"'5*i> ?*?•,l;tJ >1*-,;al
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Economic Analysis of
Effluent Limitation Guidelines and Standards
for the Centralized Waste Treatment Industry
William Wheeler
Economic and Statistical Analysis Branch
Engineering and Analysis Division
Office of Science and Technology
U.S. Environmental Protection Agency
Washington, DC 20460
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The author wishes to thank Jan Matuszko for her knowledge, cooperation, and leadership as
project officer. The author also thanks Tim Connor, Charles Tamulonis, Maria Smith, and
other members of the Centralized Waste Treatment team for their knowledge and cooperation
in the preparation of this report.
The author also thanks Research Triangle Institute for then- assistance and support in
performing the underlying analyses supporting the conclusions described in this report. Their
analysis was performed under contract number 68-C4-0060, under a subcontract to Abt
Associates. Particular thanks are given to Katherine Heller, George Van Houtven, Tyler Fox,
Jean Domanico, Sheryl Kelly, and Laura Bloch.
in
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IV
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CONTENTS
Section
EXECUTIVE SUMMARY ........................................ 1-1
1.1 Introduction . . . ........................................... 1-1
1.2 Sources of Data ........................................... 1-2
1.3 Profile of the Industry ................. ..................... 1-3
1.4 Annualized Costs of Compliance .............................. 1-5
1.5 Facility Impacts ........................................... 1-7
1 .6 Firm Impacts ................................. • ........... 1-8
1.7
Community Impacts .............................. • ......... 1-9
1.8 Initial Regulatory Flexibility Analysis ........................ 1-10
1.9 Cost-Benefit Analysis ................................ ..... 1-11
DATA SOURCES .... ................ ...................... ..... 2-1
2.1 Data from the Waste Treatment Industry Questionnaire ............ 2-1
2.1.1 Data Modifications and Corrections ..................... 2-2
2. 1 .2 Additions to Data Since Original Proposal (NOA Facilities) . . 2-4
2.2 Data Sources for Demand Characterization ...................... 2-4
2.3 Data Sources for Market Characterization ....................... 2-5
2.4 Data Sources Used for Company Analysis ...................... 2-5
2.5 References ............................................... 2-5
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CONTENTS (CONTINUED)
Page
BASELINE CONDITIONS AND INDUSTRY PROFILE 3-1
3.1 Industry Profile 3-1
3.1.1 Overview of the CWT Industry 3-1
3.1.1.1 Services Provided 3-3
3.1.1.2 Subcategories 3-3
3.1.2 Demand for CWT Services 3-4
3.1.2.1 Industries Demanding CWT Services 3-5
3.1.2.2 Trends in the Demand for CWT Services (TRI) 3-5
3.1.3 Description of Suppliers of CWT Services 3-6
3.1.3.1 Commercial Status 3-7
3.1.3.2 Industry Classification by SIC Code 3-9
3.1.3.3 Location of CWT Facilities 3-11
3.1.3.4 Facility Size 3-13
3.1.3.5 Facilities Permitted Under RCRA 3-15
3.1.4 Baseline Facility Conditions 3-16
3.1.4.1 Baseline Quantities of Waste Treated 3-16
3.1.4.2 Baseline Costs of CWT Operations 3-16
3.1.4.3 Baseline Revenues for CWT Operations 3-18
3.1.4.4 Baseline Profitability for CWT Facilities 3-19
3.1.4.5 Baseline Conditions for Noncommercial
Facilities 3-20
3.1.5 Baseline Market Conditions 3-21
3.1.5.1 Defining Regional Markets 3-21
3.1.5.2 Defining Markets for Specific CWT Services 3-23
3.1.5.3 Defining Market Structure 3-24
3.1.5.4 Substitutes for CWT Services 3-28
3.1.5.5 Baseline Market Prices and Quantities of CWT
Services 3-29
3.1.6 Company Financial Profile 3-29
3.2 Baseline Environmental Impacts of The CWT Industry 3-36
3.2.1 Pollutants Discharged 3-36
3.2.2 Affected Streams and Reaches 3-45
3.3 References 3-47
VI
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Section
CONTENTS (CONTINUED)
Page
4 DESCRIPTION OF THE CWT EFFLUENT LIMITATIONS GUIDELINES
AND STANDARDS AND COMPLIANCE COST ANALYSIS .4-1
4.1 Controls for Each Subcategory of the CWT Industry 4-1
4.1.1 Metals Subcategory 4-2
4.1.2 Oils Subcategory 4-3
4.1.3 Organics Subcategory 4-4
4.2 Costs of Controls 4-5
4.2.1 Computing the Annualized Cost of Compliance 4-5
4.2.1.1 Purpose of Cost Annualization 4-6
4.2.1.2 Depreciation and Taxes 4-6
4.2.2 Costs for Facilities with Both Commercial and Noncommercial
Operations 4-9
4.2.3 Compliance Costs Associated with RCRA Permit Modification ..... 4-9
4.2.4 Compliance Costs for the Control Options 4-10
4.2.5 Compliance Costs of Combined Regulatory Option .' 4-15
4.3 References 4-16
5 ECONOMIC IMPACT ANALYSIS METHODOLOGY 5-1
5.1 Overview of Analytic Methodology 5-3
5.2 Modeling Market and Facility Impacts 5-5
5.2.1 Defining the Markets for CWT Services 5-5
5.2.2 Modeling Facility Baseline Conditions 5-7
5.2.3 Adjustments in Response to the Variable Costs of
Complying with the Effluent Limitations Guidelines
and Standards 5-11
5.3 . Measures of Economic Impacts 5-12
5.3.1 Changes hi Market Prices and Quantities 5-12
5.3.2 Facility Impacts 5-13
5.3.3 Inputs to the Company-Level Analysis 5-14
5.3.4 Inputs into the Community Impacts Analysis 5-14
5.4 References 5-15
VII
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Section
CONTENTS (CONTINUED)
Page
6 ESTIMATED ECONOMIC IMPACTS OF THE CWT EFFLUENT
LIMITATIONS GUIDELINES AND STANDARDS 6-1
6.1 Results of the Market Analysis 6-1
6.1.1 Market Impacts 6-1
6.1.2 Facility Impacts 6-3
6.1.3 Employment Impacts 6-6
6.1.4 Financial Impacts on Companies Owning CWT Facilities .... 6-7
6.2 Summary 6-12
7 OTHERIMPACTS 7-1
7.1 Community Impacts 7-1
7.1.1 Direct Employment Changes 7-2
7.1.1.1 Facility-Specific Changes in Employment
Resulting from Market Adjustments 7-3
7.1.2 Community Employment Impacts 7-4
7.1.3 Measuring the Significance of the Community
Employment Impacts 7-7
7.2 Distributional Impacts and Environmental Justice 7-8
7.2.1 Baseline Characterization of Communities in which
CWT Facilities are Located 7-9
7.2.1.1 Minority Population 7-9
7.2.1.2 Percent of Population with Incomes Below
the Poverty Level 7-10
7.2.2 Distributional Impacts of the CWT Effluent Limitations
Guidelines and Standards 7-13
7.2.3 Environmental Justice Implications of the CWT Effluent
Limitations Guidelines and Standards 7-14
7.3 Indirect Impacts on Customers and Suppliers 7-15
7.4 Impacts on Inflation 7-16
7.5 References 7-16
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CONTENTS (CONTINUED)
8
Eage
INITIAL REGULATORY FLEXIBILITY ANALYSIS 8-1
8.1 The Regulatory Flexibility Act (RFA) as Amended by the Small
Business Regulatory Enforcement Fairness Act (SBREFA) 8-1
8.2 Initial Assessment 8-2
8.3 The Initial Regulatory Flexibility Analysis 8-3
8.3.1 Reason EPA is Considering the Proposed Rule 8-3
8.3.2 Objectives and Legal Basis for the Proposed Rule 8-3
8.3.3 Description and Estimation of Number of Small Entities to
Which the Regulation Will Apply 8-4
8.3.4 Description of the Proposed Reporting, Recordkeeping,
and Other Compliance Requirements 8-4
8.3.5 Identification of Relevant Federal Rules that May
Duplicate, Overlap, or Conflict with the Proposed Rule 8-5
8.3.6 Significant Regulatory Alternatives 8-5
8.4 Impacts on Small Businesses 8-7
8.4.1 Estimated Small Business Impacts of the Combined
Regulatory Option 8-8
8.4.2 Impacts of the Small Business Relief Regulatory Options 8-9
8.5 References 8-13
9 COSTS AND BENEFITS OF THE CWT EFFLUENT LIMITATIONS
GUIDELINES AND STANDARDS 9-1
9.1 Introduction 9-1
9.1.1 Requirements of Executive Order 12866 9-2
9.1.2 Need for the Regulation 9-3
9.2 Social Cost of the Rule 9-4
9.2.1 Aggregate Costs to Consumers and Producers 9-5
9.2.2 Government's Share of Costs 9-9
IX
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Section
CONTENTS (CONTINUED)
Page
9.3 Pollutant Reductions 9-11
9.4 Benefits Assessment 9-11
9.4.1 Overview of Benefits Assessment Methodology 9-12
9.4.1.1 A Benefits Analysis Paradigm for Water Quality
Improvements 9-12
9.4.1.2 Other Benefits: Cost Savings for POTWs 9-17
9.4.2 Impacts of Proposed CWT Effluent Limitations
Guidelines and Standards 9-18
9.4.2.1 Impacts on Ambient Water Quality and Related
Ecosystems 9-18
9.4.2.2 Affected Populations and Activities 9-21
9.4.2.3 Impacts on Humans 9-24
9.4.3 Valuation of Surface Water Quality Improvements 9-51
9.4.3.1 Health Benefits .' 9-51
9.4.3.2 Recreation Benefits 9-57
9.4.4 POTW Sludge Disposal Cost Savings 9-63
9.4.4.1 Overview of Benefits to POTWs from the
Proposed Regulation 9-64
9.4.4.2 Monetization of One of the Primary Benefits
to POTWs 9-66
9.5 Comparison of Benefits and Costs 9-74
9.5.1 Uncertainties and Limitations of Analysis of Social Costs ... 9-75
9.5.2 Uncertainties and Limitations of Analysis of Benefits 9-76
9.6 Conclusions 9-78
9.7 References 9-78
Appendix A: Copy of Part B of the Waste Treatment Industry Questionnaire A-l
Appendix B: Waste Generation by SIC Code B-l
Appendix C: SIC Code Definitions C-l
Appendix D: Detailed Description of the Economic Impact Analysis Model D-l
Appendix E: Detailed Demand Elasticity Discussion E-l
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Section
LIST OF FIGURES
Page
5-1 Integrated Facility-Market Economic Model 5-8
5-2a Effects of Compliance on Imperfectly Competitive Markets 5-9
5-2b Effects of Compliance on Competitive Supplier 5-10
5-3 Market Adjustments in Response to the CWT Effluent Limitations
Guidelines and Standards 5-12
7-1 Non-caucasian Share of Community Population Compared to State 7-12
7-2 Poverty Share of Community Population Compared to State •... 7-13
9-1 Social Cost Computed as Changes in Social Surplus 9-6
9-2 Social Cost of the Regulation 9-10
9-3 Conceptual Framework for Benefits Analysis 9-13
9-4 Steps for Assessing Annual Cancer Incidence from Fish Consumption 9-38
XI
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LIST OF TABLES
Number
Page
1-1 Baseline Number of CWT Facilities and Baseline Quantities of Waste
for Commercial CWTs, 1995 1-4
1-2 Costs of Complying with the Combined Regulatory Option 1-7
1-3 Process and Facility Closures at CWT Facilities, by Discharge Status 1-8
1-4 Estimated Aggregate Cost to Consumers and Producers 1-12
1-5 Annual Benefits of the Proposed Effluent Limitations Guidelines and
Standards 1-13
3-1 CWT Facilities by Subcategory and CWT Service 3-4
3-2 Trends in Demand for Off-Site Waste Management Services 3-7
3-3 Commercial Status of CWT Facilities 3-9
3-4 SIC Codes Describing CWT Facilities' Primary Operations 3-10
3-5 Number of Facilities Performing CWT Services 3-12
3-6 Facility Size Categories Based on Quantity of Commercial
Wastewater Treated, by Discharge Category 3-14
3-7 Size Distribution of Commercial CWT Facilities by Number of CWT
Employees 3-15
3-8 Quantity of Waste Treated by Commercial Facilities, by Subcategory 3-17
3-9 Baseline Waste Treatment Costs at Commercial CWT Facilities 3-17
3-10 Baseline Treatment and Recovery Revenues at Commercial CWT
Facilities 3-18
3-11 Baseline Profits at Commercial CWT Facilities 3-19
3-12 Baseline Conditions in Regional Markets for CWT.Services 3-25
3-13 Size Distribution of Potentially Affected Companies 3-32
3-14 Baseline Company Financial Profile, by Company Size 3-35
3-15 Categorization of CWT Industry Pollutants 3-37
3-16 Characteristics of Reaches Receiving Discharges from CWT Facilities 3-46
4-1 Compliance Costs for the Metals Subcategory 4-11
4-2 Compliance Costs for the Oils Subcategory 4-12
4-3 Compliance Costs for the Organics Subcategory 4-12
4-4 RCRA Permit Modification Costs 4-13
4-5 Costs of Complying with the Combined Regulatory Option 4-15
XII
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LIST OF TABLES (CONTINUED)
Number
Page
6-1 Market Impacts of BPT/BAT and PSES Controls 6-2
6-2 Process Closures at CWT Facilities, by Discharge Status 6-5
6-3 Facility Closures of CWT Facilities, by Discharge Status 6-5
6-4 Job Losses Resulting from Market Adjustments, by Discharge Status 6-7
6-5 Changes in Company Profit Margins, by Company Size Category 6-9
6-6 Estimated Median Profit Margin by Size Category 6-9
6-7 Change in Median Return on Investment 6-11
6-8 Change in Median Return on Assets 6-11
7-1 Changes in CWT Employment Resulting from Market Adjustments at
CWT Facilities 7-3
7-2 Direct-Effect Regional Multipliers for States in Which CWT Facilities
Are Located 7-5
7-3 Changes in Community Employment Resulting from Market
Adjustments at CWT Facilities 7-6
7-4 Community Employment Impacts 7-8
7-5 Frequency Distribution: Percent Minority Population in CWT
Communities 7-11
7-6 Frequency Distribution of Percent of Population Falling Below Poverty .... 7-12
8-1 Compliance Cost-to-Sales Screening Analysis for Regulatory
Scenarios Designed to Provide Relief to Small Companies 8-11
8-2 Impacts on Facilities Owned by Small Businesses 8-12
9-1 Estimated Aggregate Cost to Consumers and Producers 9-8
9-2 Government's Share of Costs 9-10
9-3 Human Systems/Activities Affected by Surface Water Quality 9-16
9-4 Impacts on Humans 9-17
9-5' Exceedances of Ambient Water Quality Criteria for Aquatic Life 9-20
9-6 Characterization of Carcinogenic Substances in CWT Effluent 9-27
9-7 Characterization of Noncancer Effects from Substances hi CWT Effluent... 9-28
9-8 Quantified and Unquantified Health Effects of Lead 9-34
9-9 Number of Reaches with AWQC Exceedances for Human Health 9-36
9-10 Cancer Risks for Anglers and Their Families 9-40
9-11 Baseline Annual Cancer Incidence (Fish Consumption by Anglers) 9-41
9-12 Annual Cancer Incidence Reduction (Fish Consumption by Anglers) 9-41
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LIST OF TABLES (CONTINUED)
Number Hags'
9-13 Populations at Risk for Noncancer Health Effects Through Fish
Consumption 9-43
9-14 Reductions in Lead-Related Health Effects 9-45
9-15 Annual Benefits from Reduction in Cancer Incidence from Fish
Consumption 9-54
9-16 Annual Benefits from Reduction in Lead-Related Health Effects from
Fish Consumption 9-56
9-17 Number of Reaches with Exceedances of at Least One of the
Four AWQCs 9-59
9-18 Annual Recreation Value of Reducing AWQC Exceedances 9-61
9-19 Annual Cost Savings from Shifts in Sludge Use or Disposal Practices 9-70
9-20 Shifts in POTW Disposal Practice and Annual Cost Savings (Reductions
in Sludge Disposal Costs) 9-73
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SECTION 1
EXECUTIVE SUMMARY
1.1 INTRODUCTION
This report estimates the economic and financial effects and the benefits of
compliance with the proposed effluent limitations guidelines and standards for the
Centralized Waste Treatment (CWT) industry. The Environmental Protection Agency (EPA)
has measured these impacts in terms of changes in the profitability of waste treatment
operations at CWT facilities, changes in market prices of CWT services, and changes in the
quantities of waste managed at CWT facilities in six geographic regions. EPA has also
examined the impacts on companies owning CWT facilities (including impacts on small
entities), on communities in which CWT facilities are located, and on environmental justice.
EPA examined the benefits to society of the CWT effluent limitations guidelines and
standards by examining cancer and non-cancer health effects of the regulation, recreational
benefits, and cost savings to publicly owned treatment works (POTWs) to which indirect-
discharging CWT facilities send their wastewater.
EPA also conducted an analysis of the cost-effectiveness of the regulatory options,
which was published separately in a report entitled, "Cost-Effectiveness of Proposed Effluent
Limitations Guidelines and Standards for the Centralized Waste Treatment Industry."
The effluent limitations guidelines and standards will directly impact the costs and
pollutant discharges of CWT facilities that discharge wastewater directly or indirectly to
surface water. To estimate these impacts, EPA gathered data on CWT facilities, the
companies that own them, the communities in which they are located, the waterbodies into
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which they discharge, and the populations exposed to their effluent. Section 1.2 describes the
data used for the analysis.
1.2 SOURCES OF DATA
In 1990, EPA distributed a questionnaire to a census of 452 CWT facilities under the
authority of Section 308 of the Clean Water Act. The questionnaire requested both technical
and economic information from the CWT facilities. Technical data collected by the
questionnaire characterized the quantities of waste accepted off-site into the waste treatment
and recovery operations at each facility, the treatment technologies in place at baseline, and
the baseline pollutant releases. The economic and financial section of the questionnaire
(shown in Appendix A) characterized the facility CWT costs, revenues, and profits, RCRA
permitting costs, commercial status, employment, and company ownership. Based on the
responses to the questionnaire, EPA proposed effluent limitations guidelines and standards
for the industry in 1995. Comments on the proposed rule led the Agency to reexamine the
scope of the regulation and to consider several additional control technologies. Of critical
importance was the identification of a large number of oil recovery facilities that EPA
believed should be in scope of the regulation. Thus, EPA modeled their oil recovery
operations and estimated the impacts on these facilities of complying with the 1995 proposal.
This information was published in the Federal Register in a Notice of Data Availability in
1996. Comments on the NOA, together with the comments on the proposed rule, led EPA to
decide to repropose effluent limitations guidelines and standards. This report analyzes the
costs, impacts, and benefits of the reproposed rule. The analysis is based on data for 145
CWT facilities that provided data, and is scaled up to reflect the estimated universe of
205 CWT facilities.
To conduct these analyses, EPA employed the questionnaire data for facilities
included in the 1995 proposal, modeled facility data as amended to reflect the comments
received on the NOA for the newly included oil recovery facilities, together with publicly
available information on the companies owning CWT facilities, the populations and
demographic characteristics of the communities in which they are located, the characteristics
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of the waterbodies into which their effluent is discharged, and the characteristics of
populations exposed to their effluent.
1.3 PROFILE OF THE INDUSTRY
EPA estimates that hi 1995, there were 205 CWT facilities that accepted waste from
off-site generators for treatment or recovery. The wastes sent to CWT facilities tend to be
concentrated and difficult to treat, and include process residuals, process wastewater, and
process wastewater treatment residuals such as treatment sludges. CWT facilities discharge
high concentrations of some pollutants either into surface water or to POTWs. Of these 205,
all but four accept at least some waste on a commercial basis. Fifty-nine facilities accept
metals waste for treatment or recovery, 164 accept oily waste for treatment or recovery, and
25 accept organic waste for treatment or recovery. Of the 205 facilities, 14 are direct
dischargers, 147 are indirect dischargers, and 44 are zero dischargers.
The demand for CWT services comes from manufacturing plants in many industries,
whose manufacturing activities produce not only output but also waste. Much of this demand
has resulted from increasingly stringent environmental regulations affecting the generator
facilities. Rather than develop the waste management expertise themselves, many generators
have chosen to rely on the services of waste management professionals. In recent years, the
emphasis on waste minimization and pollution prevention has resulted in an overall decrease
in the quantity of waste sent off-site for treatment and/or recovery, according to data from
EPA's Toxics Release Inventory. Because for CWT services are limited, EPA assumes
elasticities of demand that range from -0.5 to -1.5.
Table 1-1 shows the baseline quantities of waste managed in each of the five types of
commercial CWT operations analyzed by EPA. The largest number of facilities and the
largest quantities of waste managed are in the oils subcategory. Overall, EPA estimates that
CWT facilities accepted approximately 2.2 billion gallons of waste from off-site in 1995.
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TABLE 1-1. BASELINE NUMBER OF CWT FACILITIES AND BASELINE
QUANTITIES OF WASTE FOR COMMERCIAL CWTS, 1995
Metals Recovery
Metals Treatment
Oils Recovery
Oils Treatment
Organics Treatment or Recovery
Number of Facilities
7
53
152
145
25
Total Quantity
(103 gal/yr)
11,112
554,413
746,081
756,296
95,267
Commercial CWT facilities are located throughout the U.S. Based on the
characteristics of wastewater, and information provided by CWTs about the location of their
customers, EPA assumed markets for CWT services were regional, and defined markets in
six geographic regions which are assumed in the model to be completely independent. The
markets are further subdivided by baseline waste treatment costs, assuming that treatment
cost differences reflect differences in the types of waste being treated or recovered. The
number of CWT facilities offering a particular type of CWT service in a region varies from
zero to 31. Depending on the number of CWT facilities in a specific waste treatment or
recovery market, market structure is modeled as monopoly, duopoly, or perfect competition.
Company data are available for 100 of the 145 facilities providing data. These
100 facilities are owned by 73 companies. For the remaining 43 CWT facilities, EPA
assumed that company revenues and costs are equal to the revenues and costs from their
CWT operations. These 43 CWT facilities are owned by 40 companies. The company-level
analysis is based on 113 companies. After scaling up, EPA estimates that the 205 CWT
facilities are owned by 164 companies. Of these, half (62) have revenues less than
$6 million, and are therefore characterized as small businesses. It should be noted that the
assumption that company revenues are equivalent to CWT revenues for the 40 companies
without company data may understate their revenues and therefore overstate the number of
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small businesses. At baseline, companies owning CWTs are generally profitable, although
14 companies are unprofitable.
EPA also examined the baseline environmental impacts of the CWT industry. Over
120 hazardous chemical compounds have been detected in the discharges from the 119 CWT
facilities whose discharges were modeled. The pollutants include metals such as arsenic,
chromium, and lead, and organic compounds such as benzene and toluene. Of the
128 pollutants detected at baseline, four are known human carcinogens and another 17 are
considered probable or possible carcinogens. Almost half of the pollutants are systemic
toxicants for humans, and nearly all are considered hazardous to aquatic life.
To analyze water quality impacts, EPA characterized the reaches into which CWT
pollutants are discharged. Of 83 reaches modeled, 78 are in urban areas, and 22 have fish
consumption advisories in effect.
1.4 ANNUALIZED COSTS OF COMPLIANCE
EPA is proposing effluent limitations guidelines and standards for direct discharging
CWT facilities based on Best Practicable Control Technology Currently Available (BPT),
Best Conventional Pollutant Control Technology (BCT), Best Available Technology that is
Economically Achievable (BAT), New Source Performance Standards (NSPS) based on the
best available control technology that can be demonstrated. For indirect dischargers, EPA is
proposing Pretreatment Standards for Existing Sources (PSES) and Pretreatment Standards
for New Sources (PSNS). EPA examined three control options to reduce the discharge of
pollutants from the metals subcategory of the CWT industry, which are referred to as Metals
Options 2, 3, and 4. Option 4, which includes batch precipitation, liquid-solid separation,
secondary precipitation, and sand filtration, is being proposed as BPT. EPA also examined
three control options for cyanide destruction, and EPA is proposing Cyanide Option 2
(alkaline chlorination at specific operating conditions). EPA examined four control options
to reduce the discharge of pollutants from the oils subcategory. EPA is proposing BPT,
BCT, PSNS, NSPS, and BAT controls based on Oils Option 9, secondary gravity separation
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and dissolved air flotation (DAF). For indirect dischargers in the Oils subcategory, EPA is
proposing PSES based on Oils Option 8, dissolved air flotation, because it is less costly than
Option 9 and results in fewer adverse economic impacts. EPA examined two control options
to reduce the discharge of pollutants from the organics subcategory, and is proposing controls
based on Organics Option 4, equalization and biological treatment, for the organics
subcategory.
Complying with the proposed regulation will increase the costs of CWT facilities.
EPA estimated lump-sum capital, land, and RCRA permit modification costs and annual
operating, maintenance, monitoring, and record-keeping costs. Table 1-2 shows the costs of
complying with the proposed regulatory option. Annualized costs are show both before and
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TABLE 1-2. COSTS OF COMPLYING WITH THE COMBINED REGULATORY
OPTION (106 S1997)a
Total Lump- Total Annualized Costs Total After-Tax
Costs Sum Costs Before-Tax Savings Annualized Costs"
BPT/BAT Costs
PSES Costs
Total Costs
4.56
40.3
44.9
3.56
24.3
27.9
2.2
13.4
15.6
a Costs are scaled up to reflect the estimated universe of CWT facilities.
BCosts include the cost of modifying RCRA permit where appropriate.
after accounting for tax savings associated with investments in capital equipment and
operating costs.
1.5 FACILITY IMPACTS
EPA analyzed the impacts of these costs on affected CWT facilities using a
mathematical model of the facilities and regional CWT markets. Complying with the
proposed regulatory option increases the cost of direct and indirect discharging CWT
facilities. They respond by increasing the prices at which they accept waste. Overall, the
prices of CWT services increase and the quantity of waste accepted by CWTs decreases. The
increased prices for CWT services results in higher revenues for CWT facilities. EPA
computed the profitability of each CWT operation based on the estimated increases in CWT
costs and revenues. Operations for which estimated with-regulation costs exceed estimated
with-regulation revenues are unprofitable, and are assumed to shut down. If all the affected
CWT operations at a facility are estimated to shut down, EPA considers this a facility
closure. Table 1-3 shows the estimated process and facility closures by discharge status.
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TABLE 1-3. PROCESS AND FACILITY CLOSURES AT CWT FACILITIES, BY
DISCHARGE STATUS"
Discharge Status
Direct Dischargers
Indirect Dischargers
Zero Dischargers
Process
Closures
1
15
0
Percentage
4.17%
5.55%
0.0%
Facility
Closures
2
13
0
Percentage
18.2%
8.9%
0.0%
a Data are scaled up to account for the entire universe of CWT facilities.
EPA estimates that nationwide, 338 jobs will be lost at CWT facilities experiencing
reductions in CWT operations or closures of processes or facilities. This reduction in
employment is expected to be partially offset by the increases in employment required to
operate the controls at affected CWTs. EPA estimates that 97 full-time equivalent employees
will be required to operate the controls, which would offset more than a third of the projected
job losses from market adjustments.
1.6 FIRM IMPACTS
EPA analyzed impacts on firms owning CWT facilities by analyzing changes in
company profits and return on investment. For 64 companies, profit margins declined as a
result of the regulation. Thirty-four of the companies experiencing lower profit margins are
small firms. For 42 companies, profit margins increased, because their revenues are
projected to increase by more than their costs. Twenty of the 42 companies projected to
experience increased profit margins are small firms. Finally, three companies are projected
to experience no change in their profit margins due to the regulation.
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1.7 COMMUNITY IMPACTS
EPA measures impacts on communities in which CWT facilities are located by
estimating the change in community employment that is projected to result from the
regulation. CWT facilities that reduce the quantity of waste they treat, close processes, or
close CWT operations completely, are estimated to experience reduced employment. This
reduction in employment is projected to result in additional employment losses in the
community as the displaced CWT employees reduce their spending, and this generates
additional job losses. EPA made the most conservative assumption, that all job losses would
occur within the community where the CWT is located. Seventy-two communities are
projected to experience no change in employment or an increase in employment. Thirty-
seven communities are projected to experience a decline in employment of less than
0.2 percent. No community is projected to experience a loss in employment of more than
0.9 percent of baseline employment.
EPA also examined the demographic characteristics of the communities in which
CWT facilities were located, to assess the distributional and environmental justice impacts of
the regulation. Perhaps because many CWTs are located in industrial urban areas,
populations in the communities in which they are located have, on average, higher
proportions of low income residents and people of color than the states in which they are
located or the country as a whole. EPA examined community employment impacts to ensure
that communities of color and relatively low-income communities are not experiencing
disproportionately high impacts. Of the 42 communities experiencing more than one job
loss, 30 are predominantly low-income or minority. However, the employment losses are at
most 0.51 percent of baseline employment, so EPA does not believe that significant adverse
employment impacts will occur in communities of color or communities with a relatively
large share of poor residents.
To assess the environmental justice impacts of the CWT regulation, EPA examined
the benefits experienced by communities adjacent to the surface water bodies into which
CWT facilities discharge their wastewater. These are largely, but not entirely, the same as
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the communities in which the CWT facilities are located. EPA assumed that all the benefits
of the regulation are experienced by residents of the counties adjacent to the reaches
projected to be less polluted due to the regulation. Seventeen of the 32 communities with
relatively high minority or low income populations are projected to experience quantified
benefits due to the regulation. Thus, the CWT effluent limitations guidelines and standards
are projected to improve environmental justice, by reducing the exposure of these
communities' populations to pollutants discharged by CWTs.
1.8 INITIAL REGULATORY FLEXIBILITY ANALYSIS
EPA's initial assessment of the possible impact of options being considered on small
CWT companies showed that some options might have significant impacts on some small
CWT companies. Thus, EPA performed an initial regulatory flexibility analysis (IRFA) and
convened a Small Business Advocacy Review (SB AR) panel to collect the advice and
recommendation of small entity representatives (SERs) of CWT businesses that would be
affected by the proposal. EPA estimates that 82 companies owning CWTs have revenues
less than 56 million per year, and are considered small companies for this analysis. Of these,
63 own discharging CWT facilities and may incur increased costs due to the regulation. EPA
has evidence that the number of affected small businesses may be overstated, because of
trends in the CWT industry since the data were collected. However, these data are the most
complete available for these companies and are consistent with the technical and economic
characterization used hi the analysis.
'EPA considered a number of measures to mitigate the impact of the proposed rule on
small businesses, including relief from monitoring requirements and other regulatory relief
for oily waste treaters, and a less stringent NSPS for the metals subcategory. In addition,
EPA considered three general options that would mitigate the impacts of the regulation on
small entities. First, EPA proposed regulatory options that were in the form of effluent
limitations guidelines and standards, not specific requirements for design, equipment, work
practice, or operational standards. Second, the Agency considered less stringent control
options for each of the treatment subcategories than were originally proposed in 1995. Third,
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EPA selected a technology basis for pretreatment standards for the oils subcategory that
generally provides less stringent standards than the technology basis for the proposed BAT
limitations.
Of the 56 small companies for which EPA has reliable data on baseline profits, 42
own indirect discharging facilities. Ten of these are projected to experience increasing profit
margins as a result of the proposed regulatory option, and 32 are projected to experience
decreased profit margins. Overall, small companies are projected to fare better than either
medium sized or large companies. EPA also examined the potential impacts of the
regulatory relief options, and concludes that the analysis does not support the need for a
limitation. EPA is concerned that, by limiting the scope of the proposed rule based on one of
the regulatory relief scenarios, EPA might actually be encouraging ineffective treatment at
the expense of effective treatment. Thus, despite considering a variety of potential
limitations to mitigate small business impacts while still preserving the benefits of the rule,
EPA was unable to identify a single effective solution to incorporate into the proposal.
1.9 COST-BENEFIT ANALYSIS
EPA examined the costs and benefits to society of the proposed effluent limitations
guidelines and standards. The social costs are defined as the change in consumer and
producer surplus as a result of the regulation. Table 1-4 summarizes the estimated social
costs of the regulation. It should be noted that "consumer" in this case actually means
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TABLE 1-4. ESTIMATED AGGREGATE COST TO CONSUMERS AND
PRODUCERS
Social Cost Component
Change in Value
($1031997)
Change in Consumer Surplus
Change in Producer Surplus
Sum of Changes in Consumer and Producer Surplus
-$24,743
$4,654
-$20.089
customer, because CWT services are intermediate goods, sold to producers of other goods
and services.
The Agency estimates that, overall, producers and consumers of CWT services will
lose approximately $20 million in social welfare as a result of the proposed regulation.
EPA's analysis indicates that, overall, the industry will experience increased profits as a
result of the regulation, but that this will be more than offset by the increased costs incurred
by customers, due to the increased prices charged for CWT services.
Because the market model analyzes impacts based on after-tax costs of compliance,
the above values do not include all of the social costs of the proposed rule. In particular, they
do not include the costs to government. EPA estimates government's share of the costs of
the proposed rule to be approximately $12 million. Thus, the total cost of the proposed rule
is estimated to be approximately $32 million.
The proposed effluent limitations guidelines and standards for the CWT industry
would reduce pollutant discharges to surface water by approximately 14.3 million pounds per
year of conventional pollutants and 4.1 million pounds per year of toxic and nonconventional
pollutants. This reduction in pollutant loadings will lead to improvements in both the
instream water quality and the health of ecological systems in the affected waterbodies. In
addition, POTWs are expected to experience reductions in sludge disposal costs.
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To estimate the benefits of the proposed effluent limitations guidelines and standards,
EPA first estimated the changes in ambient water quality and related ecosystems that would
result from the reduction in releases. Then, EPA estimated and valued reductions in cancer
and non-cancer health effects, improvements in recreational fishing, and cost savings for
POTWs. Table 1-5 summarizes the EPA's benefits estimates.
TABLE 1-5. ANNUAL BENEFITS OF THE PROPOSED EFFLUENT
LIMITATIONS GUIDELINES AND STANDARDS
Benefits Category
Estimated Range of Benefits
($1031997)
Reduction in Cancer Incidence from Fish Consumption
Reduction in Lead-Related Health Effects from Fish
Consumption
Recreation Value of Reducing AWQC Exceedances
Reductions in Sludge Disposal Costs
$1,492,000-$8,043,000
$2,999,000 - $5,242,000
$414,000-$1,177,000
$149,400-$928,100
Sum of These Benefits Categories
$5,054,400-$15,390,100
There are uncertainties and limitations inherent in both the estimated costs and
benefits, which may have led to either underestimating or overestimating their values. More
important than these uncertainties for the benefits estimation is the fact that data limitations
prevented EPA from quantifying or valuing many other categories of benefits, including
benefits to near-stream recreation, commercial fishing, and diversionary users of affected
waterbodies, as well as nonuse benefits. The Agency is certain that the benefits estimates in
Table 1-5 are only a subset of total benefits. Thus, EPA is confident that the benefits of the
proposed regulation justify its costs.
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SECTION 2
DATA SOURCES
EPA collected the data used to profile the CWT industry and to analyze the impacts
of the effluent limitations guidelines and standards from a variety of sources. These include a
census of the industry conducted in 1991, comments on the original proposal and the Notice
of Data Availability (NOA), the Toxics Release Inventory (TRI) database (EPA, 1991-1995),
and publicly available information, such as financial databases. This section describes the
data sources and how they were combined to provide a baseline characterization of the CWT
industry and markets. Appendix A provides additional detail about the data sources.
2.1 DATA FROM THE WASTE TREATMENT INDUSTRY QUESTIONNAIRE
In 1991, EPA collected data from facilities believed to be in the CWT industry
through the Waste Treatment Industry Questionnaire (henceforth to be referred to as the
questionnaire) (EPA, 1991).1 The questionnaire collected technical information for 1989 and
economic information for 1987, 1988, and 1989 under authority of Section 308 of the Clean
Water Act (CWA). Of the 452 facilities receiving the questionnaire, EPA determined that
363 did not treat or recover materials from industrial waste received from off-site. Of the
89 that did treat or recover materials from industrial waste received from off-site, four
facilities were considered out of scope because they received off-site waste only through a
pipeline from adjacent facilities. The remaining 85 facilities were ultimately determined to
be within the scope of the proposed effluent limitations guidelines and standards.
'Appendix A of EPA (1995) contained a copy of the questionnaire instrument. It is also included in Appendix
A of this report, along with a copy of the Facility Information Sheet provided to each NOA facility with
EPA's estimated data for that facility.
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Technical data collected from these facilities included the quantities of waste they
received from off-site for management in various CWT operations, current treatment
technologies, and current releases.
Economic and financial data collected from these facilities included
• prices for wastewater treatment of different waste types,
• facility employment,
• costs and revenues for each CWT operation,
• information on commercial status of CWT operations at the facility,
• Resource Conservation and Recovery Act (RCRA) permit modification costs, and
• limited financial information for the companies owning the CWT facilities.
Most respondents provided data for the years requested: 1987,1988, and 1989. However,
some facilities had not been in operation during a part of that period, so they provided data
for other years. The Agency conducted a careful review of the responses to ensure that the
data used to develop the effluent limitations guidelines and standards were as complete and
accurate as possible.
2.1.1 Data Modifications and Corrections
The Agency's quality assurance/quality control for the questionnaire data involved
several discrete steps: reviewing the questionnaire responses for completeness and internal
consistency, contacting the facilities for additional information or clarification, comparing
responses from the technical and economic sections of the questionnaire, and adjusting the
data to make the economic and financial data consistent with the technical data.
The Agency reviewed the individual questionnaire responses to ensure that they were
complete and internally consistent. EPA contacted facilities to verify and correct responses
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that were either incomplete or appeared incorrect. After completing this quality assurance/
quality control procedure, the Agency made further adjustments to correct for remaining
discrepancies in the data. These adjustments required
• matching the time period for the technical data and the time period for the
economic data as closely as possible;
• reassigning costs and revenues for waste treatment operations so that they
matched the waste treatment operations reported in the technical section of the
questionnaire; and
• adjusting economic data reported to the base year of the analysis, using the
producers price index.
In addition, five facilities did not respond to the economic and financial section of the
questionnaire. Cost data were generated for these facilities, based on a simple statistical
analysis of data for facilities that had responded. Revenues were generated by multiplying
the price of the services offered times the quantities they reported in the technical sections of
their questionnaires.
Since proposal, EPA has made substantial changes to the scope of the regulation.
Section IV of the preamble to the proposed rule discusses these changes. The Agency has
determined that several other facilities that were considered in scope for the 1995 proposal
are no longer in scope, because they no longer conduct CWT operations. These were
removed from the analytical database.
When these adjustments were complete, the Agency had a database of information for
76 facilities that included quantities and flows of waste within the CWTs from the technical
section of the 1991 questionnaire and associated costs, revenues, and employment at the
CWTs from the economic questionnaire.
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2.1.2 Additions to Data Since Original Proposal (NOA Facilities)
Comments on the proposed rule indicated that a large number of oil recovery
facilities, which had been considered out of scope for the proposal, were in fact subject to the
regulation. To analyze the impacts of the proposed regulation on these facilities, the Agency
developed baseline data for these facilities using the following data: publicly available
facility employment data, data for similar facilities from the questionnaire, and information
provided by the National Association of Oil Recyclers (NORA), an industry trade
association. The Agency estimated waste flows at the facilities, baseline costs and revenues
for oil recovery and oily wastewater treatment, and costs to comply with the effluent
limitations guidelines and standards and then analyzed the economic impacts of the proposed
rule on these facilities. The results of these analyses were published in the Federal Register
in a NOA (EPA, 1996). To ensure that all the subject facilities were aware of the information
and had the opportunity to comment on the data (and correct any errors), the Agency
prepared Facility Information Sheets describing the data used for each facility and sent them
to the oil recycling facilities.2 Many of the facilities responded to the NOA with comments
and corrections. Based on the data received, the Agency identified 69 oil recovery facilities
that were subject to the regulation! For these, the Agency has data on the quantity of oily
waste and oily wastewater accepted from off-site, quantity of oil recovered, quantity of
wastewater discharged, facility operating costs and revenues, and employment. The data
used are those generated to analyze the economic impacts of the proposed effluent limitations
guidelines and standards for the NOA, as amended by commenters.
2.2 DATA SOURCES FOR DEMAND CHARACTERIZATION
Data to characterize the demand for CWT services come primarily from the TRI, an
annual EPA data collection effort that reports quantities of toxic chemicals released by
manufacturing facilities. Among other types of releases, the generating facilities are asked to
report quantities of waste sent off-site for treatment or recovery.
2Appendfat A of this document contains a copy of the Facility Information Sheet form mailed to each facility to
inform them of the NOA and the data being used to characterize their facility.
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2.3 DATA SOURCES FOR MARKET CHARACTERIZATION
Data used for the market characterization comprise the data from the 1991 Waste
Treatment Industry Questionnaire and data from the NOA database. Facilities were assigned
to markets based on their locations, the types of CWT operations on-site, and the per-gallon
costs of treatment or recovery for those operations. Depending on the number of facilities in
each market, the markets were characterized as monopolistic (one CWT service provider),
duopolistic (two CWT service providers), or perfectly competitive (three or more CWT
service providers).
2.4 DATA SOURCES FOR COMPANY ANALYSIS
Data were collected from several sources to profile the companies owning the CWT
facilities. These sources included the Waste Treatment Industry Questionnaire; data
developed for the NOA, as corrected by comments on the NOA data; Dun and Bradstreet's
Dun's Market Identifiers (1997) on-line database; the Securities and Exchange Commission's
EDGAR database (SEC, 1997); and other financial databases.
2.5 REFERENCES
Dun and Bradstreet. 1997. Dun's Market Identifiers Online Database. Accessed through the
EPA National Computation Center Computer, FINDS data system.
Securities and Exchange Commission. 1997. EDGAR Database: . Bethesda,MD: Lexis/Nexis.
U.S. Environmental Protection Agency. 1991 Waste Treatment Industry Questionnaire.
Washington, DC: U.S. Environmental Protection Agency.
U.S. Environmental Protection Agency. 1996. Notice of Availability Facility Information
Sheets. Washington, DC: U.S. Environmental Protection Agency.
U.S. Environmental Protection Agency. 1995. Economic Impact Analysis of Proposed
Effluent Guidelines and Standards for the Centralized Waste Treatment Industry.
Washington, DC: U.S. Environmental Protection Agency.
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SECTION 3
BASELINE CONDITIONS AND INDUSTRY PROFILE
This section describes the conditions affecting the CWT industry in the absence of
regulation. The industry profile section provides an overall description of the CWT industry
and the markets for CWT services. Following the industry profile is a discussion of the
environmental impacts of the CWT industry at baseline.
3.1
INDUSTRY PROFILE
This section profiles the CWT industry by describing the baseline conditions
characterizing facilities supplying CWT services, the companies that own CWT facilities, the
demand for CWT services, and the markets for CWT services. The baseline represents the
conditions in the CWT industry in the absence of the regulation. Thus, baseline conditions
form the basis for comparison with the projected conditions for these entities if the regulation
is promulgated as proposed.
3.1.1 Overview of the CWT Industry
The CWT industry developed primarily in response to environmental legislation. A
more complete description of the development of the CWT industry is found in the preamble
to the proposed rule.
In 1995, there were 205 CWT facilities that accepted waste from off-site sources for
treatment or recovery. The wastes sent to CWT facilities tend to be concentrated and
difficult to treat and include process residuals, process wastewater, and process wastewater
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treatment residuals such as treatment sludges. Because of the toxicity of wastes accepted and
the limited treatment provided at CWT facilities, CWT facilities discharge high
concentrations of some pollutants either into surface water or to publicly owned treatment
works (POTWs).
CWT facilities are specialists in waste treatment and may have different relationships
with the facilities generating the waste they treat, hi terms of these relationships, CWT
facilities fall into three main categories:
• commercial: facilities that accept waste only from off-site generators not under
the same ownership as their facility.
• noncommercial: facilities that accept waste only from off-site generators under
the same ownership as their facility or that accept waste on a contract basis from a
small number of adjacent facilities.
• mixed commercial and noncommercial: facilities that treat waste generated by
other facilities under the same ownership as their facility and also accept waste
from off-site generators not owned by the same company.
In developing the proposed guidelines and standards, EPA looked at facilities that
accept waste on a commercial basis and those that accept waste on a noncommercial basis.
EPA data show that 201 CWT facilities accept waste on a commercial basis, managing it for
a fee. They operate either on a strictly commercial basis or are mixed commercial/
noncommercial facilities. These facilities manage wastes from their own company and also
accept some waste from other companies for a fee. The commercial CWT operations plus
the commercial share of the mixed CWT facilities constitute the supply of marketed CWT
services. The remaining four facilities are classified as noncommercial. Demand for these
CWT services comes from waste generators that do not have the capability to completely
treat the waste they generate on-site.
Detailed questionnaire data are available for 76 of these facilities, and limited data
from notice comments are available on 69 additional facilities. Weights have been computed
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and assigned to these 145 facilities to scale up the results to the entire known universe of
205 CWT facilities.
3.1.1.1 Services Provided
CWT facilities provide waste treatment services performed at waste treatment
facilities that accept waste from off-site for treatment. CWT services include the treatment
and recovery of metal and oil-bearing wastewater and the treatment of organic wastewater.
CWT facilities may also transport, incinerate, or otherwise dispose of waste and process
residuals.
3.1.1.2 Subcategories
EPA has divided the industry into three subcategories—metals, oils, and
organics—based on the types of waste treated or recovered:
• metals subcategory: facilities that accept metal-bearing waste from off-site for
treatment or recovery.
• oils subcategory: facilities that accept oily waste from off-site for treatment or
recovery.
• organics subcategory: facilities that accept organic waste from off-site for
treatment or recovery.
Table 3-1 shows the number of commercial facilities in each industry subcategory
offering each type of waste treatment or recovery service. Many CWT facilities offer more
than one of the above services and thus fall under more than one industry subcategory.
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TABLE 3-1. CWT FACILITIES BY SUBCATEGORY AND CWT SERVICE""
Subcategory
Metals
Total in Subcategory
Oils
Total in Subcategory
Organics
CWT Service
Recovery
Treatment
Recovery
Treatment
Treatment
Number
Commercial
7
53
56
152
147
164
23
of Facilities
Noncommercial
3
0
2
Total
59
164
25
Facilities are counted as commercial if they treat any waste on a commercial basis. Because many CWT
facilities fall under more than one subcategory, the numbers do not add to the total number, 205 facilities, in
the CWT industry. Similarly, because more facilities performing metals or oils recovery also perform
treatment, the total number of facilities in those categories does not equal the sum of facilities performing
recovery and treatment.
Data are scaled up to account for the entire universe of CWT facilities.
3.1.2 Demand for CWT Services
Producing goods and services almost always involves the simultaneous production of
waste materials. During the process of manufacturing goods or providing services, the
material inputs that are not embodied in the products become waste. Environmental
regulations require that these wastes, once generated, be recycled, treated, or disposed of in
accordance with regulatory requirements.
The demand for waste management services arises from the generation of waste as a
by-product of manufacturing or other production activities. This means that the demand for
CWT services is derived from and depends on the demand for the goods and services whose
production generates the waste. For example, the higher the demand for plastics, the greater
quantity of plastics produced and, in turn, the greater the quantity of by-products of plastic
manufacturing that must be treated and disposed of.
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Producers generating waste have three choices when they determine how to treat the
waste properly. First, they may invest in capital equipment and hire labor to manage the
waste on-site, that is, at the site where it is generated. For large volumes of waste, this is
often the least expensive way to manage the waste because producers can avoid the cost of
transporting it. Some generators may choose to treat waste on-site, because they believe that
it will help them control their ultimate liability under environmental laws. Alternatively,
producers may choose partially to treat waste on-site and then to send it off-site for ultimate
treatment and disposal. This choice is referred to as on-site/off-site hi this report. Finally,
producers may choose to send waste they generate directly to a CWT facility, a method that
is called off-site waste management.
The producers of waste who choose either the on-site/off-site or the off-site method
create the demand for CWT services. The proposed guidelines and standards under analysis
apply to all facilities accepting waste from off-site for treatment or recovery.
3.1.2.1 Industries Demanding CWT Services
This report used data from the TRJ to characterize the generators of hazardous waste
by industry and to profile the types of waste treated. A wide variety of manufacturing
industries generate waste. Appendix B shows the four-digit Standard Industrial
Classification (SIC) codes and the quantities of waste those industries transferred off-site for
either treatment or recycling in 1995. A list of the definitions for SIC codes is provided in
Appendix C. The industries transferring the largest amounts of waste off-site for treatment or
recycling are blast furnaces and steel mills (3312), storage batteries (3691), nonferrous wire
drawing and insulating (3357), plastics materials and resins (2821), motor vehicle parts and
accessories (3714), and industrial organic chemicals (2869).
3.1.2.2 Trends in the Demand for CWT Services (TRI)
The data described above reflect the demand for off-site hazardous waste
management in 1995. They demonstrate that the demanders of CWT services are diverse and
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include most manufacturing and many service sectors. The TRI data provide a time series of
data on releases of materials. Table 3-2 quantifies the changes in the quantity of wastes
transferred off-site for treatment and recycling from 1991 to 1995, based on TRI data over
that time period. Waste transferred off-site for recycling increased a total of 41 percent from
1991 to 1995. In contrast, the amount of waste transferred off-site for treatment decreased a
total of 3 percent over that time period, although a sudden drop-off from 1991 to 1992 is
being offset by more recent increases.
3.1.3 Description of Suppliers of CWT Services
As explained previously, CWT facilities accept waste from off-site for treatment. The
generating facility may or may not be owned by the same company as the CWT facility.
Suppliers are characterized by commercial status and types of services performed, SIC code,
location, size, and RCRA permit status.
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TABLE 3-2. TRENDS IN DEMAND FOR OFF-SITE WASTE MANAGEMENT
SERVICES
Waste Transferred Waste Transferred
Off-Site for Off-Site for
Recovery Percentage Treatment Percentage
Year (106lbs) Change (106lbs) Change
1991
1992
1993
1994
1995
1.517
1.886
1.940
2.170
2.142
—
24.33%
2.84%
11.85%
-1.27%
244.6
215.3
210.3
219.1
237.3
—
-11.99%
-2.31% .
4.20%
8.31%
Source: U.S. Environmental Protection Agency. Toxics Release Inventory, 1991-1995.
3.1.3.1 Commercial Status
As mentioned earlier, CWT facilities have a variety of relationships with the facilities
generating the waste they treat. They fall into three main categories:
• commercial,
• noncommerical, and
• mixed commercial/noncommercial.
Information about commercial status is available from several parts of the Waste
Treatment Industry Questionnaire. A copy of this questionnaire can be found in Appendix A
of the Economic Impact Analysis report prepared for the earlier proposal (EPA, 1995).
Question A35 in the technical section of the questionnaire asks facilities about their overall
commercial status.
The part of the questionnaire where the facility reports its costs and revenues
indicates its commercial status. In Section N, in the economics section of the questionnaire,
facilities were asked to list their commercial waste treatment revenues and costs separately
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from their noncommercial. Data on commercial revenues were listed in Questions N27
through N29 and noncommercial revenues were listed in Questions N30 through N32.
Purely noncommercial facilities reported their costs in Questions N30 through N32, while
commercial and mixed facilities reported their costs in Questions N27 through N29. Finally,
in Section O, facilities were asked in Question O4 to report the quantities of aqueous liquid
waste, sludge, and wastewater they treat that is received from off-site facilities not under the
same ownership, that is received from off-site facilities under the same ownership, and that is
generated on-site.
Information from Sections N and O forms the primary basis for determining a
facility's commercial status. When no data were available, or when the data in Sections N
and O conflicted, information from Question A35 was used. Table 3-3 provides the
commercial status of the 205 CWT facilities. The characterization of facilities' commercial
status in this report refers only to the operations subject to the effluent limitations guidelines
and standards. Facilities classified in this analysis as purely commercial may conduct some
operations not subject to this proposal on a noncommercial basis. Similarly, facilities
classified as noncommercial in this analysis may conduct some operations not subject to this
proposal on a commercial basis. The noncommercial category includes four facilities that
accept waste from off-site but do not market their CWT services. Included in this category
are a facility owned by the federal government and a facility contracted to accept waste from
an adjacent generator.
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TABLE 3-3. COMMERCIAL STATUS OF CWT FACILITIES"
Commercial Status
Number of Faculties
Commercial
Noncommercial
201
4
2 Data are weighted to account for entire universe of CWT facilities.
Sources: U.S. Environmental Protection Agency. 1991 Waste Treatment Industry Questionnaire. Washington,
DC: U.S. Environmental Protection Agency.
U.S. Environmental Protection Agency. Notice of Availability Facility Information Sheets.
Washington, DC: U.S. Environmental Protection Agency.
3.1.3.2 Industry Classification by SIC Code
In the questionnaire, facilities were asked to report the SIC code that best represents
the facility's main operation. Table 3-4 shows the SIC codes reported by respondents. EPA
assigned all of the Notice of Availability facilities to SIC 4953. The responses give one
indication of the relative importance of CWT operations at the facility. No SIC code
properly describes CWT services. Facilities that listed 4953, Refuse Systems, as their SIC
code are indicating that they are primarily waste treaters. Of the facilities responding to the
questionnaire, 51 of 76 indicated that SIC 4953 best described facility operations. SIC
code 4953, Refuse Systems, is primarily for municipal waste disposal services, so the
majority of facilities in that SIC code are not CWTs but trash haulers and municipal solid
waste management facilities.
Facilities that listed other SIC codes are indicating that they are primarily
manufacturing facilities that also do some waste management. Three facilities reported 2869,
Organic Chemicals not elsewhere classified, and four additional facilities reported other SIC
codes in the 2800s, indicating that they are chemicals manufacturers. Four facilities reported
SICs in the 3300s, indicating that they are primarily metals manufacturing facilities.
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TABLE 3-4. SIC CODES DESCRIBING CWT FACILITIES' PRIMARY
OPERATIONS'
SIC Code Reported
2819
2821
2834
2869
2879
2911
3312
3321
3341
3356
3483
3499
3523
3633
3679
3724
3761
4226
4953
5090
5170
5171
9661
.9711
Total
Number of Facilities
1
1
1
3
1
1
1
1
1
1
1
1
1
1
1
1 •
1
1
51
1
1
1
1
1
76
* Data refer only to facilities responding to the 308 questionnaire.
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Therefore, EPA data show that a majority of the facilities expected to be affected by
the effluent limitations guidelines and standards are primarily waste management facilities.
The rest, although they have CWT services on-site, are primarily manufacturing or service
facilities.
It should be mentioned that the North American Industrial Classification System
(NAICS) is replacing the existing SIC system. NAICS industries will be identified by a
six-digit code, in contrast to the four-digit SIC code, increasing the number of sectors
described and therefore increasing the level of detail possible in the industry characterization.
SIC 4953, Refuse Systems, is being subdivided into eight new industries. This division will
allow differentiation between hazardous waste treatment and disposal (NAICS 562211) and
recovering materials (NAICS 56292).
3.1.3.3 Location of CWT Facilities
There are 145 facilities that provided data to EPA through the questionnaire or Notice
of Availability. These facilities are located in 38 states. The states with the highest number
of waste management facilities are Texas with 13, Ohio with 12, and California with 12.
Table 3-5 shows the number of facilities in each state. Because not all CWT facilities offer
the same set of services, facilities located near one another may not be in the same markets.
Likewise, a CWT facility may compete with facilities located a longer distance away if the
services offered are similar. However, questionnaire responses indicated that most CWTs'
customers are located within the same state as the CWT or within a few adjacent states.
Thus, most of a CWT's competitors will be located relatively close to it.
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TABLE 3-5. NUMBER OF FACILITIES PERFORMING CWT SERVICES"
State
AL
AZ
CA.
CO
CT
DE
FL
GA
HI
IA
IL
IN
KS
KY
LA
MA
MD
ME
MI
MN
Number of Facilities
3
1
12
2
5
1
8
3
1
1
6
4
2
2
3
1
2
1
10
2
State
MO
MS
MT
NC
NJ
NV
NY
OH
OK
OR
PA
RI
SC
TN
TX
VA
WA
WI
WV
Total
Number of Facilities
1
1
1
1
6
1
4
12
2
2
7
1
2
5
14
5
8
4
1
145
4 Data are not scaled up to account for the entire universe of CWT facilities. These data reflect only the
facilities for which data are available.
3-12
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3.1.3.4 Facility Size
Facility size may be defined in terms of total quantity of waste accepted for treatment
or recovery, number of employees, or total revenues and costs. This section examines
facility size using quantity of waste accepted and number of employees. Section 3.1.4
discusses facility revenues and costs.
Table 3-6 shows the quantities of wastewater treated by facility size category and
discharge status. CWT facilities may
• discharge wastewater, treated or untreated, directly to surface water (direct
dischargers);
• discharge wastewater, treated or untreated, indirectly to the sewer system, then to
a POTW (indirect dischargers); or
• not discharge their wastewater at all (zero dischargers).
Zero discharge facilities may dispose of their wastewater by pumping it down underground
injection wells, evaporating it, applying it to land, selling it or recycling it, or sending it
off-site to another CWT facility for treatment.
Facility size can also be defined in terms of employment. Nationwide, EPA estimates
that approximately 3,660 full-time equivalent employees (FTEs) work in CWT operations at
the CWT facilities. Employment in CWT operations at CWT facilities ranges from 1 FTE to
more than 100, with a median of 18 FTEs. The Agency is interested in facility-level
employment because, if production falls at a facility as a result of a regulation, some share of
the people employed there may become unemployed. This reduction hi employment may be
magnified throughout the community as facilities that produce goods and services previously
demanded by the now unemployed residents experience decreased demand for their goods
3-13
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TABLE 3-6. FACILITY SIZE CATEGORIES BASED ON QUANTITY OF
COMMERCIAL WASTEWATER TREATED, BY DISCHARGE CATEGORY3
Organics
Metals Metals Oils Oils Treatment or
Recovery Treatment Recovery Treatment Recovery
Direct dischargers
< 5 million gallons
5 million to 10 million gallons
10 million to 50 million gallons
50 to 100 million gallons
Over 100 million gallons
1
0
0
0
0
2
0
2
1
1
2
3
0
0
0
3
2
0
0
4
2
0
1
0
0
Total
Indirect dischargers
< 5 million gallons
5 million to 10 million gallons
10 million to 50 million gallons
50 to 100 million gallons
Over 100 million gallons
4
1
0
0
0
25
4
10
0
0
69
28
18
0
0
64
14
15
0
22 '
11
2
2
0
0
Total
39
114
115
15
Zero dischargers
< 5 million gallons
5 million to 10 million gallons
10 million to 50 million gallons
50 to 100 million gallons
Over 100 million gallons
Total
1
0
0
0
0
1
7
0
1
0
0
8
31
0
2
0
0
33
17
2
0
0
4
23
4
1
0
0
0
5
1 Data are scaled up to account for entire universe of CWT facilities. Counts do not include four facilities that
do not treat wastewater commercially.
3-14
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and services. Table 3-7 shows the number of commercial CWT facilities with various
numbers of employees in their CWT operations.
TABLE 3-7. SIZE DISTRIBUTION OF COMMERCIAL CWT FACILITIES BY
NUMBER OF CWT EMPLOYEES
Total Number of Employees
No data
Ito9
10 to 19
20 to 29
30 to 49
50 to 100
More than 100
Number of Facilities
60
43
33
31
17
13
4
201
Percentage
33.3%
20.9%
15.9%
14.9%
9.0%
5.9%
3.0%
100.0%a
1 Does not sum to 100 percent because of rounding.
5.1.3.5 Facilities Permitted Under RCRA
Some CWT facilities may manage hazardous wastes in operations that are permitted
under RCRA. Of the 145 CWT facilities providing data, 79 do not have a RCRA Part B
permit, and 66 have a RCRA Part B permit. This distinction is important hi part because of
what it indicates about the types of wastes the facilities manage and the types of operations
they have on-site. All facilities treating hazardous waste are required to have a RCRA
permit. Facilities engaged hi recycling and recovery operations, such as metals recovery and
oils recovery, may or may not have a RCRA permit.
Of direct concern for estimating the impacts of the proposed rule is the fact that
facilities having RCRA permits are required to file a modification of their permits whenever
their operations change (e.g., when new waste management equipment is installed). Thus, in
addition to the costs of purchasing, installing, and operating additional capital equipment to
3-15
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comply with the effluent limitations guidelines and standards, RCRA-permitted facilities will
incur the expense of modifying their RCRA permit to reflect these changes.
3.1.4 Baseline Facility Conditions
As described above, this study analyzes the estimated 205 facilities in the CWT
industry. Of these, 201 are commercial and four are noncommercial. In this analysis, the
Agency accepts the definition of "facility" used by responding CWT facilities. In some
cases, the facility is defined as only the waste management part of a plant site. In other cases,
the facility is defined as encompassing the entire plant site, including non-CWT operations.
3.1.4.1 Baseline Quantities of Waste Treated
Table 3-8 shows baseline quantities of waste treated by commercial facilities by
subcategory. The largest number of facilities and the largest quantities are related to oils
treatment and oils recovery. When the responses are weighted to account for nonresponse,
915 million gallons of waste were accepted from off-site recovery of oil. Nine hundred
twelve gallons were accepted from off-site for oil treatment.
3.1.4.2 Baseline Costs of CWT Operations
Table 3-9 shows a frequency distribution for the baseline cost of treating waste. The
proposed effluent limitations guidelines and standards, if adopted, are expected to increase
the cost of treating waste at most CWT facilities. This cost increase, in turn, will increase the
3-16
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TABLE 3-8. QUANTITY OF WASTE TREATED BY COMMERCIAL FACILITIES,
BY SUBCATEGORY (103 gal/yr)
Number of
Facilities
Metals Recovery
Metals Treatment
Oils Recovery
Oils Treatment
Organics Treatment or
Recovery
7
53
152
145
23
Total
Quantity
(103 gal/yr)
11,112
554,413
746,081
756,296
95,267
Average
Quantity
(103 gal/yr)
1,587
10,461
4,895
5,211
4,142
Minimum
Quantity
(103 gal/yr)
25.9
0.1
17.9
0.1
1.4
Maximum
Quantity
(103 gal/yr)
5,833
129,340
47,155
131,000
23,309
TABLE 3-9. BASELINE WASTE TREATMENT COSTS AT COMMERCIAL
CWT FACILITIES3
Operating Costs ($1997)
<$0.1 million
$0.1 to $1 million
$1 to $2 million
$2 to $5 million
Over $5 million
No data
Total
Number of Facilities
16
59
33
26
7
60
201
Percentage
8.0%
29.3%
16.4%
12.9%
3.5%
29.9%
100.0%
a Data are scaled up to account for entire universe of commercial CWT facilities.
cost of recovery processes because those processes generate wastewater and sludge that must
also be treated. These baseline waste treatment cost figures form a basis for comparing the
costs of compliance, described in Section 4. Baseline in-scope waste treatment costs at
3-17
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commercial facilities range from $3,500 to $25 million per facility and total $231 million
across all 201 commercial facilities. They average $1.6 million across all commercial
facilities.
3.1.4.3 Baseline Revenues for CWT Operations
A frequency distribution of treatment and recovery revenues for commercial CWT
facilities is provided in Table 3-10. Treatment and recovery revenues at commercial CWT
facilities range from $4,938 to $89.7 million. The average revenue at commercial facilities is
$4.4 million.
TABLE 3-10. BASELINE TREATMENT AND RECOVERY REVENUES AT
COMMERCIAL CWT FACILITIES"'1'
Revenues ($1997) Number of Facilities
< $0.1 million 10
$0.1 to $1 million 39
$1 to $2 million 24
$2 to $5 million 39
Over $5 million 29
No data 60
Total 201
Percentage
5.0%
19.4%
11.9%
19.4%
14.4%
29.9%
100.0%c
* Includes CWT revenue and revenue from sales of recovered product.
Data are scaled up to account for entire universe of commercial CWT facilities.
" Does not sum to 100 percent because of rounding.
3-18
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3.1.4.4 Baseline Profitability for CWT Facilities
Profitability is not a relevant measure for noncommercial facilities, which are
assumed to be treated as cost centers by their companies. EPA's analysis assumes that
noncommercial CWT operations are not expected to make a profit, any more than a
centralized accounting or legal department is expected to make a profit. Impacts associated
with compliance costs for noncommercial facilities will be incurred at the company level.
Thus, a company-level financial analysis was performed for these facilities, including an
examination of the impacts on company profits. The baseline profits from CWT operations
for commercial facilities are described in a frequency distribution in Table 3-11. These
profits range from a loss of $6.5 million to a profit of $360 million.
TABLE 3-11. BASELINE PROFITS AT COMMERCIAL CWT FACILITIES3'"
Profits
< $0.1 million
$0.1 to $1 million
$1 to $2 million
$2 to $5 million
Over $5 million
No data
Total
Number of Facilities
38
52
17
16
18
60
201
Percentage
18.9%
25.9%
8.4%
8.0%
9.0%
29.9%
100.0%c
a Profits are total revenues minus total costs.
Data are scaled up to account for entire universe .of commercial CWT facilities.
c Does not sum to 100 percent because of rounding.
3-19
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3.1.4.5 Baseline Conditions for Noncommercial Facilities
Four CWT facilities are classified as being strictly noncommercial or contract
noncommercial. Although they accept waste from off-site for treatment or recovery, they do
not market their CWT sendees to generators. Instead, then- customers are very narrowly
defined. The strictly noncommercial facilities accept waste only from facilities owned by the
same company as then- CWT facility. The contract noncommercial facilities accept waste
from a very limited number of adjacent facilities, which they were created to serve. One
facility that accepts some waste from off-site on a commercial basis is being considered
noncommercial for this report, because it is owned by the federal government. For the
purposes of this report, the crucial difference between these facilities and the commercial
facilities is how they are assumed to respond to the costs of complying with the CWT
effluent limitations guidelines and standards.
The noncommercial facilities are expected to continue to treat whatever waste their .
customers (whether inside their company or contract customers) generate and to pass the
costs of compliance along to their customers. Because strictly noncommercial CWT
facilities are generally regarded by their owner companies as providing a service to the rest of
the company, the analysis does not assess impacts at the facility level for them. Rather, the
analysis assumes that added costs will be borne by the company as a whole. The impacts of
the CWT effluent limitations guidelines and standards on strictly noncommercial facilities
are assessed at the company level. For the companies owning strictly noncommercial
facilities, this will mean that then- costs increase by the amount of the costs of compliance
and that their revenues do not increase.
Noncommercial CWT operations typically are treated as a cost center for the
company and may or may not receive explicit revenues or cross-charges in return for their
services. Most frequently, the facilities reported that the facility performed CWT services "at
cost" so that revenues from treatment exactly equaled cost. Other facilities reported
receiving no revenue for their services. Total cost accounting, which attributes to a •
production process all the costs associated with that process, would trace the waste treatment
3-20
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costs back to the production processes where the waste was generated. Most companies,
however, have made very little progress in adapting their accounting systems to this
approach.
For the contract noncommercial facilities, the customers are not owned by the same
company. Instead, generating companies have created the CWT specifically to treat the
waste they generate. Like the strictly noncommercial facilities, contract noncommercial
CWT facilities treat the waste they receive "at cost" and pass additional costs along to their
customers. Because the customers are different companies, the costs and revenues of
contract noncommercial facilities are both assumed to increase by the amount of the
compliance costs.
At baseline, four CWT facilities are classified as noncommercial. Based on the data
available, EPA has identified one of the facilities as contract noncommercial facilities and
two as strictly noncommercial, plus one federal facility. Among them, the noncommercial
facilities accept 92 million gallons of metal-bearing wastewater per year for treatment and
72 million gallons of organics-bearing wastewater. The companies owning the CWT
facilities have annual sales ranging from $6.0 million to $553 million. For the companies
owning nonfederal noncommercial facilities for which data are available, the median yearly
sales is $ 177 million.
3.1.5 Baseline Market Conditions
This report characterizes the markets for CWT services using questionnaire data and
information gathered in follow-up conversations with facilities and during site visits at
several facilities.
3.1.5.1 Defining Regional Markets
For modeling the impacts of the regulation on markets for CWT services, this study
divided the contiguous.U.S. into six regional CWT markets. In their questionnaire responses,
3-21
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the facilities indicated that, in general, their customers are located within their own state or in
a few adjacent states. This pattern is consistent with predictions of economic geography or
"location theory," which state that heavy, bulky, or fragile materials or materials otherwise
difficult to transport will be traded in localized markets. Wastewater and concentrated oily or
metal-bearing wastes are extremely heavy and bulky. Generators therefore want to transport
waste as short a distance as possible for treatment and are likely to choose a local CWT
facility rather than one located a long distance away, assuming that they offer equivalent
services.
As discussed previously, CWT facilities are widely distributed across the country; for
modeling purposes, the contiguous 48 states were divided into six regions:
• Northeast: CT, DE, MA, MD, ME, NH, NJ, NY, PA, RI, VT
• Northwest: WA, OR, ID, MT, WY
• Southeast: AL, FL, GA, KY, MS, NC, SC, TN, VA, WV
• Southwest: AZ, CA, CO, NM, NV, UT
• Upper Midwest: IA, IL, IN, MM, MI, NE, ND, OH, SD, WI
• Lower Midwest: AR, KS, LA, MO, OK, TX
This definition of regional markets is a simplification of actual markets. Obviously,
facilities located along the borders of the "regions" designated in this study may compete
with facilities in adjoining regions in addition to competing with facilities in their own
region. The regions were modeled as if they were independent. The presence of other
facilities offering the same CWT services in nearby regions would, however, in reality affect
the structure of the region's markets for CWT services.
In reality, there are exceptions to the regional pattern. Highly specialized types of
waste treatment services, such as precious metals recovery, are offered by only a few
3-22
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facilities nationwide. Markets for these services may be national. In general, however,
markets for CWT services are regional.
3.1.5.2 Defining Markets for Specific CWT Services
In the market model, facilities are identified as offering one or more of five broad
categories of CWT services:
• metals recovery,
• oils recovery,
• treatment of metal-bearing waste,
• treatment of oily waste, and
• treatment of organic waste.
The first two types of CWT services may result in the production of a salable product. They
also result in the generation of wastewater. Under the general category of wastewater
treatment, facilities may treat any or all of the following: metal-bearing wastewater, oily
wastewater, or organics-bearing wastewater. These three types of wastewater treatment
require different treatment processes and have different prices. Thus, these services are
traded in separate markets.
As noted above, within the broad types of treatment, considerable variation exists
depending on the specific characteristics of the wastes being treated. Wastes with differing
characteristics may require more treatment chemicals, for example, or more steps in the
treatment process, although the basic overall type of treatment is the same. To reflect the
complexity of these markets, each overall type of treatment or recovery can be broken into as
many as three submarkets, based on the per-gallon cost of treatment. This is based on the
assumption that different per-gallon costs of treatment reflect the different treatments
required by differing waste characteristics. Thus, facilities with similar per-gallon treatment
costs are assumed to treat similar wastes. The modeling approach assumes that each facility
3-23
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treats waste of a single type within each broad treatment category with a uniform per-gallon
cost of treatment. This modeling approach is a simplification. In fact, different batches of
wastes treated at a single facility vary in type and therefore in cost of treatment. As modeled,
each facility offers at most only a single cost level of each broad treatment category. Data
did not permit further detail in the delineation of the types of CWT services offered and their
associated costs at each facility.
As the markets are defined, the number of facilities competing in each market varies.
considerably. Table 3-12 presents the number of facilities offering each type of CWT service
by region.
3.1.5.3 Defining Market Structure
Markets in the model are defined as monopoly, duopoly (two sellers), or perfect
competition, depending on the number of sellers. Competitive markets are characterized by
large numbers of suppliers, none of which are able to exert substantial market power. In a
perfectly competitive market, suppliers would decide the most profitable quantity of waste to
3-24
-------
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3-25
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3-26
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3-27
-------
treat based on the given market price. Because of the large numbers of CWTs in the oils
recovery and oily wastewater treatment markets, these markets are likely to be perfectly
competitive. Thus, the model was designed so that it would allow either a perfectly
competitive market structure or imperfect competition. In this modeling approach, any
market with more than three sellers is defined as perfectly competitive. In reality, in markets
with fewer than eight or ten sellers, suppliers are probably able to exert some influence on the
outcomes of market negotiations and to consider their rivals' behavior in forming their
decisions related to price and quantity. However, the current modeling approach does not
allow that market structure.
3.1.5.4 Substitutes for CWT Services
The existence of substitutes for CWT services influences the responsiveness of the
demand for CWT services to changes in their price. Non-CWT facilities also produce goods
and services that may be substitutes for the goods and services produced by CWT facilities.
For example, waste-generating facilities may decide to construct treatment units on-site; thus,
on-site waste treatment would be substituted for CWT. Underground injection wells and
other activities that would not be subject to these effluent limitations guidelines and standards
can be substituted for regulated types of CWT. In most of these cases, the non-CWT goods
and services are not perfect substitutes for the goods and services produced by CWT
facilities. Nevertheless, when the cost of CWT-produced commodities increases, some
consumers of these goods and services may choose to substitute the other goods and-services,
which are now relatively cheaper.
The increased cost of waste treatment may also induce some demanders of CWT
services to choose another type of substitution. They may modify their processes, essentially
substituting additional capital equipment, materials, and labor upstream in their production
processes for waste treatment. In other words, some generators may employ pollution
prevention to reduce their demand for CWT services. This type of substitution would result
in smaller quantities of waste being generated per unit of the primary product produced. As
3-28
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reported in Section 3.1.2, the declining quantity of waste sent off-site for treatment suggests
that pollution prevention is already reducing the demand for CWT services.
3.7.5.5 Baseline Market Prices and Quantities of CWT Services
Table 3-12 also shows the baseline market prices and quantities of CWT services as
defined by the model. As described above, facilities offering CWT services within a region
were grouped into markets according to the type of service offered and the cost of treatment.
For each market, a baseline price was determined. In practice, some facilities price each
batch treated based on laboratory tests on the waste hi the batch, but the model assumes that
all batches treated by a facility in a given subcategory are similar and would have a single
price. The baseline price depends on the demand elasticity assumed for the market and on
information from the questionnaire, plus comments on the proposal and NO A. The baseline
market quantities are the summed facility quantities as reported hi the technical part of the
questionnaire, plus comments on the proposal and NOA.
3.1.6 Company Financial Profile
New effluent limitations guidelines and standards for CWT facilities will potentially
affect the companies that own the regulated facilities. The CWT facilities described in
Section 3.1.3 are the location for physical changes in treatment processes. They are the sites
with plant buildings and equipment where inputs (materials, energy, and labor) are combined
to produce outputs (waste treatment services, recovered metals, organics or oils, and
treatment residuals). Companies that own the CWT facilities are legal business entities that
have the capacity to conduct business transactions and make business decisions that affect the
facility. It is the owners of the companies that will experience the financial impacts of the
regulation.
Potentially affected companies include entities owning facilities that accept waste
from off-site for treatment in CWT processes and that generate wastewater in their waste
treatment process. These facilities are classified as indirect, direct, or zero dischargers.
3-29
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Frequently, the immediate facilities are in turn subsidiaries of larger companies that generate
much of the waste they receive from off-site. The Agency has determined that the
appropriate context for assessing the potential financial impact of the regulation is at the
highest level of corporate ownership.
Questionnaire and NOA comment data were submitted for only 145 of the estimated
205 CWT facilities. The company-level financial profile is based on the companies owning
these 145 facilities, and scaled up to represent the universe of companies owning CWT
facilities. These 145 facilities are owned by 114 individual companies and the federal
government. Company-level information is available for 100 of the 145 CWT facilities for
which the Agency has data. For facilities that responded to the Waste Treatment Industry
Questionnaire, company data are based on then- responses to Section M of the questionnaire,
adjusted to 1997 dollars using the producers price index. For facilities identified in the NOA,
company data represent either data provided in comments on the NOA or data EPA
developed from public financial databases. Four of the 145 facilities are noncommercial,
including a government-owned facility administered by the U.S. Navy. Discussion of the
government-owned facility is omitted from this section. Also omitted is a noncommercial
facility for which no facility or company financial data are available. The 100 facilities with
reliable company data are owned by 74 companies.
For the remaining 43 facilities, for which no reliable company data are available,
EPA, for purposes of this analysis, assumed that company revenues equal the revenues of the
CWT facilities owned by the company. This assumption has several possible consequences
for the analysis, which are described below. These 43 facilities are owned by 40 companies.
Thus, the financial analysis is based on 114 companies.
To obtain an estimate of the universe of companies owning CWT facilities, EPA has
scaled up the responses of the 114 companies for which it has data, using the scaling factors
developed for the NOA data. Companies owning facilities that submitted 308 questionnaires,
and companies owning both NOA and questionnaire facilities, receive a scaling factor of 1.
Companies owning only direct discharging NOA facilities receive a scaling factor of 2.
3-30
-------
Companies owning only indirect discharging NOA facilities receive a scaling factor of
1.877551. Companies owning only zero discharge NOA facilities receive a scaling factor of
1.833333. A few companies own both zero and indirect discharging NOA facilities. These
companies receive the scaling factor for the indirect discharging category. Applying these
scaling factors, EPA estimates that 164 companies own the estimated 205 CWT facilities.
Table 3-13 presents a size distribution of potentially affected companies and
highlights the effect of assuming company revenues equal CWT revenues for the
40 companies for which no reliable company data are available. The table clearly shows that
the companies with assigned revenues tend to be smaller on average than companies for
which data are available. This may in part be the case because smaller companies are less
likely to be found in published financial databases. It is also possible that some of the
40 companies have sources of revenue beyond their CWT revenues, but the Agency has not
been able to identify those sources or estimate their revenues. Thus, for the 40 companies for
which CWT revenues are assumed to be equal to company revenues, there may be some
underestimation of company revenues.
The assumption that these 40 companies have company revenue equal to facility
revenue may have several consequences. This assumption may understate company revenues
because they may have other revenues for which EPA has no information. If company
revenues are understated, then some of the companies that EPA has classified as small may
be misclassified (as shown hi Table 3-13, 27 of the companies that EPA has assumed to have
3-31
-------
TABLE 3-13. SIZE DISTRIBUTION OF POTENTIALLY AFFECTED COMPANIES
Company Revenues
Minimum Maximum
Number of Median Revenues Revenues
Companies Revenue (106$1997) (106$1997)
a. Size distribution of companies for which the Agency has reliable data
$6 million or less
$6 to $20 million
$20 to $50 million
$50 to $500 million
Over $500 million
24
15
10
12
12
b. Sales distribution of all companies,
assumed to equal CWT revenues
$6 million or less
$6 to $20 million
$20 to $50 million
$50 to $500 million
Over $500 million
c. Sales distribution of all
owning CWT facilities
$6 million or less
$6 to $20 million
$20 to $50 million
$50 to $500 million
Over $500 million
51
26
10
14
12
companies,
82
35
13
19
15
2.5
12.8
37.5
169.2
2,216.1
including those for which
2.0
12.6
37.5
156.9
2,216.1
0.2
6.5
23.1
74.3
657.2
5.6
19.0
45.6
426.0
40,411.2
company revenues are
<0.1
6.2
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scaled up to reflect the universe
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168.3
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657.2
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45.6
426.0
40,411.2
of companies
5.6
20.0
45.6
426.0
40,411.2
Note: Does not include one facility owned by the federal government, and another for which no financial data
are available.
3-32
-------
company revenues equal to facility revenues have revenues of $6 million or less). Finally,
some of the economic impacts of the proposal may be overstated. However, EPA has
concluded that its assumption, although conservative, is the most reasonable one to make.
As described above, the Agency scaled up the information on the companies owning
NO A facilities to represent the entire universe of companies owning CWT facilities, using
scaling factors developed to scale up facility-level data from the NO A. While the Agency
recognizes that the scaling is based on facility information and that scaling up the company
data may not be entirely accurate, the Agency believes that the companies owning CWT
facilities with data provide the best source of information about the characteristics of the
companies owning CWT facilities without data. After scaling up, the Agency estimates that
the 205 CWT facilities are owned by 164 companies. Table 3-13 also shows the scaled up
number of companies owning CWTs by baseline revenue categories. It is evident from
comparing the scaled up counts in Table 13-3(c) with the unsealed counts hi Table 13-3(b)
that the companies owning NO A facilities, which are scaled up, are generally smaller than
the questionnaire companies, which are not scaled up. Scaling up the company data increases
the estimated number of small companies by 61 percent, from 51 to 82, while scaling up only
increases the estimated number of companies in the largest size category by 31 percent. The
following discussion uses scaled-up company counts.
Potentially affected companies range in size from companies with less than $ 100,000
in revenues to companies with nearly $40 billion in revenues. Eighty-two of 164 companies
analyzed have sales less than $6 million per year. While EPA is concerned about economic
impacts to all companies owning CWT facilities, impacts to these small companies are of
particular concern. Under the Regulatory Flexibility Act, EPA must prepare an initial
regulatory flexibility analysis if a proposal will have a significant impact on a substantial
number of small companies. While the number of small companies affected by the CWT
effluent limitations guidelines and standards is relatively small in absolute terms (EPA
estimates fewer than 70 small companies owning direct and indirect dischargers will be
affected by the rule), impacts on individual companies owning CWT facilities may be
sizeable.
3-33
-------
The two ratios examined in this analysis to determine companies' financial status are
profit margin and return on assets (ROA). They are defined as follows:
Profit Margin =
ROA
Profit/Revenues
Profit/Assets
The profit margin shows what percentage of every sales dollar the firm was able to convert
into net income. This shows how profitable the companies' current operations are. Return
on investment relates net income to total assets, measuring how profitably a firm has used its
assets. Generally, profit data are available for many of the companies owning CWT
facilities, but asset data are not available for the NOA facilities. Thus, the ROA more
accurately reflects baseline company financial performance for the companies owning
questionnaire CWT facilities.
Table 3-14 shows the baseline financial condition of companies owning CWT
facilities. At baseline, companies owning CWT facilities are generally profitable. However,
a total of 14 companies are unprofitable at baseline, and they include companies in all size
categories except the largest one. Overall profitability appears highest for the smallest and
largest companies; the median profit margin for small companies is 18 percent, and the
largest size category of companies has a median baseline profit margin of approximately
10 percent. For companies ranging in size from $20 million to $500 million, baseline median
profit margins are in the 3 percent range.
3-34
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3-35
-------
Median return on assets (ROA) is highest for the largest size category, approximately
18 percent. Like profit margin, the ROA varies across size categories, but in this case, the
three smallest size categories, which cover companies up to $50 million hi sales, have median
ROAs in the 10 percent range. Among companies with sales ranging from $50 to
$500 million, the baseline ROA is only 3.5 percent.
3.2 BASELINE ENVIRONMENTAL IMPACTS OF THE CWT INDUSTRY
This section focuses on the specific pollutants that originate from CWT facility
effluents and the waterbodies affected by these pollutants. We characterize these pollutants
and the affected streams reaches.
3.2.1 Pollutants Discharged
Over 100 hazardous chemical compounds have been detected hi the discharges from
the 119 modeled CWT facilities. These compounds include inorganic compounds such as
arsenic, chromium, and lead, as well as organic compounds such as benzene and toluene.
Table 3-15 lists each of the 128 detected chemicals and provides information about their
toxicity. Four of the chemicals are known to be human carcinogens and another 17 are
considered probable or possible carcinogens. Almost half of the chemicals are considered
systemic toxicants for humans. That is, evidence shows that above certain thresholds of
exposure they have the potential to damage human health, including neurological,
immunological, circulatory, or respiratory effects. These exposure thresholds are represented
by the reference dose (RfD) values reported hi Table 3-15. Section 9.4.2.3 provides more
details on the human health effects of these chemicals.
3-36
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3-44
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In addition to human health effects, a majority of the 128 chemicals are considered
hazardous to aquatic life. To protect aquatic species from potentially lethal chronic and acute
exposures, EPA has established pollutant-specific water quality criteria. As reported in
Table 3-15, these are expressed as maximum allowable in-stream concentrations. EPA has
established similar criteria for the protection human health, which are also reported in
Table 3-15.
3.2.2 Affected Streams and Reaches
To analyze water quality impacts, waterbodies have been broken down into discrete
geographical segments known as a "reaches." A river network is typically made up of
several branches of rivers and streams that come together at various confluence points. In
such a network, reaches are defined as the river or stream segments lying between each of
these confluence points. For wider bodies of water, a reach is defined as a section of
shoreline (EPA, 1994c). Reaches in the U.S. average approximately 10 miles in length. This
study has modeled water quality for the reaches affected by pollutants originating from CWT
effluents. When data were insufficient for the receiving stream, water quality was modeled
for the closest downstream reach with available data.
Table 3-16 provides general characteristics of the affected stream segments, or
reaches. The affected reaches are located throughout the country, primarily in urban areas
(78 of the 83 reaches). The largest concentrations are found in the northeastern, midwestern,
and southeastern regions of the U.S. The majority of the reaches are affected by dischargers
in the oils subcategory (55 reaches), followed by the metals subcategory (38 reaches) and the
organics subcategory (20 reaches). The sum of the affected reaches in each of these
subcategories may be greater than the total number of affected reaches because some reaches
receive discharges from more than one subcategory; therefore, they may be included in more
than one of the subcategory totals.
3-45
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TABLE 3-16. CHARACTERISTICS OF REACHES RECEIVING DISCHARGES
FROM CWT FACILITIES
Reaches Affected
by Direct
Dischargers
Number of Reaches3
Metals subcategory
Oils subcategory
Organics subcategory
Location
Northeast
Southeast
Upper Midwest
Lower Midwest
Northwest
Southwest
Other
Reaches in Urban Areas
Fish Consumption
Advisories
10
7
2
3
5
1
2
2
0
0
0
9
2
Reaches Affected
by Indirect
Dischargers
73
31
53
17
18
14
20
8
5
7
1
69
20
Total Affected
Reaches
83
38
55
20
23
15
22
10
5
7
1
78
22
Some reaches receive discharges from more than one subcategory; therefore, the total number of reaches may
be less than the total of the subcategories.
Table 3-16 also provides one indicator of the current level of water quality in these
reaches. Twenty-two of the reaches are on rivers that currently have fish consumption
advisories in place. These advisories are largely due to pollutants such as dioxin,
polychlorinated biphenyl (PCBs), and various pesticides, none of which are in the scope of
the proposed regulation. Consequently, reductions in CWT pollutants cannot be anticipated
to change these advisories. Nevertheless, these advisories do provide an important indication
of the quality and level of use of the reaches.
3-46
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3.3 REFERENCES
U.S. Environmental Protection Agency. Toxics Release Inventory database, 1991-1995.
U. S. Environmental Protection Agency. 1995. "Appendix A: 1991 Waste Treatment
Industry Questionnaire, Part 2. Economic and Financial Information." Economic
Impact Analysis of Proposed Effluent Limitations Guidelines and Standards for the
Centralized Waste Treatment Industry.
U.S. Environmental Protection Agency, Office of Water, Office of Wetlands, Oceans, and
Watersheds. 1994c. "EPA Reach File 3.0 Alpha Release (RF-3 Alpha) Technical
Reference."
3-47
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SECTION 4
DESCRIPTION OF THE CWT EFFLUENT LIMITATIONS
GUIDELINES AND STANDARDS AND
COMPLIANCE COST ANALYSIS
EPA is proposing effluent limitations guidelines and standards to limit the discharge
of pollutants into navigable waters of the United States by new and existing facilities that
receive industrial waste from off-site for treatment or recovery. The Agency is proposing
controls both for facilities that discharge pollutants directly into surface water and for
facilities that discharge pollutants indirectly by sending them via the sewer system to a
POTW. This section describes the control options examined by the Agency for each
subcategory of the CWT industry and the combined regulatory option the Agency is
proposing.
4.1 CONTROLS FOR EACH SUBCATEGORY OF THE CWT INDUSTRY
For the CWT industry, the Agency is proposing effluent limitations guidelines and
standards for direct dischargers based on Best Practicable Control Technology Currently
Available (BPT), Best Conventional Pollutant Control Technology (BCT), Best Available
Technology Economically Achievable (BAT), and New Source Performance Standards
(NSPS) based on the best available control technology that can be demonstrated. For indirect
discharging CWT facilities, EPA is proposing Pretreatment Standards for Existing Sources
(PSES), and Pretreatment Standards for New Sources (PSNS). These technologies are
described below.1
'These descriptions are based on the descriptions of the technology basis for the CWT effluent limitations
guidelines and standards as contained in the preamble to the proposed rule.
4-1
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The Agency has identified three subcategories within the CWT industry, which are
defined in terms of the type of waste received for treatment or recovery. After a thorough
examination of the industry, EPA determined that the type of waste accepted for treatment or
recovery was the only factor of primary significance for subcategorization and that it
encompassed many of the other subcategorization factors (e.g., type of treatment processes
used, nature of wastewater generated). EPA's proposed subcategories are as follows:
• metals subcategory: facilities that treat, recover, or treat and recover metal from
metal-bearing waste, wastewater, or used material received from off-site
• oils subcategory: facilities that treat, recover, or treat and recover oil from oily
waste, wastewater, or used material received from off-site
• organics subcategory: facilities that treat, recover, or treat and recover organics,
from other organic waste, wastewater, or used material received from off-site
In the course of selecting the control technologies to establish as BPT, the Agency
evaluated a number of control options for each subcategory of the CWT industry. The
following section describes the control options examined for each subcategory. Note that in
numbering the control options, higher numbers do not necessarily imply greater stringency.
4.1.1 Metals Subcategory
The Agency examined the following three control options to reduce the discharge of
pollutants from the metals subcategory of the CWT industry (facilities that treat, recover, or
treat and recover metal from metal-bearing waste, wastewater, or used material received from
off-site):2
Option 2: selective metals precipitation, liquid-solid separation, secondary
precipitation, and liquid-solid separation
''Note that the numbering does not indicate the stringency of the limitations. To maintain a logical cross-
reference with the previous public and confidential rulemaking records, EPA did not sequentially renumber
the options currently under consideration.
4-2
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Option 3: selective metals precipitation, liquid-solid separation, secondary
precipitation, liquid-solid separation, tertiary precipitation, and clarification
Option 4: batch precipitation, liquid-solid separation, secondary precipitation,
and sand filtration
The Agency is proposing Option 4 as BPT.
For metal-bearing waste that includes concentrated cyanide streams, cyanide
destruction is assumed to take place prior to metals treatment. For this subset of the metals
subcategory, the Agency evaluated three alternative control technologies:
« Cyanide Option 1: alkaline chlorination
• Cyanide Option 2: alkaline chlorination at specific operating conditions
• Cyanide Option 3: confidential cyanide destruction
EPA is proposing Cyanide Option 2, alkaline chlorination at specific operating conditions,
for this subset.
4.1.2 Oils Subcategory
The Agency examined the following four control options to reduce the discharge of
pollutants from the oils subcategory of the CWT industry:
. • Option 8: dissolved air flotation (DAF)
• Option 8v: air stripping with emissions control and DAF
• Option 9: secondary gravity separation and DAF
• Option 9v: air stripping with emissions control, secondary gravity separation, and
DAF
EPA is proposing BPT, BCT, PSNS, NSPS, and BAT controls based on Option 9 for direct
discharging facilities in the oils subcategory and PSES controls based on Option 8 for
4-3
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indirect discharging facilities in the oils subcategory. EPA is proposing Option 8 for indirect
dischargers because it is less costly than Option 9 and would result in fewer adverse
economic impacts.
4.1.3 Organics Subcategory
The Agency examined the following two control options to reduce the discharge of
pollutants from the organics subcategory of the CWT industry:
• Option 3: equalization, air stripping with air emissions control, and biological
treatment
• Option 4: equalization and biological treatment
EPA is proposing controls based on Option 4 for the organics subcategory.
4.2 COSTS OF CONTROLS
Based on the information received by EPA from the technical questionnaire, a
detailed monitoring questionnaire, and site visits, the Agency has estimated the costs of
complying with each control options. The costs of complying with a control option are
assumed to affect the cost of treating waste in a single subcategory. (For example, the costs
of complying with Metals Option 4 are assumed to affect metals recovery and metals
treatment operations only.)
In estimating the costs of implementing the proposed control options, the Agency
made the conservative assumption that each facility would incur the full costs of installing all
the technology upon which the proposed limits are based, unless that facility already had
these controls in place. This assumption may lead to an overstatement of costs, because
facilities have other potential ways of achieving compliance, and some of these may be less
costly for particular facilities. Because the Agency cannot anticipate which facilities will
choose to use different approaches (such as pollution prevention or off-site transfer), facilities
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that currently do not have adequate treatment in place are assumed to incur the costs of
purchasing, installing, and operating those controls.
Costs of compliance fall into five broad categories:
» costs of capital equipment required, including installation costs;
• annual O&M costs, including costs of additional labor, energy, and materials;
• costs of additional land required, if any;
• costs of modifying the facility's RCRA permit, if any; and
• costs of monitoring controls and recordkeeping.'
The O&M and monitoring compliance costs associated with a control option are ongoing
costs that will vary with the level of throughput at the facility and will therefore increase the
facility's variable costs of operating each process. The capital, land, and RCRA-modification
costs are one-time, lump-sum expenditures. These costs are annualized over the expected life
of the capital equipment (to represent the annual cost of financing the lump sum cost). The
total annual after-tax treatment costs for a given control option are computed by summing the
annual O&M and monitoring compliance costs and the annualized capital, land, and RCRA-
modification costs, after accounting for the tax savings associated with the costs.
Section 4.2.1 describes the computation of the after-tax annualized costs.
4.2.1 Computing the Annualized Cost of Compliance
EPA employs a cost annualization model to compute the annualized cost of the
capital and other lump-sum costs of the regulation. The cost annualization model
incorporates several financial assumptions, including the type of depreciation schedule the
facility will use, the tuning of the initial investment and the start of operation for the newly
installed controls, and tax savings afforded the firm under federal and state tax laws. These
assumptions are examined in greater detail below.
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4.2.1.1 Purpose of Cost Annualization
The capital costs associated with the regulation are one-time expenses. However, the
lump-sum expenditures are too large for most CWT facilities to finance out of current
revenues. They will probably be paid for by equity or debt financing. The Agency employs
a cost annualization model that estimates the annual cost associated with incurring these
lump-sum expenses.
4.2.1.2 Depreciation and Taxes
Depreciation is the allocation of an asset's cost over a period of time longer than one
year. The cost annualization model uses a modified accelerated cost recovery system
(MACRS) of depreciation. This system of depreciation assumes a 150 percent double-
declining balance method through 8 years, with straight line thereafter, and a 1-year period
between construction and start-up. MACRS offers companies an advantage by allowing
them the ability to write off greater portions of an investment in early years, when the time
value of money is greater.
A business cannot begin to depreciate a capital investment before it goes into
operation. Approximately 1 year would be required to build and install most of the
equipment considered in the regulatory package. Thus, the cost annualization model assumes
a 1-year delay from the initial capital expenditure to operation. In addition, the indirect
discharging facilities have 3 years to begin complying with the regulation. The depreciable
life of the equipment is 20 years.
In the cost annualization model, the MACRS is used to calculate the portion of the
capital costs that can be written off or depreciated each year. Tax laws permit companies to
deduct capital depreciation as an expense and also to deduct annual costs from revenues prior
to computing the tax they owe. To compute a company's after-tax annualized costs, the
model calculates the present value of these expenses, discounted based on each company's
individual real weighted average cost of capital (WACC).
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Estimating the Firm's WACC. The Agency requested firms' WACC in the 1991
Waste Treatment Industry Questionnaire. For firms providing this information, the
questionnaire value was used. For most of the firms owning NOA facilities, little or no
company financial information is available. For these firms, the Agency assumes a WACC
of 7 percent.
For firms with adequate data that did not provide this information on the
questionnaire, EPA estimated the weighted average cost of equity and (after-tax) debt based
on the following formula:
WACC = Wd(l -t) • Kd +We • Ke
where
WACC = weighted average cost of capital,
Wd = weighting factor on debt,
t = marginal effective state and federal corporate tax rate,
Kd = cost of debt or interest rate
We = weighting factor on equity, and
Ke = cost (required rate of return) on equity.
This formula implicitly assumes that investments in pollution control equipment are similar
in risk to other projects and that the method of financing for control equipment is similar to
other investments by the company.
To estimate the WACC, values for Kd and Ke were estimated. Marginal costs of
capital, not historical average costs are appropriate hurdle rates for new investments (Bowlin
et al., 1990); however, data are available only for historical costs. EPA estimates the cost of
debt for companies owning CWT facilities based on the average bond yields reported by
Standard and Poors (S&P) (1993). Assuming that companies owning CWT facilities are in
average financial condition at baseline, the Agency used yields for corporate bonds rated
BBB and adjusted the cost of debt downward to reflect tax savings because debt interest is
deductible.
4-7
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To estimate the cost of equity capital, the Agency used the Capital Asset Pricing
Model, which can be expressed:
where
Ke
Rf
— Rf) =
Ke = Rf+p(Rm-Rf)
cost of equity capital,
risk free rate of return,
beta, a measure of the relative risk of the equity asset, and
the market risk premium.
For the risk-free rate of return, EPA used the average rate of return on long-term treasury
bonds, 7.52 percent (U.S. Department of Commerce, 1991). EPA assumed the risk premium
is 6 percent, its average historical value (Ibbotson and Associates, 1993) and used the average
beta value for companies with bonds rated BBB to B, 1.41 percent. Weighting factors were
estimated based on actual capital structure for the firms, reflecting an assumption that the
firms' actual capital structure approximates then- optimal capital structure.
Estimating the After-Tax Annualized Costs of Controls. EPA used the reported or
estimated WACC to compute the present value of the tax shield that results from these
expenses, including the deductions allowed on depreciation and the noncapital costs, as
described above. EPA then subtracted the present value of the tax shield from the present
value of the 20-year stream of lump-sum and annual compliance costs. Finally, the resulting
present value was annualized over 20 years, also at the individual company's reported or
estimated WACC.
This annualized after-tax cost is the facility's estimated additional treatment cost per
year required to comply with the control option, which is in turn used to compute the increase
in its per-gallon cost of treatment, which in turn shifts the market supply of CWT services
upward. Because indirect discharging facilities are given extra tune to comply with the
regulation, their present value cost of compliance is effectively lower. (Because of the time
value of money, future expenditures are worth less than present expenditures.)
4-8
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4.2.2 Costs for Facilities with Both Commercial and Noncommercial Operations
Some CWT facilities treat waste that was generated by a production process at
another facility owned by the same company. Because they do not receive payment from
outside the company, they are referred to as noncommercial facilities. Noncommercial CWT
operations are regarded by owner-companies as cost centers, providing a service to the entire
company (similar to a centralized accounting or personnel department). In some cases,
facilities that treat waste from within the company also provide this service to outside
customers on a commercial basis. Only the commercial share of the facility's CWT flows are
part of the market for CWT services. For facilities that perform both commercial and
noncommercial CWT, compliance costs were modified to assign a share of the costs
proportional to the share of the operation that is commercial. For example, if 90 percent of
the waste treated at a given facility were noncommercial and 10 percent were commercial,
only 10 percent of their compliance costs would be included in the market model, because
only 10 percent of their CWT waste is accepted through a marketed transaction. The other
90 percent are assumed to be absorbed by the noncommercial operations as a cost of doing
business, which is borne by the company as a whole. On the 1991 Waste Treatment Industry
Questionnaire, EPA requested the quantities of waste accepted from off-site generators under
the same ownership and the quantities from of-site facilities not under the same ownership.
These data were used to compute the commercial share of CWT operations. Eighteen
facilities indicated that their CWT operations were at least in part noncommercial. All of the
oil recovery facilities identified through the NOA were assumed to be entirely commercial.
4.2.3 Compliance Costs Associated with RCRA Permit Modification
In addition to the costs of purchasing, installing, operating, maintaining, and
monitoring pollution control equipment, some facilities will incur additional costs associated
with modifying their RCRA permit. These facilities, which are permitted under RCRA to
store, treat, recycle, or dispose of hazardous waste, must modify their RCRA permit to reflect
the new pollution control equipment and operations at the facility that result from the CWT
regulation. These costs, which are one-time costs, were estimated based on questionnaire
4-9
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responses and were annualized as described above. EPA estimates that 76 CWT facilities
will incur the costs of modifying their RCRA permits as part of complying with the proposed
regulation.
4.2.4 Compliance Costs for the Control Options
Tables 4-1 through 4-4 show the total compliance costs for each control option for
each subcategory. These include, as described above, the costs of purchasing, installing,
operating, maintaining, and monitoring new control equipment, as well as costs for
modifying RCRA permits (for facilities permitted under RCRA).
Table 4-1 shows the costs that would be incurred by CWT facilities in the metals
subcategory to comply with the control options EPA considered for that subcategory. The
first column of the costs shows the lump-sum capital and land costs under each control
option. These costs are sufficiently large that CWT facilities would generally not be able to
meet them without borrowing or selling stock. It is clear from comparing the three options
that Option 4 requires substantially less investment in capital and land than Options 2 and 3.
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TABLE 4-1. COMPLIANCE COSTS FOR THE METALS SUBCATEGORY
(106 $1997)
Costs
BPT/BAT Costs
Option 2
Option 3
Option 4
PSES Costs
Option 2
Option 3
Option 4
Total Costs
Option 2
Options
Option 4
Total Capital and
Land Costs
13.0
14.3
3.2
24.3
28.0
8.0
37.3
42.3
11.2
Total Annualized Costs
Before Tax Savings
13.7
14.2
2.8
27.5
29.0
7.9
41.2
43.2
10.8 •
Total After-Tax
Annualized Costs
8.28
8.60
1.72
j
14.7
15.5
4.23
23.0
24.1
6.0
Thus, companies owning CWT facilities would incur lower capital availability requirements
under Option 4. The second column of costs shows the total annualized costs of the
regulation, not accounting for tax savings of the facilities. This column includes annualized
capital and land costs, plus annual O&M and monitoring costs; it approximates the cost of
the regulation to society. Again, for both direct and indirect dischargers, the costs of
Option 4 are much lower than the costs of Options 2 and 3. The third column of costs shows
the total annualized costs after accounting for tax savings for deductions and depreciation.
Once again, the costs of Option 4 are by far the lowest of the three control options. CWT
facilities that discharge metal pollutants directly to surface water would face increased annual
after-tax costs of $1.7 million under Option 4, while their costs would exceed $8 million
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TABLE 4-2. COMPLIANCE COSTS FOR THE OILS SUBCATEGORY (106 $1997)'
Costs
BPT/BAT Costs
Option 8
Option 9
PSES Costs
Option 8
Option 9
Total Costs
Options
Option 9
Total Capital and Total Annualized Costs
Land Costs Before Tax Savings
0.94
0.94
18.5
43.8
19.5
44.8
0.48
0.48
13.2
18.9
13.7
19.4
Total After-Tax
Annualized Costs
0.31
0.31
7.35
10.7
7.7
11.0
1 Costs are scaled up to reflect the estimated universe of oils facilities.
TABLE 4-3. COMPLIANCE COSTS FOR THE ORGANICS SUBCATEGORY
(106 $1997)"
Costs
BPT/BAT Costs
Options
Option 4
PSES Costs
Option 3
Option 4
Total Costs
Option 3
Option 4
Total Capital and Total Annualized Costs Total After-Tax
Land Costs Before Tax Savings Annualized Costs
0.60
0.08
13.7
11.2
14.3
11.3
0.41
0.22
3.70
2.88
4.11
3.10
0.26
0.14
2.12
1.66
2.38
1.80
Costs are scaled up to reflect the estimated universe of oils facilities.
4-12
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TABLE 4-4. RCRA PERMIT MODIFICATION COSTS (106 $1997)a
Costs
BPT/BAT Costs
PSES Costs
Total Costs
Total Lump-
Sum Costs
0.34
' 2.56
2.90
Total Annualized Costs
Before Tax Savings
0.04
0.26
0.30
Total After-Tax
Annualized Costs
0.03
0.17
0.20
a Costs are scaled up to reflect the estimated universe of CWT facilities.
under both Options 2 and 3. Indirect dischargers would incur costs of approximately
$4.2 million under Option 4, while their costs would exceed $14 million under Option 2 and
$15 million under Option 3.
Table 4-2 shows the costs that would be incurred by CWT facilities discharging
wastes from oils treatment or recovery to comply with the control options considered by
EPA. Once again, the first column shows the lump-sum capital and land costs associated
with the control options, the second column shows the annualized costs of the control
options, before accounting for tax savings afforded the CWTs, and the third column shows
the after-tax annualized costs of complying with the control options. For direct dischargers,
the costs of Options 8 and 9 are estimated to be the same. For indirect dischargers, both the
lump-sum capital and land costs and the annualized costs of Option 8 are less than Option 9.
The Agency is proposing Option 9 for direct discharging oils facilities, because those
controls are believed to be more effective in removing pollutants from facilities' wastewater
discharges. For indirect discharging oils facilities, the Agency is proposing Option 8,
because its costs are lower and it is estimated to be more economically achievable.
Costs estimated to be incurred by CWT facilities in the organics subcategory to
comply with the control options under consideration are shown in Table 4-3. Again, the first
column shows the lump-sum capital and land costs, the second column the total annualized
costs before tax savings are accounted for, and the third column the costs of compliance after
accounting for tax savings. Option 4 costs are less than Option 3 costs for both direct and
4-13
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indirect dischargers, whether one considers lump-sum capital and land costs or annualized
costs.
As described above, approximately 37 percent of CWT facilities are permitted under
RCRA to store, treat, recycle, or dispose of hazardous waste. Because they would be
required to install capital equipment at then- facility to comply with the control options, and
because they might change the operation of RCRA permitted units as a result of the control
options, such facilities would be required to modify their RCRA permits to comply with the
CWT control options. In the 1991 Waste Treatment Industry Questionnaire, EPA requested
information on permit modifications obtained by questionnaire facilities. Based on the
responses, EPA has estimated the costs that would be incurred by RCRA-permitted facilities
to obtain the needed RCRA permit modifications. The permit modifications are one-time
costs, but they are substantial enough that EPA has assumed they would be financed, rather
than paid for out of current revenues. The first column of Table 4-4 reflects the lump-sum
permit modification costs. The second column shows the annualized value of the costs,
before accounting for tax savings. The third column shows the annualized RCRA permit
modification costs, after accounting for tax savings.
Commercial CWT facilities incurring these costs will respond by changing their
production behavior. This will change market quantities and, in interaction with market
demand, market prices. The changed market quantities and prices for CWT services will in
turn change the revenues and production behavior of all market CWT facilities, including
those that do not incur compliance costs (because they are zero dischargers or because their
treatment already complies with the standards set in the regulation). Such facilities will
experience higher revenues with no change in their costs, so their profits will increase. The
following sections describe the methodologies used to assess the impacts of these costs on
commercial CWT facilities and on companies owning CWT facilities, including both
commercial or noncommercial CWT facilities.
4-14
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4.2.5 Compliance Costs of Combined Regulatory Option
Many of the facilities in the CWT industry have operations in more than one
subcategory. Therefore, the overall impact of the regulation on such facilities can only be
properly assessed by summing the costs they incur in each of the subcategories. Similarly,
the Agency evaluates the total cost of the proposed rule on the industry by combining the
costs of the proposed control option for each subcategory to create a combined regulatory
option. Table 4-5 shows the total compliance costs of the combined regulatory option
proposed by the Agency. As described above, the combined regulatory option comprises
Metals 4, Oils 9, and Organics 4 for direct discharging CWT facilities and Metals 4, Oils 8,
and Organics 4 for indirect discharging CWT facilities. RCRA permit modification costs are
included as appropriate.
TABLE 4-5. COSTS OF COMPLYING WITH THE COMBINED REGULATORY
OPTION (103 $1997)"
Total Lump- Total Annualized Costs Total After-Tax
Costs Sum Costs Before Tax Savings Annualized Costs'1
BPT/BAT Costs
PSES Costs
Total Costs
4.56
40.5
45.1
3.56
24.3
27.9
2.20
13.4
15.6
a Costs are scaled up to reflect the estimated universe of CWT facilities.
b Costs include the cost of modifying RCRA permits where appropriate.
For the CWT industry as a whole, EPA estimates that the total lump-sum costs, which
include one-time capital, land, and RCRA permit modification costs, would be approximately
$45 million. Annualized costs to the industry, after accounting for tax savings afforded CWT
facilities due to depreciation and cost deducibility, are estimated to be approximately
$15.6 million. While both the lump-sum costs and the annualized costs are relatively low in
absolute terms, for some CWT facilities, the costs could be substantial relative to baseline
revenues for their CWT operations. The Agency has therefore conducted a thorough
4-15
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examination of the potential economic impacts and benefits of the regulation. The following
sections describe the methodology used for these analyses and the results of the analyses.
4.3 REFERENCES
Bowlin, Oswald D., John D.Martin, and David F.Scott. 1990. Financial Analysis. Second
Edition. McGraw Hill Publishing Co. p. 229-236.
Ibbotson and Associates. 1993. Stocks, Bonds, Bills and Inflation Yearbook. Chicago, IL:
RG Ibbotson Associates. Chapter 6.
Standard & Poor's. Security Owner's Stock Guide. Vol. 47, No. 1. January 1993.
U.S. Department of Commerce. Survey of Current Business. Vol. 71, No. 9. 1991.
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SECTION 5
ECONOMIC IMPACT ANALYSIS METHODOLOGY
EPA analyzed the economic impacts of the effluent limitations guidelines and
standards by comparing the baseline conditions of CWT facilities, companies, and markets
with conditions projected to exist with the regulation in place. This section describes the
analytical methods used to project the with-regulation conditions and estimate these measures
of economic impact and defines the measures of economic impact.
The effluent limitations guidelines and standards will directly increase the costs and
reduce the pollutant discharges of CWT facilities that discharge directly or indirectly to
surface water. Faced with increased costs resulting from the regulation, companies owning
CWT facilities have two basic choices:
* Comply with the regulation and incur the costs: The CWT facility would adjust
its operations to maximize profits under the new market conditions that result as
all CWT facilities adjust to the regulation.
• Cease CWT operations: The facility might close completely or cease its CWT
operations so that the facility is no longer subject to the guidelines or standards.
Economic reasoning argues that owner companies will choose between these responses based
on an assessment of the benefits and costs of the facility to the company under each choice.
For commercial CWT facilities, the benefits to the company of its CWT operations are the
revenues from the CWT operations. Costs to the company include the payments made to the
factors of production (e.g., labor and materials) plus the opportunity costs of self-owned
resources (e.g., the land and capital equipment). With the regulation in place, these costs will
include the costs of complying with the effluent limitations guidelines and standards. The
company will compare the with-regulation revenues of its CWT operations with the with-
5-1
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regulation costs of its CWT operations and will continue to offer a particular CWT service as
long as its revenues from that operation exceed its costs for that operation.
The Agency also estimated impacts on the markets for CWT services. Because
generators have the option of developing on-site treatment or using pollution prevention
techniques to reduce the quantity of waste they generate and send off-site, some of them may
reduce the amount of waste they send to CWTs when the price of CWT services increases.
In economic terms, this means that the demand for CWT services is not perfectly inelastic
(unresponsive to price). Thus, CWT operators will be unable to pass all the costs of
complying with the regulation along to their customers. The increased costs of CWT
operations resulting from the effluent limitations guidelines and standards are expected to
result in higher prices for commercial CWT services and lower quantities of waste treated at
commercial CWTs.
The owner of a noncommercial CWT accrues benefits other than revenues from the
operation of its facility. Noncommercial CWT operations are typically treated as a "cost
center" by the company, similar to centralized personnel or accounting services. Clearly,
however, companies have chosen to develop the capacity to manage their wastes in a
centralized manner because they perceive the benefits of captive treatment to exceed the
costs. These benefits may include lower expected future liability costs, more control over the
costs and scheduling of treatment, and certainty that treatment capacity exists for their
wastes. Owners of noncommercial CWT facilities are assumed to absorb the increased costs
of CWT operations and to continue treating the same quantity of off-site waste as they were
without the effluent limitations in place. Similarly, the small number of contract CWT
facilities, which accept waste from a limited number of customers, are assumed to continue
treating the same quantity of waste as before and to pass along the entire costs of complying
with the regulation to their customers.
As described in Section 3, four CWT facilities were identified as being either strictly
noncommercial (receiving waste only from other off-site facilities owned by the same
company) or contract noncommercial (accepting waste on a contract basis from a limited set
5-2
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of facilities owned by other companies). These facilities treat off-site waste at cost as a
service to the generating facilities and do not change the quantity of waste they treat in
response to market forces. The impact of the proposed effluent limitations guidelines and
standards on these facilities was measured by examining changes in company profits
resulting from the effluent limitations guidelines and standards, assuming that the company
absorbs all the costs of compliance (so that the company's costs increase while their revenues
are unchanged).
In addition to the strictly commercial and noncommercial facilities, there are a few
facilities that accept waste on both a commercial and a noncommercial basis. These facilities
are believed to be basically noncommercial facilities that have some unused treatment
capacity on-site. Rather than let the capacity sit idle, these facilities choose to accept some
waste from unrelated generators. The Agency's analysis of these facilities combined the
approaches used for the commercial and noncommercial facilities. EPA included their
commercial quantity treated in the market analysis and allocated the cost of complying with
the regulation proportionally to the commercial and noncommercial quantities treated. The
company is assumed to require a somewhat higher price of treatment to continue accepting
the commercial share of the waste, but it is assumed to absorb the cost of compliance fully
for their noncommercial share of waste treated.
5.1 OVERVIEW OF ANALYTIC METHODOLOGY
Depending on the commercial status of the facilities, the Agency employed different
methods to estimate the economic impacts of the proposed effluent limitations guidelines and
standards on the CWT industry. The impacts on commercial CWTs were estimated using a
mathematical model that integrated facility and market responses for each geographical
region. Impacts on noncommercial and contract CWTs were estimated by looking at changes
in the profitability of the company owning the CWT. Impacts on companies owning CWTs
were estimated using the measures described in Section 3.1.6. The rest of this section
describes the approach used to estimate impacts on commercial CWT facilities and CWT
markets.
5-3
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The Agency employed an integrated facility-market economic impact model to
project the impact of the effluent limitations guidelines and standards on commercial CWTs.
As described in Section 3, the markets for CWT services are regional. This market
characterization is based on responses to the 1991 Waste Treatment Industry Questionnaire
and is consistent with the theory of economic geography, which predicts that markets for
goods that are heavy or difficult to transport will tend to be local (Hoover, 1975). Separate
economic impact analysis models were developed for each of six CWT market regions,
which were assumed to be independent of one another.
These models combine baseline characterizations of the CWT facilities (e.g.,
quantities treated in each CWT-operation, costs and revenues of each CWT operation,
employment) with characterizations of the market structure for each CWT market and
estimated costs of compliance. Using a mathematical simulation of facilities'
decisionmaking and market interactions, EPA estimated the changes in quantities treated in
each CWT operation in response to the facilities' compliance costs. Aggregating across
facilities in each market, the model estimates changes in market supply, changes in market
price and quantity, and changes in consumer and producer surplus. An iterative solution
algorithm seeks a set of prices and quantities at which all markets and all facilities are in
equilibrium.
The model projects equilibrium changes in market prices and quantities and facility
quantities accepted at individual CWT treatment or recovery operations. Changes in the
quantity of CWT services offered would result hi changes hi the quantity of inputs used to
produce these services (most importantly, labor). Thus, the Agency projects changes in
employment at CWT facilities. These changes in employment result in impacts in the
communities where CWT facilities are located, as the local labor markets adjust to changes in
CWT demand for labor. Changes in CWT revenues and costs result in changes in revenues
and costs of the companies owning the CWT facilities and, thus, changes in their profits.
Estimation of company impacts is discussed in Section 6. Section 5.2 describes in greater
detail the methods used to estimate market and facility impacts of the effluent limitations
guidelines and standards.
5-4
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5.2 MODELING MARKET AND FACILITY IMPACTS
As described above, impacts of the effluent limitations guidelines and standards on
affected markets and facilities were-estimated using an integrated mathematical simulation
model that estimates the responses of markets and facilities to the costs of complying with
the regulation. The model integrates market and facility responses so that the estimated
changes in facility quantity, market quantity, and market price are consistent. The models
used are "comparative static" models. Comparative static models start with the baseline state
of the facilities and markets, and by simulating the responses of facilities to their increased
costs and the interactions of the facilities in the markets, they project the with-regulation state
of the facilities and markets. No attempt was made to simulate the adjustment path from the
baseline to the with-regulation state realistically. Similarly, no attempt was made to project
other changes that might affect CWT markets and facilities between now and when the
regulation is promulgated. Thus, the analysis strictly focuses on changes in CWT facilities,
markets, and companies as a result of the regulation. Strictly speaking, it is a "with and
without" regulation analysis, not a "before and after regulation" analysis. The mathematical
workings of the model are described in greater detail in Appendix D.
5.2.1 Defining the Markets for CWT Services
Each regional economic impact estimation model includes markets for up to ten
specific types of CWT service. In general, five broad types of CWT service are offered:
metals recovery, metals treatment, oils recovery, oils treatment, and organics treatment.
Within several broad categories, the cost per gallon of waste treated varies widely. This is
believed to reflect differences in the characteristics of the waste being treated, which requires
somewhat different treatments methods. Thus, within those broad types of treatment or
recovery, the CWT services offered are further broken down to reflect differences in cost of
treatment. The twelve possible types of CWT services within each regional market,
delineated based on type of waste and cost of treatment, are
metals recovery—low-cost,
5-5
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• metals recovery—medium-cost,
• metals recovery—high-cost,
« metals treatment—low-cost,
• metals treatment—medium-cost,
• metals treatment—high-cost,
• oils recovery—low-cost,
• oils recovery—medium-cost,
• oils recovery—high-cost,
• oils treatment,
• organics treatment—low-cost, and
• organics treatment—high-cost.
The actual number of markets for specific types of CWT services within each CWT region
ranges from seven to ten. Market structures are defined as either monopolistic (one CWT
facility offering the service in the region), duopolistic (two CWTs offering the service within
the region), or perfectly competitive (three or more CWTs offering the service within the
region). EPA developed market models that simulated facility and market behavior in
response to the effluent limitations guidelines and standards.
These models, illustrated in Figure 5-1, estimate a facility's quantity of waste
accepted for treatment given the market price and the facility's costs of treatment.
Aggregating across all the facilities in a market yields the market quantity of CWT services
supplied at the market price. The interaction of market supply and demand may result in
price changes, which may, in turn, prompt further facility quantity adjustments. For
example, if at a given price the quantity of waste CWTs are willing to treat is less than the
quantity of waste generators want to send off-site for treatment, CWTs will find that they can
charge higher prices for their services. As the price of the CWT service increases, some
5-6
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generators reduce the quantity they send off-site, and some CWTs are willing to increase the
quantity of waste they accept. Equilibrium is achieved when all the markets and facilities are
simultaneously satisfied with quantity and price. Sections 5.2.2 and 5.2.3 describe the
Agency's model of baseline conditions at market CWT operations and the Agency's model
of facility adjustments in their CWT operations hi response to the costs of complying with
the effluent limitations guidelines and standards.
5.2.2 Modeling Facility Baseline Conditions
In general, costs of production may be either fixed or variable, unavoidable or
avoidable. Fixed costs include all costs that do not vary with the quantity produced.
Variable costs include all costs that do vary with quantity treated. Fixed costs include many
types of overhead costs and debt service costs. Variable costs include costs of most inputs
5-7
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Baseline
Conditions
Compliance
Costs
Facility-Level
Model
Market
Model
Demand
Conditions
Prices
Figure 5-1. Integrated Facility-Market Economic Model
(e.g., labor, materials, energy), which vary as the quantity treated varies. The individual
CWT processes at each facility were assumed to be characterized by constant average
variable costs (AVC). Average variable cost is defined as the variable cost per unit of
output—in this case, the per-gallon costs of treatment or recovery. That is, facility per-gallon
costs of treatment or recovery in each operation were assumed to be constant up to the
facility's capacity in each treatment or recovery operation. Graphically (see Figure 5-2a), the
AVC curve is shaped like a backward "L." It is horizontal up to capacity, at which quantity it
becomes vertical. Although EPA believes that there is substantial unused capacity in the
CWT industry, this analysis assumes for computational simplicity that, in general, facilities
are operating at or near capacity at baseline. Marginal costs are defined as the additional
costs incurred for an additional unit of output (in this case, the additional costs of treating an
additional gallon of incoming waste). Because the per-gallon variable costs are assumed to
be constant, marginal cost equals average variable cost.
At baseline, facilities maximize then- profits from a CWT operation by treating every
gallon for which the additional revenue received (marginal revenue or MR) exceeds the
marginal cost (MC), and no gallons for which the MC exceeds MR. This point is shown at
5-8
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$/gallon
q*'
MR
AVC = MC
AVC = MC
< capacity
Gallons treated
per year
Figure 5-2a. Effects of Compliance on Imperfectly Competitive Markets
quantity q* in Figure 5-2a. Figure 5-2a shows CWT services in an imperfectly competitive
market. These facilities face downward-sloping demand and MR curves. Treating an
additional gallon of waste requires charging a lower per-gallon price, both for that gallon and
for all the others treated.
In perfectly competitive markets (illustrated in Figure 5-2b), facilities can treat as
much as they wish without affecting the price they receive. In this case, the market price is
the facility's MR. Facilities offer their CWT service as long as the market price exceeds their
costs. In perfectly competitive CWT service markets, facilities are assumed, in general, to
operate at capacity. That is, they cannot increase the amount of waste that they treat in
response to a price increase.
5-9
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P = MR
AVC1 = MC1
AVC = MC
0 =O*
^capacity ^
if P > MC1, facility continues to operate at capacity
AVC1 = MC1
P = MR
AVC = MC
= Q .
^-capacity
if P < MC1, facility shuts down this CWT operation
Figure 5-2b. Effects of Compliance on Competitive Supplier
5-10
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5.2.3 Adjustments in Response to the Variable Costs of Complying with the Effluent
Limitations Guidelines and Standards
Complying with the effluent limitations guidelines and standards will increase the
cost of performing CWT operations. After annualizing the capital costs and accounting for
depreciation and other tax savings, EPA divided the after-tax total annualized cost of controls
for each type of waste treatment (metals, oils, or organics) by the total quantity of wastewater
treated to find the incremental per-gallon cost associated with compliance. This additional
cost of treatment increases the CWT's MC as shown hi Figure 5-2, shifting the MC curve
from MC to MC1. The facilities must now compare this new higher cost of treating each
additional gallon of waste with the additional revenues they will get for treating an additional
gallon (MR for imperfectly competitive facilities, MR=P for competitive ones). CWTs will
continue to treat waste for which MR > MC1. They will not treat any waste for which
MC' > MR. In each CWT market, these adjustments will result in a decrease in supply, as
shown in Figure 5-3.
The interaction of the reduced with-regulation supply, shown by supply curve S2, with
demand for CWT services that declines as price increases results in an increase in the market
price (from Pj to P2) of CWT services and a decline in the quantity (from Q] to Q2) of waste
treated at CWTs, as illustrated in Figure 5-3. As the market prices adjust upward in response
to reductions in the supply of CWT services, facilities continue to evaluate how much off-site
waste to accept for treatment or recovery, which hi turn affects market supply. Equilibrium
is achieved when a set of prices and quantities satisfies both suppliers and demanders.
As noted above, Appendix D provides a detailed description of the mathematical
workings of the model in estimating the facility-specific and market adjustments in response
to the effluent limitations guidelines and standards.
5-11
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S/gallon
D
Gallons treated per year
Figure 5-3. Market Adjustments in Response to the CWT Effluent Limitations
Guidelines and Standards
5.3 MEASURES OF ECONOMIC IMPACTS
The integrated economic impact analysis model simultaneously estimates several
different measures of economic impact. These are changes in market prices and quantities of
CWT services, changes in facility-level quantities, costs, and revenues, closures of individual
CWT operations, closures of CWT facilities, and changes in employment at CWT facilities.
5.3.1 Changes in Market Prices and Quantities
In each of the individual markets for a CWT service, the market model estimates the
change in price and total quantity treated with the regulation in effect. The model
5-12
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simultaneously estimates changes in facility quantity treated and changes in market quantity
treated so that the estimates are consistent.
5.3.2 Facility Impacts
The economic impact model estimates impacts to each CWT operation at each facility
as a result of the costs of complying with the effluent limitation guidelines and standards.
For facilities in competitive CWT markets, the cost increase may result in the closure of a
CWT operation, although the highest-cost operation that does not close with the regulation in
effect may experience some reduction in quantity treated without closing its CWT operation.
For facilities operating in monopoly or duopoly markets, the cost increase may result in a
decrease in the quantity of waste treated at a given facility.
Facilities decide whether to close a CWT operation by comparing the revenues earned
by the operation with the costs incurred. At the with-regulation equilibrium price, facilities
will close a CWT operation if the per-gallon cost of treatment for the operation (including
compliance costs) exceeds the per-gallon revenue received (defined as a process closure). If
all the CWT operations close at a CWT facility, this is defined as a facility closure. Data
from the 1991 Waste Treatment Industry Questionnaire indicated that many CWT facilities
have other, nonregulated activities on-site, including other waste treatment operations and/or
manufacturing operations. These operations are assumed to be unaffected by the regulation.
Although the facility may remain open and may continue these other operations, it is
considered closed for the purposes of the CWT economic impact analysis if all the affected
CWT operations at the facility are projected to close.
It should be noted that some facilities offering their services in CWT markets do not
incur costs due to the regulation. These may be zero dischargers or facilities whose treatment
already achieves the standard set by the regulation. For these facilities, the regulation is
expected to result in increased profits, because the price of their service is rising, but their
costs are unchanged. In Figure 5-3, the lowest cost facility, which treats quantity (^, is such
5-13
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a facility. Its costs are not changed as a result of the regulation, but market price adjusts
upward from P, to P2. Facility profits on this CWT operation are increased by the amount
(Pi - ^2) * QA- Because of the assumption that facilities are operating at or near capacity,
facilities facing increased profitability of CWT operations do not increase the quantity of
waste they accept. If in fact they are operating below capacity, these facilities could
potentially increase not only profitability but also market share, by accepting more waste.
The economic impact model also estimates changes in facility CWT employment
proportional to the change in the quantity of waste accepted for treatment or recovery at the
facility.
53.3 Inputs to the Company-Level Analysis
The economic impact of the regulation on companies owning CWT facilities is
assessed by examining changes in company profitability resulting from the regulation. The
facility-specific changes in revenues and costs resulting from compliance were aggregated to
the parent-company level. These changes, predicted by the market model, serve as inputs
into the analysis of the company-level impacts. Changes in facility revenues and costs result
in changes in parent-company revenues and costs, and thus in parent-company profits. In
addition, the acquisition of new capital equipment and the financing arrangements estimated
to be made for purchasing the new capital equipment result.in changes in parent-company
assets and liabilities. These data were used to estimate the impacts of compliance with the
regulation on the parent companies owning CWT facilities. This analysis is discussed in
Section-6.
5.3.4 Inputs into the Community Impacts Analysis
Communities in which commercial CWT facilities are located may be affected
because of changes hi employment that may occur at these facilities. If facilities decide to
decrease the quantity of waste they accept for treatment or recovery in response to the
regulatory options, the labor needed to run then- CWT operations is assumed to decrease
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proportionally. Thus, the market model estimates market-related changes in employment at
each commercial CWT facility. Overall, CWT employment is projected to decline because
of market adjustments to the regulation.
. In addition to market-related changes in employment, the Agency has estimated
changes in CWT employment required to operate the controls associated with the effluent
limitations guidelines and standards. These changes in employment are combined with the
market-related changes in employment as an input into the analysis of total employment
changes in communities where CWTs are located.
5.4 REFERENCES
Hoover, Edgar M. 1975. An Introduction to Regional Economics. 2nd Ed. New York:
Alfred A. Knopf.
5-15
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SECTION 6
ESTIMATED ECONOMIC IMPACTS OF THE CWT EFFLUENT LIMITATIONS
GUIDELINES AND STANDARDS
This chapter describes the results of the analysis of market, facility, and company
impacts resulting from the Agency's proposed regulatory option:
• Regulatory Option 1: Metals Option 4, Oils Option 8—Indirects, Oils Option
9—Directs, Organics Option 4
6.1 RESULTS OF THE MARKET ANALYSIS
The economic model described in Section 5 estimated the changes in market prices
and changes in quantities of CWT treatment and recovery services provided as a result of
regulation. It also estimated equilibrium revenues, costs, profits, and quantities accepted at
the facility level as a result of complying with EPA's proposed regulatory options.
6.1.1 Market Impacts
The market impacts of the proposed effluent limitations guidelines and standards, if
promulgated, would include changes in market prices and quantities in affected CWT
markets. As discussed above, the facilities, in deciding how to respond to the O&M
compliance costs, modify the amount of CWT services they offer, resulting in a decrease in
market supply in most CWT markets. The market model simultaneously finds the solution
for the with-regulation equilibrium market price and quantity and the with-regulation facility
quantities in each market Table 6-1 shows the percentage changes in prices and quantities
6-1
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TABLE 6-1. MARKET IMPACTS OF BPT/BAT AND PSES CONTROLS
Percentage Percentage Change
Market Change in Price in Quantity
Regulatory Option 1
Metals Recovery — Medium Cost
Metals Recovery — Low Cost
Metals Wastewater Treatment — High Cost
Metals Wastewater Treatment — Medium Cost
Metals Wastewater Treatment — Low Cost
Oils Recovery — High Cost
Oils Recovery — Medium Cost
Oils Recovery — Low Cost
Oils Wastewater Treatment
Organics Wastewater Treatment — High Cost
Organics Wastewater Treatment — Low Cost
21.4%
0.61%
5.79%
1.67%
4.82%
24.8%
3.02%
8.17%
0.42%
11.8%
1.47%
-6.76%
-0.54%
-5.14%
-0.88%
-3.50%
-10.4%
-1.45%
-3.69%
-0.13%
-6.03%
-0.74%
for each of the CWT processes analyzed in the market model. These results reflect national
changes in quantity and the quantity-weighted average price change across the regions. A
price or quantity change in any given region may therefore be lower or higher than reflected
in this table.
Most of the analytical inputs and results shown in this report are.reported separately
for BPT/BAT controls and for PSES controls. For the market impacts, however, this is not
appropriate. Market-level impacts cannot be broken into impacts of BPT/BAT controls and
impacts of PSES controls. Because many regional markets include both facilities that are
direct dischargers and facilities that are indirect dischargers, and because the Agency is
expecting to promulgate both types of controls simultaneously, market impacts must be
analyzed and reported based on the combined effects of the BPT/BAT and PSES controls
analyzed together.
6-2
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Under each broad market category, some regional submarkets are virtually unaffected
by the regulation and others incur significant changes in price and quantity. In all cases, the
market prices of broad types of CWT services are projected to increase and the quantity of
waste treated in CWT processes is projected to fall. Thus, one of the expected features of the
guidelines is a reduction in the absolute quantity of wastes commercially treated, in addition
to an improvement in the level of treatment.
Demanders of CWT services may have, decreased, the quantity of CWT services
demanded either by generating less waste (pollution prevention) or by substituting other
waste management options not affected by this regulation for CWT services. These other
waste management options include on-site waste treatment and off-site waste disposal by
such means as underground injection or incineration. The Agency has assumed that demand
is moderately responsive to changes in price; that is, that a 1 percent change in price results in
a 0.5 percent to 1.5 percent change in quantity demanded.1 If demand in some CWT markets
is less responsive to changes in price than was assumed for this analysis, price increases
would be greater than estimated and quantity decreases would be smaller than estimated.
The converse would be true if demand is more responsive to price than assumed.
6.1.2 Facility Impacts
In addition to the changes in prices and quantities experienced by affected markets for
CWT services, complying with the costs of the control options results in impacts on CWT
facilities. Facilities adjust the quantities of waste accepted for treatment in each treatment
process to maximize their profits with the regulation in effect. At the same time, the cost per
gallon treated and the price received per gallon treated also change. Thus, CWT facilities
experience changes in revenues and costs as a results of the effluent limitations guidelines
and standards. Changes in facility revenues and costs resulting from the market and facility
responses to the effluent limitations guidelines and standards combine to result in changes in
facility profitability. This can be expressed
'See Appendix E for a detailed discussion and sensitivity analysis of demand elasticities in waste treatment
markets.
6-3
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= TR-TC
where
ic = Total Profit
TR = Total Revenue
TC = Total Cost
In some cases, facilities may experience increased profitability for some processes.
This occurs when process revenues increase by more than process costs. Approximately
22 percent of facilities hi the CWT industry are zero dischargers and thus incur no costs as a
result of the regulation. If the zero discharging facilities provide services in markets where
some other CWT facilities incur costs, they are likely to be able to charge higher prices for
their services and thus experience increased profits. In some other cases, facilities experience
cost increases that are smaller than their revenue increases. Their profits will also rise. Other
facilities will incur costs exceeding their increase in revenues and will experience reduced
profitability for some processes. In cases in which projected with-regulation costs per gallon
treated for certain processes are higher than the with-regulation market price, CWT processes
at some facilities may become unprofitable and are projected to close down. Table 6-2 shows
the process closures expected to occur as a result of the regulation, broken down by the
discharge status of the facilities.
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TABLE 6-2. PROCESS CLOSURES AT CWT FACILITIES, BY DISCHARGE
STATUS*
Discharge Status
Direct dischargers
Indirect dischargers
Zero dischargers
Process Closures
1
.15
0
Percentage
4.17%
5.55%
0.0%
a Data are scaled up to account for the entire universe of CWT facilities.
As described above, when the with-regulation cost per gallon treated exceeds the
with-regulation price received per gallon of a given treatment or recovery process, that CWT
treatment or recovery process is projected to close. In cases where this occurs in every
process at a CWT facility, that facility is said to close. (Note: the facility may have other
operations on site, either manufacturing or waste management operations, but if the CWT
operations covered by this regulation are all closed, EPA's economic analysis considers that
CWT facility to have closed.) Table 6-3 shows the facility closures expected to occur as a
result of the regulation, broken down by the discharge status of the facilities.
TABLE 6-3. FACILITY CLOSURES OF CWT FACILITIES, BY DISCHARGE
STATUS"
Discharge Status
Facility Closures
Percentage
Direct dischargers
Indirect dischargers
Zero dischargers
2
13
0
18.2%
8.9%
0.0%
1 Data are scaled up to account for the entire universe of CWT facilities.
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6.1.3 Employment Impacts
Changes in employment evaluated in this analysis result from two effects:
• Changes in the quantity of CWT services produced require changes in the quantity
of labor used.
• Labor is required to operate the controls on which the control options and
combined regulatory options are based.
To estimate the changes in employment at CWT facilities from changes in the
quantity of CWT services, the Agency used data provided in the questionnaire about hours of
full-time and part-time employment associated with CWT operations. These data were used
to compute the number of full-time equivalent employees associated with each gallon treated
at each CWT facility at baseline. The percent change hi facility employment resulting from
market adjustments is equal to the percent change in the quantity of waste treated at each
CWT facility as a result of the regulation. Table 6-4 shows the estimated changes in
employment resulting from market adjustments in the CWT industry (that is, not including
the second effect noted above), by the discharge status of CWT facilities. These employment
losses are further broken down into losses resulting from process closures and losses
resulting from facility closures. There are additional employment losses at facilities
experiencing no process closures. These losses are included in the total.
Several points should be made about these employment impacts. At present, EPA has
only national estimates of the labor requirements to operate the controls (the second effect
noted above). EPA estimates that, to operate the controls, 97 full-tune equivalent employees
would be required nationwide. This represents approximately 29 percent of the estimated job
losses due to market adjustments to the regulation. It is not certain (although it appears
likely) that the skills required to operate the pollution control equipment are the same as
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TABLE 6-4. JOB LOSSES RESULTING FROM MARKET ADJUSTMENTS, BY
DISCHARGE STATUS8
Job Losses Due to
Process Closures
Discharge Status
Direct dischargers
Indirect dischargers
Zero dischargers
Number
<1
43
0
Percentage
<0.01%
1.26%
0.00%
Job Losses Due to
Facility Closures
Number
33
233
0
Percentage
11.0%
6.83%
0.00%
Total
Job Losses
Number
40
298
0
Percentage
13.3%
8.90%
0.0%
a Data are scaled up to account for the entire universe of CWT facilities. Percentages are compared to pre-
compliance employment by. discharge status.
those required to operate the capital equipment the CWT had in place at baseline. Thus,
nearly one-third of the displaced CWT employees could be retained in the industry to operate
the controls. However, the employment gains associated with the controls may not
completely offset the job losses from production decreases at a given plant. For example, if
all the CWT operations at a facility are shut down, no employees would be required to
operate control equipment because it would not be installed. Thus, the fact that complying
with the regulation could require additional CWT employment nationwide may not protect an
individual employee from displacement due to the regulation.
6.1.4 Financial Impacts on Companies Owning CWT Facilities
Costs of compliance for each control option were estimated on a facility level. In
some cases, a parent company owns a single facility, so facility costs equal company costs.
In many cases however, a company owns multiple facilities, each incurring different costs.
Company financial impacts were estimated for the 106 companies (out of a total of 164
companies) for which baseline profit data are available. Facility costs were applied to
companies as follows: for companies owning noncommercial facilities, company costs were
increased by the amount of the estimated compliance costs. For companies owning
commercial CWT facilities, company costs were adjusted to reflect their facilities' market
responses to the regulation. For each company, baseline parent company sales were adjusted
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to take into account changes in total revenue occurring at any of their facilities resulting from
changes in market prices of CWT services. Similarly, baseline parent company net income
was adjusted to allow for any facility-level changes in earnings. Parent company assets were
adjusted to reflect purchases of capital equipment and land to comply with the regulation.
These adjusted company financial variables were then examined to assess the impacts of the
regulation on companies owning CWT facilities.
Profit margin is defined as company net income divided by company revenues.
Table 6-5 shows the number of companies whose profit margins are estimated to decline,
increase, or stay the same as a result of the regulation, grouped by company size. The table
shows that 62 percent of the companies making up the two smallest size groups saw their
profit margins decline. Less than one-third of the companies in the $20 million to
S50 million group had decreased profit margins, while between 50 percent and 60 percent of
companies in the two largest groups saw profit margins decline.
Table 6-6 shows median profit margins of companies prior to regulation and with
regulation, grouped by company size. Four of the five size categories showed slight declines
in median profit margin with only the largest size category showing no change. For
companies with sales of less than $6 million per year, median profit margin decreased from
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TABLE 6-5. CHANGES IN COMPANY PROFIT MARGINS, BY COMPANY SIZE
CATEGORY
Company Revenues
(per year)
Less than $6 million
$6 million to $20 million
$20 million to $50 million
$50 million to $500 million
Over $500 million
Number of
Firms
56
20
7
14
10
Profit
Margin
Increased
20
6
5
6
5
Profit
Margin
Unchanged
2
1
0
0
0
Profit
Margin
Decreased
34
13
2
8
5
TABLE 6-6. ESTIMATED MEDIAN PROFIT MARGIN BY SIZE CATEGORY
Company Revenues
(per year)
Less than $6 million
$6 million to $20 million
$20 million to $50 million
$50 million to $500 million
Over $500 million
Baseline Median
Profit Margin
(%)
30.70%
6.71%
2.08%
1.63%
8.76%
With-Regulation Median
Profit Margin
(%)
29.50%
6.33%
2.05%
1.30%
8.76%
30.70 percent to 29.50 percent. (Note that for this size category, lack of published company
data caused EPA to use facility-level data to represent company data for many companies.
These data may not accurately reflect the financial status of the companies owning the
facilities.)
Return on assets (ROA) is defined as profits divided by total assets. It is a measure of
how profitably the firm is using its capital stock. Table 6-7 shows the number of firms
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projected to experience increased, decreased, and unchanged ROA as a result of the
regulation. Fifty-seven percent of firms for which asset data are available are projected to
experience declines in their ROA due to the regulation, while 37 percent are projected to
experience increases. Three firms, or 6 percent of the firms for which data are available are
projected to experience no change hi their ROA.
Table 6-8 presents median return on assets (ROA) both with and without regulation
for all companies sorted by size. ROA is computed by dividing net income by total assets.
Total assets with regulation include capital expenditures required for compliance. For three
of the five size categories, the median ROA decreased as a result of regulation. The median
ROA for small companies increased from 7.93 percent to 9.64 percent. All other size
categories show very small changes projected in median ROA.
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TABLE 6-7. CHANGES IN COMPANY RETURN ON ASSETS, BY COMPANY
SIZE CATEGORY
Company Revenues
(per year)
Less than $6 million
$6 million to $20 million
$20 million to $50 million
$50 million to $500 million
Over $500 million
Number of
Firms
15
14
4
8
8
ROA
Increased
6
6
2
2
2
ROA
Unchanged
2
1
0
0
0
ROA
Decreased
7
7
2
6
6
TABLE 6-8. CHANGE IN MEDIAN RETURN ON ASSETS
Company Revenues
(per year)
Baseline Median ROA With-Regulation Median ROA
Less than $6 million
$6 million to $20 million
$20 million to $50 million
$50 million to $500 million
Over $500 million
7.93%
10.70%
10.4%
3.22%
11.24%
9.64%
10.10%
10.5%
3.05%
'11.23%
The seemingly illogical result that many companies experience an increase in profit
margin and ROA as a result of regulation can be explained as follows: While the regulation
causes prices to increase for the entire industry, not all companies must bear the higher costs
of complying with the regulation. Facilities that are already in compliance prior to regulation
benefit from higher prices without incurring any additional costs, as do zero-dischargers. For
example, out of 44 companies owning zero-discharging facilities, 31 are projected to
experience increased profits, and the remaining 13 are projected to experience no change in
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profits as a result of the regulation. Thus, a substantial share of the industry is projected to
experience improved financial status as a result of the regulation.
The changes in revenues and profits are based on outputs from the market model
based on the final market price. EPA notes that use of the market price in competitive
markets that use a step supply function may overstate post-compliance revenues, particularly
for those facilities at the bottom of the supply curve. EPA plans to investigate this issue
before issuing the final rule. EPA also notes that (as discussed in the preamble) assigning
facilities to different market structures may overestimate or underestimate impacts in the
market model, which would likewise have an effect on the firm analysis. Finally, EPA notes
that profit margin, as measured hi this analysis, is not the same as total profit. In fact, in the
monopoly market model, profit margin will always go up as costs go up (this is a well-known
result from economic theory) but total profits will always go down because the increased
mark-up is more than offset by the decreased volume of sales. In competitive markets,
profits for low-cost firms may go up, particularly if compliance costs fall more heavily on
their competitors, but total industry profit would be expected to fall. EPA has not analyzed
the effects of the rule on total profits.
6.2 SUMMARY
Complying with the proposed CWT effluent limitations guidelines and standards will
increase the cost of waste treatment and recovery operations at CWT facilities. CWT
facilities incurring costs of compliance will require a higher price to accept waste for
treatment and recovery, thus decreasing the supply of CWT services. Market prices for CWT
treatment and recovery services are estimated to increase, and the quantity of waste sent to
CWTs are estimated to decline. CWTs are projected to close .16 treatment or recovery
processes for which the with-regulation costs exceed the with-regulation price so that they are
unprofitable to operate. Fifteen CWT facilities, at which all CWT processes are projected to
become unprofitable, are estimated to close. Nationwide, employment at CWTs may fall by
approximately 240 full time equivalent employees. Thus, the impacts of the regulation on
some CWT facilities and individual employees are projected to be severe. Overall, however,
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incomes for many CWT facilities and many companies mat own CWTs are estimated to
increase. These facilities and companies either incur no costs or incur low costs of
compliance, and enjoy the benefit of the increased market prices resulting from the
regulation.
This section has examined the direct impacts of the CWT effluent limitations
guidelines and standards on the CWT facilities, employees, and owner companies. The
following section examines indirect impacts of the guidelines and standards, including
impacts on the communities hi which the CWT facilities are located; environmental justice
impacts; and impacts on CWT customers, input suppliers, and inflation.
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SECTION 7
OTHER IMPACTS
In addition to the impacts on CWT facilities and markets described in Section 6,
indirect impacts of the CWT effluent limitations guidelines and standards may be felt by
residents of the communities in which the CWTs are located, certain subsets of the
population, and customers and suppliers of CWTs; the impacts may also affect the overall
level of inflation in the economy. This section examines these impacts. It is important to
note in examining the results presented below that they are not scaled to reflect the universe
.of CWT facilities. EPA chose not to scale these impacts because there is no way of knowing
whether communities having CWT facilities and for which EPA has data resemble
communities having CWTs and for which EPA does not have data.
7.1 COMMUNITY IMPACTS
In response to the effluent limitations guidelines and standards, commercial CWT
facilities are predicted to modify the quantities of waste they treat. This change in production
will be associated with changes in employment. The changes in employment predicted to
occur as a result of the regulation include direct changes and indirect changes. Direct
changes in employment combine changes in employment associated with the labor needed to
comply with the regulation (generally increases in employment) and changes in employment
associated with market adjustments to the regulation (generally decreases in employment).
Indirect changes in employment are experienced elsewhere in the community as a result of
the changed spending of people affected by the direct changes in employment. Because
noncommercial facilities are expected to continue to treat the same quantity of waste as they
treated at baseline, no market-related reductions in employment are expected to occur at
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noncommercial facilities. They may have to hire additional labor to implement controls to
comply with the regulation.
Changes in output and employment at a CWT facility affect not only the welfare of
the individual employees either hired or laid off, but also the communities in which the CWT
facilities are located, because unemployed individuals have less income and spend less in the
community, in addition to perhaps placing additional burdens on community services within
the community. Conversely, newly employed individuals spend some of their income in the
community, which increases the incomes and spending of other community residents. Direct
changes in employment thus results in a multiplied community-wide impact. The U.S.
Department of Commerce, Bureau of Economic Analysis (BEA) (1992) publishes estimates
of direct-effect employment multipliers for each state for broad industry categories. These
multipliers estimate the direct total change in employment resulting from one job gained or
lost in each industry category in each state. These data can be used to estimate the total
community employment impacts resulting from changes in the operations of CWT facilities.
7.1.1 Direct Employment Changes
Direct employment changes resulting from compliance with the proposed effluent
limitations guidelines and standards include facility-specific changes in employment at
commercial CWT facilities that result from their changes in CWT operations as a result of
market adjustments to the proposed regulation. In addition, direct employment effects of the
proposed regulation include the estimated labor requirements of the control. These labor
requirements are estimated on a national basis and are therefore not included in the
community-level analysis. It should be noted, however, that the increased employment
needed to comply with the regulation will in some cases exceed the jobs lost due to market
adjustments. The community impacts are therefore overestimated in the following analysis.
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7.1.1.1 Facility-Specific Changes in Employment Resulting from Market Adjustments
The Agency estimated facility-specific changes in employment as facilities responded
to the costs of complying with the effluent limitations guidelines and standards. As described
in Section 6, the facilities were assumed to adjust employment proportional to the changes in
quantity of waste accepted for treatment or recovery at the facility. These employment
adjustments are in general rather small. Table 7-1 shows a distribution of the changes in
employment associated with market adjustments to the regulation.
TABLE 7-1. CHANGES IN CWT EMPLOYMENT RESULTING FROM MARKET
ADJUSTMENTS AT CWT FACILITIES
Change in Employment
Number of Facilities
BPT/BAT (estimated overall job losses: 40)
No change in employment
Decrease by fewer than 10 j obs
Decrease by more than 10 jobs
PSES (estimated overall job losses: 298)
No change in employment
Decrease by fewer than 10 jobs
Decrease by more than 10 jobs
5
6
1
104
37
6
Note: Data are not scaled to reflect the estimated universe of GWT facilities.
These changes in employment must be compared with the increased employment
estimated to be required to comply with the regulation. Nationwide, 97 additional employees
are estimated to be needed at CWT facilities to operate the control equipment assumed to be
installed to comply with the regulation. At some facilities, the net direct change in
employment may be positive. This change is not beneficial to the CWT facilities, of course,
because they are in a sense being forced by the regulation to make the decision to hire
employees that they otherwise would not have needed. From the point of view of the
employees and the communities, however, this outcome is good. In many cases, the skills
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required to comply with the effluent limitations guidelines and standards are similar to the
skills required to run the basic CWT operations at the facilities. Thus, the employment needs
of the regulation may directly mitigate the job losses due to market adjustments, so many
fewer workers may incur employment disruptions due to the regulation.
7.1.2 Community Employment Impacts
The direct market-related changes in employment at commercial CWT facilities can
be used to estimate changes in total employment in the communities in which the CWT
facilities are located. As noted above, the changed incomes of individuals either hired or laid
off at CWT facilities will result in changes in their spending within the community. This
change, in turn, will result in changes in employment at establishments throughout the
community where the CWT employees transact business. The BEA direct-effect regional
employment multipliers, published for broad industry categories in each state, measure the
change in statewide employment expected to result from a one-job change in employment
(including the initial one job change at the CWT). Table 7-2 provides the direct-effect
regional employment multipliers used to estimate the total change in employment resulting
from the market adjustments to CWT controls. These multipliers range from 2.91 in New
York to 6.55 hi Texas and average 4.05 across all states. Thus, overall each one-job direct
change in employment at a CWT facility results in a statewide change in employment of
between three and six jobs. While some of the indirect employment impacts may not be
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TABLE 7-2. DIRECT-EFFECT REGIONAL MULTIPLIERS FOR STATES IN
WHICH CWT FACILITIES ARE LOCATED
AL
AZ
CA
CO
CT
DE
FL
GA
IA
IL
IN
KS
KY
LA
MA
MD
ME
MI
5.5118
4.3034
5.1316
5.5710
3.2796
3.8990
3.4955
4.0769
3.9978
5.3610
5.3335
5.4007
5.4906
4.9349
3.3633
3.9997
2.8376
3.6638
MN
MO
MS
MT
NC
NJ
NV
NY
OH
PA
RI
SC
TN
TX
VA
WA
WI
WV
3.6915
4.5339
5.4638
4.8590
3.6247
3.8339
3.0610.,
2.9124
5.1695
5.6759
3.2728
3.9489
4.4237
6.5537
4.7204
3.8849
3.4751
5.0514
experienced in the community in which the CWT is located, EPA assumes that all the
indirect impacts are concentrated there.
Table 7-3 is a frequency distribution of the total change in community employment
resulting from the changes in CWT employment reported in Table 7-1. For direct
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TABLE 7-3. CHANGES IN COMMUNITY EMPLOYMENT RESULTING FROM
MARKET ADJUSTMENTS AT CWT FACILITIES
Change in Community Employment
Number of Communities
BPT/BAT
Increase or no change
Decrease of less than 1 FTE
Decrease of 1 to 20 FTEs
Decrease of 20 to 50 FTEs
Decrease by more than 50 FTEs
PSES
Increase or no change
Decrease of less than 1 FTE
Decrease of 1 to 20 FTEs
Decrease of 20 to 50 FTEs
Decrease by more than 50 FTEs
4
1
3
1
1
67
11
11
10
4
Note: Data are not scaled to reflect estimated universe of CWT facilities.
dischargers, changes in employment range from an increase of less than one full-time
equivalent (FTE) employee to a loss of 79 employees. The median change in community
employment resulting from controls on direct discharging facilities is -0.8 FTEs. For indirect
dischargers, changes in community employment range from a loss of 213 FTE employees to
no change in employment. Because so many indirect dischargers experience no change in
employment as a result of the market adjustments, the median change in community
employment resulting from controls on indirect dischargers is zero FTEs.
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7.1.3 Measuring the Significance of the Community Employment Impacts
To assess the severity of these impacts on the affected communities, the Agency
employed the most conservative definition of "affected community":
• It is the municipality in which the CWT facility is located, if its population is
greater than 10,000.
• For CWTs located hi communities with fewer than 10,000 people, the community
is defined as the county in which the CWT is located (U.S. Department of
Commerce, 1994).
The Agency compared the estimated change in community employment with the baseline
community employment, where community is defined as described above.
A severe employment impact is estimated to occur if the change in community
employment exceeded 1 percent of the baseline 1995 community employment. In no
community did the change in employment exceed 1 percent of baseline community
employment; therefore, no significant community impacts are predicted to result from the
proposed effluent limitations guidelines and standards. Table 7-4 presents a frequency
distribution of the percentage changes in community employment projected to result from the
regulation.
Percentage changes in employment range from a loss of 0.29 percent of baseline
employment to a gain of less than 0.001 percent as a result of the controls on direct
discharging facilities. They range from a loss of 0.67 percent of baseline community
employment to no change in community employment as a result of controls on indirect
discharging facilities. The median change in community employment resulting from the
BPT/BAT controls is -0.001 percent of baseline employment in affected communities. The
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TABLE 7-4. COMMUNITY EMPLOYMENT IMPACTS
Percentage Change in Employment
Number of Communities
BPT/BAT
No change or increase
Decrease by less than 0.2 percent
Decrease by 0.2 to 0.3 percent
PSES
No change or increase
Decrease by less than 0.2 percent
Decrease by 0.2 to 0.3 percent
Decrease by 0.3 to 0.9 percent
4
5
1
68
32
1
2
Note: Data are not scaled to reflect estimated universe of CWT facilities.
median change in community employment resulting from PSES controls is 0 percent of
baseline community employment.
7.2 DISTRIBUTIONAL IMPACTS AND ENVIRONMENTAL JUSTICE
Impacts of the CWT effluent limitations guidelines and standards include both
economic impacts such as lost employment and income and environmental impacts such as
cleaner surface water, with attendant reduced risks from drinking and fish consumption.
Environmental justice reflects the concerns that waste management facilities are more likely
to be located in communities of color or low-income communities, which may not have the
resources or political power to affect the siting decisions. If CWT facilities are located in
such communities, both the economic impacts and the benefits of the CWT effluent
limitations guidelines and standards may be disproportionately experienced by non-
Caucasian or low-income communities.
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To examine the distributional impacts and the environmental justice implications of
the regulation, the Agency examined both the community employment impacts and the
benefits of the regulation to see if communities with higher proportions of non-Caucasian or
low-income residents incurred disproportionately high employment impacts or experienced a
greater or smaller than proportional share of the benefits. EPA made the conservative
assumption that all the employment impacts are experienced in the immediate community
where the CWT is located. Thus, distributional impacts of the regulation were evaluated by
examining the ethnic and income characteristics of the communities' populations.
7.2.1 Baseline Characterization of Communities in which CWT Facilities are Located
This section characterizes communities in which CWT facilities are located by
examining two specific population characteristics: the share of the population that is non-
Caucasian and the share of the population with incomes falling below the poverty line. To
determine if communities in which CWT facilities are located pose potential environmental
justice issues, the Agency compared the non-Caucasian and poverty proportions of the
community populations with those of the states in which the communities are located. This
comparison helps account for differing demographic patterns in different regions of the
country.
7.2.1.1 Non-Caucasian Population
For the United States as a whole, non-Caucasian groups make up 16.8 percent of the
population. For communities in which CWTs are located, the non-Caucasian population
share ranges from less than 1 percent to nearly 90 percent, with a median of 25.7 percent.
Approximately 25 percent of CWT communities have populations that are more than 40
percent non-Caucasian. Table 7-5 shows a frequency distribution of the percentage of the
communities' populations that is non-Caucasian. Figure 7-1 compares CWT community
non-Caucasian population share to state non-Caucasian population share. As the figure
shows, more than 60 percent of the CWT communities have non-Caucasian population shares
exceeding that of the state in which they are located by more than five percentage points.
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This indicates that inadequately controlled releases from CWT facilities pose a significant
environmental justice concern. Thus, the Agency examined the changes in pollutant releases
and risks in communities with large proportions of people of color in their populations to
ensure that the CWT regulation is sufficiently protective of these populations. For this
analysis, environmental benefits and economic impacts on 1) communities with populations
of people of color that exceed 30 percent of the total population and 2) communities for
which the community's non-Caucasian population share exceeds state non-Caucasian
population share by more than 5 percentage points were examined to determine if the
projected economic impacts or benefits fall disproportionately on communities of color.
7.2.1.2 Percent of Population with Incomes Below the Poverty Level
Of equal concern to the Agency is the concern that impacts may fall
disproportionately on relatively low-income communities. .To analyze this problem, the
Agency examined the share of the population falling below the poverty level of income. For
the United States as a whole, approximately 13 percent of the population falls below poverty.
For CWT communities, the share of the population with incomes below poverty ranges from
2.5 percent to nearly 35 percent, with a median of 15.8 percent. Approximately 25 percent of
the communities have 20 percent or more of their residents with incomes below poverty.
Table 7-6 shows a frequency distribution of the percentage of communities' populations with
incomes below poverty. The Agency compared CWT communities'poverty share of the
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TABLE 7-5. FREQUENCY DISTRIBUTION: PERCENT NON-CAUCASIAN
POPULATION IN CWT COMMUNITIES
Percent Non-Caucasian
Population
Less than 10 percent
10 to 20 percent
20 to 30 percent
30 to 50 percent
50 percent and above
Total
Number of Communities
32
17
35
39
23
146
Percent of Communities
2 1,9
11.6
24.0
26.7
15.8
100.0
Note: Data are not scaled to reflect estimated universe of CWT facilities. Two communities are omitted due to
lack of data.
Source: U.S. Department of Commerce, Bureau of the Census. County and City Data Book, 1994.
Washington, DC: U.S. Government Printing Office, 1994.
population to those of the states in which they are located to account for regional differences
in income levels.
Figure 7-2 illustrates this comparison. Approximately 37 percent of communities
have poverty population shares significantly (five percentage points or more) higher than
those of the states in which they are located. Only about 10 percent of communities have
significantly lower poverty population shares than the states in which they are located. For
the majority of communities (approximately 53 percent), the community poverty population
share is similar to that for the state in which it is located. For this analysis, the Agency
examined impacts on communities with more than 18 percent of the population below
poverty to determine whether economic impacts or environmental benefits fall
disproportionately on relatively low-income communities.
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Within 5
Percentage Points
19.2%
Less Than
By >5 Percentage1
Points
20.5%
State By
>5 Percentage
Points
60.3%
Figure 7-1. Non-Caucasian Share of Community Population Compared to State
TABLE 7-6. FREQUENCY DISTRIBUTION OF PERCENT OF POPULATION
FALLING BELOW POVERTY
Percent Below Poverty Number of Communities Percent of Communities
Less than 7 percent
7 to 13 percent
13 to 20 percent
20 to 30 percent
30 percent and above
Total
19
33
56
31
7
146
13.0
22.6
38.4
21.2
4.8
100.0
Note: Data are not scaled to reflect the estimated universe of CWT facilities. Two communities are omitted
due to lack of data.
Source: U.S. Department of Commerce, Bureau of the Census. County and City Data Book, 1994.
Washington, DC: U.S. Government Printing Office, 1994.
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Figure 7-2. Poverty Share of Community Population Compared to State
7.2.2 Distributional Impacts of the CWT Effluent Limitations Guidelines and
Standards
EPA examined employment impacts felt by communities to ensure that communities
of color and relatively low income communities are not incurring disproportionately high
impacts. Of the 42 communities experiencing more than one FTE job loss, 30 are
communities that have relatively high non-Caucasian populations, and 26 are communities
with a relatively large share of their populations below the poverty level. Thus, there is some
reason for concern about the equity of the impacts on communities in which CWT facilities
are located. However, the largest percentage change in employment for any community is
0.51 percent. Because the changes in community employment are so small, EPA does not
believe that significant adverse employment impacts will occur in communities of color or in
communities with a relatively large share of poor residents.
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7.23 Environmental Justice Implications of the CWT Effluent Limitations Guidelines
and Standards
To assess the environmental justice implications of the CWT regulation, EPA
examined the benefits experienced by communities adjacent to the surface water bodies into
which CWT facilities directly or indirectly discharge their wastewater. These communities
are largely, but not entirely, the same as the communities in which the CWT facilities are
located. EPA assumed that all the benefits of the regulation are experienced by residents of
the counties adjacent to the stream reaches and other surface water that are projected to be
less polluted due to the regulation. Again, communities are of concern for environmental
justice if their population
• is more than 30 percent non-Caucasian,
• has a non-Caucasian share that exceeds the state's non-Caucasian share by 5
percentage points,
• has more than 18 percent of the population with income below the poverty level,
or
* has a poverty share that exceeds the state's poverty share by 5 percentage points.
EPA identified 81 counties bordering stream reaches or other surface water affected by CWT
direct or indirect discharges. Of the 81 counties, EPA identified 32 that may be of concern
because of relatively high non-Caucasian or poor populations. Seventeen (roughly 40.5
percent) of the 32 counties for which environmental justice is a potential concern are
estimated to experience benefits. This is approximately the same share of all counties (42 out
of 81, or 39.5 percent) for which benefits were quantified. Thus, the CWT effluent
limitations guidelines and standards are projected to improve environmental justice by
reducing exposure to pollutants hi 17 counties that have relatively high non-Caucasian or
poor populations.
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7.3 INDIRECT IMPACTS ON CUSTOMERS AND SUPPLIERS
Indirect impacts on customers and suppliers occur because the facilities adjust both
their prices and their purchases of inputs in response to the regulation. In general, the
Agency does not expect these indirect impacts of the CWT effluent limitations guidelines and
standards to be large, although specific customers and/or suppliers may incur significant
impacts.
The total costs incurred by waste generators to purchase CWT services (total CWT
costs) are equivalent to the CWT revenues earned by commercial CWT facilities plus the
operating costs of noncommercial CWT facilities. This amount, which is estimated to be
$664.0 million, represents a very small share of the total costs of manufacturing industries.
Appendix B lists quantities of waste sent off-site for treatment or recovery in 1995, according
to the Toxics Release Inventory, by SIC code. These industries represent most of the
customers of CWTs. To estimate the share of these SIC codes' costs represented by
centralized waste treatment, the Agency used the following formula:
(Total CWT costs)/(Value of shipments for SICs 20-39)
The value of shipments for all manufacturing industries in 1996 (adjusted to 1997 dollars) is
$3,732 billion. This formula may overstate the cost share of CWT services in total industrial
costs, because it uses only manufacturing costs as its base. Nevertheless, it is extremely
small, less than 0.001 percent. This small cost share suggests that increases in CWT prices
will not result in significant changes in the operating costs of manufacturing industries or in
the prices of goods and services whose production generates the demand for CWT services.
It should be noted, however, that while the costs of CWT services are a small share of
manufacturing costs overall, the increased price of CWT services resulting from the
regulation may result hi significant impacts for individual waste generators or individual
input suppliers. It is not possible for the Agency to isolate these individual impacts.
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Because the CWT industry is relatively small, changes in its demand for inputs is not
expected to have a significant impact on input prices. The inputs to the production of CWT
services include labor, chemicals, and energy. Impacts on labor are discussed above. The
chemicals used by CWTs in treatment or recovery operations are also used in many chemical
manufacturing activities. In general, CWTs represent a small share of the demand for these
chemicals. Thus, the CWT regulation is not expected to result in significant impacts on
suppliers of these chemicals. Likewise, CWTs' demand for energy is a small share of
industrial demand for most utilities. Thus, the CWT regulation is not expected to have a
significant impact on energy suppliers.
7.4 IMPACTS ON INFLATION
The Agency does not expect the CWT effluent limitations guidelines and standards to
result in significant impacts on inflation. The prices of CWT services are expected to
increase, in some cases substantially. This increase in CWT prices increases the cost of
production for generators demanding CWT services. This, in turn, may cause them to
increase their prices. However, because the cost of CWT services is generally a small share
of the total cost of production for most manufacturing industries, as discussed in the
preceding section, the Agency does not anticipate significant increases in the prices of
manufactured commodities whose production results in the generation of the wastes managed
at CWT facilities. Thus, no overall inflationary pressure is expected to result from the
regulation.
7.5 REFERENCES
U.S. Department of Commerce, Economics and Statistics Administration, Bureau of the
Census. 1994. City and County Data Book, 1994. Washington, DC: U.S.
Government Printing Office.
U.S. Department of Commerce, Economics and Statistics Administration, Bureau of the
Census. 1997. Statistical Abstract of the United States. Washington, DC: U.S.
Government Printing Office.
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U.S. Department of Commerce, Economics and Statistics Administration, Bureau of
Economic Analysis. May 1992. Regional Multipliers: A User Handbook for the
Regional Input-Output Modeling System (RIMS II).
U.S. Department of Labor, Bureau of Labor Statistics. Producer Price Index-Commodities.
Series ID: WPUOOOOOOOO, All Commodities. . Data extracted on September 11,1998.
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SECTION 8
INITIAL REGULATORY FLEXIBILITY ANALYSIS
This section considers-the-effects that the proposed effluent limitations guidelines and
pretreatment standards may have on small businesses in the CWT industry.
8.1 THE REGULATORY FLEXIBILITY ACT (RFA) AS AMENDED BY THE
SMALL BUSINESS REGULATORY ENFORCEMENT FAIRNESS ACT
(SBREFA)
The purpose of the Regulatory Flexibility Act (RFA) is to establish as a principle of
regulation that agencies should tailor regulatory and informational requirements to the size of
entities, consistent with the objectives of a particular regulation and applicable statutes. The
RFA provides that whenever an agency is required to publish a general notice of rulemaking
for a proposed rule, the agency generally must prepare (and make available for public
comment) an initial regulatory flexibility analysis (IRFA). This analysis or a summary of the
analysis must be published in the Federal register at the tune of publication of a proposal.
The requirement to prepare an IRFA does not apply to a proposed rule if the head of the
agency certifies that the proposal will not, if promulgated, have a significant impact on a
substantial number of small entities. If, based on an initial assessment, a proposed regulation
is likely to have a significant economic impact on a substantial number of small entities, the
RFA requires an IRFA. This analysis includes a justification for the regulation, a description
of the affected entities, and a discussion of regulatory alternatives. This chapter presents that
analysis.
In addition to the preparation of an analysis, the RFA, as amended by the Small
Business Regulatory Enforcement Fairness Act (SBREFA), imposes certain responsibilities
on EPA when it proposes rules that may have a significant impact on a substantial number of
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small entities. These include requirements to consult with representatives of small entities
about the proposed rule. The statute requires that, where EPA has prepared an initial RFA,
EPA must convene a Small Business Advocacy Review (SBAR) panel for the proposed rule
to seek the advice and recommendations of small entities concerning the proposal. The panel
is composed of employees from EPA, the Office of Information and Regulatory Affairs
within the Office of Management and Budget, and the Office of Advocacy of the Small
Business Administration. (SBA).
The RFA defines a "small entity" as a small non-for-profit organization, small
governmental jurisdiction, or small business. Small government entities are defined in the
RFA as those jurisdictions with fewer than 50,000 people. In general, the SBA, for specific
industries, sets size standards to define small businesses by number of employees or amount
of revenues. These size standards vary by SIC code. Over 70 percent of the CWTs
responding to the Waste Industry Questionnaire indicated an SIC code of 4953, "Refuse
Systems" (see Table 3-4). For this SIC code, SBA defines a small business as one receiving
less than $6 million/year, averaged over the most recent three fiscal years (SBA, 1996).
8.2 INITIAL ASSESSMENT
During development of this proposal, EPA undertook a preliminary assessment to
determine the economic effect of the options being considered for proposal on small CWT
companies. Based on this initial evaluation, EPA concluded that, if EPA adopted limitations
and standards based on some of the options being considered for proposal, the impact on
some small CWT companies might be significant. As discussed below, this would be
particularly true with respect to CWT facilities that treated oily waste. Most of the small
businesses potentially affected by the proposal would be found in this subcategory. While
the total number of small businesses engaged in CWT operations was not large—EPA
currently estimates that nationally, there are 63 small businesses that own discharging CWT
facilities—the potential costs for seventy-one percent of these companies would exceed
3 percent of their revenue (without adjusting for any potential for the CWTs to pass through
increased costs of operations to their customers).
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Given that EPA's assessment showed several of the proposed options would have
economic effects described above, EPA decided to prepare an IRFA. In addition, in
November 1997, EPA convened a SBAR Panel for this proposed rule to collect the advice
and recommendation of small entity representatives (SERs) of CWT businesses that would
be affected by the proposal.
8.3 THE INITIAL REGULATORY FLEXIBILITY ANALYSIS
The IRFA must include a discussion of the reason the agency is considering the
proposed rule, as well as the objectives and legal basis for the proposal. It must also include
a description and estimate of the number of small businesses that will be affected. It must
describe the reporting, recordkeeping, and other compliance requirements of the proposed
rule and must identify any federal rules that may duplicate, overlap, or conflict with the
proposed rule. Finally, the IRFA must describe any significant regulatory alternatives to the
rule which would accomplish the stated objectives of the applicable statutes and which
minimize any significant impacts on small businesses (EPA, 1997).
8.3.1 Reason EPA is Considering the Proposed Rule
A detailed discussion of the reason for the proposed rule is presented in Section I.X of
the preamble and EPA's development document supporting the rule (EPA, 1998a). A brief
summary may also be found hi Section 9.1.2.
8.3.2 Objectives and Legal Basis for the Proposed Rule
A detailed discussion of the objectives and legal basis for the proposed rule is
presented in Sections I and II of the preamble to the proposed rule and Chapter 1 of EPA's
development document supporting the rule (EPA, 1998a).
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8.3.3 Description and Estimation of Number of Small Entities to Which the
Regulation Will Apply
To analyze the impacts of the proposed rule on small companies, EPA compiled data
on the companies owning CWT facilities. The company data come from a variety of sources
(see Section 2). These include the 1991 Waste Treatment Industry Questionnaire and public
comments on the 1995 proposal and the Notice of Data Availability. EPA obtained other
financial data were collected from publicly available sources. Questionnaire responses,
generally referring to 1989 company financial conditions, have been adjusted to 1997 dollars.
Data from other sources were collected for 1995 and adjusted to 1997 dollars. During the
years since these data were collected, there may have been considerable change in the
ownership of facilities and the financial status of companies. In fact, EPA has information
that, due to consolidations in the CWT industry, some of the CWT businesses counted as
small businesses (based on 1989 or 1995 data) in this analysis are no longer small because
they now have higher revenues or have been purchased by larger companies. Reported
impacts on small CWT businesses may therefore be overstated. However, these data
represent the most complete information available for the industry and are consistent with the
facility engineering and economic characterization used in the analysis.
There are no nonprofit organizations or small governmental operations that operate
CWT facilities. This analysis therefore focuses only on small businesses. For SIC code
4953, Refuse Systems, small business concerns are those companies receiving less than
$6 million in annual sales. Based on this criterion, there are 82 companies operating CWT
facilities that would be classified as small entities. Sixty-three of these companies own
discharging CWTs that are potentially subject to the proposed limitations and standards.
8.3.4 Description of the Proposed Reporting, Recordkeeping, and Other Compliance
Requirements
The proposed rule does not contain any specific requirements for monitoring,
recordkeeping, or reporting. Regulations for the existing NPDES and national pretreatment
programs already contain minimum requirements, although control authorities establish the
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monitoring regime for individual facilities (see also Section 8.3.6). (Since there are no new
monitoring, recordkeeping, or reporting requirements for this rule, there are no professional
skills necessary to meet any new requirements.)
8.3.5 Identification of Relevant Federal Rules that May Duplicate, Overlap, or
Conflict with the Proposed Rule
All direct CWT dischargers must already comply with regulations associated with
wastewater permits, and all indirect dischargers are regulated by local limits and pretreatment
provisions. However, the SBREFA Small Business Advocacy Review Panel did not identify
any federal rules that duplicate or interfere with the requirements of the proposed rule (EPA,
1998a).
8.3.6 Significant Regulatory Alternatives
EPA considered a number of measures to mitigate the effect of the proposal on small
businesses.
(a.) Relief from monitoring requirements. EPA did, in estimating the costs and
impacts of the proposal, assume a monitoring regime. Monitoring costs make up a
substantial portion of compliance costs. The proposed limitations and standards would not
include any specific monitoring requirements for CWTs. therefore, establishment of specific
monitoring requirements for CWTs owned by small businesses is not an alternative to the
proposed rule. EPA's NPDES and pretreatment program regulations require monitoring by
both direct and indirect dischargers to demonstrate compliance with discharge limitations and
pretreatment standards with the frequency of monitoring established on a case-by-case basis
dependent on the nature and effect of the discharge but in no case less than once a year.
Consequently, local permitting authorities, under these regulations, have considerable
discretion in determining the frequency of monitoring and are free to establish more frequent
monitoring than specified by EPA. Because a significant portion of the costs of complying
with CWT limitations and standards is related to monitoring costs, EPA examined
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approaches to reduce these costs. EPA considered two options. The first is the use of an
indicator parameter as a surrogate for regulated organic pollutants. Instead of being required
to monitor for a series of organic pollutants, the discharger would only need to measure the
one, indicator parameter. The second option is for EPA to develop guidance for distribution
to permitting authorities that would recommend a reduced monitoring regime for small
businesses. This second option could also be combined with the first. A reduced monitoring
option is analyzed in Section 8.4.
(b.) Other regulatory relief for oily waste treaters. The bulk of small CWT
businesses are indirectly discharging oily waste (used oil) treatment companies. Among the
relief measures the Agency considered are the following:
• Whether the scope of the proposal should be limited to CWT facilities other than
small businesses. Whether the scope of the proposal should be confined to
facilities treating oily waste flows greater than 3.5 million gallon per year (or 7
million gallons per year). These options are analyzed as specific regulatory
options in Section 8.4.
• Pretreatment standards for oily waste treaters based on a less costly treatment
option (emulsion breaking and secondary gravity separation) than dissolved air
flotation. This treatment option is discussed with the other technology options
considered for the oils subcategory as the basis for today's proposal in Section
DCB.ii of the preamble.
• Development of a streamlined procedure for obtaining a variance from categorical
pretreatment standards through group applications. The CWA authorizes EPA to
grant a variance from categorical pretreatment standards for facilities that, under
specific circumstances, establish that their facility is "fundamentally different"
with respect to the factors considered hi establishing the categorical standard.
EPA discusses this relief option in Section XTV.C. of the preamble.
(c.) New source performance standards for metal-bearing waste treaters. EPA's
assessment of the technology chosen as the basis for proposed new source performance
standards (NSPS) and pretreatment standards for new sources (PSNS) was based on an
analysis for existing sources and may not accurately reflect the costs and effluent reductions
for that option for new sources. However, the analysis for existing sources indicates that the
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proposed NSPS option has higher costs with relatively low effluent reductions compared to
the proposed BAT option. EPA has therefore examined the flexibility under the CWA to
propose a less stringent option for new sources. This concern is addressed in Section XI.H of
the preamble.
In addition to examining these targeted options, EPA considered three general
options that would mitigate the impacts of the regulation on small entities. First, EPA
proposed regulatory options that were in the form of effluent limitations guidelines and
standards, not specific requirements for design, equipment, work practice, or operational
standards. This option would reduce impacts on all facilities regardless of size by allowing
operators to choose the least costly mix of process changes and new control equipment that
would meet the limitations. Second, the Agency considered less stringent control options for
each of the treatment subcategories than were originally proposed in 1995. Third, EPA
selected a technology basis for pretreatment standards for the oils subcategory which
generally provides less stringent standards than the technology basis for the proposed BAT
limitations.
8.4 IMPACTS ON SMALL BUSINESSES
This section examines the projected impacts of the proposed CWT effluent limitations
guidelines and standards on small businesses using the methods described in Section 5. First,
the impacts of the combined regulatory option are discussed. Then, EPA discusses the
estimated impacts under some of the various regulatory alternatives described in Section
8.3.6.
The CWT industry is composed of an estimated 164 businesses (as discussed hi
Section 3, this number is scaled up to reflect to total universe of CWT companies). Small
companies make up more than half of all companies in the CWT industry (an estimated 82 of
164). All of these small companies, except for one, operate single CWT facilities. One
company in the analysis operates two facilities. Sixty-three small companies own
discharging facilities (61 own indirect dischargers and 2 own direct dischargers). Fifty-nine
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of these small companies are in the oil treatment/recovery business. The number of
employees at each of these companies ranges from 2 to 94, with a median of 12.
8.4.1 Estimated Small Business Impacts of the Combined Regulatory Option
Estimated 1997 revenues for the 82 small companies that own CWTs (including zero
dischargers) ranged from about $22,000 to $5,400,000, with a median value of approximately
$2 million. Under EPA's analysis, forty-five of the 63 small companies that own discharging
facilities would incur costs exceeding 1 percent of sales, and 25 out of 63 would incur costs
exceeding 3 percent of sales.
Because the cost-to-sales comparison does not take into account many factors (such
as the ability of CWTs to pass costs along to their customers or that post-compliance
revenues may increase for some CWTs), the cost-to-sales comparison is a crude measure of
impacts on small businesses. EPA therefore examined these impacts using the other methods
described in Section 5 for examining impacts on facilities and firms.
Out of 56 small companies for which the Agency has reliable data on baseline profits,
42 own indirect discharging facilities and two own direct dischargers. Of the small
companies owning indirect dischargers, 32 are projected to experience decreased profit
margins and 10 are projected to have increased profit margins as a result of the regulation.
As noted in Section 6, changes in median profit margin indicate that some small companies
would benefit significantly from the regulation. The median profit margin for companies
with sales of less than $6 million would increase by over 33 percent as a result of the
regulation. Overall, small companies are estimated to fare better than either medium or large
companies. The median profit margins for medium-sized companies increase by a smaller
amount, while large companies will have decreased median profit margins.
Median return on assets (ROA) is estimated to increase by almost 19 percent for
small companies as a result of the regulation. Of the 15 small companies with asset data, 12
own indirect dischargers and three own zero discharging facilities. Seven of the small
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companies owning indirect dischargers experience decreases in their ROA, three experience
increases in their ROA, and two experiences no change in then- ROA.
This analysis indicates that eight small companies would close their CWT operations
as a result of the combined regulatory option. These closures are estimated to result in the
loss of 162 jobs.
8.4.2 Impacts of the Small Business Relief Regulatory Options
As noted in Section 8.3.6, as a regulatory alternative, EPA considered not including
small businesses within the scope of the proposal. EPA examined several bases for a
limitation such as the volume of wastewater flow, employment, or annual revenues. The
objective was to minimize the impacts on small businesses consistent with achieving CWA
objectives. EPA is defining small CWT businesses according to the SBA size definition of
$6 million in annual revenue but considered others that would be easier to implement in
practice because EPA assumed that a firm-level revenue definition might be difficult to
implement. EPA examined the correlation between these criteria and the size definition to
target relief to small businesses.
Because most CWTs have similar numbers of employees regardless of their size, EPA
first eliminated employment as a basis for establishing a small business limitation. While
EPA also found no correlation between annual volume of wastewater and the size of a
facility, EPA retained this criteria due to the anticipated ease in implementing a limitation
based on this criteria. If a limitation based on volume of wastewater is ultimately selected,
however, the limitation would place both small and large businesses outside the scope of the
proposal. EPA evaluated the economic impacts of the regulatory options suggested to
provide relief to small businesses during the SBREFA panel discussions. The analyzed
options were all based on the combined regulatory option with costs reduced for some
facilities the regulation limited to some facilities. Five relief scenarios were examined:
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• Scenario 1: Assume less frequent monitoring requirements on indirect discharging
CWT facilities owned by small businesses.
• Scenario 2: Limit the proposed rule to all indirect discharging facilities that accept
hazardous waster or indirect discharging facilities that accept only nonhazardous
waste and that have flows more than 3.5 million gallons per year.
• Scenario 3: Limit the proposed rule to all indirect discharging facilities having
flows more than 3.5 million gallons per year.
• Scenario 4: Limit the proposed rule to all indirect discharging facilities that
accept hazardous waster or indirect discharging facilities that accept only
nonhazardous waste and that have flows more than 7.5 million gallons per year.
• Scenario 5: Limit the proposed rule to all CWT facilities not owned by small
businesses.
Of the five regulatory scenarios considered to provide relief to small companies, only two,
Scenarios 1 and 5, directly target CWT facilities owned by small companies. The other three
scenarios target CWT facilities that are small in terms of their annual flow of CWT
wastewater discharged. These low flow facilities may or may not be owned by small
companies. The results of these analyses are summarized below. Table 8-1 shows the
number of small businesses incurring costs that exceed 1 percent and 3 percent of company
sales. For comparison, the screening analysis for the combined regulatory option with no
limitations or cost reductions is also presented.
Small businesses would incur no costs at all under Scenario 5 because the regulation
would not include them. Under all the other regulatory scenarios, fewer small businesses
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TABLE 8-1. COMPLIANCE COST-TO-SALES SCREENING ANALYSIS FOR
REGULATORY SCENARIOS DESIGNED TO PROVIDE RELIEF TO
SMALL COMPANIES
Regulatory Scenario
Small Companies with Costs
Exceeding 1 Percent of Sales
Companies Companies
Owning Direct Owning Indirect
Dischargers Dischargers
Small Companies with Sales
Exceeding 3 .Percent of Sales
Companies Companies
Owning Direct Owning Indirect
Dischargers Dischargers
Combined regulatory option
with Oils 8
Combined regulatory option
with Oils 9
1. Reduced monitoring for
small companies
2. Limit to all hazardous
and nonhazardous >3.5
mg/y
3. Limit to >3.5 mg/y
4. Limit to all hazardous
and nonhazardous >7.5
mg/y
'5. Limit to not small
companies
2
2
2
2
43
52
32
27
22
22
2
2
2
2
23
33
14
18
14
18
Note: The results have been scaled to reflect the estimated universe of CWT facilities. Results are
unadjusted for cost pass-through or postcompliance changes in revenue.
would incur significant costs compared to the combined regulatory option. Under both
Scenarios 1 and 3, the number of small businesses incurring costs greater than 3 percent of
sales is reduced from 25 to 16.
The Agency also estimated the number of potential facility closures and process
closures for small businesses. The results of these analyses are summarized in Table 8-2. All
of the scenarios developed to reduce the burden on small businesses result in somewhat lower
impacts than the combined regulatory option. Scenario 5, which includes no small
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TABLE 8-2. IMPACTS ON FACILITIES OWNED BY SMALL BUSINESSES
Process Closures at Facilities Owned
by Small Businesses
Direct Indirect
Discharging Discharging
Regulatory Scenario Facilities Facilities
Combined regulatory option 0 5
with Oils 8
Combined regulatory option 0 8
with Oils 9
1. Reduced monitoring for 0 5
small companies
2. Limit to all hazardous 0 5
and nonhazardous >3.5
mg/y
3. Limit to >3.5 mg/y 0 2
4. Limit to all hazardous 0 5
and nonhazardous >7.5
mg/y
5. Limit to not small 0 0
companies
Closures of Facilities Owned
by Small Businesses
Direct Indirect
Discharging Discharging
Facilities Facilities
0 7
0 8
0 4
0 3
0 0
0 3
0 . 0
Note: The results have been scaled to reflect the estimated universe of CWT facilities.
businesses, has the greatest effect in reducing the impacts on facilities owned by small
businesses. Reduced monitoring for facilities owned by small businesses reduces impacts on
those facilities and processes only slightly. The third regulatory scenario, which limits the
regulation to facilities with flows greater than 3.5 million gallons per year, also reduces
impacts significantly.
EPA and other industry representatives believe, however, that the predicted outcomes
of any of the potential limitations and the nature of the CWT business, in general, do not
support the need for a limitation. CWT facilities are in the business of treating wastes from
other facilities. As such, they provide an alternative to on-site treatment of industrial wastes.
EPA believes that the absence of categorical standards for CWTs has been a major
"loophole" in a national program to control industrial pollution, allowing wastes to be treated
off-site less effectively than would be required of the same wastes if treated on-site. In fact,
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as noted in Section X of the preamble, in general, performance at CWT facilities is uniformly
poor when compared to on-site treatment at categorical facilities.
One of EPA's primary concerns with any of the limitations is that they represent one
snapshot of a rapidly changing industry. If a segment of the industry is not subject to
national regulation, these companies might quickly expand leading to much greater
discharges within a few years than predicted by existing data—with environmentally
deleterious consequences. In addition, EPA believes that most CWT facilities have
substantial amounts of unused capacity. Because this industry is extremely competitive, by
limiting the scope of the CWT rule, EPA could actually be encouraging ineffective treatment
while discouraging effective treatment.
In summary, hi an effort to provide limitations to mitigate small business impacts and
still preserve the benefits of the rule, EPA considered a variety of potential limitations but
found no single, effective solution to incorporate into the proposal.
8.5 REFERENCES
Small Business Administration. 1998. "Size Standards Used to Define Small Business
Concerns." 13 CFR Part 121. Washington, DC: Small Business Administration.
.
U.S. Environmental Protection Agency. April 1992. EPA Guidelines for Implementing the
Regulatory Flexibility Act. Washington, DC: U.S. Environmental Protection
Agency, Office of Policy, Planning, and Evaluation.
U.S. Environmental Protection Agency. Februarys, 1997. EPA Interim Guidance for
Implementing the Small Business Regulatory Enforcement Act and Related Provisions
of the Regulatory Flexibility Act. Washington, DC: U.S. Environmental Protection
Agency.
U.S. Environmental Protection Agency. 1998a. Development Document for Proposed
Effluent Limitations Guidelines and Standards for the Centralized Waste Treatment
Industry. Washington, DC: U. S. Environmental Protection Agency.
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U.S. Environmental Protection Agency. July 27,1998b. "Effluent Limitations Guidelines,
Pretreatment Standards, and New Source Performance Standards for the Centralized
Waste Treatment Point Source Category." Washington, DC: U.S. Environmental
Protection Agency.
U.S. Environmental Protection Agency. January 23,1998c. Final Report of the SBREFA
Small Business Advocacy Review Panel on EPA's Planned Proposed Rule for Effluent
Limitations Guidelines and Standards for the Centralized Waste Treatment Industry.
Washington, DC: U.S. Environmental Protection Agency.
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SECTION 9
COSTS AND BENEFITS OF THE CWT EFFLUENT
LIMITATIONS GUIDELINES AND STANDARDS
Pursuant to Executive Order 12866, this section compares the costs and benefits that
are expected to accrue to society if EPA adopts the proposed CWT effluent limitations
guidelines and standards. To gain an overall understanding of whether adoption of the
proposed regulation will improve society's well-being, the Agency compares the costs that
the proposal would impose on society with any benefits it may confer. This report first
characterizes costs imposed by the regulation and then quantifies and monetizes them
(attaches dollar values to them). Similarly, the study identifies, characterizes and, to the
extent possible, quantifies and monetizes Hie benefits. If the benefits exceed the costs,
society will be better off as a result of the regulation. However, and accurate comparison of
benefits and costs is difficult because not all benefits can be quantified and monetized.
9.1 INTRODUCTION
EPA's analysis concludes that the proposed effluent limitations guidelines and
standards for the CWT industry will to reduce the discharge of pollutants by at least
14.3 million pounds per year of conventional pollutants and 4.1 million pounds per year of
toxic and nonconventional pollutants. EPA expects this reduction in pollution to improve
water quality and reduce health risks to exposed individuals. In addition, the improved water
quality will confer benefits on recreational users of the affected water bodies. To obtain
these improvements, the study estimates that CWT facilities will spend $27.8 million (before
tax savings) to implement the BAT and PSES controls. This section of the report examines
the costs and benefits of the regulation in detail, and compares them to the extent feasible, to
determine whether society realizes net benefits from the regulation.
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9.1.1 Requirements of Executive Order 12866
Executive Order (EO) 12866 requires that, for significant regulations, the Agency
"shall ...propose or adopt a regulation only upon reasoned determination that the benefits of
the intended regulation justify its costs." Regulations are deemed significant if the regulation
• has an annual effect on the economy of $ 100 million or more or adversely affects
in a material way the economy; a sector of the economy; productivity;
competition; jobs; the environment, public health or safety; or state, local, or tribal
governments or communities;
• creates a serious inconsistency or otherwise interferes with an action taken or
planned by another agency;
• materially alters the budgetary impact of entitlements, grants, user fees, or loan
programs, or the rights and obligations of recipients thereof; or
• raises novel legal or policy issues arising out of legal mandates, the President's
priorities, or the principles set forth in this EO.
While EPA expects the CWT effluent limitations guidelines and standards to cost much less
than SI00 million per year, the regulation will require significant changes in wastewater
treatment for the CWT industry. As a result, the Agency chose to perform an economic
analysis in compliance with the requirements of EO 12866. This order requires an economic
analysis that assesses the benefits and costs anticipated from the regulatory action, together
with a quantification of as many of those benefits and costs as can be quantified, and a
description of the underlying analysis of the benefits and costs. Sections 9.2 and 9.4 present
the Agency's analysis of costs and benefits, respectively.
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9.1.2 Need for the Regulation
Congress adopted the CWA to "restore and maintain the chemical, physical, and
biological integrity of the Nation's waters" (Section 101(a), 33 U.S.C. 1251(a)). To achieve
this goal, the CWA prohibits the discharge of pollutants into navigable waters except in
compliance with the statute. The primary means the CWA uses to restore and maintain water
quality is establishing restrictions on the types and amounts of pollutants discharged from
various industrial, commercial, and public sources of wastewater.
Facilities that discharge pollutants directly to surface water must comply with effluent
limitations in National Pollutant Discharge Elimination System (NPDES) permits. Indirect
discharging facilities, which discharge pollutants to sewers flowing to POTWs, must comply
with pretreatment standards that are established for those pollutants in wastewater from
indirect dischargers, which may pass through or interfere with POTW operations. National
limitations and standards are established by regulation for categories of industrial dischargers
and are based on the degree of control that can be achieved using various levels of pollution
control technology.
CWT facilities may accept a wide variety of wastes from a wide variety of customers,
wastes classified as hazardous or nonhazardous under RCRA. The adoption of the increased
pollution control measures required by the CWA and RCRA regulation was a significant
factor in the formation and development of the CWT industry. Because facilities that do not
discharge their wastewater are not subject to the requirements of the CWA, many industrial
facilities covered by other effluent limitations and guidelines have made process
modifications to reduce the volume of wastewater they generate and have chosen to send the
remaining wastewater off-site to a CWT facility for treatment.
EPA believes that any waste transferred to an off-site CWT facility should be treated
to at least the same level as required for the same wastes if treated and discharged on-site at
the manufacturing facility. In the absence of appropriate regulations to ensure at least
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comparable or adequate treatment, the CWT facility may inadvertently offer an economic
incentive for increasing the pollutant load to the environment.
In collecting data to develop the CWT effluent limitations guidelines and standards,
EPA identified a wide variation in the level of treatment provided by CWT facilities. Often,
pollutant removals were poor, sometimes significantly lower than would have been required
had the wastewaters been treated at the site where they were generated. In particular, EPA's
survey indicated that some facilities were employing only the most basic pollution control
equipment and, as a result, achieved low pollutant removals compared to those that could
easily be achieved by using other readily available pollutant control technology. EPA had
difficulty identifying more than a handful of facilities throughout the CWT industry that were
achieving optimal removals. Compliance with the proposed effluent limitations guidelines
and standards would ensure that all waste accepted by CWT facilities is adequately and
appropriately treated prior to discharge.
9.2 SOCIAL COST OF THE RULE
The effluent limitations guidelines and standards would impose costs on society. The
cost of a regulation should represent its opportunity cost, which is the value of the goods and
services that society foregoes to allocate resources to the pollution control activity. This
section describes EPA's estimate of the CWT effluent limitations guidelines and standards'
cost to society. Because the economic impacts of the regulation were estimated based on
compliance costs after deductions and other tax savings, the computation of social cost
involves summing the costs to producers, consumers, and government (costs that were
transferred to the taxpayer through the tax provisions of the law but represent part of the cost
of compliance with the regulation).
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9.2.1 Aggregate Costs to Consumers and Producers
This analysis computes the social cost of the regulation by summing the costs to
consumers, producers, and government. This section discusses the costs experienced by
producers and consumers, Section 9.2.2 discusses the costs to government.
As discussed in Section 5, the CWT regulation increases the cost of providing CWT
services, thus shifting the industry supply curve upward from S, to S2 in Figure 9-1.'
Markets respond to these increased costs by increasing market price and reducing the
quantity of waste being treated or recovered in each CWT operation (P2 and Q2 in
Figure 9-1). Using a market-based economic impact model EPA has estimated the with-
regulation price and quantity, P2 and Q2, for each affected CWT market. This analysis then
computed the social costs of the regulation by summing the changes in the net benefits to
customers and producers of CWT services, based on changes in market price. In essence, the
demand and supply curves for CWT services used to generate estimates of P2 and Q2 are now
being used, in turn, as valuation tools, to value the changes in welfare experienced by
producers and consumers of CWT services.
This approach to computing social cost divides society into producers and consumers
of the regulated commodity. In a market environment, consumers and producers of the good
Figure 9-1 is a simplification of the actual computations made to compute social cost; it is a graphical
representation of social cost in a perfectly competitive market. Several CWT markets are either monopolies
or duopolies; imperfectly competitive firms choose the quantity of CWT services that equates the with-
regulation marginal cost with marginal revenue, not price. Conceptually, the computation of social cost is
independent of market structure. The computation of social cost for imperfectly competitive firms is
discussed in detail in a memorandum to the record (Heller and Fox, 1998).
9-5
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1. loss in consumers' surplus
2. loss in producers' surplus
3. gain in producers' surplus
P2cfP,
abef
P2ceP,
Total loss in social surplus (social cost) = P2cfP, + abef- P2ceP, = abcf
Figure 9-1. Social Cost Computed as Changes in Social Surplus
or service derive welfare from a market transaction. The difference between the maximum
price consumers are willing to pay for the commodity and the price they actually pay is
referred to as "consumers' surplus." Consumers' surplus is measured as the area under the
demand curve and above the price of the product (Pjif at baseline and P2ic after market
adjustment to the regulation). Note that hi the case of an intermediate good such as CWT
services, the consumers of the service are in fact producers of other goods and services.
Similarly, the difference between the minimum price producers are willing to accept for a
good and the price they actually receive for it is referred to as "producers' surplus."
Producers' surplus, which is a measure of profits, is measured as the area above the supply
curve up to the price of the product (area Pjfa at baseline and area P2cb with the market
adjustment to the regulation). These two areas can be thought of as consumers' net benefit
9-6
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from consuming the commodity and producers' net benefit from producing it, respectively,
given the prices and consumption/production rates.
In Figure 9-1, the intersection of the market demand curve D and baseline market
supply curve Sj represents the baseline equilibrium, with baseline equilibrium market price
Pj and equilibrium market quantity Q,2. The higher costs associated with complying with the
CWT effluent limitations guidelines and standards shift the supply curve up to S2. The with-
regulation market price is P2, and the quantity of CWT services produced is Q2. At the higher
market price and lower market quantity resulting from the market adjustment, consumers'
surplus has decreased by the area P2cfP,. The regulation also affects producers' surplus. The
costs of compliance reduce producers' surplus, while the higher market price increases it,
everything else held equal. Thus, the social cost of the regulation can be computed by
summing
• reductions in consumers' surplus due to increased price and reduced quantity (area
P2cfP,),
• loss in producers' surplus due to higher costs and lower sales (area befa), and
• increased producers' surplus due to the higher price on remaining production (area
P2ceP,).
Summing all these areas yields the private social cost of the CWT effluent limitations
guidelines and standards, illustrated by area abcf. For the CWT Combined Regulatory
Option, the estimated social cost to producers and consumers (generators or customers in this
case) is shown in Table 9-1.
2 This diagram is correct for perfectly competitive markets. The social cost of the regulation in imperfectly
competitive markets is calculated in a similar way. Materials describing how to perform this calculation are
elsewhere in the record.
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TABLE 9-1. ESTIMATED AGGREGATE COST TO CONSUMERS AND
PRODUCERS
Social Cost Component
Change in Value
($1031997)
Change in Consumer Surplus
Metals Recovery—Medium Cost
Metals Recovery—Low Cost
Metals Treatment—High Cost
Metals Treatment—Medium Cost
Metals Treatment—Low Cost
Oils Recovery—High Cost
Oils Recovery—Medium Cost
Oils Recovery—Low Cost
Oils Treatment
Organics Treatment—High Cost
Organics Treatment—Low Cost
Change in Producer Surplus
Sum of Changes in Consumer and Producer Surplus
-$24,743
-$2,913
-$55
-$555
-$222
-$7,933
-$4,437
-$1,020
-$5,654
-$944
-$724
-$286
$4,654
-$20,089
Overall, the study projects that CWT effluent limitations guidelines and standards
will cost consumers and suppliers of CWT services approximately $20.1 million. These
costs fall more heavily on the CWT's customers than on the CWT industry. The greater
share of the costs of the CWT regulation fall on the customers of the CWTs, who must pay
significantly higher prices for their CWT services. The waste recovery and wastewater
treatment costs incurred by CWT customers are expected to increase by $24.7 million. As
shown above, the CWT regulation, overall, increases the profits of the CWT industry by
approximately $4.7 million. Obviously, this does not mean that all CWT facilities, or even
the majority of them, experience increased profits. But some CWT facilities do become more
profitable as a result of the market adjustments to the CWT effluent limitations guidelines
9-8
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and standards, and those facilities' increased profits outweigh the decreases in profits
experienced by others.
Traditionally, social cost computations are based on estimated market adjustments to
before-tax compliance costs. Because the computations are based on market adjustments to
after-tax compliance costs, this analysis must include an estimate of the burden to
government, which is discussed in the following section.
9.2.2 Government's Share of Costs
The tax savings afforded CWT facilities in complying with the regulation represent
the cost to governments of the CWT regulation. These costs are transferred from CWTs to
other taxpayers through tax deductions and other tax savings. Even though neither the CWT
industry or its customers, these costs represent a reallocation of society's resources and thus
are part of the opportunity cost of the regulation. Table 9-2 shows the estimated before-tax
and after-tax costs of the regulation and government's share of the costs. Government's total
share of the costs of the regulation is approximately $12.2 million per year.
To compute the total social cost of this regulation, the Agency summed the costs to
producers, consumers, and government, as illustrated in Figure 9-2. Overall, the costs to
society of complying with the effluent limitations guidelines and standards include
$20.1 million in costs to producers and consumers, plus $12.2 million in costs to government,
for a total of approximately $32 million.
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TABLE 9-2. GOVERNMENT'S SHARE OF COSTS
Costs
BPT/BAT Costs
PSES Costs
Total Costs
Annualized Costs
before Tax Savings
($106 1997)
$3.56
$24.3
$27.9
After-Tax Total
Annualized Costs
($1061997)
$2.20
$13.4
$15.6
Government Costs
($106 1997)
$1.36
$10.8
$12.2
Government
$12,117
CWT Owners and
Customers
$20,098
Figure 9-2. Social Cost of the Regulation ($1031997)
The total annual cost to society of the proposed rule exceeds the total annual facility
cost of compliance (before-tax savings) by approximately $4 million, or approximately
15.7 percent. This wedge between compliance costs and social costs results from the market
adjustments that take place in imperfectly competitive markets for CWT services. Because
some CWT facilities operate in monopolistic or oligopolistic markets, they enjoy market
power that permits them to increase the market price of their service by more than their costs
have increased due to the regulation. This increases the cost of the regulation to society. The
market-based analysis represents a short- or intermediate-run analysis of the impacts of the
CWT effluent limitations guidelines and standards, as CWT decisions are constrained by
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existing waste-treatment capacity at each plant an within each market. It represents a high
estimate of social costs, and probably overstates the burden of the regulation on CWT
customers and understates the burden on CWT owners. Ultimately, the projected increases in
waste treatment prices should lead to increases in waste-treatment capacity. Future increases
in waste treatment capacity should reduce the projected increases in regional waste treatment
prices and increase the quantity of waste treated or recycled at CWT facilities. In the longer
run, therefore, CWT customers would be somewhat better off than the model projects, while
existing CWT facilities might be somewhat less profitable.
9.3 POLLUTANT REDUCTIONS
The proposed effluent limitations guidelines and standards for the CWT industry
would reduce pollutant discharges to surface water by approximately 14.3 million pounds per
year of conventional pollutants and 4.1 million pounds per year of toxic and nonconventional
pollutants. The following section examines the benefits that are estimated to result from this
reduction in discharges. First, EPA describes the methodology to be used. Then, benefits are
identified and, to the extent possible, quantified and monetized.
9.4 BENEFITS ASSESSMENT
EPA's proposed effluent guidelines for the CWT industry will reduce discharges of
pollutants into several waterways around the country and will also reduce discharges of these
substances to a number of POTWs. As a result, the proposed regulation will lead to
improvements in both the in-stream water quality and the health of ecological systems in the
affected waterbodies. In addition, EPA's evaluation shows that POTWs will experience
reducted sludge disposal costs.
This section discusses this assessment and valuation of the benefits of the proposed
regulation. First, it presents an overview of the benefits assessment by describing the
conceptual framework that guides the analysis and by outlining the steps necessary for
applying this framework. Then, it discusses the impacts of environmental changes on human
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systems and recreational conditions, and it provides monetary estimates associated with these
impacts. Finally, the cost savings for POTWs that receive discharges from CWT facilities
are estimated. As noted below, the benefits analysis si based on a subset ofthe 145 CWT
facilities for which EPA has information. That is, the benefits are not weighted to represent
the universe of CWTs. Therefore the benefits presented in this chapter, to the extent that they
can be quantified and monetized, cannot be directly compared to the weighted costs
presented in earlier chapters.
9.4.1 Overview of Benefits Assessment Methodology
Two primary types of benefits are expected to result from the proposed regulation:
those resulting from instream water quality improvements and those from cost savings to
POTWs. This section develops a conceptual framework for assessing the benefits of surface
water quality improvements and provides an overview ofthe cost-saving benefits to POTWs.
9.4.1.1 A Benefits Analysis Paradigm for Water Quality Improvements
To associate economic values with changes in environmental quality, developing a
conceptual framework that incorporates the key interactions between environmental systems
and human systems is necessary. Figure 9-3 depicts such a framework. Figure 9-3(a)
illustrates the damage pathways (i.e., the routes through which pollutant releases into the
9-12
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9-13
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environment ultimately affect human welfare). Figure 9-3(b), paralleling the damage
pathways, illustrates the analytical framework (i.e., the steps required for evaluating the
damages and assessing the benefits of reductions in pollutant releases). Each step of the
analytical framework is described below.
Sources and Releases. The first step is to define the affected universe of sources of
the harmful pollutants. In total, EPA has information on 145 unweighted CWT facilities that
will be subject to the regulation. Twelve of these facilities are direct dischargers, discharging
effluent directly into nearby surface water. One hundred and one of these facilities are
indirect dischargers, discharging their effluent to POTWs. The remaining 32 facilities
dispose of their waste in some way other than discharging it and are considered zero
dischargers. Of these 145 facilities, affected stream segments, or "reaches," were identified
for 119 facilities. However, water quality impacts have been estimated for only 103 facilities
because 16 of the 119 facilities are zero dischargers. Section 3.2.1 describes the pollutants
released from these facilities.
Ambient Water Quality and Ecosystem Effects. The second step in the benefits
analysis is to distinguish the environmental systems that receive the pollutants and describe
how each system assimilates, disperses, and is affected by the substances. In this analysis,
the environmental systems of interest are the receiving waterbodies and the aquatic species
residing there. Section 3.2.2 describes the 83 waterbodies that receive discharges (directly or
indirectly) from the 103 modeled CWT facilities. It then describes the results of water
quality modeling for baseline conditions and for each of the regulatory options. Based on
facility pollutant loadings and flow rates in,the receiving stream, the water quality model
generates estimates of pollutant concentrations in the surface water. These concentrations are
then compared to EPA-established ambient water quality criteria (AWQC) for aquatic life to
provide indicators of potential ecological damage with and without regulation.
Affected Populations and Activities. The third step in the benefits analysis is to
determine how human populations are exposed to, and affected by, water-related
environmental quality. A fundamental distinction can be made between market and
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nonmarket effects. As Figure 9-3(a) shows, environmental quality affects human welfare by
either through market-based activities or nonmarket activities. On the one hand, individuals
interact with markets as both consumers and as suppliers of factors of production (i.e., labor)..
They are ..therefore, indirectly affected by environmental changes that influence market
production. For example, consumers will face higher prices for agricultural products when
environmental damages lead to higher costs of production for farmers. On the other hand,
*
individuals interact more directly with the environment in nonmarket contexts, such as most
outdoor recreational activities.
Table 9-3 lists many of the potential areas of market and nonmarket damages
associated with reductions in water quality. These also represent the primary areas in which
benefits may accrue as a result of the proposed rule. Market activities potentially affected by
water quality include a range of commercial activities that require proximity to or diversion
of surface water. Nonmarket activities include "household production" activities, such as
outdoor recreation, as well as government/public goods production, such as large-scale
drinking water treatment. Section 9.4.3.2 focuses primarily on fishing activities in the
affected reaches and the level of human exposure to contaminated fish. It also discusses the
other potentially affected activities.
Impacts on Humans. The fourth step in assessing benefits is to determine the
impacts of changes in environmental quality on human systems. The impacts of pollutant
discharges can be traced to behavioral changes and other outcomes related to market and
nonmarket activities. Table 9-4 provides examples of the major market and nonmarket
effects. For example, changes in market production costs, such as costs for commercial
fishing, should have observable effects on product prices and quantities sold in markets.
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TABLE 9-3. HUMAN SYSTEMS/ACTIVITIES AFFECTED BY SURFACE WATER
QUALITY
Mode of Interaction
Affected Activities
Market
Instream
Near stream
Diversionary
Nonmarket/Household
Instream
Near stream
Diversionary
Nonuse
Government/Public
Diversionary
Commercial fishing, tourism
Tourism t
Agriculture, manufacturing
Fishing (recreational and subsistence), swimming, boating
Residence, hiking, wildlife viewing
Water consumption
Perceptions
Drinking water treatment and delivery
Nonmarket effects, such as changes in human health or recreational activities, should, in
principle, also be observable (or predictable). As shown in Figure 9-3, impacts that alter
human behavior may result in different affected populations. For example, increases in the
time devoted to recreation may involve increases in angler populations. Other impacts may
not be directly observable. For example, nonusers may benefit simply from the knowledge
that water quality is improved. This is a real effect of not improved water quality but is not
necessarily observable. Section 9.4.2.3 discusses market and nonmarket impacts in more
detail with particular emphasis on changes in cancer risks to anglers.
Valuation of Impacts. The final step is to translate market and nonmarket impacts
into monetary values that reflect changes hi human welfare. The paradigm for relating
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TABLE 9-4. IMPACTS ON HUMANS
Changes in Market Behavior and Outcomes
• changes in production costs (i.e., supply)
• changes in demand for and price of residential property
Changes in Nonmarket Outcomes and Behaviors
• changes in the quality and pattern of recreation
• . changes in human health risk and outcomes
• nonbehavioral changes (i.e., nonuse-related perceptions)
human welfare to economic valuation is based on the notion of willingness to pay
(WTP)—an approach which has been widely accepted in the economics literature. This
approach is based on the rather straightforward view that the benefits (value) of a given
change (such as improved environmental quality) are equivalent to the maximum amount
individuals are willing to pay for the change. Section 9.4.3 discusses WTP-based approaches
for valuing reductions hi mortality rates and then apply these measures to value the
reductions in cancer risk that are estimated to occur as a result of the proposed regulation. It
also discusses WTP estimates for valuing recreational fishing days and for valuing
improvements in water quality that enhance recreational fishing. Using benefits transfer,
EPA applied these values to assess the recreation-based benefits of the proposed regulation.
9.4.1.2 Other Benefits: Cost Savings for POTWs
Another category of benefits expected to result from the proposed regulation is cost
savings for POTWs. The fundamental way hi which these benefits differ from those
discussed previously is that they do not occur as a result of changes hi environmental quality.
Many of the pollutants from indirect CWT dischargers accumulate in POTW sludges and are,
therefore, not released to surface water. Nevertheless, POTWs must dispose of these sludges
in ways that comply with existing regulations. When concentrations of specific contaminants
in POTW sludges are reduced, POTWs may use or dispose of their sewage sludge less
expensively. (The higher the pollutant concentrations in the sludge, the more restrictive are
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Federal use and disposal requirements and resulting disposal costs.) Although these cost-
saving benefits are not directly incorporated in the paradigm presented in Figure 9-3 and
discussed above, they will nonetheless have a positive effect on social welfare. The
procedures for estimating these cost savings and the results of this part of the analysis are
presented in Section 9.4.4.2.
9A.2 Impacts of Proposed CWT Effluent Limitations Guidelines and Standards
EPA expects that the proposed regulation, if adopted, will improve water quality in
several waterbodies across the United States by reducing pollutant loadings and instream
concentrations of over 100 pollutants. The following sections discusses the water quality
impacts of the proposed regulation in greater detail below.
9.4.2.1 Impacts on Ambient Water Quality and Related Ecosystems
The proposed regulation will reduce the in-stream concentrations of over
100 pollutants in the waterways affected by CWT facility effluents. In-stream concentrations
were modeled for each of these pollutants under both baseline and with-regulation scenarios.
The details of this modeling process are provided in the Environmental Assessment of
Proposed Effluent Guidelines for the Centralized Waste Treatment Industry (EPA, 1998).
This assessment bases its estimation of these concentrations on estimates of pollutant
loadings in the affected waterways and on estimates of the stream flow in these waterways.3
Elevated in-stream concentrations of these pollutants have the potential to adversely
affect ecological systems in a variety of ways. Aquatic organisms, in particular, will face
higher risks as a result of the degradation of the quality of then: habitats. For this analysis,
EPA did not conduct a full ecological risk assessment of these impacts for the CWT reaches.
However, the assessment does examine the consequences for aquatic life by comparing in-
stream concentrations of each pollutant with EPA's AWQC for the protection of aquatic life.
3Three stream flow conditions were analyzed (1Q10 low flow, 7Q10 low flow, and harmonic mean flow); the
first two were used to assess aquatic life impacts and the third was used to assess human health impacts.
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EPA has established water quality criteria for many pollutants for the protection of
freshwater aquatic life. These criteria include both acute and chronic criteria. The acute
value represents a maximum allowable 1-hour average concentration of a pollutant at any
time and can be related to acute toxic effects on aquatic life. The chronic value represents the
average allowable concentration of a toxic pollutant over a 4-day period. If these levels are
not exceeded more than once every 3 years, a diverse array of aquatic organisms and their
uses should not be unacceptably affected. For pollutants that do not have specific AWQC,
the study estimates specific toxicity values using various techniques or have been taken from
the published literature.
Table 9-5 reports the number of reaches with estimated exceedances of the AWQC
for aquatic life based on an analysis of 83 potentially affected CWT reaches. Under baseline
conditions, a total of three reaches will exceed the AWQC for acute aquatic life, and a total of
three reaches will exceed the AWQC for chronic aquatic life. As noted in the footnote in
Table 9-5, the combined baseline total may be less than the sum of the subcategory
exceedances because some reaches receive discharges from more than one subcategory.
Under the regulatory options, reductions in exceedances for acute and chronic aquatic life
will occur for the three subcategories. Under Oils Options 8 and 9, the number of
exceedances for acute aquatic life will drop from one to zero, while the number of
exceedances for chronic aquatic life will remain unaffected. Metals Option 4 will reduce
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TABLE 9-5. EXCEEDANCES OF AMBIENT WATER QUALITY CRITERIA FOR
AQUATIC LIFE
Number of Reaches with AWQC
Exceedances for Aquatic Life
•
Baseline
Metals
Oils
Organics
Combined baseline*
With Regulation
Metals Option 4
Oils Option 8
Oils Option 9
Organics Option 4
Combined Regulatory Option
Acute
Effects
2
1
0
3
1
0
0
0
Chronic
Effects
2
2
1
3
2
2
2
0
Both Acute and
Chronic Effects
4
3
1
6
3
2
2
0
5
a Some reaches receive discharges from more than one subcategory; therefore, the combined baseline total may
be less than the total of the subcategories.
exceedances for acute aquatic life to one, while chronic aquatic life exceedances remain
unchanged under this option. Organics Option 4 eliminates all exceedances.
Table 9-5 also indicates that there will be five AWQC exceedances for aquatic life
under the Combined Regulatory Option. The facilities included in this combined option are:
• Combined Regulatory Option = Metals Option 4 (direct and indirect dischargers)
+ Oils Option 8 (indirect dischargers) + Oils Option 9 (direct dischargers) +
Organics Option 4 (direct and indirect dischargers)
Two important caveats to these results deserve attention. First, background
concentrations of each pollutant were assumed to be zero. Consequently, EPA evaluated the
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impacts of CWT facility discharges. Second, the analysis did not consider pollutant fate
processes such as adsorption to sediments and volatilization, which would lower in-stream
concentrations. The net impact of these two simplifying assumptions is unclear—the former
leads to underestimates of in-stream concentrations, whereas the latter leads to overestimates.
The impact on changes in the number of exceedances as a result of the proposed regulation is
even less clear. Nevertheless, the results do indicate potentially important improvements in
the aquatic habitats of the CWT reaches.
The ways in which these improvements in ecological systems will lead to
improvements hi human welfare will ultimately depend on how humans interact with and
perceive the ecological systems. The next section discusses these and other effects on human
systems.
9.4.2.2 Affected Populations and Activities
As shown in Table 9-3, a wide variety of human activities are potentially affected by
changes hi water quality due to CWT effluents; however, there is inadequate information for
quantifying many of these effects. As a result, this section focuses on the measurement of
recreational and subsistence fishing populations, for which there is adequate data.
Recreational and Subsistence Fishing: Estimation of Fishing Populations at the
Affected Reaches. To develop an estimate of the number of individuals exposed to the
regulated pollutants through the fish consumption pathway, EPA assumed that the exposed
population consists of both the anglers who fish the CWT reaches and their families. The
following discussion reviews the step-by-step approach used to estimate the number of
affected individuals hi recreational and subsistence fishing households and summarizes the
results of the analysis.
Step 1: Designate a 30-Mile Buffer Zone Around Each Affected Reach. The first step in
estimating the total exposed population for the fish consumption pathway was to isolate the
area surrounding each reach where these individuals are most likely to reside. This area can
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be thought of as the extent of the "market" for the reach. EPA assumed that these individuals
will primarily be located within 30 miles of each reach. Evidence on recreational fishing
behavior for the nation as a whole indicates that between 52 and 68 percent of trips to the
freshwater fishing sites most often used by individual anglers are within 30 miles of their
homes (DOI, 1993). Because the affected reaches are located primarily in urban areas, the
average distance traveled to these reaches is probably below the national average.
Using Arcview Geographic Information System (GIS) software (ESRI, 1995), EPA isolated a
30-mile buffer-zone around each reach and estimated the total U.S. land area within the zone.
Because of variations in the length of each reach and the proximity to large bodies of water,
these buffer zones vary substantially, from 900 to 6,700 square miles. The average area of a
buffer zone is 3,400 square miles.
Step 2: Estimate the Population in Each Buffer Zone. To estimate the 1996 population in
the buffer zone, EPA overlaid GIS software onto U.S. Census data. This resulted in
population estimates ranging from 81,000 to 14 million. The Agency determined the average
population of a buffer zone to be 2.1 million.
Step 3: Estimate the Total Number of Anglers in the Buffer Zone. As mentioned earlier,
EPA assumed that the relevant exposed population is made up of the fishermen who fish the
CWT reaches and their families. To calculate the number of anglers who live in each buffer
zone, the Agency assumed that the ratio of anglers to total population was the same for the
buffer zone as it was for the state in which the reach was located. Using data from The 1996
National Survey of Fishing, Hunting, and Wildlife-Associated Recreation (DOI, 1997), EPA
estimated the percentage of anglers in each state and then applied these values to the affected
reaches in each state. EPA arrived at estimates for the total number of anglers in each buffer
zone that range from 21,000 to 1.9 million. The average number of anglers in the buffer
zones is 300,000.
Step 4: Estimate the Number of Anglers in the Buffer Zone Who Fish the Reach. The
next step was to estimate the number of anglers who fish specifically at the CWT reaches.
To calculate this number, the Agency assumed that anglers within each buffer zone were
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evenly distributed to all reach miles within the zone.4 Using GIS, EPA first estimated the
length of each CWT reach as a percentage of total reach miles within their respective buffer
zones. These values range from 0.11 percent to 4.5 percent. To calculate the number of
anglers who fish the CWT reach, the Agency men multiplied the total number of anglers
within the buffer zone by this ratio. Using this methodology, the number of fishermen who
fish each reach was estimated to range from 85 to 25,000. The average number of fishermen
who fish on a particular reach was computed to be 3,500.
Step 5: Adjust Fishing Population Estimates for Existence of Fish Advisories at the CWT
Reaches. A number of the CWT reaches currently have fish consumption health advisories
in place. Although these advisories are generally due to pollutants such as dioxin and PCBs,
which are not affected by this proposed regulation, it is reasonable to assume that some
proportion of anglers would adhere to the advisories and not fish the reach in question.
Past studies suggest that fishermen have a high, although not complete, level of awareness of
fish advisories. For example, Fiore et al. (1989) found that 72 percent of fishermen were
familiar with fishing advisories. Connelly, Knuth, and Bisogni (1992) and Connelly and
Knuth (1993) also found high rates of awareness (83 to 85 percent) in Great Lakes and New
York sport fisheries. For Maine sport fisheries, MacDonald and Boyle (1997) found 76
percent and 33 percent awareness rates, respectively, for residents and nonresidents. Despite
this level of awareness, other evidence suggests individuals do not necessarily fully adjust
their behavior by no longer fishing at the site or no longer consuming the fish caught at the
site (May and Burger, 1996; MacDonald and Boyle, 1997; Velicer and Knuth, 1994; Cable
and Udd, 1990). For the purposes of this analysis, the Agency assumed a 20 percent decrease
in fishing activity for reaches under fish advisory. Section 9.4.2.3 discusses in more detail
some of the uncertainties associated with this assumption.
"Clearly anglers may visit different reaches on different occasions; however, for purposes of the health risk
analysis, the aggregate health impact of one angler visiting a site all of the time is equivalent to two anglers
visiting the site half the time (or three anglers visiting the site a third of the time, etc.). Therefore, rather
than assuming that fishing trips are evenly distributed to each reach mile over the course of a year, EPA
simply assumed that the anglers themselves are evenly distributed to each reach mile.
9-23
-------
Twenty-two of the reaches in the analysis currently have fish advisories. To adjust
for the decline in fishing in these reaches, the analysis reduced the estimated total number of
recreational and subsistence fishermen by 20 percent at these reaches.
Step 6: Estimate the Number of Subsistence and Recreational Fishermen in Each Reach.
The above calculations do not distinguish between recreational and subsistence fishing
populations. However, estimating these populations separately is important because fish
consumption rates differ substantially between recreational and subsistence anglers. The
precise magnitude of subsistence fishing in individual states or the country as a whole is not
known. For the purpose of this analysis, EPA assumed that 5 percent of all anglers are
subsistence fishermen.
Step 7: Estimate Household Exposure for the Fish Consumption Analysis. Finally, the
analysis requires an estimate of the total population exposed to CWT pollutants by
consuming fish. The Agency assumed that this population includes not only the anglers
themselves but also other members of their households. Therefore, for each reach, the
estimated number of recreational and subsistence fishermen was multiplied by 2.65, the size
of the average U.S. household in 1996 (U.S. Department of Commerce, 1997), to estimate the
total exposed population.
The average exposed household population per reach is 8,600. The average exposed
household population for subsistence and recreational fishermen and their families is 400 and
8,200, respectively. The total exposed household population for all affected reaches is
694,000. Of this total, 659,000 are from recreational fishing households, and 35,000 are from
subsistence fishing households. Section 9.4.2.3 reports the exposed household populations
for each reach, along with the discussion of cancer risks.
9.4.2.3 Impacts on Humans
As discussed earlier in this section, water quality in the affected reaches has the
potential to affect a wide range of both market and nonmarket activities. This report now
9-24
-------
focuses on the ways in which these activities are affected and the projected outcomes of
improvements in water quality. Based on these impacts, EPA estimates in Section 9.4.3
some of the human welfare effects of the proposed regulation.
The impacts that are most readily quantified are nonmarket in nature. They are the
human health impacts related to fish consumption from recreational and subsistence fishing.
This section first discusses the quantitative assessment of health impacts, focusing primarily
on cancer risks. It then discusses the limitations and uncertainties inherent in these
assessments and assesses qualitatively the other potential impacts of the proposed regulation.
Characterization of Human Health Effects. Fish consumption is the primary route
through which individuals are likely to be exposed to the pollutants in the effluents of CWT
facilities. Over 100 hazardous substances have been detected in these effluents, and they are
associated with a wide range of health effects. These effects can be divided into cancer
effects, noncancer effects, and lead-related health effects, each of which is discussed below.
Cancer Effects. Table 9-6 provides a list of the potentially carcinogenic substances
that have been detected and information about the weight of evidence (WOE), cancer potency
factor, and target organ of each substance. EPA has established a WOE classification system
for suspected carcinogens. Carcinogens designated as Class A, which are considered known
carcinogens, are the only chemicals that can be associated with specific types of cancer. This
classification is based primarily on evidence from human data. As indicated in Table 9-6,
arsenic, benzene, and vinyl chloride are the only CWT pollutants that are known carcinogens.
Those designated as Class B are considered probable carcinogens, and those designated as
Class C are considered possible carcinogens. Cancer potency factors for Class B and Class C
carcinogens are based primarily on experimental animal studies and, therefore, are subject to
more uncertainty.5 Furthermore, they cannot be associated with specific types of cancer.
5The potency factor is used to measure the dose-response relationship between each substance and the cancer
health effect. Also known as the unit risk factor (UKF), it is specifically defined as the probability of a
response (cancer) per unit intake of a chemical over a lifetime. For the oral ingestion of these pollutants, the
unit intake is defined as one milligram per day per kilogram of body mass. A lifetime is assumed to be
70 years.
9-25
-------
Chemicals are designated as Class D when there is either no data or inadequate evidence of
the carcinogenicity on humans or animals.
Noncancer Effects. Evidence suggests that several of the pollutants in CWT facility
effluents can lead to noncancer health effects. These noncancer systemic effects include
neurological, immunological, reproductive, developmental, circulatory, and respiratory
effects. Table 9-7. lists the chemicals and reference concentrations and briefly describes the
target organs and/or health effects associated with each pollutant. Assessing noncancer risk
can be considerably more complex because the health endpoints are typically less clearly
9-26
-------
TABLE 9-6. CHARACTERIZATION OF CARCINOGENIC SUBSTANCES IN
CWT EFFLUENT
CAS Number
7440382
50328
56235
56553
67663
71432
75014
75092
75252
75354
79005
86748
87865
106467
106934
107062
117817
124481
127184
205992
207089
218019
630206
Carcinogen
Arsenic
Benzo(a)pyrene
Tetrachloromethane
Benzo(a)anthracene
Trichloromethane (Chlorofonn)
Benzene
Vinyl Chloride
Methylene chloride
Tribromomethane
1 , 1 -dichloroethene
1 , 1 ,2-trichloroelhane
Carbazole
Pentachlorophenol
1 ,4-dichlorobenzene
1 ,2-dibromoethane
1 ,2-dichloroethane
Bis(2-ethylhexyl) phthalate
Dibromochloromethane
Tetrachlorefhene
Benzo(b)fluoranthene
Benzo(k)fluoranthene
Chrysene
1,1,1 ,2-tetrachloroethane
Weight-of-Evidence
Classification'
A
B2
B2
B2
B2
A
A
B2
B2
C
C
B2
B2
C
B2
B2
B2
C
B2
B2
B2
B2
C
Cancer Potency •
Factor
1.75
7.3
0.13
1.06
0.0061
0.029
1.9
0.0075
0.0079
0.6
0.057
0.02
0.12
0.024
85
0.091
0.014
0.084
0.051
1.02
0.48
0.032
0.026
aWeight-of-evidence classification codes:
A-Human carcinogen
Bl-Probable human carcinogen (limited human data)
B2-Probable human carcinogen (animal data only)
C-Possible human data
D—Not classifiable as to human carcinogenicity
Source: U.S. Environmental Protection Agency.
9-27
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defined and much broader in scope. Furthermore, in contrast to cancer risk, noncancer risk
assessment is based on a threshold concept. At small levels of exposure, the body may
detoxify or compensate for exposures to pollutants, and no adverse health effects are
observed. However, as the level of exposure increases, the body becomes unable to
accommodate the pollutant, and eventually adverse health effects are observed.
Thresholds are determined by the level of exposure at which the adverse health effects
could occur. The lowest dose level at which the critical adverse effect is observed is called
the Lowest Observed Adverse Effect Level (LOAEL). The highest dose at which adverse
effects are not observed is the No Observed Adverse Effects Level (NOAEL). The NOAEL
is usually used to estimate a protective threshold level, while the LOAEL is used to indicate
the levels of exposure at which adverse effects are likely. Reference doses (RfD) are derived
from the NOAEL and are considered protective thresholds for ingestion. RfD can be defined
as an estimate of daily exposure to a chemical (measured as mg/kg-day) that is likely to be
without deleterious effects during a lifetime. To calculate the RfD, the NOAEL for a chosen
critical effect is divided by the product of a risk factor (typically a factor of 10) and a
modifying factor, which account for extrapolation from available data to the conditions under
which normal exposures would occur. Table 9-7 reports the RfDs for each chemical.
Lead-Related Health Effects. Lead is both highly persistent hi the environment and
highly toxic for humans and ecosystems. It is associated with a broad range of adverse
human health effects, including hypertension and heart disease in adults and developmental
impairments for children. Table 9-8 lists a more complete accounting of lead-related health
effects. In contrast to other noncarcinogens, many of the specific health effects and risks
from lead exposure can be quantified. Rather than relying on an RfD threshold model, the
magnitude of these health effects can be estimated using dose-response models similar to
those that are used to estimate cancer risks.
9-33
-------
TABLE 9-8. QUANTIFIED AND UNQUANTIFIED HEAJLTH EFFECTS OF LEAD
Population
Group
Quantified Health Effect
Unqualified Health Effect
Adult male For mean in specified age ranges:
Hypertension
Nonfatal coronary heart disease
Nonfatal strokes
Mortality
Adult female For women in specified age ranges:
Nonfatal coronary heart disease
Npnfatal stroke
Mortality
Children IQ loss effect on lifetime earnings
IQ loss on special educational needs
Neonatal mortality due to low birth
weight caused by maternal exposure
to lead
Quantified health effects of men
in other age ranges
Other cardiovascular diseases
Neurobehavioral function
Quantified health effects of
women in other age ranges
Other cardiovascular diseases
Reproductive effects
Neurobehavioral function
Fetal effects from maternal
exposure (including diminished
IQ)
Other neurobehavioral and
physiological effects
Delinquent and antisocial
behavior
Source: U.S. Environmental Protection Agency. October 1997a. The Benefits and Costs of the Clean Air Act.
1970 to 1990. Research Triangle Park, NC: Office of Air Quality Planning and Standards.
Exceedances of Ambient Water Quality Criteria for Human Health. In addition
to the previously described ambient water quality criteria for aquatic life, EPA has also
established pollutant-specific criteria for the protection of human health. These criteria
identify maximum allowable in-stream pollutant concentrations to protect human health
through two exposure routes: (1) pollutant ingestion through consumption of contaminated
aquatic organisms and (2) pollutant ingestion through both consumption of contaminated
aquatic organisms and water. Human health is assumed not to be protected if in-stream
concentrations are associated with lifetime cancer risks exceeding 10~6 or with doses
exceeding the RfDs for noncancer toxic effects. A more detailed description of the models
9-34
-------
underlying these criteria is provided in the Environmental Assessment of Proposed Effluent
Guidelines for the Centralized Waste Treatment Industry (EPA, 1998).
Table 9-9 reports the number of reaches with exceedances of the AWQC for human
health based on the analysis of 83 potentially affected CWT reaches. Under baseline
conditions, 17 reaches will exceed the AWQC for the consumption of contaminated aquatic
organisms, and 19 reaches will have exceedances for the consumption of contaminated
aquatic organisms and water. Most of these baseline exceedances can be attributed to the oils
subcategory. Under the proposed regulatory options, the number of metals exceedances will
remain unchanged, while the number of exceedances for the oils and organics subcategories
will decrease. Both Oils Option 8 and Oils Option 9 will have 11 exceedances of the AWQC
for the consumption of contaminated aquatic organisms, and they will have nine exceedances
of the AWQC for the consumption of contaminated aquatic organisms and water. Total
exceedances for Organics Option 4 will drop from five to one as a result of the regulation.
These AWQC exceedances described in Table 9-9 provide rough indicators of
potential threats to human health. These indicators are used in Section 9.4.3.2 to assess the
recreation-based values of the proposed regulation. More detailed estimates of human health
risks from consumption of contaminated fish are first discussed in the following sections.
Health Risks from Fish Consumption. The information obtained on chemicals
discussed in the two previous sections that are thought to pose either cancer or noncancer
human health risks can be used to estimate the health risks from fish consumption. Fish
9-35
-------
TABLE 9-9. NUMBER OF REACHES WITH AWQC EXCEEDANCES FOR
HUMAN HEALTH
Consumption of
Consumption of Contaminated
Contaminated Aquatic
Aquatic Organisms and
Organisms Water
Baseline
Metals
Oils
Organics
Combined Baseline*
With Regulation
Metals Option 4
Oils Option 8
Oils Option 9
Organics Option 4
Combined Regulatory Option
2
15
0
17
2
11
11
0
3
15
5
19
3
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9
1
Total
Exceedances
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Health
5
30
5
36
5
20
20
1
26
Some reaches receive discharges from more than one subcategory; therefore, the combined baseline total may
be less than the total of the subcategories.
consumption at both baseline levels of contamination and at post-regulatory levels is
considered when approximating the levels of exposure to each chemical at each affected
reach for "typical" individuals (i.e., the recreational and subsistence anglers and the members
of then- households that use the affected reaches). To estimate cancer risks, EPA combined
the previously described information about the size of these exposed populations with
information about average individual levels of exposure at each affected reach. The Agency
was then able to estimate the number of cancer cases (i.e., cancer incidence) attributable to
CWT facility pollutants.
By contrast, estimates of noncancer health effects are inherently more limited.
Analysts can observe whether the estimated individual levels of exposure to each chemical
exceed their respective safety thresholds (RfDs); however, without dose-response
9-36
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information, they cannot estimate the incidence of noncancer health effects in the exposed
population. In other words, the noncancer assessment can indicate whether exposure levels
are likely to cause adverse health effects, but it cannot provide an estimate of the magnitude
of these health effects.
Cancer Risks. As Figure 9-4 illustrates, several steps are required to estimate the
annual cancer incidence that is expected to result from consuming fish from the affected
reaches. The Environmental Assessment of Proposed Effluent Guidelines for the Centralized
Waste Treatment Industry provides methodological details for accomplishing the first three
steps in this figure (EPA, 1998). Below, these three steps, as well as a final step for
estimating annual cancer incidence are summarized.
The first step is to estimate in-stream concentrations for each of the carcinogenic
pollutants listed in Table 9-6. This step is accomplished by combining information on
pollutant loadings with specific characteristics of the receiving streams.6 Most importantly,
EPA assumed that in-waterway pollutant concentrations are inversely proportional to
waterway flow downstream of the discharge. EPA considers the harmonic mean waterway
flow (HMF) to be the appropriate measure for assessing human health effects. EPA assumed
that background concentrations of each of these chemicals are zero. In other words, EPA
assumed that CWT effluents were the only source of these chemicals in the affected reaches.
6For indirect dischargers, the initial calculation of pollutant loadings must consider not only the concentrations
in the effluent from the CWT facilities, but also the removal efficiencies for each pollutant at the receiving
POTWasweU.
9-37
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D
Instream Concentrations
i
B Concentrations in
Fish Tissue
i
h
L
r
El Average Annual 1^
Individual Cancer Risk f
i
D
Annual Cancer Incidence
L
r
Pollutant Loadings
Receiving Stream
Parameters
Bioconcentration
Factors for Fish
Cancer Slope Factors
Average Annual
Fish Consumption
Size of Populations
at Risk
Figure 9-4. Steps for Assessing Annual Cancer Incidence from Fish Consumption
The second step is to calculate concentrations of each of the pollutants in the tissue of
fish species residing in the affected waterways. This step is accomplished by combining
information from the first step (in-stream concentrations) with an assumed rate of uptake by
the fish species (i.e., bioconcentration factor).
The third step is to calculate the average annual individual cancer risk for the two
categories of exposed populations, recreational fishing households consume 30 grams offish
per day over a 30-year period and 6.5 grams per day over a 40-year period. This level of
consumption translates to an average of approximately 6.05 kilograms per year. The analysis
assumes that people in subsistence fishing households consume 140 grams per day offish
over 70 years of exposure, which translates to an average of approximately 51.1 kilograms
per year. Using the cancer potency factors listed in Table 9-6 for each carcinogen, EPA
estimated the lifetime individual cancer risks for recreational and subsistence fishing
9-38
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households. For each affected reach and individual, this value can be interpreted as the
individual's incremental risk of developing cancer that would result from consuming an
average annual dose offish from the affected reach over the course of a 70-year lifespan.
Table 9-10 provides the lifetime individual cancer risks for individuals in recreational
and subsistence households. As expected, risks for subsistence households are higher than
those for recreational households by nearly one order of magnitude. These risks are
distinguished for direct and indirect dischargers, as well. The mean individual lifetime
cancer risk for populations affected by direct dischargers is greatest under the metals
subcategory (3 x 10"6 for recreational fishermen and 2.5 x 10"5 for subsistence fishermen),
while the oils subcategory has the greatest mean for those populations affected by indirect
dischargers (4 x 10"5 for recreational fishermen and 3 x 10"4 for subsistence fishermen).
The next step is to calculate the annual cancer incidence for the affected reaches at
baseline levels and at the proposed post-regulatory levels. The analysis estimates annual
individual cancer risks by dividing these lifetime risks by 70—the assumed number of years
in a lifetime. Annual cancer incidence is then computed by multiplying (1) the individual
annual cancer risk for each population subgroup (sorted by reach and activity—recreational
or subsistence) by (2) the size of each population subgroup. Section 9.4.2.2 details the
procedures used to estimate each of the population subgroups. Table 9-11 reports results for
baseline cancer incidence. This analysis estimates total baseline annual cancer incidence for
fish consumption from the affected reaches is approximately 0.95 cases per year. Indirect
dischargers account for approximately 99 percent of these cases and direct dischargers
account for the remaining one percent.
9-39
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TABLE 9-11. BASELINE ANNUAL CANCER INCIDENCE
(FISH CONSUMPTION BY ANGLERS)
Metals
Oils
Organics
Combined
Direct
Dischargers
0.006
0.000
0.000
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Indirect
Dischargers
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0.942
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Total
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0.000
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This assessment repeated these four steps for each of the proposed regulatory options
by reestimated in-stream concentrations for each option based on their respective pollutant
loadings and annual cancer incidence at each reach. Table 9-12 reports the reductions in
annual cancer incidence for each subcategory (metals, oils, and organics). This assessment
showed that the regulatory options for the oils subcategory accounted for the largest
reductions in cancer incidence. All of the regulatory options combined will reduce the total
cancer incidence at all affected reaches by approximately 68 percent.
TABLE 9-12. ANNUAL CANCER INCIDENCE REDUCTION
(FISH CONSUMPTION BY ANGLERS)
Metals Option 4
Oils Option 8
Oils Option 9
Organics Option 4
Combined Regulatory Option
Direct
Dischargers
0.000
0.000
0.000
0.000
Indirect
Dischargers
0.000
0.648
0.653
0.000
Total
0.000
0.648
0.653
o.ooo
0.649
Noncancer Risks. Estimating noncancer risks involves the same initial steps as those
outlined above for cancer risks. Using the first two steps described above for cancer risks,
EPA estimated concentrations in fish tissue for each of the chemicals with noncancer health
9-41
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effects at each reach. At this stage, rather than estimating cancer risk, the Agency compared
the estimated average daily dose of each chemical with its reference dose (RfD) (see
Table 9-7). The ratio of the estimated dose to the RfD is known as the hazard quotient. If
this expression summed across all pollutants affecting a reach is greater than one, a potential
noncancer health effect may result from exposure.
As shown in Table 9-13, that analysis showed that only reaches in the metals and oils
subcategories are a potential source of noncancer health effects under baseline conditions.
For discharges associated with these two subcategories, a total of two reaches will have
noncancer health effects and about 19,000 people will be exposed. Under the regulatory
options, no reaches have noncancer health effects. However, it is important to note again that
a critical assumption in the analysis asserts that no background concentrations of these
chemicals exist in the affected reaches. The results could change considerably if background
concentrations do exist. In particular, the current estimates may underestimate noncancer
risks. Unfortunately, evidence is insufficient at this time to determine the accuracy of this
assumption.
Lead-Related Health Effects. Based on the loadings estimates for CWT facilities, the
analysis showed a reduction in lead loadings to four reaches that would cause meaningful and
measurable reductions in lead-related health effects from fish consumption. For each of these
reaches, the analysis estimated blood lead levels separately for recreational and subsistence
anglers and for their families under both baseline conditions and with the proposed regulatory
option in place.
9-42
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9-43
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To estimate the total exposed populations at each reach, EPA used the same
population estimates for anglers and their families that were used for the cancer risk analysis.
To subdivide these populations into the age and gender categories that are relevant for
measuring lead-related health effects, the Agency assumed that the age and gender
distribution of these families is the same as for the U.S. as a whole based on percentages
contained in the 1997 Statistical Abstract of the U.S. EPA estimated the exposed populations
in each gender-age category was estimated by multiplying the total exposed population for
each reach by the corresponding age-gender population percentage.
EPA used the population and blood lead level estimates to assess reductions in six
general categories of health effects associated with lead exposure. As shown in Table 9-14,
these categories include hypertension for adult males, changes in IQ for children exposed
before the age of seven, and neonatal mortality resulting from exposure during pregnancy. In
addition, it includes a number of health effects associated with elevated diastolic blood
pressure levels, an outcome which is also known to result from adult lead exposures. These
health effects include coronary heart disease (CHD), cerebrovascular accidents (CA), brain
infarctions (BI), and mortality.
To estimate changes hi these health effects, EPA applied the same methodology that
is used in The Benefits and Costs of the Clean Air Act, 1970 to 1990 (EPA, 1997~see
Appendix G). It includes dose-response specifications for each of the health effects and age-
gender categories identified in Table 9-14, and it also specifies the monetary value of losses
associated with each health effect.
Using Equation (11) from Appendix G of the CAA study, EPA estimated changes in
the probability of hypertension for men ages 20 to 74. The total estimated exposed
population in the group is about 29,800, and the estimated reduced incidence of hypertension
is 3.2 cases per year.
9-44
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TABLE 9-14. REDUCTIONS IN LEAD-RELATED HEALTH EFFECTS
Affected Population
Health Effect
Hypertension
Coronary Heart Disease
Cerebrovascular Accidents
Brain Infarctions
Mortality
IQ Changes
Changes in IQ points
Changes in number of
children with IQ<70
Gender
Males
Males
Females
Males
Females
Males
Females
Males
Females
Both
Both
Both
Age Group
20-74
40-59
60-64
65-74
45-74
45-74
45-74
45-74
45-74
40-54
55-64
65-74
45-74
neonates
0-6
0-6
Size
29,800
12,700
1,600
2,900
13,300
12,000
13,300
12,000
13,300
9,100
3,600
2,900
13,300
1,400
9,600
9,600
Annual
Incidence
Reduction
3.209
0.135
0.028
0.022
0.010
0.008
0.004
0.005
0.003
0.159
. 0.022
0.011
0.006
0.024
72
34
Changes in the probability of CHD, CA, BI, and adult mortality are based on changes
in diastolic blood pressure (DBF) for men and women. First, using Equations (12) and (21)
respectively from Appendix G of the CAA study, the analysis estimtated changes in DBF for
males and .females. Second, assuming that the regulation would reduce DBF to normal adult
levels (specified to be 80 mm Hg), the (absolute value of the) estimated change in DBF was
added to this to approximate baseline DBF for the exposed populations. Third, applying the
baseline and with-regulation DBF estimates to Equations (13) through (25) from Appendix G
of the CAA study, EPA estimated the change in probability of CHD, CA, BI, and adult
mortality. Fourth, multiplying these values by their respective populations and dividing this
9-45
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by the number of years in each age category, the Agency estimated the annual reduction in
incidence for each health effect. As shown in Table 9-14, the annual reduction in CHD is
0.2 cases per year, with the majority of this decline for males ages 40 to 59. The annual
reduction in CA and BI incidence is about 0.013 and 0.007 cases per year, respectively. The
annual reduction in mortality is about 0.2 deaths per year, with a majority of the decline in
males ages 40 to 54.
To estimate reductions in neonatal mortality, EPA first estimated the number of
pregnant women in the exposed population. To do this, the Agency assumed that the
percentage of pregnant women in the exposed population is equal to the birth rate (per
100 individuals) in the U.S. as a whole, which was acquired from the 1997 Statistical
Abstract of the U.S., and multiplied this value by the total exposed population. Appendix G
of the CAA study indicates that the risk of infant mortality decreases by 0.0001 for each
1 fig/dL decrease in maternal blood lead level during pregnancy (p. G-8). Applying this
dose-response relationship, EPA estimates the reduction in the incidence of neonatal
mortality to be approximately 0.02 deaths per year.
Two separate effects related to children's (ages 0 to 6) IQ were measured: (1) the
reduction in IQ points due to elevated blood lead levels and (2) the reduction in the number
of children with IQs less than 70. Using Equation (5) from Appendix G of the CAA study,
EPA estimated that the exposed population of approximately 9,600 children would gain a
total of roughly 72 IQ points as a result of the proposed rule. Using Equations (6)
through (10) from Appendix G of the CAA study, EPA estimated the reduction in the
proportion of children with IQs less than 70. To estimate the annual reduction hi the number
of children with IQs less than 70, EPA divided this value by the number of years in the age
category (i.e., 7 years) and then multiplied by the size of the exposed population (i.e.,
9,600 children). EPA estimated that approximately 34 fewer children would have IQs below
70.
Limitations and Uncertainties in the Measurement of Health Impacts. The
preceding analysis has focused largely on the health effects associated with fish consumption
9-46
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from the CWT reaches. Estimating these impacts required a number of analytical steps, each
of which required simplifying assumptions and an inevitable degree of uncertainty. This
section addresses some of the limitations and uncertainties of the analysis and discusses how
they may affect the results.
The analysis was restricted to only one reach on each waterway receiving CWT
discharges. For each direct discharger and each affected POTW, EPA analyzed water quality
and related impacts for only a single reach and did not consider impacts downstream from
these reaches. Through dilution, volatilization, and other processes, concentrations of the
pollutants will decline as one moves downstream; therefore, the downstream impacts will be
less than in the directly affected reaches. Nevertheless, excluding them from the analysis will
result in underestimates of the health impacts of the proposed regulation. In certain cases the
analysis may not have been captured upstream impacts, for example, if contaminated fish
migrate in that direction.
The analysis assumed that background concentrations of each pollutant are zero.
This analysis did not explicitly address discharges of the pollutants from sources other than
CWT facilities. Therefore, all modeled concentrations are from CWT discharges. Although
this simplification may understate baseline cancer risks from fish consumption or drinking
water for the affected reaches, it will not alter the estimated reductions in cancer risk due to
the proposed regulation. In contrast, assessments of ecological and noncancer impacts,
which are based on a threshold model, are very sensitive to the accuracy of this assumption.
Whether the assumption will lead to overstatements or understatements of impacts is
uncertain. Accounting for background concentrations will tend to increase the number of
baseline exceedances of aquatic life and human health thresholds. If these background
concentrations are sufficiently high, however, the number of exceedances eliminated as a
result of the proposed regulation may in fact decrease.
Estimation of the number of anglers using the affected reaches has not considered the
quality of substitute sites. Estimation of the size of the population affected by fish
consumption required a number of simplifying assumptions. A potentially important
9-47
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omission in the analysis has been the lack of consideration of water quality in other
waterways that may serve as substitute sites for the affected reaches. For example, EPA
assumed that anglers within the designated buffer zones are equally likely to visit each reach
mile within the zone. If water quality at other reaches is distinctly better (worse) than in the
affected reach, men the estimates of the exposed populations are likely to be too high (low).
The impact of fishing advisories is very uncertain. Twenty-two of the 83 affected
reaches have fish consumption advisories. The analysis accounted for this by adjusting the
exposed population downward by 20 percent. .This adjustment, however, is subject to
considerable uncertainty. Studies show that approximately 80 percent of anglers are aware of
fishing advisories and many do not change their fishing behavior. For example, Diana,
Bisogni, and Gall (1993) found that anglers vary in their beliefs about the credibility of
fishing advisories, and Belton, Roundy, and Weinstein (1986) also found evidence that
individuals tend not to change their behavior. For those who do change locations, many may
simply be switching to other locations where advisories are in place.
Other studies further have found that, although fishermen may not substantially
change Hheirfishing behavior in response to fish consumption advisories, they may change
their overall consumption patterns. For example, Diana, Bisogni, and Gall (1993) found that
56 percent of the households that ate the restricted fish did follow the recommended
'!|.
trimming techniques that significantly reduce the amount of pollutants consumed. Fiore et al.
(1989) also found a high percentage of individuals that change their consumption
patterns—57 percent of fishermen who were aware of the advisories did change their
preparation or cooking habits.
The analysis assumes no behavioral changes as a result of water quality
improvements. The analysis assumes that the number of anglers fishing the affected reaches
and the fish consumption rates and practices of these anglers and their families do not change
from the baseline. For the water quality changes to have an effect on angling or fish
consumption activities they must have an impact that is perceptible to potential users of the
waterbodies. Although the proposed regulation will lower the in-stream concentrations of
9-48
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several pollutants, these changes may not alter the directly observable qualities of the surface
water, such as its clarity or odor, or the fish that are caught. If this is the case, then the
assumption of no behavioral change is appropriate. However, as discussed in Section 9.4.2.1,
hazards to aquatic life from the pollutants in CWT facility effluents will be reduced as a
result of the proposed regulation, and this may have an impact that is perceptible to anglers.
If the visual characteristics of the aquatic environment improve or if catch rates increase for
anglers, these effects will enhance fishing activities. Current information is inadequate to
determine the extent to which such observable changes occur. In general, the more
perceptible water quality changes are, the more likely it is that this approach will
(1) overestimate baseline exposures (i.e., anglers will avoid observably poor water quality)
and (2) underestimate increases in angling and fish consumption rates.7 In both cases, the
likelihood that health risk reductions are overestimated is increased. At the same time,
however, this increases the likelihood of nonhealth recreation benefits accruing to the
improved waterbodies.
Other Potential Impacts. As mentioned previously, the proposed regulation will
potentially have beneficial impacts hi a number of other areas. For market-based activities
such as agriculture and manufacturing that use water as a production input, improvements in
water quality can lower production costs and improve productivity. This can increase profits
for producers and/or lead to lower prices for consumers. Unfortunately, currently available
data are insufficient to quantify these impacts.
In addition to lowering the health risks to anglers and their families who consume fish
from the affected reaches, improvements in water quality can have beneficial impacts for
anglers in other ways. Clearly individuals gain satisfaction from aspects of fishing
experiences other than those related to the health consequences of consuming their catch. A
number of recreation studies have shown that other aspects of fishing such as being outdoors
and experiencing natural surroundings are the most important contributors to the enjoyment
7Increases in consumption rates and/or increases in the number of users may have the effect of increasing
exposure to residual levels of contamination in the surface water. Increased exposure will counteract some
of the improvements in health outcomes.
9-49
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of fishing experiences (Fedler and Ditton, 1986; Holland and Ditton, 1992). If improvements
in water quality lead to perceptible improvements in fishing experiences, then they will
provide recreation benefits to anglers. Furthermore, if broader ecological impacts occur that,
for example, improve opportunities for viewing other forms of wildlife, this will also
improve recreational experiences. These types of changes are likely to not only positively
affect current users of the affected waterways but to also increase the number of users as
well. Current evidence is insufficient to reliably estimate the magnitude of these behavioral
changes. In the next section, the analysis described assumes that the number of recreational
anglers visiting these reaches remains the same after the water quality improvements.
However, this analysis does estimate how the recreation benefits to these anglers would
increase if they were able to perceive the estimated water quality improvement resulting from
the proposed regulation.
9.4.3 Valuation of Surface Water Quality Improvements
EPA expects two primary types of benefits to result from surface water quality
improvements under the proposed regulation. The first is improved health benefits from
reduced exposures to toxic substances and the second is increased recreation benefits due to
improvements in the quality of recreational surface water resources. This section describes
the methods used to assess health and recreation values and provides estimates of the
corresponding monetary benefits for the proposed rule.
9.4.3.1 Health Benefits
It is now largely accepted in the economics profession that an individual's maximum
WTP for an additional unit of a good represents the benefits of acquiring the extra unit.8
Therefore, WTP is the appropriate welfare measure for assessing benefits, and it can be
applied to valuing improvements in human health in the same way that it is applied to
*The individual's minimum willingness to accept (WTA) compensation for losing or forgoing the opportunity
to acquire a unit of the good is also a valid measure of benefits, and, in principle, it should be approximately
the same as WTP.
9-50
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valuing consumer goods. As discussed in the previous sections, a wide variety of health
effects have been associated with CWT pollutants. However, changes in the incidence (or
outcomes) of disease can only be quantified for a subset of these effects: cancers and lead-
related health effects. This section discusses separately the values associated with avoiding
these health effects.
The Benefits of Avoided Cancer Cases from Fish Consumption. Because cancer
is an often-fatal disease, individuals' WTP for reductions hi cancer risk is approximated by
the WTP for reductions in the risk of premature death. The WTP approach for valuing a
statistical life saved (or a statistical death avoided) focuses on the amount individuals are
willing to pay to reduce their risk of premature death or, conversely, what compensation they
require to increase their risk. Conceptually, once a value is established for a specific unit
change in risk (such as a one in one million change in the probability of premature death), it
is simply a matter of scaling this value so that it corresponds to a change in probability equal
to one.9 For example, if individuals have, on average, a WTP of $5 to avoid a one in one
million chance of premature death, this value aggregates to $5 million to avoid the
probability that one death will occur in a population of 1 million of these individuals. In
other words, it aggregates to $5 million for one statistical death avoided, which, in turn,
represents what is known as the value of a statistical life saved.
There are a number of empirical studies conducted since the mid-1970s that measure
individuals' valuations of death risk changes. These generally fall into three categories:
wage-risk studies, which focus on the wage compensation individuals require to
accept a riskier occupation;
contingent valuation (CV) studies in which individuals are asked in surveys to
state their WTP for changes in risk; and
"in other words, one aggregates across individuals so that their independent changes in probability sum to one
(i.e., so that the expected change in premature deaths in that population is equal to one). In this way, the
value of a statistical death avoided is the sum of the individuals' WTP for a risk change.
9-51
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• consumer studies, which focus on individuals' revealed WTP in markets for
goods that influence their risk of death (such as automobiles and smoke
detectors).
Two articles, in particular, have surveyed these empirical studies to establish a range of
values for a statistical life saved. Fisher, Chestnut, and Violette (1989) examined over
30 studies, most of which used a wage-risk approach. They conclude that the "most
defensible" range of estimates is between $2.3 and $12.4 million ($ 1997). More recently,
Viscusi (1993) reexamined and updated the range of studies. He places the most confidence
in the wage-risk studies that produce values in the range of $5.1 to $8.1 million ($ 1993) and
a consumer study of automobile purchases (Atkinson and Halvorsen, 1990) that estimates a
value of approximately $4 million per statistical life saved.
Based on the conclusions of the two survey articles, $5 million is a reasonable point
estimate of a statistical life saved. However, at least two inherent difficulties are associated
with the empirical studies reviewed. The first is the ability to measure accurately the risks
faced by individuals in wage-risk and consumer-risk situations. Wage-risk studies have
tended to rely on observed occupational death rates in broad industry categories.
Second, even in CV studies in which the investigator establishes the level of risk,
individuals' perceptions of risk may not correspond well with the more objective
probabilities used in the studies. Slovic, Fischhoff, and Lichtenstein (1979) have shown that
risk perceptions often differ significantly from observed death rates and that individuals have
a tendency to overestimate very small risks and underestimate very high ones. Furthermore,
individuals often have difficulty conceptualizing risk in terms of numerical probabilities,
particularly very small ones.
Despite these limitations, a growing body of research in this area continues to support
estimates in the ranges mentioned above. To account for the uncertainty in the value of a
statistical life and to maintain consistency with other analyses of effluent guidelines (EPA,
1995), EPA used a range of $2.3 million to $12.4 million to value a cancer case avoided.
9-52
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Table 9-15 reports the monetized benefits of the reductions in annual cancer incidence
from each of these regulatory options. The reductions hi annual cancer incidence for each
regulatory option range from zero to almost one cancer case per year. The combined option .
value of these cancer cases avoided is estimated to be hi the range of approximately
9-53
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$1.5 million to $8.0 million per year. As indicated in Table 9-15, the majority of these
benefits are attributable to the oils options.
The Benefits of Avoided Lead-Related Health Effects from Fish Consumption.
As summarized in Table 9-14, changes in several discrete health effects associated with lead
exposures can.be quantified for the proposed rule. Assuming that individuals' WTP to avoid
risks of death do not vary significantly across different types of fatal illness, the mortality
effects related to high blood pressure and to prenatal exposures from lead exposure can be
valued using the same approach applied to value avoided cancer cases—by assuming a range
of $2.3 million to $12.4 million per statistical life saved.
To assess the values of avoided morbidity effects associated with lead exposure, EPA
used the same values as reported in Appendix G of the CAA study to estimate individuals'
WTP to avoid each case (or related outcome) of these health effects. Table 9-16 reports these
values as unit values ($ 1997). By and large, these values are based on "cost-of-illness"
(COI) measures, which include estimates of the average medical expenditures and lost
earnings associated with each health outcome. Because these COI estimates do not value the
losses in well-being from pain and suffering due to illness, they are best interpreted as lower-
bound estimates of the total WTP to avoid each health outcome. Table 9-16 reports the
monetized annual benefits of the reductions in lead-related health effects as a result of the
proposed rule. EPA estimates the total value to be in the range of approximately $3.0 million
to $5.2 million per year. As indicated in the table, the majority of these benefits are
attributable to reductions in adverse IQ effects in children and to avoided mortality due to
prenatal exposures and to high blood pressure.
9-55
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9.4.3.2 Recreation Benefits
In addition to the health benefits of improving water quality in the affected reaches,
individuals will potentially benefit from enhanced recreational opportunities as well. As
previously discussed, these recreational opportunities include a wide range of in-stream and
near-stream activities. The values derived from these enhanced opportunities, however, are
likely to be largest and can most reliably be estimated for recreational fishing.
Studies of recreational fishing have shown that a number of aspects contribute to the
enjoyment of fishing experiences. In addition to the value received from being able to safely
consume their catch, recreational anglers derive much of their satisfaction from the natural
surroundings and the ecological health of the recreation site (Fedler and Ditton, 1986;
Holland and Ditton, 1992). Therefore, to assess the recreation benefits of the proposed rule,
EPA used attainment of the AWQC for human health aquatic life as the primary indicator of
where recreation benefits would accrue if anglers were aware of water quality improvements.
The Agency used three fundamental steps to measure recreational fishing values.
First, EPA determined which of the affected reaches would achieve both aquatic life and
human health AWQCs as a result of the proposed rule. Second, EPA estimated the baseline
annual value of recreational fishing activities at these reaches by combining our previously
estimated measures of fishing participation (i.e., number of recreational anglers using the
site) with estimates of the average number of fishing days per year and the average value of a
fishing day. Third, EPA estimated the increase in annual value from the baseline for the
selected reaches using evidence from a study that measured anglers' WTP for the removal of
contamination from recreational fishing areas (Lyke, 1993). We discuss each of these steps
below.
Step 1: Distinguish Reaches That Achieve A WQCs As a Result of Proposed Regulation.
Section 9.4.2.1 describes the AWQCs for aquatic life. Section 9.4.2.3 describes those for
human health. For purposes of this analysis, a reach achieves "contaminant-free" status, and
thus provide additional recreation benefits, if it exceeds at least one AWQC in the baseline
9-57
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and would exceed no AWQCs with regulation. As shown in Table 9-17,18 reaches exceed
at least one of the AWQCs under baseline conditions. Under the regulatory options, this
number declines to 2 exceedances for Metals Option 4, 9 exceedances for both Oils Option 8
*
and Oils Option 9, and one exceedance for Organics Option 4. Under the Combined
Regulatory Option, there are 13 reaches with exceedances—a reduction of 5 from the
combined baseline.
Step 2: Measure Baseline Annual Value of Recreational Fishing at These Reaches.
Section 9.4.2.2 discusses the estimated fishing populations at the affected reaches. These
estimates are based on
• the population and the total number of miles of stream reaches within a 30-mile
buffer zone around the affected reach,
• fishing participation rates within the state .as a whole, and
• the existence of fishing advisories on the affected reach.
The number of recreational anglers at each reach varies from fewer than 31 anglers to more
than 23,000. Using state-level data from the 1996 National Survey of Fishing, Hunting, and
Wildlife Associated Recreation, EPA then estimated the average number of freshwater fishing
days per recreational angler (DOI, 1997). For the 36 states in which these reaches are found,
the averages vary from roughly 8 to 23 days per year. Multiplying the estimated number of
anglers by the estimated number of trips per angler per year provides an estimate of the total
number of fishing days per year at each reach.
9-58
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TABLE 9-17. NUMBER OF REACHES WITH EXCEEDANCES OF AT LEAST
ONE OF THE FOUR AWQCS
Baseline
Metals
Oils
Organics
Combined Baseline"
With Regulation
Metals Option 4
Oils Option 8 (Indirect)
Oils Option 9 (Direct)
Organics Option 4
Combined Regulatory Option
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13
a Some reaches receive discharges from more than one subcategory; therefore, the combined baseline total may
be less than the total of the subcategories.
According to economic theory, the value of an angler's fishing day is equal to the
maximum the angler would have been willing to pay for the fishing day minus the actual
costs, both explicit and implicit costs, of the fishing day. A number of empirical models have
been developed to estimate these recreation values, and they generally fall into two
categories. On the one hand, travel cost models (TCMs) rely on observed recreational
behavior and estimates of the actual costs of a recreation day (most importantly the time and
out-of-pocket expenses associated with the trip) to estimate recreation values. CV models, on
the other hand, are survey-based approaches that rely on respondents' expressed WTP for
recreation to measure their values. Walsh, Johnson, and McKean (1992) conducted a meta-
analysis of TCM and CV studies that measured the per-day values of various types of
recreational activities and found the average value of a warm water fishing day to be
approximately $34 (in 1997 dollars). Smith and Kaoru (1990) conducted a similar study of
only TCM recreation studies and found per-day fishing values of approximately $34, as well.
9-59
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Step 3: Estimate Increase in the Annual Value of Recreational Fishing. Reducing the
level of contaminant concentrations in the affected reaches to meet. AWQCs may provide
additional benefits to recreational anglers by reducing health risks and improving aquatic
ecosystems. Research by Lyke (1993) has shown that anglers may place a significantly
higher value on a contaminant-free fishery than a fishery with some level of contamination.
Specifically, Lyke estimated (1) the consumer surplus associated with Wisconsin's
recreational Lake Michigan trout and salmon fishery and (2) the additional value of the
fishery if it were completely free of contaminants affecting aquatic species and human health.
The estimated incremental WTP associated with freeing the fishery of contaminants ranges
from 11.1 percent to 31.3 percent of the value of the fishery under current conditions.
Applying this range of percentage increases to the average value of a fishing day implies an
incremental value per fishing day of $3.70 to $10.40. When these values are applied to the
total number of fishing days at reaches where all AWQC exceedances are estimated to be
eliminated, the range of total annual recreation fishing benefits is $414,000 to $1.2 million.
This range underestimates recreation-based benefits because data were not available to
estimate angler populations for one of the five reaches at which benefits occur. As
Table 9-18 shows, the annual value of reducing AWQC exceedances is greatest under
Qrganics Option 4. The total value under the Combined Regulatory Option is less than the
sum of either oils options and the organics option because three of the reaches meeting all of
the criteria under the organics option remain hi exceedance under the oils option. Therefore,
no benefits are attributed to these three reaches under the Combined Regulatory Option.
Limitations and Uncertainties Associated with the Estimates of Recreational
Fishing Benefits. The previously described approach for estimating recreational fishing
9-60
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values is an application of benefits transfer. It involves using values for a "commodity"
estimated in one context—fishing days and water quality improvements—and transferring
them to a separate context (i.e., CWT reaches). Such a transfer allows analysts to estimate
benefits without having to conduct expensive primary data collection and analysis, but it also
inevitably involves uncertainties. Therefore, a number of important caveats should be
considered when interpreting the results.
First, the value of a fishing day from the Walsh, Johnson, and McKean study is more
likely to reflect waterbodies that are of average (and perhaps above average) quality,
•whereas, based on limited available information, the baseline quality of the affected reaches
is more likely to be below average than above average. The affected reaches are primarily
located in urban areas, and, as shown in Table 3-16,22 of these reaches have fishing
advisories. The existence of these fishing advisories has been accounted for by adjusting
participation rates by 20 percent. However, because no other adjustment has been made for
baseline water quality, the baseline fishing day values for the affected reaches may be an
overestimate.
Second, in the Lyke study, individuals were asked to value a reduction in
contamination that is complete and for all of the Great Lakes. Although the proposed rule
will almost entirely eliminate pollutant concentrations in CWT effluents, background levels
may be greater than zero in some of the reaches. Therefore, contamination may not be
completely eliminated by the proposed rule. Furthermore, the proportionate change in value
from eliminating contamination in all Great Lakes is likely to be higher than from
eliminating contamination in the individual CWT reaches because the CWT reaches are
likely to have more close substitutes. This suggests that transferring Lyke's findings will
also tend to overstate the benefits of the proposed rule.
Third, it is not clear what impacts Lyke's survey respondents associated with
eliminating contamination in the Great Lakes. As a result, the basis for their expressed
values is somewhat indeterminate. It is probably safe to assume that some of these values
reflect reductions in perceived health risks, but there is no way to know how well these
9-62
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correspond with the types and magnitudes of health risk reductions at the CWT reaches. To
the extent that the survey respondents implicitly considered cancer risk reductions in their
WTP responses, the estimated recreation benefits in Table 9-17 will at least partially double-
count the estimated value of cancer risk reductions shown in Table 9-15. Without more
information, the degree of double-counting cannot be determined. Because noncancer risk
reductions for the CWT reaches (Table 9-13) cannot be monetized, there is no double-
counting of the value of these risk reductions. Based on the analysis described in
Section 9.4.2.3, however, the proposed rule is not anticipated to provide large noncancer risk
reduction benefits.
These three caveats indicate that adding the estimated recreation benefits to the cancer
risk reduction benefits will tend to overstate benefits from the proposed rule. However,
because EPA did not measure downstream improvements in water quality, these estimates
may also fail to capture important downstream recreation benefits. In addition, using a
threshold model (with the AWQC as the threshold) and assuming zero background
concentrations may either overstate or understate benefits if background concentrations of
affected pollutants do, in fact, exist.
9.4.4 POTW Sludge Disposal Cost Savings
The benefits discussed in this section, POTW sludge disposal cost savings, are
fundamentally different from those discussed in the previous section in one respect: the
benefits to POTWs occur before the CWT pollutants are released into the environment. All
of the benefits discussed in Section 9.4.3 originate from changes hi environmental systems,
namely the water quality and ecological impacts on the receiving waterbodies. The cost
savings discussed and quantified in this section are separate from any changes in surface
water quality.
The benefits to POTWs may occur because reduced discharges from CWT facilities
will, in many cases, reduce POTW operating costs. The treatment of wastewater by POTWs
produces a sludge that contains pollutants removed from wastewater. POTWs must use or
9-63
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dispose of this sludge in compliance with state and federal requirements. These requirements
vary with the pollutant concentration of the sludge. Because the proposed regulatory options
will require reductions in pollutant levels in wastewater from CWTs, the sewage treatment
systems that receive these discharges are expected to generate sewage sludge with reduced
pollutant concentrations. As a result, the POTWs should be able to use or dispose of the
sewage sludge at a lower cost. In some cases, POTWs may be able to dispose of the cleaner
sludge by using it in agricultural applications, which will generate additional agricultural
productivity benefits. This section assesses the potential economic benefits resulting from
cleaner sewage sludge and develops a partial estimate of the benefit value. Also, it discusses
in detail the cost savings associated with reduced pollutant contamination of effluent
discharged by CWT facilities to POTWs.
9.4A.I Overview of Benefits to POTWs from the Proposed Regulation
Several benefits are expected to result from reduced contamination of sewage sludge.
Eight of the primary benefits are outlined below.
1. POTWs may be able to use or dispose of sewage sludge through less expensive
means. CWA regulations (40 CFR Part 503) contain limits on the concentrations
of pollutants in sewage sludge when used or disposed of through specified means.
As a result of the proposed regulations, sewage sludge from some POTWs may
meet more stringent limits, which, in turn, will permit less expensive use or
disposal of the sewage sludge. In the best case, sewage sludge will meet land
application pollution limits. This sewage sludge may be disposed of via land
application, which in some instances may be substantially less costly than other
use or disposal practices (e.g., incineration or landfilling).
2. Some sewage sludge that currently meets only land application ceiling
concentration limits and pollutant loading rate limits will meet the more stringent
land application pollutant concentration limits as a result of the proposed
regulation. Entities that apply these sewage sludges face fewer recordkeeping
requirements than users of sewage sludge that meets only land application ceiling
concentrations and loading rate limits. Further, POTWs producing sewage sludge
that meets the pollutant concentration limits have no application rate limits other
than the agronomic rate (determined by the nitrogen needs of crops and the plant-
available nitrogen at the application site).
9-64
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3. By land-applying sewage sludge, POTWs may avoid costly siting negotiations
regarding other sewage sludge use or disposal practices, such as incinerating
sewage sludge.
4. POTWs may use the nitrogen content of the sewage sludge to supplement other
sources of nitrogen. Sewage sludge applied to agricultural land, golf courses, sod
farms, forests, or residential gardens is a valuable source of fertilizer.
5. The organic matter in land-applied sewage sludge can improve crop yields by
increasing the ability of soil to retain water.
6. Nonpoint source nitrogen contamination of water may be reduced if sewage
sludge is used as a substitute for chemical fertilizers on agricultural land.
Compared to nitrogen in most chemical fertilizers, nitrogen in sewage sludge is
relatively insoluble in water. The release of nitrogen from sewage sludge occurs
largely through continuous microbial activity, resulting in greater plant uptake and
less nitrogen runoff compared to conventional chemical fertilizers.
7. Reduced sewage sludge concentrations of pollutants that are not currently subject
to sewage sludge pollutant concentration limits will reduce human health and
environmental risks. Human health risks from exposure to these unregulated
sewage sludge pollutants may occur from inhalation of particulates, dermal
exposure, ingestion of food grown in sewage sludge-amended soils, ingestion of
surface water containing sewage sludge runoff, ingestion offish from surface
water containing sewage sludge runoff, or ingestion of contaminated ground
water..
8. Land application of sewage sludge satisfies an apparent public preference for this
practice of sludge disposal, apart from considerations of costs and risk.
Although each of these benefits may be substantial, only the first benefit from the
above list—shifts, to less expensive sewage sludge use or disposal practices—is quantified in
this report. The remaining benefits categories associated with reduced sewage sludge
contamination were not quantified largely because of data limitations. The next section
monetizes the first benefit listed and discusses each of the steps taken to arrive at a monetary
value for this benefit.
9-65
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9.4.4.2 Monetization of One of the Primary Benefits to POTWs
The basic concept underlying quantification of shifts to less expensive sewage sludge
use or disposal practices is that POTWs choose the least expensive sewage sludge use or
disposal practice for which their sewage sludge meets pollutant limits. Sewage sludge
applied to agricultural land or placed on a surface disposal site is subject to stricter pollutant
limits than sewage sludge used or disposed of by other practices. However, these use or
disposal practices are, however, also generally less expensive than the alternatives.
Therefore, POTWs with sewage sludge pollutant concentrations that exceed the land
application for surface disposal pollutant limits in the baseline may be able to reduce sewage
sludge use or disposal costs when pollutant emissions from CWT facilities are reduced. EPA
estimated the number of POTWs and associated quantity of sewage sludge that will meet
land application pollutant limits and surface disposal pollutant limits before and after the
regulation is implemented. From the estimates of the relative costs of sewage sludge or
disposal practices, the Agency then estimated the cost savings that would accrue to POTWs
from the quantities of sewage sludge that qualify for land application or surface disposal
practices. The current sludge use and disposal practices and the cost savings methodology
used to monetize the benefits from changing these practices are the focus of this section.
Current Sewage Sludge Generation, Treatment, and Disposal Practices.
Provided below is a brief description of the sewage sludge characteristics and treatment
processes and the methods of sludge use or disposal.
Sewage Sludge Characteristics and Treatment. Sewage sludge contains five classes
of components: organic matter, pathogens, nutrients, inorganic chemicals, and organic
chemicals. The mix and level of these components ultimately determine the public health
and environmental impact of sewage sludge use or disposal and may also dictate the most
appropriate use or disposal practice.
Sewage sludge is generated as a result of the treatment of domestic wastewater in
conjunction with wastewater indirectly discharged to surface water via POTWs. The
9-66
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chemical and physical characteristics of the sewage sludge will depend on the extent and type
of wastewater treatment used (i.e., primary, secondary, or advanced wastewater treatment).
To reduce the volume of the sewage sludge generated, the sludge may be conditioned,
thickened, stabilized, or dewatered.
Sewage Sludge Use or Disposal Practices. After sewage sludge has been treated, it is
either disposed of or beneficially used. The use or disposal practice chosen depends on
several factors. These factors include the cost of preparing the sewage sludge for the chosen
use or disposal practice, pollutant concentrations, the availability of markets for sewage
sludge, the availability of suitable sites for use or disposal, the costs of transporting sewage
sludge to these sites, state environmental regulations, and public acceptance. Many POTWs
use more than one use or disposal practice to maintain operating flexibility and avoid
capacity limitations of a single practice.
There are four major sewage sludge use or disposal practices:
1. Land Application: the spraying or spreading of sewage sludge onto the land
surface, the injection of sewage sludge below the land surface, or the
incorporation of sewage sludge into the soil so that the sewage sludge can either
condition the soil or fertilize crops or vegetation grown in the soil. Sewage sludge
is applied to agricultural lands (pasture, range land, crops); forest lands
(silviculture); and drastically disturbed lands (land reclamation sites); or may be
sold or given away in a bag or other container for application to the land (formerly
known as distribution and marketing).
2. Surface Disposal: placing sewage sludge into an area of land for which only
sewage sludge is placed for final disposal. Surface disposal includes surface
impoundments (also called lagoons) used for final disposal, sewage sludge
monofills (i.e., sludge-only landfills), and land on which sewage sludge is spread
solely for final disposal (referred to as a "dedicated site").
3. Incineration: the combustion of organic and inorganic matter in sewage sludge
by high temperatures in an enclosed device.
4. Co-disposal: the disposal of sewage sludge in a municipal solid waste landfill
(MSWLF) or used to cover material at a MSWLF.
9-67
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Cost Savings Methodology. As mentioned earlier, sewage sludge for some POTWs
will meet more stringent pollutant limits, which, in turn, will permit less expensive use or
disposal of sewage sludge. This section describes the methodology used to estimate the total
annual cost savings for each of the following proposed regulatory subcategories: Metals
Option 4, Oils Option 8, Oils Option 9, Organics Option 4, and the Combined Regulatory
Option.
Determine Cost Differentials for Switching from One Sludge Use or Disposal Method
to Another. The first step in calculating the cost savings for the proposed regulations was to
determine the appropriate range of cost savings for switching from one disposal method to
another. EPA used the range of annual cost savings reported in the Regulatory Impact
Analysis of Proposed Effluent Limitations Guidelines and Standards for the Metal Products
and Machinery (MP&M) Industry (Phase I) (EPA, 1995b) that were estimated using
information from several sources. This blend of information is important because costs vary
across POTWs; however, the findings of the Regulatory Impact Analysis for MP&M Industry
indicate that, when ranking the sludge use or disposal practices by cost, the general order is
consistent across POTWs. This ranking from least to most expensive is as follows:
1. agricultural land application, surface impoundments, surface disposal to a
dedicated site (all approximately the same);
2. monofills;
3. sale or give away in a bag or other container for application to land;
4. co-disposal at a MSWLF; and
5. incineration.
Moreover, EPA judged that the differences in cost between certain combinations of
these use or disposal practices (e.g., the cost savings achieved by switching from incineration
to land application) are relatively stable despite the wide range of use or disposal costs for
given options among individual POTWs (EPA, 1995b).
9-68
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As mentioned earlier, POTWs may use more than one type of disposal method.
Table 9-19 shows two composite sludge use or disposal practice categories for both baseline
and post-compliance sewage sludge use or disposal practice. Each of these composite
categories assumes a particular mix of sludge use or disposal practices. The first composite
baseline sludge use or disposal practice—surface disposal—applies to POTWs with sludge
concentrations that meet surface disposal pollutant limits but do not meet land application
ceiling pollutant limits. The cost differentials calculated from this baseline are based on the
assumption that the POTWs having sludge concentration levels that meet this criterion will
9-69
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use a mix of sludge use or disposal practices as follows: 47 percent dedicated site, 28 percent
monofils, and 25 percent surface impoundment. The second composite baseline disposal
practice—incineration and co-disposal^—applies to POTWs with sludge concentrations that
do not meet land application or surface disposal pollutant limits. The cost differentials
calculated from this baseline assume that POTWs with sludge concentrations that fit this
criterion will choose a sludge use or disposal practice mix of 32 percent incineration and
68 percent co-disposal. The two post-compliance disposal practice categories are land
application and surface. The land application category is not a composite category because it
assumes that all POTWs having sludge concentrations that meet land application and surface
disposal pollutant limits will choose to use land application as their only sludge disposal
method. The surface category for post-compliance is the same as it was for baseline.
Estimate Baseline Sludge Use or Disposal Method. The next step in determining the
sludge disposal cost savings was to determine, for each POTW receiving discharges from
CWT facilities, which disposal method is used in the baseline based on estimated pollutant
concentrations in their sludge. For each subcategory, EPA calculated the total baseline
sludge concentration for the ten pollutants of concern. Each POTW was then matched to one
of the composite sludge use or disposal practice categories mentioned in the previous
section—land, surface, and incineration/co-disposal—based on exceedances of the relevant
limits.
To determine which disposal practice category was appropriate, EPA compared the
sewage sludge concentration levels for each POTW with the ceiling limits for land
application and the surface disposal limits published in the "Standards for the Use or
Disposal of Sewage Sludge" (40 CFR Part 503). As mentioned earlier, if the sludge
concentrations met both the land application and surface pollutant limits, the POTW was
assumed to use the land application disposal method. Because EPA is quantifying benefits
that arose from cost savings from switching disposal practices, and land application is the
least expensive disposal practice, all POTWs that had sewage sludge concentrations that met
this criterion were dropped from this analysis. Each POTW in the analysis was assumed to
receive discharges from only one facility, and 137 facilities were included in the analysis.
9-71
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Out of these 137 facilities, 116 facilities had baseline sludge concentration limits that did not
meet the land application pollutant levels. If the sludge concentration at POTWs met the
surface disposal pollutant limits but did not meet the land application pollutant limits, the
POTWs were assumed to use the surface composite disposal practice. This was the case for
113 POTWs. The remaining three POTWs, those that had sludge concentrations that did not
meet either the land application or surface disposal pollutant limits, were assumed to use the
disposal mix of incineration and co-disposal.
Estimate Post-Compliance Composite Sludge Use or Disposal Method. To calculate
cost savings, the Agency first determined, for each regulatory option, the number of POTWs
that would shift to a new sludge use or disposal method. This required estimating the post-
compliance sludge use or disposal practice using the same procedure that was implemented
to estimate baseline sludge use or disposal practice. Each POTW's post-compliance sludge
concentration was then compared with the sewage sludge pollutant limits for surface disposal
and land application, and the same assumptions were used as discussed above to match each
POTW to a sludge use or disposal practice category. Finally, EPA compared this
post-regulation sludge use or disposal practice to the baseline sludge use or disposal practice
to determine if the POTW did switch after compliance. As shown in Table 9-20, the
regulation will lead to a shift in disposal from incineration to surface for one POTW under
Metals Option 4, Oils Option 8, and Oils Option 9. No shifts in disposal practice will take
place under Organics Option 4.
Calculate Cost Savings for Each POTW. The next step in the analysis was to
calculate, for each POTW, the annual cost savings associated with each regulatory option.
9-72
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9-73
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To determine the annual cost savings of a POTW, EPA multiplied the cost differential
between baseline and post-compliance sludge use or disposal practices by the quantity of
sewage sludge that shifts into meeting land application or surface disposal limits. The cost
differential used in this estimation is the cost savings found hi Table 9-19. For the quantity
of sewage sludge that shifts into meeting new pollutant limits, the Agency used the quantity
of sludge, in metric tons (DMT), generated annually at each POTW.
Calculate Cost Savings for Each Regulatory Combination. The final step was to
calculate the total annual cost savings for each regulatory option. To calculate the savings for
a particular regulatory option, the Agency summed the cost savings of each of the individual
POTWs for that particular regulatory option. As shown in Table 9-20 these estimates were
then combined to estimate the annual cost savings for the Combined Regulatory Option,
which range from $149,000 to $928,000. The majority of these cost savings can be attributed
to the oils options, which each have an annual cost savings of between $95,000 to $590,000.
9.5 COMPARISON OF BENEFITS AND COSTS
This section compares the costs and benefits projected to be experienced by society as
a result of the CWT effluent limitations guidelines and standards. The social costs of the
regulation, including costs to CWT owners, CWT customers, and government, are estimated
to be approximately $32.2 million. The quantified and valued benefits of the regulation are
projected to range from $5.1 million to $15.4 million. A preliminary comparison of these
values shows that the estimated costs exceed the estimated benefits. However, the estimation
of both costs and benefits is subject to limitations and uncertainties. The limitations and
uncertainties are described hi greater detail earlier hi this report and are summarized below.
In general, it is not possible to determine the effect of the limitations and uncertainties
on the magnitude of the estimated costs. However, the quantified and valued benefits of the
regulation represent only a subset of its total benefits, so the benefits are certainly
underestimated.
9-74
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9.5.1 Uncertainties and Limitations of Analysis of Social Costs
Several areas of uncertainty may affect the estimated costs of the regulation. For
example, CWTs are assumed to offer their services and compete in multistate regional
markets, which may be either perfectly competitive, monopolistic, or duopolistic. The
market structure affects the distribution and magnitude of the costs of the regulation. If the
markets for CWT services are larger geographically and more competitive than EPA has
assumed, the model overestimates the social costs of the regulation and allocates too large a
share to customers and too small a share to CWT owners. If, on the other hand, the markets
are smaller and less competitive, the costs may be understated, and more of the burden may
fall on customers than predicted by the model.
The elasticity of demand assumed in the model also affects how much of the costs
may be passed on to customers and how much must be absorbed by owners. The model uses
an elasticity of demand in competitive CWT markets (-0.5) that reflects the general range of
estimated elasticities found in the literature for various types of waste management services
(see Appendix E for more detail). The elasticity of demand in imperfectly competitive
markets is assumed to be -1.5. Economic theory dictates that firms with market power
operate in the elastic range of their demand curves. Thus, the elasticity must be above 1 in
absolute value. It may, in fact, be higher or lower than assumed. If the true demand is more
elastic than assumed, more of the costs will be absorbed by the CWTs. If it is less elastic, a
larger share will be passed on to customers.
Because of data limitations, EPA assumes the average or per-unit cost functions for
individual CWT processes is constant up to process capacity, and most facilities are operating
their processes at or near capacity (that is, they do not adjust the quantity of waste treated).
EPA assumes that adjustments in quantity in response to changes in costs and price take
place only at the highest cost facilities. If this is not true, facilities whose CWT processes do
not incur costs as a result of the regulation would be likely to increase production in response
to the higher with-regulation price. Thus, this assumption may overstate both quantity and
9-75
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price impacts of the regulation (see Appendix D for a more detailed discussion of the cost
functions).
Overall, therefore, it is not possible to determine the direction of influence of the
uncertainties and limitations on the estimated costs. The following section examines the
uncertainties and limitations affecting the benefits analysis and indicates the expected sign of
the effect of those uncertainties and limitations on the estimated benefits of the regulation.
9.5.2 Uncertainties and Limitations of Analysis of Benefits
One general limitation of the benefits analysis, which probably results in an
underestimation of benefits, is that EPA analyzed water quality and related impacts only for
a single reach adjacent to each discharge point. The impacts of the regulation on reaches
downstream and upstream from the directly affected reaches will most likely be lower than
impacts on directly affected reaches, but not necessarily zero.
Many categories of benefits are not quantified and valued because of data limitations.
For example, benefits of improved water quality through reductions in most noncancer health
effects can only be identified, not quantified or valued, because dose-response functions for
these noncancer health effects do not exist. Thus, analysts can observe whether the estimated
individual levels of exposure to each chemical exceed their respective safety thresholds
(RfDs); however, without dose-response information, they cannot estimate the incidence of
the health effects in the exposed population. Other types of benefits that are not quantified or
valued are nonuse benefits, near-stream recreation benefits, benefits to commercial
fishermen, and benefits to diversionary users of the water, such as industries or municipalities
that use the water for drinking or other uses.. In addition, recreation-based benefits are
underestimated because data were not available to estimate the angler population at one of
the reaches where these benefits occur.
The analysis assumes that background concentrations of each pollutant are zero.
This assumption does not affect the reductions in cancer risk, but for assessments of
9-76
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ecological and noncancer impacts, which depend on whether the concentration of the
pollutant falls above or below a threshold level, the results are very sensitive to the accuracy
of the assumption. It is unclear whether the assumption results in an underestimate or an
overestimate of the impacts.
Estimation of the number of anglers using the affected reaches has not considered the
quality of substitute sites. The analysis assumes anglers in a region are equally likely to fish
any reach mile within the zone. If water quality in substitute sites is distinctly better (worse)
than in the affected reach, then the estimates of the exposed populations are likely to be too
high (low).
Anglers' responses to fish consumption advisories is very uncertain. This analysis
adjusted the exposed population downward by 20 percent in reaches that had fish
consumption advisories. Some studies suggest that fisherman may not change their fish
consumption behavior in response to advisories.. If this is true, the analysis underestimates
the benefits.
The analysis assumes no behavioral changes as a result of water quality
improvements. If either the perceptible qualities of the water bodies are improved or the
catch improves, anglers are likely to increase their fishing activities (and thus potential
exposures to remaining contaminants) in the affected reaches. If so, health benefits may be
overestimated in EPA's analysis, and recreation benefits may be underestimated.
The transfer of benefit values may have led to an overestimate of values. There are
two reasons for this. First, the the estimate of the value of a fishing day for the affected
reaches may be too high, because water quality at these reaches is probably generally worse
than the water quality in the waterbodies for which the benefits were originally estimated
Second, the source of the benefit values used for measuring the increase in the value of a
fishing day due to removal of all contaminants may to an extent double count the reductions
in cancer risk. Also, the CWT reaches have more close substitutes than the waterbodies used
9-77
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in the Lyke analysis (the Great Lakes), and use of Lyke's estimates may overestimate the
increased value in the CWT reaches.
9.6 CONCLUSIONS
This section has presented and compared EPA's estimates of the benefits and costs to
society of the proposed effluent limitations guidelines and standards for the CWT industry.
The estimated costs, approximately $32.1 million, represent EPA's best point estimate of the
costs of the regulation. However, because of limitations and uncertainties of the analysis, the
true costs to society may be higher or lower than the estimated costs.
EPA also estimated the values of several types of benefits of the regulation, including
reductions in cancer risk, reductions in risk due to lead exposure, in-stream recreational
benefits, and reduced costs of sludge disposal for POTWs managing CWT wastewater.
EPA's benefits estimates range from approximately $5.1 million to $15.4 million. This
chapter notes several uncertainties and limitations of these quantified and valued benefits
estimates. These might result in the estimated benefits for those categories being either
higher or lower than the true benefits for those categories. However, because data limitations
prevented the Agency from quantifying or valuing many other categories of benefits,
including benefits to near-stream recreation, commercial fishing, and diversionary users of
the affected waterbodies, as well as nonuse benefits, the Agency is certain that the quantified
and valued benefits represent only a subset of total benefits. Thus, EPA is confident that the
costs of the proposed regulation are reasonable given the expected benefits.
9.7 REFERENCES
Atkinson, Scott E., and Robert Halvorsen. 1990. "The Valuation of Risks to Life: Evidence
from the Market for Automobiles." The Review of Economics and Statistics
72(1):133-136.
Belton, Thomas, Robert Roundy, and Neil Weinstein. 1986. "Urban Fishermen: .Managing
the Risks of Toxic Exposure." Environment 28(9): 19-37.
9-78
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Cable, Ted T., and Edward Udd. 1990. "Effective Communication of Toxic Chemical
Warnings to Anglers." North American Journal of Fisheries Management
10:382-387.
Connelly, Nancy A., and Barbara A. Knuth. February 1993. Great Lakes Fish Consumption
Health Advisories: Angler Response to Advisories and Evaluation of Communication
Techniques. HDRU Series No. 93-3. Ithaca, NY: Cornell University.
Connelly, Nancy A., Barbara A. Knuth, and Carole A. Bisogni. September 1992. Effects of
the Health Advisory and Advisory Changes on Fishing Habits and Fish Consumption
in New York Sport Fisheries. Report prepared for the New York Sea Grant Institute
Project No. R/FHD-2-PD, Series No. 92-9. Ithaca, NY: Cornell University.
Diana, Susanne C., Carole A. Bisogni, and Kenneth L. Gall. 1993. "Understanding Anglers:
Practices Related to Health Advisories for Sport-Caught Fish." Journal of Nutrition
Education 25(6):320-328.
Environmental Systems Research Institute Inc. (ESRI). 1995. ArcView 3a Geographic
Information System software package. Redlands, CA.
Fedler, Anthony J., Robert B. Ditton. 1986. "A Framework for Understanding the
Consumptive Orientation of Recreational Fishermen." Environmental Management
10(2):221-227.
Fiore, Beth Jones, Henry A. Anderson, Lawrence P. Hanrahan, Leon John Olson, and
William C. Sonzogni. 1989. "Sport Fish Consumption and Body Burden Levels of
Chlorinated Hydrocarbons: A Study of Wisconsin Anglers." Archives of
Environmental Health 44(2):82-88.
Fisher, A., L. Chestnut, and D. Violette. 1989. "The Value of Reducing Risks to Death: A
Note on New Evidence." Journal of Policy Analysis and Management 8:88-100.
Heller, Katherine B. and Tyler J. Fox. 1998. Estimation of social cost under imperfect
competition. Memorandum to the record for the Centralized Waste Treatment
Effluent Limitations Guidelines and Standards.
Holland, Stephan M., Robert B. Ditton. 1992. "Fishing Trip Satisfaction: A Typology of
Anglers", North American Journal of Fisheries Management 12:28-33.
Lyke, A. 1993. Discrete Choice Models to Value Changes in Environmental Quality: A
Great Lakes Case Study. Thesis submitted in partial fulfillment of the requirements
for the degree of Doctor of Philosophy (Agricultural Economics) at the University of
Wisconsin Madison.
MacDonald, Hugh F., and Kevin J. Boyle. 1997. "Effect of a Statewide Sport Fish
Consumption Advisory on Open-Water Fishing in Maine." North American Journal
of Fisheries Management 17(3):687-695.
May, Helen, and Joanna Burger. 1996. "Fishing in a Polluted Estuary: Fishing Behavior,
Fish Consumption, and Potential Risk." Risk Analysis 16(4):459-471.
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Slovic, Paul, Baruch Fischhoff, and Sarah Liechtenstein. 1979. "Rating the Risks." In
Readings in Risk, Theodore S. Glickman and Michael Gough, eds., pp. 61-74.
Smith, V. Kerry, and Yoshiaki Kaoru. 1990. "Signals or Noise? Explaining the Variation in
Recreation Benefit Estimates." American Journal of Agricultural Economics
72(2):419-433.
U.S. Department of Commerce, Bureau of the Census. 1997. Statistical Abstract of the
United States. 117thed. Washington, DC.
U.S. Department of the Interior, Fish and Wildlife Service and U.S. Department of
Commerce, Bureau of the Census. March 1993. 1991 National Survey of Fishing,
Hunting, and Wildlife-Associated Recreation. Washington, DC.
U.S. Department of the Interior, Fish and Wildlife Service and U.S. Department of
Commerce, Bureau of the Census. November 1997. 1996 National Survey of
Fishing, Hunting, and Wildlife-Associated Recreation. Washington, DC.
U.S. Environmental Protection Agency, Office of Water. 1998. Environmental Assessment of
Proposed Effluent Guidelines for the Centralized Waste Treatment Industry.
Washington, DC. EPA Report No. 821-R-95-003.
U.S. Environmental Protection Agency, Office of Water. 1995b. Regulatory Impact
Analysis of Proposed Effluent Limitation Guidelines and Standards for the Metal
Products and Machinery Industry (Phase 1). Washington, DC. EPA Report No. 821-
R-95-023.
U.S. Environmental Protection Agency. October 1997a. The Benefits and Costs of the Clean
Air Act, 1970 to 1990.t Research Triangle Park, NC: Office of Air Quality Planning
and Standards.
Velicer, Christine M., and Barbara A. Knuth. 1994. "Communicating Contaminant Risks
from Sport-Caught Fish: The Importance of Target Audience Assessment." Risk
Analysis 14(5):833-841.
Viscusi, W. Kip. 1993. "The Value of Risks to Life and Health." Journal of Economic
Literature 32(December):1912-1946.
Walsh, Richard G., Donn M. Johnson, and John R. McKean. 1992. "Benefit Transfer of
Outdoor Recreation Demand Studies, 1968-1988." Water Resources Research
28(3):707-713.
9-80
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APPENDIX A
Copy of Part B of the Waste Treatment Industry Questionnaire
and
Notice of Availability Facility Information Sheet
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U.S. ENVIRONMENTAL PROTECTION AGENCY
WASTE TREATMENT INDUSTRY QUESTIONNAIRE
PART 2. ECONOMIC AND FINANCIAL INFORMATION
INTRODUCTION : :—
The U.S. Environmental Protection Agency (EPA) is conducting a survey of the Waste Treatment Industry
as part of its effort to establish national wastewater regulations for this industry. For purposes of this
questionnaire, hazardous and non-hazardous wastes will be covered. The data collected by the
Technical section of the questionnaire wilt be used to determine the number of facilities in this industry
the number of dischargers to surface waters and publicly-owned treatment works, the characteristics of
these discharges, and the treatment technologies currently used by this industry. The data collected by
the Economic and Financial section of the questionnaire will be used to characterize the industry and to
estimate the possfcle economic impacts of the regulations.
AUTHORITY
This survey is conducted under the authority of Section 308 of the Clean Water Act (the Federal Water
Pollution Control Act, 33 U.S.C. Section 1318). All facilities which receive this questionnaire must
respond. Only if you were instructed in Section A of Part 1 of the questionnaire to stop filling out the
questtonnaire.are you not required to complete Part 2. Follow the questionnaire instructions and answer
the questions as accurately as possible. PLEASE RETURN THE QUESTIONNAIRE TO EPA WITHIN 60
DAYS. Late ffling or failure otherwise to comply with these instructions may result In criminal fines, civil
penalties, and other sanctions as provided by law.
WHO SHOULD COMPLETE THE
ECONOMIC/FINANCIAL SECTION OF THE QUESTIONNAIRE? —
Each section of this questionnaire should be completed by the person who is most knowledgeable about
the information it requests. Nevertheless, verifying each section of the questionnaire and signing the
certification statement located In Part 3 should be a single individual's responsfoHtty. Accurate responses
will enable EPA to consider the information in future policy decisions.
EPA has prepared this part of the questionnaire so that ft is applicable to a wide variety of waste
management facilities. Therefore, not all the questions may apply to your facffity. Unless instructed
otherwise, you are expected to make an effort to complete every item using available data. However, you
are not required to perform non-routine tests or measurements solely for the purpose of responding to this
questionnaire. If exact measurements are not avmiabJe but can be estimated, please provide estimates
and note, on the NOTES page at the end of each section, the method used in making the estimation.
Please indicate on the NOTES page all question* for which your responses are estimates.
Note: ff you responded "No" to Question A.17 to P*ni, you are not required to complete Part 2.
QUESTIONNAIRE HELPLINE —
If you have any questions about the economic/financsal part of the questionnaire or would like to provide
additional information, please contact the Waste Treatment industry Questionnaire Helpline at 1-800-626-
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INSTRUCTIONS
PROVISIONS REGARDING DATA CONFIDENTIALITY
Regulations governing the confidentiality of business in ation are contained In 40 CFR Pan 2 Subpart
B. You may assert a business confidentiality claim covering part or ail of the information you submit in the
manner described in 40 CFR 2.203(b):
•(b) Method and time of asserting business confidentiality daim. A business which is submitting tnformttion
to EPA may assert a business confidentiality daim covering the information by piecing on (or asserting to)
the information, at the time it is submitted to EPA, a cover sheet, stamped or typed legend, or other suitable
form of notice employing language such •»» trade secret' 'proprietary.' or -company confidential.1 Ategediy
confidemial portions of otherwise non-c. dental documents should be dearry identified by the business,
and may be submitted separately to f acuiate identification and handling by EPA If the business desires
confidential treatment only until a certain date or until the occurrence of a certain event, the notice should so
state.*
If no business confidentiality claim accompanies the Information whan It Is received by EPA, E: A
may make the information available to the public without further notice to you.
Please be specific in indicating whether a claim of confidentiality covers all or only part of the information
on a questionnaire or attachment.
Information overed by a claim of confidentiality wfli be disclosed by EPA only to the extent, and by
means of the rocedures.s.t forth In 40 CFR Part 2 Subpart B. In general, submitted Information
protected by a business confidentiality daim may be disclosed to other employees, officers, or authorized
representatives of the United States concerned with carrying out the Clean Water Act or when relevant to
any proceeding under the Act
Effluent data are not eligible for confidential treatment, pursuant to Section 308(b) of the Clean Water Act
The information submitted wfll be made available to EPA wrtractorstnoidermmtrH^rtraaorernay
carry outthe work required by their contract with EPA, AN EPA contract ptovida that corttractor
employees shall use the Information only for the purpose of canning c»ut Rework required by melr
contract and shall refrain from disclosing any confidential business information to anyone other than EPA
without the prior written approval of each affected business or of the EPA legal office. Any comments you
may wish to make on this issue must be; jbmrtted in writing at the time of submitting your response.
Please direct any questions regarding confidential business information to the Waste Treatment Industry
Questionnaire Helpline at 1-800-626-5767.
CHECKLIST
Be sure that the following additional information * tocfcjded win the completed questionnaire, unless
instructed otherwise:
Q Question IL22: 1987.1988. and 1989 annual reports for the facSry (if Independently owned) or
for the business entity that owns and/or controfc the fadtty; incsjde income statements and
balance sheets. (Please see definitions of fadVy and business entty, p. M-1.)
Q QuestionO.2: If the facility uses a standard contract in arranging wthcSents to accept aqueous
Cquid waste, sludge, and/br wastewater generated offsle for treatment onstte. please attach a
copy of the standard contract. (Seep. O-i.)
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1.
4.
5.
6.
GENERAL INSTRUCTIONS
R«ad all definitions. P:ease read all definitions on page M-1 carefully before completing Pan 2 of
the questionnaire. The individual who responds to each section must be familiar with the pertinent
economic and financial aspects of waste treatment, disposal, and recycling/recovery operations at
Mark responses for each question. Please circle the appropriate response or responses in each
question. More than one response may be circled for some questions, where appropnate Please
SSS^SSSf"^fequire Writlen n**>n*** °y P**«g or typing in th?spaces providedIf
the space allotted tor the answer to any question is not adequate for your complete response ciease
continue the response in the NOTES area at the end of each section of the questionrSSe
Reference the comments to the appropriate question. If additional attachments are used to darifv a
£S°h?£ Sf^i6 "?** K8rtain that the codft ™«*'*» this questionnaire, which appears at the top
nght hand comer of each page, ts also placed at the top right hand comer of each page of the
3it3cnm 6 nt s •
Ptease enter all asset, liability, revenue, and cost Information In ttolltn, and price Information
in dollars p*r ton. Please enter quantity Information in short tons (2000 pounds?! tonT
Indicate information which should b* treated as confidential. Please folbw the instructions
gnren in the PROVISIONS REGARDING DATA CONFIDENTIALITY section on pm itotaScue
~ ,~ . T«" your responses is confidemial so that Hn«yt>eproteaedurKter confidentiality
Answer all Hems unless Instructed otherwis*. Please answer all Hems unless Instructed to do
otherwise. The purpose of this questionnaire is to gather all available economic and financial
information pertinent to hazardous and non-hazardous waste treatment, disposal and
2S?Sl!?^lLopewlbns that produce wastewaters- W a question is not applicable, indicate by
wnting N/A If. after conscientious attempts to obtain requested information, an item remains
SS™"^^"0^ estim£ed- «*» "UNK- and explain in the NOTES area at the end of the
appropnate section why such Information is not available. If an item seems ambiguous, complete it
SOSJZ ^f!?16 a£ f316 your ******>" in doing so in the NOTES area at theend of We
appropnate section. Reference all explanations and assumptions to the appropriate questions. If
s^n the NOTE?1 * * !° ^^ 3 qUeSli°n' P'eaSB 6StlmatB ^ ™*** ***** teve *"•
Rjtaln a copy of completed questionnaire. EPA will review the information submitted and may
SStSco0"^ Pera!^n m answe™9 toltow^jp clarification questions. « necessary, to complete the
data base. Please retain a copy of the completed questionnaire, including attachments, in case EPA
must contact you to verify your responses. Abo. please maintain a record of sources used to
complete the financial section.
!Jf tebnomlc and financial *«ctton of the questionnaire, please raattaeh tt
•ntlre questionnaire to:
Debra S. DiCianna
U.S. EPA (WH-552)
Office of Water
Office of Water Regulations and Standards
Industrial Technology Division
401 M Street. SW
Washington, DC 20460
Call In questions, if you have any questions about the ecortomfc/Tinancial section, please
telephone the Waste Treatment Industry Questionnaire Helpline at 1-800-626-5767.
m
and return
Ill
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INSTRUCTIONS
This page is intentionally
toft Wank.
-------
f 11.6. NfcwvP ;
PLEASE RETURN THIS PAGE WITH YOUR COMPLETED ECONOMSC AND FINANCIAL QUESTIONNAIRE.
1. Provide the name, title, and telephone number of the Individual who may be contacted to
car answer questions concerning Information submitted In Pan 2. Economic and FlnanSL
P***CC,M information.
« Name of Contact:
P*4'B Trtle of Contaa:
What is the most convenient time to call?
ATTACH
LABEL
HERE
Rlview.the jnforTnation on *"« Preprinted label above. If any of the information is incorrect
enter the correct information in the appropriate spaces on this page. »««*»«BW,
2. If the mailing address shown on the preprinted label Is not correct, enter the corrections to
the label in the spaces provided below.
Q N/A
Name of Facility:
f»t a. B Street Address or P.O. Box:
e City:
State:
an:
3._ If the street address of the facility Is different from the mailing address, provide the street
address In the spaces provided below.
Q N/A
w* 3 ft Name of Facility:
Street Address: .
City:
State:
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INSTRUCTIONS
This page is intentionally
toft blank.
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SECTION M: BUSINESS ENTITY FINANCIAL INFORMATION
The purpose of Section M is to collect financial information about the business entity directly owning
and/or controlling your facility. These data will be used to assess impacts of the regulation on
business entities. •
For independently-owned and operated facilities and multi-facility establishments whose primary
business is waste treatment, recycling/recovery, and/or disposal, the business entity is the facility or
establishment. The information requested in Section M is to be based on corporate annual reports.
For mutti-facility establishments whose primary business is not waste treatment, recycling/recovery,
and/or disposal activity, the business entity is the level of ownership closest to the facility for which
there exist income statements, balance sheets, market or book value of stock. This may be, for
example, the waste management division of a larger company.
Answer the questions in sequence and do not leave any entry blank unless instructed otherwise
Definitions and specific instructions are provided throughout. Use the NOTES page at the end of the
section if you wish to explain your response to any question. Reference each comment with the
appropriate question number. Reminder: Please provide estimates. If possible, of data for which
exact measurements are unavailable. Indicate on the NOTES page at the end of the section which
responses are estimates, and explain the method of estimation.
DEFINITIONS
Financial Statements: balance sheet and income statement that were derived from accounting records
according to generally accepted accounting principles (GAAP).
Business Entity: a proprietorship, partnership, or corporation, or a division or subsidiary of a
proprietorship, partnership, or corporation, for which financial statements exist.
Facility: the physical location or site where waste is managed.
DUNS Number a unique nine-digit number assigned by Dun & Bradstreet Corporation to each business
establishment (i.e., to each branch location, headquarters location, and single location
establishment). These identification numbers, based on the Data Universal Numbers System, are
referred to as D-U-N-S Numbers (printed here as DUNS).
Commercial Facility: a facility that treats, disposes, or recydes/recovers the wastes of other facilities not
under the same ownership as this facility. Commercial operations are usually made available for
a fee or other remuneration. Commercial waste treatment, disposal, or recycling/recovery does
not have to be the primary activity at a facility for an operation or unit to be considered
"Commercial".
Non-commercial Facility: a facility that provides treatment, disposal, or recycling services to other
facilities under the same ownership as this facility, for which no fee is charged. Included in this
definition are intracompany waste treatment facilities, which treat, dispose, or recycle/recover the
wastes generated off-site from facilities under the same corporate ownership. Intra-company
waste treatment facilities may receive remuneration in the form of intra-company funds, services.
etc.
Value of Product Manufactured (for non-commercial facilities only): quantity of product manufactured,
valued at market price.
-------
FILE
PARTS. SECTION M. BUSINESS ENTTTY FINANCIAL INFORMATION
M.1.
M.2.
is this facility Independently owned and operated? (La., the facility is the business entity.)
(Circle one number.)
01 Yes (GO TO QUESTION M.1 DON PAGE M-3)
02 No (CONTINUE TO NEXT QUESTION)
What is the name and mailing address of the business entity that directly owns and/or
controls this facility and for which financial statements exist?
Name of Business Entity:
Street Address or P.O. Box:
C«y:
State:
What Is the name and mailing address o: ;he corporate parent that owns and/or controls
this business entity?
Q Same as in Question M.2
Jfl Name of Corporate Parent: _________________________________^^
& Street Address or P.O. Box:
Clty:_
.State:
MUJ. What Is the business entity's OUNS number?
c &x c//f/js business entity does not have a 'VS number, circle the response code for "not
,.._,_,
applicable.7
DUNS number:
Not applicable: 00
J I
M-5. Please gtve the month and year when the business entity purchased or took control of the
faculty.
'
Month:
Yean iai \ \
com
MLS. DOM th* business entity currently own and/or control any other facilities engaged In
aqueous liquid waste, sludge, and/or wastewater treatment, recycling/recovery, and/or
disposal operations?
(Circle one number.)
01 Yes (CONTINUE TO NEXT QUESTION)
02 NO (GO TO QUESTION M£ ON THE NEXT Pt3E)
M-2
-------
PART 2. SECTION M; BUSINESS ENTITY FINANCIAL
/v, ** i !*&j lnCludlnQ your f*01111*now """y **"•«» liquid waste, sludge, and/or wastewater
„ 4
-------
PART 2. SECTION Ifc BlfSfriFSS EKTTTY RMAMCUU. HFORUAT1OM
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-------
PART 2. SECTION Ur BUgNESS EffTmr FINANCIAL tWFORMATIQM
M.17. For the business entity, report the following amounts for eacn calendar year.
C &X" '
a.
b.
c.
d.
e.
I.
c>a>es *«/ 1 ft y^
/**f 7/»rK
Working capital " "m * 1 7 B y 7
Retained earnings *«* / 7 e f 1
Earnings before interest and taxes
Total assets /*4>f7E?7
f*4i*T El1?
/H4»n£?^
Book value of total liabilities
1987: $ L
1988: $ L
1989: SL
1987: $ L
1988: $L
1989: $ L
1987: $i_
1988: $ L
1989: $ L
1987: $ L
1988: $ L
1989: $t_
1987: $L_
1988: $(_
1989: $ L.
1987: $ L.
1988: $l_
1989: $ L.
I f lr! I 1
i 1 1,1 1 1
! 1 !rl ! 1
t 1 1,1 1 1
1 1 1,1 1 1
1 1 ITI 1 1
1 1 1,1 1 1
J 1 1,1 1 1
! 1 1,1 1 1
1 1 1,1 1 1
1 1 1,1 1 1
1 1 ITI 1 1
1 1 1,1 1 t
1 1 1,1 1 f
1 1 1,1 1 I
1 1 ITI 1 I
! 1 ITI 1 1
1 1 1,1 1 1
ITI f | |
ITI 1 | |
J?l ! I 1
JTI I 1 |
I.I 1 1 I
1.1 11 I
!rl 1 1 f
lrl I 1, |
I.I f t |
JTI 1 1 1
!TI II |
I.I 1 | |
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J.I 1 1 1
ITI 1 1 1
I.I 1 II
I.I 1 1 I
w 4 / v Jtl8* Y/tlSt *th* dl*eotm"' "^ eun'nt'y "«•* by the business enttty when calculating net
M+,g torn P1*88"1 values for waste treatment, recycling/recovery, and/or disposal capital investment
decisions?
Discount rate:
*9" Wh8t te lh" corporat- Income tax rate that applies to the business sntlty?
Coi^orzte income tax rate: t t i. t i i %
*vf *+ t?&r0' What * **** averaB« prs-tas rate of Interest the business enttty paid on debt in 1989?
_
P">tax interest rate: i t »-i i i%
-------
PART 2: SECTION M: BUSINESS EMTTTY FINANCIAL INFORMATION
M.21. What is the business •ntity's after-tax rate of return on equity?
After-lax return on equity rale:
Include copies of the 1987, 1988, and 1989 annual reports and 10K reports for your facility
(If Independently owned) or for the business entity that owns and/or controls your facility,
including Income statement and balance sheet, with your return of the completed
questionnaire. Business entitles owning and/or controlling multiple facilities need send
only one copy of each annual report.
M.22.
Q
Ir
M-6
-------
PART 2. SECTION M; BUSINESS ENTITY FINANCIAL INFORMATION
/«C B
NOTES «
M CC-
mccaj Question
Numberts)
n
Notes, comments, etc.
M-7
-------
PART 2. SECTION M: BUSINESS ENTITY FINANCIAL INFORMATION
This page is intentionally
ten blank.
•.'I /!;!)
-------
SECTION N: FACILITY FINANCIAL INFORMATION
The purpose of Section N is to collect financial information at the facility level. This information will be
used to assess impacts of the regulation on facilities.
Answer the questions in sequence and do not leave any entry blank unless instructed otherwise.
Definitions and specific instructions are provided throughout. Use the NOTES page at the end of the
section if you wish to explain your response to any question. Reference each comment with the
appropriate question number. Reminder: Please provide estimates, if possible, of data for which
exact measurements are unavailable. Indicate on the NOTES page at the end of the section which
responses are estimates, and explain the method of estimation.
N.1.
What Is your facility's DUNS number?
(If your facility does not have a DUNS number, circle the response code for "not applicable.")
DUNS number: i 1 i -1 i I
Not applicable: 00
N.2.
What SIC Code best represents your facility's main operation?
(See tha list ofP°ssiDle S!C Codes, Table R-2 In Instructions and Reference Tables.)
SIC Code:
i t t t
N.3. Do you conduct manufacturing operations at this facility?
(Circle one number.)
01 Yes (CONTINUE TO NEXT QUESTION)
02 No (GO TO QUESTION N.1 DON PAGE N-3)
N.4.
Do your manufacturing operations generate aqueous flquld waste, sludge, and/or
wastawatar?
(Cirde one number.)
01 Yes (CONTINUE TO NEXT QUESTION)
02 No (GO TO QUESTION N.6 ON THE NEXT PAGE)
-------
PART2. SECnON N: FACILITY RNANCUL MFORUATION
N.5. What quantity of wastewater wa» generated by this faclitty't manufacturing operations
ounng 1997, issfe, and isea, ana wnax percentage PI mis wanewnar was uaated onsne?
Year Quantity Generated Percent Treated Onalte
1987 N*4^A?T | | i I,! I I I, I ! I I tons H44i~B*7 i |
1988 M++cA»f . I 1 1,1 i' . l,| . 1 ftans w*^W , ,
1989 U£*r^*q I J 1 JT> ' ' '»! ' ' Itons H**rB?1 | ]
J_J%
J_J%
_LJ%
N.6. What waa the calendar year during which manufactuilng operationa begar «t this facility?
ft£*^£olA Vaar- i i
. * t f Tool* I I T i I
M <$<•£> i i i i i
N.7. Does your facility ship any product manufactured onstte to other facllKles under the same
J?i? to£v ««»WWP " your fac«tty?
(Circle one number.)
01 Yes (CONTINUE TO NEXT QUESTION)
02 No (GO TO QUESTION N.10 ON THE NEXT PAGE)
What was the total value of shipments or value of product manufactured and shipped to
other facilities under the same ownership In calendar years 1987,1988, and 1989?
(Please include these revenues or cross charges in your responses to Questions N27b, N28b.
andN29b. orN30t>, N31b, andN32ti.)
H£.
1987: $
1988: $
1989: $
i i I
i i ITI i i
I i t i
i i tt i » »» i
NJ. How was the transfer price determined for shipments to other fscRUeaundar the same
(Ctrcta one number.)
>
01 Market price
02 Manufacturing cost
03 Other (spedtyj:
Jill •:,:
-------
PART 2. SECTION N: FACaLJTY FINANCIAL INFORMATION
N.10. What was the calendar year during which aqueous liquid waste, sludge, and/or waste water
ij A i 4 tOJT
N * / * com treatment, recycling/recovery, and/or disposal began at this facility?
N«*I«*. Year: i t i i >
.11. What was the calendar year during which the most recent major expansion or renovation
of aqueous liquid waste, stodge, and/or wastewater treatment, recycling/recovery, and/or
disposal capacity was substantially completed at this facility?
(A major expansion or renovation is one which resulted in a production increase of at least 10%
and/or a capital expenditure equal to at least 10% of the accumulated gross investment in plant
and equipment at the time of the investment decision.)
Year: i9i__i_J
N.12. Does your facility have a RCRA Part B permit?
N 4 / z tom (Circle one number.)
01 Yes (CONTINUE TO NEXT QUESTION)
02 No (GO TO QUESTION N20 ON PAGE N-7)
N.13. Estimate the cost of obtaining this facility's RCRA Part B permit.
a. Legal fees: $L_L_L_J»
N*i3»b. Administrative costs: . S i i IT
c. Public relations: S i i ir
13.>i d. Other (specify):, N t=i 3 ao $L_L_J_I
e. Total:
.1 ! I I
$L_L_L_Ji
N*'v c BX
N.14. Has this facility's RCRA Part B permit ever been modified?
(Circle one number.)
01 Yes (CONTINUE TO NEXT QUESTION)
02 No (GO TO QUESTION N20 ON PAGE N~7)
-------
PART 2. SECTION N: FACILITY FINANCIAL MFORUATION
N/I5. How many modifications havt bMn mad« to th» facility's RCRA Pan B parmtt?
_ Number of modifications:
For each modification, complete Questions N. 16 through N. 19 on the next page. If, tor example,
three modifications were made to your RCRA Part B permit, photocopy Page N-5 (Questions
N.16 through N. 19) two times.. JJse the original page to report information on the first
modification, and the remaining copies to report on the second and third modifications. Number
each copy in the space provided in the top right comer of the page.
-------
PART 2. SECTION N: FAaUTT FINANCIAL INFORMATION
MODIFICATION «| | OF[_j
N-16. What was the date of the modification to the facility's RCRA Part B fwrmtt?
N + lb Y8ar: 19
N.17. Estimate the cost of obtaining this modification.
a. Legal fees: Si i i tfi i i t.i i t ,
b. Administrative costs: Si i i iti i i iri t , ,
N*i7C c. Public relations: Si i i ITI i i iti i ; i
d. Other (specify): N^<7j>iQ ... Si i i ifi i i ift i
Si i i »ri i i ifi
Total: $L
N.18. For what purpose was the permit modified?
(Circle one number.)
01 Addition of new tanks for wastewater treatment
02 Addition of new units for other treatment technologies
03 Addition of new treatment technologies
04 Request for increase of storage capacity
05 Request for increase of treatment capacity
06 Request for increase of Subtitle C landfill capacity
07 Closure of a treatment unit/facility section
08 Other{-spec;ry;:
N.19. How much time was required for this modification to b* approved?
ce»r
Months:
-------
PART 2. SECTION N: FACILITY RNANOAL MFORUATION
This page is intentionally
ton blank.
-------
FILE
PART 2. SECTION N: FACILITY FINANCIAL MFORUA77C*;
M.za An your wastewater, sludge, or aqueous liquid waste treatment operations conducted, at
leaK in pan, in units permitted under RCRA?
• '^
(Circle one number.)
01 Yes
02 No
* x>
N.21 . DOM this aqueous liquid waste, sludge, and/or wastewater treatment facility provide
transportation services?
^
(Oo nof include transportation services provided by another division or facility* Include only
transportation services tor which the costs and revenues are attriauted to this aqueous liquid
wmste, sludge, and/or wastewater treatment facility.)
01 Yes (CONTINUE TO NEXT QUESTION)
02 No (GO TO QUESTION N34 ON PAGE N-8)
N.22. What ts the average distance over which you transport aqueous liquid waste, sludge,
«novor wastewater?
KIBes:i )ri i t i
IL23. What to the average cost or price of transportation services?
a. Per loaded mite:
b. Per ton:
c. Other (specify):_
$ | ITI i » »-i t i
$ l !|L_L_LJ «LJ_J
$UJjL_LJ_J
H-7
-------
-------
PA.ET2.SECTIOMK-. FA«UTY FINANCIAL INFORMATION
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PMT2.SECTTOMM! FACILITY RmmoM.
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PAKT 7. SECTION N: FACJUTY FINANCIAL INFORMATION
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-------
PABT 2. SECTION N: FAOUTY RMANCtAHNFORMATlQM
(1)
IS COMMERCIAL <'•*• ACCEPTS WASTE FROM OFFSFTE FACILITIES
UNDER THF ft AME QWNFR^HIP). CONTINUE TO QUESTION N.27 ON THE NEXT PAGE
OTHERWISE, GO TO DIRECTIONS ON PAGE N-15.
(2)
IF YOUR FACILITY IS COMMERCIAL, AND AL5£ ACCEPTS WASTE FROM OFFSITE
FACILITIES UNDER THE SAME OWNERSHIP. PLEASE COMPLETE ALL PARTS OF
. QUESTIONS N.27 THROUGH N.29.
REPORT ALL COSTS OF WASTE TREATMENT OPERATIONS
IN PART F OF QUESTIONS N.27 THROUGH N.29. THIS MAY INCLUDE THE COSTS OF
»„„„_ TREATING ANY OR ALL OF THE FOLLOWING:
WASTE FROM OFFSITE FACILITIES NOT UNDER THE SAME OWNERSHIP
WASTE FROM OFFSITE FACILITIES UNDER THE SAME OYWERSH1P
AND/OR WASTE GENERATED ONSJTE.
GIVE REVENUES ASSOCIATED WITH COMMERCIAL WASTE MANAGEMENT SERVICES IN
PART A OF QUESTIONS N.27 THROUGH N.29.
INCLUDE THE TOTAL REVENUES ASSOCIATED WITH HONCOMMFPriai WASTE
MANAGEMENT SERVICES UNDER PART C (NET SALES OF OTHER GOODS AND SERVICES
AND OTHER OPERATING REVENUE) OF QUESTIONS N.27 THROUGHi N.29? '
REPORT FACILITY LEVEL DATA FOR ALL OTHER PARTS OF QUESTIONS
N.27 THROUGH N.29. (PART B AND PARTS D THROUGH O).
THEN, REPORT IN DETAIL THE REVENUES FROM INDIVIDUAL NONCQMMEBPiAi WASTE
TREATMENT OPERATIONS IN PART A OF QUESTIONS NJ301 THROUGHIM4I2.
-------
. SEC7TOM H: PAdlJTV RHANCUL ^FORMATION
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-------
PART 2. SECTION N; FACILITY BNANCUL INFORMATION
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-------
PlffTl SECTION N: FAOLfTY FINANCIAL IN"
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4
-------
PART 2. SECTOH N: FAaUTY FINANCIAL INFQRUATinM
IF YOU DID NOT COMPLETE QUESTIONS N.27 THROUGH N.29,
PLEASE RESPOND TO ALL PARTS OF QUESTIONS N JO THROUGH N .32.
THESE QUESTIONS REQUEST COSTS AND REVENUES, CREDITS, OR
CROSS CHARGES FOR NONCOMMERCIAL FACILITIES.
(2)
IF YOU DJB COMPLETE QUESTIONS N.27 THROUGH N.29, AND
YOUR FACILITY ALSO ACCEPTS WASTE FROM OFFSITE FACILITIES
UNDER THE SAME OWNERSHIP AS YOUR FACILITY,
PLEASE COMPLETE PART A OF QUESTIONS N JO THROUGH N .32,
SHOWING THE REVENUES. CREDITS, OR CROSS CHARGES YOUR FACILITY
RECEIVED FOR TREATMENT OF WASTE GENERATED BY FACILITIES
UNDER THE SAME OWNERSHIP AS YOUR FACILITY. •
(3)
IF YOU DIE COMPLETE QUESTIONS N.27 THROUGH N.29,
AND YOUR FACILITY DOES MSI ACCEPT WASTE FROM OFFSTTE FACILITIES
UNDER THE SAME OWNERSHIP AS YOUR FACILITY,
PLEASE GO TO QUESTION N.33 ON PAGE N-19
-------
PART 2. SECTION M: FACMJTY HMANCIAt- MFORMATION
i
i
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-------
PART 2. SECTION N: FAaUTY RNANOA.L MPQRUATinM
r~
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-------
PJkTTT *. SECTiOH M; FACILITY WNANOAL MFORMAT1ON
41
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-------
PART 2. SECTION N: FAC3UTY F1KANCUL INFORMATION
H 3 3
WUrt WW* th* 'VeraQB t0t*' numb*r of
ln caten^r yw «89 In tfw
th. total •mployM hours worked at
u>t»d?
Av«rag» Total
Employ MS
Total
Employee Hours
a. Aqueous liquid waste, sludge, and/or
wastewater treatment operations
(including maintenance)
i. fulMime employees
2. part-time employees
i i i i
»*_i L_i_JiL
b. Other waste treatment, recycling/
recovery, and/or disposal operations
(including maintenance)
t full-time employees
JL part-time employees
c. Production: other
d. Non-production:
(e.g.. sales, clerical, and administrative)
e. Of the total number of employees and
labor hours worked at this facility in the
categories a-c above, how many were M 4 » 3 c i
employees of contractors? L_LJ»L
.11 i t
i i
^•' ' ' ftl
I—III—' ' 'rl I I I
LJ.I t I i.| | i i
I III '' '-I 1 I I f*4 33 2
LJiL_LJLJiLJ_J_J M* JJ
l i.i t t ITI i t i
-------
PART 2. SECTION N: FAQUTY HNANCIAL MFOFOUUVnON
N.34. What was the 1889 value of buildings, land, and equipment at thla facility?
(Note: We would prefer the appraised or assessed value of land, buildings, and equipment, if
that is not available, please give book value.)
a. What was the value of land for this facility in 1989?
1. appraised or assessed value n+3v/H Si i I ITI i t ITI i i i
ii. book value K 3«*ai $» i i ITI i i i,
fi. bookvalue H*3vea. &' t » ITI » t iti '
c. What was the value of equipment and machinery at this facility in 1989?
1. appraised or assessed value t*4> Jwei $ i > t 41 » t tti i i i
M. bookvalue ti+i^t Si i i ITI t \ ITI
d. What was the total 1989 value of land, buildings, equipment, and machinery at this facility?
(Sum items a through c.)
i. appraised or assessed value N^JUJI $i i t »Ti t t ITI i i i
D. book value ,,CJXSi i i ITI t > ITI
. Onwhatp«re*magtofinartc»tvalu*lsyourtixa8s«samwttbas«d?
(* you dti not report the assessed value of the facility's buildings, land, and equipment, circle the
response code for *not applicable.*)
Percentage of maricet value: l__l_JLJ%
3.T& Not applicable: 00
N.36. What is the estimated liquidation value of your faeiUty?
Estimated HquidatJon value: $ » » i ITI i i tf» i i »
N ST. Estimate the closure and pott-closure costs which would be Incurred tf your fadltty were
la*c dosed
M4VJOom t«j»wu.
a. Closure costs: Si t i ITI i t iti i i i
b. Post-closure costs: Si i i ITI i t ITI i < t
-------
M(L
PART 2. SECTION H; FAOUTY F!MANOAL
MC fitc
NOTES
NCC
Qutstion
Nunibarfs
D
*
Notes, comments. «tc.
N-21
I I'll l| ; i.ijillii'1, . , j Iji.,,, ,
-------
PART 2. SECTION N: FACILITY FINANCIAL INFORMATION
This page is intentionally
ton blank.
-------
FILE N
•' 05"
SE9»!PJt2: COSTS AND REVENUES FROM AQUEOUS LIQUID
WASTE, SLUDGE, AND/OR WASTEWATER TREATMENT
-———^-^"^•"•^•••M
The purpose of Section O is to obtain costs for aqueous liquid waste, sludge, and/or wastewater
J2SJ n?J2fnologies which could form tne ^sis of effluent limrtations guidelines. This information
will be used to assess impacts on waste treatment processes.
Answer the questions in sequence and do not leave any entry blank unless instructed otherwise
Definitions and specific instructions are provided throughout. Use the NOTES page at the end of the
SSSli?011 W'?tC 6Xplain y°ur response to any questjon- Re'erence each comWnt v^h toe
appropriate question number. Reminder: Please provide estimates, if possible, of data for whfch
exact measurements are unavailable. Indicate on the NOTES page at the end of the sectton which
responses are estimates, and explain the method of estimation
O.I.
Where are the facilities located which generate the aqueous liquid waste, sludge, and/or
wactewater you accept from offslte?
(Circle the number lor the largest area that applies.)
01 Within SO miles of your facility
02 Within your state
03 WBhin a few adjacent states
04 Nationwide
02. Which of the following describes the contractual arrangements under which you accept
aqueous liquid waste, sludge, and/or wastewater from offslte for treatment?
(Circle all that apply, include a copy of a standard contract with your completed
questionnaire If one Is available.)
01 Contracts are written and signed on the basis of the individual shipment of aqueous liquid
waste, sludge, and/or wastewater.
04* 3. _* a. 02 Contracts are signed with customers under which your facility agrees to accept all aqueous
aquid waste, sludge, and/or wastewater generated by the customer and meeting certain
criteria for a ore-set fee per shipment.
03 Other (specify): O+4Z.03Q
-------
PART 2. SECTION O: COSTS AND REVENUES FROM AQUEOUS WASTE AND WASTEWATER TREATMENT
O.3. What wu the total amount of revenue earned by your facility for transportation of aqueous
?t4 7 Cf>l "SUM w«*t», aludaa, and/or wastewatar for on-atta traatmant during 1987, 1988, and 1989?
a. Aqueous liquid waste, sludge, and/or wastewater
received from otfsite facilities not under the
same ownership: O4*3A87 1Q87 Si i i i,i \ \ ITL i
0*43 A »f 1988 Si I
1989 S I
b. Aqueous liquid waste, sludge, and/or wastewater
received from otfsite facilities under the same
ownership: o*+3&*T 1987 Si t i ITI i i ITI t t i
1988 S I I I 1TI I ) ITI i t i
1989 Si I I ITI I I ITI i I I
O.4. What waa the total quantity of aqueous liquid waste, sludge, and/or wastewater treated
O***f car ons|tft durtng ,987, igss, and 1989?
a. Aqueous liquid waste, sludge, and/or wastewater
received from off site facilities not under the same
ownership: O**VAr7 1987 i i i ITI ! i ITI I t itons
Off v fr« 1988 i i » lti > i ITI t i lions
? 1989 i t t IT» t t iri i i itons
b. Aqueous liquid waste, sludge, and/or wastewater
received from off site facilities under the same
ownership: O*** B?71987 i i i 1TI » i ITI i t itons
1988 i > i iji > » ITI t < nans
i t ITI t > IT» t ? ttons
c. Aqueous liquid waste, sludge, and/or wastewater
generated onsrte
(estimated value of services;: CJ**«fO?7 19B7 t t i ITI > i ITI i i ttons
1988 i t t ITI '< t ttt » i »tons
1989 i i i y i > i)i i » ttons
-------
PART 2. SECTION O: COSTS AND REVENUES PROM AQUEOUS WASTE AND WASTEWATER TREATMEMT
O.5.
car*6'
**
An any approved or authorized Investment projects planned for water pollution control?
fcifclg one
01 Yes (CONTINUE TO NEXT QUESTION)
02 No (GO TO QUESTION O.8)
Describe and give the estimated capital cost of each approved or authorized water
pollution control project.
(If additional space is necessary, complete the description in the NOTES space. Reference the
ffiformation by the above question number.)
a. Project 1: S i i i i.i i i ITI t i i
Describe: o»«»€ AQ
04* 6 B b. Project 2: S L_LJ_!»I L
Describe: 04*6 BO
Com
ITI i i i
c. Project 3: $ i i > 1,1 i t ITI i i i
Describe: o»*6co
O.7. What Is the projected completion date of each approved or authorized water pollution
control project?
(Report the month, date, and year as two-digit numbers; e.g., June 1.1989 • 06-01-89.)
O
a. Project 1:
O
b. Project2;
c. Project 3:
Did this facility perform aqueous liquid waste, sludge, and/or wastewater treatment on a
commercial basis In 1989 0*. did the facility accept for treatment ensfte aqueous liquid
waste, sludge, and/or wastewater that was generated at an offstte facility not under the
(CirciB one number.)
01 Yes (CONTINUE TO NEXT QUESTION)
02 No (GO TO QUESTION 0.10 ON PAGE O-S)
O-3
-------
PABT2. SECTION O: COSTS AND REVENUES FROM AQUEOUS WASTE AND WASTEWATER TREATMENT
O.9. Enter 1989 price information In the following table for each type of aqueous liquid waste,
p*<*« cei sludge, and/or wastewater that is currently treated In wastewater treatment processes
onstte.
(Answer tor ALL this facility's commercial wastewater treatment operations, rather than for each
individual wastewater treatment process. Base your price information on a typical shipment size
for each waste type. Circle 'NA* in the column provided for any waste type that you do not treat.
Enter price information in dollars and cents.)
Average or Typical
Price (Won)
Not
Applicable
Organic Liquids
a. Oily liquids
b. Halogenated liquids, including
ei
$ | iri i i i.i t i
$L_!iLJ_JL_
halogenated solvents
c. Nonhatogenated liquids, including
nonhatogenated solvents o *«»«*
d. Organic water mixtures o i.» i i
Waste concentrated adds (may contain
norrtoxic metals or inorganics) O44^ri $LJ»L_LJ_J-L_LJ
k. Waste concentrated bases (may contain
nontoxic metals or inorganics) O44^«i $LJiL_l_l_J«
L Other aqueous liquids (may contain
$1 i.i i i 1.1 t t
$LJ i LJ_J_J • LJ_J
$LJ,LJ_JLJ.L_LJ
Si irt i i i.i i t
S» i.i i t 1.1 i i
$1 Ii!_LJ_J.|_LJ
1-
nontoxic metals, inorganics, or organics) Si ifi i > M
Organic Sludge*
m. Halogenated organic sludges 044^*1 $[ !,I_JLJ_J.|_J-J
n. Nonhabgenated organic sludges o$4iN< $LJiL_J__L_NLJ_J
o. OB sludges O4*«Oi $L_JiLJL_l_J.L_LJ
p. Dye and paint sludge o«*i Pi * !(L_L_LJ»l
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA 04**
NA"
NA
CONTINUED ON THE NEXT PAGE
-------
PART 2. SECTION O; COSTS AND REVENUES FROM AQUEOUS
OJ3. continued.
WASTE AND WASTEWATEB TPPATMC^
Av«rag« or Typical Not
Prtea (Won) Applicable
Inorganic Sludges
q. Sludges containing toxic metals O*<»q | ,.
Other (specify): "'
O441 Ctl
o
_££!!/' $( |,
0**q w< $j ij
•vl $LJ,LJ_L_J.l_LJ
NA
NA o**q*
NA O<**«»S
NA 044^T
NA
NA 04*
-------
PART 2. SECTION O: COSTS &ND REVENUES FROM AQUEOUS WASTE AND WASTEWATER TREATMENT
O.1 1. Enter typical 1989 unit cross charges tor •aeh typ i of aqueous liquid waste, sludge, and/or
O* ii c BX wastewater that is currently treated in wastewater treatment processes onstte.
O4> " co m (This ^ the ffmcunt pgr Jon charged facifities u the same owr -ship for treatment of each
type of waste. Base your -nit cross charge inter, nation on a typi. shipment size for each waste
type. Circle "NA'in the column provided for any waste type that you do not treat. Enter price
information in dollars and cents.) .
Average or Typical Not
Charge ($/ton) Applicable
Organic Liquids
a. Oily liquids
b. Halogenated liquids, including
Off At
O4»6l
hatogenaied solvents
c. Nonhatogenated liquic. .ncluding
nonhatogenated solvents
d. Organic water mixtures
Inorganic Liquids
e. Liquids containing toxic organics o * n e I
fj'tds containing toxic inorganics
tdther than cyanide)
$1—1,1 I I
$L_J,L
$1 _ 1.1 I I !.l
$L_J,LJ_J_J.LJ_J
f.
Q-
h.
i.
j-
k.
I.
$t _ ifi t i t.i
$LJ,LJ_JLJ.L_LJ
O + H PI
Liquids containing cyanide (may contain
toxir metals or inorganics) o*u 6-1 $L_JiL_L_L
Liquids containing chromium (may contain
other toxic metals or inorganics) o 411 u i
Liquids containing toxic metals
(other than chromium) O*n £i
Waste concentrated ?:ids (may contain
nontoxic metals or inorganics) o 4 »• J i
Waste concentrated bases (may contain
nontoxic metals or inorganics) O* •• K i
Othe* cqueous liquids (may contain
nor.^uc metals, inorganics, or organies)
Organic Sludges
m. Halogenated organic sludges O*M/*I Si 1,1 i i t.i
n. Nonhaiogenated organic sludges o«*nw| $LJil_1_L_M
o. On sludges O*««Oi ^ !>l_-L-L_M
p. Dye and paint sludge O4n?f $1 IiL_L_i_J«LJLJ
CONTINUED ON THE NEXT PAGE
J.
$1 '.i i i 1.1 i i
S< i t i t i.» i i
$1 lrl I t I.I I I
$UJiL-L
$LJiL_LJ_J.L_LJ
NA
NA Of «
NA
NA
NA
NA
NA O«M
NA
NA
NA O*»
NA O4u
NA
-------
C.11, continued.
Average or Typical
Charge ($/ton)
Inorganic Sludges
q. Sludges containing'tbxic metals OM©I $ |lt
r. Inorganic process sludges otn R» $ |,
s. Sludges containing cyanide (may contain
toxic metals or inorganics) O*«. u i
v.
WO
$1—'•' ' ' '.i i i
$LJ,l
$L_I,I
Not
Applicable
NA
NA
NA
NA
NA
NA 0*1;
NA
NA
f or wch of th. (ollowina?
«'"dB«, «nd/or w«rt«w«.r tni«m.m
a. Aqueous liquid waste, sludge, and/or wastewater received from offstte facilities under the
same ownership:
b.
services):
andtorw«^
0-7
-------
PART 2. SECTION o-. COSTS AND REVENUES FROM AQUEOUS WASTE AND WASTEWATER TREATMENT
O.I 3. Does this facility have thermal processes onatte that generate aqueous liquid waste,
sludge, and/or wastewater?
(Circle one number.)
0*13 °1 YeS (CONTINUE TO NEXT QUESTION)
02 No (GO TO QUESTION 0.15)
O.I4. What quantity of wastewater was generated by this facility's thermal processes during
1987,1988, and 1989, and what percentage of this wastewater was treated onsite?
Year
Quantity Generated
Percent Treated Onsite
1987
I t I II
t lti l I I tons
1988 O4>'wAfrf I I ! 1TI I ! l?l i ! I tons
1989 O*JUftg<* l I 1 l,l l l IT1 l t ttons
I I l
I I t 1%
O.I 5. Does this facility have landfill operations onsite that generate aqueous liquid waste,
O*i .r c er tiudge, and/or wastewater (e.g., leachate or pumped groundwater)?
(Circle one number.)
01 Yes (CONTINUE TO NEXT QUESTION)
02 No (GOTOPAGEO-10)
O.I 6. What quantity of wastewater was generated by this facility's landfill operations during
O*i6cer „«„., 9Mtt —1-MB —i what percentage of this wastewater was treated onstte?
Year
Quantity Generated
Percent Treated Onstte
1987 O*i6ft?7 l t < ')« ' » V » '
1988 O*jfc/»?? l l > ITI ! t lTt l l ttons
1989 O*'fe A-8T1 t l I lti l t ITI l l (tons
> » t 1%
1111% 04/6
LJ_L_J%
0-8
-------
FILE. Nfrm£,. OC
PART 2. SECTION Q; COSTS AND REVENUES f HOM AQUEOUS WASTE AND WASTEWATER
^
OC
NOTES ______
OCC
OC oF
OC.A
l^*»«iMMM
Quastlon
Numbarts)
ges
Notes. comm«nts. etc
-------
PARTS. SECTION O: COSTS AND REVENUES FROM AQUEOUS WASTE AND WASVEWATER 'REATMEWT
YOU HAVE COMPLETED THE ECONOMIC AND FINANCIAL SECTION OF THIS
QUESTIONNAIRE. PLEASE CHECK TO SEE THAT YOU HAVE ANSWERED ALL RELEVANT
QUESTIONS. AND THAT YOU HAVE ATTACHED ANY ANNUAL REPORTS, 10K REPORTS, OR
STANDARD CONTRACTS AVAILABLE.
O-10
-------
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ide an estimate for the volu
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-------
-------
APPENDIX B
Waste Generation by SIC Code
-------
-------
TABLE B-l. WASTE GENERATION BY SIC CODE, 1995
SIC
343
347
1446
2011
2013
2015
2020
2022
2024
2026
2032
2033
2037
2038
2043
2046
2048
2066
2075
2076
2077
2079
2082
2086
2087
2096
2099
2111
2121
2141
Total Transfers to Recycling
12,814
250
1,330
38,937
14,414
1,352
77,668
25,556
164,287
13,280
9,000
2,658,513
4,400
14,305
500
46,689
43,158
Total Transfers to Treatment
18,225
10
250
5,950
_
132,700
21,500
23,913
33,800
18,330
15,771
12,534
93,267
1,064
2,375
91,733
181,800
69
750
15,033
8
71,627
1
510
10
(continued)
B-l
-------
TABLE B-l. WASTE GENERATION BY SIC CODE (CONTINUED)
SIC
2221
2231
2252
2257
2259
2261
2262
2269
2271
2273
2295
2296
2297
2298
2299
2329
2353
2389
2390
2393
2399
2421
2426
2430
2431
2434
2435
2439
2451
2491
Total Transfers to Recycling
89,643
614
- 7,500
326,000
240
309,541
3,306
65,523
217
2,554
250
7,681
755
202,681
225,840
250
6,263
100,868
Total Transfers to Treatment
4,003
454
45,327
299
1,370
9,478
36,059
5,693
25,871
484,096
5,024
3,083
5
7,277
225
2,220
1,250
55,600
750
5
1,650
250
16,426
133,963
12,550
250
336,851
(continued)
B-2
-------
TABLE B-l. WASTE GENERATION BY SIC CODE (CONTINUED)
SIC
2492
2493
2499
2500
2511
2512
2514
2517
2519
2521
2522
2530
2531
2541
2542
2565
2579
2591
2599
2611
2621
2631
2641
.2651
2653
2655
2656
2657
2671
2672
Total Transfers to Recycling
16,229
177,743
3,312
1,542,889
10,366
26,250
8,747
4,986
75,239
3,161,164
250
1,195,310
10,082
256,748
89,594
244,776
880
3,522,972
265
142,134
29,030
17,749
888
861
66,055
401,645
848,621
Total Transfers to Treatment
85
1,989
23,751
110,014
25,261
2,240
2,250
300,326
22,397
114,626
750
220,598
100
500
1,976
2,991
7,533,628
341,958
30,264
63,011
40,090
985
3,294
22,294
383,389
849,200
(continued)
B-3
-------
TABLE B-l. WASTE GENERATION BY SIC CODE (CONTINUED)
SIC
2673
2677
2679
2700
2732
2751
2752
2754
2759
2761
2771
2782
2793
2796
2800
2812
2813
2816
2819
2821
2822
2823
2824
2830
2831
2833
2834
2835
2836
2840
Total Transfers to Recycling
14,274
119,000
18,950
1,553
1,652
2,214,572
2,656,857
108,360
3,265
8,116
577,294
17,765
15,617,381
122,057
884,051
8,459,039
78,202,133
8,097,634
79,025
42,424,350
5,657,556
12,118,681
7,496
Total Transfers to Treatment
22,200
4,900
1,357
18,595
13,764
2,986
88,527
177,931
30,976
10,062
5
2,958
107,791
1,502
2,088,582
313,530
721,850
8,175,239
29,361,314
5,207,745
1,166,588
139,320
1,973
51
10,444,156
14,784,821
121,609
21,880
5,580
(continued)
B-4
-------
TABLE B-l. WASTE GENERATION BY SIC CODE (CONTINUED)
SIC
2841
2842
2843
2844
2850
2851
2861
2865
2869
2873
2875
2879
2880
2890
2891
2892
2893
2899
2911
2952
2977
2992
2999
3000
3011
3021
3041
3050
3052
3053
Total Transfers to Recycling
518,938
16,490
219,215
5,188
685,140
32,401,466
7,226,573
32,094,363
1,014,225
1,500
4,570,376
13,568
580,852
699,134
967,330
1,296,941
5,847,506
9,716
17,911,102
56,138
1,332,699
16,117
56,800
1,837,134
212,672
Total Transfers to Treatment
94,734
315,242
568,083
23,167
44,421
6,222,012
20,300
18,195,149
37,359,370
2,000
15,072
7,631,528
84,000
1,723,779
149,822
457,800
3,251,105
2,871,698
1,029
7,220
150,357
70,750
140,330
247,150
3,613
8,200
1,101
65,167
170,103
(continued)
B-5
-------
TABLE B-l. WASTE GENERATION BY SIC CODE (CONTINUED)
SIC
3061
3066
3069
3070
3079
3081
3082
3083
3084
3085
3086
3087
3088
3089
3111
3131
3142
3143
3149
3174
3179
3211
3221
3229
3231
3237
3241
3251
3253
3255
Total Transfers to Recycling
149,490
22,400
801,365
25,345
192,573
8,600,889
82,487
669,073
23,310
39,750
1,212,659
81,815
41,356
5,219,941
191,268
15,836
2,206
7,487
2
• 233,750
35,020
327,753
1,562,374
316,258
766
193,744
115,858
Total Transfers to Treatment
64,085
361,246
2,582
26,462
1,762,040
15,945
166,119
11,480
849,028
119,902
8,035
592,758
144
1,292
500
4,158
500
92
28,727
54,240
463,625
77,508
136,393
10
1,500
(continued)
B-6
-------
TABLE B-l. WASTE GENERATION BY SIC CODE (CONTINUED)
SIC
3261
3262
3264
3269
3272
3274
3281
3291
3292
3293
3295
3296
3297
3299
3300
3312
3313
3315
3316
3317
3320
3321
3322
3324
3325
3331
3334
3339
3340
3341
Total Transfers to Recycling
211,400
40,017
84,575
3,359
122,976
250
10,583
204,585
289,000
1,300
1,883,231
239,964
49,444
2,145
329,290,744
730,866
7,464,555
10,955,839
21,167,079
2,209
10,562,473
3,602,317
4,406,223
6,315,726
24,734,074
2,980,175
13,600,560
1,435,064
36,343,977
Total Transfers to Treatment
58
69,451
3,644
1,000
250
289,295
2,501
937,332
13,334
1,095
229,218
11,676
17,669,827
51,388
1,305,611
2,043,387
3,528,872
• 374
371,507
105,427
31,129
551,452
4,822,340
20,248
72,988
3,378,814
(continued)
B-7
-------
TABLE B-l. WASTE GENERATION BY SIC CODE (CONTINUED)
SIC
3351
3353
3354
3355
3356
3357
3360
3361
3362
3363
3364
3365
3366
3369
3380
3398
3399
3400
3411
3412
3417
3421
3423
3425
3428
3429
3430
3431
3432
3433
Total Transfers to Recycling
67,105,217
6,318,418
4,651,996
45,687
15,070,951
179,304,894
160,427
1,918,433
3,184,852
9,956,634
2,202,706
4,079,204
6,448,566
8,954,061
43,058
426,456
3,883,529
479,327
12,308,553
209,856
265,101
454,421
327,713
22,900
8,255,968
33,500
359,829
36,439,006
898,402
Total Transfers to Treatment
235,387
226,709
57,404
83,203
457,617
529,176
-
12,757
15,606
30,252
7,500
6,089
39,421
117,121
207,300
48,887
148,100
220,310
22,514
9,375
117,176
312,313
181,137
167,774
23,718
(continued)
B-8
-------
TABLE B-l. WASTE GENERATION BY SIC CODE (CONTINUED)
SIC
3440
3441
3442
3443
3444
3446
3448
3449
3450
3451
3452
3460
3462
3463
3465
3468
3469
3470
3471
3479
3482
3483
3484
3489
3490
3491
3492
3493
3494
3495
Total Transfers to Recycling
88,000
1,679,592
124,061
5,378,860
1,958,765
467,728
93,177
991,175
36,881
44,460,648
879,791
101,269
25,213,311
1,947,844
21,936,104
1,275,503
17,469,642
36,312,074
27,759,664
9,077,583
245,500
538,681
142,984
224,869
5,630,194
3,589,521
79,555
25,683,373
51,399
Total Transfers to Treatment
106,262
76,297
204,065
268,388
26,426
32,022
4,015
46,023
37,946
34,575
'
342,335
215,188
173,676
320
269,274
2,013
3,022,958
1,607,926
94,114
3,505
36,330
64,257
5,681
3,576
34,047
18,089
97,631
5,296
(continued)
B-9
-------
TABLE B-l. WASTE GENERATION BY SIC CODE (CONTINUED)
SIC
3496
3497
3498
3499
3500
3511
3519
3523
3524
3531
3532
3533
3534
3535
3536
3537
3541
3542
3544
3545
3546
3547
3548
3549
3550
3551
3552
3553
,3554
3555
Total Transfers to Recycling
4,804,335
7,942,154
3,864,159
28,801,072
5,851
2,794,564
3,349,987
2,667,977
81,082
1,927,996
785,714
1,030,917
377,701
627,680
438,577
1,127,241
695,623
287,008
3,969,636
549,231
386,398
97,955
1,685,401
1,100
36,926
20,380
12,024
1,748,320
277,293
Total Transfers to Treatment
400,156
378,345
451,761
716,689
154,194
193,274
30,941
750
108,996
10,958
795
3,975
3,002
1,964
27,594
9,400
50,971
95,742
50,120
2
32,612
4,060
-
21,507
53,288
(continued)
B-10
-------
TABLE B-l. WASTE GENERATION BY SIC CODE (CONTINUED)
SIC
3556
3559
3561
3562
3563
3564
3565
3566
3567
3568
3569
3571
3572
3573
3574
3577
3579
3580
3581
3582
3583
3585
3586
3589
3592
3593
3594
3596
3599
.3600
Total Transfers to Recycling
1,498,811
4,663,816
4,549,118
5,086,542
602,147
118,001
48,335
756,630
299,793
3,148,051
1,402,997
565,925
7,100
18,270
35,545
54,121
74,410
1,745
1,305,518
20,052
15,240,370
26,655
299,809
2,619,265
265,540
2,392,749
13,091
768,298
7,810
Total Transfers to Treatment
10,406
84,756
6,689
13,122
2,419
650
750
56,237
97,425
36,041
2,600
5
154,366
3,800
16,607
250
2,515
77,603
28
122,781
76,188
15,249
37,699
(continued)
B-ll
-------
TABLE B-l. WASTE GENERATION BY SIC CODE (CONTINUED)
SIC
3610
3612
3613
3619
3621
3622
3623
3624
3625
3629
3631
3632
3633
3634
3635
3639
3641
3643
3644
3645
3646
3647
3648
3651
3652
3661
3662
3663
3669
3670
Total Transfers to Recycling
250
6,867,955
9,691,397
1,370
15,075,742
55,622
129,562
1,763,129
915,833
1,606,976
1,053,180
1,454,214
784,485
238,030
49,466
684,728
1,393,941
7,051,631
1,135,232
44,465
587,328
107,914
1,759,875
1,810,188
59,161
2,991,074
322,000
6,136,001
1,926,175
40,000
Total Transfers to Treatment
14,073
582,224
26,722
64,555
5,175
13,950
17,476
3,350
16,087
2,899
7,822
248,226
47,062
31,933
5,050
17,299
134,077
1,250
17,815
6,354
13,006
7,947
43,572
(continued)
B-12
-------
TABLE B-l. WASTE GENERATION BY SIC CODE (CONTINUED)
SIC
3671
3672
3674
3675
3676
3677
3678
3679
3691
3692
3694
3695
3699
3700
3710
3711
3713
3714
3715
3716
3720
3721
3724
3728
3731
3732
3743
3744
3751
3761
Total Transfers to Recycling
5,446,597
26,622,464
1,054,550
2,804,726
240,776
237,736
6,912,007
6,400,800
260,725,363
3,698,528
6,799,919
2,713,816
2,438,326
186,706
1,406,634
42,813,612
4,029,660
101,160,421
4,634,727
126,469
2,900
1,322,085
8,233,990
4,790,125
3,057,662
163,277
4,379,805
3,741,285
66,505
Total Transfers to Treatment
629,263
1,483,939
821,120
1,474,200
14,224
11,901
4,722
165,511
31,951
138,514
14,472
281,006
9,430
1,528
1,277,849
139,190
1,635,088
47,583
2,750
477,964
732,439
343,538
147,354
20,982
174,014
4,000
20,491
24,639
(continued)
B-13
-------
TABLE B-l. WASTE GENERATION BY SIC CODE (CONTINUED)
SIC
3764
3769
3771
3792
3795
3799
3812
3821
3822
3823
3824
3825
3826
3827
3829
3832
3841
3842
3843
3844
3845
3851
3861
3873
3910
3911
3914
3915
3931
3940
3944
Total Transfers to Recycling
486,745
17,100
941
9,870
129,734
186,442
33,025
169,695
8,803,870
367,421
1,831,529
492,339
48,250
11,989
89,562
4,200
1,032,905
1,044,458
143,220
133,082
106,201
296,366
6,565,945
60,165
2,654,974
266,634
193,431
2,602,832
23,500
Total Transfers to Treatment
54,961
6,283
27,853
82,479
33,984
66,023
159,109
92,683
17,098
595
6,840
103,861
5,037
1,962
18,000
256,305
15,495
1,322
29,699
10,570
35,376
3,021,443
5,038
2,168
4,756
32,047
39,228
11,957
2,600
(continued)
B-14
-------
TABLE B-l. WASTE GENERATION BY SIC CODE (CONTINUED)
3949
3951
3952
3953
3955
3961
3964
3965
3991
3993
3995
3996
3999
4396
4911
4925 .
4953
5047
5063
5091
5169
5171
5172
7216
7389
7699
8731
8733
8734
9661
9711
9999
Total Transfers to Recycling
750,814
219,891 <*
211,334
6,890
36,000
54,653
509,153
5,584,002
3,800
898,121
1,684,185
64,652
4,743,208
22
345,219
88,700
750
224,287
858
6,400
514,413
32,640
3,000
6,807
29,469
2,041,238
64,432
Total Transfers to Treatment
120,246
4,820
13,677
124,109
1,595
250
61,619
461
40,886
1,020
13,471
850,594
2,250
1,000
27,100
202,547
340
750
215,243
9,634
139,339
" 4,511
39,778
12,075
893,292
1 021
Source: Toxics Release Inventory, 1995.
B-15
-------
-------
APPENDIX C
SIC Code Definitions
-------
-------
SIC
Code Industry
SIC
Code Industry
Agricultural Production—Crops
0111 Wheat
0112 Rice
0115 Corn
0116 Soybeans
0119 Cash grains, nee
0131 Cotton
0132 Tobacco
0133 Sugar crops
0134 Irish potatoes
0139 Field crops, except cash grains, nee
0161 Vegetables and melons
0171 Berry crops
0172 Grapes
0173 Tree nuts
0174 Citrus fruits
0175 Deciduous tree fruits
0179 Fruits and tree nuts, nee
0181 Ornamental nursery products
0182 Food crops grown under cover
0189 Horticultural specialties, nee
0191 General farms, primarily crops
Agricultural Production—Livestock'
0211 Beef cattle feediots
0212 Beef cattle, except feediots
0213 Hogs
0214 Sheep and goats
0219 General livestock, nee
0241 Dairy farms
0251 Broiler, fryer, and roaster chickens
0252 Chicken eggs
0253 Turkeys and turkey eggs
0254 Poultry hatcheries
0259 Poultry and eggs, nee
0271 Fur-bearing animals and rabbits
0272 Horses and other equines
0279 Animal specialties, nee
0291 General farms, primarily livestock
Agricultural Services
0711 Soil preparation services
0721 Crop planting and protection
0722 Crop harvesting
0723 Crop preparation services for market
0724 Cotton ginning
0729 General crop services
0741 Veterinary services, farm livestock
0742 Veterinary services, specialties
0751 Livestock services, except specialties
0752 Animal specialty services
0761 Farm labor contractors
0762 Farm management services
0781 Landscape counseling and planning
0782 Lawn and garden services
0783 Ornamental shrub and tree services
Forestry
0811 Timber tracts
0821 Forest nurseries and seed gathering
0843 Extraction of pine gum
0849 Gathering of forest products, nee
0851 Forestry services
Fishing, Hunting, and Trapping
0912 Finfish
0913 Shellfish
0919 Miscellaneous marine products
0921 Fish hatcheries and preserves
0971 Hunting, trapping, game propagation
Mining
1011 Iron ores
1021 Copper ores
1031 Lead and zinc ores
1041 Gold ores
1044 Silver ores
1051 Bauxite and other aluminum ores
1061 Ferroalloy ores, except vanadium
1081 Metal mining services
1092 Mercury ores
1094 Uranium, radium, vanadium ores
1099 Metal ores, nee
1111 Anthracite
1112 Anthracite mining services
1211 Bituminous coal and lignite
1213 Bituminous and lignite services
1311 Crude petroleum and natural gas
1321 Natural gas liquids
1381 Drilling oil and gas wells
1382 Oil and gas exploration services
1389 Oil and gas field services, nee
1411 Dimension stone
1422 Crushed and broken limestone
1423 Crushed and broken granite
1429 Crushed and broken stone, nee
1442 Construction sand and gravel
1446 Industrial sand
1452 Bentonite
1453 Fire clay
1454 Fuller's earth
1455 Kaolin and ball clay
1459 Clay and related minerals, nee
1472 Barite
1473 Fluorspar
1474 Potash, soda and borate minerals
Note: nee = not elsewhere classified.
-------
SIC
Code Industry
SIC
Code Industry
1475 Phosphate rock
1476 Rock sail
1477 Sulfur
1479 Chemical and fertilizer mining, nee
1481 Nonmetallic minerals services
1492 Gypsum
1496 Talc, soapstone, and pyrophyllite
1499 Nonmetallic minerals, nee
Construction
1521 Single-family housing construction
1522 Residential construction, nee
1531 Operative builders
1541 Industrial buildings and warehouses
1542 Nonresidential construction, nee
1611 Highway and street construction
1622 Bridge, tunnel, and elevated highway
1623 Water, sewer, and utility lines
1629 Heavy construction, nee
1711 Plumbing, heating, air conditioning
1721 Painting, paper hanging, decorating
1731 Electrical work
1741 Masonry and other stonework
1742 Plastering, drywall, and insulation
1743 Terrazzo, tile, marble, mosaic work
1751 Carpentering
1752 Floor laying and floor work, nee
1761 Roofing and sheet metal work •
1771 Concrete work
1781 Water well drilling
1791 Structural metal erection
1793 Glass and glazing work
1794 Excavating and foundation work
1795 Wrecking and demolition work
1796 Installing building equipment, nee
1799 Special trade contractors, nee
Food Products
2011 Meat packing plants
2013 Sausages and other prepared meats
Poultry dressing plants
Poultry and egg processing
Creamery butter
Cheese, natural and processed
Condensed and evaporated milk
Ice cream and frozen desserts
Fluid milk
Canned specialties
Canned fruits and vegetables
Dehydrated fruits, vegetables, soups
Pickles, sauces, and salad dressings
Frozen fruits and vegetables
Frozen specialties
2016
2017
2021
2022
2023
2024
2026
2032
2033
2034
2035
2037
2038
2041 Flour and other grain mill products
2043 Cereal breakfast foods
2044 Rice milling
2045 Blended and prepared flour
2046 Wet corn milling
2047 Dog, cat, and other pet food
2048 Prepared feeds, nee
2051 Bread, cake, and related products
2052 Cookies and crackers
2061 Raw cane sugar
2062 Cane sugar refining
2063 Beet sugar
2065 Confectionery products
2066 Chocolate and cocoa products
2067 Chewing gum
2074 Cottonseed oil mills
2075 Soybean oil mills
2076 Vegetable oil mills, nee
2077 Animal and marine fats and oils
2079 Shortening and cooking oils
2082 Malt beverages
2083 Malt
2084 Wines, brandy, and brandy spirits
2085 Distilled liquor, except brandy
2086 Bottled and canned son drinks
2087 Flavoring extracts and syrups, nee
2091 Canned and cured seafoods
2092 Fresh or frozen packaged fish
2095 Roasted coffee
2097 Manufactured ice
2098 Macaroni and spaghetti
2099 Food preparations, nee
Tobacco
2111 Cigarettes
2121 Cigars
2131 Chewing and smoking tobacco
2141 Tobacco stemming and redrying
Textile Mill Products
2211 Weaving mills, cotton
2221 Weaving mills, synthetics
2231 Weaving and finishing mills, wool
2241 Narrow fabric mills
2251 Women's hosiery, except socks
2252 Hosiery, nee
2253 Knit outerwear mills
2254 Knit underwear mills
2257 Circular knit fabric mills
2258 Warp knit fabric mills
2259 Knitting mills, nee
2261 Finishing plants, cotton
2262 Finishing plants, synthetics
Note: nee » not elsewhere classified.
C-2
-------
SIC
Code Industry
2269
2271
2272
2279
2281
2282
2283
2284
2291
2292
2293
2294
2295
2296
2297
2298
2299
Finishing plants, nee
Woven carpets and rugs
Tufted carpets and rugs
Carpets and rugs, nee
Yarn mills, except wool
Throwing and winding mills
Wool yarn mills
Thread mills
Felt goods, except woven felts and hats
Lace goods
Paddings and upholstery filling
Processed textile waste
Coated fabrics, not rubberized
Tire cord and fabric
Nonwoven fabrics
Cordage and twine
Textile goods, nee
Apparel and Related Textiles
2311 Men's and boys' suits and coats
Men's and boy's shirts and nightwear
Men's and boys' underwear
Men's and boys' neckwear
Men's and boys' separate trousers
Men's and boys' work clothing
Men's and boys' clothing, nee
Women's and misses' blouses and waists
Women's and misses' dresses
Women's and misses' suits and coats
Women's and misses' outerwear, nee
Women's and children's underwear
Brassieres and allied garments
Millinery
Hats and caps, except millinery
Children's dresses and blouses
Children's coats and suits
Children's outerwear, nee
Fur goods
Fabric dress and work gloves
Robes and dressing gowns
SIC
Code Industry
Lumber and Wood Products
2411 Logging camps and logging contractors
2421 Sawmills and planing mills, general
Hardwood dimension and flooring
Special product sawmills, nee
Millwork
Wood kitchen cabinets
Hardwood veneer and plywood
Softwood veneer and plywood
Structural wood members, nee
Nailed wood boxes and shook
Wood pallets and skids
Wood containers, nee
Mobile homes
Prefabricated wood buildings
Wood preserving
Particleboard
Wood products, nee
2426
2429
2431
2434
2435
2436
2439
2441
2448
2449
2451
2452
2491
2492
2499
2321
2322
2323
2327
2328
2329
2331
2335
2337
2339
2341
2342
2351
2352
2361
2363
2369
2371
2381
— — •—""»• ui ww^itf iu MUVY11<
2385 Waterproof outergarments
2386 Leather and sheep lined clothing
Apparel belts
Apparel and accessories, nee
Curtains and draperies
House furnishings, nee
Textile bags
Canvas and related products
Pleating and stitching"
2396 Automotive and apparel trimmings
2397 Schiffli machine embroideries
2399 Fabricated textile products, nee
Furniture and Fixtures
2511 Wood household furniture
Upholstered household furniture
Metal household furniture
Mattresses and bedsprings
Wood TV and radio cabinets
Household furniture, nee
Wood office furniture
Metal office furniture
Public building and related furniture
Wood partitions and fixtures
Metal partitions and fixtures
Drapery hardware and blinds and shades
Furniture and fixtures, nee
2512
2514
2515
2517
2519
2521
2522
2531
2541
2542
2591
2599
Paper Products
2611 Pulp mills
Paper mills, except building paper
2621
2387
2389
2391
2392
2393
2394
2395
2631
2641
2642
2643
2645
2646
2647
2648
2649
2651
2652
2653
2654
2655
2661
Paperboard mills
Paper coating and glazing
Envelopes
Bags, except textile bags
Die-cut paper and board
Pressed and molded pulp goods
Sanitary paper products
Stationery products
Converted paper products, nee
Folding paperboard boxes
Set-up paperboard boxes
Corrugated and solid fiber boxes
Sanitary food containers
Fiber cans, drums, and similar products
Building paper and board mills
Note: nee = not elsewhere classified.
-------
SIC
Code Industry
SIC
Code Industry
Printing and Publishing Industries
2711 Newspapers
2721 Periodicals
2731 Book publishing
2732 Book printing
2741 Miscellaneous publishing
2751 Commercial printing, letterpress
2752 Commercial printing, lithographic
2753 Engraving and plate printing
2754 Commercial printing, gravure
2761 Manifold business forms
2771 Greeting card publishing
2782 Blankbooks and looseleaf binders
2789 Bookbinding and related work
2791 Typesetting
2793 Photoengraving
2794 Electrotyping and stereotyping
2795 Lithographic platemaking services
Chemical Products
2800 General chemical manufacturing
2812 Alkalies and chlorine
2813 industrial gases
2816 Inorganic pigments
2818 Organic pesticide products
2819 Industrial inorganic chemicals, nee
2821 Plastics materials and. resins
2822 Synthetic rubber
2823 Cellulosic man-made fibers
2824 Organic fibers, noncellulosic
2831 Biological products
2833 Medicinals and botanicals
2834 Pharmaceutical preparations
2841 Soap and other detergents
2842 Polishes and sanitation goods
2843 Surface active agents
2844 Toilet preparations
2851 Paints and allied products
2861 Gum and wood chemicals
2865 Cyclic crudes and intermediates
2869 Industrial organic chemicals, nee
2873 Nitrogenous fertilizers
2874 Phosphatic fertilizers
2875 Fertilizers, mixing only
2879 Agricultural chemicals, nee
2891 Adhesfves and sealants
2892 Explosives
2893 Printing ink
2895 Carbon black
2899 Chemical preparations, nee
Petroleum and Coal Products
2911 Petroleum refining
2951 Paving mixtures and blocks
2952 Asphalt felts and coatings
2992 Lubricating oils and greases
2999 Petroleum and coal products, nee
Rubber and Plastic Products
3011 Tires and inner tubes
3021 Rubber and plastics footwear
3031 Reclaimed rubber
3041 Rubber and plastics hose and belting
3069 Fabricated rubber products, nee
3079 Miscellaneous plastics products
Leather Products
3111 Leather tanning and finishing
3131 Boot and shoe cut stock and findings
3142 House slippers
3143 Men's footwear, except athletic
3144 Women's footwear, except athletic
3149 Footwear, except rubber, nee
3151 Leather gloves and mittens
3161 Luggage
3171 Women's handbags and purses
3172 Personal leather goods, nee
3199 Leather goods, nee
Stone, Clay, and Glass Products
3211 Rat glass
3221 Glass containers
3229 Pressed and blown glass, nee
3231 Products of purchased glass
3241 Cement, hydraulic
3251 Brick and structural clay tile
3253 Ceramic wall and floor tile
3255 Clay refractories
3259 Structural clay products, nee
3261 Vitreous plumbing fixtures
3262 Vitreous china food utensils
3263 Fine earthenware food utensils
3264 Porcelain electrical supplies
3269 Pottery products, nee
3271 Concrete block and brick
3272 Concrete products, nee
3273 Ready-mixed concrete
3274 Lime
3275 Gypsum products
3281 Cut stone and stone products
3291 Abrasive products
3292 Asbestos products
3293 Gaskets, packing, and sealing devices
3295 Minerals, ground or treated
3296 Mineral wool
3297 Nonclay refractories
3299 Nometallic mineral products, nee
Note: nee « not elsewhere classified.
C-4
-------
SIC
Code Industry
SIC
Code Industry
Primary Metal Industries
3312 Blast furnaces and steel mills
3313 Electrometallurgical products
Steei wire and related products
Cold finishing of steel shapes
Steel pipe and tubes
Gray iron foundries
Malleable iron foundries
Steel investment foundries
Steel foundries, nee
Primary copper
Primary lead
Primary zinc
Primary aluminum
Primary nonferrous metals, nee
Secondary nonferrous metals
Copper rolling and drawing
Aluminum sheet, plate, and foil
Aluminum extruded products
Aluminum rolling and drawing, nee
Nonferrous rolling and drawing, nee
Nonferrous wire drawing and insulating
Aluminum foundries
Brass, bronze, and copper foundries
Nonferrous foundries, nee
Metal heat treating
Primary metal products, nee
3315
3316
3317
3321
3322
3324
3325
3331
3332
3333
3334
' 3339
3341
3351
3353
3354
3355
3356
3357
3361
3362
3369
3398
3399
Metal coating and allied services
Small arms ammunition
Ammunition, except for small arms, nee
Small arms
Ordnance and accessories, nee
Steel springs, except wire
Valves and pipe fittings
Wire springs
Miscellaneous fabricated wire products
Metal foil and leaf
Fabricated pipe and fittings
Fabricated metal products, nee
Metal
3411
3412
3421
3423
3425
3429
3431
3432
3433
3441
3442
3443
3444
3446
3448
3449
3451
3452
3462
3463
3465
3466
3469
3471
Fabrications
Metal cans
Metal barrels, drums, and pails
Cutlery
Hand and edge tools, nee
Hand saws and saw blades
Hardware, nee
Metal sanitary ware
Plumbing fittings and brass goods
Heating equipment, except electric
Fabricated structural metal
Metal doors, sash, and trim
Fabricated plate work (boiler shops)
Sheet metal work
Architectural metal work
Prefabricated metal buildings
Miscellaneous metal work
Screw machine products
Bolts, nuts, rivets, and washers
Iron and steel forgings
Nonferrous forgings
Automotive stampings
Crowns and closures
Metal stampings, nee
Plating and polishing
Note: nee = not elsewhere classified.
3479
3482
3483
3484
3489
3493
3494
3495
3496
3497
3498
3499
Nonelectrical Machinery
3511 Turbines and turbine generator sets
3519 Internal combustion engines, nee
Farm machinery and equipment
Lawn and garden equipment
Construction machinery
Mining machinery
Oil field machinery
Elevators and moving stairways
Conveyors and conveying machinery
Hoists, cranes, and monorails
Industrial trucks and tractors
Machine tools, metal cutting types
Machine tools, metal forming types
Special dies, tools, jigs, and fixture
Machine tool accessories
Power driven hand tools
Rolling mill machinery
Metalworking machinery, nee
Food products machinery
Textile machinery
Woodworking machinery
Paper industries machinery
Printing trades machinery
Special industry machinery, nee
Pumps and pumping equipment
Ball and roller bearings
Air and gas compressors
Blowers and fans
Industrial patterns
Speed changers, drives, and gears
Industrial furnaces and ovens
Power transmission equipment, nee
General industrial machinery, nee
Typewriters
Electronic computing equipment
Calculating and accounting machines
Scales and balances, except laboratory
Office machines, nee
Automatic merchandising machines
3523
3524
3531
3532
3533
3534
3535
3536
3537
3541
3542
3544
3545
3546
3547
3549
3551
3552
3553
3554
3555
3559
3561
3562
3563
3564
3565
3566
3567
3568
3569
3572
3573
3574
3576
3579
3581
C-5
-------
'.'Sill
StC
Code Industry
SIC
Code Industry
3582 Commercial laundry equipment
3585 Refrigeration and heating equipment
3586 Measuring and dispensing pumps
3589 Service industry machinery, nee
3592 Carburetors, pistons, rings, valves
3599 Machinery, except electrical, nee
Electrical and Electronic Machinery, Equipment,
and Supplies
3612 Transformers
3613 Switchgear and switchboard apparatus
3621 Motors and generators
3622 Industrial controls
3623 Welding apparatus, electrical
3624 Carbon and graphite products
3629 Electrical industrial apparatus, nee
3631 Household cooking equipment
3632 Household refrigerators and freezers
3633 Household laundry equipment
3634 Electric housewares and fans
3635 Household vacuum cleaners
3636 Sewing machines
3639 Household appliances, nee
3641 Electric lamps
3643 Current-carrying wiring devices
3644 Noncurrent-canying wiring devices
3645 Residential lighting fixtures
3646 Commerical lighting fixtures
3647 Vehicular lighting equipment
3648 Lighting equipment, nee
3651 Radio and TV receiving sets
3652 Phonograph records
3661 Telephone and telegraph apparatus
3662 Radio and TV communication equipment
3671 Electron tubes, receiving type
3672 Cathode ray television picture tubes
3673 Electron tubes, transmitting
3674 Semiconductors and related devices
3675 Electronic capacitors
3676 Electronic resistors
3677 Electronic coils and transformers
3678 Electronic connectors
3679 Electronic components, nee
3691 Storage batteries
3692 Primary batteries, dry and wet
3693 X-ray apparatus and tubes
3694 Engine electrical equipment
3699 Electrical equipment and supplies, nee
Transportation Equipment
37i1 Motor vehicles and car bodies
3713 Truck and bus bodies
3714 Motor vehicle parts and accessories
3715 Truck trailers
3716 Motor homes on purchased chassis
3721 Aircraft
3724 Aircraft engines and engine parts
3728 Aircraft equipment, nee
3731 Ship building and repairing
3732 Boat building and repairing
3743 Railroad equipment
3751 Motorcycles, bicycles, and parts
3761 Guided missiles and space vehicles
3764 Space propulsion units and parts
3769 Space vehicle equipment, nee
3792 Travel trailers and campers
3795 Tanks and tank components
3799 Transportation equipment, nee
Instruments
3811 Engineering and scientific instruments
3822 Environmental controls
3823 Process control instruments
3824 Fluid meters and counting devices
3825 Instruments to measure electricity
3829 Measuring and controlling devices, nee
3832 Optical instruments and lenses
3841 Surgical and medical instruments
3842 Surgical appliances and supplies
3843 Dental equipment and supplies
3851 Ophthalmic goods
3861 Photographic equipment and supplies
3873 Watches, clocks, and watchcases
Miscellaneous Manufacturing
3911 Jewelry, precious metal
3914 Silverware and plated ware
3915 Jewelers' materials and lapidary work
3931 Musical instruments
3942 Dolls
3944 Games, toys, and children's vehicles
3949 Sporting and athletic goods, nee
3951 Pens and mechanical pencils
3952 Lead pencils and art goods
3953 Marking devices
3955 Carbon paper and inked ribbons
3961 Costume jewelry
3962 Artificial flowers
3963 Buttons
3964 Needles, pins, and fasteners
3991 Brooms and brushes
3993 Signs and advertising displays
3995 Burial caskets
3996 Hard surface floor coverings
3999 Manufacturing industries, nee
Note: nee » not elsewhere classified.
C-6
-------
SIC
Code Industry
Railroad Transportation
4011 Railroads, line-haul operating
4013 Switching and terminal devices
4041 Railway express service
Local
4111
4119
4121
4131
4141
4142
4151
4171
4172
Passenger Transportation
Local and suburban transit
Local passenger transportation, nee
Taxicabs
Intercity highway transportation
Local passenger charter service
Charter service, except local
School buses
Bus terminal facilities
Bus service facilities
Trucking
4212 Local trucking, without storage
4213 Trucking, except local
Local trucking and storage
Farm product warehousing and storage
Refrigerated warehousing
Household goods warehousing
General warehousing and storage
Special warehousing and storage, nee
Trucking terminal facilities
U.S. Postal Service
Water Transportation
4411 Deep sea foreign transportation
4421 Noncontiguous area transportation
Coastwise transportation
Intercoastal transportation
Great Lakes transportation
Transportation on rivers and canals
Ferries
Lighterage
Towing and tugboat service
Local water transportation, nee
Marine cargo handling
Canal operation
Water transportation services, nee
Air Transportation
4511 Certified air transportation
4521 Noncertified air transportation
4582 Airports and flying fields
4583 Air terminal services
Pipelines
4612 Crude petroleum pipelines
4613 Refined petroleum pipelines
4619 Pipelines, nee
4722
4723
4742
4743
4782
4783
4784
4789
4214
4221
4222
4224
4225
4226
4231
4311
4422
4423
4431
4441
4452
4453
4454
4459
4463
4464
4469
SIC
Code Industry
—————..——^_
Transportation Services
4712 Freight forwarding
Passenger transportation arrangement
Freight transportation arrangement
Railroad car rental with service
Railroad car rental without service
Inspection and weighing services
Packing and crating
Fixed facilities for vehicles, nee
Transportation services, nee
Communications
4811 Telephone communication
4821 Telegraph communication
4832 Radio broadcasting
4833 Television broadcasting
4899 Communication services, nee
Electrical, Gas, and Sanitary Services
4911 Electric services
4922 Natural gas transmission
Gas transmission and distribution
Natural gas distribution
Gas production and/or distribution
Electric and other services combined
Gas and other services combined
Combination utility services, nee
Water supply
Sewerage systems
Refuse systems
Sanitary services, nee
Steam supply
Irrigation systems
4923
4924
4925
4931
4932
4939
4941
4952
4953
4959
4961
4971
Wholesale Trade
5012 Automobiles and other motor vehicles
5013 Automotive parts and supplies
Tires and tubes
Furniture
Home furnishings
Lumber, plywood, and millwork
Construction materials, nee
Sporting and recreational goods
Toys and hobby goods and supplies
Photographic equipment and supplies
Metals service centers and offices
Coal and other minerals and ores
Electrical apparatus and equipment
Electrical appliances. TV and radios
Electronic parts and equipment
Hardware
Plumbing and hydronic heating supplies
Warm air heating and air conditioning
5014
5021
5023
5031
5039
5041
5042
5043
5051
5052
5063
5064
5065
5072
5074
5075
Note: nee = not elsewhere classified.
C-7
-------
SIC
Code Industry
SIC
Code Industry
Refrigeration equipment and supplies
Commercial machines and equipment
Construction and mining machinery
Farm machinery and equipment
Industrial machinery and equipment
Industrial supplies
Professional equipment and supplies
Service establishment equipment
Transportation equipment and supplies
Scrap and waste materials
Jewelry, watches, and precious stones
Durable goods, nee
Printing and writing paper
Stationery supplies
Industrial and personal service paper
Drugs, proprietaries, and sundries
Piece goods
Notions and other dry goods
Men's clothing and furnishings
Women's and children's clothing
Footwear
Groceries, general line
Frozen foods
Dairy products
Poultry and poultry products
Confectionery
Fish and seafoods
Meats and meat products
Fresh fruits and vegetables
Groceries and related products, nee
Cotton
Grain
Livestock
Farm-product raw materials, nee
Chemicals and allied products
Petroleum bulk stations and terminals
Petroleum products, nee
Beer and ale
Wines and distilled beverages
Farm supplies
Tobacco and tobacco products
Paints, varnishes, and supplies
Nondurable goods, nee
Retail Trade
5211 Lumber and other building materials
5231 Paint, glass, and wallpaper stores
Hardware stores
Retail nurseries and gardens
Mobile home dealers
Department stores
Variety stores •
Miscellaneous general merchandise stores
5078
5081
5082
5083
5084
5085
5086
5087
5088
5093
5094
5099
5111
5112
5113
5122
5133
5134
5136
5137
5139
5141
5142
5143
5144
5145
5146
5147
5148
5149
5152
5153
5154
5159
5161
5171
5172
5181
5182
5191
5194
5198
5199
5251
5261
5271
5311
5331
5399
5411
5422
5423
5431
5441
5451
5462
5463
5499
5511
5521
5531
5541
5551
5561
5571
5599
5611
5621
5631
5641
5651
5661
5681
5699
5712
5713
5714
5719
5722
5732
5733
5812
5813
5912
5921
5931
5941
5942
5943
5944
5945
5946
5947
5948
5949
5961
5962
5963
5982
5983
5984
Grocery stores
Freezer and locker meat provisioners
Meat and fish (seafood) markets
Fruit stores and vegetable markets
Candy, nut, and confectionery stores
Dairy products stores
Retail bakeries, baking and selling
Retail bakeries, selling only
Miscellaneous food stores
New and used car dealers
Used car dealers
Auto and home supply stores
Gasoline service stations
Boat dealers
Recreation and utility trailer dealers
Motorcycle dealers
Automotive dealers, nee
Men's and boys' clothing and furnishings
Women's ready-to-wear stores
Women's accessory and specialty stores
Children's and infants' wear stores
Family clothing stores
Shoe stores
Furriers and fur shops
Miscellaneous apparel and accessories
Furniture stores
Floor covering stores
Drapery and upholstery stores
Miscellaneous home furnishings stores
Household appliance stores
Radio and television stores
Music stores
Eating places
Drinking places
Drugstores and proprietary stores
Liquor stores
Used merchandise stores
Sporting goods and bicycle shops
Book stores
Stationery stores
Jewelry stores
Hobby, toy, and game shops
Camera and photographic supply stores
Gift, novelty, and souvenir shops
Luggage and leather goods stores
Sewing, needlework, and piece goods
Mail order houses
Merchandising machine operators
Direct selling organizations
Fuel and ice dealers, nee
Fuel oil dealers
Liquefied petroleum gas dealers
Note: nee » not elsewhere classified.
C-8
-------
SIC
Code Industry
SIC
Code Industry
5992 Florists
5993 Cigar stores and stands
5994 News dealers and newsstands
5999 Miscellaneous retail stores, nee
Financial
6011 Federal Reserve banks
6022 State banks, Federal Reserve
€023 State banks, not Federal Reserve, FDIC
6024 State banks, not Federal Reserve, not FDIC
6025 National banks, Federal Reserve
6026 National banks, not Federal Reserve, FDIC
6027 National banks, not FDIC
6028 Private banks, not incorporated, not FDIC
6032 Mutual savings banks, Federal Reserve
6033 Mutual savings banks, nee
6034 Mutual savings banks, not FDIC
6042 Nondeposit trusts, Federal Reserve
6044 Nondeposit trusts, not FDIC
6052 Foreign exchange establishments
6054 Safe deposit companies
6055 Clearinghouse associations
6056 . Corporations for banking abroad
6059 Functions related to banking, nee
6112 Rediscounting, not for agricultural
6113 Rediscounting, for agricultural
6122 Federal savings and loan associations
6123 State associations, insured
6124 State associations, noninsured, FHLB
6125 State associations, noninsured, nee
6131 Agricultural credit institutions
6142 Federal credit unions
6143 State credit unions
6144 Nondeposit industrial loan companies
6145 Licensed small loan lenders
6146 Installment sales finance companies
6149 Miscellaneous personal credit institutions
6153 Short-term business credit
6159 Miscellaneous business credit institutions
6162 Mortgage bankers and correspondents
6163 Loan brokers
6211 Security brokers and dealers
6221 Commodity contracts brokers, dealers
6231 Security and commodity exchanges
6281 Security and commodity services
Insurance
6311 Life insurance
6321 Accident and health insurance
6324 Hospital and medical service plans
6331 Fire, marine, and casualty insurance
6351 Surety insurance
6361 Title insurance
6371 Pension, health, and welfare funds
6399 Insurance carriers, nee
6411 Insurance agents, brokers, and service
Real Estate
6512 Nonresidential building operators
6513 Apartment building operators
6514 Dwelling operators, except apartments
6515 Mobile home site operators
6517 Railroad property lessors
6519 Real property lessors, nee
6531 Real estate agents and managers
6541 Title abstract offices
6552 Subdividers and developers, nee
6553 Cemetery subdivides and developers
6611 Combined real estate, insurance, etc.
Holding and Other Investment Offices
6711 Holding offices
6722 Management investment, open-end
6723 Management investment, closed-end
6724 Unit investment trusts
6725 Face-amount certificate offices
6732 Educational, religious, etc. trusts
6733 Trusts, nee
6792 Oil royalty traders
6793 Commodity traders
6794 Patent owners and lessors
6798 Real estate investment trusts
6799 Investors, nee
Hotels and Personal Services
7011 Hotels, motels, and tourist courts
7021 Rooming and boarding houses
7032 Sporting and recreational camps
7033 Trailering parks for transients
7041 Membership-basis organization hotels
7211 Power laundries, family and commercial
7212 Garment pressing and cleaners' agents
7213 Linen supply
7214 Diaper service
7215 Coin-operated laundries and cleaning
7216 Dry cleaning plants, except rug
7217 Carpet and upholstery cleaning
7218 Industrial launderers
7219 Laundry and garment services, nee
7221 Photographic studios, portrait
7231. Beauty shops
7241 Barber shops
7251 Shoe repair and hat cleaning shops
7261 Funeral service and crematories
7299 Miscellaneous personal services
Note: nee = not elsewhere classified.
r.-9
-------
SIC
Code Industry
SIC
Code Industry
Business Services
7311 Advertising agencies
Outdoor advertising services
Radio, TV, publisher representatives
Advertising, nee
Credit reporting and collection
Direct mail advertising services
Blueprinting and photocopying
Comrnerical photography and art
Stenographic and reproduction, nee
Window cleaning
Disinfecting and exterminating
Building maintenance services, nee
News syndicates
Employment agencies
Temporary help supply services
Personnel supply services, nee
Computer programming and software
Data processing services
Computer related services, nee
Research and development laboratories
Management and public relations
Detective and protective services
Equipment rental and leasing
Photofinishing laboratories
Trading stamp services
Commercial testing laboratories
Business services, nee
7312
7313
7319
7321
7331
7332
7333
7339
7341
7342
7349
7351
7361
7362
7369
7372
7374
7379
7391
7392
7393
7394
7395
7396
7397
7399
Automotive Repair, Services, and Garages
7512 Passenger car rental and. leasing
7513 Truck rental and leasing
7519 Utility trailer rental
7523 Parking lots
7525 Parking structures
7531 Top and body repair shops
7534 Tire retreading and repair shops
7535 Paint shops
7538 General automotive repair shops
7539 Automotive repair shops, nee
7542 Car washes
7549 Automotive services, nee
Miscellaneous Repair Services
7622 Radio and television repair
7623 Refrigeration service and repair
7629 Electrical repair shops, nee
7631 Watch, clock, and jewelry repair
7641 Reupholstery and furniture repair
7692 Welding repair
7694 Armature rewinding shops
7699 Repair services, nee
Entertainment
7813 Motion picture production, except TV
7814 Motion picture production for TV
7819 Services allied to motion pictures
7823 Motion picture film exchanges
7824 Film or tape distribution for TV
7829 Motion picture distribution services
7832 Motion picture theaters except drive-in
7833 Drive-in motion picture theaters
7911 Dance halls, studios, and schools
7922 Theatrical producers and services
7929 Entertainers and entertainment groups
7932 Billiard and pool establishments
7933 Bowling alleys
7941 Sports clubs and promoters
7948 Racing, including track operation
7992 Public golf courses
7993 Coin-operated amusement devices
7996 Amusement parks
7997 Membership sports and recreation clubs
7999 Amusement and recreation, nee
Health Services
8011 Offices of physicians
8021 Offices of dentists
8031 Offices of osteopathic physicians
8041 Offices of chiropractors
8042 Offices of optometrists
8049 Offices of health practitioners, nee
8051 Skilled nurse care facilities
8059 Nursing and personal care, nee
8062 General medical and surgical hospitals
8063 Psychiatric hospitals
8069 Specialty hospitals, except psychiatric
8071 Medical laboratories
8072 Dental laboratories
8081 Outpatient care facilities
8091 Health and allied services, nee
Legal, Educational, and Social Services
8111 Legal services
8211 Elementary and secondary schools
8221 Colleges and universities, nee
8222 Junior colleges
8231 Libraries and information centers
8241 Correspondence schools
8243 Data processing schools
8244 Business and secretarial schools
8249 Vocational schools, nee
8299 Schools and educational services, nee
8321 Individual and family services
8331 Job training and related services
8351 Child day care services
Note: nee » not elsewhere classified.
in
-------
SIC
Code Industry
SIC
Code Industry
8361 Residential care
8399 Social services, nee
8411 Museums and art galleries
8421 Botanical and zoological gardens
Professional Organizations
8611 Business associations
8621 Professional organizations
8631 Labor organizations
8641 Civic and social associations
8651 Political organizations
8661 Religious organizations
8699 Membership organizations, nee
8811 Private households
Miscellaneous Services
8911 Engineering and architectural services
8922 Noncommercial research organizations
8931 Accounting, auditing, and bookkeeping
8999 Services, nee
Government
9111 Executive offices
9121 Legislative bodies
9131 Executive and legislative combined
9199 General government, nee
9211 Courts
9221 Police protection
9222 Legal counsel and prosecution
9223 Correctional institutions
9224 Fire protection
9229 Public order and safety, nee
9311 Finance, taxation, and monetary policy
9411 Administration of educational programs
9431 Administration of public health programs
9441 Administration of social and manpower programs
9451 Administration of veterans' affairs
9511 Air, water, and solid waste management
9512 Land, mineral, wildlife conservation
9531 Housing programs
9532 Urban and community development
9611 Administration of general economic programs
9621 Regulation, administration of transportation
9631 Regulation, administration of utilities
9641 Regulation of agricultural marketing
9651 Regulation miscellaneous commercial sectors
9661 Space research and technology
9711 National security
9721 International affairs
9999 Nonclassifiable establishment
Note: nee = not elsewhere classified.
mi
-------
-------
APPENDIX D
Detailed Description of the Economic Impact Analysis Model
-------
-------
This appendix summarizes in greater detail the economic impact methodology used to
assess impacts of the proposed effluent limitations guidelines and standards on commercial
CWT facilities. The Agency developed a partial-equilibrium market model that simulates
facility responses to the regulatory costs, resulting in changes in market supply, price,
quantity, facility revenues, costs, and employment.
D.I REGIONAL MARKETS FOR CWT SERVICES
Because wastewater is heavy, bulky, and therefore costly to transport, the markets for
CWT services are fairly localized. EPA defined six geographical regions across the
continental U.S., within which CWT services are provided. These regions, described in
Section 3, are Northeast, Southeast, Upper Midwest, Lower Midwest, Northwest, and
Southwest. Within each region, CWTs may be assigned to one or more of 11 possible
"markets":
• Metals Recovery
— medium cost
— low cost
• Metals Treatmer-.
— high cost
— medium cost
— low cost
• Oils Recovery
— high cost
D-l
-------
— medium cost
— low cost
• Oils Treatment
• Organics Treatment
— high cost
— low cost
Each of these specific types of services within a region constitutes a market. These markets
were defined by examining the questionnaire data and comments on the NOA modeling
assumptions. Facilities were assigned to one or more of the markets, based on their reported
or estimated average cost of treatment or recovery. The quantity of waste a facility is said to
accept for treatment or recovery is based on technical questionnaire data or on modeling done
for the NOA, as amended based on comments. For facilities that responded to the
questionnaire, commercial status is based on responses to Question O4, which asks about the
quantities of wastewater accepted on a commercial and noncommercial basis. EPA assumed
that the proportion reported by a facility is accurate for all subcategories and for treatment as
well as recovery. For NOA facilities, EPA assumed all waste was accepted on a commercial
basis.
For each commercial CWT, average (or per-gallon) baseline costs of treatment or
recovery were computed based on responses to the economic section of the questionnaire.
For example, the average cost of metals recovery was computed by dividing the reported cost
of metals recovery by the inflow to metals recovery as reported in the technical section of the
questionnaire. Reported dollar values were adjusted to 1997 dollars using the producer's
price index.
D.2 MARKET STRUCTURE
D-2
-------
After assigning facilities to markets, EPA determined the appropriate market structure
as either monopoly (one CWT in the market), duopoly (two CWTs in the market), or perfect
competition (three or more CWTs in the market). The market price is defined as a function
of the maximum average cost within the market. For perfectly competitive markets, market
price is defined as the maximum average cost across all facilities in the market. For the
imperfectly competitive market structures, market price is some fraction higher than the
maximum average cost across facilities in the market, reflecting the fact that under imperfect
competition, facilities have market power.
D.3 FACILITY RESPONSES TO CONTROL OPTIONS DEPEND ON THE
MARKET STRUCTURE
Complying with the regulation increases each affected facility's per-gallon cost of
treatment in each market by the annualized per-gallon cost of the controls on that process.
For example, the per-gallon cost of oils treatment is increased by the cost of implementing
the controls proposed for the oils subcategory. To compute this increase in per-gallon costs,
EPA first estimated the cost of controls for each subcategory, then annualized the capital and
land costs and added the annualized costs to the annual operating and maintenance (O&M)
and monitoring and recordkeeping (M&R) costs.
Total Annual Cost (TAC) = (Annual O&M and M&R costs)
(Annualized K and Land costs)
(D.I)
Compliance costs were adjusted from 1989 to 1995 dollars using the Construction Cost Index
published in the Engineering News Record (1998). Costs were also adjusted to account for
the tax savings due to depreciation and cost deduction provisions of the tax code. For greater
detail on the controls for each subcategory and the cost adjustments made, see Section 4.
To estimate the per-gallon annual compliance costs, the TAC was then divided by the
quantity of wastewater being processed in that subcategory at that facility. This per-gallon
cost of compliance was added to the facility's baseline average cost to obtain its with-
D-3
-------
regulation average cost of treating that subcategory of wastewater. For example, the with-
regulation average cost of oils treatment is the baseline average cost of oils treatment plus the
per-gallon cost for that facility to comply with the oils subcategory guidelines or standards.
Oils and metals recovery operations are indirectly affected by the controls, because
they generate wastewater. For each facility, the Agency has an estimate of the quantity of
wastewater generated for each gallon of oily or metal-bearing waste accepted for recovery.
If, for example, the quantity of wastewater generated by a facility's oils recovery operation is
60 percent of the quantity of oily waste accepted for recovery, the average cost of oils
recovery is increased by 0.6 times the per-gallon cost of complying with the oils subcategory
guidelines or standards.
Each facility compares the average with-regulation cost of performing each waste
treatment or recovery operation with the additional revenue it will receive and decides
whether to continue providing the waste treatment or recovery service, and if So, how much
to treat. Facilities choosing to decrease the quantity of waste they treat, aggregated together,
reduce the market supply of the CWT service. Market supply, interacting with market
demand, results in a new, higher market price for the CWT service and a new, lower total
market quantity of waste accepted at CWTs in the market for the treatment or recovery
service. As the price adjusts, facilities evaluate their supply decision. The adjustments
continue until a set of prices and quantities is identified that satisfies both suppliers and
demanders.
The precise ways in which facilities interact with the market in adjusting to the new,
higher costs of providing CWT services vary according to the market structure. Monopolies,
duopolies, and competitive facilities respond somewhat differently to the costs of complying
with the effluent limitations guidelines and standards. The rest of this appendix examines the
adjustment to the compliance costs under each of the market structures.
D.3.1 Monopoly
D-4
-------
Based on the with-regulation cost of treatment, monopolies identify the most
profitable new price and quantity for then- CWT service from the market demand for the
service. Unlike perfectly competitive facilities, monopolists recognize the power they have
to affect the market price. The monopolist chooses a price and output that maximize its
profit The choice of price and output depends on the behavior of customers as reflected in
the curvature of the demand curve facing the monopolist.
The monopolist's profit-maximizing level of output will be where his marginal
revenue equals marginal cost, or
l/n}=MC
(D.2)
where P is the market price and n < 0 is the market price elasticity of demand. Note that the
monopolist will never operate where the demand curve is inelastic, because faced with
inelastic demand, he can always increase his revenues by increasing his price. Thus, the
optimal output will only occur in that part of the demand curve where the elasticity is greater
than or equal to one.
Consider a monopolist with constant marginal costs that faces environmental
regulation with a per-gallon compliance cost equal to c. The marginal cost curve shifts up by
the amount of the unit compliance cost to MC = c, and the intersection of marginal revenue
and marginal cost moves to the left, reflecting a reduction in output. The magnitude of the
changes in market price and output will depend on the assumed shape of the demand curve.
The model may specify either a linear demand curve or a constant elasticity demand curve.
EPA has chosen to assume a constant elasticity demand curve of the form q = Cpn. Given
mis demand curve, the MR = MC condition can be rewritten
(D.3)
As indicated by that equation, a monopolist facing a constant elasticity demand curve will
charge a price that is a constant markup on marginal cost given by 1/(1 + 1/n). Given that the
D-5
-------
demand elasticity must be elastic (greater than or equal to one in absolute value), the constant
markup is greater than one so that the monopolist passes on more than the amount of the unit
compliance cost to consumers. Thus, to operationalize a monopolist facing a constant
elasticity demand function, the model would specify the parameters of the demand function
(C and n) and determine the new market price using Eq. D.3 and the new market output by
solving the market demand equation given the new market price, q = Cpn.
D3.2 Duopoly
Duopoly exists in markets having two suppliers, and each recognizes its influence
over market price and chooses a level of output to maximize its profit given the output
decision of the other supplier. There are a number of possible duopoly solutions, depending
on the assumed behavior of suppliers as collusive, competitive, or Cournot-Nash. The
Agency has chosen to employ the Cournot-Nash behavioral assumption. Under this
assumption, EPA assumed that cooperation between suppliers is not achieved. Each supplier
correctly evaluates the effect of its output choice on market price, and each does the best it
can given the output decision of its competitor. Thus, given any output level chosen by
Supplier 1, there will be a unique optimal output choice for Supplier 2. In essence,
Supplier 2 behaves as a monopolist over the residual demand curve (that portion of demand
not satisfied by Supplier 1). EPA constructed reaction functions for each supplier that define
its optimal output choice given the selected level of output from the other supplier. The
intersection of the reaction curves for each supplier is the Cournot-Nash equilibrium, since
each supplier is at its optimal output level given the decision of the other.
Consider two suppliers with constant marginal costs facing per-gallon costs of
complying with the CWT effluent limitations guidelines and standards equal to c, and c2,
respectively. The marginal cost curve for each supplier shifts up by the amount of its per-
gallon compliance cost, and the intersection of MR and MC moves to the left, reflecting a
reduction in output. The magnitude of the changes in market price and output will depend on
the shift in the "reaction curve" of each supplier associated with the regulatory costs given a
linear demand curve that is specified p (q) = A - BQ, where Q = qj + q2.
D-6
-------
In the case of duopolists facing a linear demand curve, the MR = MC condition for
each supplier becomes
and
= (A-q2)-2Bq,=MC,
MR2 = (A - q,) - 2Eq2 = MC2 +c2
(D.4)
(D.5)
Equilibrium will be determined by the intersection of these reaction curves. Substituting
Eq. D.4 into D.5 results in an equation for the optimal level of Supplier 1 's output that
depends on the demand parameters (A and B), its marginal cost (MC, + cj, and the marginal
cost of Supplier 2 (MC2 + c2):
q, = [A(l - 2b) - (MC2 + c2) + 2B(MC, + c,)] / (1 - 4B2).
(D.6)
Thus, to operationalize duopoly with a linear demand function, the model would specify the
parameters of the demand function, A and B; determine the optimal output level of
Supplier 1 using Eq. D.6 based on the unit compliance costs c, and c2; determine the optimal
output level of Supplier 2 using Eq. D.5, given the new optimal output level of Supplier 1
and its unit compliance cost c2; and then determine the new market output level (q, + q2) and
new market price p = A - B(q, + o^).
D.3.3 Perfect Competition
Many of the markets in the CWT economic impact analysis model have three or more
suppliers and are treated as perfectly competitive. Facilities offering a CWT treatment or
recovery service in a perfectly competitive market are unable to affect the market price by
their actions. Thus, they maximize their profits by producing all units for which P is greater
than or equal to MC + c, where MC is the baseline per-gallon cost of the treatment operation,
and c is the per-gallon cost of complying with the guidelines or standards. Summing all the
quantities supplied by CWTs in the market yields market supply. Market demand,
characterized by a single constant price-elasticity, determines the quantity demanded at a
D-7
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given market price. Market price increases if quantity demanded exceeds quantity supplied
or decreases if quantity supplied exceeds quantity demanded. As market price adjusts,
facilities reevaluate their desired supply of CWT services, resulting in further adjustments in
market supply. Adjustments continue until a price and quantity are found that satisfy both
suppliers and demanders. Figure D-l shows a competitive market with the regulatory costs
included. The costs of complying with the regulation shift each facility's per-gallon cost
upward, resulting in the upward shift in the supply curve. In this example, one facility has
per-gallon with-regulation costs that exceed the original market price; they choose to close
this CWT operation, because it is losing money. The market price adjusts upward to P2, and
D-8
-------
$/gallon
Q2 QI Gallons treated per year
Figure D-l. Adjustment of a Perfectly Competitive Market to the Costs of Complying
with the CWT Regulation
The highest cost facility shuts down this CWT operation.
total quantity treated falls to Q2, reflecting the closure of one CWT process and a downward
adjustment in the quantity treated by the next most costly CWT operation in the market.
D.4 IMPACT MEASURES ESTIMATED BY THE MODEL
As shown by the examples above, the economic impact analysis model estimates a
variety of impact measures for affected facilities and markets. These measures include
• with-regulation market price,
• with regulation market quantity of waste treated,
• with-regulation facility quantity treated in each CWT operation,
D-9
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« with-regulation facility revenues and costs,
• with-regulation facility employment, and
« closures of CWT operations or entire CWT facilities.
These impact measures serve as starting points for other parts of the economic analysis. For
example, facility changes in employment form the basis for estimated community-wide
changes in employment that form the basis of the community impacts analysis. The facility-
level changes in revenues and costs can be aggregated to the owner-company level to form
the basis for company-level impact measures such as changes in profit margins. Changes in
market prices and quantities are used to estimate the changes in producer and consumer
surplus that are a large part of the measure of social costs.
D.5 REFERENCES
Engineering News Record. Construction Cost Index History (1908-1997).
. Downloaded October 28, 1998.
D-10
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APPENDIX E
Detailed Demand Elasticity Discussion
-------
-------
The own-price elasticity of demand is a model parameter that measures the
responsiveness of demand for a commodity to changes hi its price. As such, it is a critically
important element in analyzing the extent to which costs incurred by producers are borne by
them or are passed on to their customers in the form of higher market prices for the goods or
services they produce. Although there are other types of demand elasticities that measure the
responsiveness of demand to factors other than the price of the commodity itself, the own-
price elasticity of demand is referred to as the elasticity of demand in this appendix. EPA
examined the elasticity of demand for CWT services and used two different elasticities
depending on the market structure. For perfectly competitive markets, EPA assumed that the
elasticity of demand is -0.5. For imperfectly competitive markets, EPA assumed that the
elasticity of demand was -1:5. EPA selected these elasticities as representing the most
reasonable range of price-elasticity values, based on economic reasoning, after examining the
economics literature and analyzing an alternative assumption. This appendix summarizes
EPA's examination of the price elasticity of demand for CWT services.
E.1 THE ECONOMIC THEORY UNDERLYING THE ELASTICITY OF
DEMAND FOR AN INPUT
As explained above, waste treatment is an input into the production of other goods
and services, whose production also creates waste. The demand for the CWT input is derived
from the demand for the other goods and services. In the market model, the change in
quantity demanded of CWT service i is described as a function of the change hi the market
price for CWT service i and the elasticity of demand for CWT service i. Thus, the change in
quantity demanded is given by
(E.1)
where
E-l
-------
_ change in quantity demanded of CWT service i,
f]i = elasticity of demand for CWT service i,
dp,. = change in price of CWT service i,
Q; = baseline quantity demanded of CWT servicei, and
Pj = baseline price of CWT service i.
CWT service markets are characterized as regional markets. Based on information
provided in the CWT survey, the Agency believes that most of a CWT facility's customers
are located within the same state as the CWT facility or within a few adjacent states. For our
market model, the continental United States was divided into six regional markets for CWT
services. All the generators within each region were assumed to send their off-site waste to a
CWT facility located within the region. Thus, competition for customers was assumed to
occur essentially within the region, although CWT facilities located outside the region do
offer a (very costly) alternative to CWT facilities within the region. The presence of these
"treaters of last resort" affects the assumptions made about the elasticity of demand for CWT
services.
The elasticity of demand measures the responsiveness of demand for a service to
changes in its price. It is defined as the percentage change in the quantity demanded of a
service divided by the percentage change in its price:
(E.2)
where the right-hand-side variables are defined as above.
Economic theory states that the elasticity of the derived demand for an input is a
function of the following:
• demand elasticity for the final good it will be used to produce,
• the cost share of the input in total production cost,
E-2
-------
the elasticity of substitution between this input and other inputs in production, and
the elasticity of supply of other inputs (Hicks, 1961; Hicks, 1966; and Allen,
1938).
Using Hicks' formula,
li = [s(n + e) + Ke(n - s)] / [n = e - K(n - s)]
(E.3)
where
s
n
e
K
elasticity of demand for the CWT service i,
elasticity of substitution between CWT service i and all other inputs,
elasticity of demand for final product,
elasticity of supply of other inputs, and
cost share of CWT service i in total production cost.
In the Appendix to The Theory of Wages, Hicks (1966) shows that, if n > s, the
demand for the input is less elastic the smaller its cost share (Levinson, 1997; Sigman, 1998;
Smith and Sims, 1985). If the data were available, this formula could be used to actually
compute the elasticity of demand for each CWT service. As noted above, however, nearly
every production activity generates some waste that is managed off-site. The number of final
products whose elasticity of demand (n) would need to be included is very large, and the
elasticities of demand for those products vary widely. Thus, resources do not permit
determination of a value for n. This makes direct computation of the elasticity of demand, t\,
impossible. In spite of this, the formula is useful because it identifies factors that influence
the magnitude of the elasticity of derived demand. Knowledge of the general magnitude of
those factors makes it possible to make an educated assumption about the magnitude of r\.
The elasticity of substitution, s, between a given waste treatment service and other
inputs is low but not zero. This means that waste generators do have some limited options in
the way they produce their final goods or services. Some limited substitution is possible
E-3
-------
between treatment technologies for a given waste form. In addition, generators may choose
to substitute out-of-region CWT services for within-region CWT services, although
transportation costs would increase greatly. Further, generating facilities may substitute
on-site capital, labor, and/or materials for off-site waste treatment either by choosing to
manage the waste on-site or by undertaking on-site pollution prevention activities. These
options are quite limited, however, so s is expected to be small, and n is likely to be larger
thans.
Thus, the magnitude of TI is proportional to the magnitude of K, the cost share of
CWT in final goods production. Other analyses done on the CWT industry found that the
cost share for waste treatment was historically very small, frequently hundredths of a percent
of total production costs. Recent regulatory changes may have increased the unit cost
somewhat, but it is still expected to be fairly small.
Insufficient data exist to enable the Agency to estimate the elasticity of demand for
CWT services econometrically. Instead, assumptions were made about the relative
magnitudes of the parameters of the Hicks equation describing the elasticity of demand for
intermediate goods and services. Based on these assumptions, a reasonable assumption was
made about the magnitude of the elasticity of demand for CWT services in each regional
market
Overall, the demand for CWT services is assumed to vary, depending on the structure
of the CWT market. For markets with three or more CWTs (modeled as having a perfectly
competitive market structure), EPA assumes the elasticity of demand to be -0.5—relatively
inelastic. This demand elasticity means that, if the price of CWT services in these markets
increases by 10 percent, the quantity of CWT services demanded will decrease by only
5 percent
For CWT markets having one or two CWTs, the demand is assumed to be slightly
elastic (-1.5). Demand elasticity in this range means that, when the price of CWT services
increases, the quantity of CWT services demanded will decrease by slightly more, in
E-4
-------
percentage terms, than the price has increased. Because the markets being modeled are
regional monopolies or duopolies, the CWT facilities possess market power and can, to an
extent at least, choose the market price they charge for their services. They will always select
prices that are in the elastic range of their demand curves. Elastic demand means that the
percentage change in quantity exceeds the percentage change in price. Inelastic demand
means that percentage change in price exceeds percentage change in quantity. A firm with
market power that is operating in the inelastic range of its demand curve can increase its
revenues by increasing the price it charges (Revenue = price • quantity). Thus, such a firm .
will always increase its price until demand becomes at least slightly elastic. In the inelastic
range of the demand curve, therefore, CWT operators with market power have nothing to
lose by increasing the price they charge. Only when the price rises into the elastic range of
the demand curve will further increases in price decrease the firm's CWT revenues.
Imperfectly competitive firms will then select the price they charge by estimating what price
will yield the highest profits.
Overall, therefore, the Agency assumed markets for CWT services to be characterized
by demand elasticities that range from -0.5 to -1.5. To further validate that these assumed
values are reasonable, the Agency examined recent articles in the economics literature that
estimate price responsiveness of similar types of services. This survey of the literature is
reported in Section E.2. Finally, in Section E.3, EPA reports the result of a sensitivity
analysis that assumed that CWT facilities are completely unable to increase their prices in
response to a change in the cost of providing their services. This "full-cost-absorption"
scenario represents the highest impacts that could be incurred by CWTs as a result of
complying with the regulation. The costs of affected CWT facilities are assumed to increase
by the amount of the total annualized compliance costs, while their revenues remain
unchanged.
E.2 EVIDENCE FROM THE LITERATURE ON DEMAND ELASTICITIES FOR
SIMILAR SERVICES
E-5
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Another source of evidence about the probable range of elasticities for CWT services
is articles in the economics literature that estimated the price responsiveness of demand for
waste management services. At proposal, EPA had identified no economics articles that
modeled markets that were similar enough to CWT services for the results to be at all
applicable. During the analysis for this re-proposal, and especially after the SBREFA panel
meetings, EPA conducted additional searches of the literature and identified several articles
whose results might be relevant. None of the articles analyze markets that are precisely the
same as the ones being affected by the CWT effluent limitations guidelines and standards.
Nevertheless, they do reveal something about the influence of price on the demand for
various types of waste management services and therefore indicate the expected sensitivity of
demand for CWT services to changes in price. This section summarizes these articles,
including a discussion of the markets being modeled and the evidence of price
responsiveness of those markets.
EPA identified six articles that provide evidence about the price responsiveness of
demand for waste management Smith and Sims (1985) examine the impact of pollution
charges on productivity growth in the Canadian brewing industry. Mark Eiswerth (1993)
uses dynamic optimization to analyze choices between disposal options for solvent wastes.
Deyle and Bretschneider (1995) examine the effect of New York's hazardous waste
regulatory initiatives on the choice of disposal methods and locations. Arik Levinson (1997)
examines the impact of state "NIMBY" (Not in My Back Yard) taxes on interstate transport
of hazardous waste for disposal in the United States. Anna Alberini (1998) looks at the
determinants of disposal choice for generators of halogenated solvents. Hilary Sigman
(1998) examines the influence of variations hi the cost of legal means of disposal of waste oil
on the number of dumping incidents.
Smith and Suns used plant-specific data on responses to a sewer surcharge scheme,
which levies extra fees for the discharge of "extra-strength" waste by indirect dischargers.
The pollutants of concern in this analysis are conventional pollutants, especially BOD and
TSS. The authors collected 10 years of data on shipments, labor, energy, materials, and
capital stock, and environmental regulation were obtained for four breweries, two of which
E-6
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were subject to sewer surcharges and two of which were unregulated. The authors estimated
a trans-log cost function where the factors were labor, capital, energy, and wastewater
treatment. (A fixed relationship was found to exist between materials and output, so
materials were omitted from estimation.) Own-price and cross-price elasticities of factor
demand were computed at the sample mean, based on the empirical results. The own-price
elasticity of demand for wastewater treatment was found to be -0.48. (A 1 percent increase
in the price of emissions reduces emissions by 0.48 percent.)
Eiswerth examined the choice, over time, between two disposal methods for solvent
waste, using a dynamic optimization model. Because the risks associated with disposing of a
single type of waste can vary significantly over time depending on the disposal method, the
optimal choice of disposal method depends not only on the risks at the time of disposal, but
also on the variation in risk over time as natural degradation occurs. He illustrates his
optimal control model by analyzing the choice between incineration and landfilling of metal-
bearing solvent wastes, using accepted or assumed values for some of the critical variables.
In this illustration, the optimal choice is shown to be relatively insensitive to changes in the
cost differential between the two management methods. (Because this is an illustration,
incorporating several simplifying assumptions, and because the dependent variable is the
socially optimal quantity of incineration and land disposal, rather than the market quantity,
this article's results may not be as germaine as some of the others cited here.)
Deyle and Bretschneider examine the influence of one state's hazardous waste
regulatory initiatives not only on choices made within that state, but on neighboring states.
They model the impact of New York policy initiatives on ultra- and interstate shipments of
hazardous waste to facilities where one of four different management technologies is applied:
land disposal, treatment, incineration, or recycling. In the 1980s, New York enacted two
initiatives aimed at encouraging generators to move up the waste management hierarchy from
land disposal to treatment, recycling, or source reduction. These initiatives—a state
superfund tax whose rates depended on management method and a ban on land disposal of
certain waste types—also increased the cost of in-state waste management. The authors
estimated 12 regression equations, examining the impact on in-state shipments to each of the
E-7
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four types of waste management, exports out-of-state to each of four types of waste
management, and imports into New York for each of the four types of waste management.
The 1985 increase in the state superfund tax had the expected effect of decreasing land
disposal and increasing treatment but had no significant impact on incineration or recycling.
The coefficients on exports were generally significant (as expected), because in-state
generators have to pay the tax wherever they send their waste for management. The tax did,
however, discourage imports from out of state, especially for land disposal. Overall, the
relative increase in the cost of land disposal, compared to other, less-risky waste management
methods, has the effect of shifting waste away from land disposal and discourages imports to
land disposal. Insufficient data are presented in the paper to enable the computation of an
elasticity.
Levinson's NBER working paper on NIMBY taxes designed to discourage in-state
disposal of hazardous waste examines the effect of such taxes on interstate shipments of
waste. He estimates the "tax elasticity," the percentage change in quantities of hazardous
waste deposited in the jurisdiction divided by the percentage change in the hazardous waste
tax rate. The estimated elasticities, computed based on average tax rates of $15 per ton,
range from 0.15 to 0.26, indicating that the decision to dispose of waste within a jurisdiction
is only slightly responsive to changes in the disposal tax rate. Because the tax is only a small
share of the overall price of waste disposal, the author notes that these elasticities are really
rather high.
Alberini's paper is an empirical study of the determinants of disposal choices for
halogenated solvents. Alberini collected data on shipments of spent halogenated solvents to
or from California. She also obtained information on prices charged by several hazardous
waste treatment facilities for treatment of these types of waste. Finally, she collected data on
the financial strength of the company owning the treatment facility, and proxied facility
waste management performance by the presence of corrective action at the facility. She
estimates conditional logit models of random utility for the generators, where the
independent variables are the cost of disposal at a facility, a set of proxies for the likelihood
that the treatment facility will become a federal or state Superfund site, variables to measure
E-8
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the facility's capacity to treat various types of waste, and a vector of variables for the
generator's likelihood of incurring liability for cleanup at the site. When the wastes are
relatively narrowly defined and the wastes are destined for recycling or transfer to another
destination, the generator's choice of treatment facility is somewhat responsive to cost.
However, when no treatment type is specified (and where the waste may be less
homogeneous or more difficult to treat), the coefficient on treatment cost, while negative and
significantly different from zero, is very small.
Finally, Sigman examines the influence of policies that increase the cost of legal
treatment for waste lubricating oil on the number of illegal dumping incidents. She examines
the impact of changes in the salvage value of oil and the existence of disposal bans. The
imposition of a ban on legal disposal increases the cost of legal disposal and increases the
number of dumping incidents. An increase in the salvage price of oil reduces the price of
legal management of waste oil and decreases the number of dumping incidents. A 10 percent
increase in the salvage value of oil is estimated to decrease the number of dumping incidents
by 6 percent.
Together, these studies show that increases in the price or cost of waste treatment
result in decreases in the quantity of waste treatment demanded. The demand for waste
treatment is shown to be slightly to moderately responsive to changes in its price.
E.3 A FULL-COST ABSORBTION SIMULATION
To analyze the maximum potential impact of the CWT effluent limitations guidelines
and standards on CWT facilities, EPA estimated the impacts on the profitability of facilities'
CWT operations under the assumption that the CWT facilities were completely unable to
pass the costs of compliance on to their customers in the form of increased prices. The
increased costs of each CWT operation reduce its profitability. Under these assumptions, the
with-regulation price (unchanged) is compared to the with-regulation unit cost of the
operation, and operations for which with-regulation unit costs exceed the price are assumed
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to shut down. Again, facilities at which all affected CWT operations become unprofitable are
defined as facility closures.
Tables E-l and E-2 compare the result of this simulation with the results of the model
using the assumed elasticities of demand. Table E-l compares the number of CWT processes
that are predicted to become unprofitable and shut down under each scenario. Impacts on
direct and zero dischargers are unchanged. Indirect dischargers are predicted to incur
13 additional process closures if they are completely unable to pass along their costs to their
customers.
TABLE E-l. PROCESS CLOSURES AT CWT FACILITIES, BY DISCHARGE
STATUS"
Process Closures
Discharge Status
Combined Regulatory Option Full-Cost Absorption
Direct dischargers
Indirect dischargers
Zero dischargers
1
16
0
1
29
0
* Data are scaled up to account for the entire universe of CWT facilities.
TABLE E-2. FACILITY CLOSURES OF CWT FACILITIES, BY DISCHARGE
STATUS"
Facility Closures
Discharge Status
Combined Regulatory Option Full-Cost Absorption
Direct dischargers
Indirect dischargers
Zero dischargers
2
13
0
2
16
0
* Data are scaled up to account for the entire universe of CWT facilities.
Table E-2 shows predicted facility closures under each scenario. Again, the impacts
on direct and zero-discharging CWT facilities are predicted to be the same. Three additional
E-10
"Is
"Illlii i1,,; ,l,
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indirect discharge facilities are predicted to close if they are completely unable to pass their
costs along to then- customers.
While the projected increase hi impacts on indirect dischargers under a full-cost
absorption scenario is not insignificant, it understates the costs that would be incurred by the
CWT industry, even if the demand elasticity assumptions do result in greater projected price
increases than would occur in reality. Thus, even if impacts on the CWT industry are more
severe than projected by the model using the assumed relatively low elasticities of demand,.
they are expected to be economically achievable.
E.4 REFERENCES
Alberini, Anna. January 1997. "The Determinants of Hazardous Waste Disposal Choice:
An Empirical Analysis of Halogenated Solvent Waste Shipments." Working paper
presented at ASSA meetings.
Allen, R.G.D. 1938. Mathematical Analysis for Economists. New York: St. Martin's Press.
Deyle, Robert E., and Stuart I. Bretschneider. 1995. "Spillovers of State Policy
Innovations: New York's Hazardous Waste Regulatory Initiatives." Journal of
Policy Analysis and Management 14(1):79-106.
Eiswerth, Mark E. 1995. "Using Dynamic Optimization for Integrated Environmental
Management: An Application to Solvent Waste Disposal." Land Economics
69(2):168-80.
Hicks, J.R. 1961. "Marshall's Third Rule: A Further Comment." Oxford Economic Papers
13:262-65.
Hicks, J.R. 1966. The Theory of Wages. 2nd Ed. New York: St. Martin's Press.
Levinson, Arik. 1997. "NIMBY Taxes Matter: State Taxes and Interstate Hazardous Waste
Shipments." NBER Working Paper 6314. .
Sigman, Hilary. 1998. "Midnight Dumping: Public Policies and Illegal Disposal of Used
Oil." RAND Journal of Economics 29(1):157-178.
Smith, J. B., and W. A. Sims. 1985. "The Impact of Pollution Charges on Productivity
Growth in Canadian Brewing." RAND Journal of Economics 16(3):410-423.
E-ll
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