAL PULP AND PAPER REGULATION
FOR THE UPPER COLUMBIA RIVER AND LAKE ROOSEVELT1
(Millions of 1995 Dollars)
Annual Monetized Benefits Associated with Water
Quality Improvements2
Annualized Costs Associated with Water Controls3
Compliance with
Option A
NE
$3.0
Compliance with
Option B
$1.5-$11.6
$3.7
NE = Not estimated
Option A is the Agency's selected option.
2Steady state benefit levels omitting nonmonetizable benefits.
3Based on annualized pretax compliance costs, reflecting a 7% real discount rate and a 16 year accounting
period. Estimated average cost for U.S. bleached papergrade kraft mills.
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9.3.7 Conclusions
A major modernization of the Celgar mill was undertaken in the early 1990s, and resulted in
essentially a new mill on the old site with doubled capacity and a modern effluent treatment system. The
process technology includes extended cooking, a closed screen room, oxygen delignification, and ECF
bleaching. The estimated water-related benefits of this modernization are approximately $1.5 million to
$11.6 million per year. These benefits most likely illustrate the benefits of Option B; air-related benefits
were not estimated. The corresponding costs of these improvements cannot be accurately discerned because
of the increased capacity developed at the mill concurrent to modernizing the effluent treatment system.
However, the average cost for bleached papergrade kraft mills does provide a rough comparison of the costs
and benefits associated with the final rule. The estimated average cost for bleached papergrade kraft mills to
comply with Option B is $3.7 million per year.
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9.4 SAMOA PENINSULA CASE STUDY
The Louisiana-Pacific Corporation Samoa mill is a bleached kraft mill on the Samoa Peninsula near
the city of Eureka, California (see Figure 9-6). The mill was constructed in 1964 and, until recently, it used
conventional chlorine bleaching technologies. Until 1993, the Simpson Paper Company also operated a mill
located on the peninsula. Both mills discharged effluent to the Pacific Ocean; beginning in 1987, NPDES
permits regulated these discharges.
In the past, surfers and other people recreating in the waters surrounding the Samoa Peninsula
frequently complained about the foul odor, foam, and discoloration caused by the mill discharges. In 1989,
EPA and the Surfrider Foundation filed a Clean Water Act (CWA) enforcement action against the mills. In
1993, the Simpson Paper mill closed and stopped discharging to the Pacific Ocean. In contrast, the
Louisiana-Pacific mill installed an oxygen delignification system in 1989, stopped using chlorine in January
1994, and recently began taking steps to recycle 100 percent of bleach plant wastewater. As a result, the
pollution from the mill effluent has been sharply reduced and the quality of the ocean waters has improved.
This case study provides estimates of the benefits realized from the process changes at the Louisiana-
Pacific mill, and compares these benefits to the potential benefits associated with the rulemaking. The
process changes implemented by Louisiana-Pacific exceed what will be required under either Option A or
Option B. As a result, the case study illustrates the potential for benefits and the potential costs of
implementing totally chlorine free (TCP) technology. In the notice of availability for the cluster rule (July
1996), EPA strongly encouraged further development and implementation of TCP technologies and products
and indicated the intent to provide regulatory incentives for mills to adopt TCP and closed cycle processes.
9.4.1 Water Quality Issues near the Samoa Peninsula
In the late 1980s, pulp and paper mill discharges to the Pacific Ocean caused concern about potential
adverse health and ecological effects from dioxin contamination. However, the primary water quality concern
associated with the Samoa Peninsula pulp and paper mills has been the degradation of aesthetic quality and
the consequent effect on recreational use of the Peninsula beach areas.
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Figure 9-6
Map of the Samoa Peninsula in Hum boldt County, California
t
N
Pacific Ocean
Towers
North Jetty
Outside
Louisiana-Pact fie
Outfall
Fairhaven T
Simpson Paper
Outfall
Legend
A - Bleached Kraft
Paper Mills
1000
Scale in meters
2000
9-S
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In September 1990, concern over dioxin concentrations in the water led the California Department of
Health Services to issue a health consumption advisory for fish and shellfish taken from the discharge region
surrounding the Samoa Peninsula. The advisory was based on findings released by EPA, which indicated
significant dioxin contamination of fish near pulp mills. California issued this advisory as a prudent public
health action since there was little data on seafood taken from the area around the Samoa Peninsula. The
state lifted the advisory in 1994 after monitoring results from 1992, 1993, and 1994 indicated that the levels
of dioxin in fish and seafood taken from the waters surrounding the Samoa Peninsula were not significantly
above background levels (Fan, 1994).
Although the dioxin concentrations found in seafood did not pose a threat to human health, there
were significant concerns about the chronic toxicity of the mill effluent to aquatic organisms. A study to
identify the constituents of the mills' wastewater that contributed to chronic toxicity found that the very high
molecular weight polar compounds accounted for most of the toxicity to sea urchin cells. The study also
found that the relatively nonpolar methylene chloride and acetonitrile fractions, which contain resin and fatty
acids as well as low molecular weight chlorinated organic compounds, accounted for minor amounts of
toxicity to sea urchin cells (Beveridge and Diamond, PC, 1988).
Also, comments made during the NPDES permitting process illustrated the extent of citizen
complaints regarding the foul odor and discoloration of the mill effluent discharges. These comments also
contended that the mill effluent caused eye and skin irritation and nausea (HSU, 1988).
In response to these comments, EPA and the North Coast Regional Water Quality Control Board
(NCRWQB) included provisions in the 301(m) permits for the mills requiring a Recreational Activity Impact
Assessment Program (RAIAP) (HSU, 1988). The RAIAP presented substantial evidence that the aesthetic
condition of the waters and beaches of the peninsula were degraded, that surfers experienced more adverse
health effects at the peninsula than at other surfing locations, and that some users perceived a health risk from
contact with the waters or consumption offish and shellfish from the area (HSU, 1988). Specifically, the
recreational study found that:
37 percent of individuals surveyed noticed unusually colored foam, unusual floating debris,
unusually colored water, or a strange taste to the water
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19 percent of the respondents indicated that these conditions decreased their enjoyment of
their visit
17 percent of the respondents avoided the Samoa Peninsula (or portions of the area) during
some of the year
35 percent of individuals interviewed at nearby beaches avoided the Samoa Peninsula for
aesthetic or health related reasons
of the respondents participating in diving, kayaking, skimboarding, surfing, and swimming,
62 percent reported health effects at some time in the past that they attributed to recreating
at the Samoa Peninsula; eye irritation and nausea were the most common reported
symptoms.
This recreational study played an important role in determining the appropriate pulp mill
modifications to address water quality concerns on the Samoa Peninsula.
9.4.2 Modernization of the Louisiana-Pacific Samoa Pulp Mill
The Louisiana-Pacific mill made capital improvements throughout its period of operation. However,
the mill started a major modernization of the plant in response to the CWA enforcement action. In 1989, the
mill installed an oxygen delignification unit. In 1994, the mill stopped using chlorine and chlorine containing
compounds in the bleaching process,23 and recently started to take steps to recycle 100 percent of bleach plant
wastewater (Jaegel and Girard, 1995).
Using totally chlorine free (TCP) bleaching in 1994 made the Samoa mill the first North American
kraft pulp mill to permanently produce bleached pulp without the use of chlorine or chlorine containing
compounds. The TCP bleaching process uses hydrogen peroxide and oxygen (Jaegel and Girard, 1995).
The mill is also one of the leaders in developing closed cycle bleaching in North America. Louisiana-
Pacific was awarded $650,000 through the U.S. Department of Energy and EPA National Industrial
Competitiveness through Energy, Environment and Economics program for research on closed cycle
23After the mill implemented oxygen delignification and converted to TCP, and the water quality
improved, the mill extended its outfall. The extension of the outfall was completed in December 1994.
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processing (Girard and Jaegel, 1996). In May 1995, the mill demonstrated 100 percent recycling of all
alkaline peroxide bleaching wastewater. In May 1996, the mill installed an advanced green liquor filtration
system to increase the capture and purge capability of other nonprocess elements, and it is running a series of
full scale mill trials through 1996 (Girard and Jaegel, 1996).
The corrosivity of residual chlorine compounds in the wastewater limits the potential to recycle
bleaching wastewater. However, the noncorrosive chemistry of TCP bleaching chemicals and the similarity
of pH and temperature conditions in bleaching stages make it easier to recycle bleaching wastewater. Other
key technologies enabling high recycling rates are:
• extended digester cooking
• improved brownstock washing
• closed pulp screening
• oxygen delignification
• high efficiency recovery boiler
• advanced green liquor filtration.
The Louisiana-Pacific mill reduced the volume of effluent discharged into the Pacific Ocean from
approximately 20 million gallons of untreated pulp effluent per day to approximately 1.1 million gallons of
effluent treated to reduce the color, conventional pollutants, and chronic toxicity. (The closure of the
Simpson Paper mill reduced the total volume of effluent discharged into the Pacific Ocean by roughly 20
million gallons per day.)
EPA estimated that the upgrade cost approximately $50.0 million in capital costs and increased
annual operating costs by a net amount of approximately $1.0 million (1995 dollars; ERG, 1996a). This
includes an estimated24 $30 million for oxygen delignification capital costs and screen room closure (a $2
24EPA's estimates differ from actual Samoa mill costs, but are based on an average mill in the Samoa
mill's circumstances. EPA's estimates for oxygen delignification costs overstate the Samoa mill costs by
(continued...)
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million savings in O&M costs) plus an estimated $20 million capital cost for installation of TCP bleaching (a
$3 million increase in O&M costs) The mill's upgrades exceed Options A and B because of the oxygen
delignification and the reduced effluent discharges because of eliminating chlorine dioxide and recycling a
high proportion of bleaching effluents.
Costs Avoided due to TCF Bleaching
As a result of the TCF process and the high levels of wastewater recycling, the Louisiana-Pacific mill
has been able to achieve significant offsetting cost savings associated with (Girard and Jaegel, 1996):
• secondary wastewater treatment and solid waste disposal costs (or costs of regulatory
exemption to these requirements)
• more efficient bleaching chemical use
• conservation of energy
• conservation of water.
Although the Louisiana-Pacific mill has not monetized all of its cost savings, one of the reasons it
implemented the change was its expectation that "long-term process economy would be achieved by
preventing the generation of waste and recycling energy, water and chemicals back into the process instead of
discharging them as waste products" (Girard and Jaegel, 1996). As of mid-1996, the mill reduced its
freshwater consumption by 15 percent (3 million gallons per day), reduced bleach plant energy consumption
by 50 percent (1.7 megawatts a year), and reduced its solid waste stream to green liquor dregs and lime grit
that are being beneficially used as an agricultural liming agent and municipal landfill cover (Girard and
Jaegel, 1996).
Additionally, the mill had previously been operating under a variance to the technologically based
effluent limitations that it obtained because the mill discharges to the Pacific Ocean and is located in a
sensitive coastal dune habitat, which limits expansion of the mill facilities. The costs associated with this
24(...continued)
about $8 million.
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exemption (monitoring costs and a research and development fee imposed as a condition of the exemption)
were approximately $0.68 million annually (A. Jaegel, Louisiana-Pacific mill, personal communication,
1996). As a result of the process changes at the mill, these costs are no longer being incurred (Girard and
Jaegel, 1996).
9.4.3 Water Quality Improvements
Using oxygen delignification and TCP bleaching significantly improved the quality of the mill's
wastewater discharges. The process changes reduced concentrations of dioxin, furans, and AOX in the mill's
effluent to below detection levels, and also reduced the chronic toxicity of the effluent as measured by early
life stage marine organisms in a laboratory setting (Jaegel and Girard, 1995). Oxygen delignification reduced
whole effluent color by about 40 percent, and other process changes that reduced discharges resulted in an
additional 82 percent reduction in color (Jaegel and Girard, 1995). The volume of the mill's effluent was
reduced from approximately 20 million gallons per day to about 1.1 million gallons per day, and BOD and
COD loadings were also reduced (Jaegel and Girard, 1995). These improvements have decreased the
deleterious effects on the aesthetic quality of the Pacific Ocean waters near the mill and peninsula.
9.4.4 Qualitative Assessment of Benefits
The following discussion provides an assessment of changes in uses of the Samoa Peninsula
attributable to both the process changes at the Louisiana-Pacific mill and the closure of the Simpson mill.
EPA divided the benefits estimated in this section equally between the two mills because the mills each
historically discharged approximately 20 million gallons per day of untreated mill effluent, both mills would
have faced similar process controls, and the improvement in the effluent from the Louisiana-Pacific mill
improved water quality to the point that it does not apparently diminish recreational enjoyment significantly.
Aesthetic improvements in water quality increased the quality of recreational uses such as
beachwalking, wildlife viewing, and surfing. In addition, benefits likely accrued to nonusers of the Samoa
Peninsula. This discussion includes both quantitative benefits as well as qualitative benefits that are difficult
to value.
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Recreational Activities at the Samoa Peninsula
In 1989, the Bureau of Land Management received a state grant for $250,000 from the Off Highway
Vehicle (OHV) program to develop 300 acres on the Samoa Peninsula for OHV use (B. Cann, Bureau of
Land Management, Samoa Dunes Recreation Area, personal communication, 1996). The project area
encompassed most of the public access areas of the Samoa Peninsula. The grant funded removing junk and
debris, repairing roads, developing a parking lot for trailers, installing restroom and picnic facilities,
developing a scenic overlook, and protecting threatened plants and wetlands (B. Cann, Bureau of Land
Management, Samoa Dunes Recreation Area, personal communication, 1996).
Thus, users of the Samoa Peninsula benefited from both improved water quality and improved
recreational facilities. The final section below comparing costs and benefits apportions the benefits between
the process changes at the mill and the development of the recreation area.
The number of visits to the beaches of the peninsula increased significantly after the water quality
improved and the recreational area was developed. In 1988. There were 40,827 total visitor days to the
affected regions of the Samoa Peninsula (Towers, Fairhaven T, and the North Jetty). In 1993, visitor use at
the newly developed Samoa Dunes Recreation Area increased to 175,000 and has remained at this level since
then (BLM, unpublished). The 300 acre Samoa Dunes Recreation Area encompasses the entire North Jetty,
but does not include the Towers and the Fairhaven T; therefore, visitor use counts underestimate the total
number of visitors to affected areas. No visitor estimates for the beach areas outside of the Samoa Dunes
Recreation Area are available; however, it is unlikely that these beaches attract some recreational users
because they do not allow OHVs.
The change in recreational use of the North Jetty of the Samoa Peninsula is described below in terms
of (1) increased use and improved quality of the recreational experience for surfers, and (2) increased use and
improved quality of the recreational experience for all types of beach activities.
Recreational Surfing. The aesthetic and toxicity improvements in the Pacific Ocean waters off of
the Samoa Peninsula have contributed to an increase in the number of surfers using in the area. Anecdotal
evidence indicates that recreational users notice a significant difference in the water quality in the area, and
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that the primary reason for the increased surfing at the Samoa Peninsula is the improved water quality (C.
Guzzi, Surfrider Foundation, personal communication, 1996).
Since 1988, the number of surfers at the North Jetty increased from an estimated 4,550 annual visits
in 1988 to approximately 26,250 in 1993 and to a projected 43,750 in 1996 (HSU, 1988; BLM, unpublished;
B. Cann, Bureau of Land Management, Samoa Dunes Recreation Area, personal communication. 1996).
Although total visitor use leveled off in recent years, the number of surfers increased as a proportion of users;
therefore, the estimate of annual surfer visits for 1996 is higher than the estimate for 1993 (B. Cann, Bureau
of Land Management, Samoa Dunes Recreation Area, personal communication, 1996). The increased
popularity of surfing in the area led the Surfrider Foundation to install an emergency call box and to develop
plans to install shower facilities in the area (B. Cann, Bureau of Land Management, Samoa Dunes Recreation
Area, personal communication, 1996).
The North Jetty is considered one of the best local surfing areas during conditions of southerly winds
and swells (HSU, 1988). Therefore, EPA assumed that the increase in the number of surfing visits represents
a net increase in surfing recreation of 39,200 surfing days rather than simply a transfer from one location to
another. Additionally, existing surfers are likely to experience an increase in the value of their trips to the
extent that they no longer perceive a health risk associated with contact with the water or eating fish and
shellfish from the area.
Recreational Beach Use. Aesthetic improvements in water quality and reductions in toxicity
improved the quality of recreation at the Samoa Peninsula. Recreational users include hikers, sightseers,
beach walkers, picnickers, wildlife viewers, surfers, divers, kayakers, swimmers, skimboarders, anglers, and
OHV riders. The improvements in aesthetic water quality most directly affected the users that participate in
full-body water contact activities (primarily surfing, but also diving, kayaking, swimming, and
skimboarding). However, according to the RAIAP survey, individuals participating in noncontact activities
were also affected by the degraded water quality. Just under half of the respondents observing an unusual
aesthetic condition at one of the study sites on the North Jetty were involved in noncontact activities (HSU,
1988).
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Ecological and Passive Use Benefits
The Samoa Peninsula supports a number of endangered species, including the peregrine falcon and
the California brown pelican, as well as endangered or threatened plants such as the Menzies' wallflower, the
Point Reyes bird beak, and habitats such as the Northern California Salt Marsh (G. Munroe, California
Department of Fish and Game, personal communication, 1996). In developing the Samoa Dunes Recreation
Area, the Bureau of Land Management protected approximately 40 acres for endangered or threatened plants
as well as 135 acres of wetlands (B. Cann, Bureau of Land Management, Samoa Dunes Recreation Area,
personal communication, 1996).
Dioxin poses a risk to aquatic-associated wildlife, and the most sensitive ecologically important
endpoints for mammals and birds are reproductive effects (U.S. EPA, 1993). The process changes at the
Samoa mill dramatically reduced the toxicity of the mill's effluent to early life stage marine organisms. As
measured by bioassay tests, there has been a 91 percent reduction in sea urchin toxicity, a 41 percent
reduction in red abalone toxicity, a 65 percent reduction in giant kelp germination toxicity, and a 70 percent
reduction in kelp germ tube growth toxicity (Girard and Jaegel, 1996).25
9.4.5 Quantitative Assessment of Benefits
Benefits from Recreational Activities at the Samoa Peninsula
Water quality improvements have both increased the number of visits to the Samoa Peninsula and
improved the quality of recreational experiences on the peninsula. Benefits may be associated with two types
of visits to the beach area: (1) the number of new visits made for which there are no comparable local
substitute recreation opportunities (i.e., surfing), and (2) the improved quality of the annual visits for other
types of recreational activities.
25The sea urchin, red abalone, and giant kelp toxicity tests are critical life stage tests and are
considered to be among the most sensitive bioassay tests in regulatory use (Jaegel and Girard, 1995).
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The benefits either fully attributable to the water quality improvements or jointly attributable to the
water quality and the recreational facility improvements are estimated below. These benefits are then
attributed to the respective improvements.
Recreational Surfing Benefits. Because the Samoa Peninsula is a unique location for surfing, net
benefits may be associated with the increase of 39,200 annual surfing visits since 1988. However, this is an
underestimate of new users because it does not include surfing outside of the Samoa Dunes Recreation Area.
Although much of the surfing is done at the North Jetty, surfers recently began using the area just north of the
Louisiana-Pacific mill (B. Cann, Bureau of Land Management, Samoa Dunes Recreation Area, personal
communication, 1996).
The literature does not contain user day value estimates specifically for surfing, although one study
did estimate the value of water-dependent activities, which included surfing as one of several activities. Table
9-29 presents studies that valued similar activities and therefore may be useful for a benefits transfer.
Although Dornbusch et al. (1987) is specific to Humboldt County and the water-dependent activities
valued include surfing, the study uses an older travel cost method and, therefore, provides only a lower-bound
estimate of benefits. An upper bound for benefits comes from the value for nonmotorized boating in Walsh
et al. (1990) because it provides a rough value for a comparable, equipment-intensive water sport.
Multiplying the range of estimated values ($6 to $34) by the estimated increase in the number of surfers
suggests annual surfing benefits for additional activity in the range of $0.23 to $1.33 million. Attributing
these benefits equally between the Louisiana-Pacific mill and the Simpson mill results in estimated annual
benefits of between $0.11 and $0.66 million from the process changes at the Louisiana-Pacific mill.
Recreational Beach Use Benefits. Since 1993, visitors spent an estimated 131,250 annual beach
user days (excluding surfers) at the Samoa Dunes Recreation Area. Adjusting this value to exclude OHV
users, because it is unlikely that they benefited significantly from the improvements in water quality, and
accounting for existing users produces an estimate of 65,800 annual beach user days resulting from both the
mill process changes and the improvements in the recreation area.
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TABLE 9-29
VALUES FOR WATER-BASED RECREATIONAL ACTIVITIES
Study
Dornbusch et al.
(1987)
Rosenthal and
Cordell (1984)
Walsh et al.
(1990)
Walsh et al.
(1990)
Location
Humboldt
County,
CA
Upper
Delaware
River
U.S.
U.S.
Type of Activity
Water-dependent activities
(swimming, scuba and
snorkeling, body surfing, and
board surfing)
River recreation (boating,
including kayaking and
canoeing)
Nonmotorized boating
Swimming
Mean Reported
Value1 (per day)
$3.50(1982)
$13.68(1983)
$25.36 (1987) 3
$22.97 (1987) 4
1995
Value1
$5.53 2
$20.93
$34.02 3
$30.81 4
Consumer surplus.
2Relies on an older, less robust travel cost model.
3Adjusted for different methodologies, empirical approaches, and study dates. The median was used instead
of the mean because of the notable difference between the mean and median values (suggesting that the
frequency distribution is skewed such that relatively few extremely high estimates substantially increase the
mean).
4Adjusted for different methodologies, empirical approaches, and study dates.
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Beach user day values in the literature are typically associated with specific activities at the site (e.g.,
swimming, sunbathing, picnicking, wildlife observation). Table 9-30 presents studies that valued beach use
or similar activities.
This analysis uses a range of user day values for beach outings of $8 to $45, based on the range of
values described above, omitting the high and low end values. Applying this range of values to the estimated
65,800 new beach user days per year to the site, the annual benefits of new beach user days are $0.53 million
to $2.96 million. Because both water quality improvements and park development contributed to increased
recreational use, benefits are attributed jointly. Both changes were necessary conditions for improving
recreation on the peninsula. In lieu of allocating benefits between these improvements, EPA included the
costs of upgrading the recreational quality in its cost estimates for the case study.26 Attributing these benefits
equally between the Louisiana-Pacific mill and the Simpson mill results in estimated annual benefits of
between $0.27 and $1.48 million from the process changes at the Louisiana-Pacific mill.
Passive Use Benefits
Individuals may value reduced toxic concentrations and improved aesthetic conditions of the Pacific
Ocean waters apart from any values associated with their direct or indirect use of the resource. These passive
use values are difficult to estimate absent carefully designed and executed primary research, but benefits
transfer techniques can provide a rough sense of the potential magnitude of these values.
Approach 1: Rule of Thumb. Applying the Fisher and Raucher (1984) 50 percent rule of thumb to
the relevant recreational activities for this case study — beach use and surfing — suggests a potential
magnitude of passive use values associated with improvements in water quality of the Pacific Ocean of $0.19
million to $1.07 million per year. The method may also be conservative; studies in the literature report a ratio
of passive use values to use values of two or more (Sanders et al., 1990; Sutherland and Walsh, 1985).
Approach 2: Comparable Water Quality Improvements. EPA found no studies of the value to
nonusers of water quality improvements similar to those experienced on the Samoa Peninsula. Bockstael et
26See Table 9-34 and footnote to table.
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TABLE 9-30
CONTINGENT VALUATION STUDIES OF VALUES FOR BEACH USE
Study
Dornbusch et
al. (1987)
Hay (1988)
Leeworthy et
al. (1991)
Leeworthy
and Wiley
(1993)
Kaoru(1994)
Location
Humboldt
County, CA
California
Pismo State
Beach
Southern
California
State Beach,
Martha's
Vineyard, MA
Type of Activity
Water-enhanced beach
activities (picnicking, hiking,
backpacking, nature
appreciation, visiting scenic
areas, sunning, beachcombing,
beach games, and camping)
Nonconsumptive wildlife-
related recreation (observing,
photographing, or feeding)
Beach use
Beach use
Beach use by local residents
Mean Reported
Value1
(per day)
$4.98 (1982) 2
$32(1985)
$4.98 (1990)
$8.16-$51.94
(1989)
$15.38-$18.03
(1991)
1995 Value1
$7.86 2
$45
$5.81
$10.03-$63.84
$17.21-$20.17
Consumer surplus.
2Relies on an older travel cost method.
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al. (1989) conducted a contingent valuation study to value improvements in water quality in the Chesapeake
Bay, which is adversely affected by nutrient overenrichment and toxic substances, to a condition that the
respondent considers acceptable for swimming. Nonusers were willing to pay $51 annually (updated to 1995
dollars) for such an improvement. Applying this result to the approximately 46,617 individuals in the county
surrounding the Samoa Peninsula produces an estimate of $2.38 million per year in passive use benefits.
Attributing these benefits equally between the Louisiana-Pacific mill and the Simpson mill results in an
estimated $1.19 million per year in passive use benefits.
Summary of Water-related Benefits
Table 9-31 provides a summary of the estimated benefits from the process changes at the Louisiana
Pacific mill and the OHV program. Attributing these benefits evenly between the Louisiana-Pacific mill and
the Simpson mill results in annual benefits of between $0.6 and $3.4 million attributable to the process
changes at the Louisiana-Pacific mill and the improvements in the recreation area.
Table 9-32 lists key omissions, biases, and uncertainties in the estimation of benefits. Because the
direction of many of these uncertainties is unknown, the overall impact on the estimated benefits is unknown.
9.4.6 Air Benefits
Table 9-33 presents the estimated emission reductions and air-related benefits of the selected options
for the Louisiana-Pacific mill. Annual air-related benefits for MACT I range from a disbenefit of $5.0 million
to a benefit of $10.1 million under Option A. Under Option B, the lower end of this range is increased to a
disbenefit of $4.8 million per year. EPA estimated no additional benefits resulting from the implemenation of
MACT II in the case study area.
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TABLE 9-31
ANNUAL MONETIZED BENEFITS OF WATER QUALITY
AND RECREATIONAL FACILITY IMPROVEMENTS AT
THE SAMOA PENINSULA FOR LOUISIANA PACIFIC PROCESS CHANGES 1
(Millions of 1995 Dollars)
Benefits Category
Recreational Surfing
Recreational Beach Use
Ecological and Passive Use
Other Benefits 2
Total Monetized Benefits
Annual Value (1995)
$0.1-$0.7
$0.3-$1.5
$0.241.2
+
$0.643.4
Includes benefits from both process changes at the mill and recreational facility improvements from a state
grant for $250,000. Excludes benefits attributable to Simpson mill closure.
2Excludes increased value of existing recreational trips from reduced adverse health effects to surfers and
benefits to recreational users at affected sites on the peninsula outside of the Samoa Dunes Recreation Area.
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TABLE 9-32
KEY OMISSIONS, BIASES, AND UNCERTAINTIES IN THE
BENEFIT-COST ANALYSIS FOR THE PACIFIC OCEAN
Omissions/Biases/Uncertainties
Direction of Impact on
Benefit/Cost Estimates
Comments
Benefits Estimates
The estimation of benefits was
limited to only a portion of the
affected area (e.g., recreation at
affected beach areas outside of the
Samoa Dunes Recreation Area).
The omission of affected
recreation areas will cause
benefits to be underestimated.
Insufficient data and
information to evaluate the
potential magnitude of these
benefits.
Benefits were estimated using
benefits transfer.
It is unknown what bias the
selected studies have on
benefits.
Studies of similar recreational
activities were used, and
transferred values are
supported by a number of
studies.
One approach used to estimate
passive use values is based on
recreational use values.
It is unknown what bias
estimating passive use values
based on recreational use
values has on benefits.
The uncertainties in
estimating recreational use
benefits are inherent in the
estimation of passive use
benefits in this manner.
One approach used to estimate
passive use values is based on a
contingent valuation study of the
Chesapeake Bay in which water
quality improves from an impaired
condition to a condition considered
acceptable for swimming.
Passive use values for a unique
and well known water body
such as the Chesapeake Bay
may be higher than passive use
values for the Samoa
Peninsula.
It is unknown how the change
in water quality and passive
use value at the Samoa
Peninsula compares to the
change in water quality and
passive use value for the
Chesapeake Bay.
Benefits were attributed equally
between the process changes at the
Louisiana-Pacific mill and the
closure of the Simpson mill.
It is unknown what bias the
assumption of equal attribution
has on benefits.
Each of the mills were
evaluating similar process
changes and had similar
levels of discharge before the
Simpson mill closed.
Overall Impact on Benefits
Estimates
The direction of bias of many
of the uncertainties is
unknown.
+ Potential overestimate.
Potential underestimate.
? Uncertain impact.
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TABLE 9-33
POTENTIAL ANNUAL AIR-RELATED BENEFITS OF THE SELECTED OPTIONS
FOR THE LOUISIANA-PACIFIC MILL LOCATED ON THE SAMOA PENINSULA
Regulatory Option
Option A and MACT I
VOC
Participate Matter
SO2
TOTAL Monetized Benefits
Option A and MACT II
Participate Matter
Option B and MACT I
VOC
Participate Matter
SO2
TOTAL Monetized Benefits
Option B and MACT II
Particulate Matter
Emission Reductions
(Mg/yr)
0-3,928
(0.05)2
(1,025)2-0
NA
0
0-3,928
(0.05)2
(984)2-0
NA
0
Annual Value1
(Millions of $1995)
$0-$10.1
$03
($5.0)-$0
($5.0)-$10.1
$0
$0-$10.1
$03
($4.8)-$0
($4.8)-$10.1
$0
1 Benefits may not adde due to rounding.
2 Numbers in parentheses represent emissions increases and related increased social costs.
3 Disbenefits of $631 per year.
NA = Not applicable.
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Retrospective Benefits and Costs
Table 9-34 provides a comparison of the estimated benefits and costs from the process changes
implemented at the Louisiana-Pacific mill located on the Samoa Peninsula. Annualized costs of the mill
upgrade are somewhat greater than the annual monetized benefits. The estimated annual monetized portion
of benefits ranges from $0.6 million to $3.4 million, and the annualized cost of the upgrade is approximately
$5.6 million (ERG 1996a, based on a 7 percent real discount rate and a 16 year accounting period).
Benefits and Costs Comparable to the Regulation
The benefits and costs in Table 9-34 reflect effluent controls more stringent than both Option A and
Option B. Therefore, the total annualized costs that would correspond to Options A and B are less than what
has already been spent for upgrades at the mill and, similarly, the corresponding monetizable portion of
benefits could be a subset of the benefits estimatedin Table 9-34.
Costs and benefits of the regulation related to air controls are not shown in Table 9-34. Table 9-35
shows the estimated costs and benefits for water and air controls (any air-related costs and benefits associated
with upgrades implemented in the early 1990s have not been estimated). Table 9-35 shows the benefits and
costs for the case study that are comparable to the current rulemaking.
Benefits and Costs for Option B. The mill exceeded Option B by pursuing TCP technologies and
recycling bleaching effluent. Consequently, not all the benefits (and costs) estimated above and associated
with these new technologies can be attributed to Option B. After the upgrade in 1989 to install oxygen
delignification and related modifications, the mill was close to Option B, but was not as environmentally
advanced because chlorine dioxide substitution was only 5 percent to 16 percent instead of 100 percent. EPA
estimated that to upgrade from the pre-1990 status to Option B, the mill would have incurred capital costs of
approximately $34.0 million and the operating costs at the mill would have increased by approximately $1.1
million per year for an annualized cost of $4.7 million dollars (W. Grome, ERG, personal communication,
1996).
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TABLE 9-34
BENEFITS AND COSTS OF THE PROCESS CHANGES
IMPLEMENTED AT THE LOUISIANA-PACIFIC MILL
LOCATED ON THE SAMOA PENINSULA
(Millions of 1995 Dollars)
Annual Monetized Benefits Associated with Water Quality
Improvements l
Annualized Costs for Mill Upgrade 2
Upgrade (both 1989 3 and in 1994 4)
Costs Avoided due to 1994 Upgrade 5
Costs of Recreational Facility Improvements 6
Total Upgrade Costs
Annual Value
$0.6-$3.4
$6.3
($0.7)
$0.0
$5.6
Includes boating and recreational angling benefits associated with an increase in participation, and ecological
and passive use benefits.
2Based on annuatized present value of pretax compliance costs, reflecting a 7% real discount rate and a
16 year accounting period.
Included oxygen delignification and 5%-16% chlorine dioxide substitution.
4Began elimination of chlorine dioxide and recycling of bleaching effluents.
5Annual costs associated with a wastewater discharge exemption.
6State grant for $250,000 from the Off-Highway-Vehicle program to develop recreational facilities averaged
over 16 years.
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TABLE 9-35
ANNUAL BENEFITS AND COSTS COMPARABLE
TO THE FINAL PULP AND PAPER REGULATION FOR THE SAMOA PENINSULA1
(Millions of 1995 Dollars)
Benefits and Costs
Annual Monetized Benefits
Water 2 (retrospective)
Air 3 (MACT I)
Air (MACT II)
Water and MACT I
Water, MACT I and MACT II
Annualized Costs 4
Water 5
Water and MACT 1 6
Water, MACT I, and MACT II 6
Compliance with
Option A
$0.1-$1.4
($5.0)-$10.1
$0
($4.9)411.5
($4.9)411.5
$3.9
$4.8
$5.0
Compliance with
Option B
$0.643.4
($4.8)410.1
$0.0
($4.2)413.5
($4.2)413.5
$4.7
$5.6
$5.8
Option A is the Agency's selected option.
2Steady state benefit levels omitting nonmonetizable benefits.
3Estimated air benefits do not include any benefits that may have occurred as a result of past upgrades.
4Based on annuatized pretax compliance costs, reflecting a 7% real discount rate and a 16 year accounting
period.
5Estimated cost to upgrade from pre 1989 status to compliance with the rule.
6Includes retrospective and forthcoming costs. Estimated air costs do not include any costs for air controls
that may have been incurred in past upgrades.
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The benefits categories estimated in the case study rely primarily on reductions in color, odor,
foaming, and a perceived health risk from contact with mill effluent. Although the conversion to 100 percent
substitution provided valuable reductions in toxicity and contributed to reductions in color, the extent to
which these additional improvements would affect benefits is unknown. However, visitor use at the Samoa
Dunes Recreation Area increased from approximately 41,000 in 1988 to 175,000 in 1993, and has not
increased notably since that time (HSU, 1988; BLM, unpublished). Therefore, any water quality
improvements associated with the conversion to TCP processing and closed cycle bleaching have not yet
translated into increases in visitor use. It is unknown if these process changes will generate increased visitor
use (or user day values) in the future. Consequently, the water quality-based benefits estimated for the
retrospective case study are a reasonable estimate of the benefits attributable to Option B.
Benefits and Costs for Option A. After the 1989 upgrade, the mill exceeded Option A in that
oxygen delignification was installed. Consequently, the benefits (and costs) estimated above and associated
with oxygen delignification cannot be attributed to Option A. EPA estimated that to upgrade from the pre-
1990 status to Option A the mill would have incurred capital costs of approximately $15.6 million and the
operating costs at the mill would have increased by approximately $2.2 million per year for an annualized
cost of $3.9 million dollars (W. Grome, ERG, personal communication, 1996).
Color was a major contributor to the realized surfing and beach use benefits, and EPA used color to
estimate the differences in water quality-based benefits between Option A and Option B at the Samoa
Peninsula. For kraft mills, the estimated reductions in color under Option A are 8 percent of the reductions
in color under Option B (ERG, 1996b). EPA assumed that there was a linear relationship between color and
recreational use. This is clearly likely to overestimate the differences in benefits between Option A and
Option B, since fear of exposure to toxins before changes at the Louisiana-Pacific mill and closure of the
Simpson mill clearly inhibited the use of the Samoa Peninsula waters. For all practical purposes, Option A
eliminates toxic discharges to water, as does Option B. Applying the 8 percent figure, estimated surfing and
beach use benefits under Option A would be $0.03 million to $0.17 million. Using this value to recalculate
the low-end estimate for passive use benefits (the upper-end estimate cannot be recalculated to distinguish
between levels of water quality improvements) results in estimated passive use benefits under Option A of
$0.02 million to $1.19 million. Estimated total benefits attributable to Option A, therefore, are between $0.1
million and $1.4 million per year. EPA notes that this likely underestimates benefits for the reasons noted
above.
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9.4.7 Conclusions
In the early 1990s, the Louisiana-Pacific mill installed an oxygen delignification system and began
implementing totally chlorine free (TCP) technology. Recently, the mill began taking steps to recycle 100
percent of bleach plant wastewater. The process changes implemented at the mill exceed what would be
required under either Option A or Option B. Therefore, the portion of water-related benefits comparable to
the rulemaking are less than the benefits already achieved. EPA estimates that the water-related benefits
comparable to Option A are at least $0.1 million to $1.4 million per year. With the implementation of the
selected regulatory options (Option A, final MACT I, and proposed MACTII Alternative A), EPA estimates
that the annual benefits will range from a disbenefit of $4.9 million to a benefit of $ 11.5 million. The
annualized costs for the selected regulatory options are estimated to be $5.0 million.
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9.5 PENOBSCOT RIVER CASE STUDY
The case study of the Penobscot River in Maine assesses the benefits and costs of the regulation for
two bleached kraft mills located on the river between Lincoln and the river's mouth. For the RIA at proposal,
potential water-related benefits were estimated for the human health, recreational angling, subsistence use,
and ecological/passive use categories of benefits. This section presents revised human health benefits
estimates and an assessment of health risks and risk reductions to the Penobscot Tribe (not included in the
analysis of the proposed regulation). The sections below also respond to public comments on the case study.
9.5.1 Human Health Benefits
Table 9-36 summarizes the results of the Agency's analysis of carcinogenic effects in the case study
area (the estimated reductions in statistical cancer cases come from the national risk assessment in described
in Chapter 8). Based on an estimated value of a statistical life of $2.5 million to $9.0 million (American Lung
Association, 1995) and assuming all cancers are fatal, potential human health benefits from reduced dioxin
contamination in the case study area are between $6,000 and $72,000 per year.
9.5.1.1 Risk Assessment for Native Americans
The potential human health effects described above are based on evaluation offish consumption by
licensed anglers. The above assessment does not include the Penobscot Indian Tribe because Native
Americans are not required to purchase fishing licenses to fish within their treaty-protected fishing grounds.
The Penobscot Nation's reservation includes 146 islands in the Penobscot River north of Old Town. The
tribe has treaty-protected rights to the Penobscot River fishery, and has traditionally relied heavily on
subsistence fishing. This section provides an assessment of risks to tribal members from the consumption of
dioxin-contaminated fish from the Penobscot River, and the potential health benefits from the regulation.
Exposed Population. Tribal enrollment figures and a 1991 Penobscot Nation Survey provide an
estimate of the Native American population that is consuming fish from the Penobscot River. Estimated
tribal enrollment, including members residing both on and off the reservation, is 2,089. The tribal population
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TABLE 9-36
POTENTIAL HUMAN HEALTH BENEFITS OF OPTION A
TO LICENSED ANGLERS IN THE PENOBSCOT RIVER AREA1
Angler Group
Recreational Anglers
Subsistence Anglers2
Total
Annual Reduction
in Cancer Cases2
0.002-0.006
0.001-0.002
0.002-0.008
Annual Monetized Benefits
(1995 dollars)
$5,000454,000
$2,000418,000
$6,000472,000
Benefits reflect reductions in cancer risk resulting from reduced levels of 2,3,7,8-TCDD and 2,3,7,8-TCDF
in fish tissue.
2Range is based on low and high estimates of exposed population (10% to 33% of licensed anglers in
counties adjacent to the receiving stream).
3Does not include Penobscot Tribe members (they have treaty-ceded fishing rights to the Penobscot River, are
not required to purchase a fishing license and, therefore, are not in this analysis).
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residing on the reservation is 410, and the tribal population residing in Maine is 1,167 (1996 enrollment; J.
Banks, Department of Natural Resources, Penobscot Nation, personal communication, 1996). The in-state
population accounts for many tribe members who live in nearby communities such as Old Town or Bangor
and who continue to regularly use the Penobscot River (J. Banks, Department of Natural Resources,
Penobscot Nation, personal communication, 1996).
A 1991 survey of tribal use of the Penobscot River found that 24 percent of respondents eat fish
from the Penobscot River (Penobscot Nation Department of Natural Resources, 1991). The survey, which
was mailed to all tribal members over the age of 18 residing in Maine, received only a 25 percent response
rate. However, no other source of information on tribal practices is available. The survey probably
underestimates actual exposure since individuals who practice a "traditional" lifestyle (i.e., members who
spend substantial time on the reservation fishing and hunting) generally do not respond well to written
surveys and thus are probably underrepresented in the survey results (Banks, 1992). Multiplying the in-state
enrollment (1,167) by 24 percent results in an estimate of the exposed adult population of 280.
Consumption. Consuming anglers responding to the 1991 Penobscot Nation Survey reported an
average consumption of 11 gpd, and a number of assumptions must be made to interpret this portion of the
survey (Penobscot Nation Department of Natural Resources, 1991; CRITFC, 1994). This estimate is
supported by the results for the 95th percentile of Maine anglers using freshwater rivers and streams in the
state (12 gpd) (ChemRisk, 1992). The Penobscot Nation, which traditionally relies on the Penobscot River
for sustenance, can be expected to be among the highest fish consuming populations in Maine. However, as
described above, the Penobscot Nation Survey may underestimate mean consumption since tribal members
that practice a traditional lifestyle may be underrepresented in the survey. The 90th percentile of fish
consumption from the Penobscot Nation Survey was 48 gpd (CRITFC, 1994).
This analysis uses 11 gpd as a central estimate of consumption for the Penobscot Tribe, and provides
results for an upper bound estimate of 48 gpd. Note that these values are much lower than the estimated fish
consumption used for the nationwide risk assessment for licensed anglers. Nationally, for this EA, EPA
estimates that recreational anglers consume an average of 21 gpd and subsistence anglers consume 48 gpd.
However, on-site data are presumed to be most accurate, so EPA uses the survey consumption information.
The survey consumption information may reflect "suppressed" fish consumption due to fear of
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contamination. However, EPA had no way to correct for that outcome other than to also consider the upper
bound estimate.
Fish Tissue Concentrations. EPA modeled the baseline and post-regulation concentrations of
dioxin in fish tissue for each mill using the DRE model (U.S. EPA, 1997). Because of the location of the
tribe's fishing grounds, only the Lincoln mill is relevant for this analysis. Observations of fishing habits
suggest that the majority of tribal fishing occurs below the Lincoln mill between Old Town and the West
Enfield Dam (a map of the case study area was provided in the 1993 RIA). Tribe members using canoes to
fish would have to use a vehicle or portage in order to fish the reach above the dam (J. Banks, Department of
Natural Resources, Penobscot Nation, personal communication, 1996). Based on this observation, 90
percent of the total catch of tribal members is assumed to come from waters affected by effluent from the
Lincoln mill.
The Penobscot most frequently consume smallmouth bass, brook trout, Atlantic salmon, landlocked
salmon, pickerel, and perch (Penobscot Nation Department of Natural Resources, 1991). The DRE model
provides concentrations for an average or "generic" fish.
Central Estimate Risk Level and Benefits. Cancer risk is assessed using standard EPA
assumptions regarding body weight and exposure (see appendix), and cancer slope factors and oral RFDS for
TCDD and TCDF consistent with those used previously in this EA. Penobscot River Native American
anglers face a somewhat elevated baseline cancer risk from the consumption of dioxin-contaminated fish.
Assuming consumption of 11 gpd, baseline cancer risk for the Penobscot is 3.25 x 10~5. The selected option
(Option A) reduces the baseline risk by an order of magnitude to 3.09 x 10~6. Lifetime cancer cases are
reduced by 0.009, yielding annualized benefits of $300 to $1,000, based on a 70 year life and a value of a
statistical life of between $2.5 million and $9.0 million (American Lung Association, 1995).
Upper Bound Risk Level and Benefits. Assuming fish consumption of 48 gpd, Penobscot River
Native American anglers face an elevated baseline cancer risk from the consumption of dioxin-contaminated
fish. Baseline cancer risk for the Penobscot is 1.42 x 10"4. Under the selected option (Option A), baseline
risk is reduced to 1.35 x 10"5. Lifetime cancer cases are reduced by 0.04, yielding annualized benefits of
$1,300 to $4,600, based on a 70 year life and a value of a statistical life of between $2.5 million and $9.0
million (American Lung Association, 1995).
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Uncertainties in the Estimation of Risk. There are numerous sources of uncertainties in the
estimate of baseline risks to the Penobscot Tribe, and in the estimated reduction in risks from implementation
of the regulation. Variations in health risks may occur, depending upon the factors described in Section 9.1.6.
Additional uncertainties specific to this risk assessment include:
Accuracy of Exposure Assumptions Used in Risk Calculations. There is no
comprehensive source of information on the fish consumption habits of the Penobscot Tribe.
The low and high consumption estimates used above are based on a tribal survey; however,
the results are thought to underestimate consumption (Banks, 1992). Based on fish
consumption levels observed elsewhere in the U.S. by tribal and other subsistence or sport
anglers, the potentially low consumption rates may underestimate health risks.
Accuracy of Fish Tissue Contaminant Concentrations Used to Determine Risks. The
fish tissue concentrations used to assess risks are estimates derived from EPA's DRE model
and, as such, may not represent site conditions.
Accuracy of Estimates of Reductions in Contamination. The estimated reduction in fish
tissue contamination may not represent immediate outcomes. It might take years for fish
tissue contaminant reductions to occur.
9.5.2 Recreational Angling Benefits
For the proposal, EPA estimated recreational angling benefits in the Penobscot case study for the
Atlantic salmon fishery and for other river fisheries. For the Atlantic salmon fishery, benefits were based on
the increased value of the fishery to anglers from a lifting of FCAs on the river (value of a contaminant-free
fishery). Comments on the case study asserted that the value of a contaminant-free fishery may not be
realistic for the Penobscot River because it is based on a study of the Wisconsin Great Lakes trout and
salmon fishery (Lyke, 1993).
Great Lakes sport fishing differs significantly from current fishing conditions on the Penobscot
River, but both are popular salmon fisheries with contamination problems. Using the relationship between
the value of a fishery and the increased value of a contaminant-free fishery found in the Lyke study to
estimate benefits to anglers of other (non-Atlantic salmon) fisheries may be less appropriate. However,
because there are no other applicable studies of the value to anglers of reducing toxic contamination in fish,
the Lyke results (which are a range) are transferred for this case study.
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Commenters also asserted that EPA's use of salmon angling days as an estimate of other, nonsalmon
angling days could overestimate the size of the non-Atlantic salmon fishery. Although the level of activity
associated with other Penobscot River fisheries is not known, state sources indicate that bass are the third
most popular game fish in Maine, and that the bass fishery on the Penobscot River is very good
(RCG/Hagler, Bailly, 1989). Additionally, most of the Atlantic salmon fishing on the Penobscot occurs
above Bangor and below the dam in Veazie (Gordon Research Service, 1991, as cited in Boyle et al., 1992),
which leaves a large portion of the study site (from the Lincoln mill to Veazie) that may be dominated by
other types of fisheries. Therefore, the assumption that the angling days for all other fisheries combined is as
high as the number of Atlantic salmon angling days appears to be a reasonable upper bound estimate.
Angling benefits are not revised for analysis of the final rulemaking.
9.5.3 Subsistence Use Benefits
For the proposal, EPA estimated the traditional use benefits to the Penobscot Tribe from reducing
dioxin contamination to levels allowing FCAs to be rescinded. EPA estimated the value of the Tribe's
resources based on previous settlements and negotiations that have involved compensation to U.S. tribes for
loss or partial loss of natural resource use. Commenters asserted that these values were transferred to an
inappropriate population. They claimed that tribal enrollment is not the correct population estimate to use for
this approach because not all members live in the area that will actually benefit from the regulation.
Information provided by John Banks of the Penobscot Nation supports the assertion that only about
one third of enrolled tribal members live in the immediate vicinity, and that a significant percentage of
members live outside Maine. Nevertheless, the 2,033 tribal members maintain the rights to use the Penobscot
fishery and other services of the Penobscot River for traditional purposes. The benefits analysis used a range
of values for annualized per capita settlements. These per capita settlement values were calculated using
lump-sum settlements and tribal enrollment (including members who do not live locally). Therefore,
assuming that the proportion of local tribal members in the previous settlements is comparable to the
proportion of Penobscot members living in the immediate vicinity of the Penobscot River, the tribal
enrollment is the appropriate number to use in developing the benefits estimate. These benefits are not
revised for analysis of the final rulemaking.
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EPA also notes that the recreational angling benefits estimated above are based on licensed anglers
and, therefore, do not include benefits associated with recreational angling by Penobscot Tribe members.
9.5.4 Passive Use Benefits
For the proposal, EPA estimated passive use values using two different approaches to provide a
plausible range of values that did not rely on a single study or methodological approach. One approach used
Fisher and Raucher's (1984) rule of thumb in which passive use values were estimated to be at least as great
as 50 percent of recreational angling values. Commenters study noted that this method is questionable
because of the uncertainties present in the estimation of recreational benefits. However, EPA's use of the "50
percent of recreation value" rule of thumb is consistent with a conservative interpretation of empirical
evidence provided by a large body of research (Fisher and Raucher, 1984). Studies in the literature have
found the ratio of passive use values to use values to be approximately two or more (Sutherland and Walsh,
1985; Sanders etal, 1990).
The second approach transferred the results of a 1981 national survey of willingness to pay for water
quality improvements in one's own state to the households in the case study area (Mitchell and Carson, 1984;
1986). The comments claimed that this method assumes that Penobscot River households do not value any
improvements to water bodies in the state other than the Penobscot River. Although this approach may
overstate the values held by local residents for the Penobscot River, the potential overstatement is likely to be
more than outweighed by the fact that the analysis does not include values held by other residents of the state,
and of the nation as a whole, for preserving and enhancing the quality of the Penobscot River. Given the
national prominence of the Penobscot as habitat for Atlantic salmon, it is highly likely that many individuals
other than local residents hold passive use values for the river. Therefore, EPA did not revise the estimate of
passive use benefits for analysis of the final rule.
9.5.5 Summary of Water-Related Benefits
Table 9-37 provides a summary of the revised benefits of the regulation for the Penobscot River case
study potential benefits total between $0.7 million and $2.3 million per year in 1995 dollars. These estimates
9-116
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TABLE 9-37
POTENTIAL ANNUAL WATER-RELATED BENEFITS OF THE
PULP AND PAPER REGULATION
FOR THE PENOBSCOT RIVER CASE STUDY
(1995 Dollars)
Benefit Category
Human Health
Licensed Anglers
Penobscot Tribe
Angling
Recreational1
Tribal
Restoration of Subsistence Use to Penobscot Nation
Passive Use
Total Monetized Benefits
Millions of Dollars
$0.0-$0.1
$0.0-$0.0
$0.3-$1.0
+
$0.2-$0.6
$0.2-$0.7
$0.7- >$2.3
+ Positive benefits expected but not estimated.
^pperbound estimate based on assumption of other river fishing days equal to Atlantic salmon fishing days.
9-117
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are comparable to the water-related case study benefits estimated in the RIA for the proposed rule ($0.6
million to $2.5 million in 1992 dollars).
9.5.6 Air Benefits
Table 9-38 presents revised estimates of emission reductions and air-related benefits of the selected
options at the bleached kraft mills located on the Penobscot River. EPA estimates that the benefits associated
with reductions in emissions resulting from MACT I controls range from a disbenefit of $9.5 million to a
benefit of $7.7 million per year under Option A. Emission reductions resulting from MACT II controls are
valued at approximately $0.1 million.
9.5.7 Comparison of Benefits and Costs
Table 9-39 presents a comparison of the monetized benefits and annualized costs of the regulation.
EPA estimates that the annual benefits of implementing the selected regulatory options (Option A, final
MACT I, and proposed MACT II, Alternative A) range from a disbenefit of $8.7 million to a benefit of $10.1
million. The monetized benefits do not reflect all benefits categories. Confidentiality agreements preclude
disclosure of total costs for this site. However, for comparison the average annualized water-related cost for
bleached papergrade kraft mills is $3.0 million. So a rough approximation of annualized costs for the two
mills is $6.0 million.
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TABLE 9-38
POTENTIAL ANNUAL AIR-RELATED BENEFITS OF THE SELECTED OPTIONS FOR
THE MILLS ON THE PENOBSCOT RIVER
Regulatory Option
Option A and MACT I
VOC
Participate Matter
SO2
TOTAL Monetized Benefits
Option A and MACT II
Emission Reductions
(Mg/yr)
0-2,985
(0.14)1
(760)1-0
NA
9
Annual Value
(Millions of $1995)
$0-$7.7
($0.0)2
($9.5)-$0
($9.5)-$7.7
$0.1
1 Numbers in parentheses represent emissions increases and related increased social costs.
2 Disbenefits of $1,767 per year.
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TABLE 9-39
ANNUAL MONETIZED BENEFITS AND COSTS OF OPTION A
FOR THE FINAL PULP AND PAPER REGULATION: PENOBSCOT RIVER CASE STUDY
Benefits and Costs
Annual Monetized Benefits1
Water
Air (MACT I)
Air (MACT II)
Water and MACT I
Water, MACT I, and MACT II
Annualized Costs
Water and MACT I
Water, MACT I, and MACT II
Millions of 1995 Dollars
$0.7-$2.3
($9.5)-$7.7
$0.1
($8.8)-$10.0
($8.7)-$10.1
A
A
1 Steady state benefit levels omitting nonmonetizable benefits.
A. Confidentiality agreements preclude disclosure of total costs for this site. For a comparison, the estimated
average annualized water-related cost for bleached papergrade kraft mills is $3.0 million.
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9.6 WISCONSIN RIVER CASE STUDY
The Wisconsin River case study assesses the benefits and costs of the regulation for five bleached
kraft mills located on the Wisconsin River. For the proposal, potential water-related benefits were estimated
for human health, recreational angling, and ecologic/passive use benefits categories. This section presents
revised estimates of costs, human health benefits, and a comparison of benefits to costs.
9.6.1 Revised Costs
EPA estimated that the combined cost for the case study mills to comply with Option A will be $21.0
million in capital and $2.8 million in annual operating costs (ERG, 1996a).
9.6.2 Human Health Benefits
The Agency's revised estimates of reductions in pollutant loadings and fish tissue contaminant
concentrations translate into revised human health benefits in the case study area. Table 9-40 shows the
reductions in excess cancer cases (the estimated reductions in statistical cancer cases come from the national
risk assessment described in Chapter 8. Based on an estimated value of a statistical life of $2.5 million to
$9.0 million (American Lung Association, 1995) and assuming all cancers are fatal, potential human health
benefits from reduced dioxin contamination in the case study area are between $100 and $1,000 per year.
The estimated risks and reductions in risk due to the regulation may be underestimated in the case
study area. EPA's methodology for estimating fish tissue contaminant concentrations considers each mill in
isolation and thus ignores the cumulative impact of effluent from more than one mill. As mentioned above,
there are five mills in the case study area.
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TABLE 9-40
POTENTIAL HUMAN HEALTH BENEFITS OF OPTION A
TO LICENSED ANGLERS IN THE WISCONSIN RIVER CASE STUDY AREA1
Angler Group
Recreational Anglers
Subsistence Anglers
Total3
Annual Reduction in Cancer
Cases2
< 0.001
< 0.001
< 0.001
Annual Monetized Benefits
(1995 Dollars)
$0-$700
$0-$400
$10041,000
Benefits reflect reductions in cancer risk resulting from reduced levels of 2,3,7,8-TCDD and 2,3,7,8-TCDF
in fish tissue. Results are expected to underestimate benefits for the case study site because the methodology
for estimating risks does not reflect the cumulative effect of effluent from more than one mill on dioxin
concentrations in fish tissue.
2Based on low and high estimates of exposed population (10% to 33% of licensed anglers in counties
adjacent to the receiving stream).
3Detail does not add due to rounding.
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9.6.3 Summary of Water-Related Benefits
Table 9-41 provides a summary of the revised water-related benefits of the regulation for the
Wisconsin River case study. Potential monetized benefits total between $0.1 million and $1.5 million per year
in 1995 dollars. The benefits estimates reflect a downward revision from the case study benefits estimated in
the RIA for the proposed rule due to a reduction in baseline toxin loadings ($0.5 million to $3.4 million per
year in 1992 dollars).
9.6.4 Air Benefits
Table 9-42 presents revised estimates of emission reductions and air-related benefits from
implementation of air controls at the bleached kraft mills located on the Wisconsin River. EPA estimates that
the annual benefits from implementing MACT I range from a disbenefit of $16.9 million to a benefit of $15.6
million under Option A . Emission reductions in particulate matter resulting from MACT II controls are
valued at $2.1 million per year under Option A.
9.6.5 Comparison of Benefits and Costs
Table 9-43 presents a comparison of the annual monetized benefits and annualized costs of the
regulation. EPA estimates that the annual benefits of implementing the selected regulatory options (Option
A, final MACT I, and proposed MACT II, Alternative A) range from a disbenefit of $14.7 million to a
benefit of $19.2 million and annualized costs are $9.3 million. The monetized benefits do not reflect all
benefits categories.
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TABLE 9-41
POTENTIAL ANNUAL MONETIZED WATER-RELATED BENEFITS OF THE
PULP AND PAPER REGULATION FOR THE WISCONSIN RIVER CASE STUDY
(1995 Dollars)
Benefit Category
Human Health l
Licensed Anglers
Recreational Angling
Ecologic/Passive Use
Other Benefits
Total Monetized Benefits
Millions of Dollars
$0.0-$0.0
$0.1-$0.1
$0.0-$1.4
+
$0.1-$1.5
+ Positive Benefits expected but not monetized.
Results are expected to underestimate benefits because the methodology for estimating risks does not reflect
the cumulative effect of effluent from more than one mill on dioxin concentrations in fish tissue.
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TABLE 9-42
POTENTIAL ANNUAL AIR-RELATED BENEFITS OF THE SELECTED OPTIONS FOR
BLEACHED KRAFT PULP AND PAPER MILLS ON THE WISCONSIN RIVER
Regulatory Option
Option A and MACT I
VOC
Participate Matter
SO2
TOTAL Monetized Benefits
Option A and MACT II
Participate Matter
Emission Reductions
(Mg/yr)
0-6,036
(0.01)1
(1,349V -0
NA
164
Annual Value
(Millions of $1995)
$0-$15.6
$02
($16.9)-$0
($16.9)-$15.6
$2.1
1 Numbers in parentheses represent emissions increases and related increased social costs.
2 Disbenefits of $1,262 per year.
NA = Not applicable.
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TABLE 9-43
ANNUAL CASE STUDY MONETIZED BENEFITS AND COSTS OF OPTION A
FOR THE FINAL PULP AND PAPER REGULATION: WISCONSIN RIVER CASE STUDY
Annual Monetized Benefits l
Water
Air (MACT I)
Air (MACT II)
Water and MACT I
Water, MACT I, and MACT II
Annualized Costs 2
Water and MACT I
Water, MACT I, and MACT II
Millions of 1995 Dollars
$0.1-$1.5
($16.9)-$15.6
$2.1
($16.8)-$17.1
($14.7)-$19.2
$8.0
$9.3
1 Steady state benefit levels omitting nonmonetizable benefits.
2Based on annuatized pretax compliance costs, reflecting a 7% real discount rate and a 16 year accounting
period.
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9.7 LOWER COLUMBIA RIVER CASE STUDY
The case study of the Lower Columbia River in Washington and Oregon assesses the benefits from
the regulation for four bleached kraft mills located in the Lower Columbia River basin. For the RIA at
proposal, potential water-related benefits were estimated for the human health, recreational fishing,
nonconsumptive, and ecologic/passive use benefits categories. This section presents revised costs, revised
human health benefits, an assessment of risks to Native American populations in the Columbia River Basin
(not included in the analysis of the proposed regulation) and a comparison of benefits to costs.
9.7.1 Revised Costs
EPA estimates that the combined cost for the case study mills to comply with Option A will be $58.6
million in capital and a savings of $1.6 million in annual operating costs (ERG, 1996a).
9.7.2 Human Health Benefits
Table 9-44 summarizes the results of the Agency's revised analysis of carcinogenic effects in the
case study area (the estimated reductions in statistical cancer cases come from the national risk assessment
described in Chapter 8. Based on an estimated value of a statistical life of $2.5 million to $9.0 million
(American Lung Association, 1995) and assuming all cancers are fatal, potential human health benefits from
reduced dioxin contamination in the case study area are between $60,000 and $710,000 per year.
The estimated risks and reductions in risk due to the regulation may be underestimated in the case
study area. EPA's methodology for estimating fish tissue contaminant concentrations considers each mill in
isolation and thus ignores the cumulative impact of effluent from more than one mill. As stated above, there
are five mills in the case study area.
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TABLE 9-44
POTENTIAL HUMAN HEALTH BENEFITS OF OPTION A TO LICENSED ANGLERS
IN THE LOWER COLUMBIA RIVER CASE STUDY AREA1
Angler Group
Recreational Anglers
Subsistence Anglers3
Total
Annual Reduction in Cancer
Cases2
0.019-0.062
0.005-0.017
0.024-0.079
Annual Monetized Benefits
(Millions of 1995 Dollars)
$0.05-$0.56
$0.01-$0.15
$0.0640.71
Benefits reflect reductions in cancer risk resulting from reduced levels of 2,3,7,8-TCDD and 2,3,7,8-TCDF
in fish tissue. Results are expected to underestimate benefits for the case study site because the methodology
for estimating risks does not reflect the cumulative effect of effluent from more than one mill on dioxin
concentrations in fish tissue.
2Range is based on low and high estimates of exposed population (10% to 33% of licensed anglers in
counties adjacent to the receiving stream).
3Does not include Columbia River Inter-Tribal Fish Commission members tribes (they have treaty-ceded
fishing rights in the Columbia River Basin, are not required to purchase a fishing license and, therefore, are
not in this analysis).
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9.7.2.1 Risk Assessment for Native Americans
The assessment of risk to anglers from the consumption offish was based on licensed anglers, and
their household members, who reside in counties bordering affected river reaches. Because Native Americans
are not required to purchase fishing licenses to fish within their treaty-ceded fishing grounds, the above
estimates do not capture human health benefits to Native American populations. This section provides an
assessment of risks to Native American populations from the consumption of dioxin contaminated fish from
the Columbia River, and the potential health benefits from the regulation.
The Umatilla, Nez Perce, Yakama, and Warm Springs tribes, collectively referred to as the Columbia
River Inter-Tribal Fish Commission (CRITFC) member tribes, each possess fishing rights in the Columbia
River Basin reserved by treaties, and members from each tribe fish for both ceremonial and subsistence
purposes in the Columbia River Basin. The tribes harvest both the anadromous and resident fish species
from the Lower Columbia River. The fishery resource is not only a major food source for tribal members; it
is also "an integral part of the tribes' cultural, economic, and spiritual well-being" (CRITFC, 1994).
Exposed Population. The U.S. Bureau of Census (1993) reports Native American populations on
reservations and trust lands. According to the Census, there are 1,883 Nez Perce, 1,030 Umatilla, 6,198
Yakama, and 2,871 Warm Springs Native Americans living on reservation and trust lands.
Consumption. During the fall and winter of 1991-1992, the CRITFC conducted a survey to
determine the level and nature offish consumption among Columbia River Basin tribes (CRITFC, 1994).
Based on low-end estimates offish consumption provided by respondents, the survey showed tribal members
18 years and older consume an average of 58.7 gpd offish. This rate reflects both consuming and
nonconsuming tribal members, and includes fish from all sources. Overall, 87 percent of fish is obtained
from self or family, friends, ceremonies, and tribal distributions. Nine percent offish is obtained from stores,
and 4 percent is obtained from other sources such as restaurants. The 90th percentile of consumption was
between 97 gpd and 130 gpd. Tribal members 60 years of age and older consume 74.4 gpd; nursing mothers
and females who had previously breast-fed their children consume an average of 59.1 gpd. For this
assessment, risks were assessed for an average consumption of 58.7 gpd. The midpoint of the 90th percentile
(114 gpd) provides an upper bound estimate.
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Fish Tissue Concentrations.
Background Fish Tissue Concentrations. A recent survey of the portion of the Columbia River
from Bonneville Dam to the mouth provided the data on fish tissue contaminant concentrations (Terra Tech,
1996). This survey, conducted from September 1994 to February 1995, was designed specifically to collect
human health risk assessment data. In addition to dioxin, the background risk assessed here includes risk
from arsenic (inorganic), mercury, selenium, silver, aldrin, alpha-BHC, PCBs, beta-BHC, dieldrin, gamma-
BHC, heptachlor, heptachlor epoxide, hexachlorobenzene, p,p'-DDD, p,p'-DDE, p,p'-DDT, and toxaphene.
Although the regulation will result in reduced risks only from dioxin, data availability allowed the calculation
of background risks for the range of contaminants present in fish tissue. This calculation provides
perspective on the total background risk level from fish consumption faced by Native Americans. The
contaminants listed above are a subset of the contaminants analyzed in the sampling survey that are of most
concern for human health. Not all contaminants were detected in each species. When a contaminant was
detected in any species, EPA used one-half the detection limit to estimate the degree of contamination in those
species in which the contaminant was not detected.
The sampling survey (Terra Tech, 1996) included filets of carp, largescale sucker, white sturgeon,
steelhead trout, coho salmon, and chinook salmon. The fish consumption survey (CRITFC, 1994) provides
detailed information on grams offish consumed by species for 10 species specifically listed on the survey
(salmon, trout, lamprey, smelt, whitefish, sturgeon, walleye, sucker, shad, and squawfish). Information from
these two surveys was used to construct a weighted average fish tissue concentration that reflects the actual
mix of species consumed. Salmon and trout are the most consumed species, and the species listed in the
survey comprise 66 percent of total mean consumption. The species listed in the survey were matched as
closely as possible to the available sampling data, and contaminant concentrations for the consumption of
species not listed in the CRITFC survey (44 percent of total consumption) were calculated as an average of
species consumed. Note that carp, among the most contaminated species sampled, was not included in the
weighted concentration because it was not specifically listed in the CRITFC survey.
Post-Regulation Fish Tissue Concentrations. EPA modeled the background and post-regulation
concentrations of TCDD and TCDF in fish tissue for each mill using the DRE model (U.S. EPA, 1997). The
percentage reduction in TCDD and TCDF was applied to the background concentrations described above to
calculate post-regulation concentrations. There are six bleached kraft mills in the Lower Columbia River
9-130
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basin. The average percentage reduction across these mills was used for this analysis. EPA used a
conservative estimate of one-half the detection limit where dioxins and furans are not detected in pulp mill
effluent of mills that use chlorine bleaching compounds. This may overestimate the remaining dioxin-related
risks to Native Americans after compliance with either Option A or Option B. Both Option A and Option B
virtually eliminate dioxin from pulp and paper mill discharges.
Central Estimate Risk Level and Benefits. Cancer risk is assessed using standard EPA
assumptions regarding body weight and exposure (see appendix), and cancer slope factors and oral RFDS for
TCDD and TCDF consistent with those used previously in this EA (U.S. EPA, 1997). The cancer slope
factors and oral RFDS for contaminants other than TCDD and TCDF are from Tetra Tech (1996) unless
otherwise noted in the appendix. Assuming consumption of 58.7 gpd, the background risk from all
contaminants for the Columbia River Native American anglers is 1.15 x 10~4. The selected BAT/PSES
(Option A) reduces the background risk to 1.03 x 10~4, although virtually all cancer risk from pulp and paper
mills is eliminated. All of the remaining cancer risk is from sources other than pulp and paper mills. The
selected BAT will reduce lifetime cancer cases by 0.15, yielding annualized benefits of $5,000 to $19,000,
based on a 70 year life and a value of a statistical life of between $2.5 million and $9.0 million (American
Lung Association, 1995).
Upper Bound Risk Level and Benefits. Assuming consumption of 114 gpd, Columbia River
Native American anglers face a somewhat excessive background cancer risk from the consumption of dioxin-
contaminated fish. Background cancer risk for the Columbia River Native American anglers is 2.23 x 10~4.
Under the selected BAT/PSES, background risk is reduced to 2.0 x 10~4. Lifetime cancer cases are reduced
by 0.28, yielding annualized benefits of $10,000 to $36,000.
Uncertainties in the Estimation of Risk. There are numerous sources of uncertainties in the
estimate of background risks to Native Americans fishing the Lower Columbia River, and in the estimated
reduction in risks from implementation of the regulation. Variations in health risks may occur, depending on
the factors described in Section 9.1.6 (with the exception of the uncertainty associated with other
contaminants in fish; this analysis considers contaminants other than dioxin). Additional uncertainties
specific to this risk assessment include:
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Accuracy of Fish Tissue Contaminant Concentrations Used to Determine Risks. The
fish tissue concentrations used to assess risks are estimates derived from EPA's DRE model
and, as such, may not represent site conditions. Moreover, the assumption of one- half
detection limits is very conservative.
Accuracy of Estimates of Reductions in Contamination. The estimated reduction in fish
tissue contamination may not represent actual conditions. It might take years for fish tissue
contaminant reductions to occur, or they might occur sooner than predicted.
9.7.3 Summary of Water-Related Benefits
Table 9-45 provides a summary of the revised benefits of the regulation for the Lower Columbia
River case study. Potential benefits total between $1.5 million and $8.6 million per year in 1995 dollars.
These benefits reflect a downward revision from the water-related case study benefits estimated in the RIA
for the proposed rule ($1.8 to $12.5 million per year in 1992 dollars).
9.7.4 Air Benefits
Table 9-46 presents revised estimates of emission reductions and air-related benefits of the selected
options at four bleached kraft pulp and paper mills on the Lower Columbia River. Annual MACT I air-
related benefits for the Lower Columbia River region range from a disbenefit of $26.9 million to a benefit of
$56.2 million under Option A. Annual MACT II air-related benefits are estimated at $0.7 million under
Option A.
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TABLE 9-45
POTENTIAL ANNUAL MONETIZED WATER-RELATED BENEFITS OF THE
PULP AND PAPER REGULATION FOR THE LOWER COLUMBIA RIVER CASE STUDY
(1995 Dollars)
Benefit Category
Human Health1
Licensed Anglers
Columbia River Basin Tribes
Recreational Angling
Commercial Angling
Nonconsumptive Use
Ecologic/Passive Use
Other Benefits
Total Monetized Benefits
Millions of Dollars
$0.1-$0.7
$0.0-$0.0
$0.8-$2.4
$0.1-$0.8
$0.140.2
$0.444.5
+
$1.548.6
+ Positive Benefits expected but not monetized.
Results are expected to underestimate benefits because the methodology for estimating risks does not reflect
the cumulative effect of effluent from more than one mill on dioxin concentrations in fish tissue.
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TABLE 9-46
POTENTIAL ANNUAL AIR-RELATED BENEFITS OF THE SELECTED OPTIONS FOR
THE BLEACHED KRAFT PULP AND PAPER MILLS ON
THE LOWER COLUMBIA RIVER
Regulatory Option
Option A and MACT I
VOC
Participate Matter
SO2
TOTAL Monetized Benefits
Option A and MACT II
Participate Matter
Emission Reductions
(Mg/yr)
0-21,774
(0.56)1
(5,500)-0
NA
57
Annual Value
(millions of $1995)
$0-$56.2
$02
($26.9)-$0
($26.9)-$56.2
$0.7
1 Numbers in parentheses represent emissions increases and related increased social costs.
2 Disbenefits of $7,067 per year.
NA = Not applicable.
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9.7.5 Comparison of Benefits and Costs
Table 9-47 presents a comparison of the monetized benefits and annualized costs of the regulation.
EPA estimates that the annual benefits of implementing the selected regulatory options (Option A, final
MACT I, and proposed MACTII, Alternative A) range from a disbenefit of $24.7 million to a benefit of
$65.5 million and estimated annualized costs are $16.6 million. The monetized benefits do not reflect all
benefits categories.
9.8 CONCLUSIONS
The case studies presented in this chapter provide insight into both the types and potential magnitude
of benefits expected to result from implementation of the pulp and paper rulemaking. Table 9-48 presents a
summary of the monetized benefits estimates for the retrospective case studies and a comparison to costs. A
large portion of the benefits for these case studies have already been realized; however, some benefits,
particularly those associated with implementation of air controls, would occur after implementation of the
final rule. Table 9-49 presents a summary of the revised estimated benefits and costs for the prospective
study sites at which the air or water controls that will be mandated by the regulation have not been
implemented. An analysis of the representativeness of the case study sites with respect to the universe of
affected sites is presented in Chapter 8.
case
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TABLE 9-47
ANNUAL CASE STUDY BENEFITS AND COSTS OF OPTION A
FOR THE FINAL PULP AND PAPER REGULATION:
LOWER COLUMBIA RIVER CASE STUDY
Benefits and Costs
Millions of 1995 Dollars per Year
Annual Monetized Benefits l
Water
Air (MACT I)
Air (MACT II)
Water and MACT I
Water, MACT I, and MACT II3
$1.5-$8.6
($26.9)-$56.2
$0.7
($25.4)-$64.8
($24.7)-$65.5
Annualized Costs2
Water and MACT I
Water, MACT I, and MACT II
$14.0
$16.6
1 Steady state benefit levels omitting nonmonetizable benefits.
2Based on annuatized pretax compliance costs, reflecting a 7% real discount rate and a 16 year accounting
period.
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TABLE 9-48
SUMMARY OF RETROSPECTIVE CASE STUDY EVALUATIONS OF ANNUAL
MONETIZED BENEFITS AND COSTS OF THE SELECTED OPTION1
FOR THE FINAL PULP AND PAPER REGULATION
(Millions of 1995 Dollars)
Case Study Site
Tombigbee and
Mobile Rivers
Pigeon River
Upper
Columbia
River
Samoa
Peninsula
Retrospective Portion
Annual Monetized Benefits 2
Water
Air
Combined Water and Air
Annualized Costs 4
Water
Air
Combined Water and Air
$1.1-$12.0
7
$1.1-$12.0
savings of $1.8
7
savings of $1.8
$2.7-$8.7
7
$2.7-$8.7
$5.8
7
$5.8
$1.5-$11.63
7
$1.5-$11.63
$3.0
7
$3.0
$0.1-$1.4
7
$0.1-$1.4
$3.9
7
$3.9
Prospective Portion
Annual Monetized Benefits 2
Water
Air
Combined Water and Air
Annualized Costs 4
Water
Air
Combined Water and Air
+
($55.1)-$194.9
($55.1)-$194.9
$24.2
$10.1
$34.3
$0
($3.7)-$7.8
($3.7)-$7.8
$0
$1.3
$1.3
$0
NA
$0
$0
NA
$0
$0
($5.0)-$10.1
($5.0)-$10.1
$0
$1.1
$1.1
Retrospective and Prospective Combined
Annual Monetized Benefits 2
Water
Air
Combined Water and Air
Annualized Costs 4
Water
Air
Combined Water and Air
$1.1-$12.0
($55.1)-$194.9
($54.0)-$206.9
$22.4
$10.1
$32.5
$2.7-$8.7
($3.7)-$7.8
($1.0)-$16.5
$5.8
$1.3
$7.1
$1.5-$11.63
NA
$1.5-$11.63
$3.0
NA
$3.0
$0.1-$1.4
($5.0)-$10.1
($4.9)-$11.5
$3.9
$1.1
$5.0
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TABLE 9-48 (continued)
? Retrospective air costs and benefits are not estimated.
+ Potential benefits from additional upgrades to meet compliance with rule are not estimated.
NA Benefits and costs for air controls are not available for the Upper Columbia River case study because
the mill is located in Canada.
1 Option A, MACT I, and MACT II Alternative A.
2Steady state benefit levels omitting nonmonetizable benefits.
3Benefits for Option B are estimated to be $1.5 to $11.6.
4Based on annualized pretax compliance costs, reflecting a 7% real discount rate and a 16 year accounting
period.
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TABLE 9-49
SUMMARY OF REVISED PROSPECTIVE CASE STUDY EVALUATIONS OF
ANNUAL MONETIZED BENEFITS AND COSTS OF THE SELECTED OPTION1
FOR THE FINAL PULP AND PAPER REGULATION
(Millions of 1995 Dollars)
Annual Monetized Benefits 2
Water
Air (MACT I)
Air (MACT II)
Water and MACT I
Water, MACT I, and MACT II
Annualized Costs 3
Water and MACT I
Water, MACT I, and MACT II 4
Penobscot
River
$0.7-$2.3
($9.5)-$7.7
$0.1
($8.8)-$10.0
($8.7)-$10.1
A
A
Wisconsin
River
$0.1-$1.5
($16.9)-$15.6
$2.1
($16.8)-$17.1
($14.7)-$19.2
$8.0
$9.3
Lower
Columbia
River
$1.5-$8.6
($26.9)-$56.2
$0.7
($25.4)-$64.8
($24.7)-$65.5
$14.0
$16.6
A. Confidentiality agreements preclude disclosure of total costs for this site. For comparison, the estimated
average annualized water-related cost for bleached papergrade kraft mills is $3.0 million.
1 Option A.
2Steady state benefit levels, omitting nonmonetizable benefits.
3Based on annualized pretax compliance costs, reflecting a 7% real discount rate and a 16 year accounting
period.
4MACT II floor Option (#1).
9-139
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9.9 REFERENCES
Reference material supporting Chapter 9 is located in the Pulp and Paper Water Docket.
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9-140
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B.C. Environment Ministry of Health. Date unknown. Lower Columbia River fish consumption summary,
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FAA. 1983. Survey of the sport and commercial fisheries of the Lower Tombigbee River and Mobile Delta.
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Hagler Bailly Consulting. 1995. Columbia River System Operation Review recreation impacts: demand
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Hay, M.J. 1988. Net economic values of nonconsumptive wildlife-related recreation. Division of Policy and
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HSU. 1988. 301(m) NPDES Permit Recreational Activity Impact Assessment Program final report.
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Jaegel, A.F. and K.A. Girard. 1995. Fact sheet: TCP bleaching at the Louisiana-Pacific Corporation Samoa
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Jolly, C. and J. Leckrone. 1993. Managing Lake Roosevelt—an international challenge. Proceedings of the
American Water Resources Association Annual Symposium. Water Docket, DCN 14,684.
Kaoru, Y. 1994. Discrete-choice contingent valuation of beach recreation benefits for tourists and local
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Kask, S.B. and J.F. Shogren. 1994. Benefit transfer protocol for long-term health risks valuation: a case of
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Kleinschmidt Associates. 1995. Carolina Power & Light Company Walters Hydroelectric Project (FERC
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DCN 14,812.
Knuth, B.A. and N.A. Connelly. 1992. Is New York's health advisory on fish consumption making a
difference? Coastlines. 22(4):4-5. Water Docket, DCN 14,711.
Knuth, B.A., N.A. Connelly, and M.A. Shapiro. 1993. Angler attitudes and behavior associated with Ohio
River health advisories. Prepared by the Human Dimensions Behavior Research Unit of the Department of
Natural Resources of the New York State College of Agriculture and Life Sciences. HDRU Series No. 93-6.
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Leeworthy, V.R. and P.C. Wiley. 1993. Recreational use value for three Southern California beaches.
Strategic Environmental Assessments Division, Office of Ocean Resource Conservation and Assessment,
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Leeworthy, V.R, D.S. Schruefer, and P.C. Wiley. 1991. A socioeconomic profile of recreationists at public
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Liebe, R.P. Cobban, B. Holms, J. Parchomchuk, T. Tripp, and J. Van Oostdam. 1994. Dioxins and furans in
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9-144
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Manuel,! 1993. The Pigeon flies again. Canoe. 21(4): 17-20. Water Docket, DCN 14,731.
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recreation on the national forests: twelve types of primary activity trips across nine forest regions. Research
Paper RM-289. Rocky Mountain Forest and Range Experiment Station, Forest Service, U.S. Department of
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water pollution control. Resources for the Future, Washington, DC. September. Water Docket, DCN
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Docket, DCN 14,689.
NC DEHNR. Undated. Draft basinwide data summary for the French Broad River Basin. North Carolina
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NC DEHNR. 1994. Memorandum to Ken Eagleson from David Penrose, Division of Environmental
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NC DEM. Unpublished. Data on dioxin sampling conducted by Champion International, Carolina Power &
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NCWRC. 1993. 1990 North Carolina angler opinion survey. North Carolina Wildlife Resources
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Wheat, D. 1983. The floater's guide to Colorado. Falcon Press Publishing, Billings, MT. Water Docket,
DCN 14,722.
Whitehead, J.C. 1991. Benefits of quality changes in recreational fishing: a single-site travel cost approach.
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Zabik, M.E., M.J. Zabik, and H. Humphrey. 1993. Assessment of contaminants in five species of Great
Lake fish at the dinner table. Final Report. Michigan State University, East Lansing, MI. Water Docket,
DCN 14,709.
Ziemer, R.F., W.N. Musser, and R.C. Hill. 1980. Recreation demand equations: Functional form and
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CHAPTER 10
COMPARISON OF MONETIZED BENEFITS AND COSTS
This chapter provides a comparison of the monetized benefits and costs of the pulp and paper
rulemaking (i.e., Option A, MACT I, and the selected alternative for MACTII). The comparison is presented
in a variety of ways. First, we present the national estimate of annual benefits and costs based on the
methodology applied in Chapter 8. These values are then examined over a 30-year period to evaluate the
impact of benefits that accrue in the future. Finally, annual benefits and costs of the case studies are
presented in Section 10.2.
As discussed in Chapter 8, EPA is unable to place a value on all benefit categories, including several
health and welfare endpoints as well as entire pollutant categories, that will accrue as a result of the pulp and
paper rulemaking. Therefore, monetized benefits are underestimated. Given this shortfall in the benefit
estimates, it would be misleading to subtract benefits from the estimated costs and make conclusions about
the net benefits of the regulation to society. In the final section of this chapter, conclusions are presented
based only on a general comparison of benefits and costs.
10.1 SUMMARY OF NATIONAL MONETIZED BENEFITS AND COSTS
EPA monetizes national benefits and costs of the selected regulatory options based on both air- and
water-related impacts. On an annual basis, EPA estimates that the combined air- and water-related national
benefits, when fully realized, will range from a disbenefit of $727 million to a benefit of $1,496 million. As
shown in Table 10-1, the large range in total benefits is driven by the large range in estimated air-related
benefits. EPA estimates compliance costs are $420 million (Table 10-1), about the midpoint of the benefits
range.
EPA also estimates the present value of these benefits and costs over a 30-year period. A 30-year
period provides a reasonable estimate of cumulative benefits and costs that can be expected to result from the
rule. This approach assumes that the characteristics of the industry and the affected population 30 years in
10-1
-------
TABLE 10-1
ANNUAL BENEFITS AND COSTS OF THE SELECTED REGULATORY OPTIONS
Monetized Benefits" and Costs
(Millions of 1995 dollars per year)'
Water-Related Benefits
Human health0
Recreational angling
"Contaminant-free" fishery
Increased participation"1
Sludge
Total Water-Related Benefits
Air-Related Benefits
MACTI and Option A
MACTII Alternative A
Total Air-Related Benefits
Total Combined Benefits
$2-$22
$2-$19
+
$8-$16
$12-$57
($1,040)-$1,054
$302-$384
($739)-$l,438
($727)-$l,496
Water-Related Costs
Air-Related Costs
MACT I
MACT II
Total Air-Related Costs
Total Combined Costs
$263
$125
$32
$157
$420
aNational-level benefits are not inclusive of all categories of benefits that can be expected to result
from the regulation.
bTotals may not add due to rounding.
°Does not include reduction in noncancer health effects and risk reductions (cancer and
noncancer) to unlicensed anglers such as Native Americans with treaty-ceded fishing rights.
dFor example, an increase in participation of 20% would generate benefits on the order of $5
million to $15 million annually.
10-2
-------
the future will be similar to the characteristics that exist today. While it is likely that some characteristics will
change due to population growth or the development of new technologies that alter production processes (and
thus emissions) or creates substitute markets for pulp and paper, this analysis is a useful tool to compare
benefits and costs over time.
The present value calculation employs both a 7 percent discount rate, in accordance with OMB
guidance, as well as a 3 percent social rate of time preference to demonstrate the sensitivity of the results to
the interest rate chosen. The present value calculation reflects phase-in periods for water-related benefits to
account for lags in the realization of these benefits. EPA phased in recreational angling values over 2 years
and human health values over 5 years (i.e., at full value in years 3 and 6, respectively). Sludge benefits and
air-related benefits are not phased in. The cost calculation reflects capital costs in years 1 and 21 (including a
7 percent opportunity cost on capital), and O&M costs in years 2 through 30. Table 10-2 summarizes the
annual and present value estimates for national monetized benefits and costs. EPA did not calculate net
benefits because only a portion of air- or water-related benefits categories have been monetized at the
national level, although annual and present value costs using either discount rate fall within the corresponding
range of benefits. The case study examples provide somewhat more comprehensive estimates of water-
related benefits.
10.2 SUMMARY OF CASE STUDY BENEFITS AND COSTS
The case studies provide greater insight into both the types and potential magnitude of water-related
benefits expected to result from implementation of the pulp and paper rulemaking. Table 10-3 presents a
summary of the monetized benefit and cost estimates for the three original case studies and the four new case
studies. The original case studies evaluate water controls that will be applied as a result of the final effluent
guidelines, while new case studies are based on mills that have already implemented water-related process
changes similar to what will be required in the final rule. The estimation of air benefits and costs for all case
studies are based on the air controls that are assumed to be applied after implementation of the rule.
A large portion of the benefits (and costs) for the new case studies have already been realized;
however, some benefits (and costs), particularly those associated with implementation of air controls, would
occur after implementation of the final rule. For the original case studies, the air and water controls that will
10-3
-------
TABLE 10-2
ANNUAL AND PRESENT VALUES OF BENEFITS AND COSTS FOR THE
SELECTED REGULATORY OPTIONS FOR THE FINAL PULP AND PAPER
REGULATION
(Millions of 1995 Dollars)
Combined Monetized
Benefits
Combined Costs
Annual Value
($727) -$1,496
$420
Present Value"
7% Discount
Rate
($9,654) -
$19,788
$5,348
3% Discount
Rate
($14,675) -
$30,120
$7,563
aPresent value over a 30 year period. The calculation reflects capital costs in years
1 and 21 (including a 7% escalation to reflect the opportunity cost of capital), and
O&M costs in years 2 through 30.
10-4
-------
TABLE 10-3
ANNUAL MONETIZED BENEFITS AND ANNUALIZED COSTS OF THE SELECTED
REGULATORY OPTIONS FOR THE FINAL PULP AND PAPER RULE
(Millions of 1995 Dollars)
Site
Water-Related
Benefits
Air-Related Benefits"
MACTI
MACT II
Total
Monetized
Benefits
Total
Compliance
Costs
Original Case Studies
Penobscot River
Wisconsin River
Lower Columbia
River
$0.7-$2.3
$0.1-$1.5
$1.5-$8.6
($9.5)-$7.7
($16.9)-
$15.6
($26.9)-
$56.2
$0.1
$2.1
$0.7
($8.7)-$10.1
($14.7)-$19.2
($24.7)-$65.5
b
$9.3
$16.6
New Case Studies
Lower Tombigbee
and Mobile Rivers
Pigeon River
Samoa Peninsula
Upper Columbia
River/Lake
Roosevelt
$1.1-$12.0
$2.7-$8.7
$0.1-$1.4
$1.5-$11.6
($136.8)-
$113.2
($5.8)-$5.7
($5.0)-
$10.1
NA
$81.7
$2.1
$0.0
NA
($54.0)-
$206.9
($1.0) -$16.5
($4.9)-$11.5
$1.5-$11.6
$32.5
$7.1
$5.0
$3.0
aResults are reported for the final MACT I standard and the proposed MACT II alternative in
conjunction with the final BAT/PSES option.
bConfidentiality agreements preclude disclosure of total costs for this site.
NA Not applicable.
10-5
-------
be required by the regulation have not been implemented, and consequently, the estimated benefits and costs
have not yet been realized. As in the national estimates of monetized benefits, the large range in total benefits
is driven by the large range in estimated air-related benefits. An analysis of the representativeness of the
water components of the case study sites with respect to the universe of affected sites indicates that the
benefits at the case study facilities may under-represent the aggregate potential benefits of the final rule, but
may also underestimate potential costs (see Chapter 8).
Because many benefits categories are not monetized at the national level, the case studies provide a
more comprehensive assessment of the water-related benefits that may be expected at individual sites. To
provide a sense of the potential magnitude of water-related benefits that have not been captured in the
monetized benefits at the national level, EPA extrapolated water-related benefits from the case studies to the
national level based on comparability of receiving water and sociodemographic characteristics. Using this
approach, EPA estimates that total national water-related benefits could range from $91 million to $451
million per year, approximately eight times the portion of water-related benefits EPA monetized at the
national level ($12 million to $57 million per year). Because the same methodology to estimate air benefits
and costs at the national level is applied to the case studies, air benefits from the case studies are not
extrapolated to the national level.
10.3 CONCLUSIONS
Although several benefit categories are not monetized, a comparison of both annual and present
value benefits and costs indicates that the costs fall within the range of monetized benefits of the final
rulemaking. The case studies illustrate that the national level water quality benefits assessment is missing
some potentially valuable categories of benefits, particularly those related to recreational water use. As with
the national level assessment, costs fall within the estimated range of benefits for the six case studies where
both costs and benefits are presented.
10-6
-------
APPENDIX A
PRICE INCREASE METHODOLOGY
A-l
-------
A.1 PRICE INCREASE CALCULATION
The percentage that a producer can increase his or her prices due to an increase in input costs can be
calculated by the following formula for each product i:
P
8-5
N
EC.
(A.I)
P
Where:
dP/P = the percentage increase in the price of product i
e = the price elasticity of supply for product i
6 = the price elasticity of demand for product i
Q = the pre-tax compliance cost for product i
Qj = the equilibrium quantity of domestic production of product i given price P
P = the pre-pollution control equilibrium price for product i
N = the total number of mills which produce i
i = bleached papergrade kraft pulp; papergrade sulfite pulp; dissolving pulp (both kraft and
sulfite); unbleached kraft pulp, or semichemical products
The term:
(A'2)
represents the percent change in price for a given shift in the supply curve as represented by a percent change
in cost. Dividing total compliance cost (2Q) by total quantity (Q,) yields the compliance cost per unit.
Dividing this figure by equilibrium price:
(A.3)
A-2
-------
expresses the increase in unit costs due to compliance as a percentage of the equilibrium price; in other
words, the shift in the supply curve as a percentage of the current price.
The percentage price increase at integrated mills with non-pulp products can be calculated as:
dP_ __ ^ dP_ Q^ + ^ dP_ dP_
p >m L^/i ^ p '' 0 t-^i ^ p '' 9 ^ p '
z
Where again for all mills m:
(dP/P)j = the percentage increase in the price of product i
Qj = the equilibrium level of production of product i given price P
P = the pre-pollution control equilibrium price for product i
N = the total number of mills that produce i
i = bleached papergrade kraft pulp; papergrade sulfite pulp; dissolving pulp (both
kraft and sulfite); unbleached kraft pulp, or semichemical products
j = a product produced with i
cCy = the quantity of pulp i needed to produce 1 ton of product j
The first summation operator calculates the percentage price changes for pulp products i, which are then
weighted by the percentage of market shipments of pulp product i out of total shipments by mill m. The
second summation operator calculates the percent increase in price for each product j sold by mill m, which
uses pulp i as an input.
Table A-l summarizes the elasticity, price, and quantity data taken from EPA, 1993. A price
increase for bleached papergrade kraft, for example, is calculated as:
dP e ^Q\ .186 9,207,000 (A.5)
P e-8 P (.186 - (-.413)) 646.49
where SQ is the specific option's sum of annualized pre-tax compliance costs for all mills in that
subcategory.
A-3
-------
TABLE A-l
PRICE PERCENTAGE INCREASE COMPONENTS
Variable
Supply Elasticity (e)
Demand Elasticity (5)
Equilibrium Price
($/ton)
Equilibrium Quantity
(off-machine tons)
Total Annualized Pre-
tax Compliance Costs
($)
Sub category
Coefficient
Bleached
Papergrade Kraft
Pulp
0.186
-0.413
$646.49
9,207,000
depends on specific
option
5.21e-ll
Papergrade Sulfite
Pulp
0.232
-1.051
$556.77
359,000
depends on specific
option
9.05e-10
Dissolving
Pulps
0.201
-0.750
$735.33
1,470,000
depends on specific
option
1.95e-10
Unbleached Kraft
Pulp
0.267
-0.913
$384.37
320,000
depends on specific
option
1.84e-09
Semichemical
0.276
-0.353
$361.50
5,927,000
depends on
specific option
2.05e-10
Source: EPA, 1993.
A-4
-------
Given that the only parameter that varies for a product is the cost of the option, Equation 3.5 can be
restated to calculate product-specific coefficients to be used with the option costs. This information is
summarized in the last line of Table A-l. The specific percentage price increase for each option is used to
adjust forecasted earnings in the closure analysis (see Chapter 3).
A.2 DERIVATION OF PRICE INCREASE FORMULA
Start with a constant elasticity supply curve where the variable k represents a percentage change in
production costs:
(A 6)
and a constant elasticity demand curve:
Qd = bP& (A.7)
In equilibrium:
(A-8)
A-5
-------
Take the total derivative of the equilibrium condition:
-ec(\+kye-lPedk + ec(\+kyeP£-ldP = dbP5~ldP (A.9)
where for convenience the following derivatives:
dc = db = de = dd = 0 (A. 10)
Rearranging:
zc(l+k}-E~lPEdk (A.ll)
Divide through by the coefficient for dk:
[zc(l+k}-K-lYlp-E(zc(l+kyKPK-1 - dbP&~l)dP = dk (A.12)
Multiply by P to the power negative epsilon:
[zc(l+k}-K-l]-l(zc(l+kyKp-1 - dbP&-l~E)dP = dk (A.13)
and divide the left hand side by P:
e-lle 5-£
[ec(\+kye-lYl(ec(\+kye - dbP5-£)— = dk (A.14)
A-6
-------
Now the equilibrium condition implies that:
= £.(1+*)-
Substitute this term into the equation:
_ ^
( J
Simplify:
Rearrange the left hand side:
=dk
Divide through for the final result:
dP_ = E dk
P ~ (s-6)(l+/t
A-7
(A. 17)
-------
A.3 REFERENCES
U.S. EPA. 1993. Economic Impact and Regulatory Flexibility Analysis of Proposed Effluent Guidelines
and NESHAP for the Pulp, Paper, and Paperboard Industry. EPA/82l/R-93/021. Washington, DC: Office
of Water. November. Pulp and Paper Water Docket, DCN 8,587.
A-8
-------
APPENDIX B
POLLUTANT REMOVALS
B-l
-------
TABLE B-l
POLLUTANT REMOVALS
PAPERGRADE KRAFT SUBCATEGORY-DIRECT DISCHARGERS
CHEMICAL NAME
CHLOROFORM
2,3,7,8-TETRACHLORODIBENZO-P-DIOXIN
2,3,7,8-TETRACHLORODIBENZOFURAN
TRICHLOROSYRINGOL
2,4, 5-TRICHLOROPHENOL
2,4,6-TRICHLOROPHENOL
3,4,5-TRICHLOROCATECHOL
3,4,5-TRICHLOROGUIACOL
3,4,6-TRICHLOROCATECHOL
3,4,6-TRICHLOROGUIACOL
4, 5,6-TRICHLORGUI ACOL
TETRACHLOROCATECHOL
TETRACHLOROGUAIACOL
2,3,4,6-TETRACHLOROPHENOL
PENTACHLOROPHENOL
POLLUTANTS REMOVED (pounds) POL]
OPTION A OPTION B TOXIC WEIGHTING FACTOR
7.82E+04
2.18E-02
2.16E-01
5.99E+03
8.49E+01
1.59E+04
4.08E+04
1.32E+04
1.21E+02
1.04E+03
7.81E+03
5.68E+03
2.23E+03
1.22E+01
2.52E+02
7.82E+04
2.38E-02
2.19E-01
6.36E+03
2.83E+02
1.63E+04
4.15E+04
1.36E+04
3.88E+02
1.28E+03
8.18E+03
6.37E+03
2.68E+03
2.46E+02
6.38E+02
5.71E-03
4.24E+08
6.69E+06
1.06E-01
1.25E+00
1.93E+00
3.11E-01
7.47E-01
1.47E-01
1.85E-01
1.81E+00
7.67E-01
1.75E+00
5.62E-01
4.99E-01
TOTALS:
LUTANTS REMOVED (pound equivalents)
OPTION A OPTION B
4.46E+02
9.23E+06
1.45E+06
6.34E+02
1.06E+02
3.08E+04
1.27E+04
9.88E+03
1.78E+01
1.92E+02
1.41E+04
4.36E+03
3.90E+03
6.84E+00
1.26E+02
10,755,545
4.46E+02
1.01E+07
1.47E+06
6.74E+02
3.54E+02
3.15E+04
1.29E+04
1.02E+04
5.70E+01
2.36E+02
1.48E+04
4.89E+03
4.70E+03
1.38E+02
3.18E+02
11,641,298
Conversion factor from kg to Ibs. =
2.2046
B-2
-------
TABLE B-2
POLLUTANT REMOVALS
PAPERGRADE KRAFT SUBCATEGORY-INDIRECT DISCHARGERS
POLLUTANTS REMOVED (pounds) POLLUTANTS REMOVED (pound eqmvaleni
CHEMICAL NAME OPTION A OPTIONS TOXIC WEIGHTING FACTOR OPTION A OPTIONS
CHLOROFORM
2,3,7,8-TETRACHLORODIBENZO-P-DIOXIN
2,3,7,8-TETRACHLORODIBENZOFURAN
TRICHLOROSYRINGOL
2,4,5-TRICHLOROPHENOL
2,4,6-TRICHLOROPHENOL
3,4,5-TRICHLOROCATECHOL
3,4,5-TRICHLOROGUIACOL
3 ,4,6-TRICHLOROCATECHOL
3 ,4,6-TRICHLOROGUIACOL
4,5,6-TRICHLORGUIACOL
TETRACHLOROCATECHOL
TETRACHLOROGUAIACOL
2,3 ,4,6-TETRACHLOROPHENOL
PENTACHLOROPHENOL
9.43E+03
2.04E-03
1.97E-02
5.26E+02
1.01E+01
1.33E+03
2.20E+03
7.82E+02
8.54E+00
9.61E+01
5.31E+02
4.85E+02
2.14E+02
4.27E+00
8.54E+00
9.43E+03
2.20E-03
1.99E-02
5.56E+02
2.78E+01
1.36E+03
2.26E+03
8.13E+02
3.50E+01
1.20E+02
5.62E+02
5.37E+02
2.58E+02
2.85E+01
3.50E+01
5.71E-03
4.24E+08
6.69E+06
1.06E-01
1.25E+00
1.93E+00
3.11E-01
7.47E-01
1.47E-01
1.85E-01
1.81E+00
7.67E-01
1.75E+00
5.62E-01
4.99E-01
TOTALS:
5.38E+01
8.63E+05
1.32E+05
5.57E+01
1.26E+01
2.56E+03
6.85E+02
5.84E+02
1.26E+00
1.78E+01
9.62E+02
3.72E+02
3.74E+02
2.40E+00
4.26E+00
1,000,467
5.38E+01
9.32E+05
1.33E+05
5.90E+01
3.48E+01
2.62E+03
7.04E+02
6.07E+02
5.14E+00
2.22E+01
1.02E+03
4.12E+02
4.52E+02
1.60E+01
1.75E+01
1,070,965
Conversion factor from kg to Ibs. =2.2046
B-3
-------
TABLE B-3
POLLUTANT REMOVALS
PAPERGRADE SULFITE SUBCATEGORY-DIRECT DISCHARGERS
CHEMICAL NAME
CHLOROFORM
2,3,7,8-TETRACHLORODIBENZO-P-DIOXIN
2,3 ,7,8-TETRACHLORODIBENZOFURAN
TRICHLOROSYRINGOL
2,4,5-TRICHLOROPHENOL
2,4,6-TRICHLOROPHENOL
3,4,5-TRICHLOROCATECHOL
3,4,5-TRICHLOROGUIACOL
3 ,4,6-TRICHLOROCATECHOL
3 ,4,6-TRICHLOROGUIACOL
4,5,6-TRICHLORGUIACOL
TETRACHLOROCATECHOL
TETRACHLOROGUAIACOL
2,3 ,4,6-TETRACHLOROPHENOL
PENTACHLOROPHENOL
POLLUTANTS REMOVED
(pounds)
OPTION A
1.06E+04
1.42E-03
1.42E-02
2.65E+02
1.69E+01
4.63E+02
1.53E+03
5.21E+02
2.32E+01
7.07E+01
3.56E+02
3.37E+02
1.54E+02
1.51E+01
2.32E+01
TOXIC WEIGHTING FACTOR
5.71E-03
4.24E+08
6.69E+06
1.06E-01
1.25E+00
1.93E+00
3.11E-01
7.47E-01
1.47E-01
1.85E-01
1.81E+00
7.67E-01
1.75E+00
5.62E-01
4.99E-01
TOTALS:
POLLUTANTS REMOVED
(pound equivalents)
OPTION A
6.07E+01
6.01E+05
9.47E+04
2.81E+01
2.11E+01
8.94E+02
4.77E+02
3.89E+02
3.40E+00
1.31E+01
6.44E+02
2.59E+02
2.69E+02
8.48E+00
1.16E+01
699,061
Conversion factor from kg to Ibs. = 2.2046
B-4
-------
TABLE B-4
POLLUTANT DISCHARGES
PULP, PAPER, AND PAPERBOARD INDUSTRY
CHEMICAL NAME
CHLOROFORM
2,3,7,8-TETRACHLORODIBENZO-P-DIOXIN
2,3,7,8-TETRACHLORODIBENZOFURAN
TRICHLOROSYRINGOL
2,4, 5-TRICHLOROPHENOL
2,4,6-TRICHLOROPHENOL
3,4,5-TRICHLOROCATECHOL
3,4,5-TRICHLOROGUIACOL
3,4,6-TRICHLOROCATECHOL
3,4,6-TRICHLOROGUIACOL
4, 5,6-TRICHLORGUIACOL
TETRACHLOROCATECHOL
TETRACHLOROGUAIACOL
2,3,4,6-TETRACHLOROPHENOL
PENTACHLOROPHENOL
POLLUTANTS DISCHARGED (pounds)
POLLUTANTS DISCHARGED (pound equivalents)
TOXIC
Direct Indirect WEIGHTING
All Mills Dischargers Dischargers FACTOR
1.19E+05
3.53E-02
2.67E-01
8.29E+03
1.33E+03
1.93E+04
4.75E+04
1.60E+04
2.46E+03
2.52E+03
1.02E+04
9.42E+03
5.17E+03
1.29E+03
2.75E+03
1.07E+05
3.25E-02
2.47E-01
7.63E+03
1.22E+03
1.78E+04
4.51E+04
1.51E+04
2.27E+03
2.32E+03
9.55E+03
8.72E+03
4.76E+03
1.22E+03
2.55E+03
nd
nd
nd
nd
nd
nd
nd
nd
nd
nd
nd
nd
nd
nd
nd
5.71E-03
4.24E+08
6.69E+06
1.06E-01
1.25E+00
1.93E+00
3.11E-01
7.47E-01
1.47E-01
1.85E-01
1.81E+00
7.67E-01
1.75E+00
5.62E-01
4.99E-01
TOTALS:
All Mills
6.78E+02
1.50E+07
1.79E+06
8.79E+02
1.66E+03
3.72E+04
1.48E+04
1.20E+04
3.62E+02
4.66E+02
1.85E+04
7.22E+03
9.06E+03
7.25E+02
1.37E+03
16,847,136
Direct
Dischargers
6.12E+02
1.38E+07
1.65E+06
8.09E+02
1.53E+03
3.43E+04
1.40E+04
1.13E+04
3.33E+02
4.29E+02
1.73E+04
6.69E+03
8.33E+03
6.86E+02
1.27E+03
15,523,922
Indirect
Dischargers
nd
nd
nd
nd
nd
nd
nd
nd
nd
nd
nd
nd
nd
nd
nd
1,323,235
'nd' = not disclosed due to confidentiality.
Conversion factor from kg to Ibs. = 2.2046
B-5
-------
TABLE B-5
INDUSTRY COMPARISON OF BAT COST-EFFECTIVENESS
FOR DIRECT DISCHARGERS
(Toxic and Nonconventional Pollutants Only; Copper-Based Weights"; S 1981)
Industry
Aluminum Forming
Battery Manufacturing
Canmaking
Centralized Waste Treatment0
Coal Mining
Coil Coating
Copper Forming
Electronics I
Electronics II
Foundries
Inorganic Chemicals I
Inorganic Chemicals II
Iron & Steel
Leather Tanning
Metal Finishing
Metal Products and Machinery0
Nonferrous Metals Forming
Nonferrous Metals Mfg I
Nonferrous Metals Mfg II
Oil and Gas: Offshoreb
Coastal— Produced Water/TWC
Drilling Waste
Organic Chemicals
Pesticides
Pharmaceuticals0 A/C
B/D
Plastics Molding & Forming
Porcelain Enameling
Petroleum Refining
Pulp & Paper
Textile Mills
PE Currently Discharged
(thousands)
1,340
4,126
12
3,372
BAT=BPT
2,289
70
9
NA
2,308
32,503
605
40,746
259
3,305
140
34
6,653
1,004
3,809
951
BAT = Current Practice
54,225
2,461
897
90
44
1,086
BAT=BPT
15,524
BAT=BPT
PE Remaining at Selected
Option
(thousands)
90
5
0.2
1,261-1,267
BAT=BPT
9
8
3
NA
39
1,290
27
1,040
112
3,268
70
2
313
12
2,328
239
BAT = Current Practice
9,735
371
47
0.5
41
63
BAT=BPT
4,069
BAT=BPT
Cost-Effectiveness of
Selected Option(s)
(S/PE removed)
121
2
10
5-7
BAT=BPT
49
27
404
NA
84
<1
6
2
BAT=BPT
12
50
69
4
6
33
35
BAT = Current Practice
5
14
47
96
BAT=BPT
6
BAT=BPT
14
BAT=BPT
"Although toxic weighting factors for priority
'Produced water only; for produced sand and
Troposed.
pollutants varied across these
drilling fluids and drill cutting
rules, this table reflects the cost-effectiveness at the time of regulation.
;s, BAT=NSPS.
B-6
-------
TABLE B-6
INDUSTRY COMPARISON OF PSES COST-EFFECTIVENESS
FOR INDIRECT DISCHARGERS
(Toxic and Nonconventional Pollutants Only; Copper-Based Weights3; $ 1981)
Industry"
Aluminum Forming
Battery Manufacturing
Canmaking
Centralized Waste Treatment'
Coal Mining
Coil Coating
Copper Forming
Electronics I
Electronics II
Foundries
Inorganic Chemicals I
Inorganic Chemicals II
Iron & Steel
Leather Tanning
Metal Finishing
Metal Products and Machinery'
Nonferrous Metals Forming
Nonferrous Metals Mfg I
Nonferrous Metals Mfg II
Organic Chemicals
Pesticide Manufacturing
Pesticide Formulating
Pharmaceuticals0
Plastics Molding & Forming
Porcelain Enameling
Pulp & Paper
PE Currently
Discharged (To Surface
Waters)
(thousands)
1,602
1,152
252
689
NA
2,503
934
75
260
2,136
3,971
4,760
5,599
16,830
11,680
1,115
189
3,187
38
5,210
257
7,746
340
NA
1,565
1,323
PE Remaining at
Selected Option (To
Surface Waters
(thousands)
18
5
5
328-330
NA
10
4
35
24
18
3,004
6
1,404
1,899
755
234
5
19
0.41
72
19
112
63
NA
96
314
Cost-Effectiveness of
Selected Option(s)
Beyond BPT
($/PE removed)
155
15
38
70-110
NAC
10
10
14
14
116
9
<1
6
111
10
127
90
15
12
34
18
<3
1
NA
14
14
"Although toxic weighting factors for priority pollutants varied across these rules, this table reflects the cost-effectiveness at the time of
regulation.
'TSfo known indirect dischargers at this time for offshore oil and gas and coastal oil and gas.
'Proposed.
B-7
-------
TABLE B-7
COST-EFFECTIVENESS OF CWA POLLUTION CONTROL OPTIONS
BLEACHED PAPERGRADE KRAFT AND SODA SUBCATEGORY
DIRECT DISCHARGERS
POST-TAX COSTS
Option
Total Annual
Pound
Equivalents
Removed
(PE)
Post-tax
Annualized
Cost
($000, 1981)
Incremental
Pound
Equivalents
Removed
(PE)
Post-tax
Annualized
Cost
($000, 1981)
Incremental
Cost
Effectiveness
($1981/PE)
Average
Cost
Effectiveness
($1981/PE)
Baseline
A
B
0
10,755,545
11,641,298
$0
$95,195
$123,686
N/A
10,755,545
885,754
N/A
$95,195
$28,491
N/A
$8.85
$32.17
N/A
$8.85
$10.62
TABLE B-8
COST-EFFECTIVENESS OF CWA POLLUTION CONTROL OPTIONS
BLEACHED PAPERGRADE KRAFT AND SODA SUBCATEGORY
INDIRECT DISCHARGERS
POST-TAX COSTS
Option
Total Annual
Pound
Equivalents
Removed
(PE)
Post-tax
Annualized
Cost
($000, 1981)
Incremental
Pound
Equivalents
Removed
(PE)
Post-tax
Annualized
Cost
($000, 1981)
Incremental
Cost
Effectiveness
($1981/PE)
Average
Cost
Effectiveness
($1981/PE)
Baseline
A
B
0
1,000,467
1,070,965
$0
$9,392
$15,864
N/A
1,000,467
70,498
N/A
$9,392
$6,472
N/A
$9.39
$91.81
N/A
$9.39
$14.81
B-8
-------
TABLE B-9
COST-EFFECTIVENESS OF CWA POLLUTION CONTROL OPTIONS
PAPERGRADE SULFITE SUBCATEGORY
DIRECT DISCHARGERS
POST-TAX COSTS
Option
Total Annual
Pound
Equivalents
Removed
(PE)
Post-tax
Annualized
Cost
($000, 1981)
Incremental
Pound
Equivalents
Removed
(PE)
Post-tax
Annualized
Cost
($000, 1981)
Incremental
Cost
Effectiveness
($1981/PE)
Average
Cost
Effectiveness
($1981/PE)
Baseline
A
0
699,061
$0
$6,023
N/A
699,061
N/A
$6,023
N/A
$8.62
N/A
$8.62
B-9
-------
TABLE B-10
COST-EFFECTIVENESS OF CWA POLLUTION CONTROL OPTIONS
PULP, PAPER, AND PAPERBOARD INDUSTRY
POST-TAX COSTS
Subcategory
Total Annual
Pound
Equivalents
Removed
(PE)
Post-tax
Annualized
Cost
($000, 1981)
Incremental
Pound
Equivalents
Removed
(PE)
Post-tax
Annualized
Cost
($000, 1981)
Incremental
Cost
Effectiveness
($1981/PE)
Average
Cost
Effectiveness
(S1981/PE)
BAT
Bleached Papergrade Kraft and Soda
Papergrade Sulfite
Industry Total
10,755,545 $95,195 10,755,545 $95,195 $8.85 $8.85
699,061 $6,023 699,061 $6,023 $8.62 $8.62
11,454,605 $101,218 11,454,605 $101,218 $8.84 $8.84
PSES
Bleached Papergrade Kraft and Soda 1,000,467
Papergrade Sulfite ND
Industry Total ND
$9,392 1,000,467
ND ND
ND
ND
$9,392
ND
ND
$9.39
$31.43
$9.58
$9.39
$31.43
$9.58
ND: not disclosed for reasons of confidentiality.
Note: Incremental costs and removals are calculated from the selected option and the preceding option in the
subcategory cost-effectiveness analysis.
B-10
-------
APPENDIX C
SUBCATEGORY POLLUTANT LOADS AND BENEFITS
C-l
-------
Appendix C
Summary of Subcategory Loads and Benefits
Bleach Plant
Baseline Load
Final Effluent
Baseline Load
Option A
Discharge Loada
Option B
Discharge Loada
Option A
Reduction13
Option B
Reduction13
AOX fkkg/yearl
All Mills
All Kraft
BAT Kraft
PSES Kraft
All Sulfite
BAT Sulfite
PSES Sulfite
All Direct
All Indirect
41,000
36,000
33,000
3,000
nd
4,000
nd
37,000
nd
12,000
12,000
11,000
910
nd
370
nd
12,000
nd
6,200
5,800
5,400
420
nd
370
nd
5,800
nd
28,000
24,000
22,000
2,100
nd
3,600
nd
26,000
nd
34,000
30,000
28,000
2,600
nd
3,600
nd
32,000
nd
COD fkkg/yearl
All Mills
All Kraft
BAT Kraft
PSES Kraft
All Sulfite
BAT Sulfite
PSES Sulfite
All Direct
All Indirect
1,200,000
1,200,000
1,100,000
97,000
nd
59,000
nd
1,100,000
nd
1,100,000
1,000,000
960,000
88,000
nd
42,000
nd
1,000,000
nd
860,000
810,000
740,000
65,000
nd
42,000
nd
780,000
nd
130,000
110,000
100,000
9,000
nd
17,000
nd
120,000
nd
370,000
350,000
320,000
32,000
nd
17,000
nd
330,000
nd
C-2
-------
Appendix C (cont.)
Summary of Subcategory Loads and Benefits
Bleach Plant
Baseline Load
Final Effluent
Baseline Load
Option A
Discharge Loada
Option B
Discharge Loada
Option A
Reduction13
Option B
Reduction13
Color [kkg/year]
All Mills
All Kraft
BAT Kraft
PSES Kraft
All Sulfite
BAT Sulfite
PSES Sulfite
All Direct
All Indirect
2,200,000
2,100,000
1,900,000
180,000
nd
120,000
nd
2,000,000
nd
2,100,000
2,000,000
1,800,000
180,000
nd
100,000
nd
1,900,000
nd
1,700,000
1,600,000
1,400,000
130,000
nd
100,000
nd
1,500,000
nd
55,000
41,000
38,000
3,400
nd
14,000
nd
50,000
nd
510,000
490,000
440,000
47,000
nd
14,000
nd
460,000
nd
Chloroform [kg/year]
All Mills
All Kraft
BAT Kraft
PSES Kraft
All Sulfite
BAT Sulfite
PSES Sulfite
All Direct
All Indirect
1,400,000
1,300,000
1,200,000
140,000
nd
120,000
nd
1,300,000
nd
54,000
48,000
44,000
4,900
nd
5,000
nd
49,000
nd
9,000
8,800
8,100
610
nd
210
nd
8,400
nd
9,000
8,800
8,100
610
nd
210
nd
8,400
nd
45,000
40,000
35,000
4,300
nd
4,800
nd
40,000
nd
45,000
40,000
35,000
4,300
nd
4,800
nd
40,000
nd
C-2
-------
Appendix C (cont.)
Summary of Subcategory Loads and Benefits
Bleach Plant
Baseline Load
Final Effluent
Baseline Load
Option A
Discharge Loada
Option B
Discharge Loada
Option A
Reduction13
Option B
Reduction13
2,3,7,8-TCDD [g/year]
All Mills
All Kraft
BAT Kraft
PSES Kraft
All Sulfite
BAT Sulfite
PSES Sulfite
All Direct
All Indirect
16
15
14
1.2
nd
0.78
nd
15
nd
16
15
14
1.2
nd
0.78
nd
15
nd
4.5
4.4
4.1
0.33
nd
0.13
nd
4.2
nd
3.6
3.4
3.2
0.25
nd
0.13
nd
3.3
nd
11
11
10
0.92
nd
0.64
nd
11
nd
12
12
11
1.0
nd
0.64
nd
11
nd
2,3,7,8-TCDF [g/year]
All Mills
All Kraft
BAT Kraft
PSES Kraft
All Sulfite
BAT Sulfite
PSES Sulfite
All Direct
All Indirect
120
110
110
9.5
nd
6.7
nd
110
nd
120
110
110
9.5
nd
6.7
nd
110
nd
7.9
7.6
7.1
0.54
nd
0.30
nd
7.4
nd
6.3
6.0
5.6
0.43
nd
0.30
nd
5.9
nd
110
110
100
8.9
nd
6.4
nd
100
nd
120
110
100
9.0
nd
6.4
nd
110
nd
C-4
-------
Appendix C (cont.)
Summary of Subcategory Loads and Benefits
Bleach Plant
Baseline Load
Final Effluent
Baseline Load
Option A
Discharge Loada
Option B
Discharge Loada
Option A
Reduction13
Option B
Reduction13
Trichlorosyringol [kg/year]
All Mills
All Kraft
BAT Kraft
PSES Kraft
All Sulfite
BAT Sulfite
PSES Sulfite
All Direct
All Indirect
6,800
6,600
6,000
520
nd
250
nd
6,300
nd
3,800
3,600
3,300
290
nd
140
nd
3,500
nd
680
660
610
49
nd
18
nd
630
nd
490
480
440
35
nd
18
nd
460
nd
3,100
3,000
2,700
240
nd
120
nd
2,800
nd
3,300
3,100
2,900
250
nd
120
nd
3,000
nd
2,4,5-Trichlorophenol [kg/year]
All Mills
All Kraft
BAT Kraft
PSES Kraft
All Sulfite
BAT Sulfite
PSES Sulfite
All Direct
All Indirect
1,100
1,100
980
86
nd
31
nd
1,000
nd
600
580
540
47
nd
17
nd
550
nd
550
540
500
43
nd
10
nd
510
nd
450
440
410
35
nd
10
nd
420
nd
52
43
39
4.6
nd
7.7
nd
46
nd
150
140
130
13
nd
7.7
nd
140
nd
C-5
-------
Appendix C (cont.)
Summary of Subcategory Loads and Benefits
Bleach Plant
Baseline Load
Final Effluent
Baseline Load
Option A
Discharge Loada
Option B
Discharge Loada
Option A
Reduction13
Option B
Reduction13
2,4,6-Trichlorophenol [kg/year]
All Mills
All Kraft
BAT Kraft
PSES Kraft
All Sulfite
BAT Sulfite
PSES Sulfite
All Direct
All Indirect
16,000
15,000
14,000
1,200
nd
420
nd
15,000
nd
8,700
8,500
7,800
650
nd
230
nd
8,100
nd
680
660
610
18
nd
0.00
nd
630
nd
500
480
440
18
nd
0.00
nd
460
nd
8,100
7,800
7,200
600
nd
210
nd
7,400
nd
8,200
8,000
7,400
620
nd
210
nd
7,600
nd
3,4,5-Trichlorocatechol fkg/year]
All Mills
All Kraft
BAT Kraft
PSES Kraft
All Sulfite
BAT Sulfite
PSES Sulfite
All Direct
All Indirect
39,000
38,000
36,000
2,000
nd
1,300
nd
37,000
nd
22,000
21,000
20,000
1,100
nd
730
nd
20,000
nd
1,400
1,300
1,200
97
nd
36
nd
1,300
nd
990
950
880
69
nd
36
nd
920
nd
20,000
20,000
19,000
1,000
nd
700
nd
19,000
nd
21,000
20,000
19,000
1,000
nd
700
nd
20,000
nd
C-6
-------
Appendix C (cont.)
Summary of Subcategory Loads and Benefits
Bleach Plant
Baseline Load
Final Effluent
Baseline Load
Option A
Discharge Loada
Option B
Discharge Loada
Option A
Reduction13
Option B
Reduction13
3,4,5-Trichloroguaiacol [kg/year]
All Mills
All Kraft
BAT Kraft
PSES Kraft
All Sulfite
BAT Sulfite
PSES Sulfite
All Direct
All Indirect
13,000
13,000
12,000
730
nd
460
nd
12,000
nd
7,300
7,000
6,600
400
nd
250
nd
6,900
nd
670
660
610
49
nd
18
nd
630
nd
490
480
440
35
nd
18
nd
460
nd
6,600
6,400
6,000
350
nd
240
nd
6,200
nd
6,800
6,500
6,200
370
nd
240
nd
6,400
nd
3,4,6-Trichlorocatechol [kg/year]
All Mills
All Kraft
BAT Kraft
PSES Kraft
All Sulfite
BAT Sulfite
PSES Sulfite
All Direct
All Indirect
2,000
2,000
1,800
160
nd
50
nd
1,900
nd
1,100
1,100
1,000
85
nd
28
nd
1,000
nd
1,000
1,000
950
81
nd
17
nd
960
nd
910
890
820
69
nd
17
nd
840
nd
72
59
55
3.9
nd
11
nd
66
nd
200
190
180
16
nd
11
nd
190
nd
C-7
-------
Appendix C (cont.)
Summary of Subcategory Loads and Benefits
Bleach Plant
Baseline Load
Final Effluent
Baseline Load
Option A
Discharge Loada
Option B
Discharge Loada
Option A
Reduction13
Option B
Reduction13
3,4,6-Trichloroguaiacol [kg/year]
All Mills
All Kraft
BAT Kraft
PSES Kraft
All Sulfite
BAT Sulfite
PSES Sulfite
All Direct
All Indirect
2,100
2,000
1,800
160
nd
84
nd
1,900
nd
1,100
1,100
1,000
89
nd
46
nd
1,100
nd
590
580
530
46
nd
14
nd
550
nd
470
460
430
35
nd
14
nd
440
nd
550
510
470
44
nd
32
nd
500
nd
670
630
580
54
nd
32
nd
610
nd
4,5,6-Trichloroguaiacol [kg/year]
All Mills
All Kraft
BAT Kraft
PSES Kraft
All Sulfite
BAT Sulfite
PSES Sulfite
All Direct
All Indirect
8,400
8,100
7,500
530
nd
330
nd
7,900
nd
4,600
4,400
4,200
290
nd
180
nd
4,300
nd
680
660
610
49
nd
18
nd
630
nd
490
480
440
35
nd
18
nd
460
nd
3,900
3,800
3,500
240
nd
160
nd
3,700
nd
4,100
4,000
3,700
250
nd
160
nd
3,900
nd
-------
Appendix C (cont.)
Summary of Subcategory Loads and Benefits
Bleach Plant
Baseline Load
Final Effluent
Baseline Load
Option A
Discharge Loada
Option B
Discharge Loada
Option A
Reduction13
Option B
Reduction13
Tetrachlorocatechol [kg/year]
All Mills
All Kraft
BAT Kraft
PSES Kraft
All Sulfite
BAT Sulfite
PSES Sulfite
All Direct
All Indirect
7,800
7,400
6,900
570
nd
340
nd
7,200
nd
4,300
4,100
3,800
310
nd
190
nd
4,000
nd
1,300
1,300
1,200
93
nd
36
nd
1,200
nd
980
950
880
69
nd
36
nd
910
nd
3,000
2,800
2,600
220
nd
150
nd
2,700
nd
3,300
3,100
2,900
240
nd
150
nd
3,000
nd
Tetrachloroguaiacol [kg/year]
All Mills
All Kraft
BAT Kraft
PSES Kraft
All Sulfite
BAT Sulfite
PSES Sulfite
All Direct
All Indirect
4,300
4,100
3,700
340
nd
180
nd
3,900
nd
2,300
2,200
2,100
190
nd
100
nd
2,200
nd
1,200
1,100
1,000
90
nd
30
nd
1,100
nd
940
910
840
69
nd
30
nd
870
nd
1,200
1,100
1,000
97
nd
70
nd
1,100
nd
1,400
1,300
1,200
120
nd
70
nd
1,300
nd
C-9
-------
Appendix C (cont.)
Summary of Subcategory Loads and Benefits
Bleach Plant
Baseline Load
Final Effluent
Baseline Load
Option A
Discharge Loada
Option B
Discharge Loada
Option A
Reduction13
Option B
Reduction13
2,3,4,6-Tetrachlorophenol [kg/year]
All Mills
All Kraft
BAT Kraft
PSES Kraft
All Sulfite
BAT Sulfite
PSES Sulfite
All Direct
All Indirect
1,100
1,100
980
87
nd
29
nd
1,000
nd
600
590
540
48
nd
16
nd
550
nd
590
580
530
46
nd
8.8
nd
540
nd
470
460
430
35
nd
8.8
nd
430
nd
16
7.5
5.5
1.9
nd
6.8
nd
12
nd
130
120
110
13
nd
6.8
nd
120
nd
Pentachlorophenol [kg/year]
All Mills
All Kraft
BAT Kraft
PSES Kraft
All Sulfite
BAT Sulfite
PSES Sulfite
All Direct
All Indirect
2,300
2,200
2,100
160
nd
50
nd
2,100
nd
1,200
1,200
1,100
85
nd
28
nd
1,200
nd
1,100
1,100
1,000
81
nd
17
nd
1,000
nd
930
910
840
69
nd
17
nd
860
nd
130
120
110
3.9
nd
11
nd
120
nd
320
310
290
16
nd
11
nd
300
nd
C-10
-------
Appendix C (cont.)
Summary of Subcategory Loads and Benefits
Bleach Plant
Baseline Load
Final Effluent
Baseline Load
Option A
Discharge Loada
Option B
Discharge Loada
Option A
Reduction13
Option B
Reduction13
All 12 Chlorophenolics [kg/year]
All Mills
All Kraft
BAT Kraft
PSES Kraft
All Sulfite
BAT Sulfite
PSES Sulfite
All Direct
All Indirect
100,000
100,000
94,000
6,500
nd
3,600
nd
98,000
nd
57,000
55,000
52,000
3,600
nd
2,000
nd
54,000
nd
10,000
10,000
9,400
770
nd
240
nd
9,700
nd
8,100
7,900
7,300
590
nd
240
nd
7,500
nd
47,000
45,000
42,000
2,800
nd
1,700
nd
44,000
nd
49,000
47,000
44,000
3,000
nd
1,700
nd
46,000
nd
NCASI 2,3,7,8-TCDD [g/year]
All Mills
All Kraft
BAT Kraft
PSES Kraft
All Sulfite
BAT Sulfite
PSES Sulfite
All Direct
All Indirect
14
13
12
0.88
nd
0.59
nd
13
nd
4.5
4.3
4.0
0.33
nd
0.13
nd
4.1
nd
3.3
3.2
2.9
0.23
nd
0.13
nd
3.1
nd
9.3
8.8
8.2
0.56
nd
0.46
nd
8.7
nd
10
10
9.3
0.65
nd
0.46
nd
10
nd
C-ll
-------
Appendix C (cont.)
Summary of Subcategory Loads and Benefits
Bleach Plant
Baseline Load
Final Effluent
Baseline Load
Option A
Discharge Loada
Option B
Discharge Loada
Option A
Reduction13
Option B
Reduction13
NCASI 2,3,7,8-TCDF [g/year]
All Mills
All Kraft
BAT Kraft
PSES Kraft
All Sulfite
BAT Sulfite
PSES Sulfite
All Direct
All Indirect
45
42
41
1.0
nd
3.4
nd
44
nd
8.6
8.4
7.8
0.60
nd
0.28
nd
8.0
nd
6.7
6.5
6.0
0.44
nd
0.28
nd
6.3
nd
36
33
33
0.44
nd
3.1
nd
36
nd
38
35
35
0.61
nd
3.1
nd
38
nd
Notes: 'nd' = not disclosed due to confidentiality.
Columns may not add due to rounding.
Tor Papergrade Sulfite, only one option was evaluated for each segment; Option A is equivalent to Option B.
bReduction = Baseline Load minus Option Discharge Load. For Papergrade Sulfite Option A is equivalent to Option B.
C-12
-------
APPENDIX D
BASELINE FISHERY VALUES
D-l
-------
Table 1
Baseline Fishery Value at Sites with a Fish Consumption Advisory for Dioxin [1]
(assumes use by 10% of licensed anglers in adjacent counties)
Receiving Stream [2]
Number of
Anglers
with
Advisory
State
Average
Days
Fished per
Angler[3]
Baseline
Fishing
Days
Estimated Value
(1995$)[4]
Androscoggin River (ME) 2,363 14.6 34,500 $2,499,856
Androscoggin River (NH) 805 15.3 12,317 $892,454
Bayou La Foyrche, Wham Brake, and
Lake Irwin (LA) 2,006 16.5 33,099 $1,045,597
Blackwater River (VA) 358 15.0 5,373 $169,727
Chowan River (TN) 428 16.1 6,893 $217,735
Houston Ship Channel (TX) 14,495 14.5 210,178 $6,639,507
Kennebec River (ME) 2,069 14.6 30,207 $2,188,828
Neches River (TX) 5,669 14.5 82,201 $2,596,714
Penobscot River (ME) 1,838 14.6 26,835 $1,944,450
Pigeon River (NC) 394 14.5 5,717 $180,606
Pigeon River (TN) 227 16.1 3,650 $115,303
Roanoke River, Abelmarle Sound, and
Welch Creek (NC) 583 14.5 8,454 $267,046
Total 31,235 459,422 $18,757,823
Lower Bound Estimate of Increase in
Value (11.1% of Baseline Value) $2,082,118
[1] Used as a basis for calculation of potential benefits from increased value of fishery. Sites where
advisories associated with other contaminants will still be in place are not included.
[2] Represents 14 different water bodies and 16 different advisories, because two of the water bodies
have advisories in two states. Does not include the Escatawpa River in Mississippi, the Menominee
River in Michigan, or the Wisconsin River in Wisconsin because advisories are expected to remain in
place for contaminants other than dioxin or furan.
[3] Source: U.S. DOI, Fish and Wildlife Service, and U.S. Department of Wildlife, Bureau of Census.
1991 National Survey of Fishing, Hunting, and Wildlife-Associated Recreation, U.S. Government
Printing Office, Washington, D.C. 1993. Data reflect freshwater fishing days.
[4] Calculated by multiplying the number of angling days by consumer surplus per day. Mean values
for warmwater ($31.59), coldwater ($41.08), and anadramous ($72.46) fishing are from Walsh et al.
(1990), updated to 1995 dollars.
D-2
-------
Table 2
Baseline Fishery Value at Sites with a Fish Consumption Advisory for Dioxin [1]
(assumes use by 33% of licensed anglers in adjacent counties)
Receiving Stream [2]
State
Number of Average
Anglers Days Baseline Estimated
with Fished per Fishing Value
Advisory Angler[3] Days (1995$)[4]
Androscoggin River (ME) 7,798 14.6
Androscoggin River (NH) 2,655 15.3
Bayou La Foyrche, Wham Brake,
and Lake Irwin (LA) 6,619 16.5
Blackwater River (VA) 1,182 15.0
Chowan River (TN) 1,413 16.1
Houston Ship Channel (TX) 47,834 14.5
Kennebec River (ME) 6,829 14.6
Neches River (TX) 18,709 14.5
Penobscot River (ME) 6,065 14.6
Pigeon River (NC) 1,301 14.5
Pigeon River (TN) 748 16.1
Roanoke River, Abelmarle Sound,
and Welch Creek (NC) 1,924 14.5
Total 103,077
Upper Bound Estimate of Increase in
Value (31.3% of Baseline Value)
113,851
40,622
109,214
17,730
22,745
693,593
99,703
271,281
88,549
18,867
12,045
27,898
$8,249,629
$2,943,434
$3,450,054
$560,100
$718,526
$21,910,603
$7,224,508
$8,569,751
$6,416,261
$595,998
$380,501
$881,298
1,516,097 $61,900,665
$19,374,908
[1] Used as a basis for calculating potential benefits from increased value of fishery. Sites
where advisories associated with other contaminants will still be in place are not included.
[2] Represents 14 different water bodies and 16 different advisories, because two of the water
bodies have advisories in two states. Does not include the Escatawpa River in Mississippi, the
Menominee River in Michigan, or the Wisconsin River in Wisconsin because advisories are
expected to remain in place for contaminants other than dioxin or furan.
[3] Source: U.S. DOI, Fish and Wildlife Service, and U.S. Department of Wildlife, Bureau of
Census. 1991 National Survey of Fishing, Hunting, and Wildlife-Associated Recreation, U.S.
Government Printing Office, Washington, D.C. 1993. Data reflect freshwater fishing days.
[4] Calculated by multiplying the number of angling days by consumer surplus per day. Mean
values for warmwater ($31.59), coldwater ($41.08), and anadramous ($72.46) fishing are from
Walsh et al. (1990). updated to 1995 dollars.
D-3
-------
Table 3
Potential Recreational Angling Benefits from Increased Participation
(assumes use by 10% of licensed anglers in adjacent counties)
[1]
Receiving Stream[2]
Number of Number of Change
Anglers Anglers Change in State Average in Estimated
with without Number of Days Fished per Fishing Value
Advisory Advisory Anglers Angler[3] Days (1995$)[4]
Androscoggin River (ME) 2,363 2,954 591
Androscoggin River (NH) 805 1,006 201
Bayou La Foyrche, Wham Brake, and
Lake Irwin (LA) 2,006 2,507 501
Blackwater River (VA) 358 448 90
Chowan River (TN) 428 535 107
Houston Ship Channel (TX) 14,495 18,119 3,624
Kennebec River (ME) 2,069 2,587 518
Neches River (TX) 5,669 7,087 1,418
Penobscot River (ME) 1,838 2,297 459
Pigeon River (NC) 394 493 99
Pigeon River (TN) 227 283 57
Roanoke River, Abelmarle Sound, and
Welch Creek (NC) 583 729 146
Total 31,235 39,045 7,810
14.6
15.3
16.5
15.0
16.1
14.5
14.6
14.5
14.6
14.5
16.1
14.5
8,629
3,075
8,267
1,343
1,723
52,548
7,563
20,561
6,701
1,429
912
2,117
$625,228
$222,836
$261,139
$42,432
$54,434
$1,659,991
$548,000
$649,522
$485,583
$45,151
$28,826
$66,876
114,869 $4,690,020
[1] Method does not account for potential substitution between sites which would result in lower benefits.
[2] Represents 14 different water bodies and 16 different advisories, because two of the water bodies have advisories in two
states. Does not include sites where advisories are expected to remain in place for contaminants other than dioxin or furan.
[3] Source: U.S. DOI, Fish and Wildlife Service, and U.S. Department of Wildlife, Bureau of Census. 1991 National Survey of
Fishing, Hunting, and Wildlife-Associated Recreation, U.S. Government Printing Office, Washington, D.C. 1993. Data reflect
freshwater fishing days.
[4] Calculated by multiplying the change in angling days by consumer surplus per day. Mean values for warmwater ($31.59),
coldwater ($41.08), and anadramous ($72.46) fishing are from Walsh et al. (1990), updated to 1995 dollars.
[5] EPA estimates that after implementation of the final rule, advisories will remain in place for other contaminants and that the
number of recreational anglers will not increase.
D-4
-------
Table 4
Potential Recreational Angling Benefits from Increased Participation [1]
(assumes use by 33% of licensed anglers in adjacent counties)
Receiving Stream[2]
Number of Number of
Anglers Anglers Change in State Average Change in Estimated
with without Number of Days Fished Fishing Value
Advisory Advisory Anglers perAngler[3] Days (1995$)[4]
Androscoggin River (ME)
Androscoggin River (NH)
Bayou La Foyrche, Wham Brake,
and Lake Irwin (LA)
Blackwater River (VA)
Chowan River (TN)
Houston Ship Channel (TX)
Kennebec River (ME)
Neches River (TX)
Penobscot River (ME)
Pigeon River (NC)
Pigeon River (TN)
Roanoke River, Abelmarle Sound,
and Welch Creek (NC)
Total
7,798
2,655
6,619
1,182
1,413
47,834
6,829
18,709
6,065
1,301
748
1,924
9,747
3,319
8,274
1,478
1,766
59,793
8,537
23,386
7,581
1,626
935
2,405
103,077 128,847
1,949
664
1,655
296
353
11,959
1,708
4,677
1,516
325
187
481
25,770
14.6
15.3
16.5
15.0
16.1
14.5
14.6
14.5
14.6
14.5
16.1
14.5
28,455
10,159
27,308
4,433
5,686
173,406
24,937
67,817
22,134
4,717
3,011
$2,061,878
$736,136
$862,644
$140,025
$179,632
$5,477,880
$1,806,921
$2,142,323
$1,603,801
$149,000
$95,125
6,975 $220,324
379,036 $15,475,688
[1] Method does not account for potential substitution between sites which would result in lower benefits.
[2] Represents 14 different water bodies and 16 different advisories, because two of the water bodies have advisories in
two states. Does not include sites where advisories are expected to remain in place for contaminants other than dioxin or
fur an.
[3] Source: U.S. DOI, Fish and Wildlife Service, and U.S. Department of Wildlife, Bureau of Census. 1991 National
Survey of Fishing, Hunting, and Wildlife-Associated Recreation, U.S. Government Printing Office, Washington, D.C.
1993. Data reflect freshwater fishing days.
[4] Calculated by multiplying the change in angling days by consumer surplus per day. Mean values for warmwater
($31.59). coldwater ($41.08). and anadramous ($72.46) Fishing are from Walsh et al. (1990), updated to 1995 dollars.
D-5
-------
APPENDIX E
HUMAN HEALTH BENEFITS CALCULATIONS
1.0 ALABAMA CASE STUDY
2.0 UPPER COLUMBIA RIVER/LAKE ROOSEVELT CASE STUDY
3.0 PENOBSCOT RIVER CASE STUDY
4.0 LOWER COLUMBIA RIVER CASE STUDY
E-l
-------
ALABAMA CASE STUDY
E-2
-------
CANCER RISK TO SPORT ANGLERS FROM INGESTION OF DIOXIN CONTAMINATED FISH
ALABAMA TOMBIGBEE RIVER AND MOBILE RIVER MILLS
[BW]
[EF]
[ED]
[AT]
[POP]
[CSF]
[IR]
[CF]
[Fl]
[IN]
[CR]
[CL]
[CY]
[LV]
[HV]
[LB]
[HB]
Consumption 4 oz Method
Body Weight (kg)
Exposure Frequency (days/year)
Exposure Duration (years)
Averaging Time (days)
Exposed Pop=Anglers*3.9
Dioxin CSF (mg/kg-day)A-1
Consumption (kg/day) 4 oz Method
Fish Tissue Dioxin Contamination Change (ppm)
Fraction AL Trips to Tombigbee R & Mobile R BK Mills
Intake Avoided (mg/kg-day)
Cancer Risk Avoided
Lifetime Cancer Cases Avoided
Yearly Cancer Cases Avoided
Low Value per Case
High Value per Case
Low Annual Benefits
High Annual Benefits
70
365
70
25,550
89,660
1.60E+05
0.0408
5.72E-06
5%
1.82E-10
2.91 E-05
2.607
0.037
$2,500,000
$9,000,000
$93,106
$335,183
[BW]
[EF]
[ED]
[AT]
[POP]
[CSF]
[IR]
[CF]
[Fl]
[IN]
[CR]
[CL]
[CY]
[LV]
[HV]
[LB]
[HB]
Consumption Harvest Method
Body Weight (kg)
Exposure Frequency (days/year)
Exposure Duration (years)
Averaging Time (days)
Exposed Pop=Anglers*3.9
Dioxin CSF (mg/kg-day)A-1
Consumption (kg/day) Harvest Method
Fish Tissue Dioxin Contamination Change (ppm)
Fraction AL Trips to Tombigbee R & Mobile R BK Mills
Intake Avoided (mg/kg-day)
Cancer Risk Avoided
Lifetime Cancer Cases Avoided
Yearly Cancer Cases Avoided
Low Value per Case
High Value per Case
Low Annual Benefits
High Annual Benefits
70
365
70
25,550
89,660
1.60E+05
0.0451
5.72E-06
5%
2.01 E-10
3.21 E-05
2.881
0.041
$2,500,000
$9,000,000
$102,893
$370,415
NOTES
[BW] u.S. EPA. 1989. Interim Final Risk Assessment Guidance for Superfund, Volume I: Human Health Evaluation Mannual. Prepared by the Office of
Emergency and Remedial Response. U.S. Environmental Protection Agency. Washington DC.
[EF] u.S. EPA. 1989. Interim Final Risk Assessment Guidance for Superfund, Volume I: Human Health Evaluation Mannual. Prepared by the Office of
Emergency and Remedial Response, U.S. Environmental Protection Agency. Washington DC.
[ED] u.S. EPA. 1989. Interim Final Risk Assessment Guidance for Superfund, Volume I: Human Health Evaluation Mannual. Prepared by the Office of
Emergency and Remedial Response, U.S. Environmental Protection Agency. Washington DC.
[AT] u.S. EPA. 1989. Interim Final Risk Assessment Guidance for Superfund, Volume I: Human Health Evaluation Mannual. Prepared by the Office of
Emergency and Remedial Response. Washington DC.
[POP] Alabama Department of Conservation and Natural Resources. 1994. 1993-1994 Annual License Report. License Unit, Game and Fish Division,
Department of Conservation and Natural Resources, State of Alabama. Montgomery, Alabama.
FIMS and FAA (Fishery Information Management Systems, Inc. and Department of Fisheries and Allied Aquaculture). 1993. Estimation of Daily Per
Capita Freshwater Fish Consumption of Alabama Anglers. Prepared for Alabama Department of Environmental Management. Montgomery, Alabama.
Tucker, W.H. 1987. Alabama Angler Survey. Department of Conservation and Natural Resources, State of Alabama. Montgomery, Alabama.
[CSF] Jetra Tech. 1996. Revised Water Quality Assessment of Proposed Effluent Guidelines for the Pulp, Paper, and Paperboard Industry. Office of Science
and Technology, U.S. Environmental Protection Agency. Washington. DC.
[IR] FIMS and FAA (Fishery Information Management Systems, Inc. and Department of Fisheries and Allied Aquaculture). 1993. Estimation of Daily Per
Capita Freshwater Fish Consumption of Alabama Anglers. Prepared for Alabama Department of Environmental Management. Montgomery, Alabama.
[CF] ADEM (Alabama Department of Environmental Management). 1995b. Bleached Kraft Mills Dioxin Fish Data. Montgomery, Alabama.
[Fl] Tucker, W.H. 1987. Alabama Angler Survey. Department of Conservation and Natural Resources, State of Alabama. Montgomery, Alabama.
[IN]= (CF* IR*FI*EF* ED)/(BW*AT)
[CR]= IN* CSF
[CL] = CR * POP
[CY] = (CR * POP) / ED
[HV] American Lung Association. 1995. Dollars and Cents: The Economic and Health Benefits of Potential Particulate Matter Reductions in the United States.
Prepared by L.G. Chestnut, Hagler Bailly Consulting, Inc., Boulder, Colorado. New York. June.
[LV] American Lung Association. 1995. Dollars and Cents: The Economic and Health Benefits of Potential Particulate Matter Reductions in the United States.
Prepared by L.G. Chestnut, Hagler Bailly Consulting, Inc., Boulder, Colorado. New York. June.
[HB] HV*CY
[LB] LV * CY
E-3
-------
UPPER COLUMBIA RIVER/LAKE ROOSEVELT CASE STUDY
E-4
-------
CANCER RISK TO SPORT ANGLERS FROM INGESTION OF DIOXIN CONTAMINATED FISH
UPPER COLUMBIA RIVER AND LAKE ROOSEVELT; UNITED STATES
Low Consumption
1990 Contamination Levels
[BW] Body Weight (kg)
[EF] Exposure Frequency (days/year)
[ED] Exposure Duration (years)
[AT] Averaging Time (days)
[POP] Exposed Pop
[CSF] Dioxin CSF (mg/kg-day)A- 1
[IR] Consumption (kg/day) EPA Sport Angler
[CF] Fish Tissue Dioxin Contamination (ppm)
[IN] Intake Avoided (mg/kg-day)
[CR] Cancer Risk
[CL] Lifetime Cancer Cases
[CY] Yearly Cancer Cases
1994 Contamination Levels
[BW] Body Weight (kg)
[EF] Exposure Frequency (days/year)
[ED] Exposure Duration (years)
[AT] Averaging Time (days)
[POP] Exposed Pop
[CSF] Dioxin CSF (mg/kg-day)A- 1
[IR] Consumption (kg/day) EPA Sport Angler
[CF] Fish Tissue Dioxin Contamination (ppm)
[IN] Intake Avoided (mg/kg-day)
[CR] Cancer Risk
[CL] Lifetime Cancer Cases
[CY] Yearly Cancer Cases
Difference 1990 to 1994
90 Yearly Cancer Cases - 94 Yearly Cancer Cases
[LV] Low Value per Case
[HV] High Value per Case
[LB] Low Consumption Low Annual Benefits
[HB] Low Consumption High Annual Benefits
70
365
70
25,550
80,199
1.60E+05
0.0200
7.05E-06
2.01 E-09
3.22E-04
25.849
0.369
70
365
70
25,550
80,199
1.60E+05
0.0200
1 .07E-06
3.05E-10
4.87E-05
3.909
0.056
0.313
$2,500,000
$9,000,000
$783,549
$2,820,776
High Consumption
1990 Contamination Levels
[BW] Body Weight (kg)
[EF] Exposure Frequency (days/year)
[ED] Exposure Duration (years)
[AT] Averaging Time (days)
[POP] Exposed Pop
[CSF] Dioxin CSF (mg/kg-day)A- 1
[IR] Consumption (kg/day) CRITFC Adult
[CF] Fish Tissue Dioxin Contamination (ppm)
[IN] Intake Avoided (mg/kg-day)
[CR] Cancer Risk
[CL] Lifetime Cancer Cases
[CY] Yearly Cancer Cases
1994 Contamination Levels
[BW] Body Weight (kg)
[EF] Exposure Frequency (days/year)
[ED] Exposure Duration (years)
[AT] Averaging Time (days)
[POP] Exposed Pop
[CSF] Dioxin CSF (mg/kg-day)A- 1
[IR] Consumption (kg/day) CRITFC Adult
[CF] Fish Tissue Dioxin Contamination (ppm)
[IN] Intake Avoided (mg/kg-day)
[CR] Cancer Risk
[CL] Lifetime Cancer Cases
[CY] Yearly Cancer Cases
Difference 1990 to 1994
90 Yearly Cancer Cases - 94 Yearly Cancer Cases
[LV] Low Value per Case
[HV] High Value per Case
[LB] High Consumption Low Annual Benefits
[HB] High Consumption High Annual Benefits
70
365
70
25,550
80,199
1.60E+05
0.0587
7.05E-06
5.91 E-09
9.46E-04
75.865
1.084
70
365
70
25,550
80,199
1.60E+05
0.0587
1 .07E-06
8.94E-10
1 .43E-04
1 1 .473
0.164
0.920
$2,500,000
$9,000,000
$2,299,716
$8,278,979
E-5
-------
CANCER RISK TO SPORT ANGLERS FROM INGESTION OF DIOXIN CONTAMINATED FISH
UPPER COLUMBIA RIVER AND LAKE ROOSEVELT; CANADA
Low Consumption
1990 Contamination Levels
[BW] Body Weight (kg)
[EF]
[ED]
[AT]
[POP]
[CSF]
[IR]
[CF]
[IN]
[CR]
[CL]
[CY]
1994
[BW]
[EF]
[ED]
[AT]
[POP]
[CSF]
[IR]
[CF]
[IN]
[CR]
[CL]
rcvi
Exposure Frequency (days/year)
Exposure Duration (years)
Averaging Time (days)
Exposed Pop
Dioxin CSF (mg/kg-day)A-1
Consumption (kg/day) EPA Sport Angler
Fish Tissue Dioxin Contamination (ppm)
Intake Avoided (mg/kg-day)
Cancer Risk
Lifetime Cancer Cases
Yearly Cancer Cases
Contamination Levels
Body Weight (kg)
Exposure Frequency (days/year)
Exposure Duration (years)
Averaging Time (days)
Exposed Pop
Dioxin CSF (mg/kg-day)A-1
Consumption (kg/day) EPA Sport Angler
Fish Tissue Dioxin Contamination (ppm)
Intake Avoided (mg/kg-day)
Cancer Risk
Lifetime Cancer Cases
Yearly Cancer Cases
70
365
70
25,550
ERR
1.60E+05
0.0200
ERR
ERR
ERR
ERR
ERR
70
365
70
25,550
ERR
1.60E+05
0.0200
ERR
ERR
ERR
ERR
ERR
Difference 1990 to 1994
[LV]
[HV]
LBJ
[HB]
90 Yearly Cancer Cases - 94 Yearly Cancer Cases
Low Value per Case
High Value per Case
Low Consumption Low Annual Benefits
Low Consumption High Annual Benefits
ERR
$2,500,000
$9,000,000
ERR
ERR
High Consumption
1990 Contamination Levels
[BW] Body Weight (kg)
[EF] Exposure Frequency (days/year)
[ED] Exposure Duration (years)
[AT] Averaging Time (days)
[POP] Exposed Pop
[CSF] Dioxin CSF (mg/kg-day)A-1
[IR] Consumption (kg/day) CRITFC Adult
[CF] Fish Tissue Dioxin Contamination (ppm)
[IN] Intake Avoided (mg/kg-day)
[CR] Cancer Risk
[CL] Lifetime Cancer Cases
[CY] Yearly Cancer Cases
1994 Contamination Levels
[BW] Body Weight (kg)
[EF] Exposure Frequency (days/year)
[ED] Exposure Duration (years)
[AT] Averaging Time (days)
[POP] Exposed Pop
[CSF] Dioxin CSF (mg/kg-day)A-1
[IR] Consumption (kg/day) CRITFC Adult
[CF] Fish Tissue Dioxin Contamination (ppm)
[IN] Intake Avoided (mg/kg-day)
[CR] Cancer Risk
[CL] Lifetime Cancer Cases
[CY] Yearly Cancer Cases
Difference 1990 to 1994
90 Yearly Cancer Cases - 94 Yearly Cancer Cases
[LV] Low Value per Case
[HV] High Value per Case
[LB] High Consumption Low Annual Benefits
[HB] High Consumption High Annual Benefits
70
365
70
25,550
ERR
1.60E+05
0.0587
ERR
ERR
ERR
ERR
ERR
70
365
70
25,550
ERR
1.60E+05
0.0587
ERR
ERR
ERR
ERR
ERR
ERR
$2,500,000
$9,000,000
ERR
ERR
E-6
-------
NOTES
[BW] U.S. EPA. 1989. Interim Final Risk Assessment Guidance for Superfund, Volume I: Human Health Evaluation Mannual. Prepared by the
Office of Emergency and Remedial Response. U.S. Environmental Protection Agency. Washington DC.
[EF] U.S. EPA. 1989. Interim Final Risk Assessment Guidance for Superfund, Volume I: Human Health Evaluation Mannual. Prepared by the
Office of Emergency and Remedial Response, U.S. Environmental Protection Agency. Washington DC.
[ED] U.S. EPA. 1989. Interim Final Risk Assessment Guidance for Superfund, Volume I: Human Health Evaluation Mannual. Prepared by the
Office of Emergency and Remedial Response, U.S. Environmental Protection Agency. Washington DC.
[AT] U.S. EPA. 1989. Interim Final Risk Assessment Guidance for Superfund, Volume I: Human Health Evaluation Mannual. Prepared by the
Office of Emergency and Remedial Response. Washington DC.
[POP] Griffith, J.R. and AT. Scholz. 1990. Lake Roosevelt Fisheries Monitoring Program Annual Report. Project No. 88-63. Contract Number
DE-8179-88DP91819. Prepared by Janelle R. Griffith and Allan T. Scholz, Upper Columbia United Tribes Fisheries Center, Department of
Biology, Eastern Washington University. Prepared for Fred Holm, U.S. Department of Energy, Bonneville Power Administration, Portland,OR
Hagler Bailly Consulting, Inc. 1995. Columbia River System Operation Review Recreation Impacts: Demand Model and Simulation Results.
Prepared by Hagler Bailly Consulting, Inc., Boulder, CO. Prepared for Matthew Rea, U.S. Army Corps of Engineers, Portland, OR. June 30.
U.S. Bureau of Census. 1990. Characteristics of American Indians by Tribe and Language. Washington, DC.
[CSF] Tetra Tech. 1996. Revised Water Quality Assessment of Proposed Effluent Guidelines for the Pulp, Paper, and Paperboard Industry. Office
of Science and Technology, U.S. Environmental Protection Agency. Washington. DC.
[IR] Low U.S. EPA. 1989. Interim Final Risk Assessment Guidance for Superfund, Volume I: Human Health Evaluation Mannual. Prepared by the
Office of Emergency and Remedial Response. Washington DC.
[IR] High Columbia River Intertribal Fish Commission. 1994. A Fish Consumption Survey of the Umatilla, Nez Perce, Yakama, and Warm Springs
Tribes of the Columbia River Basin. Technical Report 94-3. October.
[CF] Various Canadian Agencies as cited in Serdar, D. 1993. "Retrospective Analysis of Toxic Contaminants in Lake Roosevelt." Prepared for
The Lake Roosevelt Water Quality Council.
Axys Analytical Services, Ltd. 1994. Analysis Report: Polychlorinated Dibenzodioxins and Dibenzofurans, High Resolution GC/MS. Prepared
by Axys Analytical Services, Ltd., Sidney, B.C. Prepared for Hatfield Consultants. December 16.
[IN] = (CF *IR *EF *ED)/(BW *AT)
[CR] = IN * CSF
[CL] = CR * POP
[CY] = (CR * POP) / ED
[HV] American Lung Association. 1995. Dollars and Cents: The Economic and Health Benefits of Potential Particulate Matter Reductions in the
United States. Prepared by L.G. Chestnut, Hagler Bailly Consulting, Inc., Boulder, Colorado. New York. June.
[LV] American Lung Association. 1995. Dollars and Cents: The Economic and Health Benefits of Potential Particulate Matter Reductions in the
United States. Prepared by L.G. Chestnut, Hagler Bailly Consulting, Inc., Boulder, Colorado. New York. June.
[HB] HV * CY
[LB] LV * CY
E-7
-------
PENOBSCOT RIVER CASE STUDY
E-8
-------
CANCER RISK TO NATIVE AMERICAN ANGLERS FROM INGESTION OF DIOXIN
CONTAMINATED FISH
PENOBSCOT RIVER, MAINE
High Consumption Estimate
[BW] Body Weight (kg)
[EF] Exposure Frequency (days/year)
[ED] Exposure Duration (years)
[AT] Averaging Time (days)
[POP] Exposed Pop
[CSF] CSF (mg/kg-day)A-1
[IR] Consumption (kg/day) Penobscot Survey
[ADJ] Percent Consumption Contaminated
[CF] Baseline Fish Tissue Contamination (ppm)
[IN] Baseline Intake (mg/kg-day)
[CR] Baseline Cancer Risk
[CL] Baseline Lifetime Cancer Cases
[CY] Baseline Yearly Cancer Cases
[CF] Option 1 Fish Tissue Contamination (ppm)
[IN] Option 1 Intake (mg/kg-day)
[CR] Option 1 Cancer Risk
[CL] Option 1 Lifetime Cancer Cases
[CY] Option 1 Yearly Cancer Cases
[CF] Option 2 Fish Tissue Contamination (ppm)
[IN] Option 2 Intake Avoided (mg/kg-day)
[CR] Option 2 Cancer Risk
[CL] Option 2 Lifetime Cancer Cases
[CY] Option 2 Yearly Cancer Cases
[CL] Option 1 Lifetime Cases Reduction
[CY] Option 1 Yearly Cases Reduction
[CL] Option 2 Lifetime Cases Reduction
[CY] Option 2 Yearly Cases Reduction
[VAL] Value of a Cancer Case - Low
[BEN] Option 1 Annual Benefits
[BEN] Option 2 Annual Benefits
[VAL] Value of a Cancer Case - High
[BEN] Option 1 Annual Benefits
[BEN] Option 2 Annual Benefits
TCDD
70
365
70
25,550
280
1.60E+05
0.0480
90%
7.70E-07
4.75E-10
7.60E-05
0.02129
0.00030
1 .24E-07
7.65E-11
1 .22E-05
0.00343
0.00005
8.35E-08
5.15E-11
8.25E-06
0.00231
0.00003
0.01786
0.00026
0.01898
0.00027
TCDF
70
365
70
25,550
280
1.60E+04
0.0480
90%
6.66E-06
4.11E-09
6.58E-05
0.01841
0.00026
1 .24E-07
7.65E-11
1 .22E-06
0.00034
0.00000
8.35E-08
5.15E-11
8.25E-07
0.00023
0.00000
0.01807
0.00026
0.01818
0.00026
TOTAL
1 .42E-04
0.03970
0.00057
1 .35E-05
0.00377
0.00005
9.07E-06
0.00254
0.00004
0.03593
0.00051
0.03716
0.00053
$2,500,000
$1,283
$1,327
$9,000,000
$4,620
$4,778
SYSTEMIC RISK TO NATIVE AMERICAN ANGLERS FROM INGESTION OF DIOXIN
CONTAMINATED FISH
PENOBSCOT RIVER, MAINE
High Consumption Estimate
BW] Body Weight (kg)
EF] Exposure Frequency (days/year)
ED] Exposure Duration (years)
AT] Averaging Time (days)
[RfD] RfD (mg/kg-day)
IR] Consumption (kg/day) Penobscot Survey
ADJ] Percent Consumption Contaminated
CF] Baseline Fish Tissue Contamination (ppm)
IN] Baseline Intake (mg/kg-day)
HI] Baseline Hazard Index
CF] Option 1 Fish Tissue Contamination (ppm)
IN] Option 1 Intake (mg/kg-day)
HI] Option 1 Hazard Index
CF] Option 2 Fish Tissue Contamination (ppm)
IN] Option 2 Intake (mg/kg-day)
[HI] Option 2 Hazard Index
HI Option 1 HI Reduction
HI Option 2 HI Reduction
TCDD
70
365
70
25,550
1.00E-08
0.0480
90%
7.70E-07
4.75E-10
0.05
1 .24E-07
7.65E-11
0.01
8.35E-08
5.15E-11
0.01
0.04
0.04
TCDF
70
365
70
25,550
1.00E-07
0.0480
90%
6.66E-06
4.11E-09
0.04
1 .24E-07
7.65E-11
0.00
8.35E-08
5.15E-11
0.00
0.04
0.04
TOTAL
0.09
0.01
0.01
0.08
0.08
E-9
-------
CANCER RISK TO NATIVE AMERICAN ANGLERS FROM INGESTION OF DIOXIN
CONTAMINATED FISH
PENOBSCOT RIVER, MAINE
Low Consumption Estimate
[BW] Body Weight (kg)
[EF] Exposure Frequency (days/year)
[ED] Exposure Duration (years)
[AT] Averaging Time (days)
[POP] Exposed Pop
[CSF] CSF (mg/kg-day)A-1
[IR] Consumption (kg/day) Penobscot Survey
[ADJ] Percent Consumption Contaminated
[CF] Baseline Fish Tissue Contamination (ppm)
[IN] Baseline Intake (mg/kg-day)
[CR] Baseline Cancer Risk
[CL] Baseline Lifetime Cancer Cases
[CY] Baseline Yearly Cancer Cases
[CF] Option 1 Fish Tissue Contamination (ppm)
[IN] Option 1 Intake (mg/kg-day)
[CR] Option 1 Cancer Risk
[CL] Option 1 Lifetime Cancer Cases
[CY] Option 1 Yearly Cancer Cases
[CF] Option 2 Fish Tissue Contamination (ppm)
[IN] Option 2 Intake Avoided (mg/kg-day)
[CR] Option 2 Cancer Risk
[CL] Option 2 Lifetime Cancer Cases
[CY] Option 2 Yearly Cancer Cases
[CL] Option 1 Lifetime Cases Reduction
[CY] Option 1 Yearly Cases Reduction
[CL] Option 2 Lifetime Cases Reduction
[CY] Option 2 Yearly Cases Reduction
[VAL] Value of a Cancer Case - Low
[BEN] Option 1 Annual Benefits
[BEN] Option 2 Annual Benefits
[VAL] Value of a Cancer Case - High
[BEN] Option 1 Annual Benefits
[BEN] Option 2 Annual Benefits
TCDD
70
365
70
25,550
280
1.60E+05
0.0110
90%
7.70E-07
1.09E-10
1 .74E-05
0.00488
0.00007
1 .24E-07
1.75E-11
2.81 E-06
0.00079
0.00001
8.35E-08
1.18E-11
1 .89E-06
0.00053
0.00001
0.00409
0.00006
0.00435
0.00006
TCDF
70
365
70
25,550
280
1.60E+04
0.0110
90%
6.66E-06
9.42E-10
1 .51 E-05
0.00422
0.00006
1 .24E-07
1.75E-11
2.81 E-07
0.00008
0.00000
8.35E-08
1.18E-11
1 .89E-07
0.00005
0.00000
0.00414
0.00006
0.00417
0.00006
TOTAL
3.25E-05
0.00910
0.00013
3.09E-06
0.00086
0.00001
2.08E-06
0.00058
0.00001
0.00823
0.00012
0.00852
0.00012
$2,500,000
$294
$304
$9,000,000
$1,059
$1,095
SYSTEMIC RISK TO NATIVE AMERICAN ANGLERS FROM INGESTION OF DIOXIN
CONTAMINATED FISH
PENOBSCOT RIVER, MAINE
Low Consumption Estimate
BW] Body Weight (kg)
EF] Exposure Frequency (days/year)
ED] Exposure Duration (years)
AT] Averaging Time (days)
[RfD] RfD (mg/kg-day)
IR] Consumption (kg/day) Penobscot Survey
ADJ] Percent Consumption Contaminated
CF] Baseline Fish Tissue Contamination (ppm)
IN] Baseline Intake (mg/kg-day)
HI] Baseline Hazard Index
CF] Option 1 Fish Tissue Contamination (ppm)
IN] Option 1 Intake (mg/kg-day)
HI] Option 1 Hazard Index
CF] Option 2 Fish Tissue Contamination (ppm)
IN] Option 2 Intake (mg/kg-day)
[HI] Option 2 Hazard Index
HI Option 1 HI Reduction
HI Option 2 HI Reduction
TCDD
70
365
70
25,550
1.00E-08
0.0110
90%
7.70E-07
1.09E-10
0.01
1 .24E-07
1.75E-11
0.00
8.35E-08
1.18E-11
0.00
0.01
0.01
TCDF
70
365
70
25,550
1.00E-07
0.0110
90%
6.66E-06
9.42E-10
0.01
1 .24E-07
1.75E-11
0.00
8.35E-08
1.18E-11
0.00
0.01
0.01
TOTAL
0.02
0.00
0.00
0.02
0.02
E-10
-------
NOTES
[BW] u.S. EPA. 1989. Interim Final Risk Assessment Guidance for Superfund, Volume I:
Human Health Evaluation Mannual. Prepared by the Office of Emergency and Remedial
Response. U.S. Environmental Protection Agency. Washington DC.
[EF] U.S. EPA. 1989. Interim Final Risk Assessment Guidance for Superfund, Volume I:
Human Health Evaluation Mannual. Prepared by the Office of Emergency and Remedial
Response, U.S. Environmental Protection Agency. Washington DC.
[E°] U.S. EPA. 1989. Interim Final Risk Assessment Guidance for Superfund, Volume I:
Human Health Evaluation Mannual. Prepared by the Office of Emergency and Remedial
Response, U.S. Environmental Protection Agency. Washington DC.
[AT] U.S. EPA. 1989. Interim Final Risk Assessment Guidance for Superfund, Volume I:
Human Health Evaluation Mannual. Prepared by the Office of Emergency and Remedial
Response. Washington DC.
[POP] Penobscot Nation Department of Natural Resources. 1991. Results of the 1991
Penobscot River Users Survey Conducted by the Department of Natural Resources.
[CSF] jetra Tech. 1996. Revised Water Quality Assessment of Proposed Effluent Guidelines
for the Pulp, Paper, and Paperboard Industry. Office of Science and Technology, U.S.
Environmental Protection Agency. Washington. DC.
[RfD] Tetra Tech. 1996. Revised Water Quality Assessment of Proposed Effluent Guidelines
for the Pulp, Paper, and Paperboard Industry. Office of Science and Technology, U.S.
Environmental Protection Agency. Washington. DC.
[IR] Penobscot Nation Department of Natural Resources. 1991. Results of the 1991
Penobscot River Users Survey Conducted by the Department of Natural Resources.
[ADJJ Percentage fish from below mill, J. Banks pers. comm.
[CF ] Analysis for this RIA
[IN] = (CF*ADJ*IR*EF*ED)/(BW*AT)
[CR] = IN* CSF
[HI] = IN/RfD
[CL] =CR * POP
[CY] =(CR * POP) / ED
[VAL] = American Lung Association. 1995. Dollars and Cents: The Economic and Health Benefits
of Potential Particulate Matter Reductions in the United States. Prepared by L.G.
Chestnut, Hagler Bailly Consulting, Inc., Boulder, Colorado. New York. June.
[BEN] = [CY] * [VAL]
E-11
-------
LOWER COLUMBIA RIVER CASE STUDY
E-12
-------
CANCER RISK TO NATIVE AMERICAN ANGLERS FROM INGESTION
OF CONTAMINATED FISH
COLUMBIA RIVER
High Consumption Estimate
BW] Body Weight (kg)
EF
Exposure Frequency (days/year)
ED] Exposure Duration (years)
[AT]
[IR]
Averaging Time (days)
Consumption (kg/day)
CR] Baseline Cancer Risk by Contaminant
2,3,7,8-TCDD
2,3,7,8-TCDF
Total Dioxin (w/o TCDD/TCDF)
Arsenic (Inorganic)
Aldrin
alpha-BHC
alpha-Chlordane
Total PCB
beta-BHC
delta-BHC
Dieldrin
gamma-BHC
gamma-Chlordane
Heptachlor
Heptachlor Epoxide
Hexachloro benzene
p,p'-DDD
p,p'-DDE
p,p'-DDT
Toxaphene
Total Cancer Risk
POP] Exposed Pop Nez Perce
Exposed Pop Umatilla
Exposed Pop Yakama
Exposed Pop Warm Springs
[CL]
Baseline Lifetime Cancer Cases TOTAL
CY] Baseline Yearly Cancer Cases TOTAL
CR] Option A Cancer Risk
CL]
CY
CR
CL]
Option A Lifetime Cancer Cases TOTAL
Option A Yearly Cancer Cases TOTAL
Option B Cancer Risk
Option B Lifetime Cancer Cases TOTAL
CY1 Option B Yearly Cancer Cases TOTAL
CL]
Option A Lifetime Cases Reduction
CY1 Option A Yearly Cases Reduction
CL]
Option B Lifetime Cases Reduction
CY1 Option B Yearly Cases Reduction
VAL] Value of a Cancer Case - Low
BEN] Option A Annual Benefits
BEN] Option B Annual Benefits
VAL] Value of a Cancer Case - High
[BEN] Option A Annual Benefits
[BEN] Option B Annual Benefits
70
365
70
25,550
0.1140
4.69E-05
2.95E-05
5.48E-05
3.21 E-05
4.24E-07
2.85E-07
O.OOE+00
4.27E-05
4.20E-08
O.OOE+00
8.34E-07
5.80E-08
O.OOE+00
1 .05E-07
O.OOE+00
6.81 E-07
1 .33E-06
5.87E-06
8.91 E-07
6.85E-06
2.23E-04
1,883
1,030
6,198
2,871
2.67705
0.03824
2.00E-04
2.39525
0.03422
1 .94E-04
2.32322
0.03319
0.28180
0.00403
0.35383
0.00505
$2,500,000
$10,064
$12,637
$9,000,000
$36,232
$45,492
Percent
20.98%
13.23%
24.54%
14.39%
0.19%
0.13%
0.00%
19.09%
0.02%
0.00%
0.37%
0.03%
0.00%
0.05%
0.00%
0.31 %
0.60%
2.63%
0.40%
3.06%
100.00%
NOTES
[BW] U.S. EPA. 1989. Interim Final Risk Assessment Guidance for Superfund, Volume I: Human Health Evaluation Mannual.
Prepared by the Office of Emergency and Remedial Response. U.S. Environmental Protection Agency. Washington DC.
[EF] U.S. EPA. 1989. Interim Final Risk Assessment Guidance for Superfund, Volume I: Human Health Evaluation Mannual.
Prepared by the Office of Emergency and Remedial Response, U.S. Environmental Protection Agency. Washington DC.
[ED] u.S. EPA. 1989. Interim Final Risk Assessment Guidance for Superfund, Volume I: Human Health Evaluation Mannual.
Prepared by the Office of Emergency and Remedial Response, U.S. Environmental Protection Agency. Washington DC.
[AT] u.S. EPA. 1989. Interim Final Risk Assessment Guidance for Superfund, Volume I: Human Health Evaluation Mannual.
Prepared by the Office of Emergency and Remedial Response. Washington DC.
-pop] U.S. Bureau of Census. 1993. 1990 Census of Population and Housing. Summary Tape File 3C. Washington, DC.
F] Tetra Tech. 1996. Final Report: Lower Columbia River Bi-State Program, Assessing Human Health Risks from Chemically
Contaminated Fish in the Lower Columbia River, Risk Assessment. Redmond, Washington. (Unless otherwise noted).
[CSF] Dioxins Tetra Tech. 1996. Revised Water Quality Assessment of Proposed Effluent Guidelines for the Pulp, Paper, and Paperboard
Industry. Office of Science and Technology, U.S. Environmental Protection Agency. Washington. DC.
[CSF] Toxaphene u.S. EPA. 1994. "Integrated Risk Information System On-Line Database of Chemical-Specific Toxicity Factors: Toxaphene."
Prepared by Office of Research and Development, Washington D.C.
[|R] CRITFC (Columbia River Inter-Tribal Fish Commission). 1994. A Fish Consumption Survey of the Umatilla, Nez Perce, Yakama,
and Warm Springs Tribes of the Columbia River Basin. Report No. 94-3. Portland, Oregon.
!CF] Analysis for this RIA
= (CF * ADJ * IR * EF * ED) / (BW* AT)
;CR]= IN* CSF
= IN/RfD
PL] = CR * POP
] = (CR * POP) / ED
[VAL] = American Lung Association. 1995. Dollars and Cents: The Economic and Health Benefits of Potential Particulate Matter
Reductions in the United States. Prepared by L.G. Chestnut, Hagler Bailly Consulting, Inc., Boulder, Colorado. New York. June.
[BEN] = [CY] * [VAL]
-------
Assumptions:
Body Weight (BW)
Exposure Frequency (EF)
Exposure Duration (ED)
Averaging Time
Consumption (IR)
Contaminant
Dioxin/Furan
Dioxin
1,2,3,4,6,7,8-HpCDD
1,2,3,4,6,7,8-HpCDF
1,2,3,4,7,8,9-HpCDF
1,2,3,4,7,8-HxCDD
1,2,3,4,7,8-HxCDF
1,2,3,6,7,8-HxCDD
1,2,3,6,7,8-HxCDF
1,2,3,7,8,9-HxCDD
1,2,3,7,8,9-HxCDF
1,2,3,7,8-PeCDD
1,2,3,7,8-PeCDF
2,3,4,6,7,8-HxCDF
2,3,4,7,8-PeCDF
OCDD
OCDF
2,3,7,8-TCDD
2,3,7,8-TCDF
Total Dioxin (w/o TCDD/TCDF)
Metal
Arsenic (Inorganic)
Cadmium
Lead
Mercury
Selenium
Silver
Pesticide/PCB
Aldrin
alpha-BHC
alpha-Chlordane
PCB
Aroclor 1260
Total PCB
beta-BHC
delta-BHC
Dieldrin
gamma-BHC
gamma-Chlordane
Heptachlor
Heptachlor Epoxide
Hexachlorobenzene
p,p'-DDD
p,p'-DDE
p,p'-DDT
Toxaphene
Semi-Volatile
4-Nitrophenol
Phenol
70 kg
365 days/year
70 years
25,500 days
0.114 kg/day
Slope
Factor
(CSF)
(kg-day/mg)
1.60E+03
1.60E+03
1.60E+03
1.60E+04
1.60E+04
1.60E+04
1.60E+04
1.60E+04
1.60E+04
8.00E+04
8.00E+03
1.60E+04
8.00E+04
1.60E+02
1.60E+02
1.60E+05
1.60E+04
Chinook
Salmon
20.0%
2.40E-04
6.17E-05 *
8.17E-05
8.67E-05
6.17E-05
1.40E-04
5.00E-05
1.10E-04
9.33E-05
1.62E-04
1.07E-04
7.00E-05 *
1.38E-04
1.23E-03
2.55E-04
2.35E-04
1.61E-03
Concentrations (ppb) (percents below indicate species mix)
Coho
Salmon
20.0%
1.97E-04
1.43E-04
3.17E-05 *
2.83E-05 *
5.50E-05
2.10E-04
2.27E-04
3.83E-05
3.67E-05 *
2.33E-04 *
4.07E-04
6.67E-05
7.50E-05
2.58E-04 *
2.15E-04
3.23E-04
6.77E-04
Largescale
Sucker
0.3%
3.40E-04
6.00E-04
1.69E-04 *
1.79E-04
3.40E-04 *
1.99E-04
5.31E-04
1.93E-04 *
6.24E-04
2.81E-04 *
8.76E-04
3.28E-04
1.74E-04 *
1.11E-03
1.04E-03
1.91E-04 *
1.26E-03
Steelhead
Trout
11.0%
9.50E-05
8.33E-05 *
1.15E-04 *
6.33E-05
9.67E-05 *
7.17E-05 *
9.83E-05 *
7.50E-05 *
1.13E-04 *
9.17E-05 *
1.40E-04
8.83E-05 *
8.00E-05 *
1.77E-04 *
6.67E-05 *
4.67E-05 *
2.37E-04
White
Sturgeon
1.0%
1.72E-04
2.93E-04
1.02E-04 *
9.25E-05 *
1.08E-04 *
9.33E-05 *
4.05E-04 *
1.11E-04 *
3.06E-04
1.10E-04 *
2.28E-04
1.01E-04
7.08E-05
5.96E-04
6.51E-04
1.02E-04 *
2.69E-03
Other
47.7%
2.09E-04
1.69E-04
6.24E-05
7.50E-05
9.45E-05
1.19E-04
2.19E-04
7.53E-05
1.68E-04
1.10E-04
3.52E-04
9.34E-05
7.68E-05
4.82E-04
3.71E-04
1.28E-04
1.29E-03
Baseline Baseline
Concentration Intake
Total (CF) (IN)
100.0% (mg/kg=ppm) (mg/kg-day)
2.00E-04 2.00E-07 3.27E-10
1.35E-04
6.66E-05
6.72E-05
8.11E-05
1.36E-04
1.76E-04
7.55E-05
1.23E-04
1.43E-04
2.91E-04
8.36E-05
8.93E-05
5.56E-04
2.88E-04
1.80E-04
1.13E-03
1.35E-07
6.66E-08
6.72E-08
8.11E-08
1.36E-07
1.76E-07
7.55E-08
1.23E-07
1.43E-07
2.91E-07
8.36E-08
8.93E-08
5.56E-07
2.88E-07
1.80E-07
1.13E-06
2.21E-10
1.09E-10
1.10E-10
1.32E-10
2.22E-10
2.87E-10
1.23E-10
2.01E-10
2.34E-10
4.75E-10
1.36E-10
1.46E-10
9.07E-10
4.70E-10
2.93E-10
1.85E-09
Baseline
Cancer
Risk
(CR)
5.23E-07
3.53E-07
1.74E-07
1.75E-06
2.12E-06
3.56E-06
4.60E-06
1.97E-06
3.22E-06
1.87E-05
3.80E-06
2.18E-06
1.17E-05
1.45E-07
7.52E-08
4.69E-05
2.95E-05
5.48E-05
1.75E+00
NC
NC
NC
NC
NC
1.70E+01
6.30E+00
NA
2.00E+00
1.28E+01
2.17E+00 *
7.00E+00
9.97E+01
2.80E+02
1.33E+00
2.00E-02 *
2.00E-02 *
2.00E-02 *
9.97E+00
2.67E+00
3.00E+00
4.17E+00
4.40E+01
1.68E+02
6.67E-01
2.00E-02 *
2.00E-02 *
2.00E-02 *
3.05E+00
1.25E+01
2.83E+00
1.28E+01
1.53E+02
1.69E+02
5.00E-01 *
8.33E-03 *
8.33E-03 *
8.33E-03 *
3.35E+01
6.50E+00
5.67E+00 *
1.53E+01 *
6.37E+01
4.30E+02
l.OOE+00 *
2.00E-02 *
8.67E-02
2.00E-02 *
5.06E+00
3.91E+01
4.50E+00 *
1.15E+01 *
6.33E+01
3.99E+02
7.92E-01 *
2.29E-02
3.08E-02
7.08E-03 *
4.64E+01
1.47E+01
2.60E+00
8.46E+00
8.47E+01
2.89E+02
6.13E-01
1.01E-02
2.07E-02
8.38E-03
1.96E+01
1.13E+01
2.95E+00
8.11E+00
7.73E+01
2.79E+02
8.11E-01
1.53E-02
2.78E-02
1.43E-02
1.31E+01
1.13E-02
2.95E-03
8.11E-03
7.73E-02
2.79E-01
8.11E-04
1.53E-05
2.78E-05
1.43E-05
1.31E-02
1.84E-05
4.81E-06
1.32E-05
1.26E-04
4.56E-04
1.32E-06
2.49E-08
4.53E-08
2.33E-08
2.13E-05
3.21E-05
O.OOE+00
O.OOE+00
O.OOE+00
O.OOE+00
O.OOE+00
4.24E-07
2.85E-07
O.OOE+00
4.27E-05
4.27E-05
1.80E+00
NA
1.60E+01
1.30E+00
NA
4.50E+00
NA
1.60E+00
2.40E-01
3.40E-01
3.40E-01
1.10E+00
NC
NC
2.00E-02 *
2.00E-02 *
4.50E-02 *
2.00E-02 *
2.00E-02 *
2.00E-02 *
2.00E-02 *
l.OOE-02 *
3.71E+00
8.52E+00
1.47E+00
2.96E+00 *
6.67E+00 *
7.90E+01
2.00E-02 *
2.00E-02 *
4.50E-02 *
2.00E-02 *
2.00E-02 *
2.00E-02 *
2.00E-02 *
l.OOE-02 *
9.92E-01
3.03E+00
8.13E-01
2.96E+00 *
5.00E+00 *
3.57E+01
8.33E-03 *
8.33E-03 *
1.67E-02 *
8.33E-03 *
8.33E-03 *
8.33E-03 *
8.33E-03 *
5.00E-01
8.77E+00
2.32E+01
1.70E+00
4.63E+00 *
2.96E+01
1.21E+01
2.00E-02 *
2.00E-02 *
4.50E-02 *
2.00E-02 *
2.00E-02 *
2.00E-02 *
2.00E-02 *
1.07E+00
2.43E+00
2.26E+00
3.17E+00
1.11E+01 *
2.53E+01
1.75E+01 *
7.08E-03 *
7.08E-03 *
1.42E-02 *
2.14E-01
7.08E-03 *
7.08E-03 *
7.08E-03 *
3.77E-01
6.23E+00
4.19E+01
1.07E+00
3.94E+00 *
4.61E+01
7.25E+00
8.38E-03
8.38E-03
1.84E-02
3.14E-02
8.38E-03
8.38E-03
8.38E-03
2.81E-01
4.43E+00
1.58E+01
1.64E+00
2.84E+00
1.61E+01
2.53E+01
1.43E-02
1.43E-02
3.19E-02
2.73E-02
1.43E-02
1.43E-02
1.43E-02
2.61E-01
3.41E+00
1.06E+01
1.61E+00
3.81E+00
1.33E+01
3.70E+01
1.43E-05
1.43E-05
3.19E-05
2.73E-05
1.43E-05
1.43E-05
1.43E-05
2.61E-04
3.41E-03
1.06E-02
1.61E-03
3.81E-03
1.33E-02
3.70E-02
2.33E-08
2.33E-08
5.21E-08
4.46E-08
2.33E-08
2.33E-08
2.33E-08
4.26E-07
5.56E-06
1.73E-05
2.62E-06
6.22E-06
2.18E-05
6.04E-05
4.20E-08
O.OOE+00
8.34E-07
5.80E-08
O.OOE+00
1.05E-07
O.OOE+00
6.81E-07
1.33E-06
5.87E-06
8.91E-07
6.85E-06
O.OOE+00
O.OOE+00
*: 100% non-detect. Concentration is one-half of detection limit.
NC: Not a known carcinogen.
NA: Cancer Slope Factor not available.
Sources of Contaminant Concentrations : Tetra Tech. 1996. Final Report: Lower Columbia River Bi-State Program, Assessing Human Health
Risks from Chemically Contaminated Fish in the Lower Columbia River, Risk Assessment. Redmond, Washington.
CSF for PCBs based on US EPA. 1996. "PCBs: Cancer Dose-Response Assessment and Application to Environmental Mixtures." EPA/600/P-96/001F. September 1996.
Source of All Other Factors Cited on Summary Sheet.
-------
CANCER RISK TO NATIVE AMERICAN ANGLERS FROM INGESTION
OF CONTAMINATED FISH
COLUMBIA RIVER
Low Consumption Estimate
[BW]
[EF]
[ED]
[AT]
[IR]
[CR]
Body Weight (kg)
Exposure Frequency (days/year)
Exposure Duration (years)
Averaging Time (days)
Consumption (kg/day)
Baseline Cancer Risk by Contaminant
2,3,7,8-TCDD
2,3,7,8-TCDF
Total Dioxin (w/o TCDD/TCDF)
Arsenic (Inorganic)
Aldrin
alpha-BHC
alpha-Chlordane
Total PCB
beta-BHC
delta-BHC
Dieldrin
gamma-BHC
gamma-Chlordane
Heptachlor
Heptachlor Epoxide
Hexachlorobenzene
p,p'-DDD
p,p'-DDE
p,p'-DDT
Toxaphene
Total Cancer Risk
[POP]
Exposed Pop Nez Perce
Exposed Pop Umatilla
Exposed Pop Yakama
Exposed Pop Warm Springs
[CL]
rcvi
[CR]
[CL]
[CY1
[CR]
[CL]
CY1
CL]
[CY1
[CL]
CY1
VAL]
[BEN]
[BEN]
[VAL]
[BEN]
[BEN]
Baseline Lifetime Cancer Cases TOTAL
Baseline Yearly Cancer Cases TOTAL
Option A Cancer Risk
Option A Lifetime Cancer Cases TOTAL
Option A Yearly Cancer Cases TOTAL
Option B Cancer Risk
Option B Lifetime Cancer Cases TOTAL
Option B Yearly Cancer Cases TOTAL
Option A Lifetime Cases Reduction
Option A Yearly Cases Reduction
Option B Lifetime Cases Reduction
Option B Yearly Cases Reduction
Value of a Cancer Case - Low
Option A Annual Benefits
Option B Annual Benefits
Value of a Cancer Case - High
Option A Annual Benefits
Option B Annual Benefits
70
365
70
25,550
0.0587
2.41 E-05
1 .52E-05
2.82E-05
1 .66E-05
2.18E-07
1.47E-07
O.OOE+00
2.20E-05
2.16E-08
O.OOE+00
4.29E-07
2.99E-08
O.OOE+00
5.40E-08
O.OOE+00
3.51 E-07
6.87E-07
3.02E-06
4.59E-07
3.53E-06
1.15E-04
1,883
1,030
6,198
2,871
1 .37845
0.01969
1 .03E-04
1 .23334
0.01762
9.98E-05
1.19625
0.01709
0.14510
0.00207
0.18219
0.00260
$2,500,000
$5,182
$6,507
$9,000,000
$18,656
$23,425
Percent
20.98%
13.23%
24.54%
14.39%
0.19%
0.13%
0.00%
19.09%
0.02%
0.00%
0.37%
0.03%
0.00%
0.05%
0.00%
0.31 %
0.60%
2.63%
0.40%
3.06%
100.00%
NOTES
U.S. EPA. 1989. Interim Final Risk Assessment Guidance for Superfund, Volume I: Human Health Evaluation Mannual. Prepared by
[BW] the Office of Emergency and Remedial Response. U.S. Environmental Protection Agency. Washington DC.
U.S. EPA. 1989. Interim Final Risk Assessment Guidance for Superfund, Volume I: Human Health Evaluation Mannual. Prepared by
[EF] the Office of Emergency and Remedial Response, U.S. Environmental Protection Agency. Washington DC.
U.S. EPA. 1989. Interim Final Risk Assessment Guidance for Superfund, Volume I: Human Health Evaluation Mannual. Prepared by
[ED] the Office of Emergency and Remedial Response, U.S. Environmental Protection Agency. Washington DC.
U.S. EPA. 1989. Interim Final Risk Assessment Guidance for Superfund, Volume I: Human Health Evaluation Mannual. Prepared by
[AT] the Office of Emergency and Remedial Response. Washington DC.
[POP] U.S. Bureau of Census. 1993. 1990 Census of Population and Housing. Summary Tape File 3C. Washington, DC.
Tetra Tech. 1996. Final Report: Lower Columbia River Bi-State Program, Assessing Human Health Risks from Chemically
[CSF] Contaminated Fish in the Lower Columbia River, Risk Assessment. Redmond, Washington. (Unless otherwise noted).
Tetra Tech. 1996. Revised Water Quality Assessment of Proposed Effluent Guidelines for the Pulp, Paper, and Paperboard Industry.
[CSF] Dioxins Office of Science and Technology, U.S. Environmental Protection Agency. Washington. DC.
U.S. EPA. 1994. "Integrated Risk Information System On-Line Database of Chemical-Specific Toxicity Factors: Toxaphene."
[CSF] Toxaphene Prepared by Office of Research and Development, Washington D.C.
CRITFC (Columbia River Inter-Tribal Fish Commission). 1994. A Fish Consumption Survey of the Umatilla, Nez Perce, Yakama, and
[IR] Warm Springs Tribes of the Columbia River Basin. Report No. 94-3. Portland, Oregon.
[CF] Analysis for this RIA
[IN] = (CF * ADJ * IR * EF * ED) / (BW* AT)
[CR]= IN* CSF
[Hl]= IN/RfD
[CL] = CR * POP
[CY] = (CR * POP) / ED
American Lung Association. 1995. Dollars and Cents: The Economic and Health Benefits of Potential Particulate Matter Reductions
[VAL] = in the United States. Prepared by L.G. Chestnut, Hagler Bailly Consulting, Inc., Boulder, Colorado. New York. June.
[BEN] = [CY] * [VAL]
E-15
-------
Assumptions:
Body Weight (BW)
Exposure Frequency (EF)
Exposure Duration (ED)
Averaging Time
Consumption (IR)
Contaminant
Dioxin/Furan
Dioxin
1,2,3,4,6,7,8-HpCDD
1,2,3,4,6,7,8-HpCDF
1,2,3,4,7,8,9-HpCDF
1,2,3,4,7,8-HxCDD
1,2,3,4,7,8-HxCDF
1,2,3,6,7,8-HxCDD
1,2,3,6,7,8-HxCDF
1,2,3,7,8,9-HxCDD
1,2,3,7,8,9-HxCDF
1,2,3,7,8-PeCDD
1,2,3,7,8-PeCDF
2,3,4,6,7,8-HxCDF
2,3,4,7,8-PeCDF
OCDD
OCDF
2,3,7,8-TCDD
2,3,7,8-TCDF
Total Dioxin (w/o TCDD/TCDF)
Metal
Arsenic (Inorganic)
Cadmium
Lead
Mercury
Selenium
Silver
Pesticide/PCB
Aldrin
alpha-BHC
alpha-Chlordane
PCB
Aroclor 1260
Total PCB
beta-BHC
delta-BHC
Dieldrin
gamma-BHC
gamma-Chlordane
Heptachlor
Heptachlor Epoxide
Hexachlorobenzene
p,p'-DDD
p,p'-DDE
p,p'-DDT
Toxaphene
Semi-Volatile
4-Nitrophenol
Phenol
70 kg
365 days/year
70 years
25,500 days
0.0587 kg/day
Slope
Factor
(CSF)
(kg-day/mg)
1.60E+03
1.60E+03
1.60E+03
1.60E+04
1.60E+04
1.60E+04
1.60E+04
1.60E+04
1.60E+04
8.00E+04
8.00E+03
1.60E+04
8.00E+04
1.60E+02
1.60E+02
1.60E+05
1.60E+04
Chinook
Salmon
20.0%
2.40E-04
6.17E-05 *
8.17E-05
8.67E-05
6.17E-05
1.40E-04
5.00E-05
1.10E-04
9.33E-05
1.62E-04
1.07E-04
7.00E-05 *
1.38E-04
1.23E-03
2.55E-04
2.35E-04
1.61E-03
Concentrations (ppb) (percents below indicate species mix)
Coho
Salmon
20.0%
1.97E-04
1.43E-04
3.17E-05 *
2.83E-05 *
5.50E-05
2.10E-04
2.27E-04
3.83E-05
3.67E-05 *
2.33E-04 *
4.07E-04
6.67E-05
7.50E-05
2.58E-04 *
2.15E-04
3.23E-04
6.77E-04
Largescale
Sucker
0.3%
3.40E-04
6.00E-04
1.69E-04 *
1.79E-04
3.40E-04 *
1.99E-04
5.31E-04
1.93E-04 *
6.24E-04
2.81E-04 *
8.76E-04
3.28E-04
1.74E-04 *
1.11E-03
1.04E-03
1.91E-04 *
1.26E-03
Steelhead
Trout
11.0%
9.50E-05
8.33E-05 *
1.15E-04 *
6.33E-05
9.67E-05 *
7.17E-05 *
9.83E-05 *
7.50E-05 *
1.13E-04 *
9.17E-05 *
1.40E-04
8.83E-05 *
8.00E-05 *
1.77E-04 *
6.67E-05 *
4.67E-05 *
2.37E-04
White
Sturgeon
1.0%
1.72E-04
2.93E-04
1.02E-04 *
9.25E-05 *
1.08E-04 *
9.33E-05 *
4.05E-04 *
1.11E-04 *
3.06E-04
1.10E-04 *
2.28E-04
1.01E-04
7.08E-05
5.96E-04
6.51E-04
1.02E-04 *
2.69E-03
Other
47.7%
2.09E-04
1.69E-04
6.24E-05
7.50E-05
9.45E-05
1.19E-04
2.19E-04
7.53E-05
1.68E-04
1.10E-04
3.52E-04
9.34E-05
7.68E-05
4.82E-04
3.71E-04
1.28E-04
1.29E-03
Baseline Baseline
Concentration Intake
Total (CF) (IN)
100.0% (mg/kg=ppm) (mg/kg-day)
2.00E-04 2.00E-07 1.68E-10
1.35E-04
6.66E-05
6.72E-05
8.11E-05
1.36E-04
1.76E-04
7.55E-05
1.23E-04
1.43E-04
2.91E-04
8.36E-05
8.93E-05
5.56E-04
2.88E-04
1.80E-04
1.13E-03
1.35E-07
6.66E-08
6.72E-08
8.11E-08
1.36E-07
1.76E-07
7.55E-08
1.23E-07
1.43E-07
2.91E-07
8.36E-08
8.93E-08
5.56E-07
2.88E-07
1.80E-07
1.13E-06
1.14E-10
5.60E-11
5.64E-11
6.82E-11
1.14E-10
1.48E-10
6.35E-11
1.04E-10
1.20E-10
2.44E-10
7.03E-11
7.50E-11
4.67E-10
2.42E-10
1.51E-10
9.51E-10
Baseline
Cancer
Risk
(CR)
2.69E-07
1.82E-07
8.96E-08
9.03E-07
1.09E-06
1.83E-06
2.37E-06
1.02E-06
1.66E-06
9.64E-06
1.95E-06
1.12E-06
6.00E-06
7.48E-08
3.87E-08
2.41E-05
1.52E-05
2.82E-05
1.75E+00
NC
NC
NC
NC
NC
1.70E+01
6.30E+00
NA
2.00E+00
1.28E+01
2.17E+00 *
7.00E+00
9.97E+01
2.80E+02
1.33E+00
2.00E-02 *
2.00E-02 *
2.00E-02 *
9.97E+00
2.67E+00
3.00E+00
4.17E+00
4.40E+01
1.68E+02
6.67E-01
2.00E-02 *
2.00E-02 *
2.00E-02 *
3.05E+00
1.25E+01
2.83E+00
1.28E+01
1.53E+02
1.69E+02
5.00E-01 *
8.33E-03 *
8.33E-03 *
8.33E-03 *
3.35E+01
6.50E+00
5.67E+00 *
1.53E+01 *
6.37E+01
4.30E+02
l.OOE+00 *
2.00E-02 *
8.67E-02
2.00E-02 *
5.06E+00
3.91E+01
4.50E+00 *
1.15E+01 *
6.33E+01
3.99E+02
7.92E-01 *
2.29E-02
3.08E-02
7.08E-03 *
4.64E+01
1.47E+01
2.60E+00
8.46E+00
8.47E+01
2.89E+02
6.13E-01
1.01E-02
2.07E-02
8.38E-03
1.96E+01
1.13E+01
2.95E+00
8.11E+00
7.73E+01
2.79E+02
8.11E-01
1.53E-02
2.78E-02
1.43E-02
1.31E+01
1.13E-02
2.95E-03
8.11E-03
7.73E-02
2.79E-01
8.11E-04
1.53E-05
2.78E-05
1.43E-05
1.31E-02
9.46E-06
2.48E-06
6.81E-06
6.49E-05
2.35E-04
6.81E-07
1.28E-08
2.33E-08
1.20E-08
1.10E-05
1.66E-05
O.OOE+00
O.OOE+00
O.OOE+00
O.OOE+00
O.OOE+00
2.18E-07
1.47E-07
O.OOE+00
2.20E-05
2.20E-05
1.80E+00
NA
1.60E+01
1.30E+00
NA
4.50E+00
NA
1.60E+00
2.40E-01
3.40E-01
3.40E-01
1.10E+00
NC
NC
2.00E-02 *
2.00E-02 *
4.50E-02 *
2.00E-02 *
2.00E-02 *
2.00E-02 *
2.00E-02 *
l.OOE-02 *
3.71E+00
8.52E+00
1.47E+00
2.96E+00 *
6.67E+00 *
7.90E+01
2.00E-02 *
2.00E-02 *
4.50E-02 *
2.00E-02 *
2.00E-02 *
2.00E-02 *
2.00E-02 *
l.OOE-02 *
9.92E-01
3.03E+00
8.13E-01
2.96E+00 *
5.00E+00 *
3.57E+01
8.33E-03 *
8.33E-03 *
1.67E-02 *
8.33E-03 *
8.33E-03 *
8.33E-03 *
8.33E-03 *
5.00E-01
8.77E+00
2.32E+01
1.70E+00
4.63E+00 *
2.96E+01
1.21E+01
2.00E-02 *
2.00E-02 *
4.50E-02 *
2.00E-02 *
2.00E-02 *
2.00E-02 *
2.00E-02 *
1.07E+00
2.43E+00
2.26E+00
3.17E+00
1.11E+01 *
2.53E+01
1.75E+01 *
7.08E-03 *
7.08E-03 *
1.42E-02 *
2.14E-01
7.08E-03 *
7.08E-03 *
7.08E-03 *
3.77E-01
6.23E+00
4.19E+01
1.07E+00
3.94E+00 *
4.61E+01
7.25E+00
8.38E-03
8.38E-03
1.84E-02
3.14E-02
8.38E-03
8.38E-03
8.38E-03
2.81E-01
4.43E+00
1.58E+01
1.64E+00
2.84E+00
1.61E+01
2.53E+01
1.43E-02
1.43E-02
3.19E-02
2.73E-02
1.43E-02
1.43E-02
1.43E-02
2.61E-01
3.41E+00
1.06E+01
1.61E+00
3.81E+00
1.33E+01
3.70E+01
1.43E-05
1.43E-05
3.19E-05
2.73E-05
1.43E-05
1.43E-05
1.43E-05
2.61E-04
3.41E-03
1.06E-02
1.61E-03
3.81E-03
1.33E-02
3.70E-02
1.20E-08
1.20E-08
2.68E-08
2.30E-08
1.20E-08
1.20E-08
1.20E-08
2.19E-07
2.86E-06
8.89E-06
1.35E-06
3.21E-06
1.12E-05
3.11E-05
2.16E-08
O.OOE+00
4.29E-07
2.99E-08
O.OOE+00
5.40E-08
O.OOE+00
3.51E-07
6.87E-07
3.02E-06
4.59E-07
3.53E-06
O.OOE+00
O.OOE+00
*: 100% non-detect. Concentration is one-half of detection limit.
NC: Not a known carcinogen.
NA: Cancer Slope Factor not available.
Source of Contaminant Concentrations : Tetra Tech. 1996. Final Report: Lower Columbia River Bi-State Program, Assessing Human Health
Risks from Chemically Contaminated Fish in the Lower Columbia River, Risk Assessment. Redmond, Washington.
CSF for PCBs based on US EPA. 1996. "PCBs: Cancer Dose-Response Assessment and Application to Environmental Mixtures." EPA/600/P-96/001F. September 1996.
Source of All Other Factors Cited on Summary Sheet.
-------
SYSTEMIC RISK TO NATIVE AMERICAN ANGLERS FROM INGESTION
OF CONTAMINATED FISH
COLUMBIA RIVER
High Consumption Estimate
BW]
[EF]
[ED]
[AT]
flRl
HI]
Body Weight (kg)
Exposure Frequency (days/year)
Exposure Duration (years)
Averaging Time (days)
Consumption (kg/day)
Baseline Hazard Index by Effect
Cardiovascular
Developmental
Hepatic
Immunological
Other
HI]
Option A Hazard Index by Effect
Cardiovascular
Developmental
Hepatic
Immunological
Other
HI]
Option B Hazard Index by Effect
Cardiovascular
Developmental
Hepatic
Immunological
Other
70
365
70
25,550
0.1140
1.46
0.50
0.20
0.35
0.11
1.46
0.49
0.20
0.35
0.11
1.46
0.48
0.20
0.35
0.11
NOTES
U.S. EPA. 1989. Interim Final Risk Assessment Guidance for Superfund, Volume I: Human
Health Evaluation Mannual. Prepared by the Office of Emergency and Remedial Response.
[BW] U.S. Environmental Protection Agency. Washington DC.
U.S. EPA. 1989. Interim Final Risk Assessment Guidance for Superfund, Volume I: Human
Health Evaluation Mannual. Prepared by the Office of Emergency and Remedial Response,
[EF] U.S. Environmental Protection Agency. Washington DC.
U.S. EPA. 1989. Interim Final Risk Assessment Guidance for Superfund, Volume I: Human
Health Evaluation Mannual. Prepared by the Office of Emergency and Remedial Response,
[ED] U.S. Environmental Protection Agency. Washington DC.
U.S. EPA. 1989. Interim Final Risk Assessment Guidance for Superfund, Volume I: Human
Health Evaluation Mannual. Prepared by the Office of Emergency and Remedial Response.
[AT] Washington DC.
U.S. Bureau of Census. 1993. 1990 Census of Population and Housing. Summary Tape File
[POP] 3C. Washington, DC.
Tetra Tech. 1996. Final Report: Lower Columbia River Bi-State Program, Assessing Human
Health Risks from Chemically Contaminated Fish in the Lower Columbia River, Risk
[RFD] Assessment. Redmond, Washington. (Unless otherwise noted).
Tetra Tech. 1996. Revised Water Quality Assessment of Proposed Effluent Guidelines for the
Pulp, Paper, and Paperboard Industry. Office of Science and Technology, U.S. Environmental
[RFD] Dioxins Protection Agency. Washington. DC.
U.S. EPA. 1994. "Integrated Risk Information System On-Line Database of Chemical-Specific
Toxicity Factors: Toxaphene." Prepared by Office of Research and Development, Washington
[RFD] Toxaphene D.C.
CRITFC (Columbia River Inter-Tribal Fish Commission). 1994. A Fish Consumption Survey of
the Umatilla, Nez Perce, Yakama, and Warm Springs Tribes of the Columbia River Basin.
[IR] Report No. 94-3. Portland, Oregon.
[CF] Analysis for this RIA
[IN]= (CF*ADJ*IR* EF*ED)/(BW*AT)
[CR]= IN*CSF
[Hl]= IN/RfD
[CL] = CR * POP
[CY] = (CR * POP) / ED
American Lung Association. 1995. Dollars and Cents: The Economic and Health Benefits of
Potential Particulate Matter Reductions in the United States. Prepared by L.G. Chestnut,
[VAL] = Hagler Bailly Consulting, Inc., Boulder, Colorado. New York. June.
[BEN]= [CY] * [VAL]
E-17
-------
Contaminant
Dioxin/Furan
D
,2,3,4,6,7,8-HpCDD
,2,3,4,6,7,8-HpCDF
,2,3,4,7,8,9-HpCDF
,2,3,4,7,8-HxCDD
,2,3,4,7,8-HxCDF
,2,3,6,7,8-HxCDD
,2,3,6,7,8-HxCDF
,2,3,7,8,9-HxCDD
,2,3,7,8,9-HxCDF
,2,3,7,8-PeCDD
,2,3,7,8-PeCDF
2,3,4,6,7,8-HxCDF
2,3,4,7,8-PeCDF
2,3,7,8-TCDD
2,3,7,8-TCDF
OCDD
OCDF
Metal
Arsenic (Inorganic)
Cadmium
Lead
Mercury
Selenium
Silver
Pesticide/PCB
Aldrin
alpha-BHC
alpha-Chlordane
PCB
Aroclor 1260
beta-BHC
delta-BHC
Dieldrin
gamma-BHC
gamma-Chlordane
Heptachlor
Heptachlor Epoxide
Hexachlorobenzene
p,p'-DDD
p,p'-DDE
p,p'-DDT
Toxaphene
Semi-Volatile
4-Nitrophenol
Phenol
Reference
Dose
(RED)
(mg/kg-day)
l.OOE-06
l.OOE-06
l.OOE-06
l.OOE-07
l.OOE-07
l.OOE-07
l.OOE-07
l.OOE-07
l.OOE-07
2.00E-08
2.00E-07
l.OOE-07
2.00E-08
l.OOE-08
l.OOE-07
l.OOE-05
l.OOE-05
Concentrations (ppb) (percents below indicate species mix)
Chinook
Salmon
20.0%
2.40E-04
6.17E-05 *
8.17E-05
8.67E-05
6.17E-05
1.40E-04
5.00E-05
1.10E-04
9.33E-05
1.62E-04
1.07E-04
7.00E-05 *
1.38E-04
2.35E-04
1.61E-03
1.23E-03
2.55E-04
Coho
Salmon
20.0%
1.97E-04
1.43E-04
3.17E-05 *
2.83E-05 *
5.50E-05
2.10E-04
2.27E-04
3.83E-05
3.67E-05 *
2.33E-04 *
4.07E-04
6.67E-05
7.50E-05
3.23E-04
6.77E-04
2.58E-04 *
2.15E-04
Largescale
Sucker
0.3%
3.40E-04
6.00E-04
1.69E-04 *
1.79E-04
3.40E-04 *
1.99E-04
5.31E-04
1.93E-04 *
6.24E-04
2.81E-04 *
8.76E-04
3.28E-04
1.74E-04 *
1.91E-04 *
1.26E-03
1.11E-03
1.04E-03
Steelhead
Trout
11.0%
9.50E-05
8.33E-05 *
1.15E-04 *
6.33E-05
9.67E-05 *
7.17E-05 *
9.83E-05 *
7.50E-05 *
1.13E-04 *
9.17E-05 *
1.40E-04
8.83E-05 *
8.00E-05 *
4.67E-05 *
2.37E-04
1.77E-04 *
6.67E-05 *
White
Sturgeon
1.0%
1.72E-04
2.93E-04
1.02E-04 *
9.25E-05 *
1.08E-04 *
9.33E-05 *
4.05E-04 *
1.11E-04 *
3.06E-04
1.10E-04 *
2.28E-04
1.01E-04
7.08E-05
1.02E-04 *
2.69E-03
5.96E-04
6.51E-04
Other
47.7%
2.09E-04
1.69E-04
6.24E-05
7.50E-05
9.45E-05
1.19E-04
2.19E-04
7.53E-05
1.68E-04
1.10E-04
3.52E-04
9.34E-05
7.68E-05
1.28E-04
1.29E-03
4.82E-04
3.71E-04
Baseline
Baseline Baseline Hazard
Concentration Intake Index
Total (CF) (IN) (HI) Effects
100.0% (mg/kg=ppm) (mg/kg-day)
2.00E-04 2.00E-07 3.27E-10 0.00
1.35E-04
6.66E-05
6.72E-05
8.11E-05
1.36E-04
1.76E-04
7.55E-05
1.23E-04
1.43E-04
2.91E-04
8.36E-05
8.93E-05
1.80E-04
1.13E-03
5.56E-04
2.88E-04
1.35E-07
6.66E-08
6.72E-08
8.11E-08
1.36E-07
1.76E-07
7.55E-08
1.23E-07
1.43E-07
2.91E-07
8.36E-08
8.93E-08
1.80E-07
1.13E-06
5.56E-07
2.88E-07
2.21E-10
1.09E-10
1.10E-10
1.32E-10
2.22E-10
2.87E-10
1.23E-10
2.01E-10
2.34E-10
4.75E-10
1.36E-10
1.46E-10
2.93E-10
1.85E-09
9.07E-10
4.70E-10
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.01 D
0.00
0.00
0.01
0.03 D
0.02 D
0.00
0.00
3.00E-04
l.OOE-03
NA
l.OOE-04
5.00E-03
5.00E-03
3.00E-05
NA
NA
7.00E-05
1.28E+01
2.17E+00 *
7.00E+00
9.97E+01
2.80E+02
1.33E+00
2.00E-02 *
2.00E-02 *
2.00E-02 *
9.97E+00
2.67E+00
3.00E+00
4.17E+00
4.40E+01
1.68E+02
6.67E-01
2.00E-02 *
2.00E-02 *
2.00E-02 *
3.05E+00
1.25E+01
2.83E+00
1.28E+01
1.53E+02
1.69E+02
5.00E-01 *
8.33E-03 *
8.33E-03 *
8.33E-03 *
3.35E+01
6.50E+00
5.67E+00 *
1.53E+01 *
6.37E+01
4.30E+02
l.OOE+00 *
2.00E-02 *
8.67E-02
2.00E-02 *
5.06E+00
3.91E+01
4.50E+00 *
1.15E+01 *
6.33E+01
3.99E+02
7.92E-01 *
2.29E-02
3.08E-02
7.08E-03 *
4.64E+01
1.47E+01
2.60E+00
8.46E+00
8.47E+01
2.89E+02
6.13E-01
1.01E-02
2.07E-02
8.38E-03
1.96E+01
1.13E+01
2.95E+00
8.11E+00
7.73E+01
2.79E+02
8.11E-01
1.53E-02
2.78E-02
1.43E-02
1.31E+01
1.13E-02
2.95E-03
8.11E-03
7.73E-02
2.79E-01
8.11E-04
1.53E-05
2.78E-05
1.43E-05
1.31E-02
1.84E-05
4.81E-06
1.32E-05
1.26E-04
4.56E-04
1.32E-06
2.49E-08
4.53E-08
2.33E-08
2.13E-05
0.06 C,H,O
0.00
NA
1.26 C
0.09 C,D,H
0.00
0.00
NA
NA
0.30 D,I
NA
NA
5.00E-05
3.00E-04
NA
5.00E-04
1.30E-05
8.00E-04
5.00E-04
5.00E-04
5.00E-04
NA
6.20E-02
6.00E-01
2.00E-02 *
2.00E-02 *
4.50E-02 *
2.00E-02 *
2.00E-02 *
2.00E-02 *
2.00E-02 *
l.OOE-02 *
3.71E+00
8.52E+00
1.47E+00
2.96E+00 *
6.67E+00 *
7.90E+01
2.00E-02 *
2.00E-02 *
4.50E-02 *
2.00E-02 *
2.00E-02 *
2.00E-02 *
2.00E-02 *
l.OOE-02 *
9.92E-01
3.03E+00
8.13E-01
2.96E+00 *
5.00E+00 *
3.57E+01
8.33E-03 *
8.33E-03 *
1.67E-02 *
8.33E-03 *
8.33E-03 *
8.33E-03 *
8.33E-03 *
5.00E-01
8.77E+00
2.32E+01
1.70E+00
4.63E+00 *
2.96E+01
1.21E+01
2.00E-02 *
2.00E-02 *
4.50E-02 *
2.00E-02 *
2.00E-02 *
2.00E-02 *
2.00E-02 *
1.07E+00
2.43E+00
2.26E+00
3.17E+00
1.11E+01 *
2.53E+01
1.75E+01 *
7.08E-03 *
7.08E-03 *
1.42E-02 *
2.14E-01
7.08E-03 *
7.08E-03 *
7.08E-03 *
3.77E-01
6.23E+00
4.19E+01
1.07E+00
3.94E+00 *
4.61E+01
7.25E+00
8.38E-03
8.38E-03
1.84E-02
3.14E-02
8.38E-03
8.38E-03
8.38E-03
2.81E-01
4.43E+00
1.58E+01
1.64E+00
2.84E+00
1.61E+01
2.53E+01
1.43E-02
1.43E-02
3.19E-02
2.73E-02
1.43E-02
1.43E-02
1.43E-02
2.61E-01
3.41E+00
1.06E+01
1.61E+00
3.81E+00
1.33E+01
3.70E+01
1.43E-05
1.43E-05
3.19E-05
2.73E-05
1.43E-05
1.43E-05
1.43E-05
2.61E-04
3.41E-03
1.06E-02
1.61E-03
3.81E-03
1.33E-02
3.70E-02
2.33E-08
2.33E-08
5.21E-08
4.46E-08
2.33E-08
2.33E-08
2.33E-08
4.26E-07
5.56E-06
1.73E-05
2.62E-06
6.22E-06
2.18E-05
6.04E-05
NA
NA
0.00
0.00
NA
0.00
0.00
0.00
0.01 C,D,H,I,O
0.03 C,D,H,I,O
0.01
NA
0.00
0.00
*: 100% non-detect. Concentration is one-half of detection lim it.
NA: No RfD available.
Source of Contaminant Concentrations : Tetra Tech. 1996. Final Report: Lower Columbia River Bi-State
Program, Assessing Human Health Risks from Chemically Contaminated Fish in the Lower Columbia River,
Risk Assessment. Redmond, Washington.
Source of All Other Factors Cited on Summary Sheet.
Effects:
C = Cardiovascular including
hyperkalemia, myocardial arhythmia or
hypertension
D = Developmental
H = Hepatic
I = Immunological
O = Other
E-18
-------
SYSTEMIC RISK TO NATIVE AMERICAN ANGLERS FROM INGESTION
OF CONTAMINATED FISH
COLUMBIA RIVER
Low Consumption Estimate
BW]
[EF]
[ED]
[AT]
flRl
HI]
Body Weight (kg)
Exposure Frequency (days/year)
Exposure Duration (years)
Averaging Time (days)
Consumption (kg/day)
Baseline Hazard Index by Effect
Cardiovascular
Developmental
Hepatic
Immunological
Other
HI]
Option A Hazard Index by Effect
Cardiovascular
Developmental
Hepatic
Immunological
Other
HI]
Option B Hazard Index by Effect
Cardiovascular
Developmental
Hepatic
Immunological
Other
70
365
70
25,550
0.0587
0.75
0.26
0.10
0.18
0.06
0.75
0.25
0.10
0.18
0.06
0.75
0.25
0.10
0.18
0.06
NOTES
[BW]
[EF]
[ED]
[AT]
[POP]
U.S. EPA. 1989. Interim Final Risk Assessment Guidance for Superfund, Volume I: Human
Health Evaluation Mannual. Prepared by the Office of Emergency and Remedial Response.
U.S. Environmental Protection Agency. Washington DC.
U.S. EPA. 1989. Interim Final Risk Assessment Guidance for Superfund, Volume I: Human
Health Evaluation Mannual. Prepared by the Office of Emergency and Remedial Response,
U.S. Environmental Protection Agency. Washington DC.
U.S. EPA. 1989. Interim Final Risk Assessment Guidance for Superfund, Volume I: Human
Health Evaluation Mannual. Prepared by the Office of Emergency and Remedial Response,
U.S. Environmental Protection Agency. Washington DC.
U.S. EPA. 1989. Interim Final Risk Assessment Guidance for Superfund, Volume I: Human
Health Evaluation Mannual. Prepared by the Office of Emergency and Remedial Response.
Washington DC.
U.S. Bureau of Census. 1993. 1990 Census of Population and Housing. Summary Tape File
3C. Washington, DC.
Tetra Tech. 1996. Final Report: Lower Columbia River Bi-State Program, Assessing Human
Health Risks from Chemically Contaminated Fish in the Lower Columbia River, Risk
[RFD] Assessment. Redmond, Washington. (Unless otherwise noted).
Tetra Tech. 1996. Revised Water Quality Assessment of Proposed Effluent Guidelines for the
Pulp, Paper, and Paperboard Industry. Office of Science and Technology, U.S. Environmental
[RFD] Dioxins Protection Agency. Washington. DC.
U.S. EPA. 1994. "Integrated Risk Information System On-Line Database of Chemical-Specific
Toxicity Factors: Toxaphene." Prepared by Office of Research and Development, Washington
[RFD] Toxaphene D.C.
CRITFC (Columbia River Inter-Tribal Fish Commission). 1994. A Fish Consumption Survey of
the Umatilla, Nez Perce, Yakama, and Warm Springs Tribes of the Columbia River Basin.
Report No. 94-3. Portland, Oregon.
Analysis for this RIA
(CF * ADJ * IR * EF * ED) / (BW * AT)
IN*CSF
IN / RfD
[IR]
[CF]
[IN] =
[CR] =
[Hl] =
[CL] =
[CY] =
[VAL] =
[BEN] =
CR * POP
(CR * POP) / ED
American Lung Association. 1995. Dollars and Cents: The Economic and Health Benefits of
Potential Particulate Matter Reductions in the United States. Prepared by L.G. Chestnut,
Hagler Bailly Consulting, Inc., Boulder, Colorado. New York. June.
[CY] * [VAL]
E-19
-------
Assumptions:
Body Weight (BW)
Exposure Frequency (EF)
Exposure Duration (ED)
Averaging Time
Consumption (IR)
Contaminant
Dioxin/Furan
Dioxin
1,2,3,4,6,7,8-HpCDD
1,2,3,4,6,7,8-HpCDF
1,2,3,4,7,8,9-HpCDF
1,2,3,4,7,8-HxCDD
1,2,3,4,7,8-HxCDF
1,2,3,6,7,8-HxCDD
1,2,3,6,7,8-HxCDF
1,2,3,7,8,9-HxCDD
1,2,3,7,8,9-HxCDF
1,2,3,7,8-PeCDD
1,2,3,7,8-PeCDF
2,3,4,6,7,8-HxCDF
2,3,4,7,8-PeCDF
2,3,7,8-TCDD
2,3,7,8-TCDF
OCDD
OCDF
Metal
Arsenic (Inorganic)
Cadmium
Lead
Mercury
Selenium
Silver
Pesticide/PCB
Aldrin
alpha-BHC
alpha-Chlordane
PCB
Aroclor 1260
beta-BHC
delta-BHC
Dieldrin
gamma-BHC
gamma-Chlordane
Heptachlor
Heptachlor Epoxide
Hexachlorobenzene
p,p'-DDD
p,p'-DDE
p,p'-DDT
Toxaphene
Semi-Volatile
4-Nitrophenol
Phenol
70 kg
365 days/year
70 years
25,500 days
0.0587 kg/day
Reference
Dose
(RfD)
(mg/kg-day)
l.OOE-06
l.OOE-06
l.OOE-06
l.OOE-07
l.OOE-07
l.OOE-07
l.OOE-07
l.OOE-07
l.OOE-07
2.00E-08
2.00E-07
l.OOE-07
2.00E-08
l.OOE-08
l.OOE-07
l.OOE-05
l.OOE-05
3.00E-04
l.OOE-03
NA
l.OOE-04
5.00E-03
5.00E-03
3.00E-05
NA
NA
7.00E-05
NA
NA
5.00E-05
3.00E-04
NA
5.00E-04
1.30E-05
8.00E-04
5.00E-04
5.00E-04
5.00E-04
NA
6.20E-02
6.00E-01
Chinook
Salmon
20.0%
2.40E-04
6.17E-05 *
8.17E-05
8.67E-05
6.17E-05
1.40E-04
5.00E-05
1.10E-04
9.33E-05
1.62E-04
1.07E-04
7.00E-05 *
1.38E-04
2.35E-04
1.61E-03
1.23E-03
2.55E-04
1.28E+01
2.17E+00 *
7.00E+00
9.97E+01
2.80E+02
1.33E+00
2.00E-02 *
2.00E-02 *
2.00E-02 *
9.97E+00
2.00E-02 *
2.00E-02 *
4.50E-02 *
2.00E-02 *
2.00E-02 *
2.00E-02 *
2.00E-02 *
l.OOE-02 *
3.71E+00
8.52E+00
1.47E+00
2.96E+00 *
6.67E+00 *
7.90E+01
Concentrations (ppb) (percents below indicate species mix)
Coho
Salmon
20.0%
1.97E-04
1.43E-04
3.17E-05 *
2.83E-05 *
5.50E-05
2.10E-04
2.27E-04
3.83E-05
3.67E-05 *
2.33E-04 *
4.07E-04
6.67E-05
7.50E-05
3.23E-04
6.77E-04
2.58E-04 *
2.15E-04
2.67E+00
3.00E+00
4.17E+00
4.40E+01
1.68E+02
6.67E-01
2.00E-02 *
2.00E-02 *
2.00E-02 *
3.05E+00
2.00E-02 *
2.00E-02 *
4.50E-02 *
2.00E-02 *
2.00E-02 *
2.00E-02 *
2.00E-02 *
l.OOE-02 *
9.92E-01
3.03E+00
8.13E-01
2.96E+00 *
5.00E+00 *
3.57E+01
Largescale
Sucker
0.3%
3.40E-04
6.00E-04
1.69E-04 *
1.79E-04
3.40E-04 *
1.99E-04
5.31E-04
1.93E-04 *
6.24E-04
2.81E-04 *
8.76E-04
3.28E-04
1.74E-04 *
1.91E-04 *
1.26E-03
1.11E-03
1.04E-03
1.25E+01
2.83E+00
1.28E+01
1.53E+02
1.69E+02
5.00E-01 *
8.33E-03 *
8.33E-03 *
8.33E-03 *
3.35E+01
8.33E-03 *
8.33E-03 *
1.67E-02 *
8.33E-03 *
8.33E-03 *
8.33E-03 *
8.33E-03 *
5.00E-01
8.77E+00
2.32E+01
1.70E+00
4.63E+00 *
2.96E+01
1.21E+01
Steelhead
Trout
11.0%
9.50E-05
8.33E-05 *
1.15E-04 *
6.33E-05
9.67E-05 *
7.17E-05 *
9.83E-05 *
7.50E-05 *
1.13E-04 *
9.17E-05 *
1.40E-04
8.83E-05 *
8.00E-05 *
4.67E-05 *
2.37E-04
1.77E-04 *
6.67E-05 *
6.50E+00
5.67E+00 *
1.53E+01 *
6.37E+01
4.30E+02
l.OOE+00 *
2.00E-02 *
8.67E-02
2.00E-02 *
5.06E+00
2.00E-02 *
2.00E-02 *
4.50E-02 *
2.00E-02 *
2.00E-02 *
2.00E-02 *
2.00E-02 *
1.07E+00
2.43E+00
2.26E+00
3.17E+00
1.11E+01 *
2.53E+01
1.75E+01 *
White
Sturgeon
1.0%
1.72E-04
2.93E-04
1.02E-04 *
9.25E-05 *
1.08E-04 *
9.33E-05 *
4.05E-04 *
1.11E-04 *
3.06E-04
1.10E-04 *
2.28E-04
1.01E-04
7.08E-05
1.02E-04 *
2.69E-03
5.96E-04
6.51E-04
3.91E+01
4.50E+00 *
1.15E+01 *
6.33E+01
3.99E+02
7.92E-01 *
2.29E-02
3.08E-02
7.08E-03 *
4.64E+01
7.08E-03 *
7.08E-03 *
1.42E-02 *
2.14E-01
7.08E-03 *
7.08E-03 *
7.08E-03 *
3.77E-01
6.23E+00
4.19E+01
1.07E+00
3.94E+00 *
4.61E+01
7.25E+00
Other
47.7%
2.09E-04
1.69E-04
6.24E-05
7.50E-05
9.45E-05
1.19E-04
2.19E-04
7.53E-05
1.68E-04
1.10E-04
3.52E-04
9.34E-05
7.68E-05
1.28E-04
1.29E-03
4.82E-04
3.71E-04
1.47E+01
2.60E+00
8.46E+00
8.47E+01
2.89E+02
6.13E-01
1.01E-02
2.07E-02
8.38E-03
1.96E+01
8.38E-03
8.38E-03
1.84E-02
3.14E-02
8.38E-03
8.38E-03
8.38E-03
2.81E-01
4.43E+00
1.58E+01
1.64E+00
2.84E+00
1.61E+01
2.53E+01
Baseline
Baseline Baseline Hazard
Concentration Intake Index
Total (CF) (IN) (HI) Effects
100.0% (mg/kg=ppm) (mg/kg-day)
2.00E-04 2.00E-07 1.68E-10 0.00
1.35E-04
6.66E-05
6.72E-05
8.11E-05
1.36E-04
1.76E-04
7.55E-05
1.23E-04
1.43E-04
2.91E-04
8.36E-05
8.93E-05
1.80E-04
1.13E-03
5.56E-04
2.88E-04
1.13E+01
2.95E+00
8.11E+00
7.73E+01
2.79E+02
8.11E-01
1.53E-02
2.78E-02
1.43E-02
1.31E+01
1.43E-02
1.43E-02
3.19E-02
2.73E-02
1.43E-02
1.43E-02
1.43E-02
2.61E-01
3.41E+00
1.06E+01
1.61E+00
3.81E+00
1.33E+01
3.70E+01
1.35E-07
6.66E-08
6.72E-08
8.11E-08
1.36E-07
1.76E-07
7.55E-08
1.23E-07
1.43E-07
2.91E-07
8.36E-08
8.93E-08
1.80E-07
1.13E-06
5.56E-07
2.88E-07
1.13E-02
2.95E-03
8.11E-03
7.73E-02
2.79E-01
8.11E-04
1.53E-05
2.78E-05
1.43E-05
1.31E-02
1.43E-05
1.43E-05
3.19E-05
2.73E-05
1.43E-05
1.43E-05
1.43E-05
2.61E-04
3.41E-03
1.06E-02
1.61E-03
3.81E-03
1.33E-02
3.70E-02
1.14E-10
5.60E-11
5.64E-11
6.82E-11
1.14E-10
1.48E-10
6.35E-11
1.04E-10
1.20E-10
2.44E-10
7.03E-11
7.50E-11
1.51E-10
9.51E-10
4.67E-10
2.42E-10
9.46E-06
2.48E-06
6.81E-06
6.49E-05
2.35E-04
6.81E-07
1.28E-08
2.33E-08
1.20E-08
1.10E-05
1.20E-08
1.20E-08
2.68E-08
2.30E-08
1.20E-08
1.20E-08
1.20E-08
2.19E-07
2.86E-06
8.89E-06
1.35E-06
3.21E-06
1.12E-05
3.11E-05
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.01 D
0.00
0.00
0.00
0.02 D
0.01 D
0.00
0.00
0.03 C,H,O
0.00
NA
0.65 C
0.05 C,D,H
0.00
0.00
NA
NA
0.16 D,I
NA
NA
0.00
0.00
NA
0.00
0.00
0.00
0.01 C,D,H,I,O
0.02 C,D,H,I,O
0.00
NA
0.00
0.00
*: 100% non-detect. Concentration is one-half of detection limit.
NA: No RfD available.
Source of Contaminant Concentrations : Tetra Tech. 1996. Final Report: Lower Columbia River Bi-State
Program, Assessing Human Health Risks from Chemically Contaminated Fish in the Lower Columbia
River, Risk Assessment. Redmond, Washington.
Source of All Other Factors Cited on Summary Sheet.
Effects:
C = Cardiovascular including
hyperkalemia, myocardial arhythmia
or hypertension
D = Developmental
H = Hepatic
I = Immunological
O = Other
-------
APPENDIX F
ENVIRONMENTAL JUSTICE ANALYSIS OF THE
PULP AND PAPER INTEGRATED RULE
F-l
-------
Executive Order 12898 directs federal agencies, including EPA, to identify and address, as
appropriate, disproportionately high and adverse human health or environmental effects of their programs,
policies, and activities on minority and low-income populations. EPA has determined that the final pulp and
paper regulations will significantly reduce the environmental health risks to potentially affected minority and
low-income populations, while causing a modest increase in paper prices that low-income populations will
have to bear.
EPA conducted three analyses to address environmental justice-related concerns of the final pulp and
paper rule:
1. an assessment of the health effects of the rule's water-related controls on Native American
subsistence anglers;
2. a comparison of race, income, and employment statistics for counties with pulp and paper
mills and the state as a whole; and
3. an evaluation of the effects of pulp and paper compliance costs on paper price increases, and
the resulting impacts on low-income consumers.
EPA did not conduct a specific environmental justice analysis of the effect of MACT (air) standards
on minority and low-income populations because accurate modeling of the exposure of these populations was
not feasible.
F. 1 HEALTH EFFECTS ON NATIVE AMERICAN SUBSISTENCE ANGLERS
For the final rule, EPA estimated the cancer and noncancer health risks to Native American
subsistence anglers expected under the water-related options considered for two subcategories of the industry
(papergrade kraft/soda and papergrade sulfite) and compared these risks to baseline conditions. Baseline
conditions are defined as the pollutant concentrations found in pulp and paper mill effluent discharges as of
mid-1995. EPA considered three technology options for the papergrade kraft/soda subcategory: (1) Option
A — 100 percent substitution of chlorine dioxide for chlorine (the option selected for BAT/PSES), (2)
Option B — oxygen delignification and/or extended cooking followed by 100 percent substitution of chlorine
dioxide for chlorine, and (3) totally chlorine free (TCP) bleaching. EPA evaluated one option for each of
three segments of the papergrade sulfite subcategory (Table F-l).
F-2
-------
TABLE F-l
PROCESS OPTIONS FOR EACH SUBCATEGORY
Subcategory
Options
Papergrade Kraft/Soda
Option A
100% substitution
of chlorine dioxide
for chlorine
Option B
Oxygen
delignification
and/or extended
cooking followed
by 100%
substitution of
chlorine dioxide for
chlorine
TCP
TCP: Totally Chlorine-Free —
oxygen- and peroxide-enhanced
extraction, followed by
peroxide bleaching
Papergrade Sulfite (3 segments)
(1) Uses an acidic cooking liquor of calcium, magnesium,
or sodium sulfite
(2) Uses an acidic cooking liquor of ammonium sulfite
(3) Produces specialty grade pulp characterized by a high
percentage of alpha cellulose and high brightness
TCP: Totally Chlorine-Free — oxygen- and peroxide-enhanced extraction,
followed by peroxide bleaching
ECF: Elemental-Chlorine-Free — 100% substitution of chlorine dioxide for
chlorine, peroxide-enhanced extraction, and elimination of hypochlorite
ECF: Elemental-Chlorine-Free — 100% substitution of chlorine dioxide for
chlorine, oxygen- and peroxide-enhanced extraction, and elimination of
hypochlorite
F-3
-------
F.I.I Methodology
The assessment of carcinogenic risk and noncancer hazards was conducted in accordance with
available EPA guidance including Risk Assessment Guidance for Superfund (U.S. EPA, 1989b) and
Assessing Human Health Risk from Chemically Contaminated Fish and Shellfish: A Guidance Manual
(U.S. EPA, 1989a). Potential human health impacts on Native American subsistence anglers were evaluated
by (1) estimating potential individual carcinogenic risks and noncarcinogenic hazards from the consumption
offish tissue under baseline conditions and BAT/PSES options for Native American subsistence anglers on a
nationwide basis and for reservations with treaty-ceded fishing rights, and (2) estimating the annual incidence
of cancer and the number of individuals exposed to noncancer hazards among the potentially exposed Native
American subsistence anglers with treaty-ceded fishing rights under baseline and BAT/PSES conditions.
EPA assumed that the increased cancer and noncancer risks to Native American subsistence anglers from
pulp and paper mills were the result of consumption offish tissue contaminated by dioxin (2,3,7,8-TCDD),
furan (2,3,7,8-TCDF), and five other pollutants in mill discharges. Consumption offish tissue can be an
important route of human exposure for certain pollutants such as dioxins/furans, which can bioaccumulate in
fish tissues to high concentrations even when water concentrations are below detection limits. Extremely low
doses of 2,3,7,8-tetrachlorodibenzo-p-dioxin (2,3,7,8-TCDD) have been found to elicit a wide range of toxic
responses in animals, including carcinogenicity, teratogenicity, fetotoxicity, reproductive dysfunction, and
immunotoxicity (U.S. EPA, 1987). This compound is the most potent animal carcinogen evaluated by EPA
and EPA has determined that there is sufficient evidence to conclude that 2,3,7,8-TCDD is a probable human
carcinogen (U.S. EPA, 1989c). Variations in fish consumption can affect exposure to contaminants in fish
tissue and, hence, health risks. Some populations, such as subsistence anglers and some ethnic groups, tend
to consume more fish than the general U.S. population.
EPA based its estimates of reductions in increased cancer risks on computer modeling results that
showed decreases in fish tissue concentrations of five carcinogens as a result of the rule—chloroform;
pentachlorophenol; 2,3,7,8-TCDD; 2,3,7,8-TCDF; and 2,4,6-trichlorophenol. EPA based its estimates of the
reductions in increased noncancer hazards on estimates of reduced fish tissue concentrations of six toxicants
as a result of the rule — chloroform; pentachlorophenol, 2,3,7,8-TCDD; 2,3,7,8-TCDF; 2,3,4,6-
tetrachlorophenol; and 2,4,5-trichlorophenol.
F-4
-------
To estimate both baseline and post-compliance risk levels, EPA evaluated the effluent pollutant
loadings of 92 mills, the flows of pulp and paper receiving streams, and the populations of Native Americans
residing downstream of pulp and paper mills. Because site-specific information on pollutant concentrations
in fish was not available for each of the 92 mills, EPA predicted fish tissue concentrations and human health
benefits of the final rule based on computer model simulations. EPA used a simple dilution model to predict
water column and fish tissue concentrations of all contaminants except dioxin/furan. The simple dilution
modeling approach is a conservative approach that assumes all pollutants (except dioxin/furan) discharged to
receiving streams are available to the biota. EPA used the Office of Research and Development's Dioxin
Reassessment Evaluation (DRE) model to estimate fish tissue concentrations of dioxin/furan from pulp and
paper mill discharges. The DRE model provides more reliable information regarding the partitioning of
hydrophobic pollutants like dioxin/furan between sediment and the water column, and thus on their
bioavailability to fish.
EPA divided the angler population into three groups — recreational anglers, subsistence anglers, and
Native American subsistence anglers. Recreational anglers are those anglers who fish for enjoyment, not to
survive. However, they do consume more fish than typical members of the general population. Subsistence
anglers (non-Native American) are those anglers who depend on fishing for at least part of their daily intake
of food. Native American subsistence anglers are those Native Americans who consume relatively more fish
than members of other subsistence groups as part of their daily diet, either for survival or because of customs
or religious practices and beliefs.
EPA assumed that recreational anglers consume 21 grams per day (g/day) offish, subsistence anglers
(non-Native American) consume 48 g/day, and Native American subsistence anglers consume 70 g/day. EPA
based the recreational and subsistence angler fish consumption rates on the 90th and 95th percentiles,
respectively, of the estimated nationwide distribution of per capita freshwater and estuarine finfish and
shellfish consumption rates of persons 18 and older. These estimated fish consumption rates are based on a
recently completed analysis of the U.S. Department of Agriculture combined 1989, 1990, and 1991
Continuing Survey of Food Intake by Individuals (CSFII). The analysis was conducted by the Office of
Science of Technology of EPA's Office of Water (U.S. EPA, 1997).
EPA based the Native American subsistence angler consumption rate on average fish consumption
rates of Native Americans determined in studies conducted by the Columbia River Inter-Tribal Fish
F-5
-------
Commission (CRITFC, 1994) and Wolf and Walker (1987). CRITFC conducted a fish consumption survey
among four Columbia River Basin tribes during the fall and winter of 1991-1992. The target population
included all adult tribal members who lived on or near the Yakama, Warm Springs, Umatilla, or Nez Perce
reservations. Adults in the CRITFC study had an average fish intake of 58.7 g/day. Wolf and Walker (1987)
analyzed a data set from 94 Native Alaskan communities for harvests of fish, land mammals, marine
mammals, and other wild resources. The analysis was performed to evaluate the distribution and productivity
of subsistence harvests in Alaska during the 1980s. The median per capita individual fish intake in the 94
communities was 81 g/day. The average fish intake rates of the two studies (i.e., 58.7 g/day for CRITFC and
81 g/day for Wolf and Walker) were combined and the average of these two values (approximately 70 g/day)
was used as the fish consumption rate for Native Americans for the water quality assessment.
EPA conducted two separate evaluations of the potential risk to Native American subsistence angler
populations. In the first, EPA evaluated the risk to Native American subsistence anglers nationwide by
assuming Native Americans fish on streams below the discharges of all of the pulp and paper mills. This
assumption most likely overstates the potential risk since Native Americans might not (and probably do not)
fish below all of the pulp and paper mills' receiving streams. However, records of the number of Native
Americans who practice subsistence angling nationwide are not available. Thus, EPA was not able to
estimate the potentially exposed population and the potential reduction in cancer cases and noncancer health
effects that might result from implementation of the final rule. EPA was able to evaluate only the potential
risk levels faced by Native American subsistence anglers nationwide.
For the second evaluation, EPA identified the Native American tribes participating in subsistence
fishing with treaty-ceded fishing grounds potentially affected by pulp and paper mill discharges (Lenhart and
Castillo, 1997). EPA then evaluated the risk to the members of these tribes and also determined the
population size of these tribes. Therefore, EPA considered only members of tribes living on reservations with
treaty-ceded fishing rights when estimating the number of cancer cases avoided and reductions in the number
of individuals exposed to noncancer effects as a result of implementing each of the water-related technology
options. For both the nationwide assessment and the assessment of members of tribes with treaty-ceded
fishing rights, EPA assumed Native American subsistence anglers consume 70 g/day of fish.
EPA estimated the chronic daily intake (GDI) for each pollutant evaluated based on modeled fish
tissue concentrations and a 70 g/day fish tissue consumption rate for Native American subsistence anglers.
F-6
-------
GDIs are expressed as milligrams of pollutant contacted per kilogram of body weight per day. EPA assumed
that Native American subsistence anglers are exposed to pulp and paper effluent pollutants for 70 years. The
potential cancer risks associated with pulp and paper mill pollutant discharges are expressed as an increased
probability of developing cancer over a lifetime, or the excess individual lifetime cancer risk (U.S. EPA,
1989b). Cancer risks are quantified by multiplying the GDI times the pollutant-specific slope factor for each
pollutant evaluated:
Cancer risk, = GDI, * SF,
where:
Cancer riskj = potential carcinogenic risk associated with exposure to chemical /' (unitless);
CDIj = chronic daily intake for chemical /' (mg/kg/day); and
Sfj = slope factor for chemical/'((mg/kg/day)"1).
The slope factor is a plausible upper-bound estimate of a cancer-related response per unit intake of a
chemical over a lifetime. It is used to estimate the upper-bound probability that an individual will develop
cancer as a result of a lifetime of exposure to a particular level of a potential carcinogen. Chemical-specific
cancer risks are summed in accordance with EPA guidance (U.S. EPA, 1989b) to quantify the combined
cancer risk associated with exposure to a mixture of chemicals.
EPA evaluated noncancer hazards for four systemic human toxicants by comparing the estimated
GDI dose with a reference dose (RfD). These four systemic toxicants (chloroform, pentachlorphenol, 2,3,4,6-
tetrachlorophenol, and 2,4,5-trichlorophenol) are the pollutants analyzed that have EPA-approved RfDs
contained in the Integrated Risk Information System, or IRIS. The RfD represents an estimate, with
uncertainty spanning perhaps an order of magnitude, of the level of daily exposure that is likely to be without
an appreciable risk of deleterious effects to an individual during a lifetime.
EPA did not use the RfD approach to evaluate potential noncancer effects associated with
dioxin/furan because the use of an RfD for dioxin/furan presents special problems. If EPA were to establish
an RfD for dioxin/furan using the standard conventions of uncertainty, the RfD value would most likely be
one or two orders of magnitude below average background population exposures. This situation precludes
using the RfD as a means for determining an acceptable level of dioxin/furan exposure, since at ambient
F-7
-------
background levels, effects are not discernable (William Farland, Director of the National Center for
Environmental Assessment, letter to Andrew Smith, State lexicologist, Maine Bureau of Health, January 24,
1997).
Instead, EPA evaluated the potential noncancer effects of dioxin/furan on Native American
subsistence anglers by comparing the modeled incremental exposure from fish tissue consumption using the
toxic equivalent (TEQ) approach, which combines dioxin/furan exposures to average national ambient
background exposures as estimated by EPA (120 picograms (pg) TEQ/day; U.S. EPA, 1994). EPA (1994)
estimates that adverse impacts associated with dioxin/furan exposures may occur at or within one order of
magnitude of average background exposures. As exposures increase within and above this range, the
probability and severity of human noncancer effects most likely increases. For this evaluation, EPA
identified the number of mills associated with dioxin/furan fish tissue exposures greater than one order of
magnitude above ambient background exposures.
F.I.2 Potential Reductions in Increased Cancer Risk
EPA's estimates of average increased individual lifetime cancer risks for subsistence anglers in
Native American populations nationwide under baseline conditions and after implementation of Option A,
Option B, and TCP are shown in Table F-2. With the implementation of either Option A or Option B at
papergrade kraft/soda facilities, EPA estimates that increased dioxin/furan-related cancer risk for exposed
Native American subsistence anglers nationwide would be reduced from the 10~4 level to the 10~5 level. The
difference between Option A and Option B is insignificant. Under TCP, the risk goes to zero. For
papergrade sulfite mills, EPA estimates that the reduction in increased risk to Native American subsistence
anglers nationwide would also be from the 10~4 level to the 10~5 level. For all pollutants other than
dioxin/furan, EPA estimates that increased risks to exposed Native American subsistence anglers nationally
under baseline conditions are at the 10~7 level for papergrade kraft/soda mills and the 10~8 level for papergrade
sulfite mills. These risks would be reduced to the 10~8 level for papergrade kraft/soda mills and the 10~9 level
for papergrade sulfite mills. EPA does not consider these risk levels to be of significant concern.
EPA estimates that the increased dioxin/furan-related cancer risk for Native American subsistence
anglers with treaty-ceded fishing rights would be at the 10~4 level under baseline conditions, and would be
F-8
-------
TABLE F-2
AVERAGE INDIVIDUAL INCREASED LIFETIME CANCER RISKS FROM DIOXIN FOR
EXPOSED NATIVE AMERICAN ANGLER POPULATIONS UNDER BASELINE CONDITIONS
AND BAT/PSES OPTIONS3
Subcategory
Papergrade Kraft/Soda
Papergrade Sulfite
Dioxinb
Baseline
5.3xlO-4
S.OxlO-4
Options
A
9.9xlO-5
2.8xlO-5
B
7.7xlO-5
NA
All Other Pollutants
Baseline
2.3xlO-7
3.3xlO-8
Options
A
4.9xlO-8
6.1xlO-9
B
3.9xlO-8
NA
1 Based on modeled fish tissue levels below 92 mills and a fish tissue consumption rate of 70 g/day.
b Under TCP, there would be no risk associated with dioxin/furan.
Note: A 10"5 risk means the risk of one cancer case out of 100,000 individuals exposed to a given level, a 10"6 risk means the risk of one
cancer case out of 1,000,000 individuals exposed, etc.
F-9
-------
reduced to the 10~5 level under Options A and B and to zero under TCP (Table F-3). EPA estimates that a
maximum of approximately 23,000 Native Americans would be exposed at this level. This represents an
increased cancer risk of 0.14 cancer cases per year under baseline conditions, which would be reduced to
0.008 cases per year with Option A and 0.007 cases per year with Option B, a reduction of about 95 percent
for either option. Under TCP, the residual number of cancer cases per year would be zero.
For all pollutants other than dioxin/furan, EPA estimates that increased cancer risks to Native
American subsistence anglers with treaty-ceded fishing rights would be reduced from the 10~8 level under
baseline conditions to the 10~9 level under Options A and B.
F.I.3 Noncancer Hazard Reductions
For Native American subsistence anglers nationally, EPA estimates that no mills will exceed the oral
RfDs for any of the four contaminants with EPA-approved RfDs contained in IRIS (under either baseline
conditions or any BAT/PSES option). EPA also estimates that potential Native American dioxin/furan
exposures from consumption of contaminated fish associated with three mills (all papergrade kraft/soda
mills) exceed ambient background exposures by an order of magnitude under baseline conditions. Under
Option A, Option B, and TCP, no mills are associated with dioxin/furan exposures greater than an order of
magnitude above background exposures.
For Native American subsistence anglers with treaty-ceded fishing rights, the maximum exposure
under baseline conditions is projected to be 803 pg TEQ/day (Table F-4). Under the selected BAT/PSES
options, the maximum incremental dioxin/furan exposure is reduced to 39 pg TEQ/day, which is less
background exposures. EPA estimates that no Native American subsistence anglers with treaty-ceded fishing
rights would receive a maximum dioxin/furan exposure greater than one order of magnitude above
background under baseline conditions or the selected BAT/PSES options (i.e., exposures are less than the
level of concern).
F-10
-------
TABLE F-3
AVERAGE INDIVIDUAL INCREASED CANCER RISKS AND ANNUAL INCREASED
INCIDENCE OF CANCER FROM DIOXIN/FURAN AND ALL OTHER POLLUTANTS FOR
EXPOSED NATIVE AMERICAN ANGLER POPULATIONS WITH TREATY-CEDED FISHING
RIGHTS UNDER BASELINE CONDITIONS AND BAT/PSES OPTIONS
Cancer Risk
Annual Increased
Incidence of Cancer
Dioxin/Furan"
Baseline
3.5xlO-4
0.14
Options
A
2.3xlO-5
0.008
B
1.9xlO-5
0.007
All Other Pollutants
Baseline
5.6xlO-8
0
A
7.3xlO-9
0
B
6.3xlO-9
0
* Under TCP, dioxin/furan-related risk and annual incidence of cancer would be zero.
NOTE: A 10 "5 risk means the risk of one cancer case out of 100,000 individuals exposed to a given level, a 10"6 risk means the risk
of one cancer case out of 1,000,000 individuals exposed, etc.
F-ll
-------
TABLE F-4
MILLS EXCEEDING BACKGROUND EXPOSURES OF DIOXIN/FURAN (TEQ: 120 pg/day)
FROM FISH TISSUE CONSUMPTION FOR NATIVE AMERICANS WITH TREATY-CEDED
FISHING RIGHTS
Option
Baseline
Option A
Option B
TCP
Maximum Estimated Exposure
(pg/day)
803
39
39
0
Number of Mills Exceeding Background
Exposure By An Order Of Magnitude
0
0
0
0
F-12
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F.1.4 Analysis of Specific Tribes
EPA also investigated the fish habits of 48 specific Native American tribes located downstream from
pulp mills in 15 states and determined that 8 of these — the Flathead (Montana), Micmac (Maine), Tulalip
(Puget Sound, Washington), Nez Perce, Umatilla, Warm Springs, Yakama (the Lower Columbia River,
Oregon and Washington), and Penobscot (Maine) — have treaty-ceded fishing rights and engage in
subsistence fishing in waters potentially affected by pulp and paper mill effluent. The Flathead, Micmac, and
Tulalip tribes have very limited information on fish consumption in mill-affected waters. The Lower
Columbia River and Penobscot River tribes are considered in detail in two case studies EPA conducted for
this rule. The results of the two case studies are reported below. EPA has determined that members of these
tribes have elevated health risks from consuming contaminated fish because of higher consumption levels.
EPA expects that the rule will reduce cancer risks by an order of magnitude (i.e., tenfold) for members of the
Penobscot Nation, and by slightly less for the Lower Columbia River tribes, who consume greater quantities
offish. EPA's analysis of the Lower Columbia River tribes also indicates that the background level of risk
from sources other than pulp and paper mills is significant, and that the removal of dioxin/furan by the final
rule will not resolve continuing background risk levels.
F.I.5 Penobscot River and Penobscot Nation
The Penobscot Nation's reservation includes 146 islands in the Penobscot River north of Old Town,
Maine. The tribe has treaty-protected rights to the Penobscot River fishery, and has traditionally relied
heavily on subsistence fishing. EPA assessed the risks to tribal members from the consumption of dioxin-
contaminated fish from the Penobscot River, and the potential health benefits from the regulation.
Exposed Population. To estimate the potentially exposed population, EPA used tribal enrollment
figures and a 1991 survey of the Penobscot Nation. Estimated tribal enrollment, including members residing
both on and off the reservation, is 2,089. The tribal population residing on the reservation is 410, and the
tribal population residing in Maine is 1,167 (1996 enrollment; J. Banks, Department of Natural Resources,
Penobscot Nation, personal communication, 1996). The in-state population accounts for many tribe
members who live in nearby communities such as Old Town or Bangor and who continue to regularly use the
F-13
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Penobscot River (J. Banks, Department of Natural Resources, Penobscot Nation, personal communication,
1996).
A 1991 survey of tribal use of the Penobscot River found that 24 percent of respondents eat fish
from the Penobscot River (Penobscot Nation Department of Natural Resources, 1991). The survey, which
was mailed to all tribal members over the age of 18 residing in Maine, received only a 25 percent response
rate. However, no other source of information on tribal practices is available. The survey probably
underestimates actual exposure since individuals who practice a "traditional" lifestyle (i.e., members who
spend substantial time on the reservation fishing and hunting) generally do not respond well to written
surveys and thus are probably under represented in the survey results (Banks, 1992). Multiplying the in-state
enrollment (1,167) by 24 percent results in an estimate of the exposed adult population of 280.
Consumption. Consuming anglers responding to the 1991 Penobscot Nation Survey reported an
average consumption of 11 g/day, although a number of assumptions must be made to interpret this portion
of the survey (Penobscot Nation Department of Natural Resources, 1991; CRITFC, 1994). This estimate is
supported by the results for the 95th percentile of Maine anglers using freshwater rivers and streams in the
state (12 g/day) (ChemRisk, 1992). The Penobscot Nation, which traditionally relies on the Penobscot River
for sustenance, can be expected to be among the highest fish consuming populations in Maine. However, as
described above, the Penobscot Nation Survey may underestimate mean consumption since tribal members
that practice a traditional lifestyle may be underrepresented in the survey. The 90th percentile offish
consumption from the Penobscot Nation Survey was 48 g/day (CRITFC, 1994).
For this analysis, EPA used 11 g/day as a central estimate of consumption for the Penobscot Tribe,
and 48 g/day as an upper bound estimate. Note that these values are much lower than the estimated fish
consumption used for the nationwide risk assessment for licensed anglers. Nationally, EPA estimates that
recreational anglers consume an average of 21 g/day and subsistence anglers consume 48 g/day. However,
on-site data are the most accurate, so EPA uses the survey consumption information for the Penobscot
Nation. The survey consumption information may reflect "suppressed" fish consumption due to fear of
contamination. However, EPA had no way to correct for that outcome other than to also consider the upper
bound estimate.
F-14
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Fish Tissue Contaminant Concentrations. The Penobscot Nation's treaty-ceded fishing grounds are
located below the Lincoln mill, and EPA modeled the baseline and post-regulation concentrations of
dioxin/furan in fish tissue for this mill using the DRE model as described above. Observations of fishing
habits suggest that the majority of tribal fishing takes place below this mill. Therefore, EPA assumed that 90
percent of the total catch of tribal members comes from waters affected by effluent from the Lincoln mill.
Species from the river most frequently consumed by tribal members are smallmouth bass, brook trout,
Atlantic salmon, landlocked salmon, pickerel, and perch. The DRE model provides concentrations for an
average or "generic" fish.
Increased Cancer Risk and Risk Reductions. EPA assessed cancer risk following the methodology
described above. Under baseline conditions and assuming consumption of 11 g/day, EPA estimates that
Penobscot Nation anglers face an increased cancer risk from dioxin/furan of 3.25 x 10~5. Under EPA's
selected option (Option A), this risk would be reduced by an order of magnitude to 3.09 x 10~6. Under
Option B, this risk would be reduced by slightly more than an order of magnitude to 2.08 x 10"6. Assuming
fish consumption of 48 g/day, Penobscot Nation anglers face an increased cancer risk of 1.42 x 10"4 under
baseline conditions. The selected option would reduce this risk to 1.35 x io~5, while Option B would reduce
this risk to 9.07 x 10"6. Under the final rule for EPA's selected option (as well as Option B), increased
lifetime cancer cases are reduced by 0.009 under the central estimate of consumption (11 g/day) and by 0.04
under the upper bound estimate (48 g/day). It should be noted that these estimates reflect only the risk from
dioxin/furan that is expected to be reduced by the regulation and not the potential risk from other sources and
contaminants that may be found in fish from the Penobscot River.
F.I.6 Lower Columbia River: Umatilla, Nez Perce, Yakama, and Warm Springs Tribes
The Umatilla, Nez Perce, Yakama, and Warm Springs tribes, which make up the CRITFC member
tribes, each possess fishing rights in the Columbia River Basin reserved by treaties, and members from each
tribe fish for both ceremonial and subsistence purposes in the Columbia River Basin. The tribes harvest both
the anadromous and resident fish species from the Lower Columbia River. The fishery resource is not only a
major food source for tribal members but also "an integral part of the tribes' cultural, economic, and spiritual
well-being" (CRITFC, 1994).
F-15
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Exposed Population. The U.S. Bureau of Census (1993) reports Native American populations on
reservations and trust lands. According to the Census, there are 1,883 Nez Perce, 1,030 Umatilla, 6,198
Yakama, and 2,871 Warm Springs Native Americans living on reservation and trust lands. These figures
may be conservative estimates of the exposed tribal population because they do not include members living
near the reservation (or elsewhere along the watershed) who may also practice a traditional subsistence
lifestyle.
Consumption. During the fall and winter of 1991-1992, the CRITFC conducted a survey to
determine the level and nature offish consumption among Columbia River Basin tribes (CRITFC, 1994).
Based on low-end estimates offish consumption provided by respondents, the survey showed tribal members
18 years and older consume an average of 58.7 g/day offish. This rate reflects both consuming and
nonconsuming tribal members, and includes fish from all sources. Overall, 87 percent of fish is obtained
from self or family, friends, ceremonies, and tribal distributions. Nine percent offish is obtained from stores,
and 4 percent is obtained from other sources such as restaurants. The 90th percentile of consumption was
between 97 g/day and 130 g/day. Tribal members 60 years of age and older consume 74.4 g/day; nursing
mothers and females who had previously breast-fed their children consume an average of 59.1 g/day. For this
assessment, EPA used an average consumption rate of 58.7 g/day and the midpoint of the 90th percentile
(114 g/day) for an upper bound estimate.
Background Fish Tissue Concentrations. A recent survey of the portion of the Columbia River
from Bonneville Dam to the mouth provided the data on fish tissue contaminant concentrations (Terra Tech,
1996). This survey, conducted from September 1994 to February 1995, was designed specifically to collect
human health risk assessment data. In addition to dioxin, the background risk assessed here includes risk
from arsenic (inorganic), mercury, selenium, silver, aldrin, alpha-BHC, PCBs, beta-BHC, dieldrin, gamma-
BHC, heptachlor, heptachlor epoxide, hexachlorobenzene, p,p'-DDD, p,p'-DDE, p,p'-DDT, and toxaphene.
Although this analysis estimates reduced risks from only dioxin exposure, data availability allowed the
calculation of background risks for the range of contaminants present in fish tissue. This calculation provides
perspective on the total background risk level from fish consumption faced by Native Americans. The listed
contaminants represent a subset of the contaminants analyzed in the sampling survey that are of most concern
for human health. Not all contaminants were detected in each species. When a contaminant was detected in
any species, EPA used one-half the detection limit for those species where the contaminant was not detected.
F-16
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The sampling survey (Tetra Tech, 1996) included filets of carp, large-scale sucker, white sturgeon,
steelhead trout, coho salmon, and chinook salmon. The fish consumption survey (CRITFC, 1994) provides
detailed information on grams offish consumed by species for 10 species specifically listed on the survey
(salmon, trout, lamprey, smelt, whitefish, sturgeon, walleye, sucker, shad, and squawfish). Information from
these two surveys was used to construct a weighted average fish tissue concentration that reflects the actual
mix of species consumed. Salmon and trout are the most consumed species, and the species listed in the
survey comprise 66 percent of total mean consumption. The species listed in the survey were matched as
closely as possible to the available sampling data, and contaminant concentrations for the consumption of
species not listed in the CRITFC survey (44 percent of total consumption) were calculated as an average of
species consumed. Note that carp, among the most contaminated species sampled, was not included in the
weighted concentration because it was not specifically listed in the CRITFC survey.
Post-Regulation Fish Tissue Concentrations. EPA modeled the background and post-regulation
concentrations of TCDD and TCDF in fish tissue for each mill using the DRE model as described above.
The percentage reduction in TCDD and TCDF were applied to the background concentrations described
above to calculate post-regulation concentrations. There are six bleached kraft mills in the Lower Columbia
River basin. The average percentage reduction across these mills (30 percent for TCDD and 33 percent for
TCDF under Option A; 38 percent for TCDD and 40 percent for TCDF under Option B) was used for this
analysis.
Increased Cancer Risk and Risk Reductions. EPA assessed cancer risk following the methodology
described above. Assuming consumption of 58.7 g/day, the background risk from all contaminants for the
Columbia River Native American anglers is 1.15 x 10~4. Option A reduces the background risk to
1.03 x 10'4, although virtually all cancer risk from pulp and paper mills is eliminated. Option B is estimated
to reduce background risk to approximately 1 x 10~4. All of the remaining cancer risk is from sources other
than pulp and paper mills. The selected BAT (Option A) will reduce increased lifetime cancer cases by 0.15,
while Option B will reduce increased lifetime cancer cases by 0.18.
Assuming consumption of 114 g/day, Columbia River Native American anglers face a background
cancer risk of 2.23 x 10~4. Under Option A, background risk is reduced to 2.0 x 10~4 and increased lifetime
cancer cases are reduced by 0.28. Under Option B, background risk is reduced to 1.94 x 10~4 and increased
lifetime cancer cases are reduced by 0.35.
F-17
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F.2 RACIAL AND INCOME CHARACTERISTICS OF AFFECTED COUNTIES AND STATES
EPA also compared the socioeconomic characteristics of counties with pulp and paper mills to the
state as a whole to investigate whether low-income and minority populations are disproportionately affected
by pulp and paper mills. EPA selected the county as a unit of comparison of ethnic and income difference on
the assumption that health risks from pulp and paper mills on these groups would be derived principally from
the consumption of fish contaminated by toxic substances in mill effluent. EPA conducted its entire analysis
of risks to anglers associated with contaminated fish consumption based on records of licensed anglers in
counties adjacent to receiving waters. EPA determined that within-state comparisons of ethnic and income
data were the most accurate means to account for interregional demographic differences.
EPA's analysis of race and income data indicates that, of the 26 states with bleached papergrade
kraft mills:
• Fifteen states had a minority (i.e., nonwhite) mill county population percentage that was less
than the state in which they were located; 11 states had a minority mill county population
that was greater than the state's;
• Sixteen states had mill counties with an African-American population percentage that was
less than or equal to the state, and 10 states had a population percentage that was greater;
• Seven states had mill counties with an African American population percentage at least 3
percent greater than the state (in Arkansas, the African American population percentage was
22 percent greater in counties with mills compared to the state);
• Seven states had mill counties with an American Indian population percentage that was at
least double the American Indian population percentage for the state;
• Fifteen states had a percent of the mill county population below the poverty line that was
greater than the state. However, for all mill counties, the average percent below the poverty
line was 15 percent, whereas the average for all states with mills was 14.1 percent. EPA has
determined that this difference is statistically insignificant;
• Eighteen states had average unemployment rates in mill counties that were significantly
higher than the state unemployment rate; and
• The average median income for all mill counties is $25,657, compared to $28,157 for the
states.
Complete results are reported in Table F-5.
F-18
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TABLE F-5
RACE AND INCOME CHARACTERISTICS IN STATES AND COUNTIES WITH BLEACHED
KRAFT MILLS
State
%
White
%
Black
%
American
Indian
%
Asian
%
Other
Median
Income"
% Below
Poverty
Level
%
Unemployed"
Alabama
Total in Counties
with Mills
Total in State
64.5%
73.6%
33.9%
25.2%
0.9%
0.5%
0.6%
0.5%
0.1%
0.1%
$21,373
$23,597
23.66%
18.34%
8.99%
6.87%
Arkansas
Total in Counties
with Mills
Total in State
61.0%
82.7%
38.0%
15.9%
0.5%
0.6%
0.3%
0.5%
0.2%
0.3%
$20,576
$21,147
24.13%
19.07%
9.49%
6.76%
California
Total in Counties
with Mills
Total in State
92.6%
69.1%
0.7%
7.4%
3.9%
0.8%
1.9%
9.6%
0.9%
13.1%
$24,688
$35,798
15.46%
12.51%
8.68%
6.65%
Florida
Total in Counties
with Mills
Total in State
79.9%
83.1%
17.2%
13.6%
0.8%
0.3%
1.6%
1.2%
0.5%
1.8%
$24,250
$27,483
16.74%
12.69%
7.01%
5.78%
Georgia
Total in Counties
with Mills
Total in State
63.4%
71.1%
34.5%
26.9%
0.3%
0.2%
1.4%
1.1%
0.5%
0.6%
$27,551
$29,021
16.15%
14.65%
6.13%
5.74%
Idaho
Total in Counties
with Mills
Total in State
93.9%
94.4%
0.2%
0.4%
4.9%
1.5%
0.6%
0.9%
0.5%
2.8%
$25,219
$25,257
12.03%
13.25%
7.31%
6.15%
Kentucky
Total in Counties
with Mills
Total in State
97.5%
92.1%
2.3%
7.1%
0.1%
0.2%
0.0%
0.5%
0.1%
0.2%
$22,717
$22,534
17.66%
19.03%
11.56%
7.37%
Louisiana
Total in Counties
with Mills
Total in State
65.3%
67.3%
32.7%
30.8%
0.3%
0.5%
1.3%
0.9%
0.5%
0.5%
$25,037
$21,949
20.64%
23.58%
9.07%
9.65%
Maine
Total in Counties
with Mills
Total in State
98. 1%
98.4%
0.4%
0.4%
0.7%
0.5%
0.6%
0.6%
0.1%
0.1%
$28,028
$27,854
11.26%
10.80%
6.64%
6.65%
F-19
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TABLE F-5 (continued)
State
%
White
%
Black
%
American
Indian
%
Asian
%
Other
Median
Income"
% Below
Poverty
Level
%
Unemployed"
Maryland
Total in Counties
with Mills
Total in State
97.3%
71.0%
2.1%
24.9%
0.0%
0.3%
0.4%
2.9%
0.1%
0.9%
$21,546
$39,386
16.50%
8.27%
8.16%
4.30%
Michigan
Total in Counties
with Mills
Total in State
88.2%
83.5%
9.7%
13.9%
1.1%
0.6%
0.4%
1.1%
0.6%
0.9%
$25,043
$31,020
14.49%
13.12%
8.35%
8.24%
Minnesota
Total in Counties
with Mills
Total in State
95.5%
94.5%
0.2%
2.2%
3.6%
1.1%
0.3%
1.8%
0.4%
0.5%
$24,367
$30,909
12.50%
10.22%
7.75%
5.15%
Mississippi
Total in Counties
with Mills
Total in State
73.0%
63.5%
26.0%
35.6%
0.2%
0.3%
0.7%
0.5%
0.2%
0.1%
$24,739
$20,136
18.83%
25.21%
8.21%
8.43%
Montana
Total in Counties
with Mills
Total in State
96.2%
92.8%
0.2%
0.3%
2.3%
6.0%
1.0%
0.5%
0.3%
0.5%
$23,388
$22,988
16.99%
16.07%
7.22%
6.96%
New Hampshire
Total in Counties
with Mills
Total in State
99.3%
98.0%
0.1%
0.6%
0.2%
0.2%
0.2%
0.8%
0.2%
0.3%
$25,897
$36,329
10.12%
6.42%
8.56%
6.22%
New York
Total in Counties
with Mills
Total in State
97.5%
74.5%
1.4%
15.9%
0.3%
0.3%
0.5%
3.8%
0.3%
5.5%
$28,340
$32,965
10.32%
13.03%
7.63%
6.88%
North Carolina
Total in Counties
with Mills
Total in State
75.4%
75.6%
22.5%
22.0%
1.2%
1.2%
0.4%
0.8%
0.5%
0.4%
$22,727
$26,647
16.59%
12.97%
6.67%
4.79%
Ohio
Total in Counties
with Mills
Total in State
92.6%
87.8%
6.5%
10.6%
0.2%
0.2%
0.5%
0.8%
0.1%
0.5%
$24,286
$28,706
17.75%
12.54%
9.71%
6.60%
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TABLE F-5 (continued)
State
%
White
%
Black
%
American
Indian
%
Asian
%
Other
Median
Income"
% Below
Poverty
Level
%
Unemployed"
Oregon
Total in Counties
with Mills
Total in State
96.9%
92.8%
0.2%
1.6%
1.3%
1.5%
0.7%
2.4%
0.8%
1.8%
$26,462
$27,250
12.56%
12.42%
7.18%
6.20%
Pennsylvania
Total in Counties
with Mills
Total in State
95.6%
88.6%
3.3%
9.2%
0.1%
0.1%
0.5%
1.1%
0.5%
1.0%
$28,524
$29,069
10.11%
11.13%
5.56%
5.97%
South Carolina
Total in Counties
with Mills
Total in State
64.0%
69.1%
34.4%
29.8%
0.4%
0.3%
0.8%
0.6%
0.4%
0.3%
$28,548
$26,256
14.29%
15.37%
5.47%
5.58%
Tennessee
Total in Counties
with Mills
Total in State
97.1%
83.0%
2.2%
15.9%
0.3%
0.3%
0.3%
0.6%
0.0%
0.2%
$23,898
$24,807
15.09%
15.70%
6.64%
6.41%
Texas
Total in Counties
with Mills
Total in State
67. 1%
75.3%
18.5%
11.9%
0.3%
0.4%
3.6%
1.9%
10.6%
10.6%
$31,210
$27,016
15.25%
18.10%
6.78%
7.11%
Virginia
Total in Counties
with Mills
Total in State
71.4%
77.5%
27.7%
18.8%
0.6%
0.3%
0.2%
2.6%
0.1%
0.9%
$28,324
$33,328
12.60%
10.25%
5.87%
4.48%
Washington
Total in Counties
with Mills
Total in State
90.5%
88.6%
3.3%
3.0%
1.5%
1.7%
3.6%
4.3%
1.1%
2.3%
$32,069
$31,183
9.92%
10.92%
5.53%
5.72%
Wisconsin
Total in Counties
with Mills
Total in State
98. 1%
92.3%
0.1%
5.0%
0.4%
0.8%
1.3%
1.1%
0.1%
0.8%
$28,263
$29.442
8.90%
10.70%
5.21%
5.20%
a For "Total in Counties with Mills," medium income is calculated as a weighted average across counties using median income and
population.
Source: Census of Population and Housing. 1990. Summary Tape File 3 on CD-ROM. Prepared by the Bureau of the Census,
Washington: The Bureau, 1992.
F-21
-------
These racial and income differences vary from state to state, and as a result, it is difficult to conclude
that minority and low-income populations are disproportionately affected by pulp and paper discharges and
emissions and would therefore disproportionately benefit from regulations. The differences in income levels
may be more highly correlated with urban versus rural distinctions, and pulp mills are often located near
wood supplies in lower-wage rural locations. In 12 of 26 states, minorities may be disproportionally affected
by pulp and paper discharges. Low-income populations may be disproportionally affected by pulp and paper
discharges in 7 of the 26 states. However, these populations may also be the most adversely affected
economically if mills close as a result of the pulp and paper integrated rules. EPA notes that the cost of
rejected Option B technology (oxygen delignification + 100 percent substitution) could increase the number
of individuals below the poverty line in up to five counties, whereas the cost of TCP technology could
increase the number of individuals below the poverty level in up to nine counties where mills would be
predicted to close.
F.3 PRICE EFFECTS ON LOW-INCOME CONSUMERS
The compliance costs associated with the various air and water pollution control options that EPA
considered will have some effect on prices as a result of increasing supply costs. In Chapter 6 of the EA,
EPA estimates that the price effect will benefit the regulated community, i.e., one or more mills may remain
open that would otherwise close if they could not pass on some of their increased compliance costs.
However, consumers must ultimately pay these increased prices, with the burden falling most heavily on
those consumers who use the most paper on a per capita basis, or for whom paper products consume a
disproportionate share of income. EPA used the Bureau of Labor Statistics' (U.S. Bureau of Census, 1995)
1995 Annual Consumer Expenditure Survey to evaluate the effects of regulation-induced price changes on
low-income consumers by identifying: price increases associated with various combinations of MACT and
BAT/PSES technology options for the bleached papergrade kraft and soda subcategory, average paper
consumption for low-income populations, and the effects of price increases on low-income populations.
Based on the response of pulp and paper producers to supply shortages resulting from post-
compliance mill closures, the average pulp and paper price increase associated with the final rules
(BAT/PSES and MACT I) combined with the proposed MACT II rule is 1.5 percent. With Option B
technology, paper prices would increase up to a maximum of 1.9 percent. Were TCP selected as BAT, EPA
F-22
-------
predicts prices would increase by 5.6 percent when combined with final MACT I and proposed MACTII
rules. When the most stringent MACT II option is selected in combination with the final MACT I and TCP,
EPA estimates that pulp prices would increase by an average of 6 percent.
Based on the Bureau of Labor Statistics' 1995 Consumer Expenditure Survey, EPA estimates that
low-income consumers (those with incomes under $10,000) spend an average of 2.09 percent of their pretax
income on paper products. The pulp and paper rule will increase this to 2.12 percent of pretax income,
whereas TCP would increase this to 2.2 percent of pretax income. The aggregate effect on low-income
consumers would be increased annual expenditures of up to $25.3 million for the selected rules, $32.2 million
for Option B, and $90.1 million for TCP. Thus, compared to the selected BAT, EPA estimates that TCP
would have a greater economic effect on low-income consumers who may be required to make tradeoffs with
other necessities to sustain paper price increases.
F.4 SUMMARY
Overall, EPA's investigations into environmental justice considerations reveal:
Individual Native Americans that engage in subsistence fishing downstream from pulp mills
have elevated individual cancer risks compared to the general population or normative
anglers. The rule will lower dioxin-related cancer risks by an order of magnitude for
individuals consuming fish at average and upper end consumption rates;
Native American tribes located on the Lower Columbia and Penobscot Rivers have treaty-
ceded fishing rights and engage in subsistence fishing in waters located downstream from
bleached kraft pulp and paper mills. Based on site-specific case studies of these tribes,
under the selected option (Option A) EPA estimates that the rule will result in reducing
individual cancer risk by an order of magnitude for the Penobscot Nation (from 1 x 10"4 to
1 x 10"5), and somewhat less for the Lower Columbia River Tribes (from 2.23 x 10"4 to 2.0 x
10-4);
In 19 of the 26 states with bleached kraft mills, there is no statistically significant difference
between the percentage of the population below the poverty level in counties where bleached
kraft mills are located and the state as a whole (in several states the percentage of the
population below the poverty level is less in counties where bleached kraft mills are located);
In 14 of the 26 states with bleached kraft mills, there is no statistically significant difference
in ethnic makeup between the counties with mills and the state as a whole (in several states
F-23
-------
the percentage of minorities in counties with mills is significantly less than the percentage of
minorities in the state, statistically);
Unemployment rates in mill counties generally exceed the related state unemployment rates.
Mill closures have the potential to make this worse and to increase the number of people
below the poverty level in these areas; and
Environmental groups have stated a preference for TCP technology to reduce adverse health
effects on low-income and minority populations. Low-income people may also be adversely
affected by paper price increases, particularly for technology options with relatively higher
costs, such as TCP. Implementation of TCP would reduce cancer and noncancer risk among
recreational, subsistence, and Native American anglers by a very small amount, but would
increase unemployment in some counties with unemployment rates already above state and
national averages, and may disproportionately adversely affect low-income consumers.
F.5 REFERENCES
Banks, J. 1992. Appendix A: the Penobscot Nation's view of the benefits provided by Atlantic Salmon.
Prepared by Penobscot Department of Natural Resources, Old Town, ME. Water Docket, DCN 14,695.
ChemRisk. 1992. Consumption of freshwater fish by Maine anglers. Report prepared with HBRS, Inc.,
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