EPA-23D/l-75-DB5a
FEBRUARY 1976
           ECONOMIC ANALYSIS OF
    INTERIM FINAL EFFLUENT GUIDELINES
        FOR SELECTED  SEGMENTS OF
  THE EXPLOSIVES INDUSTRY--GROUP H
                     QUANTITY
     U.S. ENVIRONMENTAL PROTECTION AGENCY
          Office of Water Planning and Standards
               Washington, D.C. 20460
                      *•**!
USB,
                     ^

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  This document is available in limited quantities through the
U. S. Environmental Protection Agency,  Economic Analysis
Section (WH-553), 401 M Street, S.W., Washington, D.C. 20460.

  This document will  subsequently be available through the
National Technical Information Service, Springfield, VA 22151.

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EPA 230/1-75-065a



  ECONOMIC ANALYSIS OF INTERIM FINAL EFFLUENT GUIDELINES

                 FOR SELECTED SEGMENTS OF

             THE EXPLOSIVES INDUSTRY - GROUP II
                    Contract No. 68-01-1541
                       Task Order No. 39
          OFFICE OF WATER PLANNING AND STANDARDS
             ENVIRONMENTAL PROTECTION AGENCY
                   WASHINGTON, D.C.  20460
                        February 1976
                            U.S. Environmental Protection Agency
                            Region  V, Library
                            230 South Dearborn Street   >
                            Chicago, Illinois  60604

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This report has been reviewed by the Office of Water Planning and Standards, EPA,
and approved  for publication. Approval does not signify that the contents neces-
sarily reflect the views and policies of the Environmental Protection Agency, nor
does mention  of trade names or commercial  products constitute endorsement or
recommendation for use.

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                     TABLE OF CONTENTS

                                                        Page

List of Tables                                                v

1.0    EXECUTIVE SUMMARY                                  1

      1.1  INTRODUCTION                                   1

      1.2  PURPOSE AND SCOPE                              2

      1.3  STUDY APPROACH                                 3

          1.3.1   Prescreening                                3

      1.4  CHARACTERIZATION OF THE CIVILIAN
          EXPLOSIVES INDUSTRY                            4

      1.5  CONCLUSIONS AS TO THE ECONOMIC IMPACT ON
          THE COMMERCIAL SECTOR OF THE EXPLOSIVES
          INDUSTRY                                       5

      1.6  SUMMARY OF THE COSTS OF POLLUTION
          ABATEMENT FOR SUBCATEGORIES A AND C           7

2.0    INDUSTRY CHARACTERIZATION                         9

      2.1  GENERAL INDUSTRY DESCRIPTION                   9

      2.2  DESCRIPTION OF SUBCATEGORIES OF THE
          INDUSTRY                                      11

          2.2.1   Subcategory A — Manufacture of Explosives        11
          2.2.2   Subcategory B — Manufacture of Propellents        13
          2.2.3   Subcategory C — Load,  Assemble and Pack
                              Operations                    13
          2.2.4   Subcategory D — Manufacture of Initiating
                              Compounds                  15

      2.3  INDUSTRY PRODUCT PRICES BY SUBCATEGORY       16

3.0    PROPOSED TREATMENT TECHNOLOGY  AND
      ASSOCIATED COSTS                                   17

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               TABLE OF CONTENTS (Continued)

                                                    Page

4.0   PRESCREEN OF ECONOMIC IMPACT OF EFFLUENT
     GUIDELINES                                      21

     4.1   PRESCREENING METHODOLOGY                   21

     4.2   ECONOMIC AND TECHNOLOGICAL FACTORS          23

5.0   ECONOMIC IMPACT OF THE INTERIM FINAL EFFLUENT
     GUIDELINES ON THE CIVILIAN EXPLOSIVES INDUSTRY      27
                           w

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                            LIST OF TABLES

Table No.                                                           Page

  1.4A      Apparent Consumption of Industrial Blasting Agents
            and Explosives                                            4

  1.4B      Estimated Industry Product Prices by Subcategory             5

  1.5       Estimated BPCTCA Plus BATEA Costs as a Percent of
            Selling Price for Products of the Explosives Industry            6

  1.6       Cost of Pollution Abatement for Selected Subcategories
            of the Explosives Industry                                  8

  2.1       Apparent Consumption of industrial Blasting Agents
            and Explosives                                           10

  2.2.3      Changes in U.S. Civilian Markets for Explosives in
            Subcategory C                                           14

  2.3       Estimated Industry Product Prices by Subcategory            16

  3.0A      Wastewater Treatment Costs for BPCTCA, BADCT and
            BATEA Effluent Limitations                               18

  3.0B      Wastewater Treatment Costs for BPCTCA, BADCT and
            BATEA Effluent Limitations                               19

  4.2       Information Table — Commercial Explosives Industry         24

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                        1.0 EXECUTIVE SUMMARY

1.1 INTRODUCTION

     This report is one of a series of reports to be prepared by Arthur D. Little,
Inc.  (ADL) for the Environmental Protection  Agency  (EPA) under Contract
No. 68-01-1541, Task No. 39. The overall objective of this task is the determina-
tion of the economic impact that EPA-proposed interim final effluent limitations
will have on eight point source categories.  The EPA plans to name the following
industries as point source categories:

     Pharmaceuticals (SIC 2831, 2833, and  2834);

     Gum and Wood Chemicals (SIC 2861);

     Pesticides  and  Agricultural Chemicals (SIC 2879 and those  establish-
     ments engaged in  manufacturing agricultural pest-control  chemicals
     covered under SIC 281 and 286);

     Adhesives (SIC 2891);

     Explosives (SIC 2892);

     Carbon Black (SIC 2895);

     Photographic Processing (SIC 7221, 7333, 7395, 7819); and

     Hospitals (SIC 8062, 8063, and 8069).

     This report on selected segments of the  explosives industry (SIC 2892) is
principally  concerned with the  civilian sector of the industry. A subsequent com-
plete report will deal in  greater detail with  the military sector of the industry as
well as the civilian sector.

    The primary source of effluent treatment cost information is the Develop-
ment  Document for the Explosives Manufacturing  Point Source Category, dated
January 1976, by Roy F. Weston, Inc. The Development Document has broken
the industry into the following subcategories:

    A.  Manufacture of Explosives. Examples of explosives are dynamite,
         nitroglycerin,  cyclotrimethylenetrinitramine  (RDX), cyclotetra-
         methylenetetranitramine  (HMX),  trinitrotoluene (TNT),  ammo-
         nium perchlorate and nitroguanidine.

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     B.   Manufacture of Propellants. Examples of propellants  are rolled
         powder, high-energy  ball powder,  and nitrocellulose (NC).  Pro-
         pelJants can be single-based, double-based, or triple-based.

     C.   Load,  Assemble,  and Pack Operations.  Includes plants which
         blend  explosives and market  a final  product,  and plants  that
         fill shells and blasting caps. Examples of such installations would
         be plants manufacturing ammonium nitrate and fuel oil (ANFO),
         nitrocarbonitrate (NCN), slurries, wate;- gels, and shells.

     D.   Manufacture of initiating Compounds.  Initiating  compounds are
         highly-sensitive  explosives  used for detonation.  Examples  are
         pentaerythritol tetranitrate (PETN),  lead styphnate, tetryl, mer-
         cury fulminate, lead azide, and nitromannite (HMN).

1.2 PURPOSE AND SCOPE

     The purpose of this report  is to assess the economic impact on  the  U.S.
Explosives  Industry (SIC 2892} of the cost of meeting EPA standards for pollu-
tion abatement applicable to the discharge  of water effluents from point sources.

     Compliance  with the  water pol'ution abatement standards may require the
industry  to install  new physical  facilities in its  present operations, modify its
current technical operations, or incorporate specialized facilities in new installa-
tions. Furthermore, the industry  may have to install  equipment  and  facilities
capable of three levels of effluent water treatment  such that:

     •   Level  I  -  by  1977, for current industry installations, the best
         practicable  control technology  currently available  (BPCTCA) is
         being  used  to control the  pollutant content in the streams  dis-
         charged by the industry;

     •   Level  II  - by 1983, for current industry installations, the best
         available  technology that  is economically achievable (BATEA)
         is being similarly  used; and

     •   Level  III - new source performance standards (NSPS)  for new
         industry  installations discharging directly  in  navigable waters to
         be constructed  after the  promulgation of applicable  guidelines
         for  water  pollution abatement; facilities  will be incorporated
         that will be capable of meeting these guidelines.

     This report  presents the results of a prescreening process and further tech-
nical and economic analyses applied to the Explosives Industry to determine the
economic impact of the proposed effluent  limitations.

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1.3 STUDY APPROACH

1.3.1  Prescreening

     In our October 1975 working draft report en selected segments of the eight
industries studied under this contract, we developed  methodologies to aid our
industry  experts  in selecting those industry categories or  subcategories  that
probably  would not  be significantly impacted  by  the Interim Final Effluent
Guidelines.

     ADL industry  experts initiated the project by studying the  Development
Document, compiling prescreen information, and preparing statements on factors
which they  believed  would have an economic impact on the industry. To aid
them in preparing their  comments, the team of ADL experts wss supplied a table
describing the information  to be covered, and they were directed to complete the
table with brief descriptions.  In preparing their comments and completing the in-
formation table, the industry experts were also directed to use only their own per-
sonal knowledge, or information they could readi'y  retrieve. This limitation was
invoked to prevent  an excessive use of available -esources in conducting the pre-
screen exercise. The completed information tables and the accompanying industry
expert comments are contained in the body of this report.

     To determine which industry subcategories we would recommend for elimina-
tion from further economic impact  study, we analyzed the information of the in-
dustry experts against four criteria.  If an industry subcategory met any one (or a
combination) of the following criteria, we considered its elimination. The criteria:

     1.   The industry subcategory was generating no wastewater.

     2.   The ratio of  BPCTCA* plus BATEA** to  selling price  was Jess
         than 2%  and/or  the ratio of BPCTCA plus  BATEA to profits
         was less than 15%.

     3.   Practically all of the plants in  the subcategory were currently
         discharging  into  municipal sewage systems and would  continue
         to do so with little or no pretreatment costs incurred.

     4.   The treatment facilities recommended  in the Development Docu-
         ment had  already been installed in practically all oi the plants of
         the subcategory.
 *Best Practicable Control Technology Currently Available
'*Best Available Technology Economically Achievable

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1.4 CHARACTERIZATION OF THE CIVILIAN EXPLOSIVES INDUSTRY

     Commercial explosives at present principally consist of "blasting  agents"
instead  of "dynamites" which formerly dominated  the  market.  Blasting Agent
is  a  term now  applied to explosives which consist principally  of ammonium
nitrate in admixture with  a variety of nonexplosive sensitizing fuels (e.g., fuel
oil, aluminum, dinitrotoluene). These explosives are more economical products
having significantly less hazardous properties (lacking sensitiveness) than those of
the dynamites.

     For  1974  the U.S.  Department of the Interior records  the  apparent con-
sumption of industrial blasting agents and explosives in the United  States to be as
indicated in Table  1.4A.


                                 TABLE 1.4A

          APPARENT CONSUMPTION OF INDUSTRIAL BLASTING AGENTS
                              AND EXPLOSIVES
                                  (U.S. 1974)

                  Class                        Pounds         Metric Tons

     1.    Permissibles                          42,331,000         19,200
     2.    Other High Explosives                 257,735,000        116,900
     3.    Water Gels and Slurries                293,248,000        133,000
     4.    Cylindrically Packaged
            Blasting Agents                    301,261,000        136,600
     5.    Other Processed Blasting Agents        1,867,715,000        847,000
              Totals                        2,762,290,000      1,252,700

     Source: U.S. Department of Interior, Mineral Industry Surveys.
     Only  two of the above classification -  Classification 1  (Permissibles) and
Classification  2  (Other  High  Explosives) - relate  to Subcategory  A  of  the
Development  Document. In these two classifications are included all the dyna-
mites, gelatin dynamites and semi-gelatin dynamites of both the permissible and
non-permissible species.  Classification 2  (Other  High Explosives) includes such
explosive mixtures as ammonium nitrate and trinitrotoluene (TNT) packaged in
(cylindrical) metal containers and would fall into Subcategory C (Load and Pack)
of  the Development Document. Classifications  3, 4, and 5  also fall into Sub-
category C (Load and Pack) of the Development Document.

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     The dynamite industry is presently in a state of decline. Dynamite manu-
facturers are redirecting their efforts towards the development of slurry explosives
and blasting agents. We estimate that dynamite will be essentially eliminated from
the explosives market in the next five years. We expect that eventually only two
types of explosive materials will dominate the explosives market. These two types
are:  1) ammonium nitrate-fuel oil (ANFO) and other ANFO related types, and
2) explosives and blasting agents based on slurries or water gels.

     In the commercial explosives industry, only nitroglycerin  and the associated
manufacture of dynamite are in Subcategory A (see Section 1.1) of the Develop-
ment Document. All other materials listed in Subcategory A are in the military
field. The military also uses a large number of propellants (Category B) but the
commercial  applications are principally for shells for shotguns, rifles and pistols
used for sporting purposes.

     The majority  of commercial explosives  industry operations belong in  Sub-
category C where materials made in Subcategories A, B, and D and/or materials
from other industries are mixed, compounded and assembled into usable form.

     Subcategory D includes primary explosives manufactured for use in making
detonators, primers, boosters and other initiating devices used  in civilian applica-
tions.

     Product prices vary with the wide  range of products  produced in the indus-
try and typical estimated prices by subcategory  are shown in Table 1.4B.
                                TABLE 1.4B

           ESTIMATED INDUSTRY PRODUCT PRICES BY SUBCATEGORY


         Subcategory                    Price Range Per Metric Ton

             A                            $  334 - $    667
             B                            $ 1,800 - $220,000
             C                            $  242 - $  8,500
             D                            $22,000-$ 33,000
1.5 CONCLUSIONS AS TO THE ECONOMIC IMPACT ON THE
    COMMERCIAL SECTOR OF THE EXPLOSIVES INDUSTRY

     Estimated  treatment costs due to the Interim Final Effluent Guidelines are
shown in Table  1.5 for the various subcategories.

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                                TABLE 1.5

       ESTIMATED BPCTCA PLUS BATEA COSTS AS A PERCENT OF SELLING
             PRICE FOR PRODUCTS OF THE EXPLOSIVES INDUSTRY
                                        Treatment Cost
             Subcategory                 As Percent of Sales

                A                          1.7  to   3.4
                B                          O.IOto  12.5
                C                          0.05to   1.7
                D                        195.0  to 293.0
     We do  not expect that the Interim Final Effluent Guidelines will have a
significant economic impact on Subcategory A - Manufacture of Explosives -
in the commercial sector. For other reasons, nitroglycerin dynamites are rapidly
losing their share of the market. We expect that the companies still producing
nitroglycerin  dynamites will  gradually  shift  to  production  of blasting  agents
based on slurries and water gels as well  as ANFO products. Accordingly we see
no significant effects of the Guidelines  on  price  or production of explosives in
Subcategory A. Effects on employment and communities would be insignificant.

     The Development Document  indicates a BPCTCA treatment for  Subcate-
gory C that costs $2.14 per metric ton. On the cheapest packaged ANFO  products
this treatment cost amounts to 0.9 percent of their sales prices. This cost  is judged
to be economically  nonimpactive, especially since the cost appears to  be over-
stated for the reasons given in Section 3.0 of this report.

     The BATEA process presented in  the Development Document was  based on
carbon absorption while the BATEA technology now recommended is based on
multi-media  filtration. Addition of the presently  recommended BATEA process
brings the total treatment costs to $4.05 per metric ton or a maximum of 1.7 per-
cent of the selling price of the  cheapest ANFO products. Under our criteria, the
Interim Final Guidelines are not considered to be economically impactive.

     Had the original carbon  adsorption BATEA step been retained, the costs
would have been $13.17 per metric ton or 5.4% of the ANFO  sales price. Carbon
adsorption  may be  reinstituted for  Subcategory C, if data gathered before
promulgation of the  1983  effluent limitations show that carbon adsorption pro-
vides effluent load reduction commensurate with the costs.

     The importance of determining the appropriateness of the BATEA treatment
costs attributed to ANFO and other NCN products is obvious when it is realized

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 that products of this type make up almost 90% of the tonnage of civilian explo-
 sives products. If the higher BATEA treatment costs are necessary, the shift from
 off-site mixing to on-site mixing will be accelerated due to the fact that on-site
 mixing is not covered by the guidelines and will not incur the concomitant treat-
 ment costs.

     Because of the wide range of treatment  costs versus selling prices in Sub-
 categories B  and  D, it is not possible to state that plants in these  subcategories
 will not experience an economic impact from  the Interim Final Effluent Guide-
 lines.   Certain plants in  these subcategories will  undoubtedly have  very small
 impacts, but on an overall basis the subcategories will apparently  be impacted.
 Further study of plants in Subcategories B and D will be required.

 1.6 SUMMARY OF THE COSTS OF POLLUTION ABATEMENT FOR
    SUBCATEGORIES A AND C

     The costs of pollution abatement for Subcategories A and C are summarized
 in Table  1.6. All  treatment  costs and investment  costs were  adjusted  to 1975
 levels by use of the Engineering News Record Construction Index (1972 = 1780,
 1975  = 2276). Annual costs were calculated using treatment costs per metric ton
 and the estimated production in the subcategory. Total investment  costs were
 calculated using costs given for the model plant in the Development Document
 multiplied  by  the number of  such  plants required to produce the estimated
 production of the subcategory.

     The number of plants engaged  in the manufacture of  products falling into
 Subcategories A and C are preliminary estimates. The actual number of plants in
 Category C  (especially for slurry and water gel production) is  difficult  to deter-
 mine  because of  the changing  status in the application of techniques  used for
 blasting services.  Some large producers of slurry blasting agents and water gel
 explosives have facilities  captively committed  to single large mining operations.
 We have included such sites in our estimate of the number of plants.

    A  complex facility  producing a variety of products falling into  Subcate-
gory C (e.g., NCN's,  boosters  and water gels) is  counted as one site  for our
estimate.

    Most of the large "producers" of ANFO do not  undertake the manufacture
of this product at their complex facilities. Instead, companies like Hercules,
DuPont and Atlas license distributors throughout the country  to compound this
product and  to package it (or bulk produce it) under their respective company
labels.  We  have not  made  any  estimate  of the  number  of  distributor-manu-
facturers engaged in these operations.

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                                                               TABLE 1.6

                      COST OF POLLUTION ABATEMENT FOR SELECTED SUBCATEGORIES OF THE EXPLOSIVES INDUSTRY1
00


Subcategories



A
C
Estimated
Number
of Plants



14
50

Estimated
Production
(metric tons)


135,000
590,000
Treatment Cost
as a Percent of
1975 Selling Price

BPCTCA
BPCTCA & BATEA
0.9 to 1.9 1.7 to 3.4
0.92 1.72


Annual Cost
(in millions
BPCTCA
BPCTCA & BATEA
0.8 1.5
1.3 2.4


Total
of dollars)

BPCTCA
3.5
2.8


Investment

BPCTCA
& BATEA
5.5
75
                                                                   Total Costs:
2.1
3.9
6.3
13.0
        1. Treatment costs were obtained from the "Development Document" and adjusted to 1975 values by the use of the Engineering News Record Con-
          struction Index.  1972=1780.  1975=2276.

        2. Calculated for ANFO only.

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                   2.0  INDUSTRY CHARACTERIZATION

2.1 GENERAL INDUSTRY DESCRIPTION

     The general industry description will deal with the major parts of the com-
mercial explosives manufacture and load and  pack operations (Subcategories A
and C). These comprise the bulk of the commercial explosives industry. Propel-
lant manufacture and initiator manufacture which comprise a much smaller part
of the civilian explosives industry are discussed briefly in the appropriate section
of this report. The government sponsored explosives industry  is to be the subject
of a  future report; however, it is briefly discussed in the following sections where
appropriate.

     The  principal  explosives manufacturers  (Subcategories  A  and  C)  in  the
United States are: DuPont, Hercules, Austin, Gulf, Atlas,  Trojan,  Dow and Ireco.
With the exception of Ireco, Dow and Gulf, these  companies have been traditional
dynamite  producers. Now  they all produce a  line  of ammonium nitrate-fuel oil
(ANFO) type blasting agents as well as bulk and packaged slurry and water gel
explosives and slurry blasting agents.  DuPont has, as of about a year ago, ceased
the manufacture of nitroglycerin based explosives — dynamites and gelatin dyna-
mites — and has committed itself to the production of small diameter, water gel
type, specially sensitized products.

     Commercial explosives in the United States  may now be  effectively charac-
terized by the term "blasting agents"  instead  of "dynamites" which may have
adequately described the industry as recently as  1960. In 1965 the consumption
of dynamite  type explosives  — those based on nitroglycerin  (N/G) sensitizer -
was still approximately equivalent to the  consumption of ammonium nitrate-fuel
oil (ANFO) type blasting agents.

     Blasting Agent is a term now applied to explosives which consist principally
of ammonium nitrate in  admixture  with a variety of non-explosive sensitizing
fuels  (e.g., fuel oil, aluminum, dinitrotoluene). These explosives are more  eco-
nomical products having significantly less hazardous properties (lacking sensitive-
ness)  than those of the dynamites. Within the category  of blasting agents, two
principal types of industrial explosives are  recognized. These are:

     1.    The "dry" ammonium  nitrate-fuel oil mixture (ANFO)  —  a
          nitrocarbonitrate species, and

     2.    The slurry blasting agents and water gels.

     For  1974 the  U.S.  Department of the Interior records  the apparent con-
sumption  of industrial blasting agents and explosives in the United States to be as
follows:

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                                  TABLE 2.1

          APPARENT CONSUMPTION OF INDUSTRIAL BLASTING AGENTS
                               AND EXPLOSIVES
                                   (U.S. 1974)

                  Class                         Pounds         Metric Tons

     1.    Permissibles                           42,331,000         19,200
     2.    Other High Explosives                 257,735,000        116,900
     3.    Water Gels and Slurries                 293,248,000        133,000
     4.    Cylindrically Packaged
            Blasting Agents                     301,261,000        136,600
     5.    Other Processed Blasting Agents         1,867,715,000        847,000.
              Totals                         2,762,290,000      1,252,700

     Source: U.S. Department of Interior, Mineral Industry Surveys.

     The  five product classifications listed by the Mineral Industry Surveys bul-
letin now correspond  to those  used by the commercial manufacturers' organiza-
tion, the Institute of Makers of Explosives. These classifications are described as
follows:

     1.    Permissibles:  Grades of  high explosives approved by  the Bureau
          of Mines for use in underground coal mines.

     2.    Other High Explosives:  All high explosives except:

              a)   permissibles and

              b)   any  water gels or slurries that would otherwise be clas-
                   sified as high explosives.

          Included in  this classification are all  formulations packaged in
          metal containers.

     3.    Packaged and  Bulk Water Gels and Slurries:   All such  materials
          packaged or in bulk made by addition  of more than 5% water to
          high explosives or blasting agents.

     4.    Cylindrically Packaged  Blasting  Agents:  Ammonium  nitrate  and
          fuel  mixtures  packaged  in cylindrical  containers,  trade  name
          identified with a diameter and weight or length measurement
          and used for "down-the-hole" loading  as distinguished from bulk
          loading.
                                      10

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     5.    Other Processed Blasting  Agents and  Unprocessed  Ammonium
          Nitrate (AN):

              a)   AN and fuel mixtures sold in bulk or packed in paper,
                   plastic or burlap bags designed for bulk loading and

              b)   Prilled or grained ammonium nitrate.

     Explosives  in  the  above list differ from Blasting Agents in the degree of
potential  hazard associated with  these materials during transportation, as well
as in their sensitivity to initiation by a blasting cap.  Explosives can be  initiated
by a blasting cap while blasting agents require high strength explosive priming.

     Only two of the above classifications  -  Classification  1  (Permissibles) and
Classification  2 (Other  High Explosives) -  relate  to  Subcategory A of the
Development Document.  In these two classifications are included  all the dyna-
mites, gelatin dynamites and semi-gelatin dynamites of both the permissible and
non-permissible  species.  Classification  2 (Other High Explosives) includes such
explosive  mixtures  as ammonium nitrate and trinitrotoluene (TNT) packaged in
(cylindrical) metal containers and would fall into Subcategory C (Load and Pack)
of the Development  Document. Classifications 3,  4, and 5 also fall into Sub-
category C (Load and Pack) of the Development Document.

     The dynamite industry is  presently in  a  state of decline. Dynamite manu-
facturers are redirecting their efforts  towards the development  of  slurry explo-
sives and blasting agents. We estimate that dynamite will be essentially eliminated
from the explosives market in the next five years. We expect that eventually only
two  types of explosive materials will dominate the explosives market. These two
types are: 1) ammonium nitrate-fuel oil (ANFO) and  other ANFO related types,
and 2) explosives and blasting agents based on slurries or water gels.

2.2 DESCRIPTION OF  SUBCATEGORIES OF THE INDUSTRY

2.2.1  Subcategory A — Manufacture of Explosives

     Examples of explosives given in the Development Document are dynamite,
nitroglycerin,    cyclotrimethylenetrinitramine    (RDX),   cyclotetramethylene-
tetranitramine  (HMX),  trinitrotoluene  (TNT),  ammonium  perchlorate  and
nitroguanidine.

     There is a  fairly strict  division between the explosives in this subcategory
that  are manufactured for military purposes  and those produced for commercial
purposes.  Traditionally,  commercial explosives have  been or are  now  charac-
terized by such compositional and component terms as:
                                     11

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                       Dynamite
                       Nitroglycerin (N/G)
                       Nitrocarbonitrate (NCN)
                       Ammonium Nitrate-Fuel Oil (ANFO)
                       Slurry Blasting Agent (SBA)
                       Slurry High Explosive (SHE)
                       Water Gels

     In the  above list of terms, only dynamite  and nitroglycerin fall into  Sub-
category A.  Nitroglycerin  is an integral part of  dynamites and its manufacture
for explosive purposes is almost exclusively for its use in dynamite compositions.
Nitroglycerin may, of course, be manufactured  also on a commercial  basis for
incorporation into propellants.

     The military sector is not involved in the production of dynamite, nor  does
it  manufacture nitroglycerin  for explosive purposes. The military is largely  con-
cerned  with the manufacture of the  three essential explosives  listed in  Sub-
category A of the Document. These are:

                  Trinitrotoluene (TNT)
                  Cyclotrimethylenetrinitramine (RDX)
                  Cyclotetramethylenetetranitramine (HMX)

     These  three molecular explosives are largely  used  for incorporation  into
cyclotols (RDX/TNT) and  octols (HMX/TNT) for use in bomb fillings and  pro-
jectile bursting charges.

     TNT, the  large  volume "work horse" explosive, was for a long time manu-
factured at  both  military  plants and at  a very  few commercial  plants, but its
production  on  a commercial basis was terminated in 1971. It is  now only  pro-
duced at Government-owned facilities.

     RDX and HMX, of which the former is produced in greater  volume, are
produced on a  large  scale only at one Government-owned  facility (Holston) and,
to our knowledge, are not manufactured  in significant quantities at any privately
owned facility.

     Nitroguanidine, listed  in Subcategory A of the Development Document, is
not used as an explosive  compound,  principally  because it is too difficult  to
detonate. However, it is used as a military  propellant ingredient (Subcategory B).

     Nitroguanidine, as far as we know, has not been manufactured by either the
military or commercial sectors but has always been imported from Canadian pro-
ducers. This non-domestic  source has now terminated its production and plans
are under way  to erect a facility in the U.S. under military auspices scheduled to
be on-stream in late 1979.
                                     12

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     Ammonium perchlorate (AP) is manufactured in the commercial sector and
like ammonium  nitrate is regarded as non-explosive and should not be included in
this subcategory. Ammonium perchlorate is covered by the  Kffluent Guidelines
for the Industrial Organic Chemicals (NEC) under SIC 2819.

2.2.2 Subcategory B — Manufacture of Propellants

     Examples of propellants are rolled powder, high energy ball powder and
nitrocellulose  (N/C). Propellants can be single-based, double-based or triple-based.
Single-based powders contain colloided nitrocellulose but do not contain nitro-
glycerin. Nitrocellulose and nitroglycerin  are the  principal explosive ingredients
in double-based powders.  Triple-based powders contain three  explosive ingre-
dients, nitrocellulose, nitroglycerin and nitroguanidine.

     All  the  propellants listed above are based on nitrocellulose in association
with various  property-modifying ingredients such  as nitroguanidine, ammonium
perchlorate and  aluminum. The  propellants  listed are all used extensively by  the
military  for propulsion  of missiles and rockets  The civilian commercial applica-
tions  are confined  largely  to the powders  used in shotgun  shells and  rifle and
pistol  ammunition; these   are  predominantly  single-based  powders,  although
double-based powders are also employed.

     In the commercial  sector,  companies such as Atlantic  Research, Hercules,
Olin,  Aerojet  General, DuPont and Thiokol are involved in  a variety of propel-
lant  manufacturing  processes. The diversity of finished products is extremely
great  and processes  for manufacture  are often complex in order to obtain  the
desired combustion properties for specific applications.

     The majority of the plants manufacturing military propellants are govern-
ment-owned plants which  are often operated by companies such as those previ-
ously listed, but other government plants may be government operated. In some
instances  the  propellants for special  military  application are manufactured in
company-owned plants.

2.2.3  Subcategory C — Load, Assemble and Pack Operations

     Load, assemble and pack operations take materials that are manufactured
in operations defined in Subcategories A, B, and D and/or materials derived from
other industries and  mix,  compound, and  assemble them into a usable form.
Often it is impossible to distinguish  between the load  and  pack operations  of
Subcategory C and the manufacturing operations of Subcategories A, B, and  D.
One example of this difficulty occurs in the manufacture of  propellants at large,
integrated plants. In these plants the materials making up the propellant are con-
tinuously mixed together and loaded into the finished units.
                                     13

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     Examples of companies engaged in load, assemble and pack operations are
Ircco, DuPont, Hercules, Olin and Aerojet General. In some instances, a company
in the explosives industry may not  be engaged in the manufacture of any mate-
rial  in  Subcategory  A. For example, a  slurry blasting agent  producer brings
together a large variety of components prepared by other producers to formulate
these into a wide spectrum of slurry  type explosives and blasting agents.

     Analogously   in   some  Government-owned-Government-operated   plants,
materials are not manufactured but  are obtained from outside suppliers (civilian,
foreign  and other military suppliers) and  formulated into the desired munitions
items.  For example,  at  some  U.S. Naval Ammunition Depots,  TNT,  and/or
cyclotols  are brought in and formulated  with  other additives  into a variety of
cast explosives for filling projectiles and bombs.

     The civilian market in Subcategory C type explosives has grown or declined
at the following rates for the  years indicated:

                                 TABLE 2.2.3

    CHANGES IN U.S. CIVILIAN MARKETS FOR EXPLOSIVES IN SUBCATEGORY C
                                   Percent Change             Percent Change
Explosive or Blasting Agent            From 1972 to 1973          From 1973 to 1974

Permissibles                             - 4.1                     - 4.4
Other High Explosives                     -2.4                     - 1.8
Water Gels/Slurries                        +16.5                     +11.0

Processed Blasting Agents
and Unprocessed AN                      + 2.0                     - 2.0

Cylindrically Packaged
Blasting Agents                           + 4.7                     + 8.0

Total Apparent Consumption of
Industrial Explosives and
Blasting Agents in the United
States                                  + 3.2                     + 0.3
Source: U.S. Department of Interior, Mineral Industry Surveys.
                                      14

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     Another kind of load, assemble and pack operation performed in the civilian
sector of  explosive  manufacturing involves  the remelting  and recasting  of
cyclotols and octols (RDX/TNT and HMX/TNT respectively). Such plants do not
synthesize  the component explosives of such mixtures but acquire these (in flake
or pellet form for example) from non-domestic sources or from domestic military
surpluses and by "melt and pour" techniques cast the explosives into boosters and
primers for use in initiating charges of blasting agents.

     RDX  in homogeneous admixture with wax may also be hydraulically pressed
at such plants into shaped charge configuration for use as jet tappers (perforators)
in the steel industry.

2.2.4 Subcategory D — Manufacture of Initiating Compounds

     This subcategory includes initiating compounds and  a large variety of small-
volume compounds  which are usually classified  as primary explosives, such as
those used in  the preparation of detonators, primers, boosters, detonating cord,
and  other  initiating devices. Examples of highly sensitive  explosives used for
detonation include  PETN, lead styphnate, tetryl, mercury fulminate, lead azide,
and nitromannite (HMN). The subcategory does not include the loading of these
compounds into specially designed containers for use as initiating devices.

     Examples of companies who make initiating compounds are Hercules, Com-
mercial Solvents, and DuPont.  As far  as we know, no  initiating compounds are
presently made at Government-owned-Government-operated facilities.

     As noted in the Development Document, this subcategory is characterized
by high waste loads per unit of product, probably due  to batch processing  of
small quantities. The preparation of initiating compounds also requires the use of
large quantities  of  water to thoroughly stabilize these sensitive  products. The
water is used to  wash away trace  impurities which contribute to the  hazardous
sensitization of these products during  storage. Another significant contribution
to the  effluent  waste load  is  made  by the necessity  for thorough cleanup
procedures for equipment after  each run. Generally such cleanup often requires
the use of strong oxidizing or  reducing agents,  or caustic solutions, to effect
rapid decomposition of solid  waste materials.

     The diversity of compounds in this subcategory makes it difficult  to provide
a framework which will  assure uniformity of treatment methodology. The  eco-
nomic  impact  of effluent treatment costs will  vary widely among the groups  of
firms engaged  in  these operations; single plants that manufacture a spectrum  of
such compounds  will likely  be heavily impacted by the need for  separate treat-
ment technologies.
                                    15

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     Lead styphnate can be used as an example of the complexity of assessing
the economic impact of wastewater treatment on a subcategory. For the waste
material derived from cleanup and scrap collection procedures of this compound,
there are at least three  current and near future  treatment processes (apart from
detonation and combustion). These treatments handle such wastewater pollutants
as trinitroresorcinol, sodium hydroxide, sodium dichromate, sodium carbonate,
sodium aluminate, and sodium aminoresorcinol. Dissolved lead salts (and, more
rarely, suspended  solids) are also  present in amounts determined by the efficacy
of treatment. With  PETN  manufacture, a totally different and simpler array of
wastewater pollutants is derived from the processing  and cleanup operations
associated with its manufacture.

2.3 INDUSTRY PRODUCT PRICES BY SUBCATEGORY

     Because of the diversity of  products produced in  the  explosives industry,
individual manufacturing plants may  have  product prices that  differ  drastically
from  those of other plants. Estimated price ranges  for products in the various
subcategories of the industry are shown in the following table.
                                TABLE 2.3

                   ESTIMATED INDUSTRY PRODUCT PRICES
                             BY SUBCATEGORY
              Subcategory              Price Range Per Metric Ton

                  A                   $   334-$   677
                  B                   $ 1,800 - $220,000
                  C                   $   242-$  8,500
                  D                   $22,000-$ 33,000
     The extreme range in price of products in Subcategory B is due to the price
of simple nitrocellulose at the low end of the  range and by the price of specially
formed  high energy propellants (often requiring  costly catalyst components) at
high end of the range.

     Subcategory C has a range which includes the prices of ANFO at the lower
extreme and electric blasting caps at the higher extreme.
                                     16

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  3.0 PROPOSED TREATMENT TECHNOLOGY AND ASSOCIATED COSTS

     For this report, we have accepted the information on hydraulic loads, treat-
ment technologies and associated costs contained in the Development Document.
We have adjusted the effluent  treatment  costs from the 1972 level used in the
Development Document to  the  1975 level using the respective  values of the
Engineering News Record Construction Cost Index (1972 = 1780, 1975 = 2276)
to allow comparison of treatment costs versus selling prices of explosives.

     The Development Document presents treatment technologies and treatment
costs for typical plants in each industry subcategory as shown in Tables 3.0A and
3.OB. It is obvious that some actual plants may have costs higher than the typical
models while others may have extremely  low  costs. Wastewater treatment costs
based on a model plant that  covers an entire subcategory can become apparently
economically impactive on a plant that is producing a low cost item in  the sub-
category. The wastewater volumes and treatment costs given in the Development
Document appear to be logical for Subcategory A — Manufacture of Explosives.
However, we would  like to comment  on corresponding data for Subcategory C -
Load, Assemble and  Pack Operations.

     As will be described in the next section  of this report, the production of
ANFO blasting agents makes up a major portion of Subcategory C. The normal
cleanup procedure in ANFO  plants consists of  dry cleanup techniques employing
shovels, brooms and vacuum  pickup. Very little water is used in cleaning ANFO
plants so the 26,000 liters (6,810 gallons) per day figure given for a Subcate-
gory C plant in the  Development Document is  far in excess of normal usage. We
estimate  that actual process contact wastewater in ANFO plants will  only  be
from one to four percent of  the Development Document estimate. Therefore any
economic impact calculations will overstate the apparent cost of meeting Interim
Effluent  Guidelines, so the  actual costs charged against the low priced ANFO
product will be even  less than indicated per unit of production.

     While  wastewater production of other types of plants in  Subcategory C is
larger than  for ANFO plants, the volumes  and  costs appear to be large enough to
cover other plants in this subcategory.

     The January 1976 version of the Development Document includes multi-
media filtration as the final process in the BATEA system for the model  plant of
Subcategory C. Originally this treatment technology included carbon adsorption
as a  final step, which caused the incremental annual cost of achieving the  BATEA
level to  be  $33,200  for the Subcategory C model plant. The incremental invest-
ment cost for carbon adsorption was $117,000. Carbon adsorption may  be rein-
stituted  for Subcategory C,  if  data gathered before promulgation of the 1983
effluent limitations show that carbon adsorption provides effluent load reduction
commensurate with  these costs.  However, the present cost analyses have been
done for Subcategory  C by  substituting the costs presented under BADCT for
those shown under BATEA in Table 3.OB.
                                    17

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                                                            TABLE 3.0A

                     WASTEWATER TREATMENT COSTS FOR BPCTCA, BADCT AND BATEA EFFLUENT LIMITATIONS
                                                   (ENR 1780 - August, 1972 Costs)
                                                  Explosive Industry — Subcategory A
                                                                      RWL
Average Production  36.2 x 103 kg/day
                 (79.6 x 103 Ibs/day)

Production Days    260

Wastewater Flow -  kL/day  61
                  (gpd)  (16,000)
                  kL, 1,000 kg Product
                  (gal/1,000 Ibs)

BOD Effluent Limitation -  kg BOD/1,000 kg product3
                         mg/L

COD Effluent Limitation —  kg COD/1,000 kg product3
                         mg/L

Total Capital Costs

Annual Costs
   Capital Recovery plus return at 10% at 10 years
   Operating + Maintenance
   Energy + Power
   Total Annual Cost
   Cost1 $/1,000 kg Product
        ($/1,000 Ibs Product)

1.  Cost based on total annual cost
2.  Incremental cost over BPCTCA cost
3.  kg/kkg product is equivalent to lbs/1,000 Ibs product
   1.68
(201)
                                                                                                  Technology Level
                BPCTCA
  BADCT2
              $192,000
$35,200
  BATEA-
1.46
871
3.87
2,310
0.10
61
1.08
647
0.092
55
0.94
560
0.028
17
0.23
137
$108,000
$ 31,400
11,400
3,000
$ 45,800
4.87
(2.21)
$ 5,800
2,000
—
$ 7,800
0.83
(0.38)
S 31,600
6.400
—
S 38,400
404
n 84)
Source: Development Document, January 1976

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	 	 IMBL.tIJ.UD
WASTEWATER TREATMENT COSTS FOR BPCTCA, BADCT AND BATEA EFFLUENT
(ENR 1780 - August, 1972 Costs)
Explosive Industry — Subcategory C

RWL BPCTCA
Average Production 14.8 x 103 kg/day
(32.6 x 103lbs/day)
Production Days 260
Wastewater Flow - kL/day 26
(gpd) (6,810)
kL/ 1,000 kg Product 1.76
(gal/1, 000 Ibs) (211)
~ BOD Effluent Limitation - kg BOD/1 ,000 kg product3 0.0005 **
mg/L less than 1 **
COD Effluent Limitation - kg COD/1,000 kg product3 0.08 **
mg/L 45
TSS Effluent Limitation - kg TSS/1,000 kg product3 0.92
mg/L 523 50 mg/L
Total Capital Costs $14,300
Annual Costs
Capital Recovery plus return at 10% at 10 years $ 2,350
Operating + Maintenance $ 3,360
Energy + Power 700
Total Annual Cost $ 6,410
Cost1 $/1, 000 kg Product 1.67
(S/1, 000 Ibs Product) (0.76)
LIMITATIONS

Technology Level
BADCT2



* *
* *
* *
* *
20 mg/L
$24,100
$ 3,910
$ 1,250
550
$ 5,710
1.49
(0.67)



BATEA2



0.00014
less than 1
0.017
10
10 mg/L
$117,000
$ 19,100
$ 14,100
$ 33,200
8.63
(3.92)
1.  Cost based on total annual cost
2.  Incremental cost over BPCTCA cost
3.  kg/kkg product is equivalent to lbs/1,000 Ibs product

Source: Development Document, January 1976

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WASTEWATER TREATMENT COSTS FOR BPCTCA, BADCT AND BATEA EFFLUENT
(ENR 1780 - August, 1972 Costs)
Explosive Industry — Subcategory C

RWL BPCTCA
Average Production 14.8 x 103 kg/day
(32.6 x 103 Ibs/day)
Production Days 260
Wastewater Flow - kL/day 26
(gpd) (6,810)
kL/1, 000 kg Product 1.76
(gal/1 ,000 Ibs) (211)
— BOD Effluent Limitation - kg BOD/1,000 kg product3 0.0005 **
mg/L less than 1 **
COD Effluent Limitation - kg COD/1,000 kg product3 0.08 **
mg/L 45
TSS Effluent Limitation - kg TSS/1, 000 kg product3 0.92
mg/L 523 50 mg/L
Total Capital Costs $14,300
Annual Costs
Capital Recovery plus return at 10% at 10 years $ 2,350
Operating + Maintenance $ 3,360
Energy + Power 700
Total Annual Cost $ 6,410
Cost1 $/ 1,000 kg Product 1.67
($/1, 000 Ibs Product) (0.76)
LIMITATIONS

Technology Level
BADCT2



* *
* *
* *
* *
20 mg/L
$24,100
$ 3,910
$ 1,250
550
$ 5,710
1.49
(0.67)



BATEA2



0.00014
less than 1
0.017
10
10 mg/L
$117,000
$ 19,100
$ 14,100
$ 33,200
8.63
(3.92)
1.  Cost based on total annual cost
2.  Incremental cost over BPCTCA cost
3.  kg/kkg product is equivalent to tbs/1,000 Ibs product

Source:  Development Document, January 1976

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   4.0 PRESCREEN OF ECONOMIC IMPACT OF EFFLUENT GUIDELINES

4.1  PRESCREENING METHODOLOGY

     The objective of the prescreen was to provide EPA with sufficient informa-
tion to permit it to choose which industry subcategories it could eliminate from
further study by ADL.  Of course, eliminating some of the subcategories would
permit a more cost-effective utilization of the  available resources for studying
the economic impact of the proposed effluent guidelines.

     For any prescreen process to be effective, it  must:

     •   Exclude  only  those subcategories for  which  there is  strong
         evidence readily  available that the economic impact would  be
         insignificant; and

     •   Not consume a large amount of the available resources.

     Initiating the study, ADL interviewed its own experts  for each industry
category  to develop  information which characterized the industry, its markets,
its  pollution control  practices, and any  consideration the  industry  expert  felt
EPA should know about respective industry subcategories. To guide  the experts
on  the kind of information they should provide, we developed an outline in
tubular form of the information needed.

     The experts  were  instructed to  prepare  their comments utilizing only
personal  knowledge  or information that  was  immediately available  to them in
completing the  information table for their  respective industry subcategories. In
many instances, there were  areas in the information table on which no comment
was  possible, either because the expert did not have the requisite information
immediately available to him, or because the answer was too complex  for answer-
ing at the prescreen level.

     The information contained in the experts' comments and on  the information
table not only provided  the basis for our  recommendations concerning the cate-
gories EPA should  consider eliminating, but  also generalized the condition of the
industry with respect to the proposed regulations.

     In developing our recommendations, we  wanted to have a high degree  of
certainty  that  any category  we recommended  for elimination could not,  on
further study, be  shown to be  seriously impacted.  Thus,  we  developed four
criteria, any one of which,  if met  by an industry subcategory, would be enough
to give a tentative classification as a subcategory for  elimination.  Before  we
                                    21

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recommended  that IvPA  consider elimination of a subcategory  from further
study, we made an overall assessment involving other data known to the industry
expert. The criteria are as follows:

     (1)  The industry subcategory is generating no wastewater.

     (2)  The ratio of BPCTCA plus BATEA to selling price is less than 2%
         and/or the ratio of BPCTCA plus BATEA to profits is less than
          15%.

     (3)  Most  of the plants in the subcategory  are currently discharging
         into municipal sewage systems and may continue to do so with
         little or no pretreatment costs incurred.

     (4)  Most  of the recommended treatment facilities have already been
         installed in most of the plants in the subcategory.

     Criterion  (1) obviously  represents the strongest reason for eliminating  an
industry  from further study. If the industry does not discharge wastewater, water
pollution regulations will have no impact upon the  industry.

     Criterion  (2) is  based on  discussions with ADL economic experts. We
decided that, if this  criterion were met, the proposed standards would  likely
not  result in a significant economic impact.  Often, our experts had no  profit
margin information available. In those instances, when the ratio of treatment
cost to selling price was less than 2%, we still recommended that EPA consider
removing the subcategory from further study. However, this recommendation is
not so strong as the recommendations made using profit information.

     In considering treatment cost/selling price and treatment cost/profit margin
ratios, it  is important  to realize that the treatment  costs presented in the Develop-
ment Document are for a total treatment system and represent the costs incurred
by a plant having no wastewater treatment already in place. Most facilities within
the eight industries studied under this contract have some  form of wastewater
treatment already installed.

     Criterion (3) also  represents a very strong  reason for eliminating  a sub-
category  from further study. If the wastewater treatment  practice within  a sub-
category  consists  mainly of discharging to municipal sewage systems, the cost of
that treatment is  already being incurred via sewer charges.  If the subcategory can
continue this practice, be consistent with the pretreatment standards set forth in
the Development Document, and yet incur little or no pretreatment cost, then the
incremental economic impact to that subcategory will be nil. Since the Develop-
ment Document does not provide pretreatment costs, Criterion (3) was used to
eliminate a category  only when it was very  clear that pretreatment  would be
either unnecessary or minimal.
                                     22

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     Criterion (4) represents a reason for eliminating an industry  from further
study on the basis that, should the industry meet Criterion (4), it  will not have
to expend as much money as the Development Document indicates to meet the
proposed standards.

     The wastewater treatment already installed to meet other Federal or State
regulations may be adequate to meet the requirements of the proposed guidelines.
Therefore, the incremental treatment costs attributable to the guidelines may be
zero for many facilities. In any  event, the  treatment costs in the  Development
Document represent  maximum costs, so that for plants with treatment facilities
in place we expect that actual costs will be less than indicated by the Develop-
ment Document and the 2 percent  or 15 percent criteria used in the prescreen
process are therefore conservative.

4.2 ECONOMIC AND TECHNOLOGICAL FACTORS

     Economic and  technological information is presented in Table 4.2. In Sub-
category A, the only commercial explosive is nitroglycerin and the associated
production of dynamite. The total of  BPCTCA  plus BATEA unit  treatment
costs is  estimated to  be  1.7 to 3.4% of estimated  selling prices. The correspond-
ing figures  for BPCTCA alone are 0.9 to 1.9% of selling price. These estimated
costs are low enough so that we do not judge them to be economically impactive.
As  mentioned in Section 2.1, we expect that the nitroglycerin dynamites  will
essentially disappear  from the market in the next five years so  that  only the
BPCTCA cost is likely to be felt by the  industry.

     BPCTCA plus BATEA treatment costs versus selling prices vary from 0.10
to 12.5% for Subcategory B,  from 0.05% to  1.7% for Subcategory C and from
195 to 293% for Subcategory D.

     The Development Document indicates a BPCTCA treatment for Subcate-
gory C that costs $2.14 per metric ton.  On the cheapest packaged ANFO products
this treatment cost amounts to 0.9 percent of their sales prices. This cost is judged
to be economically nonimpactive, especially since the cost appears to be over-
stated for the reasons given in Section 3.0 of this report.

     The BATEA process presented in  the Development Document was based on
carbon adsorption while the BATEA technology now recommended is based on
multi-media  filtration. Addition of the presently recommended BATEA process
brings the total treatment costs to $4.05 per metric ton or a maximum of 1.7
percent  of  the  selling price of the cheapest ANFO  products.  Had  the original
carbon adsorption step  been  retained, the  costs  would  have  been $13.17  per
metric ton  or 5.4%  of  the ANFO sales price. Since ammonium  nitrate is  the
                                    23

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                                                          TABLE 4.2

                                INFORMATION TABLE ~ COMMERCIAL EXPLOSIVES INDUSTRY


                                                                           Subcategories
            I ndustry Data

 1.  Annual Production (units/yr)
 2.  Production Value ($MM sales)
 3.  Representative Range of Unit Selling
    Price,*     ($/metric ton)
 4.  Estimated Prolit Margin i% of selling
    price)
 5.  BPCTCA (1977) Treatment Cost**
    ($/metnc ton)
 6.  BATE A (1983) Treatment Cost**
     ($/metric ton)

Technical and Economic Factors Pertinent
to Economic Impact Analysis

          Technical Factors
 7.  Possibility of drastically reducing or
    totally eliminating wastewater flow
    rate, compared to Development
     Document.
 8.  Possibility of substantially reducing
    cost of end-of-pipe treatment via
    m-plant changes and/or process
    modifications.
 9.  Fraction of plants with substantial
    wastewater treatment facilities in
    place.
10.  Fraction of plants presently discharging
    into municipal wastewater treatment
    facilities.
11.   Frequency or likelihood of plants
    sharing waste treatment facilities.
    with other manufacturing operations
12.   Degree to which proposed treatment
    departs from currently employed
    treatment.
13.  Seriousness of other pending
    environmental control problems
     (including OSHA).

          Economic Factors
14.   BPCTCA plus BATEA unit treatment
    cost as percent of unit selling price.
15.   BPCTCA plus BATEA unit treatment
    cost as percent of unit profit  margin.
16  Would the demand for the industry's
     product be significantly affected by
     a 10% increase in price?
A. Manufacture of
    Explosives

  See Section 2.1
    $334-677

       16%

      $6.22

      $5.17
                                                                 B. Manufacture of   C. Load and Pack
       Low



       Low


       Low


       Low


       Low


       High


       High



    1.7%-3.4%

    11.3%-22.7%


       No
  Propellents

Not Determined
Not Determined

$1800-220,000

Not Determined

     $162

     $62.1
     Low



     High


     Low


     Low


     Low


     High


     High



  0.10%-12.5%




      No
    Plants

See Section 2,1


  $242-8500

    7-15%

    $2.14

    $1.91
    High



    Low


    Low


    Low


    Low


    High


 Probably Low



  0.05-1.7%

    0.3-24%


     No
 D. Manufacture of
Initiating Compounds

  Not Determined
  Not Determined

  $22,000-$33,000

  Not Determined

      $47,180

      $17,260
       Low



       Low


       Low


       Low


       Low


       High


    Probably Low



     195%-293%




        No
  'Selling prices are based on 1975 estimates.
  •BPCTCA and BATEA treatment costs have been adjusted from 1972 to the 1975 level using the Engineering News Record Construction
   Cost Index (1972 = 1780, 1975 = 2276).
                                                            24

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principal ingredient in wastewaters from the civilian sector Subcategory C plants,
it is doubtful that a carbon adsorption process would be cost effective. Neverthe-
less, carbon adsorption may be reinstituted for Subcategory C, if data gathered
before promulgation of the 1983 effluent limitations show  that carbon adsorp-
tion provides effluent load reduction commensurate with the costs.

     The importance of determining the appropriateness of the BATEA treatment
costs attributed to ANFO and other NCN products is obvious when it is realized
that products of this type make up almost 90% of the tonnage of civilian explo-
sives products. If the higher BATEA treatment costs are necessary, the shift from
off-site mixing  to on-site mixing will be accelerated due to the  fact that on-site
mixing is not covered by the guidelines and will not incur  the concomitant treat-
ment costs.

     Because of the wide range of treatment costs versus selling prices in Subcate-
gories B and D, it  is not possible to state that plants in these subcategories will not
experience  an economic impact from the Interim Final Effluent Guidelines. Cer-
tain plants in these subcategories will undoubtedly have very small impacts, but
on  an overall basis the subcategories will apparently be impacted. Further study
of plants in Subcategories B and D will be required.
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5.0 ECONOMIC IMPACT OF THE INTERIM FINAL EFFLUENT GUIDELINES
               ON THE CIVILIAN EXPLOSIVES INDUSTRY

     As stated  in Section 4.2, we do not expect that the Interim Final Effluent
Guidelines will  have a significant economic impact on the civilian sector of Sub-
category A, Manufacture of Explosives. The  BPCTCA costs amount  to 0.9 to
1.9% of the selling prices of products in this subcategory. The total of BPCTCA
plus BATEA unit treatment costs is estimated to be 1.7  to 3.4% of  estimated
selling  prices. These costs are low enough so  we do not judge them to be eco-
nomically  impactive.  As mentioned  in  Section 2.1,  the  dynamite industry  is
presently in a state of decline. In  1960 dynamites based on nitroglycerin were the
major commercial explosives in the United States. Even as recently as 1965 the con-
sumption  of dynamite type explosives (based on nitroglycerin) was still approxi-
mately equal to the consumption of ammonium nitrate-fuel oil  (ANFO) blasting
agents. At  the present time, blasting agents based on ammonium nitrate in admix-
ture with  a variety of  nonexplosive sensitizing fuels have taken over approxi-
mately 90% of  the civilian explosives market. We estimate that dynamite will be
essentially  eliminated  from the explosives market in the next five years. (Manu-
facture of nitroglycerin for propellants in Subcategory B will continue.)

     Because of the above-mentioned  industry sales trends as well as increased
costs to meet OSHA regulations,  we expect  that compajnAt?, ^f,'A» pioQutuig nitro-
glycerin dynamites will gradually shift to production of blasting agents based on
slurries or water gels as well as ANFO products. Therefore we do not expect this
industry  to sec the effect  of the Subcategory A  BATEA costs because  the
industry  would be  converted into the  Subcategory  C classification  by  1983.
Because the plants would be expected to remain in the same locations, effects
on employment and  communities would be insignificant.

    The BPCTCA treatment costs for Subcategory C (Load, Assemble and Pack
Operations) will only  amount to 0.9%  of  sales  prices of the  cheapest ANFO
products.  The presently contemplated BATEA process would give a combined
cost for BPCTCA and BATEA that would be  1.7% of the ANFO selling price.
Under our  criteria neither the liPCTCA cost nor the combined  costs are judged
to be economically impactive.

    As was discussed in Section  3.0 of this  report, the typical ANFO plants will
not have the volume of wastewater indicated in the model plant of the Develop-
ment Document. Therefore, the  costs will be even lower than calculated above.
Other plants in  this subcategory producing water gels and slurries may approach
the  water  usage of the model plant. Prices for water gels and slurries are higher
than for ANFO so we are confident that all Subcategory C plants will  snow  no
significant  economic impact from the Interim  Final Effluent Guidelines.
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     Within relatively wide limits, the demand for blasting agents is price inelastic.
Our contacts  with  several  distributors indicated that the  15%  rise  in prices for
blasting agents in 1975  due to rises in ingredient costs had no apparent effect on
sales volume.  Therefore we expect that the added costs of treatment would be
passed on directly to consumers in the form of modest price increases. We do not
believe that these relatively small treatment costs of 0.9 to 1.7% would be taken
from company profits nor would they cause significant shifts in modes of opera-
tion in the industry. On the other hand, if large increases in costs due to effluent
controls were  imposed,  the prevailing shift from off-site mixing to on-site mixing
of ANFO at mines  would accelerate because on-site mixing is not covered by the
guidelines. A  corresponding shift from off-site to on-site mixing  of  packaged
water gels and  slurries is  not  envisioned because of  the greater  difficulty of
processing these materials  at a mine site.  The large business in on-site mixing of
slurries and water gels for  direct  addition to bore  holes is  expected  to continue.
These operations are conducted  by  the companies that have patents on blasting
agent compositions  or by their licensees working on a royalty basis.

     Subcategory C plants  have  few pressing OSHA problems and plants in this
subcategory should  be able to accomodate tne costs of meeting the Interim  Final
Effluent  Guidelines with a minimum  of  difficulty. Therefore,  we anticipate no
significant effects on employment or on communities. Because of the highly com-
pcuuve conditions  in areas that  use large amounts of blasting agents, the  price
changes should be minJ.'nal  and will  probably consist of a simple pass through of
the minor treatment costs to be borne.
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