United Slates
hn\ ironnienlal Protection
Agenc)
Office Of Air Qualits
Planning And Standards
Research Triangle Park. NC 27711
LPA-452/R-OI-014 \/
September 2.001
FINAL REPORT
Air
Economic Impact Analysis of the Proposed
Hydrochloric Acid (HCI) Production NESHAP
Final Report
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Introduction
This regulatory action proposes national emission standards for hazardous air pollutants
(NESHAP) for hydrochloric acid (HCI) production facilities, including HCI production at fumed
silica facilities. The EPA has identified these facilities as major sources of hazardous air
pollutant (HAP) emissions, primarily HCI. Hydrochloric acid is associated with a variety of
adverse health effects. These adverse health effects include chronic health disorders (for
example, effects on the central nervous system, blood, and heart) and acute health disorders (for
example, irritation of eyes, throat, and mucous membranes and damage to the liver and kidneys).
These proposed NESHAP would implement section 1 12(d) of the Clean Air Act (CAA) by
requiring all HCI production facilities that are major sources to meet HAP emission standards
reflecting the application of the maximum achievable control technology (MACT). The EPA
estimates that these proposed NESHAP would reduce nationwide emissions of HAP from HCfcl
production by approximately 1 .790 tons per year (tpy). This amount of reduction is 52 percent
of the baseline HAP emissions estimate of 3.450 tpy. Of these emissions. 72 percent (2.490 tpy)
is h\drochloric acid, and the remaining 960 tpy is chlorine.
d
1* There are 64 HCI facilities that will have to install controls, according to the estimates prepared
•< by the Agency.' The production processes that this proposed NESHAP will affect are processes
^ that routes a gaseous stream that contains HCI to an absorber, '.hereby creating a liquid HCI
"^ product. Amone these various processes are:
-4
organic and inorganic. chemical manufacturing processes that produce HCI
as a by-product:
the reaction of salts and sulfuric acid (Mannheim process):
the reaction of a salt, sulfur dioxide, oxygen, and water (Hargreaves
process):
the combustion of chlorinated organic compounds:
the direct synthesis of HCI through the burning of chlorine in the presence
of hydrogen; and
fumed silica production, including combustion of silicon tetrachloride in
hydrogen-oxygen furnaces.
- Memorandum Maxuell. B.US Environmental Protection Agency, to Hydrochloric Acid Production
NESHAP Docket List of Facilities in the Hydrochloric Acid Production Source Categor\ March 21. 2001
2
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It is important to note that most HC1 production is as a by-product of other processes such as
aliphatic and aromatic hydrocarbon chlorinations, the phosgenation of amines for isocvanates.
and halogenations for making chlorofluorocarbons. Only about 5 percent of HC1 is produced as
primary product.
The fumed silica sources affected by this proposed rule include any facility engaged in the
production of fumed silica. Fumed silica is a fine white powder used as a thickener or
reinforcing agent in inks, resins, rubber, paints, and cosmetics. HC1 and chlorine emissions are
the primary HAPs released from fumed silica production facilities and result from the HC1
recovery/production system. Because the largest HAP emission source at fumed silica facilities
is related to the HC1 recovery /production system, we decided to combine fumed silica sources
and HC1 production sources under this proposed rule.
Background for Economic Impact Analysis
The Agency has prepared an economic impact analysis in support of this proposed NESHAP.
The legal authority for this analysis is Section 317 of the CAA. As part of this anahsis. the
Agency has prepared a small business analysis in order to comply with the Regulatory Flexibilit)
Act (RFA). as amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA).
This economic impact analysis presents a short profile of the industries affected b\ this proposed
rule, a short look at the firms that will be affected by this rule, and the impacts to these firms and
their consumers from implementation of the proposed rule.
Table 1 lists the 3 industries that will be affected by the requirements of this proposal.
Table 1. Affected Industries
Categon SlCa NAICSh Name of Industry
Industry 2819 325188 All Other Basic Inorganic Manufacturing
2821 325211 Plastic Materials, and Resin Manufacturing
2869 325199 All Other Basic Organic Manufacturing
a Standard Industrial Classification
b North American Information Classification Svstem
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These industries are all large with a substantial number of firms and employees that make up
their operations. Table 2 contains estimates of employees and the value of shipments for these
industries as a whole.2
Table 2
Value of Shipments and Employment Data on Affected Industries
(Millions of 1997 Dollars)
Industr\
NA1CS
325188
NAICS
325199
V
NA3CS
325211
1997
17.275
52.40^
45.226
Value of
Shipments
1998
22.760
48.989
49.176
1999
23.279
47.151
48.024
Percentage
Change
from 1997
to 1999
34.7
-10.0
62
1997
534
88.2
61.6
Total
Employment
(thousands)
1998
56.2
86.9
62.8
1999
53.8
81.2
58.5
Percentage
Change
from 1997
to 1 999
1.2
7.9
50
HCI production is bin a small portion of output and activity in these industries. While the
production of output reaches mam millions of tons for each of these industries, the total
production from the U.S. HCI industry is roughh 4.2 million tons year as of 1997. Most of the
production is captive capacit> : that is: the HCI is produced as an intermediate product to be used
in final output. Ghen that about 5 percent of HCI produced in the U.S. is as primary product.
this means that onh about 200.000 tons of primary HCI output is generated in a typical year.
The use of HCI in the production of other chemicals is the major way in which HCI is used in the
U.S. Thiru percent of HCI produced in the U.S. goes into production of other chemicals. The
next most common uses of HCI are steel pickling (20 percent), oil wrell acidizing (19 percent).
and food processing (17 percent). Other uses for HCI include semiconductor production and
regeneration of ion-exchange resins for water treatment.
The U.S. imports and exports very little HCI. In 1997, the U.S. imported 85,000 tons of HCI, or
:U S Department of the Commerce: Bureau of the Census. International Trade Association. Found on the
Internet at uuu nj d>^ >jo\ id mJn--ir\ oicii LIMITS KiNi'*_naic:> Downloaded on September 7. 2001 .
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only 2 percent of U.S. capacity. During that same year, the U.S. exported 60,000 tons of HC1. or
only 1.5 percent of U.S. production capacity.3 Hence, the U.S. imports as much or more HC1 as
to exports, but the trade balance is negligible compared to the output consumed within the U.S.
Most of this trade is with Canada.
The growth in U.S. HC1 production averaged about 4.2 percent per year from 1993 to 1998.
Growth has averaged roughly 3 percent per year from 1985 through 1998, so there has been some
increase in production growth in the decade of the 1990's.4 Prices for HC1 have increased
considerably from 1992 to 1998. These prices generally ranged from $40/ton to $57/ton in 1992
and 1993, but rose to over $90/ton in 1998 due to railroad disruptions that occurred late in 1997
and continuing into 1998. Projected growth is expected to be about 2.5 percent per year through
2003. though this amount could be an underestimate if continued strength in oil drilling leads to
additional demand for HC1.
Costs of the Proposed Rule
The estimated annual costs of the proposed rule are $4.05 million in 1999 dollars. These costs
include not only the costs of control but also those associated with monitoring, recordkeeping
and reporting. The capital costs are estimated at $12.87 million. The costs are estimated using
six model plants that are considered representative of the sources they are applied to. The data
taken to develop the linkage between the model plants and the actual facilities are based on
facility information taken from EPA permit files and assumptions of the applicability of control
equipment. Estimates of what each of these plants must do to meet the proposed alternative.
which is the MACT floor, is listed in Table 4. The costs for each of the six model plants is in
Table 5. The annual costs associated with each of these model facilities includes annualized
capital costs for control and monitoring equipment, annual operation and maintenance (O&M)
costs for control and monitoring equipment, and labor and O&M costs associated with reporting
and recordkeeping (R&R) requirements associated with the MACT floor regulator) alternative
3U.S. Department of Commerce, Bureau of the Census. Current Industrial Reports. Series MA28A(Ti
September. 1998.
4Chemica! News and Intelligence. ChemExpo Chemical Profile: Hydrochloric Acid No\ember 22. 19Ui-
\\\\\v.chemexpo.com/news TROFILE991122.cfm.
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' Table 3. Model Facility Actions Needed To Comply With MACT Floor Alternative
Model
Facility
#
1
2
3
4
5
6
Equipment Needed to Comply with MACT Floor Alternative
Process Vents (PV)
Control
Equipment
none
none
none
nons
scrubber
noP\
Monitoring
Equipment?
Yes
Yes
Yes
Yes
Yes
No
Storage Tanks (ST)
Control
Equi-ment
none
none
duct-\sork
no ST
no ST
scrubber
Monitoring
Equipment?
Yes
Yes
No
No
No
Yes
Transfer Operations (TO)
Control
Equipment
none
duct-\\ork
no TO
no TO
no TO
no TO
Monitoring
Equipment?
Yes
No
No
No
No
No
it of
Facilities .
5
5
10
20
12
9
Table 4. Annual Costs For Each Model Facility.
Model Facility #
1
->
3
4
5
6
Annual Costs per Facility(1999S)
PV
Equipment
S1.212
S 1.2 12
S 1.2 12
S1.212
S105.357
SO
ST Equipment
S1.212
S1.212
$691
$0
$0
$7.167
TO Equipment
S1.212
. S691
$0
$0
$0
$0
R&R Labor
andO&M
S65.055
$65.055
$65.055
$65.055
$65.055
$65,055
Total
$68.691
$68.170
$66.958
$66.267
$170.412
$72.222
The equipment costs include annualized capital as well as O&M and were obtained from
calculations performed to estimate regulatory alternative impacts. The annual R&R costs were
calculated using the template used to calculate annual R&R burden in the Information Collection
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Request for HCI Production. The costs for the 4th year after promulgation, which is the first year
after the compliance date for existing sources, were calculated for a single facility/"
In summary, the annual cost per facility for complying with the draft MACT for HCI Production
ranges from $66,267 to $170,412. The weighted (by number of plants) average annual cost per
facility is $83,971 and the unweighted average is $73,246.
As can be seen in Table 3, sources at most of the affected facilities will only have R&R
requirements and/or some additional ductwork. At 21 facilities, however, a new waste or caustic
scrubber is likely to be required for these facilities to meet the MACT floor requirements for
either process vents or storage tank emissions. As seen above, the costs for any one facility-
should be no higher than $170,412 (in 1999 dollars).
The annual costs shown in Table 4 can be considered reasonable representations of potential
.facility-level cost impacts associated with the MACT floor level of control. However, there is
one particular anomaly with this analysis that should be discussed. The nationwide cost impacts
analysis extrapolates the model emission point costs to the assumed number of affected sources
in the United States, which is 64.5 Certain assumptions were made in the cost impacts analysis
regarding the use of common control devices to reduce emissions from different types of
emission sources. Specifically, it was assumed that 20 of the 29 facilities with storage tanks also
had process vents at the site, and a single scrubber could be used to control emissions from both
sources. It was also assumed that all 10 facilities with transfer operations also had process vents
(so a scrubber could be shared). These assumptions from the impacts analysis were considered
in the facility-level combination of the individual emission sources. But since all pre\ ious
analyses were conducted on an emission source basis, it was not possible to develop
combinations to represent 64 HCI production facilities while remaining consistent with the
assumptions of shared control devices cited above. It is likely, however, that this anomaly will
not lead to a substantial mischaracterization of the costs nationally. The above extrapolation
takes into account the impacts to fumed silica facilities. Appendix A provides more specific
information on the representation of facilities in the HCI cost analysis.
Cost and Economic Impact Results
Table 5 lists the compliance (control, monitoring, and R&R) costs of the MACT floor regulator}
alternative per affected parent company, and these costs as a percentage of the parent
companies's revenues. All data below is based on 1999 statistics, unless more recent data is
available.
- Memorandum Maxwell. B.. U.S Environmental Protection Agency, to Hydrochloric Acid Production
NESHAP Docket. List of Facilities in the Hydrochloric Acid Production Source Category. March 21 2001
7
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Table 5.
Economic Impacts for Parent Companies Affected by
the Proposed HCLTumed Silica MACT*
Parent
Company
Arch
Chemicals
Ausimont
USA
(subsidian, of
Montedison
Group)
Axentis
CropScience
BASF Corp.
CIBA-GEIGY
Corp
(subsidiar\ of
Ncnartis)
Crompton
Corp
Detrex Corp
Dover
Chemical
Corp
(subsidiary of
ICC Industries
Corp.)
Dou
Chemical
DuPont
Number of
Employees
3.500
33.049
92.500
100.000
69.000
8.300
350
3.200
41.943
93.000
Large or
Small
Business?
Larse
Large
Larse
#
Large
Large
Large
Small
Larae
Lar°e
Large
Revenues(1999
unless stated
differently)
S900 million
1 1.266 million
(2000)
20.021 million
32.226 million
(2000)
17.200 million
3.038 million
100 million
1.500 million
23.008 million
28.268 million
Annual
Compliance
Costs
(1999S)
66.958
S171.794
171.794
171.794
171.794
171.794
171.794
171.794
171.794
171.103
Compliance
Costs/Revenues
(%)
0.0007
0.00152
0.00086
0.00053
0.001
0 00566
0 1996
0.0115
0.0001
00001
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Elf Atochem
(subsidiary of
TotalFinaElf)
Ferro Corp.
FMC Corp.
General
Electric Co.
Honeywell
Corp.
Huntsman
Corp.
1C1 Americas
(partoflCI
Corp.)
Jones-
Hamilton Co.
Louisiana
Pigment Co.
(oWned b\ ML
Industries)
MDA
Manufacturing
(owned b\
Daitkm
Products.
Inc.)
Metachem
Products
Miles Ba\er
(owned b\ the
Ba\er Group)
Monsanto Co.
Occidental
Chemical Co.
(owned by
Occidental
Petroleum
Co.)
127.252
6,700
15,000
313,000
125,000
14,000
45.130
91
2.500
14,000
110
120.400
14,700
8.800
Large
Large
Large
Large
Large
Large
Large
Small
Large
Large
Small
Large
Large
Large
67,352 million
1,360 million
3,900 million
129,500 million
23,735 million
7.000 million
8,592 million
10 to 25 million
(no precise
estimate available)
908 million
3. 799 million
30 million
27.320 million
5,500 million
13.574 million
171.794
171.794
171,794
343,588
66,958
171.794
171.794
171.794
72.222
171.794
171.794
171.794
171.794
171.794
0.00026
0.0126
0.0044
0.00027
0.003
0.00245
0.00180
1.7 18 (worst-case): 0.981
(best estimate)**
00008
0.00452
0573
0.00062
0.00312
0.00047
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O\\mar
(owned b\
Occidental
Petroleum Co.
and Marubeni
Co)
Oxyvinyls
PPG
Industries
Shell
Velsicol
Chemical
Corp
Vulcan
Materials
Chao Group
(of Thailand.
o\\ner of
\\ estlake
Monomers)
Fumed Silica
GE Silicones
(owned b\
GE)
Cabot
Degussa
13.851
(a joint
venture of
Occidental
Petro'eum
Co. and
Polyone
Internation
al)-
18.800
33.000
95.000
515
9.3 1 5
25.000
313.000
4.200
63.000
Large
Large
Lar°e
Large
Small
Larse
Large
Larae
Large
Large
73 billion
17,074 billion
(combined revenue
of Occidental
Petroleum and
Polyone
International)
8. 370 million
149. 146 million
160 million
2.492 million
3.000 million
128.543 million
1.51 7 million
12.567 million
171,794
171,794
170.412
171,794
171.794
171.794
171,794
171.794
171.794
171.794
0.00047
0.0010
0.002
0.0002
0.172
0.007
0.00571
0 00027
0.0101
0.00137
* Employee and revenue data taken from the companies's Web sites. \\\\\\ biibinebS.com. or Hoover's Online.
**The "best estimate" impact sho\\n for Jones-Hamilton is based on a revenue estimate that is the midpoint of the
°iven revenue ranee - SI 7.5 million
The economic impact anah sis. which is essentially a comparison of compliance costs for the
affected parent firms with their revenues, shows that the estimated costs associated with the
10
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MACT floor option are no more than 1.0 percent of the revenues for any of the 33 affected firms.
It is important to note that most of the companies and facilities affected by this standard are large
U.S. companies or subsidiaries of large multinational companies. It is likely that the expected
reduction in affected HC1 and fumed silica output is no more than 0.0015 percent or less from
that industry, since the overall compliance costs is less than 0.001 percent of the revenues for the
affected parent firms, and a demand elasticity of-1.5 that is applicable to NAICS 325199 and
325211 as prepared for another economic analysis done for a proposed MACT standard affecting
these NAICS codes.6 In addition, it is likely that the impacts to individual firms should not be
substantial, since the cost to sales estimates per firm are much less than the average profit margin
(i.e.. profit per unit of sales by firm) enjoyed by firms in these industries (about 5 percent).7 It
should be noted that these results are based on the application of costs from a subset of the
affected facilities to the remaining facilities. This is necessary due to incomplete facility-level
cost data, as explained in the previous section on costs.
Small Business Impacts
The RFA generally requires an agency to conduct a regulatory flexibility analysis of any rule
subject to notice and comment rulemaking requirements under the Administrative Procedure Act
or any other statute unless the agency certifies that the rule will not have a significant economic
impact on a substantial number of small entities. Small entities include small businesses, small
organizations, and small governmental jurisdictions.
For purposes of assessing the impacts of today's rule on small entities, small entity is defined as
a small business according to Small Business Administration size standards8 by the North
American Industry Classification System (NAICS) category of the owning parent entity. The
small business size standard for the affected industries (NAICS 325188. All Other Basic
Inorganic Chemical Manufacturing, NAICS 325199. All Other Basic Organic Manufacturing.
and NAICS 325211. Plastics Materials, and Resins Manufacturing) is a maximum of 1.000
employees for an entity.
After considering the economic impact of today's proposed rule on small entities. 1 certif) that
this action will not ha\e a significant impact on a substantial number of small entities In
accordance with ihe RFA. as amended by the Small Business Regulatory Enforcement I airnes.-*
Act (SBREFA), 5 U.S.C. 601, et. seq.. EPA conducted an assessment of the proposed standard
on small businesses within the industries affected by the rule. Based on SBA size definitions for
6 U.S. Environmental Protection Agency. Economic Impact Analysis of Air Pollution Regulations Organs
Liquid Distribution. Produced by the Research Triangle Institute. September 2001.
" Reference 5.
6 Small Business Administration. Washington. D.C. Found on the Internet at w\v\v.sba.go\ size.
11
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the affected industries and reported sales and employment data, the Agency identified four
affected small businesses out of 32 affected parent businesses (or 13 percent of the total number).
In order to estimate impacts to affected small businesses, the Agency conducted a screening
analysis that consists of estimates of the annual compliance costs these businesses are expected
to occur as compared to their revenues. Since the data are such that costs can only be estimated
for a subset of the affected facilities, the available data was used to determine the costs to the
facilities outside of this subset. The results of this screening analysis show that none of the small
businesses is expected to have annual compliance costs of 1 percent or more. Therefore, this
analysis allows us to certify that there will not be a significant impact on a substantial number of
small entities from the implementation of this proposed rule.
A summary of the small business impacts, with a comparison to the impacts to the large
companies, is in Table 6. The median compliance cost as a percent of sales for the affected
small companies affected is 0.39 percent, which is larger than that for the affected large
companies (0.001 percent).
Table 6
Summary of Small Business Impacts for HC1 Production and Fumed Silica
MACT Floor Option
Total Number of Companies
Total Number of Small Companies
Total Number of Large Companies
Average Annual Compliance Cost per
Small Company (in 1999 dollars)
Average Annual Compliance Cost per
Large Compam (in 1999 dollars)
Comparison of Compliance Costs to Sales
Compliance Costs of <1% of Sales
Compliance Costs of >1% of Sales
"» ">
jj
4
29
$171.194
166.811
Small: 4
Large: 29
Small: 0
Large: 0
Share: 100%
Share: 100%
Share: 0%
Share: 0%
12
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Compliance Cost to Sales: Statistics
Average: 0.061
For Small: 0.481
For Large: 0.003
Median: 0.0019
For Small:0.386
For Large: 0.0012
Maximum: 0.981
For Small: 0.981
For Large: 0.0126
Minimum: 0.0001
For Small: 0.172
For Large: 0.0001
13
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Appendix A
Summary of Representation of Actual Facilities in
HC1 Production NESHAP Cost Analysis
-------
Summary of Representation of Actual Facilities in the HCI Production Impacts Analysis
No 1'ioeess Vents
I'mtess Vents
Wo
95%
No Storage 1 auks
Storage Tanks
994%
95%
0%
No Transfer Operations
Transfer Operations
994%
95%
0%
Number of
Karilitics in Permit
Database
5
21
16
5
14
12
4
5
3
22
4
2
1
1
Assumed controls
needed
none
new scmhhei
none
ductwork/
new scrubber'1
new scrubber'1
none
ductwork'1
ductwork'1
"Real" plants from list of 64 represented
DuPont, KY. PPG. WV
Allied Signal. Baton Rouge. Bayer. WV. Degussa. NY. Dow. LA,n DuPont.'
1 A. Dul'oni. WV. Louisiana Pigment. PPG. LA (x3)h
Dow. LA." Dul'oni Dow. LA. PPG. OH. Shell. LA
Bayer. WV. Degussa. NY. DuPont. LA; PPG. OIL Shell, LA. PPG. LA
Dow, LA;n DuPont, KY; PPG, WV; DuPont, WV
Allied Signal, Baton Rouge; DuPont Dow, LA
Louisiana Pigment; Dow, LA"
Allied Signal, Baton Rouge; Bayer, WV; Degussa, NY; Dow, LA;a
DuPont, LA; DuPont Dow, LA; DuPont, WV, Louisiana Pigment;
PPG, OH; PPG, WV; PPG, LA (x3)c
DuPont, KY
Dow, LAa
Shell, LA
Number of non-
64 plants
represented
3
6
1
6
0
3
1
9
1
0
0
transfer operation.
'' (here are three facilities at this plant site that control process vent emissions at 994%. One of these three is a chlor-alkali facility that would not be subject to
the rule. But, we included it in the "64" column because the plant site is on the list of 64 facilities in the source category.
' I here are three facilities at this plant site that do not have storage tanks emissions or transfer operation emissions
1 It was assumed that four storage tanks controlled at 95% are located at facilities with process vents, so the process vent scrubber could be used for the storage
-------
tank (and a new scrubber would not be needed). It was also assumed that the transfer operation at 95% and the OIK
with no control were also at facilities where the process vent scrubber could be shared. It was also assumed that OIK
storage tank at 95% and the three with no control are at facilities without process vents, so a new scrubber will be
needed These assumptions are not based on any real facility.
16
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TECHNICAL REPORT DATA
(Please read Instructions on reverse before completing)
1. REPORT NO. 2.
EPA-452/R-01-014
4. TITLE \ND SI BT1TLE
Economic Impact Analysis for the Proposed Hydrochloric Acid
Production NESHAP
7. Al THOR(S)
9. PERFORMING ORGANIZATION NAME AND ADDRESS
U.S. Environmental Protection Agency
Office of Air Quality Planning and Standards
Air Quality Strategies and Standards Division
Research Triangle Park, NC 2771 1
. 12. SPONSORING .AGENO NAME AND ADDRESS
Director
Office of Air Quality Planning and Standards
Office of Air and Radiation
U.S. Environmental Protection Agency
Research Triangle Park, NC 27711
3. RECIPIENT'S ACCESSION NO.
5. REPORT DATE
September 2001
6. PERFORMING ORGANIZATION CODE
8. PERFORMING ORGANIZATION REPORT NO.
10. PROGRAM ELEMENT NO.
11. CONTRACT/GRANT NO.
13. ^ PE OF REPORT AND PERIOD COVERED
14. SPONSORING AGENO CODE
EPA/200/04
15. SI PPLEMENTAR^ NOTES
16. ABSTRACT
This document is an economic impact analysis for the industries and other entities subject to the
proposed Hydrochloric Acid Prodction National Emission Standards for Hazardous Air Pollutants
(NESHAP). The analysis shows price and production changes for affected entities, and provides some
financial data for those entities and the industries they are in.
17. KE^ \\ORDS AND DOCIMENT ANAL\SIS
a. DESCRIPTORS
Control Costs
Industry Profile
Economic Impacts
18. DISTRIBl TION STATEMENT
Release Unlimited
b. IDENTIFIERS/OPEN ENDED TERMS c. COSATI Field/Group
Air Pollution control
19. SECl HIT'S CLASS (Report) 21. NO. OF PAGES
Unclassified 16
20. SECl RIT\ C L ASS (Page) 22. PRICE
Unclassified
EPA Form 2220-1 (Rex. 4-77)
PRE\ IOI S EDITION IS OBSOLETE
17
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