United States
Environmental Protection
Agency
Office of Air Quality
Planning and Standards
Research Triangle Park, NC 27711
EPA-450/392009
December 1992
Air
f> EPA Regulatory Impact Analysis for the
National Emissions Standards for
Hazardous Air Pollutants for Source
Categories: Organic Hazardous Air
Pollutants from the Synthetic Organic
Chemical Manufacturing Industry and
Seven Other Processes
DRAFT
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EPA No. 450/3-92-009
REGULATORY IMPACT ANALYSIS
For The
National Emissions Standards for Hazardous Air Pollutants
for Source categories: Organic Hazardous Air Pollutants from the
Synthetic organic Chemical Manufacturing Industry and
Seven other Processes
Emission Standards Division
U.S. Environmental Protection Agency
Office of Air and Radiation
Office of Air Quality Planning and Standards
MD-13, Research Triangle Park, North Carolina 27711
December 1992
U.S. Environmental Protection Agency
Region 5, Library (PL-12J)
77 West Jackson Boulevard, 12th Floor
Chicago, IL 60604-3590
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(Disclaimer)
This report has been reviewed by the Emission Standards
Division of the office of Air Quality Planning and Standards,
EPA, and approved for publication. Mention of trade names or
commercial products is not intended to constitute endorsement or
recommendation for use. Copies of this report are available
through the Library Services Office (MD-35), U.S. Environmental
Protection Agency, Research Triangle Park, NC 27711, or from
National Technical Information Services, 5285 Port Royal Road,
Springfield, VA 22161.
11
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EXECUTIVE SUMMARY
The Environmental Protection Agency (EPA) plans to propose
regulations to reduce air pollutant emissions from synthetic
organic chemical manufacturing industry (SOCMI) facilities in
eight source categories, and facilities in seven other equipment
leak source categories. Both new and existing facilities that
meet the Clean Air Act definition of major sources will be
regulated under the authority of sections 112(c) and (d). This
decision is based on evidence that SOCMI facilities release air
pollutants that have adverse effects on both public health and
welfare, and the need for additional control of air pollutants
already covered by the Act before the 1990 Amendments.
Section 112(b) lists 189 hazardous air pollutants (HAP's).
The proposed regulation will reduce the emissions of
approximately 150 of the organic chemicals on the list. The
proposed regulation requires sources to achieve emissions limits
reflecting the application of the maximum achievable control
technology (MACT).
The HON regulation covers five types of emission points:
process vents, wastewater, transfer operations, storage vessels,
and equipment leaks. The regulation is made up of two standards,
one covering the first four emission points, and the second
covering equipment leaks. The standard for the first four
emission points was arrived at by the usual regulatory process,
while the equipment leaks standard was developed by regulatory
negotiation.
This regulation is unusual in that the regulation of the
emissions occurring from production of an extremely large number
of chemicals is being targeted at one time. Facilities in
virtually every state shall be affected by the HON. In
determining the regulatory options, the Agency evaluated methods
of determining 'what technologies should be applied for particular
types of emissions, what would be the minimum level of stringency
for pollutant control, and strategies for obtaining control at
the lowest cost (emission averaging).
The standards will require reductions of emissions of HAP's,
which are a subset of VOC's (volatile organic compounds). The
level of control provided by the regulatory options chosen ranges
from no control for existing small storage tanks (i.e, storage
tanks with less than 10,000 gallon capacity) to 95 percent
control for new process vents. The total amount of emission
reduction for HAP's will be 475,000 Mg (megagrams), and for all
VOC's (including HAP's) approximately 980,000 Mg.
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These standards, based on the regulatory options chosen,
will cost the nation $182 million annually by the fifth year
after all affected sources have complied with the regulation
(i.e., 1997). The most stringent alternative, total industry
control (TIC), if chosen would have cost the nation $359 million
annually by 1997. The economic impacts for the regulatory
options chosen are expected to be small. Price increases for a
large majority (78 percent) of affected chemicals are expected to
be under 2 percent, and decreases in production for a very large
majority (91 percent) of affected chemicals are expected to be
under 2 percent. Due to the flexible nature of the SOCMI, and
the several process routes possible for production of most SOCMI
chemicals, significant closures for SOCMI facilities are quite
unlikely.
The regulatory alternatives under consideration will not
affect a substantial number of small entities, so a Regulatory
Flexibility Analysis is not required.
The absence of valuation and sufficient exposure-response
information precludes a quantitative benefits analysis at this
time.
IV
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Table of Contents
Acronyms, Definitions, Units and Conversions
Chapter 1- Background
1.l Introduction
1.2 Legal History
1.3 Retrospective on Section 111 and 112 Standards affecting
the SOCMI
1.4 Executive Order 12291
1.5 Guide to the References
Chapter 2- The Proposed EON Emission Standards in Brief
2.1 Subpart F: Applicability of the HON
2.2 Subpart G: Provisions for Process Vents, Wastewater
Operations, Storage Vessels, and Transfer Operations
2.3 Subpart H: Provisions for Equipment Leaks
Chapter 3- The Need for and consequences of Regulatory Action
3.1 The Problems
3 .2 Need for Regulation
3.2.1 Market Failure
3.2.1.1 Air Pollution as an Externality
3.2.1.2 Natural Monopoly
3.2.1.3 Inadequate Information
3.2.2 Insufficient Political and Judicial Forces
3.2.3 Harmful Effects of Hazardous Organic Air Pollutants
3.3 Consequences of Regulation
3.3.1 Consequences if EPA's Emission Reduction Objectives
are Met
3.3.1.1 Allocation of Resources
3.3.1.2 Emissions Reductions and Air Quality
3.3.1.3 Costs
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3.3.1.4 Energy Impacts
3.3.1.5 Solid Waste and Water Quality Impacts
3.3.1.6 Technological Innovation
3.3.1.7 State Regulation and New Source Review
3.3.1.8 Other Federal Programs
3.3.2 Consequences if EPA's Emission Reduction Objectives
are not Met
Chapter 4- Control Techniques
4.1 Combustion Technology
4.1.1 Incinerators
4.1.1.1 Thermal
4.1.1.1.1 Applicability
4.1.1.1.2 Types of Thermal Incinerators
4.1.1.2 Catalytic
4.1.1.2.1 Applicability
4.1.1.2.2 Types of Catalytic Incinerators
4.1.2 Flares
4.1.2.1 Applicability
4.1.2.2 Efficiency
4.1.2.3 Types of Flares
4.1.2.3.1 Steam-Assisted Flares
4.1.2.3.2 Air-Assisted Flares
4.1.2.3.3 Non-Assisted Flares
4.1.2.3.4 Pressure-Assisted Flares
4.1.2.3.5 Enclosed Ground Flares
4.1.3 Boilers and Process Heaters
4.1.3.1 Description of Boilers
4.1.3.2 Description of Process Heaters
4.1.3.3 Efficiency of Boilers and Process Heaters
4.1.3.4 Applicability of Boilers and Process Heaters
4.2 Product Recovery Devices
4.2.1 Absorbers
4.2.1.1 Absorber Efficiency
4.2.1.2 Applicability of Absorbers
4.2.2 Steam Stripping
4.2.2.1 Description
4.2.2.2 Collecting, Conditioning, and Recovery
4.2.2.3 Efficiency of Control
4.2.2.4 Applicability
VI
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4.2.3 Carbon adsorbers
4.2.3.1 Types of Adsorbers
4.2.3.2 Control Efficiency
4.2.3.3 Applicability
4.2.4 Condensers
4.2.4.1 Description
4.2.4.2 Control Efficiency
4.2.4.3 Applicability
4.2.5 Vapor Collection Systems for Loading Racks
4.2.5.1 Description of Vapor Collection Systems
4.2.5.2 Efficiency
4.2.5.3 Applicability
4.3 LDAR
4.3.1 Equipment Description and Controls
4.3.1.1 Pumps
4.3.1.1.1 Seals for Pumps
4.3.1.1.2 Sealless Pumps
4.3.1.2 Compressors
4.3.1.3 Agitators
4.3.1.4 Pressure Relief Devices
4.3.1.5 Open-Ended Lines
4.3.1.6 Sampling Connections
4.3.1.7 Process Valves
4.3.1.7.1 Seals for Valves
4.3.1.7.2 Sealless Valves
4.3.1.8 Connectors
4.3.1.9 Instrumentation Systems
4.3.2 Closed Vent Systems
4.3.3 Work Practices
4.3.3.1 Leak Detection Methods
4.3.3.1.1 Individual Component Survey
4.3.3.1.2 Area Survey
4.3.3.1.3 Fixed Point Monitors
4.3.3.2 Repair Methods
VII
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4.4 Internal Floating Roofs
4.4.1 Types of Losses and How They are Controlled
4.4.1.1 Control of Seal Losses
4.4.1.2 Control of Fitting Losses
4.4.1.3 Control of Deck Seam Losses
4.4.2 Applicability
Chapter 5- Regulatory Options
5.1 Introduction
5.2 No Additional EPA Regulation
5.2.1 Judicial System
5.2.2 State and Local Action
5.3 EPA Regulation
5.3.1 Categories, Emission Points, and Floors
5.3.2 Development of MACT and Regulatory Alternatives
5.3.3 Description of MACT and the Regulatory Alternatives
5.3.4 Role of Cost Effectiveness
5.3.5 Economic Incentives: Subsidies, Fees, and Marketable
Permits
Chapter 6- Control Cost and Cost Effectiveness Analysis
6.1 Cost Impacts of Control Technologies
6.2 Cumulative Cost Control Analysis
6.2.1 Building Chemical Trees
6.2.2 Cumulative Control Cost Methodology
6.2.3 Cumulative Control Cost Results
6. 3 Costs and Regulatory Options
6.4 National Costs
6.4.1 Monitoring, Recordkeeping, and Reporting Costs
6.4.2 Summary
Chapter 7- Economic Impact Analysis
7.1 Industry Profile
7.1.1 Introduction
7.1.2 Production, Shipments, and Capacity Utilization
7.1.3 Demand and End-Use Markets
7.1.4 Foreign Trade
7.1.5 Pricing
7.1.6 Financial Profile
7.2 Studies of 20 Selected Chemicals
7.2.1 Selection Rationale
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7.2.1.1 HON Compliance Costs
7.2.1.2 Volume of Production
7.2.1.3 Basic Feedstock Chemicals
7.2.1.4 Selected Chemicals
7.2.2 Methodology for Selected Studies
7.2.2.1 Profiles
7.2.2.2 Economic Impacts
7.2.2.2.1 The Model
7.2.2.2.2 Compliance
7.2.2.2.3 Pricing
7.2.2.2.4 Elasticities
7.2.2.2.5 Estimating Market Adjustments
7.2.2.2.6 Market Structure
7.2.3 Results of Studies
7.3 Distribution of Cumulative Costs
7.4 Implications for the Rest of the Affected Chemical Industry
7.4.1 Low Cost Impacts
7.4.2 Immediate Cost Impacts
7.4.3 High Cost Impacts
7.5 Small Business Impacts
7.6 Control Device Manufacturing Industry
7.7 Conclusions
Chapter 8- Benefits
8.l Introduction
8.2 Hazardous Air Pollutant Benefits
8.2.1 Health Benefits of Reduction in Hazardous Air
Pollutants
8.2.2 Welfare Benefits of Reduction in Hazardous Air
Pollutants
8.3 Ozone Benefits
8.3.1 Health Benefits of Reduction in Ambient Ozone
Concentration
8.3.2 Welfare Benefits of Reduction in Ambient Ozone
Concentration
8.4 Particulate Matter Benefits
8.5 Additional Benefits
8.6 Conclusion
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Chapter 9- Weighing the Benefits and the costs
9.1 Introduction
9.2 Economic Efficiency Considerations
9.3 Cost-Effectiveness of HON Induced VOC Emission Reductions
In Ozone Nonattainment Areas
9.4 Conclusions
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List of Tables Page No.
3-1 HON Chemicals by Classification 3-7
5-1 Regulatory Options 5-8
5-2 Floor Elements 5-9
6-1 Annualized Control Cost Estimates 6-3
6-2 Cost Effectiveness for Model Units (Quarterly
Valve Monitoring) 6-4
6-3 Cost Effectiveness for Model Units (Monthly
Valve Monitoring) 6-5
6-4 Annualized Control Cost Estimates for Example
Model Tank 6-7
6-5 Cost Effectiveness for Wastewater Model Streams . 6-9
6-6 Annual Control Cost Estimates 6-11
6-7 Cumulative Control Cost Analysis Results for
Total Industry Control (TIC) Options 6-14
6-8 Control Options for Process Vents - Existing
Sources . 6-15
6-9 Control Options for Process Vents - New Sources . 6-16
6-10 Control Options for Wastewater - Existing Sources 6-17
6-11 Control Options for Wastewater - New Sources . . .6-18
6-12 Control Options for Transfer Operations - Existing
Sources 6-19
6-13 Control Options for Transfer Operations - New
Sources 6-20
6-14 Control Options for Storage Vessels: Existing
Sources 10,000 to 20,000 Gallon Capacity .... 6-21
6-15 Control Options for Storage Vessels: New Sources
10,000 to 20,000 Gallon Capacity 6-22
XI
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6-16 Control Options for Storage Vessels: Existing
Sources 20,000 to 40,000 Gallon Capacity .... 6-23
6-17 Control Options for Storage Vessels: New Sources
20,000 to 40,000 Gallon Capacity 6-24
6-18 Control Options for Storage Vessels: Existing
Sources 40,000 Gallon Capacity and Greater . . . 6-25
6-19 Control Options for Storage Vessels: New Sources
40,000 Gallon Capacity and Greater 6-26
6-20 Annualized Costs of Monitoring, Recordkeeping, and
Reporting from HON Compliance 6-27
6-21 National Control Cost Impacts in the Fifth Year . 6-28
7-1 SIC Codes for the SOCMI 7-4
7-2 • Selection of Twenty SOCMI Chemicals 7-11
7-3 Summary of Market Adjustments 7-20
7-4 Likelihood of Closure and Process Change Under TIC
Controls 7-22
7-5 Distribution of HON Chemicals by Percentage Cost
Increase and Annual Production (106 kg) : TIC
Option 7-25
7-6 Summary of Percentage Price Increases for Selected -
Chemicals 7-26
7-7 1990 Sales and Employment of Selected SOCMI
Members 7-29
XII
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Acronyms, Definitions, and Conversions
Acronyms
BID
CAA
CAAA
CPP
EPA
HAP
HON
LDAR
LEL
MACT
NAAQS
NESHAP
NPDES
OAQPS
OSHA
POTW
RACT
RFA
SIC
SIP
SOCMI
Background Information Document
Clean Air Act
Clean Air Act Amendments of 1990
Chemical Production Processes
Environmental Protection Agency
Hazardous Air Pollutant
Hazardous Organic NESHAP (NESHAP is defined
below)
Leak Detection and Repair
Lower Explosive Limit
Maximum Achievable Control Technology
National Ambient Air Quality Standards
National Emission Standards for Hazardous Air
Pollutants
National Pollutant Discharge Elimination
System
Office of Air Quality Planning and Standards
Occupational Safety and Health Administration
Publicly Owned Treatment Works
Reasonably Available Control Technology
Regulatory Flexibility Act; also Regulatory
Flexibility Analysis
Standard Industrial Classification
State Implementation Plan
Synthetic Organic Chemical Manufacturing
Industry
Xlll
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TLV Threshold Limit Value
TRE Total Resource Effectiveness
VOC Volatile Organic Compound
VHAP Volatile Hazardous Air Pollutant
VOHAP Volatile Organic Hazardous Air Pollutant
WHAP Very Volatile Hazardous Air Pollutant
Chemical symbols
C02 Carbon dioxide
CO Carbon monoxide
HC1 Hydrochloric acid
NH3 Ammonia
NOX Nitrogen oxide
O3 Ozone
SO2 Sulfur dioxide
Economic, Regulatory, and Scientific Terms
Annual Cost Annualized capital plus annual operating
costs
Area Source Any emission source emitting less than
10 tons per year of a single HAP or 25
tons or more per year of two or more
HAPs, unless EPA establishes a lesser
quantity cutoff
bbl One barrel; equal to 42 gallons
Btu One British thermal unit
C/E Cost effectiveness, which is the net
present value of cost of emission
control divided by the present value of
emission reductions in megagrams
(defined below)
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Gg
One gigagram, or 1,000,000 kilograms
Gm
kw
1pm
Major Source
Mg
MJ
MW
ppmv
ppmw
psia
One gram
One kilowatt, or 1,000 watts
One liter per minute
Any emission source emitting 10 tons
or more a year of a single HAP or 25
tons or more a year of two or more HAPs
One megagram, or 1,000 kilograms
One megajoule, or .949 Btu
One megawatt, or .949 Btu per second
parts per million by volume (air)
parts per million in water
Pounds per square inch absolute
112(b)
scfm
Title I
Title III
Section of Title III in the CAAA that
requires the EPA to promulgate
regulations establishing emission
standards for new and existing sources
of HAPs on the list of 189 HAPs in the
title
One standard cubic foot per minute
The first title of the CAAA; this title
classifies nonattainment areas, sets
attainment schedules, and prescribes
control measures for O3, CO, PM-10, and
for SOX, NOX, and Lead
The third title of the CAAA; this title
lists the 189 HAPs to be controlled with
MACT, as well as the control of major
and area sources, incinerator air
emissions, accidental releases, and
special studies
xv
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TIC
Total Industry Control; che most
stringent regulatory option for each
source type
Units and Conversions
This report uses metric units, some of which may not be
familiar to all readers. The EPA is required by Congress to use
metric measurements. The following is a short guide to the units
and their conversions.
Conversions
To Approximate
As
Multiply by
Mg (megagram)
scm (standard
Ton (2,000 Ib)
scf( standard
1.1
cubic meter)
MJ
MW
kg
(megajoule)
(megawatt)
(kilogram)
cubic foot)
Btu (British
thermal unit)
Btu/ second
Ib (pound)
35.3
949
949
2.2
xvi
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CHAPTER 1
BACKGROUND
l.1 introduction
The NESHAP being proposed is commonly known as the hazardous
organic NESHAP, or HON. The HON would regulate emissions of
certain organic hazardous air pollutants from SOCMI process
units. A SOCMI process unit is defined as a unit producing one
or more of a list of SOCMI chemicals. A SOCMI process unit is
only covered by the HON if it either 1) produces a HAP as a
product, by-product, co-product, or intermediate; or 2) uses a
HAP as a reactant or raw material to produce a SOCMI chemical.
Seven non-SOCMI source categories would also be regulated under
the proposed equipment leaks standard (see Section 2.1):
styrene/butadiene rubber production; polybutadiene production;
chlorine production; pesticide production; chlorinated
hydrocarbon use; pharmaceutical production; and miscellaneous
butadiene use.
1.2 Legal History
On November 15, 1990, the Clean Air Act was amended
significantly. Section 112 was substantially revised at that
time altering the basic framework for regulating emissions of
toxic air pollutants from stationary sources.
Prior to the amendments passed in 1990, Section 112 required
the Administrator to list air pollutants for which he intended to
establish NESHAPs. Within 180 days after the listing of such air
pollutants, regulations were to be proposed. Final regulations
were to be issued in another 180 days. Thus, once the
Administrator added a pollutant to the Section 112 list, a final
NESHAP for that pollutant had to be issued within one year. The
statute itself did not contain a list of hazardous air
pollutants.
The amendments enacted in 1990 altered the preexisting
scheme of Section 112 fundamentally. Instead of requiring the
Administrator to determine which air pollutants ought to be
listed and regulated as hazardous air pollutants, Congress
provided a list of 189 hazardous air pollutants in the statute
itself. EPA may revise that list only in conformance with clear
statutory guidelines. The Agency is now required to develop a
list of all categories and subcategories of sources emitting any
of the listed pollutants, and develop technology-based standards
to control such emissions. Thus, these standards are to be based
on the sources of the emissions rather than being set pollutant
by pollutant as in the past and are no longer to be risk based.
Regulations for all source categories must be promulgated within
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10 years of enactment of the amendments. Generally, assessment
and control of any remaining unacceptable health risk is to occur
8 years after the technology-based standards are promulgated.
However/ for the HON the residual risk assessment is to be
conducted 9 years after promulgation.
1.3 Retrospective on Section 111 and 112 Standards Affecting the
SOCMI
The provisions of the proposed standards incorporate data,
information, and experience gained by EPA through previous
rulemaking efforts involving similar sources. Information on
control technology applicability, performance, and cost were
available from previous NSPS and NESHAP regulatory development
efforts. This information was considered in selecting MACT and
in developing the proposed standards.
Under the NSPS program, EPA has promulgated NSPS for SOCMI
air oxidation and distillation process vents; SOCMI emissions
from equipment leaks; petroleum refinery equipment leaks; and VOC
emissions from volatile organic liquid storage vessels.
Similarly, under the NESHAP program, regulations were promulgated
for benzene storage tanks, transfer racks and wastewater
emissions , and for vinyl chlorine and benzene equipment leaks.
In the development of the HON, this previously collected array of
information was carefully reconsidered in light of the provisions
of the CAA of 1990. This technical information is presented in
detail in the HON BID.
Each of these previous efforts regulates some sources or
chemicals that would be subject to the HON, but none of them
comprehensively regulate emissions of all of the organic HAP's
emitted from new and existing SOCMI process units from all
emission points. The HON would regulate all five of the emission
points at each affected SOCMI source (see Section 2.1), and would
regulate emissions of any of the listed organic HAP's. The first
of the HON standards (Subpart G) was developed through usual
regulatory procedures, and covers four of the five emission
points. An analysis of various regulatory alternatives was
conducted for this standard. The second, the equipment leaks
NESHAPs (Subpart H), was developed through the regulatory
negotiation process, and, as a result, a formal analysis of
regulatory alternatives was not conducted.
The negotiators in this process originally were to develop
standards for equipment leaks for 13 source categories that would
be affected by standards already under development. The
standards under development would have applied to only eight
organic chemicals. However, during negotiation of the
amendments to the CAA, EPA expanded the scope of the standards to
include all SOCMI processes that produce or use as a reactant one
of the 149 organics listed in the CAA list of 189 HAP's (55 FR
1-2
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8984, March 9, 1990; 55 FR 14349, April 17, 1990). Petroleum
refinery processes were not to be covered, however.
1.4 Executive order 12291
The President issued Executive Order 12291 on February 17,
1981. It requires EPA to prepare regulatory impact analyses
(RIAs) for all regulations having "major" impacts. An impact is
considered "major" if the annual effect on the economy is $100
million or more, and/or may result in a "significant" increase in
prices. The EPA considers the HON regulations to be major and
thus is issuing this RIA.
Along with requiring an analysis of benefits and costs, E.G.
12291 specifies that EPA, to the extent allowed by the clean Air
Act and court orders, demonstrate 1) that the benefits of the HON
regulations will outweigh the costs and 2) that the maximum level
of net benefits will be reached. Chapter 8 describes the
benefits in detail. As explained in that chapter, EPA cannot
quantify some of the benefits. Thus, EPA cannot show
quantitatively that the benefits of the regulations will outweigh
the costs. Despite this problem of quantifying benefits, EPA has
determined that CAA Sec. 112 requires issuance of the HON
regulations at the stringency level described in Chapter 2. For
more information, refer to Chapter 9 and the Federal Register
preambles to the HON.
1.5 Guide to the References
Most of this RIA is a summary of research reports, analyses,
correspondence, minutes of various meetings and hearings, policy
directives, legal notices, laws, regulations, and other documents
relating to the development of CAA Sec. 112 regulations for SOCMI
(and certain non-SOCMI) facilities. The principal references are
listed in the back of the chapter on the subject of interest to
you. Consult these references, as well as the preambles that
accompany proposal of the HON in the Federal Register, for more
detailed information. References are held in public dockets and
are available for inspection and copying-the latter may require a
fee-during normal business hours. For more information on the
docket, contact:
Air Docket (LE-131)
Room M-1500,
Waterside Mall
401 M Street, SW
Washington, DC 20460
Hours: 8:00 a.m. to 3:30 p.m.
Phone No.: (202) 382-7549
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CHAPTER 2
THE PROPOSED HON EMISSION STANDARDS IN BRIEF
The HON is organized in three subparts. Subpart F provides
a description of the applicability of the standards. Subparts G
and H provide the control, monitoring, recordkeeping and
reporting requirements for the standard.
2.1 Subpart F: Applicability of the HON
The HON would regulate certain components of new and
existing major sources, as defined by Section 112(a), in the
SOCMI and 7 non-SOCMI equipment leak source categories.
To define the SOCMI source category, Subpart F includes a
list of organic HAP's and a list of approximately 400 synthetic
organic chemicals produced by the SOCMI as commercial products.
The "chemical manufacturing processes" used to produce these 400
chemicals can, but do not always, result in organic HAP
emissions. Only those processes resulting in HAP emissions are
subject to the standard.
As proposed, Subpart F defines "source" for the SOCMI source
category as all process vents, storage vessels, transfer racks,
wastewater streams, and equipment leaks in the organic HAP
emitting chemical manufacturing processes that are subject to the
HON. To be subject to the HON, a chemical manufacturing process
must be used to produce one or more of the approximately 400
SOCMI chemicals listed in Subpart F, and have an organic HAP as
either 1) a product, by-product, co-product, or intermediate; or
2) a raw material in the production of another SOCMI chemical
product.
To be part of the same source, chemical manufacturing
processes that are subject to the HON must also be located within
a contiguous plant site under common control.
Subpart G will apply to the following kinds of emission
points in SOCMI chemical manufacturing processes: process vents,
wastewater operations, storage vessels and transfer operations.
Subpart H will apply to the equipment leaks in SOCMI and
non-SOCMI chemical manufacturing processes. The following non-
SOCMI equipment leak source categories are subject to Subpart H:
styrene/butadiene rubber production;, polybutadiene production;
chlorine production; pesticide production; chlorinated
hydrocarbon use; pharmaceutical production; and miscellaneous
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butadiene use.
2.2 Subpart 6: provisions for Process Vents/ Wastewater
Operations, storage Vessels and Transfer operations
Subpart G of the proposed rule would require the owner or
operator of a source to limit source-wide emissions of HAP's.
Subpart G provides specific instructions for determining how much
emissions must be reduced at each source. The required emissions
reduction is determined by how much emissions would be reduced if
a "reference control technology" were applied to all the
"Group 1" emission points in the source.
The proposed standard specifies the reference control
technology for each kind of point. Group 1 points are those
points that meet the applicability criteria included in the
control requirements for the proposed standard. The reference
control technologies and applicability criteria for Group l
points are specified in Subpart G of the standard as well as the
definition list in the HON preamble.
The owner or operator of a source can use two methods to
comply with the emissions reduction requirement. Either method
can be used exclusively, or the two can be combined.
The first method is to apply the reference control
technology, or an equivalent technology, to Group l emission
points; thereby achieving some part of the required emission
reduction at each Group 1 point that is controlled.
The second method is to average emissions from two or more
emission points such that the overall required emission reduction
is achieved. With the second method, emissions averaging, the
owner or operator does not have to apply the reference control
technology to each Group 1 point, as long as an equivalent or
greater emissions reduction is achieved elsewhere in the source.
The proposal provides specific procedures that must be followed
to utilize emissions averaging as a means of compliance with the
HON. These procedures are summarized in Section III.B.6 of this
notice.
Although equipment leaks are included in the definition of
source for the SOCMI source category, equipment leaks can not be
included in the emissions averages because: 1) the equipment
leaks standard has no fixed performance level; and 2) no method
currently exists for determining the magnitude of allowable
emissions to assign equipment leaks for purposes of emissions
averaging. When this methodology is developed, EPA will consider
allowing equipment leak emissions to be included in emissions
averages.
2-2
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2.3 Subpart H: Provisions for Equipment Leaks
The provisions in Subpart H of the proposed rule were
developed using regulatory negotiation and represent an extension
of existing equipment leak control techniques to the eight source
categories regulated by today's proposal.
Subpart H proposes work practice requirements to reduce
emissions from equipment leaks for equipment in volatile HAP
service for 300 or more hours per year. To be in volatile HAP
service is to be in contact with or containing fluid that is 5
percent or more HAP.
The following types of equipment are subject to the proposed
standards in Subpart H: valves, pumps, connectors, compressors,
pressure relief devices, open-ended lines, sampling connection
systems, instrumentation systems, agitators, product accumulator
vessels, and closed-vent systems and control devices.
2-3-
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CHAPTER 3
THE MEED FOR AMD CONSEQUENCES OF REGULATORY ACTION
3.1 The Problems
One of the concerns about potential threats to human health
and the environment from chemical manufacturing plants is air
emissions of hazardous organics. Hazardous chemicals can also
find their way into underground water supplies, and in the solid
waste stream. Health risks from emissions of hazardous organics
into the air include increases in cancer incidences and other
toxic effects. This chapter discusses the need for and
consequences of regulating of hazardous air emissions from
chemical plants. Section 3.2.3 provides more detail on the
health risks of these pollutants.
3.2 Meed for Regulation
3.2.1 MarXet Failure
The U.S. Office of Management and Budget (OMB) directs
regulatory agencies to demonstrate the need for a major rule.1
The regulatory impact analysis must show that a market failure
exists and that it cannot be resolved by measures other than
Federal regulation. Market failures are categorized by OMB as
externalities, natural monopolies, or inadequate information.
The following paragraphs address the three categories of market
failure. Chapter 5 discusses the regulatory options and makes a
case for the necessity of a Federal regulation.
3.2.1.1 Air Pollution as an Externality
Air pollution is an example of a negative externality. This
means that, in the absence of government regulation, the
decisions of generators of air pollution do not fully reflect the
costs associated with that pollution. For a chemical plant
operator, air pollution from the plant is a product or by-product
that can be disposed of cheaply by venting it to the atmosphere.
Left to their own devices, many plant operators treat air as a
free good and do not fully "internalize" the damage caused by
emissions. This damage is born by society, and the receptors
the people who are the ones adversely affected by the pollution—
-are not able to collect compensation to offset their costs.
They cannot collect compensation because the adverse effects,
like increased risks of morbidity and mortality, are by and
large, non-market goods, that is, goods that are not explicitly
3-1
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and routinely traded in organized free markets.*
Consider an example. It may be somewhat unreal, but it
illustrates why air pollution is a market externality. A young
man estimates that over his remaining lifetime he has a risk of
getting cancer of, let's say, 4 chances in 10. A new chemical
plant is being constructed in his neighborhood, and he
pessimistically calculates that the added pollution to his own
environment will boost his odds of getting cancer to, say, 5
chances in 10. He walks up to the people owning the chemical
plant and offers to "sell his exposure" to the plant's air
pollution for a bargain basement price of just $5 a day. For his
efforts he gets no more than a laugh. What's wrong? Most young
men either would be unwilling to even consider such a
transaction, or, if they were willing, they would not know enough
about their futures and about the effects of the pollution to set
such a precise price. Furthermore, even if they were willing and
did have a price, they would not have any good way of coming to
terms with the plant owners.b The plant owners would ordinarily
not attempt such a transaction for many of the same reasons the
young man would not. attempt it. Given that the plant owners and
the young man could accept such a transaction, if transactions
costs were low enough and all others parties' concerns were
negligible, a transaction which would internalize the air
pollution externality could occur, as explained in Coase's
theorem. However, it is unusual for this type of externality to
be eliminated by this route.6
1 Litigation also is a possible route for collecting
compensation. EPA recognizes that improving the legal system to
facilitate environmental protection lawsuits, and the consequent
reduction of negative externalities, may be as cost effective and
equitable as regulation under the CAA. However, EPA has not
explored this avenue for controlling hazardous organic air
pollutant emissions.
b Again, litigation would be a possible route.
cAn air pollution externality caused by a chemical plant
outside of Port Arthur, Texas was dealt with by a market
transaction. The company owning the plant purchased the homes of
local residents who had complained about the pollution. However,
this transaction only occurred after intense political activity
instigated by the residents. See "How a Neighborhood Talked Fina
Refinery Into Buying It Out," The Wall Street Journal, December 10,
1991. Other oil companies have also bought land around facilities
(called "greenbelts") in order to preempt the creation of pollution
externalities. However, this land buying preceded operations.
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How would it help to force chemical plants either to
compensate the people suffering the consequences of the
pollution, or simply to reduce the pollution? Where there are
negative externalities like air pollution, the market price of
goods and services does not reflect the costs, borne by receptors
of air pollution, generated in the course of producing the goods
and services. Government regulation can be used to improve the
situation. The NESHAPs will force chemical plant owners and
operators to reduce the quantity hazardous organic air pollutants
they emit. With the NESHAPs in effect, what chemical plant
owners and operators must spend to produce chemicals will more
closely approximate the full social costs of production. In the
long run, chemical plants will be forced to increase prices of
the products sold in order to cover total production costs.
Thus, prices will rise, consumers accordingly will reduce their
demand for chemical products, and hence less chemicals will be
provided. The more the costs of pollution are internalized by
the chemical plants, the greater the improvement in the way the
market functions. If we could internalize all negative
externalities including, of course, those from chemical plants-
—society's allocation of resources would be improved.
3.2.1.2 Natural Monopoly
In some respects, chemical plants can tend toward "natural"
monopolies. There are large economies of scale in chemical
manufacturing; the heavy up-front capital needed to construct a
plant acts as a barrier to entry. Due to the necessity for heavy
up-front capital, most chemical market are oligopolies (i.e.,
dominated by a few firms). Thus, each firm in this type of
market possesses more monopoly power than if each firm were
operating in a more competitive market. The NESHAPs are not
designed to address this circumstance, and will not reduce the
tendency of chemical production markets toward monopoly or
oligopoly.
3.2.1.3 Inadequate Information
The third category of potential market failure that
sometimes is used to justify government regulation is inadequate
information.
Some chemical manufacturing facilities can reduce costs by
installing air pollution control devices, reducing leaks or
recycling hazardous organic chemicals. Due to lack of
information, some of these facilities do not install such
systems. The NESHAPs would require the collection of information
that may give a chemical plant owner enough data to make an
informed decision on whether or not control devices are the best
option.
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3.2.2 Insufficient Political and Judicial Forces
There are a variety of reasons why many emission sources, in
EPA's judgment, should be subject to reasonably uniform national
standards. The principal reasons:
* Air pollution crosses jurisdictional lines.
* The people who breathe the air pollution travel freely,
sometimes coming in contact with air pollution outside their
home jurisdiction.
* Harmful effects of air pollution detract from the nation's
health and welfare regardless of whether the air pollution
and harmful effects are localized.
* Uniform national standards, unlike potentially piecemeal
local standards, are not likely to create artificial
incentives or artificial disincentives for economic
development in any particular locality.
* One uniform set of requirements and procedures can reduce
paperwork and frustration for firms that must comply with
emission regulations across the country.
None of these reasons, by itself, provides overriding justi-
fication for Federal action in the case at hand. Collectively,
however, the reasons argue against reliance on state and local
action to control hazardous organic air emissions from chemical
plants.
Citizens, as well as EPA, may sue state and local
governments to force them to control hazardous organic air
emissions from chemical plar-.s. Litigation under both the CAA
and RCRA is possible. However, EPA has not explored ways of
improving the judicial route so that it might serve as a
substitute for action under Section 111 of the CAA.
3.2.3 Harmful Effects of Hazardous Organic Air Emissions
Only health effects associated with hazardous organic air
emissions are addressed in these NESHAPs. Direct exposure to air
emissions can occur through inhalation, soil ingestion, the food
chain, and dermal contact.
Out of the 189 hazardous air pollutants identified in the
Clean Air Act Amendments, 149 chemicals are being regulated by
the HON; however, of these 149, only 110 are regulated by
Subpart G of the HON. Of these 110 chemicals, approximately one-
third are carcinogens and approximately two-thirds are
noncarcinogens. The EPA has devised a system, which was adapted
from one developed by the International Agency for Research on
3-4
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Cancer, for classifying chemicals based on the weight-of-
evidence.2 Three of the carcinogens, benzene, vinyl chloride,
and bis(chloromethyl)ether, are classified as group A or known
human carcinogens. This means that there is sufficient evidence
to support that the chemical causes an increased risk of cancer
in humans. One of these known human carcinogens, benzene, is a
concern to the EPA because long term exposure to this chemical
has been known to cause leukemia in humans. While this is the
most well known effect, benzene exposure is also associated with
aplastic anemia, multiple myeloma, lymphomas, pancytopenia,
chromosomal breakages, and weakening of bone marrow (53 FR 28504;
July 28, 1988) .
Vinyl chloride is another known human carcinogen. Exposure
to vinyl chloride has been known to cause angiosarcoma of the
liver. It has also been associated with other forms of cancer as
well as noncancerous effects. The noncancerous effects include
liver damage and, potentially, chemical mutagenicity and
teratogenicity (40 FR 59533; Dec. 24, 1975).
Most of the carcinogenic chemicals on the list are
classified as group B or probable human carcinogens. This means
that there is limited data on human carcinogenicity, but
sufficient data on animal carcinogenicity to suggest possible
increased human risks as well. Some examples of the twenty-five
probable human carcinogens on the list are 1,3-butadiene, carbon
tetrachloride, acetaldehyde, benzyl chloride, and
tetrachloroethylene. In several rat studies, 1,3-butadiene
caused several tumors on different organs (50 FR,
pp. 41466-41468, Oct. 10, 1985). In addition, at high concen-
trations, it can cause coughing, fatigue, sleepiness, headache,
giddiness, unconsciousness, respiratory paralysis, and death.3
Carbon tetrachloride is known to cause cancer in animals and is
thus suspected to cause cancer in humans. It may also increase
stratospheric ozone depletion, which can cause a rise in the
incidence of skin cancer and possibly various other effects (50
FR 32621; Aug. 13, 1985).
*
Twelve of the HON chemicals are considered to be group C or
possible human carcinogens. A few of these are acrolein,
vinylidene chloride, allyl chloride, and 1,1,2,2-
tetrachloroethane. For these chemicals, there is either
inadequate data or no data on human carcinogenicity, and there is
limited data on animal carcinogenicity. Therefore, while cancer
risk is possible, there is not sufficient evidence to support
that these chemicals will cause increased cancer risks in humans.
The remaining 70 HON chemicals are noncarcinogens. Though
they do not cause cancer, they are considered hazardous because
of the other significant adverse health effects with which they
are associated. Some examples of the noncarcinogens include
3-5
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chloroprene, methyl chloroform, diethyl sulfate, methyl
hydrazine, and triethylamine. One of these chemicals,
chloroprene, causes various effects at different lengths of
exposure. Possible effects from acute exposure range from
vertigo and nausea at very short exposure periods to liver damage
and death after a few hours. Subchronic toxicity effects
observed in human studies include fatigue, pressure and chest
pain, dermatitis and hair loss. Subchronic animal studies at
higher concentrations and for longer periods of time revealed
effects ranging from small increases in underdevelopment and
behavioral effects to lung and liver tissue damage and death (50
FR 39632; Sept. 27, 1985).
Methyl chloroform is another noncarcinogen that is a concern
to the EPA. Acute exposure to this chemical may result in small
changes in perception, while subchronic effects of slight
histological and biochemical alterations have been observed in
mice livers. At high concentrations, liver necrosis has been
reported.
The following table lists the HON chemicals by CAS number
and their classification by their carcinogenic effect, if any.
3-6
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Table 3-1. HON Chemicals by Classification
CAS
Number
71432
542811
75014
107131
75218
50000
75070
79107
62533
98077
100447
75252
106990
56235
67663
111444
542756
77781
123911
122667
106898
106934
107062
118741
75092
75569
127184
79016
107028
107051
75343
87683
67721
78591
79345
79005
75354
60355
75058
98862
79061
90040
92524
Chemical
Name
Benzene
Bis (choromethyl) ether
Vinyl chloride
Acrylonitrile
Ethylene oxide
Forma Idehy de
Acet a Idehyde
Acrylic acid
Aniline
Benzotrichloride
Benzyl chloride
Br omo form
1,3 -Butadiene
Carbon tetrachloride
Chloroform
Dichloroethyl ether
1, 3-Dichloropropene
Dimethyl sulfate
1,4-Dioxane
1,2-Diphenylhydrazine
Epichlorohydrin
Ethylene dibromide
Ethylene dichloride
Hexachlorobenzene
Methylene chloride
Propylene oxide
Tetrachloroethylene
Trichloroethylene
Acrolein
Allyl chloride
Ethylidene dichloride
Hexachlorobutadiene
Hexachloroethane
Isophorone
1,1,2, 2-Tetrachloroethane
1,1, 2-Trichloroethane
Vinylidene chloride
Acetamide
Acetonitrile
Acetophenone
Acrylamide
0-Anisidine
Biphenyl
Classification*
A
A
A
Bl
Bl
Bl
B2
B2
B2
B2
B2
B2
B2
B2
B2
B2
B2
B2
B2
B2
B2
B2
B2
B2
B2
B2
B2
B2
C
C
C
C
C
C
C
C
C
NC
NC
NC
NC
NC
NC
3-7
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HON Chemicals by Classification (Continued)
CAS
Number
105602
75150
79118
532274
108907
126998
1319773
95487
108394
106445
98828
106467
111422
121697
64675
119937
68122
57147
131113
51285
121142
140885
100414
75003
107211
0
123319
108316
67561
74839
74873
71556
78933
60344
108101
624839
80626
1634044
101688
Chemical Classification*
Name
Caprolactum
Carbon disulfide
Chloroacetic acid
2 -Chloroacetophenone
Chlorobenzene
Chloroprene
Cresols/Cresylic acid (isomers and
mixture)
o- Cresols/Cresylic acid (isomers and
mixture)
m-Cresols/cresylic acid (isomers and
mixture)
p-Cresols/Cresylic acid (isomers and
mixture)
Cumene
1 , 4-Dichlorobenzene
Diethanolamine
N , N-Dimethylaniline
Diethyl sulfate
3,3' -Dimethylbenzidine
N , N-Dimethy If ormamide
1 , 1-Dimethylhydrazine
Dimethyl phthalate
2 , 4-Dinitrophenol
2 , 4-Dinitrotoluene
Ethyl acrylate
Ethylbenzene
Ethyl chloride
Ethylene glycol
Glycol ethers
Hydroquinone
Maleic anhydride
Methanol
Methyl bromide
Methyl chloride
Methyl chloroform
Methyl ethyl ketone
Methylhydrazine
Methyl isobutyl ketone
Methyl isocyanate
Methyl methacrylate
Methyl tert-butyl ether
Methylenediphenyl diisocyanate (MDI)
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
3-8
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EON Chemicals by Classification (Continued)
CAS
Number
Chemical
Name
Classification*
101779 4,4-Methylenedianiline
91203 Naphthalene
98953 Nitrobenzene
100027 4-Nitrophenol
79469 4-Nitropropane
108952 Phenol
106503 p-Phenylenediamine
75445 Phosgene
85449 Phthalic anhydride
0 Polycyclic organic matter
57578 beta-propiolactone
123386 Propionaldehyde
78875 Propylene dichloride
106514 Quinone
100425 Styrene
127184 Tetrachloroethylene
108883 Toluene
95807 2,4-Toluenediamine
584849 2,4-Toluene diisocyanate
95534 o-Toluidine
120821 1,2,4-Trichlorobenzene
95954 2,4,5-Trichlorophenol
121448 Triethylamine
540841 2,2,4-Trimethylpentane
108054 Vinyl acetate
1330207 Xylenes
95476 o-Xylene
108383 m-Xylene
106423 p-Xylene
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
NC
*The carcinogens included in this list are chemicals which have
been designated as group A, Bl, B2, or C by IRIS, CRAVE
verification, or a Health Assessment Document. NC stands for
noncarcinogenic.
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3.3 Consequences of Regulation
3.3.1 consequences if EPA*a Emission Reduction Objectives are
Met
3.3.1.1 Allocation of Resources
There will be improved allocation of resources associated
with chemical manufacturing. Specifically, more of the costs of
the harmful effects of chemical production will be internalized
by chemical plants. This, in turn, will affect consumers'
decisions on whether, where, how, and how much chemicals to use.
To the extent these newly-internalized costs are then passed
along to the people who use the chemical products, and to the
extent these people are free to buy as much or as little products
as they wish, they will purchase less (relative to their
purchases of other competing services). If this same process of
internalizing negative externalities occurs throughout the entire
chemical manufacturing industry, an economically optimal
situation is approached. This is the situation when the marginal
cost of resources devoted to chemical production equals the
marginal value of the products to the people who are using the
chemical products. There are many "ifs" in this chain of events.
It is easy to cite situations where the air pollution control
costs will not ripple through as suggested here and affect
decisions by the consumers of chemical products. Nevertheless,
in the aggregate and in the long run, the NESHAPs will move
society toward this economically optimal situation.
3.3.1.2 Emissions Reductions and Air Quality
Under the proposed standard, it is estimated that emissions
of hazardous air pollutants will be reduced by 475,000 megagrams
annually by 1997 and emissions of VOC's (which includes HAP's)
will be reduced by 986,000 megagrams annually by 1997. (For more
information refer to Chapter 8.) Air quality will improve.
(This analysis does not translate emission reductions into
ambient air quality improvements.)
There will be a slight increase in emissions of carbon
monoxide and nitrogen oxides resulting from the on-site
combustion of fossil fuels as part of control device operations.
These estimates are 1,570 megagrams per year of carbon monoxide
and 15,700 megagrams per year of nitrogen oxides.
3.3.1.3 Costs and Benefits
The national annual cost of emission control will increase
by about $182 million by 1997. Expected benefits include reduced
risks for certain adverse health and welfare effects from lower
levels of HAP's and VOC's emissions. (See Chapters 8 and 9.)
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3.3.1.4 Energy Impacts
Increases in energy use were estimated for steam, natural
gas, and electricity. These three types of energy were compared
and totaled on a barrels of energy (BOE) basis. Under the
standard, estimates for total energy use are 260 million kw-hr/yr
(440,000 BOE/yr) of electricity, 6,650 billion Btu/yr (6.31
billion J/yr) of natural gas, and 5,300 billion Btu/yr (5.03
billion J/yr) of steam. This equates to 2.42 million BOE/yr
(15.5 billion J/yr).
3.3.1.5 Solid Waste and Water Quality
Impacts for water pollution and solid waste were 'judged to
be negligible and were not quantified. The required controls do
not generate any solid waste. However, in time, as collection
and control equipment is replaced, the components themselves may
become part of the solid waste stream.
3.3.1.6 Technological Innovation
Section 112 of the CAA regulations serve to disseminate both
pollution control and chemical manufacturing technology, and to
stimulate further technological development. Chemical facility
constructors have the freedom to seek the most economical way to
comply with standards. The NESHAPs may promote the sharing of
technology with other countries, and probably will open new
directions of research in chemical manufacturing technology.
3.3.1.7 State Regulation and New Source Review
State regulatory programs will be strengthened. The NESHAPs
will be delegated to the states for enforcement as part of their
operating permitting programs if they are approved the EPA.
Assuming states do not pull resources from other programs to
handle their enlarged responsibilities, there will be a natural
strengthening of state air pollution control staffs. Recognition
that the NESHAPs are effectively reducing emissions will expedite
the state process of reviewing applications for new chemical
plants and issuing permits for their construction and operation.
There will be less controversy involved. Finally, state
regulations will be uniform, and the disadvantages of the
piecemeal approach to emission regulation will be avoided.
3.3.1.8 Other Federal Programs
The effects of the NESHAPs on other Federal regulatory
programs have not been thoroughly investigated. Under Title I
there are CTGs (control technology guidelines) that specify
levels of control for VOC's in nonattainment areas. Any NESHAP
shall require control in attainment and nonattainment areas.
While the baseline for the HON incorporates present CTGs, the
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effect from new CTGs is not incorporated. There is possible
overlap between these new CTGs and HON for facilities in
nonattainment areas. The extent of this overlap has not been
defined.
3.3.2 Consequences if EPA's Emission Reduction Objectives are
not Met
The most obvious consequence of failure to meet EPA's
emission reduction objectives would be emissions reductions and
benefits that are not as large as EPA is projecting. However,
costs are not likely to be as large either. Whether it is
noncompliance from ignorance or error, or from willful intent, or
simply slow compliance due to owners and/or operators exercising
legal delays, poor compliance can save some facilities money.
Unless states respond by pouring more resources into enforcement,
then poor compliance could bring with it smaller aggregate
nationwide control costs. EPA has not included an allowance for
poor compliance in its estimates of emissions reductions. This
is because poor compliance is unlikely.
If the emission control devices degraded rapidly over time
or in some other way did not function as expected, there could be
a misallocation of resources. This situation is very unlikely
because the NESHAPs are based on demonstrated technology. Other
ways the regulations could fail are conceivable.
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References
1. U.S. Office of Management and Budget. Regulatory Impact
Guidance, Appendix V of Regulatory Program of the United
States Government, April 1, 1991 - - March 31, 1992.
2. U.S. Environmental Protection Agency. The Risk Assessment
Guidelines of 1986, Office of Health and Environmental
Assessment, Washington, D.C. August 1987.
3. Sittig, Marshall. Handbook of Toxic and Hazardous Chemicals
and Carcinogens, Second Edition. New Jersey: Noyes
Publication, 1985. pp. 153-154.
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CHAPTER 4
CONTROL TECHNIQUES
The scope of the HON is broad. The control technology and
techniques involved are extensive. Combustion technology,
product recovery devices, steam strippers, and vapor recovery
tanks are all part of the technology requirements for the HON,
and LDAR will be used to control fugitive emissions. This
chapter does not attempt to be comprehensive in explaining the
technology and techniques used to control air toxics emissions
under the HON; it does attempt to survey what technologies and
techniques are being used and how effective they are.
4.1 Combustion Technology
Combustion control devices, unlike noncombustion control
devices, alter the chemical structure of the VOC. Destruction o"f
the VOC by combustion is complete if all VOC's are converted to
CO2 and water. Incomplete combustion results in some of the VOC
remaining unaltered or being converted to other organic compounds
such as aldehydes or acids. If chlorinated or sulfur-containing
compounds are present in the mixture, the products of complete
combustion include the acid components HC1 or SO2, respectively,
in addition to water and carbon dioxide.
4.1.1 Inc inerators
Incineration is one of the best known methods of industrial
gas waste disposal. It is a method of ultimate disposal, that
is, the constituents to be controlled in the waste gas stream are
converted rather than collected. Provided proper engineering
design is used, incineration can eliminate the desired organic
chemicals in a gas stream safely and cleanly.
The heart of an incinerator is a combustion chamber in which
the VOC-containing waste stream is burned. The temperature
required for combustion is much higher than the temperature of
the inlet gas, so energy is usually supplied to the incinerator
to raise the waste gas temperature. This is accomplished by
adding auxiliary fuel (usually natural gas).
The amount of auxiliary fuel required can be decreased and
energy efficiency increased by providing heat exchange between
the inlet stream and the effluent stream. The effluent stream
containing the products of combustion, along with any inerts that
may have been present in or added to the inlet stream, can be
used to preheat the incoming waste stream, auxiliary air, or both
via a "primary", or recuperative, heat exchanger.
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Auxiliary air may be required for combustion if the
requisite oxygen is not available in the inlet gas stream. Most
industrial gases that contain VOC's are dilute mixtures of
combustible gases in air. With air oxidation reactor and
distillation processes, the waste gas stream is deficient in air.
Important in the design and operation of incinerators is the
concentration of combustible gas in the waste gas stream. Having
a large amount of excess air (i.e., in excess of the required
stoichiometric amounts) may be costly, but any mixture within the
flammability limits, on either the fuel-rich or fuel-lean side of
the stoichiometric mixture is considered a fire hazard as a feed
stream to the incinerator. Therefore, some waste gas streams
are diluted with air before incineration, even though this
requires more fuel in the incinerator.
There are two types of incinerators: thermal and catalytic.
While much of what was discussed above applies to both, there are
important differences in their design and operation.
4.1.1.1 Thermal Incinerators
As is true of other combustion control devices, thermal
incinerators operate on the principle that any VOC heated to a
high enough temperature in the presence of sufficient oxygen will
be oxidized to C0a and water. The theoretical temperature for
thermal oxidation depends on the properties of the VOC to be
combusted. There is great variation in theoretical combustion
temperatures between different VOC's.
There are three requirements that must be met for a thermal
incinerator to be considered efficient: 1) a high enough
combustion chamber to enable oxidation of the organic compounds
to proceed rapidly to completion; 2) enough turbulence for good
mixing of the hot combustion products from the burner, the
combustion air, and the organic compounds; and 3) sufficient
residence time for oxidation to reach completion.1
A typical thermal incinerator is a refractory-lined chamber
containing a burner or set of burners at one end. Entering gases
are mixed with the process vent streams and the inlet air in a
premixing chamber. Then the stream of gases passes into the main
combustion chamber. This chamber is designed to allow the
mixture enough time at the required combustion temperature for
complete oxidation (usually from 0.3 to 1.0 second). A heat
recovery section is often added to increase energy efficiency.2
Oftentimes inlet combustion air is preheated; if this occurs,
insurance regulations require the VOC concentration must be
maintained below 25 percent of the lower explosive limit (LEL) to
minimize the possibility of explosions. Concentrations from 25
to 50 percent are permitted given continuous monitoring by LEL
monitors.
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monitors.
The required level of VOC control of the waste gas that must
be achieved within the time it spends in the thermal combustion
chamber dictates the reactor temperature. The shorter the
residence time, the higher the reactor temperature must be. Once
the unit is designed and built, the residence time is not easily
changed, so that the required reaction temperature becomes a
function of the particular gaseous species and the desired level
of control. These required combustion reaction temperatures
cannot be calculated a priori, although incinerator vendors can
provide guidelines based on their extensive experience.
Predictions of these temperatures are further complicated by the
fact that most process vent streams are mixtures of compounds.3
Good mixing is also important, particularly in determining
destruction efficiency. Even though it cannot be measured,
mixing is a factor of equal or even greater importance than other
parameters such as temperature. The most feasible and efficient
way to improve the mixing in an incinerator is to adjust it after
start-up.
Other parameters affecting thermal incinerator performance
are the heat content of the vent stream, the water content of the
stream, and the amount of excess combustion air (the amount of
air above the stoichiometric air needed for combustion).
Combustion of a vent stream with a heat content less than 1.9
MJ/m3 (52 BTU/scf) usually requires burning supplemental fuel to
maintain the desired combustion temperature.
The maximum achievable VOC destruction efficiency decreases
with decreasing inlet VOC concentration because combustion is
slower at lower inlet concentrations. Therefore, a VOC weight
percentage reduction based on the mass rate of VOC exiting the
control device versus the mass rate of VOC entering the device is
appropriate for vent streams with VOC concentrations above
approximately 2,000 ppmv (which corresponds to 1,000 ppmv VOC in
the incinerator inlet stream since air dilution is typically
1:1) .5
4.1.1.1.1 Applicability
Thermal incinerators are technically feasible control
devices for most vent streams. They are not recommended,
however, for vent streams with potentially excessive fluctuations
in flow rate (process upsets, for example), and for vent streams
containing halogens. The former case would require a flare (see
Section 4.2) and the latter case would require additional
equipment such as acid gas scrubbers (see Section 4.1.3).
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4.1.1.1.2 Types of Thermal Incinerators
The very simplest type of thermal incinerator is the direct
flame incinerator, which is made up of only the combustion
chamber. Energy recovery devices such as a waste gas preheater
and a heat exchanger are not included with this type of
incinerator.
A second type of thermal incinerator is the recuperative
model. Recuperative incinerators use the exit (product) gas to
preheat the incoming feed stream, combustion air, or both via a
heat exchanger. These heat exchangers can recover up to 70
percent of the energy (or enthalpy) in the product gas. The two
types of heat exchangers commonly used for this purpose and many
others are plate-to-plate and shell-and-tube. Plate-to-plate
exchangers can be built to achieve a variety of efficiencies and
offer high efficiency energy recovery at lower cost than shell-
and-tube designs. But when gas temperatures exceed 520 degrees
Celsius, shell-and-tube exchangers usually have lower purchase
costs than plate-to-plate designs. Moreover, shell-and-tube
exchangers offer better long-term structural reliability than
plate-to-plate units.6
Occasionally it is desired to recover some of the energy
added by auxiliary fuel in the traditional thermal units (but not
recovered in preheating the feed stream). Additional heat
exchangers can be added to provide process heat in the form of
low pressure steam or hot water for on-site application. The
need for this higher level of energy recovery will be dependent
upon the plant site. The additional heat exchanger is often
provided by the incineration unit vendor.
A third type of thermal incinerator is the regenerative
incinerator. This type of incinerator use direct contact heat
exchangers constructed of a ceramic material that can tolerate
the high temperatures needed to achieve ignition of the waste
stream. The concept behind this incinerator type is that the
traditional approach to energy recovery in thermal units still
requires a significant amount of auxiliary fuel to be burned in
the combustion chamber when waste gas heating values are too low
to sustain the desired reaction temperature at the moderate
preheat temperature employed. Under these conditions, additional
fuel savings can be realized in units with more complete transfer
of exit stream energy. Hence the regenerative incinerator.
In this type of incinerator, the inlet gas first passes
through a hot ceramic bed thereby heating the steam to its
ignition temperature. The hot gases then react and release
energy in the combustion chamber and while passing through
another ceramic bed, thereby heating it to tn% combustion chamber
outlet temperature. The process flows are then switched, now
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feeding the inlet stream to the hot bed. This cyclic process
affords very high energy recovery (up to 95 percent).7
4.1.1.2 Catalytic incinerators
A catalyst promotes oxidation of some VOC's at a lower
temperature than that required for thermal incineration. The
catalyst increases the rate of the chemical reaction without
becoming permanently altered itself. Catalysts typically used
for VOC incineration include platinum and palladium. These
catalysts work well for most organic streams, but are not
tolerant of compounds containing halogens such as chlorine and
sulfur. Among the catalysts that have been developed that are
effective in the presence of these halogens are chromia/alumina,
cobalt oxide, and copper oxide/manganese oxide.* Inert
substrates are coated with thin layers of these materials to
provide maximum surface area for contact with the VOC in the vent
stream. Compounds containing elements such as lead, arsenic, and
phosphorus should, in general, be considered poisons for most
oxidation catalysts. In addition, particulate matter, including
dissolved minerals in aerosols, can rapidly blind (deactivate)
the pores of catalysts and deactivate them over time. Because
essentially all the active surface of the catalyst is contained
in relatively small pores, the particulate matter need not be
large to blind the catalyst.
For optimal operation, the volumetric gas flow rate and the
concentration of combustibles (in this case, VOC's) should be
constant. Large fluctuations in the flow rate will cause the
conversion of the VOC's to fluctuate also. Changes in the
concentration or type of organic compounds in the gas stream can
also affect the overall conversion of the VOC contaminants. Most
changes in flow rate, organic concentration, and chemical
composition are generally the result of upsets in the
manufacturing process generating the waste gas stream.
4.1.1.2.1 Applicability
Applicability of catalytic incinerators for control of VOC's
is limited by the catalyst deactivation sensitivity to the
characteristics of the inlet gas stream. The vent stream to be
combusted should not contain materials that can poison the
catalyst or deposit on and block the reactive sites on the
catalyst surface. In addition, catalytic incinerators are unable
to handle high inlet concentrations of VOC or very high flow
rates. Catalytic incineration is generally useful for
concentrations of 50 to 10,000 ppmv, if the total concentration
is less than 25 percent of the LEL and for flow rates of less
than 2,820 m3/roin (ioo,000 scfm).9 Catalytic units are also
typically used for vent streams with stable flow rates and
concentrations (refer to Section 4.1.1.2).
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4.1.1.2.2 Types of Catalytic Incinerators
One type of catalytic incinerator is fixed-bed. Fixed-bed
incinerators themselves come in two varieties, depending on the
type of catalyst used: the monolith and packed-bed. The
monolith catalyst is the most widespread method of contacting the
VOC-containing stream with the catalyst. In this scheme the
catalyst is a porous solid block containing parallel/ non-
intersecting channels aligned in the direction of the gas flow.
Monolith catalysts offer the advantages of minimal attrition due
to thermal expansion/contraction during startup/shutdown and low
overall pressure drop.
A second contacting scheme is a simple packed-bed in which
catalyst particles are supported either in a tube or in shallow
trays through which the gases pass. The tray type arrangement is
the more common packed-bed scheme due to the use of palletized
catalysts. This tray arrangement is preferred because pelletized
catalysts can handle inlet streams containing contaminants such
as phosphorus or silicon.10 The tube arrangement is not used
widely due to its inherently high pressure drop compared to a
monolith, and the breaking of catalyst particles due to thermal
expansion when the confined catalyst bed is heated/cooled during
startup/shutdown.
A third contacting pattern between the gas and catalyst is a
fluid-bed. Fluid-beds have the advantage of very high mass
transfer rates, although the overall pressure drop is somewhat
higher than for a monolith. Fluid-beds also possess the
advantage of high bed-side heat transfer compared to a normal gas
heat transfer coefficient. This higher heat transfer rate to
heat transfer tubes immersed in the bed allows higher heat
release rates per unit volume of gas processed and therefore may
allow waste gases with higher heating values to be processed
without exceeding maximum permissible temperatures in the
catalyst bed. The catalyst temperatures depend on the rate of
reaction occurring at the catalyst surface and the rate of heat
exchange between the catalyst and imbedded heat transfer
surfaces.
In general, fluid-bed systems are more tolerant of
particulates in the gas stream than fixed-bed or packed-bed
systems. This results from the constant abrasion of the
fluidized catalyst pellets, which helps remove these particulates
from the exterior of the catalysts in a continuous manner.
4.1.2 Flares
Flaring is an open combustion process in which the oxygen
necessary for combustion is provided by the air around the flame.
The organic compounds to be combusted are piped to a remote,
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usually elevated, location and burned in an open flame in the
open air using a specially designed burner tip, auxiliary fuel,
and sometimes steam or air to promote mixing for nearly complete
(98 percent minimum) destruction of combustibles. Good
combustion in a flare is governed by flame temperature, residence
time of organic species in the combustion zone, turbulent mixing
of the organic species to complete the oxidation reaction, and
the amount of oxygen available for free radical formation.
Combustion is complete if all combustibles (i.e., VOC's) are
converted to CO2 and water, while incomplete combustion results
in some of the VOC's being unaltered or converted to other
organic compounds such as aldehydes or acids.
Flares are generally categorized in two ways: 1) by the
height of the flare tip (i.e., ground-level or elevated), and 2)
by the method of enhancing mixing at the flare tip (i.e., steam-
assisted, air-assisted, pressure-assisted, or unassisted).
Elevating the flare can prevent potentially dangerous conditions
at ground level where the open flame is located near a process
unit. Further, the products of combustion can be dispersed above
working areas to reduce the effects of noise, heat radiation,
smoke, and objectionable odors.
In most flares, combustion occurs by means of a diffusion
flame. A diffusion flame is one in which air diffuses across the
boundary of the fuel/combustion product stream toward the center
of the fuel flow, forming the envelope of a combustible gas
mixture around a core of fuel gas. This mixture, on ignition,
establishes a stable flame zone around the gas core above the
burner tip. This inner gas core is heated by diffusion of hot
combustion products from the flame zone.
*
Cracking can occur with the formation of small hot particles
of carbon that give the flame its characteristic luminosity.11 If
there is an oxygen deficiency and if the carbon particles are
cooled to below their ignition temperature, smoking occurs. In
large diffusion flames, combustion product vortices can form
around burning portions of the gas and shut off the supply of
oxygen. This localized instability causes flame flickering,
which can be accompanied by soot formation.
4.1.2.1 Applicability
Flares can be dedicated to almost any VOC stream, and can
handle fluctuations in VOC concentration, flow rate, heating
value, and inerts content. Flaring is appropriate for
continuous, batch, and variable flow vent stream applications.
Some streams, such as those containing halogenated or
sulfur-containing compounds, are usually not flared because they
corrode the flare tip or cause formation of secondary pollutants
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for complete combustion, have lower combustion temperatures that
minimize cracking reactions, and are more resistant to cracking.
4.1.2.3.4 Pressure-Assisted Flares
This type of flare use vent stream pressure to promote
mixing at the burner tip. If sufficient vent stream pressure is
available, these flares can be applied to streams previously
requiring steam or air assist for smokeless operation. Pressure-
assisted flares generally have the burner arrangement at ground
level, and consequently, must be located in a remote area of the
plant where there is plenty of space available. They have
multiple burner heads that are staged to operate based on the
quantity of gas being released. The size, design, number, and
group arrangement of the burner heads depend on the vent gas
characteristics.
4.1.2.3.5 Enclosed Ground Flares
The burner heads of an enclosed flare are inside a shell
that is insulated. This shell reduces noise, luminosity, and
heat radiation and provides wind protection. A high nozzle
pressure drop is usually adequate to provide the mixing necessary
for smokeless operation and air or steam assist is not required.
In this context, enclosed flares can be considered a special
class of pressure-assisted or non-assisted flares. Enclosed
flares are always at ground level.
Enclosed flares generally have less capacity than open
flares and are used to combust continuous, constant flow vent
streams/ although reliable and efficient operation can be
attained over a wide range of design capacity. Stable combustion
can be obtained with lower heat content vent gases than is
possible with open flare designs, probably due to their isolation
from wind effects.17
4.1.3 Boilers and Process Heaters
4.1.3.1 Descriptiqn of Boilers
Industrial boilers are combustion units that boil water to
produce high and low pressure steam. Industrial boilers can also
combust various vent streams containing VOC's, including vent
streams from distillation operations, reactor processes, and
other general operations.
The majority of industrial boilers used in the chemical
industry are of watertube design, and over half of these boilers
use natural gas as a fuel.18 In a watertube boiler, hot
combustion gases contact the outside of heat transfer tubes which
contain hot water and steam. These tubes are interconnected by a
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set of drums that collect and store the heated water and steam.
Energy transfer from the hot flue gases to the water in the
furnace watertube and drum system can be better than 85 percent
efficient.1* Additional energy can be recovered from the flue gas
by preheating combustion air in an air preheater or by preheating
incoming boiler feed water in an economizer unit.
When firing natural gas, forced- or natural-draft burners
throughly mix the incoming fuel and combustion air. A VOC-
containing vent stream can be added to this mixture or it can be
fed into the boiler through a seperate burner. In general,
burner design depends on the characteristics of the fuel— either
the combined VOC-containing vent stream and fuel or the vent
stream alone (when a separate burner is used).
4.1.3.2 Description of Process Heaters
A process heater is similar to an industrial boiler in that
heat liberated by the combustion of fuels is transferred by
radiation and convection to fluids contained in tubular coils.
It is different from an industrial boiler in that process heaters
raise the temperature of process streams instead of producing
high temperature steam. Process heaters are used in many
chemical manufacturing operations to drive endothermic reactions.
They are also used as feed preheaters and as reboilers for some
distillation operations. The fuels used in process heaters
include natural gas, refinery offgases, and various grades of
fuel oil.
A typical process heater design consists of the burner(s),
the firebox, and a row of tubular coils containing the process
fluid. Most heaters also contain a convective section in which
heat is recovered from hot combustion gases by convective heat
transfer to the process fluid.
4.1.3.3 Efficiency of Boilers and Process Heaters
Average furnace temperature and residence time determine the
combustion efficiency of boilers and process heaters, just as
they do for incinerators. When a vent gas is injected as a fuel
into the flame zone of a boiler or process heater, the required
residence time is reduced because of the relatively high
temperature and turbulence of the flame zone.
Residence time and temperature profiles in boilers and
process heaters are determined by factors such as overall
configuration, fuel type, heat input, and excess air level.20 A
mathematical model developed to estimate furnace residence time
and temperature profiles for a variety of industrial boilers
predicts mean furnace residence times ranging 0.25 to 0.83 second
for natural gas-fired watertube boilers that range in size from
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4.4 to 44 MW (15 to 150 x 106 Btu/hr).21 Boilers with a 44-MW
capacity or greater generally have residence times and operating
temperatures that would ensure a 98 percent VOC destruction
efficiency. The required temperatures for these size boilers are
at least 1,200 degrees Celsius.
Firebox temperatures for process heaters can show wide
variations depending on the application. Firebox temperatures
can range from 400 degrees Celsius for preheaters and reboilers
to 1,260 degrees Celsius for pyrolysis furnaces. Tests conducted
by EPA on process heaters using a mixture of benzene offgas and
natural gas showed greater than 98 percent destruction efficiency
for C, to C6 hydrocarbons.22
4.1.3.4 Applicability of Boilers and Process Heaters
Both of these devices are used throughout the chemical
industry to provide steam and heat input essential to chemical
processing. Most of these devices possess sufficient size to
provide the necesary temperature and residence time for VOC
destruction. Furthermore, boilers and process heaters have
proved effective in destroying compounds that are difficult to
combust, such as PCBs (polychlorinated biphenyls). Boilers and
process heaters are thus effective in reducing VOC emissions from
any vent streams that are certain not to reduce the performance
or reliability of the boiler or process heater.
Ducting some vent streams to a boiler or process heater can
present potential safety and operating problems. The varying
flow rate and organic content of some vent streams can lead to
explosive mixtures or flame instability within the furnace. In
addition, vent streams with halogenated or sulfur-containing
compounds are usually not combusted in boilers or process heaters
due to the possibility of corrosion.
Boilers and process heaters are most applicable where the
potential exists for heat recovery from the combustion of the
vent stream. Vent streams with a high enough VOC concentration
and high flow rate can provide enough equivalent heat value to
act as a substitute for fuel that would otherwise be needed.
Because boilers and process heaters cannot tolerate wide
fluctuations or interruptions in the fuel supply, they are not
widely used to reduce VOC emissions from batch operations or
other noncontinuous vent streams.
4.2 Product Recovery Devices
4.2.1 Absorbers
In absorption, a soluble vapor is absorbed from its mixture
with an inert gas by means of a liquid in which the solute gas is
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more or l&ss soluble. For any given solvent, solute, and
operating conditions, there exists an equilibrium ratio of solute
concentration in the gas mixture to solute concentration in the
solvent. The driving force for mass transfer at a given point in
an operating absorber is the difference between the concentration
of solute in the gas and the equilibrium concentration of solute
in the liquid.
Devices based on absorption principles include spray towers,
venturi and wet impingement scrubbers, acid gas scrubbers, packed
columns, and plate columns. Spray towers have the least
effective mass transfer capability due to their high atomization
pressure requirement, and are generally restricted to particulate
matter removal and control of high-solubility gases such as SO2
and NH3 (ammonia).23 Venturi scrubbers have a high degree of
gas/liquid mixing and provide high particulate matter removal
efficiency. They also require high pressure drops (i.e. high
energy requirements) and have relatively short contact times.
Their use is also restricted to high-solubility gases. Acid gas
scrubbers are used with thermal incinerators to remove corrosive
combustion products. Acid gas is formed upon the contact of
halogenated or sulfur-containing VOCs with intense heat during
incineration. This gas is quenched to lower its temperature and
is then scrubbed in an absorber. In most cases, the type of
absorber used is packed or plate columns, the two most commonly
used absorbers for VOC control.
Packed towers are vertical columns containing inert packing,
manufactured from materials such as porcelain, metal, or plastic,
that provides the surface area for contact between the liquid and
gas phases in the absorber. Packed towers are used mainly for
corrosive materials and liquids, with tendencies to foam or plug.
They are less expensive than plate columns for small-scale or
pilot plant operations where the column diameter is less than
0.6 m. They are also suitable where the use of plate columns
would result in excessive pressure drops.
Plate columns contain a series of trays on which contact
between the gas and liquid phases in a stepwise fashion. The
liquid phase flows down tray to tray as the gas phase moves up
through openings in the tray (usually perforations or bubble
caps), passing through the liquid on the way.
The major design parameters for absorbing any substance are
column diameter and height, system pressure drop, and required
liquid flow rate. Deriving these parameters is accomplished by
considering the solubility, viscosity, density, and concentration
of the VOC in the inlet vent stream (all of which depend on
column temperature); the total surface area provided by the
packing material; and the mass flow rate of the gases to be
treated.
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4.2.1.1 Absorber Efficiency
Control efficiencies for absorbers can vary widely depending
on the solvent selected, design parameters, and operating
practices. Solvents are chosen for high solubility for the
specific VOC and include liquids such as water, mineral oils,
kerosenes, nonvolatile hydrocarbon oils, and aqueous solutions of
oxidizing agents, sodium carbonate, and sodium carbonate.24 An
increase in absorber size (i.e., contact surface area) or a
decrease in the operating temperature can increase the VOC
removal efficiency of the system for a given solvent and solute.
It is sometimes possible to increase VOC removal efficiency by
changing the solvent.
4.2.1.2 Applicability of Absorbers
The primary determinant of absorption applicability for
controlling VOC emissions is the availability of a suitable
solvent.25 Water is a suitable solvent for absorption of organic
chemicals with relatively high water solubilities (e.g., most
alcohols, organic acids, aldehydes, glycols). For organic
compounds with low water solubilities, other solvents (usually
organic liquids with low vapor pressures) are used.
Other important factors influencing absorption applicability
include absorptive capacity and strippability of VOC in the
solvent. Absorptive capacity is a measure of the solubility of
VOC in the solvent. The solubility limits the total quantity of
VOC that could be absorbed in the system, while strippability
describes the ease with which the VOC can be removed from the
solvent. If strippability is low, then absorption is less viable
as a VOC control technique.26
%
The concentration of VOC in the inlet vent stream also
determines the applicability of absorption. Absorption is
usually considered only when the VOC concentration is above 200
to 300 ppm.27 Below these gas-phase concentrations, the rate of
mass transfer of VOC to solvent is decreased enough to make
reasonable designs infeasible.
4.2.2 Steam Stripping
Steam stripping can be used as initial treatment of a
process wastewater stream to reduce the voc loading of that steam
before it is sent to the facility-wide wastewater treatment
system. There are several components in a steam stripping
system: a feed tank, heat exchanger, steam stripping column,
condenser, overhead receiver, and a destruction device (if
necessary).
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4.2.2.1 Description
Steam stripping involves the fractional distillation of
wastewater to remove VOC's. The basic operating principle of
steam stripping is the direct transfer of heat through contact of
steam with wastewater. This heat transfer vaporizes the more
volatile organic compounds. The overhead vapor contains water
and organic compounds, and it is condensed and separated to
recover the organic fraction. Recovered organic compounds are
either recycled for reuse in the process or incinerated in an on-
site combustion device for heat recovery.
Steam stripper systems may be operated in batch or
continuous mode. Batch steam strippers are more prevalent when
the wastewater feed is generated by batch processes, when feed
characteristics are highly variable, or when small volumes of
wastewater are generated. They may also be used if wastewater
contains relatively high concentrations of solids, resins, or
tars. In batch stripping, wastewater is charged to the receiver,
or pot, and brought to the boiling temperature of the mixture.
Solids and other residues remaining in the bottom of the pot
(hence the term "bottoms") at the completion of the batch are
nonvolatile, heavy compounds that are removed for disposal. By
varying the heat input and fraction of the initial charge boiled
overhead, a batch stripper can be used to treat wastewater
mixtures with widely varying characteristics.28
In contrast to batch strippers, continuous steam strippers
are designed to treat wastewater streams with relatively
consistent characteristics. Continuous strippers can have
several stages and achieve greater efficiencies of VOC removal
than batch strippers. Other advantages offered by continuous
strippers include more consistent effluent quality, more
automated operation, and lower annual operating costs.
Typically, wastewater steams continuously discharged from
process equipment are usually consistent in composition. A
continuous steam stripper system would thus be indicated for
treating the wastewater. However, batch wastewater streams can
also be controlled by continuous steam strippers by incorporating
a feed tank with adequate residence time to provide a consistent
outlet composition.
4.2.2.2 Collecting, Conditioning/ and Recovery
The controlled sewer system or hard piping from the point of
wastewater generation to the feed tank controls emissions before
steam stripping. The feed tank collects and conditions the
wastewater fed to the steam stripper. If the feed tank is
adequately designed, a continuous steam stripper can treat
wastewater generated by some batch processes. In these cases,
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the feed tank serves as a buffer between the batch process and
the continuous steam stripper. During periods of no wastewater
flow from the batch process, wastewater stored in the feed tank
is fed to the stripper at a relatively constant rate.
Often present in the feed tank are aqueous and organic
phases. The feed tank provides the retention time necessary for
these phases to separate. The organic phase is recycled to the
process for recovery of organic compounds or disposed by
incineration. The water phase is fed to the stripper to remove
the soluble organic compounds. Solids are also separated in the
stripper feed tank; the separation efficiency depends on the
density of the solids dissolved in the process wastewater. The
more dense solids, which settle to the bottom of the tank, are
removed periodically from the feed tank and are usually
landfilled or landfarmed.
After this conditioning of the wastewater, it is pumped
through the feed/bottoms heat exchanger where it is preheated and
then pumped into the steam stripping column. Steam is sparged
into the stripper at the bottom of the column, and the wastewater
feed enters at the top. The wastewater flowing down the column
contacts the flowing countercurrently up the column. Both latent
and sensible heat is transferred from the steam to the organic
compounds in the wastewater, vaporizing them into the vapor
stream. These constituents flow out the top of the column with
any uncondensed steam.
The wastewater effluent leaving the bottom of the stripper
is pumped through the feed/bottoms heat exchanger which heats the
feed stream and cools the bottoms before discharge. After
leaving the exchanger, the bottoms stream is usually either
routed to an on-site wastewater treatment plant and discharged to
an NPDES-permitted outfall, or sent to a publicly owned treatment
works (POTW).
Recovery of both VOC's and water vapors from the gaseous
overheads stream from the steam stripper is usually accomplished
with a condenser. The condensed stream is fed to an overhead
receiver, and the recovered VOC's are usually either pumped to
storage and recycled to the process unit or combusted for their
fuel value in an incinerator, boiler, or process heater (all
discussed earlier in this chapter). If an aqueous phase is
generated, it is returned to the feed tank and recycled through
the steam stripper system.
4.2.2.3 Efficiency of Control
The degree of contact between the steam and the wastewater
is the primary variable affecting the ability of a steam stripper
to remove VOC's. In turn, this variable is affected by five
factors: 1) column dimensions (height and diameter); 2) the
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contacting media (packing or trays); and 3) operating parameters
such as the steam-to-feed ratio, column temperature, and
wastewater pH.
Control efficiency increases as column height increases
since there is greater opportunity for contact between the steam
and the wastewater. The column height is determined by the
number of theoretical stages required to achieve the desired
removal efficiency. The number of theoretical stages is a
function of the equilibrium coefficient of the pollutants and the
efficiency of mass transfer in the column, and this number can be
computed by either the McCabe-Thiele graphical method or the
Kremser analytical method.
The column diameter determines the required cross-sectional
area for liquid and vapor flow through the column. The smaller
the cross-sectional area, the higher the superficial gas
velocity, which increase turbulence and mixing resulting in high
column efficiencies. However, the column cross-sectional area
must be sufficient to prevent flooding from excessive liquid
loading or liquid entrainment. This area also affects the liquid
retention time, with higher retention times resulting in higher
efficiencies. These factors have to be weighed in selecting the
column diameter and the design velocities.
The contacting media in the column also play an important
role in determining the mass transfer efficiency. Packing or
trays are used to provide contact between liquid and vapor
phases. Packing provides for continuous contact while trays
provide staged contact. Trays are usually more effective for
wastewater containing dispersed solids because of the plugging
and cleaning problems encountered with packing. Tray towers can
also operate over a wider range of liquid flow rates than packed
towers. Packed towers, on the other hand, are often more cost
effective to install and operate when treating highly corrosive
wastewater since corrosion resistant ceramic packing can be used.
Also, the pressure drop through packed towers may be less than
through tray towers.29
The steam-to-feed ratio required for high removal
efficiencies is affected by the wastewater temperature as it
enters the column. If the feed temperature is lower than the
operating temperature at the top of the column, part of the steam
is required to heat the feed. With good column design,
sufficient steam flow is provided to heat the feed as well as
volatilize the organic constituents. Any steam in excess of this
flow rate helps carry VOC's out of the top of the column with the
overheads stream. Also, increasing the steam-to-feed ratio will
increase the ratio of the vapor to liquid flow through the
column, which increases the stripping of VOC's into the vapor
phase.
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Two other influences on VOC removal are the column
temperature and wastewater pH. Temperature influences the
solubility and equilibrium coefficients of the organic compounds.
pH has an effect on the vapor liquid equilibrium characteristics
of VOC's. To ensure steam stripping is successful, columns are
operated at pressures slightly exceeding atmospheric, and
operating temperatures are usually slightly higher than the
normal boiling point of water. Wastewater pH is controlled by
adding caustic to the feed.30
4.2.2.4 Applicability
Steam stripping is most applicable to treating wastewaters
with organic compounds that are highly volatile and have a low
solubility in water. The VOC's that have low volatility tend not
to volatilize and thus are not easily stripped out of the
wastewater by the steam. Similarly, VOC's that are very soluble
in water tend to remain in the wastewater and are not easily
stripped by steam. Oil, grease, solids content and pH of
wastewater also affect applicability. High oil, grease, and
solids levels can cause operating problems for steam strippers,
and extremes in pH may prove to be corrosive to equipment.
Design or wastewater preconditioning techniques can be used to
mitigate these problems.
4.2.3 Carbon Adsorbers
Adsorption is a mass-transfer operation involving
interaction between gas- or liquid-phase components and solid-
phase components. In this operation, certain components of a
gas- or liquid-phase (or adsorbate) are transferred to the
surface of a solid adsorbent. The transfer is accomplished by
physical or chemical adsorption mechanisms. Physical adsorption
takes place when intermolecular (van der Waals) forces attract
and hold the gas molecules to the solid surface. Chemisorption
occurs when a chemical bond forms between the gaseous- and solid-
phase molecules. A physically adsorbed molecule can be removed
readily from the adsorbent (under suitable temperature and
pressure conditions); the removal of a chemisorbed component is
much more difficult.
Most industrial adsorption systems use activated carbon as
the adsorbent. Activated carbon effectively captures certain
organic vapors by physical adsorption. The vapors can then be
released for recovery by regenerating the adsorption bed with
steam or nitrogen. Oxygenated adsorbents such as silica gels or
diatomaceous earth exhibit a greater selectivity for capturing
water vapor than organic gases compared to activated carbon.
They thus are of little use for high-moisture vent streams
characteristic of some VOC-containing vent streams.31
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Among the factors influencing the design of a carbon
adsorption system are the chemical characteristics of the VOC
being recovered, the physical properties of the inlet stream
(temperature, pressure, and volumetric flow rate), and the
physical properties of the adsorbent. The mass of VOC that
adheres to the adsorbent surface is directly proportional to the
difference in VOC concentration between the gas phase and the
solid surface. In addition, the quantity of VOC adsorbed depends
on the adsorbent bed volume, the surface area of adsorbent
available to capture VOC, and the rate of diffusion of VOC
through the gas film at the gas- and solid-phase interface (the
mass transfer coefficient). It should be noted that physical
adsorption is an exothermic operation that is most efficient
within a narrow range of temperature and pressure.32
4.2.3.1 Types of Adsorbers
There are five types of adsorption equipment used in gas
collection: 1) fixed regenerable beds;
2) disposable/rechargeable cannisters; 3) traveling bed
adsorbers; 4) fluid bed adsorbers; and 5) chromatographic
baghouses. The fixed-bed type is the one most commonly used for
control of VOC's,33 so this section addresses this type only.
Fixed-bed units can be sized for controlling continuous,
VOC-containing streams over a wide range of flow rates, ranging
up to several thousand cubic meters per minute (100,000 scfm).
VOC concentrations in streams that can be treated by fixed-bed
units can range from several parts per billion by volume (ppbv)
to 10,000 ppmv.
Fixed-bed adsorbers can be operated in two modes:
intermittent or continuous. In intermittent mode, the adsorber
removes VOC's for a specified time (called "the adsorption
time"), which corresponds to the time during which the controlled
source is emitting VOC's. In continuous mode, a regenerated
carbon bed is always available for adsorption, so that the
controlled source can operate continuously without shutting down.
While continuous operation allows for more adsorption over the
same period of time because it does not need to be shut down,
more carbon must be provided. This is necessary since a bed for
desorbing must be provided along with the adsorbing bed in order
to recover the captured VOC from the carbon.34
4.2.3.2 Control Efficiency
Well designed and operated carbon adsorption systems can
achieve control efficiencies of 95 to 99 percent for a variety of
solvents including ketones such as methyl ethyl ketone and
cyclohexanone. The VOC control efficiency depends on factors
such as inlet vent stream characteristics (temperature, pressure,
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and velocity), the physical properties of. the compounds present
in the vent stream, the physical properties of the adsorbent, and
the condition of the regenerated carbon bed.
The adsorption capacity of the carbon and the resulting
outlet concentration are dependent upon the temperature of the
inlet vent stream. High vent stream temperatures increase the
kinetic energy of the gas molecules, causing them to overcome van
der Waals forces and release from the surface of the carbon. At
vent stream temperatures above 38 degrees Celsius, both
adsorption capacity and outlet concentration may be adversely
affected.35
Increasing vent stream pressure improves VOC removal
efficiency. Increased stream pressure results in higher VOC
concentrations in the vapor phase and increased driving force for
mass transfer to the carbon surface. Decreased stream pressure,
on the other hand, is often used to regenerate carbon beds.
Reduced pressure in the carbon bed effectively lowers the
concentration of VOCs in the vapor phase, desorbing the VOCs from
the carbon surface to the vapor phase.
Vent stream velocity entering the carbon bed must be quite
low to allow time for diffusion and adsorption. Typical inlet
vent stream velocities range from 15 to 30 meters per minute
(50 to 100 feet per minute). If inlet VOC concentrations are low,
as is expected in the SOCMI, the bed area required for the volume
needed usually permits a velocity at the high end of this range.36
The required depth of the bed for a given compound is
directly proportional to the carbon granule size and porosity and
to the inlet vent stream velocity. For a given carbon type, bed
depth must increase as the vent stream velocity increases.
Generally, carbon adsorber bed depths range from 0.40 to 0.95
meter (1.5 to 3.0 feet).
The condition of the regenerated carbon bed will change with
use. After repeated regeneration, the carbon bed loses activity,
resulting in reduced VOC removal efficiency.
4.2.3.3 Applicability
Carbon adsorption cannot be used universally for
distillation or process vent streams. It is not recommended
under"the following conditions, common with many VOC-containing
vent streams: 1) high VOC concentrations, 2) very high or low
molecular weight compounds, 3) mixtures of high and low boiling
point VOC's, and 4) high moisture content.
Absorbing vent streams with VOC concentrations above 10,000
ppmv may result in excessive temperature rise in the carbon bed
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due to the accumulated heat of adsorption resulting from the VOC
loading. If flammable vapors are present, insurance company
requirements may limit inlet concentrations to less than 25
percent of the LEL.37
The molecular weight of the compounds to be adsorbed should
be in the range of 45 to 130 gm/gm-mole for effective adsorption.
High molecular weight compounds that are characterized by low
volatility are strongly adsorbed on carbon. The affinity of
carbon for these compounds makes it difficult to remove them
during regeneration of the carbon bed. Conversely, highly
volative materials (i.e, molecular weight less than about 45 gm)
do not adsorb readily on carbon, thus adsorption is not typically
used for controlling streams containing such compounds.
Adsorption systems can be very effective with homogeneous
vent streams but much less so with streams containing a mixture
of light and heavy hydrocarbons. The lighter organic compounds
tend to be displaced by the heavier compounds, greatly reducing
systeA efficiency.
Humidity is not a factor in adsorption at adsorbate
concentrations above 1,000 ppmv. Below this level, however,
water vapor competes with VOC's in the vent stream for adsorption
sites on the carbon surface. In these cases, vent stream
humidity levels exceeding 50 percent (relative humidity) are not
desirable.38
4.2.4 Condensers
Condensation is a separation technique in which one or more
volatile components of a vapor mixture are separated from the
remaining vapors through saturation followed by a phase change.
The phase change from gas to liquid can be achieved in two ways:
1) by increasing the system pressure at a given temperature or 2)
by lowering the temperature at a constant pressure. The latter
method is the more common to achieve the specified phase change,
and it alone is addressed here.
4.2.4.1 Description
The basic equipment includes a condenser, refrigeration
unit(s), and auxiliary equipment such as a precooler,
recovery/storage tank, pump/blower, and piping.
The two most commonly used condenser types are surface
condensers and direct contact condensers.39 In surface
condensers, the coolant fluid does not contact the vent stream;
heat transfer occurs through the tubes or plates in the
condenser. As the vapor condenses, a film forms on the cooled
surface and drains away to a collection tank for storage, reuse,
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or disposal. Because the coolant from surface condensers does
not contact the vapor stream, it is not contaminated and can be
recycled in a closed loop. Surface condensers also allow for
direct recovery of VOC's from the gas stream.
Most refrigerated surface condensers are the shell-and-tube
type, which circulates the coolant fluid on the tube side. The
VOC's condense on the outside of the tube (the shell side).
Plate-type heat exchangers are also used as surface condensers in
refrigerated systems. Plate condensers operate under the same
principles as the shell-and-tube systems, for there is no contact
between the coolant and vent stream) , but the two streams are
separated by thin, flat plates instead of cylindrical tubes.
In contrast to surface condensers, direct contact condensers
cool the vapor stream by spraying a liquid at ambient or lower
temperature directly into the vent stream. Spent coolant
containing VOC's from direct contact condensers usually cannot be
reused directly. Additionally, VOC's in the spent coolant cannot
be recovered without further processing. The combined stream
could present a potential waste disposal problem, depending upon
the coolant and the specific VOC's.
A refrigeration unit generates the low-temperature medium
necessary for heat transfer for recovery of VOC's. Typically in
refrigerated condenser systems two kinds of refrigerants are
used, primary and secondary. Primary refrigerants such as
ammonia and chlorofluorocarbons (e.g., chlorodifluoromethane) are
those that undergo a phase change from liquid to gas after
absorbing heat. Secondary refrigerants, such as brine solutions,
have higher boiling points and thus act only as heat carriers and
remain in the liquid phase.
There are some applications that require auxilary equipment.
If the vent stream contains water vapor or if the VOC has a high
freezing point (e.g., benzene or toluene), ice or frozen
hydrocarbons may form on the condenser tubes or plates. This
will reduce the heat transfer efficiency of the condenser and
thereby reduce the removal efficiency. Formation of ice will
also increase the pressure drop across the condenser. In such
cases, a precooler may be used to remove the moisture before the
vent stream enters the condenser. Alternatively, ice can be
melted during an intermittent heating cycle by circulating
ambient temperature brine through the condenser or using radiant
heating coils.
It is necessary in some cases to provide a recovery tank for
temporary storage of condensed VOC before its reuse,
reprocessing, or transfer to a large storage tank. Pumps and
blowers are typically used to transfer liquid (e.g., coolant and
recovered VOC) and gas streams, respectively, within the system.
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4.2.4.2 Control Efficiency
The major parameters that affect the removal efficiency of
refrigerated surface condensers designed to control air/VOC
mixtures are: 1) Volumetric flow rate of the VOC-containing vent
stream; 2) Inlet temperature of the vent stream; 3)
Concentrations of the VOC's in the vent stream; 4) Absolute
pressure of the vent stream; 5) Moisture content of the vent
stream; and 6) properties of the VOC's in the vent stream, such
as dew points, heats of condensation, heat capacities, and vapor
pressures.40
Any operator of a condenser should remember that a condenser
cannot lower the VOC concentration to levels below the saturation
concentration at the coolant temperature. Removal efficiencies
above 90 percent can be achieved with coolants such as chilled
water, brine solutions, ammonia, or chlorofluorocarbons.
4.2.4.3 Applicability
Condensers are widely used as product recovery devices.
They may be used to recover VOC's upstream of other control
devices or they may be used alone for controlling vent streams
containing relatively high VOC concentrations (usually greater
than 5,000 ppmv). In these cases, the removal efficiencies of
condensers can range widely, from 50 to 95 percent.
Since the temperature necessary for condensation depends on
the properties and concentration of VOC's in the vent stream,
streams having either low VOC concentrations or more volatile
compounds require lower condensation temperatures. Also,
depending on the type of condenser used, disposal of the spent
coolant can be a problem. If cross-media* impacts are a concern,
surface condensers would be preferable to direct contact
condensers.
Condensers used as emission control devices can process flow
rates as high as about 57 m3/min (120,000 scfm) . Condensers for
vent streams with greater volumetric flow rates and having high
concentrations of noncondensibles will require significantly
larger heat transfer areas.
4.2.5 Vapor Collection Systems for Loading Racks
When liquids are transferred into a transport vessel, vapors
in the head space of that vessel can be lost to the atmosphere.
The principal factors affecting emissions from transfer
operations are the vapor pressure of the chemical being
transferred. Other factors that influence emissions from
transfer operations include the transfer rate and the purge rate
of nitrogen (or other inert gas) through the vessel during
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transfer.
The vapor pressure of the chemical being transferred has the
greatest influence on emissions from transfer operations. For
pure materials, the vapor pressure gives a measure of the amount
of organic compound lost during transfer. The total potential
emissions from any transfer is related to the void volume of the
transport vessel and the concentration of the VOC in the head
space.
The mode of transfer is also an important factor in
determining emissions from transfer operations. Top splash
loading creates the most emissions because it enhances the
agitation of the liquid being transferred, creating a higher
concentration of the compound in the vapor space. With alternate
loading techniques, such as submerged fill or bottom loading, the
organic liquid is loaded under the surface of the liquid, which
reduces the amount of agitation and suppresses the generation of
excess vapor in the head space of the transport vessel.
The rate of transfer has a more subtle influence on
emissions; its greatest effect is on air quality. Transfer rate
will dictate the short-term emission rate of the compound being
transferred, thereby influencing exposure to the worker or
public.
A nitrogen purge is used to reduce the potential for
explosion of some chemicals in air or to keep some chemicals
moisture-free. Using an inert gas purge increases the emission
rate of VOC lost to the atmosphere because it creates a turnover
rate of gas through the transport vessel, increasing the total
volume of vapor discharged to the atmosphere.
»
Most vapor collection systems collect the vapors generated
during transfer operations and transport them to either a
recovery device for return to the process or a combustion device
for destruction. In vapor balancing systems, vapors generated
during transfer operations are returned directly to the storage
facility for the material, and the system requires no additional
controls.
4.2.5.1 Description of Vapor Collection Systems
Vapor collection systems consist of piping that captures and
transports to a control device VOC's in the vapor space of
transport vessels that are displaced when liquids are loaded.
These systems may use existing piping normally used to transport
liquids under pressure into the transport vessel or piping
separate from that for transfer. Collection systems comprise
very few pieces of equipment and minimal piping. The principal
piece of equipment in a collection system is a vacuum pump or
blower, used to induce the flow of vapors from the transport
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vessel to the recovery or combustion system.
Blowers can also be used to remove vapors from the head
space of the tank car as liquid is transferred into the tank car.
Standard recovery techniques such as condensation or
refrigeration/condensation systems, or combustion can be applied
to the captured vapors.
Vapor balancing is another means of collecting vapors and
reducing emissions from transfer operations. Vapor balancing is
most commonly used where storage facilities are adjacent to the
loading facility. In this collection system, an additional line
is connected from the transport vessel to the storage tank to
return any vapor in the transport vessel displaced by the liquid
that is loaded to the vapor space of the storage vessel left by
the transferred liquid, since this is a direct volumetric
change, there are no losses to the atmosphere.
4.2.5.2 Efficiency
The three factors affecting the efficiency of a vapor
collection system are:
1) Operating pressure of the collection system;
2) Volume of piping between the loading arm and the
transport vessel; and
3) The efficiency of the ultimate control device.
The first factor influences the efficiency of collection
through the VOC concentration remaining in the line after
transfer. The VOC concentration for systems operating at low
pressures or under vacuum is decreased, thus lowering the total
amount of VOC in the piping. This effectively reduces the amount
of VOC lost to the atmosphere when disconnecting transfer lines.
The opposite occurs for systems operating at higher pressures.
The second factor establishes the quantity of VOC not
delivered to the transport vessel and not collected for
treatment. Systems that minimize the piping between the transfer
loading arm and the transport vessel are more efficient than
those with larger piping connections, because there is less open
piping to the atmosphere.
The third factor is the most important, for it affects the
the overall efficiency of the collection system and the control
system. In the SOCMI, collection systems are generally hard-
piped between the transport vessel and the control system. Thus,
there is no loss of efficiency, other than losses associated with
connections and disconnections.
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4.2.5.3 Applicability
Applicability of vapor collection systems depends on four
factors:
1) Vapor pressure of the material;
2) Value of the product;
3) Physical layout of the facility; and
4) OSHA considerations.
Materials with.vapor pressures greater than atmospheric are
stored and loaded under pressure. Loading under pressure
eliminates the losses associated with atmospheric transfer
operations and limits losses to those associated with connections
and disconnections.
For purely economic considerations, expensive products are
candidates for more extensive collection and recovery systems.
Further, it is unlikely that combustion techniques will be used
to control emissions of products whose value is high enough to
warrant recovery efforts.
The third factor, physical layout of the facility, is the
most important. The shorter the distance between the vapor
balancing system and the storage tank, the fewer meters of piping
required, and the more affordable a vapor balancing system is.
Because vapor balancing is a simple and cost effective control
technique for transfer operations, it is often used in RACT
(reasonably available control technology) requirements and has
been used in many instances as a control measure to meet the
emission requirements of many state air toxic regulations.
OSHA limitations on work place exposure to chemicals being
transferred are additional considerations. Some chemical
compounds being transferred are more toxic than others, and thus
must be more tightly controlled. Highly toxic or carcinogenic
compunds require stringent control measures such as transferring
VOCs under vacuum, vapor compression, refrigeration, and
combustion.
4.3 LDAR
Leak detection and repair programs have been required by the
EPA for a number of years. They have been undertaken to reduce
emissions due to leaking equipment. These emissions occur when
process fluid (liquid or gaseous) is released through the sealing
mechanisms of equipment in the chemical plant. This section
discusses the sources of equipment leak emissions and control
techniques that can be applied to reduce emissions from equipment
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leaks, including the applicability of each control technique and
its associated effectiveness in reducing emissions.
Many potential sources of equipment leak emissions exist in
an organic chemical plant. The following sources are covered in
this section: pumps, compressors, agitators, pressure relief
devices, open-ended lines, sampling connections, process valves,
connectors, instrumentation systems, and product accumulator
vessels.
The techniques for reducing emissions from equipment leaks
are as diverse as the types of sources. The three major
categories for techniques are: 1) Equipment (modifications); 2)
Closed vent systems; and 3) Work practices. The selection of a
control technique and its effectiveness in reducing emissions
depends on a number of factors including: 1) Type of equipment;
2) Equipment service (gas, light liquid, heavy liquid);
3) Process variables influencing equipment selection
(temperature, pressure); 4) Process stream composition; and 5)
Costs.
4.3.1 Equipment Description and Controls
4.3.1.1 Pumps
Pumps are used widely in the SOCMI for the movement of
organic liquids.41 Chemicals transferred by pump can leak at the
point of contact between the moving shaft and the stationary
casing. Consequently, all pumps require a seal at the point
where the shaft penetrates the housing in order to isolate the
pumped fluid from the environment.
4.3.1.1.1 Seals for Pumps
Two generic types of seals, packed and mechanical, are used
on pumps. Packed seals can be used on both reciprocating and
rotary action (centrifugal) pumps. A packed seal consists of a
cavity (or "stuffing box") in the pump casing filled with packing
material that is compressed with a packing gland to form a seal
around the shaft. Coolant is required to remove the frictional
heat between the packing and shaft. The necessary lubrication is
provided by a coolant that flows between the packing and the
shaft.42 Deterioration of the packing can result in leakage of
the process liquid.
Mechanical seals are limited in application to pumps with
rotating shafts. There are single and double mechanical seals,
with many variations to their basic design, but all have a lapped
seal face between a stationary element and a rotating seal ring.
In a single mechanical seal, the faces are held together by the
pressure applied by a spring on the drive and by the pump
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pressure transmitted through the pumped fluid on the pump end.
An elastomer o-ring seals the rotating face to the shaft. The
stationary face is sealed to the stuffing box with another
elastomer O-ring or gasket.
For double mechanical seals, two seals are arranged back-to-
back, in tandem, or face to face. In the back-to-back
arrangement, a closed cavity is created between the two seals. A
seal liquid, such as water or seal oil, is circulated through the
cavity. This seal liquid is used to control the temperature in
the stuffing box. For the seal to function properly, the
pressure of the seal liquid must be greater than the operating
pressure of the pump. In this manner, any leakage would occur
across the seal faces into the process or the environment.
Double mechanical seals are used in many process
applications, but there are some conditions for which their use
is not indicated. Such conditions include service temperatures
above 260 degrees Celsius, and pumps with reciprocating shaft
motion. Further, double mechanical seals cannot be used where
the process fluid contains slurries, polymeric, or undissolved
solids.
4.3.1.1.2 Sealless Pumps
Another type of pump used in the SOCMI is the sealless pump.
Sealless pumps are used primarily in processes where the pumped
fluid is hazardous, highly toxic, or very expensive and where
every effort must be made to prevent all possible leakage of the
fluid. Canned-motor, diaphragm, and magnetic drive pumps are
three common types of sealless pumps.
Canned-motor pumps have interconnected cavity housings,
motor rotors, and pump casings. Because the process liquid is
the bearing lubricant, abrasive solids in the process lines
cannot be tolerated. Canned-motor pumps are widely used for
handling organic solvents, organic heat transfer liquids, and
light oils.
Diaphragm pumps contain a flexible diaphragm of metal,
rubber, and plastic as the driving member. The primary advantage
of this arrangement is the elimination of all packing and seals
exposed to the process liquid provided the diaphragm's integrity
is maintained. This is important when handling hazardous or
toxic liquids. Emissions from diaphragm pumps can be large,
however, if the diaphragm fails.
In magnetic-drive pumps, no seals contact the process fluid.
An externally-mounted magnet coupled to the pump motor drives the
impeller in the pump casing.
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4.3.1.2 compressors
Compressors move gas through a process unit in much the same
way that pumps transport liquid. Compressors are typically
driven with rotating or reciprocating shafts. Thus, the sealing
mechanisms for compressors are similar to those for pumps, i.e.,
packed and mechanical seals. Emissions from this source type may
be reduced by improving the seals' performance or by collecting
and controlling the emissions from the seal. Emissions from
mechanical contact seals depend on the type of seal or control
device used and the frequency of seal failure.
Shaft seals for compressors are of several different types:
labyrinth, restrictive carbon rings/ mechanical contact, and
liquid film. All of these seal types restrict leaks, although
none of them completely eliminates leakage. Compressors can be
equipped with ports in the seal area to evacuate collected gases,
which could then be controlled.
A buffer or barrier fluid may be .used with these mechanical
seals to form a buffer between the compressed gas and the
environment, similar to barrier fluids in pumps. This system
requires a clean, external gas supply that is compatible with the
gas being compressed. Barrier gas can become contaminated and
must be disposed of properly, for example by venting to a control
device. Compressors can also be equipped with liquid film seals.
This seal is formed by a film of oil between the rotating shaft
and stationary gland.
4.3.1.3 Agitators
Agitators are used in the SOCMI to stir or blend chemicals.
As with pumps and compressors, emissions from agitators can occur
at the interface of a moving shaft and a stationary casing.
Emissions from this source type may be reduced by improving the
seal or by collecting and controlling emissions. There are four
seal arrangements commonly used with agitators: packed seals,
mechanical seals, hydraulic seals, and lip seals. Packed seals
for agitators are similar in design and application to the packed
seals for pumps (refer to Section 4.3.1.1).
While mechanical seals are more costly than other seal
arrangements, they provide better leakage rate reduction. Also,
the maintenance frequency of properly installed and maintained
mechanical seals is one-half to one-fourth that of packed seals.43
Mechanical seals can be designed specifically for high pressure
applications (i.e., greater than 1,140 kPa or 165 psia) .** As
with packed seals, the mechanical seals for agitators are similar
to the design and application of mechanical seals for pumps.
The hydraulic seal is the simplest and least-used agitator
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shaft seal. In this type of seal, an annular cup attached to the
process vessel contains a liquid that contacts an inverted cup
attached to the rotating agitator shaft. The primary advantage
of this seal is that it is a noncontact seal. However, this seal
is limited to low temperatures and pressures and can only handle
very small fluctuations. Process chemicals may contaminate the
seal liquid and then be released into the atmosphere as equipment
leak emissions.
Lip seals, which are relatively inexpensive and easy to
install, can be used on a top-entering agitator as a dust or
vapor seal. Once the seal has been installed, the agitator shaft
rotates in continuous contact with the lip seal. Emissions can
be released through this seal when it wears excessively or when
the operating pressure surpasses the pressure limitation of the
seal.
4.3.1.4 Pressure Relief Devices
Insurance, safety, and engineering codes require that
pressure relief devices or systems be used in applications where
the process pressure may exceed the maximum allowable working
pressure of the process equipment. Pressure relief devices
include rupture disks and safety/relief valves. The most common
pressure relief device is a spring-loaded valve designed to open
when the operating pressure of a piece of process equipment
exceeds a set pressure. Equipment leak emissions from spring-
loaded relief valves may be caused by failure of the valve seat
or valve stem, improper reseating after overpressure relief, or
process operation near the relief valve set pressure which may
cause the relief valve to frequently open and close or "simmer."
Rupture disks are designed to burst at overpressure to allow
the process gas to vent directly to the atmosphere. Rupture
disks allow no emissions as long as the integrity of the disk is
maintained. They must be replaced after each pressure relief
episode to restore the process to an operating pressure
condition. Although rupture disks can be used alone, they are
sometimes installed upstream of a relief valve to prevent
emissions through the relief valve stem.
Combinations of rupture disks and relief valves require
certain design constraints and criteria to avoid potential safety
hazards. For example, appropriate piping changes must be made to
prevent disk fragments from lodging in damaging the relief valve
when relieving overpressure. A block valve upstream of the
rupture disk can be used to isolate the rupture disk/relief valve
combination and permit in-service replacement of the disk after
it bursts. Otherwise, emissions could result through the relief
valve.
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4.3.1.5 Open-Ended Lines
Emissions from open-ended lines are caused by leakage
through the seat of an upstream valve in the open-ended line.
Emissions that occur through the stem and gland of the valve are
not considered "open-ended" emissions and are addressed in the
section on process valves. Emissions from open-ended lines can
be controlled by installing a cap, plug, flange, or second valve
to the open end. Control efficiency of these control measures is
assumed to be 100 percent.
4.3.1.6 Sampling Connections
Emissions from sampling connections occur as a result of
purging the sampling line to obtain a representative sample of
the process fluid. These emissions can be reduced by using a
closed loop sampling system or disposing of the purged process
fluid in a control device. The closed loop sampling system is
designed to return the purged fluid to the process at a point of
lower pressure. Closed loop sampling is assumed to be 100
percent effective for controlling emissions from a sample purge.
This purged fluid could also be directed to a control device such
as an incinerator, in which case the control efficiency would
depend on the efficiency of the incinerator in removing the VOC.
4.3.1.7 Process Valves
Valves are the most common and numerous process equipment
type found in the chemical industry.45 There are many designs for
valves, and most of the designs contain a valve stem which
operates to restrict or allow fluid flow. Typically, the stem is
sealed by a packing gland or 0-ring to prevent leakage of process
fluid to the atmosphere. Emissions from valves occur at the stem
or gland area of the valve body when the packing or 0-ring in the
valve fails.
4.3.1.7.1 Seals for Valves
Valves that require the stem to move in and out or turn must
utilize a packing gland. A variety of packing materials are
suitable for conventional packing glands. The most common
packing materials are the various types of braided asbestos that
contain lubricants; other packing materials include graphite,
graphite-impregnated fibers, and tetrafluorethylene. The choice
of packing material depends on the valve application and
configuration.46 Conventional packing glands can be used over a
wide range of operating temperatures.
4.3.1.7.2 Sealless Valves
Emissions from process valves can be eliminated if the valve
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stem can be isolated from the process fluid. There are two types
of sealless valves available: diaphragm valves and sealed
bellows valves.
Diaphragm valves isolate the valve stem from the process
fluid using a flexible elastomer or metal diaphragm. The
position of the diaphragm is regulated by a plunger, which is
controlled by the stem. Depending on the diaphragm material,
this type of valve can be used at temperatures as high as 205
degrees Celsius and in strong acid service. If the diaphragm
fails, the valve can become a relatively larger source of
emissions.47 In addition, use at temperatures beyond the
operating limits of the material tends to damage or destroy the
diaphragm.
Sealed bellows valves are another alternative leakless
design. In this valve type, metal bellows are welded to the
bonnet and disk of the valve, thereby isolating the stem from the
process. These valves can be designed to withstand high
temperatures and pressures and can provide leak-free service at
operating conditions beyond the limits of diaphragm valves.
However, they are usually dedicated to highly toxic services and
the nuclear industry.
The control effectiveness of both diaphragm and sealed
bellows valves is essentially 100 percent, although a failure of
the diaphragm or bellows could cause temporary emissions much
larger than those from other types of valves.
4.3.1.8 Connectors
Connectors are flanges, threaded fittings, and other
-fittings used to join sections of piping and equipment. They are
used wherever pipe or other equipment (such as vessels, pumps,
valves, and heat exchangers) require isolation or removal.
Flanges are bolted, gasket-sealed connectors. Normally,
flanges are used for pipes with diameters of 50 mm or greater and
are classified by pressure rating and face type. The primary
cause of flange leakage are poor installation and thermal stress,
which results in the deformation of the seal between the flange
faces.48
Threaded fittings are made by cutting threads into the
outside end of one piece (male) and the inside end of another
piece (female). These male and female parts are then screwed
together like a nut and bolt. Threaded fittings are normally
used to connect piping and equipment having diameters of 50 mm or
less. Seals for these fittings are made by coating the male
threads with a sealant before joining it to the female piece.
Emissions from threaded fittings can occur as the sealant ages
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and eventually cracks. Leakage can also occur as the result of
poor assembly or application of the sealant, and thermal stress
of the piping and fittings.
Emissions from connectors can be controlled by regularly
scheduled maintenance. Potential emissions can be reduced by
replacing the gasket or sealant materials. If connectors are not
required for process modification or periodic equipment removal,
emissions from connectors can be eliminated by welding the
connectors together.
4.3.1.9 Instrumentation Systems
An instrumentation system is a group of equipment components
used to condition and convey a sample of process fluid to
analyzers and instruments for the purpose of determining process
operating conditions (e.g., composition, pressure, and flow
rate). Valves and connectors are the predominant types of
equipment used in instrumentation systems, although other
equipment may be included. Emissions resulting from the
components in the instrumentation system are controlled as they
are for the same component in the process system.49
4.3.2 Closed Vent Systems
Emissions from equipment leaks may be controlled by
installed a closed vent system around the leaking equipment and
venting the emissions to a control device. This method of
control is only applicable to certain equipment types, i.e.,
pumps, compressors, agitators, pressure relief valves, and
product accumulator vessels. Because of the many valves,
connectors, and open-ended lines typically found in chemical
facilities it is not practical to use this technique for reducing
emissions from all of these potential sources for an entire
process unit. However, a closed vent system can be used to
control emissions from a limited number of components, which
could be enclosed and maintained under negative pressure and
vented to a control device.
4.3.3 Work Practices
LDAR methods are used to identify equipment components that
are emitting significant amounts of VOC and to reduce these
emissions. The emission reduction potential for LDAR as a
control technique is highly variable and depends on several
factors, the most important of which are the frequency of
monitoring and the techniques used to identify leaks. Repair of
leaking components is required only when the equipment leak
emissions reach a set level—the leak detection level. A low
leak definition will initiate repair at lower levels, resulting
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in a lower overall emission rate.
4.3.3.1 Leak Detection Methods
Leak detection methods include individual component surveys,
area (walk-through) surveys, and fixed point monitors.
Individual component surveys form a part of the other methods.
4.3.3.1.1 Individual Component Survey
Each source of equipment leak emissions (pump, valve,
compressor, etc.) can be checked for VOC leakage by visual,
audible, olfactory, soap bubble, or instrument techniques.
Visual methods are good for locating liquid leaks. A visible
leak does not necessarily indicate VOC emissions, however,
because the leaking material may be non-VOC. High-pressure leaks
may be detected by the sound of escaping vapors, and leaks of
odorous materials may be detected by smell.
Soap spraying on equipment components can be used to survey
individual components in certain applications. If the soap
solution forms bubbles or blows away, a leak is indicated, and
vice versa. Disadvantages of this method are that 1) it does not
distinguish leaks of hazardous VOC's from nonhazardous VOC's; 2)
it is only semiquantitative, since it requires the observer to
determine subjectively the rate of leakage based on the behavior
of the soap bubbles; and 3) it is limited to sources with
temperatures below 100 degrees Celsius, because the water in the
soap solution will evaporate at temperatures above this figure.
This method is also not suited for moving shafts on pumps or
compressors, because the motion of the shaft may interfere with
the motion of the bubbles caused by a leak.
The best method for identifying leaks of VOC from components
is using a portable hydrocarbon detection instrument. Air close
to the potential leak site is sampled and analyzed by a sampling
traverse ("monitoring") over the entire are where leaks may
occur. The concentration of hydrocarbons in the sampled air is
displayed on the instrument meter and is a rough indicator of the
VOC emission rate from the component. If the concentration is
higher than a specified figure ("action level"), then the leaking
component is marked for repair.
4.3.3.1.2 Area Survey
An area or walk-through survey requires the use of a
portable hydrocarbon detector and a strip chart recorder. The
procedure involves carrying the instrument within one meter of
the upwind and downwind sides of process equipment. The
instrument is then used for an individual component survey in a
suspected leak area. The efficiency of this method for locating
leaks is not well established. Problems with this method include
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the fact that leaks from overhead valves or relief valves will
not be detected, and the possibility of leaks from adjacent units
and adverse meteorological conditions affecting the results of
the walk-through survey. Thus, the area survey is best for
locating only large leaks at small expense.
4.3.3.1.3 Fixed point monitors
This method consists of placing several automatic
hydrocarbon sampling and analysis instruments at various
locations in the process unit. If elevated hydrocarbon
concentrations are detected, a leaking component is indicated.
Identifying the specific leaking component requires an individual
component survey. The efficiency of fixed point monitoring is
not well established, but fixed point monitoring of VOC's is not
as effective as a complete individual component survey.50 Fixed-
point monitors are expensive, multiple units may be required, and
the portable instrument is also needed to locate the particular
leaking component. Calibration and maintenance costs may be
high. Fixed-point.monitors are used successfully to detect
emissions of hazardous or toxic substances, and can provide an
increased detection efficiency by selecting a particular compound
as the sampling criterion.
4.3.3.2 Repair Methods
This section describes repair methods for possible equipment
emission sources in a chemical plant. These are not intended to
be complete repair procedures.
Many pumps have in-line or parallel spares that can be used
while the leaking pump is being repaired. Leaks from packed
seals may be reduced by tightening the packing gland. With
mechanical seals, the pump must be dismantled to repair or
replace the leaking seal. Dismantling pumps can result in
spillage of some process fluid. If the seal leak is small,
evaporative emissions of VOC from such spillage may be greater
than the continued leak from the seal. Precautions must be taken
to prevent or reduce these emissions.
Leakage from compressors with packed seals may be reduced by
tightening the packing gland, as described for pumps. Repair of
compressors with mechanical seals requires the compressor be
removed from service. Since compressors usually do not have
spares, immediate repair may not be practical or possible without
a process unit shutdown.
Agitators, like pumps and compressors, can leak VOC's at the
point where the shaft penetrates the casing, and seals are
required to minimize fugitive emissions. Leaks from packed seals
may be reduced by the repair procedure described for pumps, while
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repair of other types of seals require the agitator to be out of
service. In this latter case, process shutdown or isolation of
the particular agitator being repaired is required.
Leaking repair valves usually must be removed for repair.
To remove the relief valve without shutting down the process, a
block valve may be required upstream of the relief valve. A
spare relief valve should be attached while the faultly valve is
repaired and tested.
A rupture disk can be installed upstream from a pressure
relief valve to eliminate leaks until an overpressure release
occurs. Once a release occurs, the rupture disk must be replaced
to prevent further leaks. A-block valve is required to isolate
the rupture disk for replacement.
Most valves have a packing gland that can be tightened while
in service. Although this procedure should decrease the
emissions from the valve, it can actually increase the emission
rate if the packing is old and brittle or has been over-
tightened. Some types of valves have no means of in-service
repair and must be isolated from the process and removed for
repair and replacement. Most control valves have a manual bypass
loop that allows them to be isolated and removed. Most block
valves cannot be isolated easily, although temporary changes in
process operation may allow isolation in some cases.
In some cases, leaks from connectors can be reduced by
replacing the connector gaskets, but most connectors cannot be
isolated to permit gasket replacement. Tightening of connector
bolts also may reduce emissions from connectors. Where
connectors are not required for process modification or periodic
equipment removal, emissions from connectors can be eliminated by
welding them.
4.4 Internal Floating Roofs
Internal floating roofs are commonly used in the chemical
manufacturing industry to control emissions of chemicals from
storage tanks. As the name implies, it is a roof inside a tank
that floats on the surface of the stored liquid.
The presence of a floating roof (or deck) inside a fixed
roof tank significantly reduces the surface area of exposed
liquid. It serves as a physical barrier between the volatile
organic liquid and the air that enters the tank through vents.
Because evaporation is the primary emission mechanism
associated with storage tanks, emissions from floating roof tanks
as well as fixed roof tanks vary with the vapor pressxare of the
stores liquid. Thus, the control efficiency of retrofitting a
fixed roof tank with an internal floating deck depends on the
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material being stored.
Other factors affecting emissions, and therefore control
efficiency, are tank size, number of turnovers, and the type of
deck and seal system selected. Installing an internal floating
roof can reduce emissions by 61 to 98 percent.51 The relative
effectiveness of one internal floating roof design over another
is a function of how well the deck can be sealed. Probably the
most typical internal floating roof design is the noncontact,
bolted, aluminum internal floating roof with a single vapor-
mounted wiper seal and uncontrolled fittings.
4.4.1 Types of Losses and Hov They are controlled
Loss of VOC's from internal floating roof tanks occurs in
one of four ways:
1) Through the annular rim space around the
perimeter of the floating roof (seal
losses),
2) Through the openings in the deck required
for various types of fittings (fitting
losses),
3) Through the nonwelded seams formed when joining
sections of the deck material (deck seam
losses), and
4) Through evaporation of Liquid left on the tank
wall following withdrawal of liquid from the
tank (withdrawal loss) ,52
4.4.1.1 Control of Seal Losses
Internal floating roof seal losses can be minimized by
employing liquid-mounted primary seals instead of vapor-mounted
seals and/or by employing secondary wiper seals in additioh to
primary seals.
Available emissions test data suggest that the location of
the seal (i.e., vapor- or liquid-mounted) and the presence of a
secondary seal are the major factors affecting seal losses. A
liquid-mounted primary seal has a lower emissions rate, and thus
a higher control efficiency, than a vapor-mounted seal. A
secondary seal, with either a liquid- or a vapor-mounted primary
seal, provides an additional level of control.
The type of seal used plays a less significant role in
determining the emissions rate.53 The type of seal is important
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only to the extent that the seal must be suitable for the
particular application. For instance, an elastomeric wiper seal
is commonly employed as a vapor-mounted primary seal or as a
secondary seal for an internal floating roof. Because of its
shape, this seal is not suitable for use as a liquid-mounted
primary seal. Resilient foam seals, on the other hand, can be
used as both liquid- and vapor-mounted seals.
4.4.1.2 Control of Fitting Losses
There are numerous fittings that penetrate or are attached
to an internal floating roof. Among them are access hatches,
column wells, roof legs, sample pipes, ladder wells, vacuum
breakers, and automatic gauge float wells. Fitting losses occur
when VOCs leak around these fittings. Fitting losses can be
controlled with gasketing and sealing techniques or by the
substitution of fittings that are designed to leak less.
The effectiveness of fitting controls at reducing the
overall emission rate is a function of the number of fittings of
each type employed on a given tank. For example, if using
controlled fittings reduces total fitting loss by 36 percent, and
if fitting losses are about 35 percent of the total emissions
from a typical internal floating roof tank, then the controlled
fittings reduce the overall emissions by (.36*.35)= .126, or 12.6
percent over a similar tank without fitting controls. The usual
increase in control efficiency achieved by installing controlled
fittings ranges from 0.5 to 1.0 percent.54
4.4.1.3 Control of Deck Seam Losses
Deck seam losses are inherent in a number of floating roof
types including internal floating roofs. Any roof constructed of
sheets or panels fastened by mechanical fasteners (e.,g., bolts)
is expected to have deck seam losses. Deck seam losses are
considered to be a function of the length of the seams and not
the type of mechanical fastener or the position of the deck
relative to the liquid surface. This is a conclusion drawn from
a 1986 study on two roof types with significantly different
mechanical fasteners and differences in the amount* of contact
with the liquid surface.55
Deck seam losses are controlled by selecting a roof type
with vapor-tight deck seams. The welded deck seams on steel pan
roofs are vapor tight. Fiberglass lapped seams of a glass fiber
reinforced polyester roof may be vapor tight as long as there is
negligible permeability of the liquid through the seam lapping
materials. Some manufacturers provide gaskets for bolted metal
deck seams.
Selecting a welded roof (rather than a bolted roof) will
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eliminate deck seam losses. For a typical internal roof that has
primary seals, secondary seals, and controlled fittings already,
eliminating deck seam losses will raise the control efficiency as
much as 1.5 percent.56
4.4.2 Applicability
The applicability of any storage tank improvement in order
to reduce VOC emissions is dependent upon the characteristics of
the particular VOC. Since floating decks are often constructed
primarily of aluminum, they may not be applicable to tanks
storing halogenated compounds, pesticides, or other compounds
that are incompatible with aluminum. Contact between these
compounds and an aluminum deck could corrode the deck and cause
product contamination.
In addition, vapor pressures may affect the selection of
tank improvements as an applicable control technology. For
chemicals with very low vapor pressure, fixed roof tank emissions
will already be so low that installing an internal floating roof
may not significantly reduce emissions further. For chemicals
with vapor pressures up to 65 kPa (9.4 psia), emission reductions
of 95 percent and above are achievable with this technology.
Above this vapor pressure, achievable emission reduction starts
to decrease with increasing vapor pressure. Thus, an internal
floating roof may not be indicated for chemicals with relatively
high vapor pressures.
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References
1. U.S. Environmental Protection Agency. Office of Air Quality
Planning and Standards, Research Triangle Park, North
Carolina. Hazardous Air Pollutant Emissions from Process
Units in the Synthetic Organic Chemical Manufacturing
Industry — Background Information for Proposed Standards,
Volume IB. September 1991. p. 2-8.
2. Reed, R.J. North American Combustion Handbook. Cleveland,
Ohio. North American Manufacturing Company. 1979, p. 269.
3. U.S. Enviromental Protection Agency. Office of Air Quality
Planning and Standards. Research Triangle Park, North
Carolina. OAQPS Control Cost Manual, Fourth Edition.
January 1990. p. 3-8.
4. Reference 3. p. 3-9.
5. Reference 1. p. 2-13.
6. Letter from Thomas Schmidt (ARI International, Palatine, IL)
to William M. Vatavuk (U.S. EPA, Office of Air Quality
Planning and Standards, Research Triangle Park, North
Carolina). August 16, 1989.
7. Reference 3. p. 3-11.
8. Manning, P. Hazardous Waste. Volume 1 (1). 1984.
9. Kosusko, M. and Ramsey, G. Destruction of Air Emissions
Using Catalytic Oxidation. U.S. Environmental Protection
Agency. Air and Energy Engineering Research Laboratory,
Research Triangle Park, North Carolina. EPA Publication
No. 600-D-88/107. May 1988. p. 3.
10. Letter from Robert M. Yarrington (Englehard Corporation,
Edison, NJ) to William M. Vatavuk (U.S. EPA, OAQPS, RTF,
NC). August 14, 1989.
11. Reference 3. p. 7-5.
12. Reactor Processes in SOCMI — Background Information for
Proposed Standards. U.S. Environmental Protection Agency.
Office of Air Quality Planning and Standards, Research
Triangle Park, North Carolina. Preliminary Draft. EPA
Publication No. 450/3-90-016a. June 1990.
13. Letter from David Shore (Flaregas Corp., Spring Valley, NY)
to William M. Vatavuk (U.S. EPA, OAQPS, RTF, NC).
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October 3, 1990.
14. Reference 12.
15. Guide for Pressure-Relieving and Depressuring Systems.
Refining Department, API Recommmended Practice 521, Second
Edition. September 1982.
16. Reference 13.
17. Kalcevic, V. (IT Enviroscience). "Control Device Evaluation
Flares and the Use of Emissions as Fuels," Organic Chemical
Manufacturing Volume 4. U.S. Environmental Protection
Agency. Research Triangle Park, North Carolina. EPA
Publication No. 450/3-80-026. December 1980. Report 4.
18. Devitt, T., Spaite, P. and Gibbs, L. (PEDCo Environmental,
Inc.) Population and Characteristics of
Industrial/Commercial Boilers in the U.S. Prepared for the
U.S. Environmental Protection Agency. Washington, D.C. EPA
Publication No. 600/7-79-178a.
19. Reference 1. p. 2-17.
20. Castaldini, C., Willard, H.K., Wolbach, D., and Waterland,
L. (Acurex Corporation). A Technical Overview of the
Concept of Disposing of Hazardous Waste in Industrial
Boilers. Prepared for the U.S. Environmental Protection
Agency. Cincinnati, OH. EPA Contract No. 68-03-2567.
January, 1981. p. 44.
21. Reference 20. p. 73.
22. U.S. Environmental Protection Agency. Benzene — Organic
Chemical Manufacturing, Ethylbenzene Styrene. Emission Test
Report, El Paso Products Company (Odessa, TX). Research
Triangle Park, North Carolina. EMB Report No. 79-OCM-15.
April 1981.
23. U.S. Environmental Protection Agency. Office of Air and
Waste Management. Control Techniques for Volatile Organic
Emissions from stationary Sources. Research Triangle Park,
North Carolina. EPA Publication No. 450/2-78-002. May
1978. p. 72.
24. Reference 23. p. 76.
25. U.S. Environmental Protection Agency. Air and Energy
Engineering Research Laboratory. Handbook — Control
Technologies for Hazardous Air Pollutants. Research Triangle
Park, North Carolina. EPA Publication No. 625/6-86-014.
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September 1986. pp. 26-27.
26. Standifer, R.L. (IT Enviroscience). Control Device
Evaluation: Gas Absorption. In: Organic Chemical
Manufacturing Volume 5: Adsorption, Condensation, and
Absorption Devices. U.S. Environmental Protection
Agency, Research Triangle Park, North Carolina. EPA
Publication No. 450/3-80-027. December 1980. Report 3.
p. 1-7.
27. Reference 26. p. 1-1.
28. Reference 1. p. 2-34.
29. Reference 1. p. 2-41.
30. Trip Report. R.H. Howls and M.A. Vancil, Radian Corp., to
file. 7 pgs. Report of May 12, 1987 visit to Allied
Fibers.
31. Stern, A.C. Air Pollution. Third Edition. Volume IV. New
York, Academic Press, 1977. p. 336.
32. Reference 1. p. 2-43.
33. Calvert, Seymour and Englund, Harold M., eds. Handbook of
Air Pollution Control Technology. John Wiley and Sons.
New York, 1984. pp. 135-172.
34. Reference 3. p. 4-5.
35. Basdekis, H.S. and Parmele, C.S. (IT Enviroscience).
Control Device Evaluation: Carbon Adsorption. In Organic
Chemical Manufacturing Volume 5: Adsorption, Condensation,
and Absorption Devices. U.S. Environmental Protection
Agency. Research Triangle Park, North Carolina. EPA
Publication No. 450/3/80/027. December 1980. Report 1.
p. II-l.
36. Reference 35. p. II-7.
37. Reference 25. p. 28.
38. Barnett, K.W., May, P.A., and Elliott, J.A. (Radian
Corporation). Carbon Adsorption for Control of VOC
Emissions: Theory and Full Scale System Performance.
Prepared for the U.S. Environmental Protection Agency.
Research Triangle Park, North Carolina. EPA Contract No.
68-02-4378. June 6, 1988. p. 2-2.
39. Vatavuk, W.M. and Neveril, R.B. Cost File Part XVI. Costs
of Refrigeration Systems. Chemical Engineering. May 16,
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1983. pp. 95-98,
40. Reference 1. pp. 2-31, 32.
41. Erikson, D.G. and Kalcevic, V. (Hydroscience, Inc.)
Emissions Control options for the Synthetic Organic
Chemicals Manufacturing Industry. (Prepared for U.S.
Environmental Protection Agency.) Research Triangle
Park, North Carolina. EPA Contract No. 68-02-2577.
February 1979. p. II-2.
42. Reference 41. p. II-2.
43. Ramsey, W.D. and Zoller, G.C. How the Design of Shafts,
Seals, and Impellers Affects Agitator Performance.
Chemical Engineering. 83 (18): pp. 101-108. August 30,
1976.
44. Reference 43. p. 105.
45. Reference 1. p. 2-73.
46. Lyons, J.L. and Askland, C.L. Lyons' Encyclopedia of
Valves. New York, Van Nostrand Reinhold Company, 1975.
p. 290.
47. Pikulik, A. Manually Operated Valves. Chemical
Engineering. 85_(7) : p. 121. April 3, 1978.
48. McFariand, I. Preventing Flange Fires. Chemical
Engineering Progress. 6j5(8) : 59-61. August 1969.
49. Reference 1. p. 2-76.
50. Hustvedt, K.C. and Weber, R.C. (U.S. Environmental
Protection Agency.) Detection of Volatile Organic Compound
Emissions from Equipment Leaks. (Presented at the 71st
Annual Meeting of the Air Pollution Control Association.
Houston, Texas. June 25-30, 1978.)
51. Memorandum from Probert, J.A., Radian Corporation, to
Project File. August 7, 1991. Achievable emission
reduction for internal floating roofs.
52. Reference 1. p. 2-52.
53. U.S. Environmental Protection Agency. Office of Air Quality
Planning and Standards. VOC Emissions from Volatile Organic
Liquid Storage Tanks — Background Information for
Promulgated Standards. Research Triangle Park, North
Carolina. EPA Publication No. 450/3-81-003b.
January 1987.
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54. Reference 1. p. 2-61.
55. Reference 53. Appendix C.
56. Reference l. p. 2-62.
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CHAPTER 5
REGULATORY OPTIONS
5.1 Introduction
This chapter is devoted to briefly explain the decision
process for choosing a regulatory option. The rationale for
regulation vs. no regulation will be discussed as well as a MACT
floor analysis, cost effectiveness, and economic incentives.
5.2 No Additional EPA Regulation
5.2.1 Judicial System
In the absence of governmental regulation, market systems
fail to make the generators of pollution pay for the costs
associated with that pollution. For an individual firm,
pollution is an apparently unusable by-product that can be
disposed of cheaply by venting it to the atmosphere. However, in
the atmosphere pollution causes real costs to others. The fact
that producers, consumers, and others whose activities result in
air pollution do not bear the full costs of their actions leads
to a divergence between private costs and social costs. This
divergence is considered a market failure since it results in a
misallocation of society's resources. Too many resources are
devoted to the polluting activity when polluters do not bear the
full cost of their actions.
Also, if there was no regulation, the previous regulations
would be relied upon as the basis for making judicial decisions
regarding excess emissions.
5.2.2 State and Local Action
The Clean Air Act requires each state to develop and
implement measures to attain and maintain EPA's standards. Each
state assembles these measures in a document called the State
Implementation Plan (SIP). SIPs must be approved by the EPA, and
the EPA is empowered to compel revision of plans it believes are
inadequate. The EPA may assume enforcement authority over air
pollution control programs any state fails to implement. • The
standards will become parts of each state's SIP, and enforcement
authority will be delegated to the states. If the EPA were not
to promulgate the standards, states would be responsible for
making case-by case MACT decisions under Section 112 (g) and (j)
whenever there is a major modification or when the date for MACT
promulgation has passed without action on EPA's part.
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The EPA believes that reliance on state and local action is
not a viable substitute for the standards. This belief holds even
if the EPA were to step up research and technology transfer
programs to assist state and local governments.
5.3 EPA Regulation
5.3.1 Categories. Emission Points, and Floors
The EPA source category list identifies source categories
for which NESHAP's are to be established. This list implements
Section 112 (c) of the Act and reflects the EPA's determination
that listed source categories include major sources of hazardous
air pollutants. The source category list includes SOCMI chemical
production as well as the seven non-SOCMI equipment leak source
categories.
The SOCMI is a segment of the chemical manufacturing
industry that includes the production of many high-volume organic
chemicals. The products of SOCMI production processes are
derived from approximately 10 petrochemical feedstocks. Of the
hundreds of organic chemicals that are produced by the SOCMi,
some are final products and some are the feedstocks for
production of other chemicals or synthetic products. For
example, large quantities of SOCMI products are used in the
production of plastics, fibers, surfactants, Pharmaceuticals,
synthetic rubber, dyes, and pesticides. Production of these end
products is not considered to be part of SOCMI production.
In the source category list, EPA identified the SOCMI with a
list of chemical products whose production is believed to involve
emissions of organic HAP's. This list of chemicals was
identified from the literature describing SOCMI production
processes, reactants, and products. A chemical was listed if
organic HAP's could be used as reactants or produced in the
production of the SOCMI chemical. The EPA recognizes that these
chemical products can be produced using other reaction sequences
and that not all plants producing the listed chemicals use a
process that involves organic HAP emissions. Thus, the standard
will only apply to those chemical production processes from which
organic HAP's can be emitted.
The equipment leak standard would apply to the SOCMI and to
processes within seven other non-SOCMI source categories:
styrene/butadiene rubber production; polybutadiene production;
chlorine production; pesticide production; chlorinated
hydrocarbon use; pharmaceutical production; and miscellaneous
butadiene use.
For this SOCMI component of the regulation, the EPA is
proposing to define source as all the process vents, storage
vessels, transfer operations, wastewater collection and treatment
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operations, and equipment leaks in the subject industrial
processes used to manufacture synthetic organic chemicals that
are located in a single facility covering a contiguous area under
common control.
As the entire production process is contained within a
single source that is part of one source category, a single
floor, as defined in Section 112 (d)(3), is applicable to the
entire operation.1 The five kinds of emission points as stated
above are process vents, storage vessels, transfer operations,
wastewater collection and treatment operations, and equipment
leaks.
Though equipment leaks are included in the definition of
source, they cannot be included in emissions averaging because
there is no method that currently exists for determining the
magnitude of allowable emissions to assign equipment leaks for
purposes of emissions averaging. When methods are developed to
assign allowable emission levels to particular leak points, the
EPA will consider revising the HON to allow the inclusion of
equipment leaks in emissions averages.
In order to develop the MACT standards, the floor must be
established for the source category. This is due to the fact
that the Act specifies that the standard be at least as stringent
as the floor. Since there were no readily available data to
determine the floor for the source as a whole, each kind of
emission point was examined to determine the floor. Controls
that comprise the best 12 percent of performance for existing
sources determine the existing source floor. For new sources,
the best controlled similar source is used to determine the
floor. For SOCMI, what distinguishes a well-controlled facility
is not only the type of control equipment used, but also the
number of emission points that are controlled. The EPA used
existing Federal and State regulations to determine current
control levels on the emission points. Using this process to
establish a floor for the part of the source regulated by Subpart
G ensures that the control level of the standard will be
equivalent to the emission control level on the best controlled
12 percent of SOCMI facilities.
For Subpart H, the negotiating committee agreed that the
requirements of the negotiated standards constitute MACT for
equipment leaks. The standards for equipment leaks were
determined under the regulatory negotiation process. The
committee that negotiated the equipment leak rule considered the
many factors and uncertainties associated with regulating
equipment leaks at a wide variety of chemical plants and
developed an acceptably balanced approach. The negotiators
weighted the need to be flexible, the technical uncertainties,
the requirement for MACT standards, and the data limitations. At
5-3
-------
the final negotiating session, the committee members conceptually
resolved all outstanding major issues and over the following
several months reached final agreement on the draft rsgulation
and preamble.
All committee members agreed to support the standard
providing that EPA proposes and promulgates a regulation and
preamble with the same substance and effect as what was contained
in the final agreement. Consequently, there were no regulatory
options evaluated under the HON rule.
5.3.2 Development of MACT and the Regulatory
Alternatives
The SOCMI standards potentially represents the greatest
emissions reduction likely to be achieved by any air toxics
source category being regulated under Title III. As such,
regulating this industry represents a significant first step
toward fulfilling the mandate of Title III to reduce emissions of
toxic air pollution to the greatest feasible extent. In
addition, SOCMI facilities tend to be large individual emitters
of toxic air pollutants, which are generally suspected to pose
potential health hazards at the local level (i.e. close to
individual sources).
The EPA recognizes that the 110 HAP's regulated by Subpart G
of the HON represent a wide range of toxicities associated with a
variety of potential toxic effects at a variety of exposure
levels. However, Title III does not contemplate quantifying the
specific health and environmental risks associated with different
chemicals in MACT standard setting. While .MACT decisions are
thus not risk-based, and risk information specific to the SOCMI
industry has not been developed, the EPA nevertheless recognizes
clear public interest in reducing toxic emissions from the SOCMI
industry as much as is feasible, based upon the potential for
health and environmental benefits from toxic emissions reduction
of this magnitude.
Aside from the general goal of maximum feasible emissions
reduction, the EPA has endeavored to structure this first nrajor
MACT rule to incorporate several other goals: overall
administrative simplicity, allowing flexibility in implementation
(in order to reduce costs), encouraging pollution prevention and
source reduction, and enforceability. Some goals reinforce each
other (e.g. ensuring flexibility and encouraging pollution
prevention). Where different goals may tend toward opposing
outcomes (e.g. flexibility vs. enforceability), the EPA has
striven to find workable resolution of issues, and will be
requesting comment on our proposed solutions.
The EPA has devised a standard for sources in this category
that permits compliance either by applying reference technology
5-4
-------
(MACT or an approved alternative) to all points specified by the
standard, or alternatively by using emissions averaging,
including Pollution Prevention/ Early Reduction credits.
Once the floor level of control was established, as required
by the Act, the EPA considered the floor level of control for
every kind of emission point and the options for control
requirements beyond the floor. Bearing in mind all relevant
statutory criteria, the EPA considered the magnitude of the
emissions reduction to be obtained at a plant, the relative costs
of different levels of controls and the general characteristics
of this source category compared to other sources of hazardous
air pollution when considering control requirements.
The alternative options were structured for each emission
point. The same technology was used for each alternative but
different parameters of emission points were generated which
would result in a broader coverage as alternatives became more
stringent.
5.3.3 Description of MACT and the Regulatory
Alternatives
The options and floors chosen for each source are as
follows: (See Tables 1 and 2 for details)
Process Vents
Using the TRE calculations, the EPA determined that the
existing source floor level of control for process vents is
equivalent to a cost effectiveness value of $1,500. The new
source floor level of control is a TRE based cost effectiveness
value of $11,000. The proposed standard would require combustion
with 98 percent control efficiency for existing and new source
process vents with TRE cost effectiveness values of less than
$5,000 and $11,000, respectively.
Storage Vessels
For purposes of selecting control requirements, storage
vessels were divided by capacity as follows: 10,000 to 20,000
gallons (small); 20,000 to 40,000 gallons (medium); and greater
than 40,000 gallons (large). These size divisions are commonly
used in regulations for storage vessels. The existing source
floor level of control is a vapor pressure of 13.1 kPa (1.9 psia)
for both large and medium storage vessels. The floor analysis
for small storage vessels indicates that less than 12 percent of
all small vessels are controlled to the efficiency of the
reference control, and thus there is no floor control for
existing source small storage vessels. The new source floor
level of control is a vapor pressure of 13.1 kPa (1.9 psia) for
small and medium storage vessels.
The control requirements for storage vessels apply to
5-5
-------
existing source medium and large storage vessels storing liquids
of vapor pressures more than 13.1 kPa (1.9 psia) and 5.2 kPa
(0.7 psia), respectively. The proposed applicability crij:3rion
for new source small and medium storage vessels is storage of
liquids with vapor pressures greater than 13.1 kPa (1.9 psia).
There is no proposed control requirement for existing source
small storage vessels. The proposed applicability criterion for
new source large vessels is vapor pressures above 0.7 kPa
(0.1 psia). The control requirements are the same for new and
existing source vessels in the medium and large size divisions.
Transfer Operations
The existing and new source floor levels of control for
transfer operations are a vapor pressure and throughput
combination of 10.3 kPa (1.5 psia) and 643.5 m3/yr (0.17 million
gal/yr), respectively.
Wastewater Streams
The floor level of control for new source wastewater streams
is 10 ppmw for very volatile HAP's (WHAP) . The control
requirements for new source wastewater streams are to be applied
to those streams with 10 ppmw WHAP and 1000 ppraw volatile HAP.
The applicability criteria for control of existing source
wastewater streams are 10 1pm flow and 1000 ppmw volatile HAP.
There is no floor for existing wastewater streams.
Ecruipment Leaks
The regulation would apply to both existing and new process
units. It categorizes the regulated processes into five groups
and uses a staggered implementation scheme, requiring some
process units to comply 6 months after promulgation, while others
would have to comply as late as 18 months after promulgation.
*
The regulation applies to those pieces of equipment
currently regulated in the existing equipment-leak rules,
including all valves, pumps, compressors, pressure relief
devices, open-ended valves or lines, connectors, closed-vent
systems and control devices, sampling connection systems, and
product accumulator vessels.
These standards are estimated to reduce emissions by about
60-70 percent and after control, leak frequencies (i.e. the
percentage of equipment components within a process unit that
leak) would be approximately 5 percent.
The standard only applies to equipment containing or
contacting process materials that are five percent VHAP or
greater. In certain chemical plants, particularly those with
batch processes that produce a number of different products, some
equipment is used in VHAP service only occasionally. In such
cases, implementation of the standard could be difficult and
5-6
-------
cases, implementation of the standard could be difficult and
would achieve very little emission reduction. For these
situations, equipment that is operated in VHAP service for 300
h/yr is exempt.
The HON will establish a control requirement for each kind
of emission point regulated by Subparts G and H. To facilitate
emissions averaging, the standard will also establish an
allowable emissions level for the emission points regulated by
Subpart G at each source. The allowable emissions level will be
equal to the sum of the emissions from each point in the source
excluding equipment leaks, after the required controls have been
applied. As such, the allowable emissions level is set for a
given mix of emission points, and the emissions limit will change
as the number of each kind of emission point in the source
changes.
Both Group 1 and 2 emission points as defined in Subpart G
must be included in the calculation of the source's allowable
emissions level. However, emission points associated with
equipment that is no longer operational are not to be included in
the calculation of the emissions limit because these points are
not subject to the standard. Though the form of the standard
established in Subpart G of the HON is an allowable emissions
level, the EPA does not anticipate that any owner or operator
will actually calculate emissions estimates for every point in
order to comply with the standard. Actual emissions estimates
will only be required for those emission points that are included
in emissions averages. For emission points that are not included
in emissions averages, compliance will be determined on a point
by point basis. For these points, the use of an appropriate and
well maintained control serves as a surrogate for an emissions
estimate in determining compliance with the allowable emissions
level.2
5-7
-------
Table 5-1
Regulatory Options
Process Vents
0 Existing - C/E < $2,000/Mg
0 New - C/E < $ll,000/Mg
Transfer Operations
0 Existing and New - Control for racks with vapor
pressure > 10.3 kPa (1.5 psia) and throughput > 643.5
m3/yr (0.17 million gallons/yr)
Wastewater Operations
0 Existing - > 10 liter/min and > 1000 ppmw total VOHAP
0 New
Control for WRAP > 10 ppmw and > 1000 ppmw total
VOHAP
Storage Vessels
0 Small Tanks
Existing - no control
New - control for vapor pressure > 13.1 kPa (1.9
psia)
0 Medium Tanks
Existing - control for vapor pressure > 13.1 kPa
(1.9 psia)
New - same as existing
0 Large Tanks
Existing - control for vapor pressure > 5.2 kPa
(0.75 psia)
New - control for vapor pressure > 0.7 kPa
(0.1 psia)
5-8
-------
Table 5-2
Floor Elements
Process Vents
0 Existing - control vents with cost effectiveness of
< $1500/Mg
0 New - No control required
Wastewater Operations
0 Existing - No control required
0 New - control for streams > 10 ppmw WHAP
Transfer Operations
0 Existing - control for racks loading liquid HAP's with
vapor pressure > 10.3 kPa (1.5 psia) and throughput >
643.5 m3/yr (0.17 million gallons per year)
0 New - same as existing
Storage Vessels
0 Small Tanks
Existing - no control required
New - control for tanks storing HAP's with vapor
pressure > 13.1 kPa (1.9 psia)
0 Medium Tanks
Existing - control for tanks storing HAP's with
vapor pressure > 13.1 kPa (1.9 psia)
New - same as existing
0 Large Tanks
Existing - control for tanks storing HAP's with
vapor pressure > 13.1 kPa (1.9 psia)
New - control for tanks storing HAP's with vapor
pressure > 5.2 kPa (0.75 psia)
5-9
-------
5.3.4 Role of Coat Effectiveness
EPA has often used cost effectiveness (C/E) analysis as a
guide for selecting among regulatory alternatives. Regulatory
alternatives can sometimes be ranked based on stringency of
control. All else equal, alternatives yielding the same level of
control but higher average C/E (usually control cost per ton of
pollutant reduced) could be eliminated from consideration.
Incremental C/E can then be calculated for each step up the
stringency ranking. The selection of a regulatory alternative
could then be made by selecting the most stringent alternative
below some agreed upon C/E cutoff. The level of such a C/E
cutoff would generally depend on the pollutant being controlled
and other factors.
However, since the HON regulation is to be a MACT standard,
the role of C/E analysis for selecting a regulatory alternative
for this regulation is somewhat limited. A MACT floor level of
control stringency is required regardless the C/E at this control
level. At stringency levels beyond the MACT floor, cost
effectiveness can be legally considered, and EPA believes cost-
effectiveness of controls is a primary consideration for
stringency levels beyond the MACT floor.
5.3.5 Economic Incentives; Subsidies, Fees, and Marketable
Permits
Economic incentive strategies, when designed properly, act
to harness the marketplace to work for the environment. Such
strategies influence, rather than dictate producer and consumer
behavior, in order to achieve environmental goals. They make
environmental protection of economic interest to producers and
consumers. When feasible, properly designed systems can be
employed to achieve any environmental goal at the least cost to
society.
Several types or categories of economic incentive strategies
exist. One broad category of incentive programs is based of the
use of fees or subsidies. Fee programs establish and collect a
fee on emissions, providing a direct economic incentive for
emitters to decrease emissions to the point where the cost of
abating emissions equals the fee.3 Similarly, subsidy programs
provide a direct incentive for emitters to decrease emissions by
providing subsidy payments for emission reductions beyond some
baseline.
A second broad category of economic incentive strategies is
based on the concept of emissions trading. A wide range of
variations in emissions trading programs exist. The common idea
in such programs is to allow sources with low abatement cost
5-10
-------
abatement cost alternatives so that the cost of meeting a given
total level of abatement is minimized.
There are two important constraints regarding the
workability of economic incentive programs. The first constraint
concerns the problem of emissions monitoring, without an
effective emissions monitoring system it is not possible to
charge fees or use other economic incentive strategies. Only the
traditional "command and control" approach of requiring
employment of specific control technologies is feasible in this
circumstance.
The second problem constraining the potential value of
economic incentive strategies is legal. Various legal
restrictions imposed by the CAAA limit the applicability of
economic incentive strategies to reduce air pollution.
Legal constraints imposed by Title III of the Act severely
limit the usefulness of economic incentive strategies for
reducing HAP emissions. Title III requires the implementation of
MACT. Thus sources have little or no choice as to the type or
level of control they implement except perhaps if going beyond
the MACT floor control level. As a limited economic incentive,
it may the be possible to impose, for example, and emissions fee
on residual emissions after the MACT technology is employed to
encourage additional control.
Hence the applicability of economic incentive programs for
the HON regulation is very limited. However, limited emissions
at the facility level may be feasible and legal given that each
facility is considered an emissions source. This emissions
averaging strategy allows facilities to trade emission reductions
across emission points so as to minimize control costs for any
given facility level emission reduction requirement. Thus, to
this extent, an economic incentive strategy may be implemented
for the HON regulation.
The analysis of control costs (Chapter 6) does not
incorporate emission averaging. It is recognized that if
facilities were to use this strategy their costs of control
should fall. Thus, the costs calculated are an overestimate. It
also should be noted that the economic impacts and benefits
analyses (Chapters 7 and 8) are only for the TIC option due to
data paucities. These analyses are therefore overestimates of
the impacts and benefits of the regulation. The control costs
calculated in Chapter 6 do, however, include data for the MACT
floor and more stringent options up to TIC for each emission
point.
5-11
-------
References
1. U.S. Environmental Protection Agency, Office of Air
Quality Planning and Standards. Draft Preamble for the HON.
December 1991.
2. Reference 1.
3. U.S. Environmental Protection Agency, Office of Air
Quality Planning and Standards. Municipal Waste Landfills -
Regulatory Impact Analysis. March 1991.
5-12
-------
CHAPTER 6
CONTROL COST AND COST EFFECTIVENESS
Due to the unavailability of complete information upon which
to base emission and control impacts to the desired degree of
accuracy for all chemicals, estimates were developed in the
following manner. As much information gathering and analysis as
possible was completed for those chemical production processes
(CPP) used in the manufacture of SOCMI chemicals.1 Emissions and
control impacts were then estimated for each CPP involved in the
manufacture of those chemicals for which complete information was
available.2 For those chemicals with incomplete information,
generic estimates of emissions and control impacts were
developed.
Section 6.1 of this chapter presents and discusses the cost
and cost effectiveness for controlling each of the five HON
emissions source types. Section 6.2 presents the method for and
results of estimating the cumulative control cost of producing
SOCMI chemicals. Section 6.3 addresses control costs in light of
the regulatory alternatives, and Section 6.4 presents the
estimated national costs of the HON.
6.1 Cost Impacts of control Technologies
In developing facility level and national costs for the HON,
source emission models and appropriate control technologies were
paired with the CPP units in the HON database. Control impacts
were determined for each modeled emission source at a process
unit that was required to implement additional control.
The costs, emission reductions, and cost effectiveness on a
model plant basis, are shown in Tables 6-1 through 6-5. Table 6-
1 shows the annualized costs, emission reductions, and cost
effectiveness for controlling 12 model process vent streams.
These model vent streams were selected to illustrate a range of
impacts as well as a range of production processes and control
For a detailed explanation of the methodology used to
assess emission and control impacts, refer to Volume 1A,
Chapter 4 of the HON BID.
The chemicals for which sufficient information was found
account for more than 90 percent of total SOCMI
production capacity.
6-1
-------
technologies.3 For this analysis it was assumed that each
production process would be equipped with a dedicated combustion
device. Some cost savings would be achieved at larger facilities
if a common combustion device was used to control multiple
production process vent streams. As shown, the annualized costs
range from $8 to $2,630,000.
Tables 6-2 and 6-3 show annualized costs, emission
reductions, and cost effectiveness for controlling equipment
leaks for 6 model units. The model units represent combinations
of numbers of equipment components and existing control levels.4
The recovery credit values are determined by multiplying VOC
emission reductions by the average chemical price of $l,590/Mg.
Table 6-2 presents annualized costs, emission reduction, and cost
effectiveness when quarterly valve monitoring is required.
Quarterly monitoring is required if less than 2 percent of all
valves are leaking at or above a leak definition of 500 ppmv.
Table 6-3 presents annualized costs, emission reduction, and cost
effectiveness when monthly valve monitoring is required. Monthly
monitoring is required if more than 2 percent of all valves are
leaking at or above a leak definition of 500 ppmv. The costs
range from a savings of $246,539 to a net cost of $390.
For a detailed explanation of the development and use of
model process vent streams see Volume 1C, Chapter 2 of
the HON BID. The model streams are subsets of all the
process vent streams in the database.
For a detailed explanation of the development and use of
equipment leak model units see Volume 1C, Chapter 6 of
the HON BID.
6-2
-------
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-------
Table 6-4 summarizes the annualized costs, emission
reductions, and cost effectiveness for controlling each of 17
model storage tank farms.5 The costs depend on the emission rate
of the storage vessel and the specific control device used. For
this analysis it was assumed that each individual tank would be
equipped with a dedicated control device. However, some cost
savings could be achieved at larger facilities if, for instance,
a single condenser serves all the tanks in one farm,, The product
recovery credit shown is the value in dollars per year of the
recovered product. It is calculated by multiplying the emission
reduction by the unit price of the individual chemical. The
total annualized costs for the model tank farms range from a
savings of $280,000 to a net cost of $556,000.
Table 6-5 summarizes the annualized cost, emission
reductions and cost effectiveness for controlling 18 model waste
water streams with steam strippers. A total of 84 model
wastewater streams were created from various combinations of flow
rate, VOHAP concentration, and strippability.6 Although impact
estimates were made based on specific stream characteristics of
all 84 streams, a subset of 18 examples were selected from the 84
model streams to illustrate the potential cost and environmental
impacts. These 18 were selected to provide a manageable number
of examples while still illustrating the full range of impacts.
For calculating treatment costs, it was assumed that facilities
would combine wastewater streams for treatment whenever
technically feasible. Accordingly, steam strippers were sized
and costed for combined wastewater feed rates of 50 and 500
liters per minute (1pm). As shown in table 6-5, the annualized
costs per facility range from $121,000 to $418,000.
For a detailed explanation of the development and use of
model storage tank farm farms see Volume 1C, Chapter 4 of
the HON BID.
For a detailed explanation of the development and use of
model wastewater streams see Volume 1C, Chapter 5 of the
HON BID.
6-6
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Table 6-6 shows the annualized cost, emission reduction and
cost effectiveness for controlling 20 model transfer operations.7
The costs depend on the transfer rate for a given loading rack
and the combustion device selected for control. For this
analysis a single control device was assumed to service the
entire facility. The annualized costs of the control systems for
model transfer racks range from $9,630 to $84,400.
6.2 Cumulative control Cost Analysis
In addition to addressing the cost of the HON on a facility
level, the HON economic impact analysis requires an estimate of
the potential impact of the HON on SOCMI chemical prices. To
better facilitate this assessment, an analysis of the potential
cumulative control cost associated with each chemical's
production was performed. The basis for this analysis was
chemical use trees developed specifically for the HON.
A chemical tree conveys the production relationship between
chemicals, indicating the possible precursor evolution of a SOCMI
chemical. For instance, the tree in Figure 6-1 depicts the
relationship between chemical A and its precursors. Chemical A
can be produced by either combining chemicals B and C, or
combining chemicals E and F. Chemical B can be produced from
chemical D, and D by combining chemicals G and H.
Figure 6-1 Hypothetical Chemical Tree
Chemical A (B + C)
D (G + H)
(E + F)
For a detailed explanation of the development and use of
model transfer loading operations see Volume 1C, Chapter
3 of the HON BID.
6-10
-------
Table 6-6. Annual Control Cost Estimates3
Model
Rack
Number
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Total
Annual! zed
Cost ($/yr)
9,
63
9,
66
10
84
22
25
39
28
6,
63
10
15
63
16
14
74
67
38
630
,800
650
,000
,600
,400
,600
,900
,000
,100
870
,800
,100
,600
,800
,800
,300
,300
,200
,400
Total HAP/VOC
Emission
Reduction
(Mg/yr)
3
6
1
3
9
9
2
6
2
9
2
2
8
.56
.32
.42
.08
.19
3
.63
1
6
5
.34
.32
.96
.72
.08
.11
.55
4
4
* 10-6
* 10-4
* 10"4
* 10-2
* 10-2
.39
* 10-1
.67
.39
.65
* io~6
* 10-4
* ID"4
* 10-4
* 10-1
* 1Q-1
* 10-1
.46
.22
19.3
COSt
Effectiveness
($/Mg)b
2
1
6
2
1
2
2
1
6
4
2
1
3
1
3
7
1
1
1
1
.70
.01
.81
.14
.16
.49
.35
.55
.11
.98
.93
.01
.42
.61
.06
.97
.68
.67
.59
.99
*
*
*
it
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
109
108
10?
106
105
104
104
104
103
103
109
108
10?
10?
105
104
104
104
104
103
aEach transfer rack has a dedicated control device.
bCost Effectiveness ($/Mg) = Total Annual Cost ($/yr) *
Total HAP/VOC Emission Reduction (Mg/yr).
6-11
-------
6.2.1 Building Chemical Trees
Chemical trees are formed by linking together individual
CPPs. A CPP is identified by its chemical inputs and outputs.
The chemical output of one process is matched to the chemical
input of another to form a chain. Additional processes that
match are linked to the chain to form the tree. The HON trees
begin with a "root" chemical and identify all the chemicals that
can be used to produce the root chemical. Each root chemical can
be associated with a producer, and the cost of controlling the
process that makes each precursor chemical can be introduced into
the tree framework.
6.2.2 Cumulative control Coat Methodology
Cumulative control cost refers to the price increase for the
root chemical that is necessary to recover HON compliance cost,
given that the root chemical and its precursor chemicals incur
additional production costs as a result of regulation. In simple
form, the cumulative cost of controlling a root chemical is the
sum of all control costs for each link in the root chemical's
production chain. Because the market relationships between
production process links are not fully characterized by a
chemical tree, each link is assumed to denote an imaginary common
marketplace where output chemicals of one process are sold as
inputs to another process. One limitation of the cumulative
control cost methodology is that market quantity adjustments are
not considered. There are hundreds, possibly thousands, of
market interactions that would have to be characterized in order
to incorporate the chemical production quantity changes that
result from the HON into the analysis, and this was not deemed
feasible. Therefore, the chemical trees cumulative control cost
analysis only addresses for each chemical the probable price
increase necessary to recover the HON compliance cost when all
other variables are held constant.8
Another limitation already alluded to is that the chemical
trees represent possible market interactions, not actual
interactions. Not all process links in the chemical trees are
technically or economically viable. Without an indepth
investigation of individual circumstances, an interaction
determination cannot be made with certainty.
6.2.3 Cumulative Control Cost Results
The cumulative control cost analysis was performed for the
HON options representing total industry control (TIC). This
analysis, therefore, represents an upper-bound, or worst-case
cost impact scenario. Table 6-7 shows the results of the
For a summary of the indepth economic impact analysis of
the representative HON chemicals, refer to Volume 1A,
Chapter 6 of the HON BID, or Chapter 7 in this document.
6-12
-------
cumulative control cost analysis for the TIC options. The
average percentage cost increase for all HON chemical products
appears prohibitively high due to the extremely low cost
effectiveness of controlling some small (less than 1.00 Gg/yr)
production process units. Of course, many of these units would
be unaffected by options less stringent than TIC. The chemical
percent price increase necessary to recover HON compliance costs
is relatively insignificant for chemicals whose annual production
exceeds 1 Gg.
6.3 Costs and Regulatory Options
Tables 6-8 through 6-19 present the total annual cost,
emission reductions, and cost effectiveness for the control
options considered for each source type (with the exception of
equipment leaks which is governed by a negotiated regulation).
It is important to note that the information in these tables
pertains only to those CPPs for which sufficient information was
available. Recall from this chapter's introduction that these
CPPs account for over 90 percent of total SOCMI production.
Tables 6-8 and 6-9 present the control options for existing and
new process vents. Tables 6-10 and 6-11 present the control
options for existing and new wastewater sources. Tables 6-12 and
6-13 present the control options for existing and new transfer
operations. Tables 6-14 and 6-15 present the control options for
existing and new 10,000 to 20,000 gallon storage vessels. Tables
6-16 and 6-17 present the control options for existing and new
20,000 to 40,000 gallon storage vessels. Tables 6-18 to 6-19
present the control options for existing and new storage vessels
with greater than 40,000 gallon capacity.
6.4 National costs
6.4.1 Monitoring, Recordlceepina. and Reporting Costs
The national costs of monitoring, recordkeeping, and
reporting from compliance with the HON were calculated.
Estimates of hours per item (i.e., a required action), frequency
of required action per year, and number of respondents used in
the cost calculations were prepared in consultation with people
who routinely work with or consult major chemical firms or have
considerable experience with such firms. These costs are shown
in Table 6-20.
To compute the costs associated with the burden estimates, a
wage rate of $32 per hour (in 1990 dollars) was assumed. This
assumption was based on 85 percent of the labor accomplished by
technical personnel (typically by an engineer with a wage rate of
$33 per hour), 10 percent by a manager (at $49 per hour), and 5
percent clerical (at $15 per hour). All of the wage rates
include an additional 110 percent for overhead. Costs were
annualized assuming an expected remaining life for affected
6-13
-------
facilities of 15 years from HON promulgation (officially November
1992), and using an interest rate of 10 percent.
The annualization of costs took into account the different
starting points for compliance requirements. For example,
facilities must develop implementation plans for monitoring,
recordkeeping, and recording by 12 or 18 months before the
compliance date. The starting point for annualizing these costs
is taken as November 1993, a choice that employs the conservative
assumption that facilities will develop implementation plans by
the earliest possible time.9
Compliance requirements vary in terms of frequency, and are
taken into account in the annualization of costs. Performance
tests to demonstrate compliance with the control device
requirements are required once. Compliance requirements also
include monitoring of operating parameters of control devices and
records of work practice and other inspections. These activities
must be reported semiannually. The compliance requirements that
must be met only once are annualized over the time from the year
in which they are to take place to the expected end of facility
life (November 2007) .
6.4.2
Table 6-21 shows the national annual control cost and
average cost effectiveness for the options currently proposed for
the HON. These costs include costs for monitoring,
recordkeeping, and reporting. The national annual control cost
and cost effectiveness are estimated for the fifth year following
proposal. The fifth year is used to approximate the date by
which all affected sources will have complied with the
regulation. The total annual control cost is estimated to be
$182 million.
9For more information, refer to the memorandum from Larry
Sorrels, U.S. EPA/OAQPS, to Troy Hillier, U.S. OMB, dated October
7, 1992.
6-14
-------
Table 6-7. Cumulative Control Cost Analysis Results
For Total Industry Control (TIC) Options
Chem.
Pro-
duction
(Gg/yr)
> 0
> 1
> 5
> 10
% Of
HON
Chem.
100
87
79
66
Percent
of Total
HON Pro-
duction
100.00
99.99
99.89
99.41
Average
Cumul .
Cost
Increase
($Ag)
19.85
0.069
0.066
0.020
Median
Cumul .
Cost
Increase
($/kg)
0.016
. 0.014
0.012
0.009
Average
Percent
Cost
Increase
1,158
3.74
3.55
1.35
Median %
Cost
Increase
1.12
0.94
0.85
0.71
6-15
-------
Table 6-8. Control Options For Process Vents
Existing Sources
Option*
1
2
3
4
5
6
7
3
Emission
Reduct .
(Mg HAP
per yr)
231,980
233,556
235,115
236,186
236,790
237,047
237,401
237,601
Percent
HAP
Reduct . b
93
93
94
94
94
95
95
95
Annual
Cost
($1000)
51,032
53,882
57,701
61,868
65,406
67,601
73,198
92,614
Avg . Cost
Effective-
ness
($/Mg)
220
231
245
262
276
285
308
390
Incremental
Cost
Effective-
ness ($/Mg)
1,808
2,450
3,891
5,858
8,546
15,800
97,153
'Option 1 -
Option 2-
(MACT floor) control vents with cost effectiveness
< $l,500/Mg.
control vents with cost effectiveness < $2,000/Mg.
This was the regulatory option chosen.
Option 3
Option 4
Option 5
Option 6
Option 7
Option 8
""Baseline
control vents with cost effectiveness < $3,000/Mg.
control vents with cost effectiveness < $5,000/Mg.
control vents with cost effectiveness < $7,500/Mg.
control vents with cost effectiveness <$10,000/Mg.
control vents with cost effectiveness <$28,000/Mg.
control all vents with any HAP's (i.e., TIC).
emissions are 250,664 Mg/yr of HAP.
6-16
-------
Table 6-9. Control Options For Process Vents
New Sources
Option*
l
2
3
4
Emission
Reduct .
(Mg HAP
per yr)
45,046
45,106
45,132
45,144
Percent
HAP
Reduct . b
95
95
95
95
Annual
Cost
($1000)
15,206
16,199
17,745
20,203
Avg. Cost
Effective-
ness
($/Mg)
338
359
393
448
Incremental
Cost
Effective-
ness ($/Mg)
16,550
59,452
205,528
'Option 1-
Option 2-
Option 3-
Option 4-
bBaseline
(MACT floor) control vents with cost effectiveness
<$ll,000/Mg. This was the regulatory option
chosen.
control vents with cost effectiveness <$28,000/Mg.
control vents with cost effectiveness
<$100,000/Mg.
control all vents with any HAP's.
emissions are 47,626 Mg/yr of HAP.
6-17
-------
Table 6-10. Control Options For Wastewater
Existing Sources
Option*
1
2
3
4
5
6
7
Emission
Reduct .
(Mg HAP
per yr)
82,100
82,200
82,800
85,300
85,700
85,800
85,700
Percent
HAP
Reduct . b
73
73
74
76
77
77
77
Annual
Cost
($1000)
23,900
24,500
25,700
34,300
37,900
38,900
37,900
Avg . Cost
Effective-
ness
($/Mg)
291
298
310
402
442
453
442
Incremental
Cost
Effective-
ness ($/Mg)
5,126
1,968
3,500
7 , 644
19,890
15,002
'MACT floor is no control.
Option 1 - control streams > 10 1pm and > 1000 ppmw volatile
HAP's. This was the regulatory option chosen.
Option 2-
Option 3-
Option 4-
Option 5-
Option 6-
control streams > 5 1pm and > 1000 ppmw volatile
HAP's.
control streams > 5 1pm and > 800 ppmw volatile
HAP•s.
control streams > 2 1pm and > 500 ppmw volative
HAP's.
control streams > l 1pm and > 200 ppmw volative
HAP's.
control streams > l 1pm and > 100 ppmw volative
HAP's.
Option 7- control all streams with any HAP's (i.e., TIC).
bBaseline emissions are 111,984 Mg/yr of HAP.
6-18
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Table 6-11. Control Options For Wastewater
New Sources
Option*
1
2
3
4
Emission
Reduct .
(Mg HAP
per yr)
17,790
24,170
24,270
24,595
Percent
HAP
Reduct. b
64
87
88
89
Annual
Cost
($1000)
6,400
16,500
17,200
33,700
Avg. Cost
Effective-
ness
($/Mg)
360
685
710
1,370
Incremental
Cost
Effective-
ness ($/Mg)
1,595
6,990
49,980
'Option 1 -
Option 2-
Option 3-
Option 4-
(MACT floor) control streams > 10 1pm and > 1000
ppmv volatile HAP's. This was the regulatory
option chosen.
control streams > 1 1pm and > 10 ppmw highly
volatile HAP's; other streams > 1 1pm and > 800
ppmw volatile HAP's.
control streams > 1 1pm and > 10 ppmw highly
volatile HAP's; other streams > 1 1pm and > 500
ppmw volatile HAP's.
control streams > 1 1pm and > 10 ppmw highly
volatile HAP's; other streams > 1 1pm and > 200
ppmw volatile HAP's.
Option 5'
bBaseline
control all streams with any HAP's (i.e., TIC).
emissions are 21,277 Mg/yr of HAP.
6-19
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Table 6-12.
Control Options For Transfer
Existing Sources
Option*
1
2
Emission
Reduct .
(Mg HAP
per yr)
360
424
Percent
HAP
Reduct . b
65
77
Annual
Cost
($1000)
3,128
6,521
Avg . Cost
Effective-
ness
($/Mg)
8,690
15,416
Incremental
Cost
Effective-
ness ($/Mg)
53,860
•Option 1 -
(MACT floor) control racks loading liquid HAP's
with vapor pressure > 10.3 kPa (1.5 psia) and
throughput > 643.5 m3/yr (0.17 million gallons per
year). This was the regulatory option chosen.
control all racks loading liquid HAP's (i.e.,
TIC) .
Option 2-
bBaseline emissions are 551 Mg HAP/yr.
6-20
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Table 6-13. Control Options For Transfer Operations
New Sources
Option1
1
2
Emission
Reduct .
(Mg HAP
per yr)
68
81
Percent
HAP
Reduct . b
65
77
Annual
Cost
($1000)
594
1,239
Avg . Cost
Effective-
ness
($/Mg)
8,690
15,420
Incremental
Cost
Effective-
ness ($/Mg)
53,860
"Option 1 -
(MACT floor) control racks loading liquid HAP's
with vapor pressure > 10.3 kPa (1.5 psia) and
throughput > 643.5 m3/yr (0.17 million gallons per
year). This was the regulatory option chosen.
Option 2-
bBaseline emissions are 105 Mg HAP/yr.
control all racks loading liquid HAP's (i.e.,
TIC) .
6-21
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Table 6-14. Control Options For Storage Vessels:
Existing Sources 10,000 to 20,000 Gallon Capacity
Option*
1
2
3
Emission
Reduct .
(Mg HAP
per yr)
53
322
359
Percent
HAP
Reduct . b
14
85
95
Annual
Cost
($1000)
318
7,736
18,949
Avg . Cost
Effective-
ness
($/Mg)
6,000
23,950
52,780
Incremental
Cost
Effective-
ness ($/Mg)
27,474
311,500
*MACT floor is no control. The MACT floor was the regulatory
option chosen.
Option 1 - control tanks storing HAP's with vapor pressure >
60.1 kPa (11.1 psia).
Option 2-
control tanks storing HAP's with vapor pressure >
13.1 kPa (1.9 psia).
Option 3- control all tanks storing HAP's (i.e., TIC).
bBaseline emissions are 379 Mg/yr of HAP.
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Table 6-21. National Control Cost Impacts In The Fifth
Year*
Emission
Source Type
and Other
Cost
Categories
Equipment
Leaks
Process Vents
Storage
Vessels
Wastewater
Collection
and Treatment
Transfer
Operations
Monitoring,
Recordkeeping
and Reporting
Total
Total
Capital
Cost
(106 $)
110
92
49
86
10
. N/A
347
Total
Annual
Cost
(106 $)
(1)
75
19
35
5
48
182
Average
HAP Cost
Effective-
ness ($/Mg
HAP)b
(20)
260
3,400
280
10,000
N/C
280
Average
voc Cost
Effective
-ness
($/Mg
VOC)
(10)
160
3,400
80
10,000
N/C
140
'Existing emission points account for 84 percent of the total.
Emission points constructed or modified in the first five years
account for the additional 16 percent.
bAverage cost effectiveness values are determined by dividing
total annual costs by total annual emission reduction.
N/A = Not Available
N/C = Not Calculated
6-29
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CHAPTER 7
ECONOMIC IMPACT ANALYSIS
7.1 Industry Profile
7.1.1 Introduction
It is necessary to define the affected industry before
beginning an economic analysis.1 In the subsections below, a
brief synopsis of the U.S. synthetic organic chemicals industry
is presented. The purpose of the profile is to identify factors
and trends likely to influence the nature and magnitude of the
economic impacts of the HON, which will involve the regulation of
approximately 450 synthetic organic chemicals. Due to the large
number and diversity of chemicals that will be regulated under
the HON, the scope of the profile is broad. Recent trends (up to
1989) in the synthetic organic chemicals industry are covered.
Topics covered include industry structure, production trends,
supply, demand, end uses, foreign trade, pricing, and
profitability.
It should be noted that the U.S. International Trade
Commission defines synthetic organic chemicals to include
intermediate and end-use organic chemicals.2 For this report,
however, the synthetic organic chemicals industry will be taken
to include all organic chemicals. This definition reflects the
interdependence of organic chemicals in processes. This is also
consistent with definitions EPA has used in previous studies.
Upon examination of the synthetic organic chemicals
industry, one characteristic that is quickly evident is its
diversity. More than 7,000 chemicals are produced by this
industry for varied uses such as packaging, consumer products,
automotive products, housing and construction, Pharmaceuticals,
and agriculture.3 And in all, there are nearly 1,500 firms in
the U.S. that produce chemicals and similar products.4
Complexity is also a characteristic of the synthetic organic
chemicals industry. Many synthetic organic chemicals are
produced as coproducts of other chemicals, and can be produced by
more than one process. With more than one process route
possible, process substitution can occur given price changes and
technical considerations. Some chemical industries have the
ability to switch between different types of feedstocks. One
example is the U.S. petrochemical industry. Two-thirds of its
capacity has the capability to switch back and forth between
heavy liquids (e.g. petroleum)-based feedstocks and natural gas
liquids-based feedstocks.5 Due to the interdependence of many
synthetic organic chemicals, many producers of synthetic organic
chemicals are horizontally and/or vertically integrated.
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The degree of both types of integration increased in the
late 1980s. It came in the form of acquisitions, spin-offs,
plant closings, and early retirement and layoff programs. An
example of this is the styrene-butadiene industry, which in 1984
had 13 firms operating 24 plants. By 1989, the same industry
contained five firms operating six plants.7 Takeovers have
decreased due to high levels of debt among chemical companies and
the demise of the junk bond market.
Most plants producing synthetic organic chemicals are
located in five states: Texas, Louisiana, New Jersey, Ohio, and
Illinois, with Texas containing the most plants. Plant
capacities for this industry vary widely, from under 500 kg per
year to over 2,000 Gg.8 Generally speaking, basic and
intermediate chemicals are produced in larger volumes than
end-use chemicals, which means that plants producing basic and
intermediate chemicals normally have larger capacities than end-
use chemical plants.
Included among selected Census data for eight four-digit SIC
categories that can be considered to comprise the synthetic
organic chemical industry (see Table 7-1)9 is data giving an
indication of the incidence of small facilities in the industry.
In every category but SIC 2824 (Manmade Organic Fibers, except
Cellulosic), establishments with fewer than 20 employees account
for one-third or more of all establishments. The highest
proportion is in SIC 2833 (Medicinal Chemicals and Botanical
Products), in which 62.7 percent of all establishments have fewer
than 20 employees. SIC 2824 has the highest incidence of
establishments with 100 or more employees, at 72.2 percent.
Table 5 shows the value distribution of shipments by
establishment size. Due to their small size, establishments with
less than 20 employees account in all cases for a lower share of
the total value of shipments than of the total number of
establishments. In every four-digit code other than SIC 2891
(Adhesives and Sealants), establishments with 100 or more
employees contribute more than 50 percent of total value of
shipments, ranging up to 99.1 percent for SIC 2824. The highest
contribution to total value of shipments by establishments with
fewer than 20 employees is 15.3 percent in SIC 2891.
7.1.2 Production, Shipments, and Capacity Utilization
From production and sales data compiled by the U.S.
International Trade Commission (ITC) in 1987 and 1988 for
synthetic organic chemicals and their raw materials (basic
organics), there is presented information for 13 major categories
of synthetic organic chemicals—based principally on end use—and
two categories of basic organics. Total production of organic
chemicals in 1988 was 387,659 pounds (176,209 kilograms). It
should be noted, however, that the ITC data reflect duplication
because production and sales of some chemicals are measured at
7-2
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more than one stage of the manufacturing process. For example,
intermediates will be double-counted if production and sales of
the finished chemicals in which they are consumed are also
reported. Nevertheless, the data give a good indication of the
comparative sizes of the various different major categories of
synthetic organic chemicals. In each category, quantity sold is
less than quantity produced because a portion of output is
consumed captively. This is particularly true in categories such
as "primary products from petroleum and natural gas" and "cyclic
intermediates"— where the products are generally intended for
further processing downstream. Due to some definitional changes,
the data for 1987 and 1988 are not strictly comparable.10
As for the whole chemical industry, including allied
products — SIC 28 — increased by 2 percent from 1989 to 1990."
This followed higher increases of 2.9 percent in 1989 and 5.4
percent in 1988. Output of industrial organic chemicals,
however, fell 2 percent from 1989 to 1990, a sharp departure from
the increase of 5.9 percent occurring from 1988 to 1989. While
production in SIC 28 has closely followed total manufacturing
output since 1985, output in SIC 28 has increased only 20 percent
since 1980, total manufacturing output has increased by 39
percent in the same period. There was an overall increase of 8
percent in production of plastics from 1989 to 1990, a reversal
from the decrease of 2 percent recorded from 1988 to 1989. This
increase partially explains the increase in output in 1990 of two
important plastics feedstocks: ethylene and propylene. In 1990,
ethylene production increased by 7 percent, and propylene
production by 8 percent.
An examination of selected SIC groupings that include
synthetic organic chemicals reveals that the value of shipments
in SIC 28 was $274.5 billion in 1989.n In the SICs defined by
the Commerce Department to represent the petrochemicals industry,
value of shipments was $123.6 billion, about one-half of which
was contributed by SICs 2865 and 2869. Because of an increase in
the price level, growth in constant-dollar value of shipments
has been less than growth in current-dollar value of shipments.
Constant-dollar value of shipments is usually a good proxy for
the physical volume of shipments. An increase in the constant-
dollar value of shipments from 1988 to 1989, despite a decline in
production, is most likely due to draw downs in inventories,
causing shipments to exceed production. It also is partially
explained by a change in product mix, particularly an increase in
the average quality of shipments, which would be reflected in an
increase in shipment value, but not a price adjustment.
7-3
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Table 7-1
SIC Codes for the SOCMI
SIC Code industry
2821 Plastics Materials,
Synthetic Resins,
and Nonvulcanizable
Rubber
2822 Synthetic Rubber
2824 Manmade Organic Fibers,
Except Cellulosic
2833 Medicinal Chemicals
and Botanical Products
2843 Surface Active Agents,
Finishing Agents,
Sulfohated Oils, and
Assistants
2865 Cyclic Organic Crudes
and Intermediates, and
Organic Dyes and Pigments
2869 Industrial Organic
Chemicals, N.E.C.
2891 Adhesives and Sealants
7-4
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Average capacity utilization in the chemical industry
increased to a peak in January, 1989 of 89.3 percent, its highest
level since 1951.13 Production of some chemicals, particularly
plastics, were running at nearly 100 percent of capacity. By the
end of the year, however, capacity utilization dropped to 87.0
percent.14
7.1.3 Demand and End-use Markets
Demand for synthetic organic chemicals leveled off in 1990
after a continuous increase from the mid- to late- 1980s. Weak
markets for automotive products and housing were to blame.
Production of motor vehicles declined 4 percent in 1989 to the
lowest level since 1983.15 In the first five months of 1990,
motor vehicle output was down 20 percent from the same period in
1989. In addition, new housing starts in 1989 were at the lowest
level since 1982, falling 7 percent from 1988.16 The decrease in
domestic demand was offset only partially by strong export
demand. Demand in 1989 did not decline as much as production,
however, since demand was met by a reduction in inventory. An
inventory build-up in the previous year in anticipation of supply
shortages was relieved by the end of 1989,17 and it has been
predicted that "production of synthetics should better than match
final demand in 1990."l8
The demand for two groups of chemicals, polymers and
specialty chemicals, have outpaced demand for chemicals as a
whole in the 1980s. The reasons for the high demand for polymers
was the stronger consumer markets in synthetic products used as
end products.19 There was growth in the amount of polymers used
in packaging for consumer products, and the use of polymers in
housing and consumption. They also achieved some of their growth
in the 1980s by replacing such na'tural materials as wood, metals,
glass, and paper. Reasons for the increased demand for specialty
chemicals include increasing use of specialty polymers, refinery
chemicals, adhesives, water treatment chemicals, lubricant
additives, and industrial coatings.
There is an unpublished demand elasticity estimate for
chemicals and allied products of -0.7 to -0.9, which is cited in
a U.S. International Trade Commission document in April 1983.20
According to this estimate, the demand for chemicals is in
general relatively inelastic. This is consistent with the notion
that most chemicals are producer goods that are needed as inputs
by other producers — both other producers in the chemical
industry (it is true that the largest market for chemicals is the
chemical industry itself) and producers in other industries. It
should be noted that the elasticity of demand for chemicals must
be evaluated on a case-by-case basis. Demand could be relatively
elastic if a substitute is readily available at comparable cost.
For example, synthetic materials face competition from such
natural materials as wood, metals, paper, and glass. Another
7-5
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example comes from a trade journal article. In reference to the
surfactants business, the article states that "intermediates
producers don't always have the luxury of passing cost hikes
along to customers ... because of the pressures of potential
substitutions ... "21-
7.1.4 Foreign Trade
The chemical industry is the leading export industry in the
U.S. Exports in SIC 28, Chemicals and Allied Products, amounted
to $38.0 billion in 1989, and the trade balance was +14.8 billion
dollars. The trade surplus for SIC 28 has increased 54.7 percent
since 1987, based on impressive export growth of 42.4 percent
that exceeded import growth of 35.6 percent. In 1989, the only
two four-digit SIC codes within SIC 28 with trade deficits were
SIC 2843, Surface Active Agents (-$10 million), and SIC 2833,
Medicinals and Botanicals ($-886 million).22 The major reasons
for the improvement in the balance of trade are the decline in
the value of the dollar, which made U.S.-produced chemicals less
expensive relative to foreign chemicals; and cost-cutting by U.S.
industry in the early 1980s, which improved the competitiveness
of the industry.23
Plastics, resins and organic chemicals lead the way in U.S.
foreign trade statistics, accounting for 54 percent of all
exports and 55 percent of the total trade surplus. The U.S. also
accounts for 13.2 percent of world exports and 7.6 percent of
world imports. The U.S. ranks second behind Germany in three
major measures of world trade: exports, imports, and the balance
of trade.
7.1.5 Pricing
*
Prices of chemicals and related products recorded their
biggest gains in 1988 and 1989 since 1981.24 The 5.8 percent
increase in 1989 masks a decline in prices that began in the
middle of the year, however. The Producer Price Index (computed
by the U.S. Department of Labor) peaked in April and May of 1989,
and by December had fallen 3.1 percent. Still, prices were 7.2
percent higher than in January, 1988. The decline in prices in
the second half of 1989 can be attributed to lower demand and
capacity increases. The fall in prices was most pronounced for
organic chemicals and plastics materials.25
The price decreases in the second half of 1989 occurred
despite increases in labor and raw materials costs. This
suggests that it may not be possible to recover cost increases by
increasing prices if demand conditions do not permit. In
general, it is likely that producers of end-use chemicals have
more pricing flexibility than producers of basic and intermediate
chemicals. It should be noted, however, that this does not mean
end-use chemical producers have sufficient pricing flexibility to
7-6
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recover cost increases for production inputs to a great extent.
Basic and intermediate chemicals are essentially commodity
products, produced to standard specifications with little or no
product differentiation. There are usually a large number of
producers as well. For example, in the U.S., basic chemicals are
produced on average by 25 different producers.26 These two
factors could inhibit pricing flexibility. End-use chemicals are
generally produced in smaller volumes and produced to perform a
specific function and are more differentiated than basic and
intermediate chemicals. Consequently, their producers are likely
to have some pricing discretion.
7.1.6 Financial Profile
Profitability in the U.S. chemical industry turned down
during the middle of 1989, but the year was still a profitable
one for U.S. chemical companies. Thirty companies sampled in
1989 had an average after-tax profit margin of 8.6 percent, a
higher margin than in any other year in the 1980s except 1988.v
Total capital spending in 1990 was $20.54 billion, up 11.2
percent from the year before. The average annual rate of
increase from 1980 to 1989 was 6.4 percent. Capital spending is
forecast to reach $21.63 billion for 1991.
From a sample of 19 chemical companies with sales over $1
billion in 1989, Chemical & Engineering News calculated that the
median ratio of long-term debt to total capitalization (or long-
term debt plus equity) in 1989 was 32.6 percent, the median ratio
of capital spending to sales was 9.0 percent, and the median
ratio of R&D spending to sales was 2.7 percent.28 In comparison
with a sample of 17 chemical companies with sales below $1
billion, the companies in the former sample tend to devote a
greater portion of their budgets to capital spending and R&D
spending. Also, large companies are more highly leveraged. The
average ratio of debt to total capitalization in SIC 28
(mentioned above) in 1989 was 33.5 percent, the highest figure in
that decade. This is lower, however, than the average ratio for
all manufacturing, 37.2 percent.29 The major reason for the
increase in the ratio is that many acquisitions were financed by
debt.
7.2 Studies of Twenty Selected Chemicals
7.2.1 Selection Rationale
For purposes of analyzing the SOCMI, chemical trees have
been constructed for chemical compounds regulated by the HON,
which identify the various routes by which a particular chemical
is produced. (See Chapter 6 for a discussion of chemical trees.)
Of these approximately 450 chemicals, 20 have been chosen for
detailed analysis, all of which are subject to HON controls.
7-7
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Selecting chemicals for analysis is an important process, geared
towards adequately representing the SOCMI.
Relevant data for the SOCMI are, in general, limited.
Accurate judgements of economic impacts hinge on the ability to
assemble comprehensive profiles, detailing key market
characteristics for each chemical, including pricing and output
and trends, market structure variables, and overseas competition.
Thus, the first factor governing sample selection is the
availability of information. One of the implications of this
limitation is that information is available primarily for those
chemicals which are commercially important. These chemicals tend
to have large production volumes. Therefore, from the outset the
sample is biased towards large-volume chemicals.
An initial list of potential candidates was formed based on
a preliminary search of available market information. This
search resulted in an inventory of approximately 60 compounds
subject to HON regulations. From this initial list, more
complete literature searches were performed.30
Once precursory information files were assembled for this
subset of synthetic organic chemicals, rankings were assigned so
that the list could be paired down. Three factors were
considered central as determinants of rank. (1) Compliance cost
distribution — efforts were made to cover regulated chemicals
from the low end to the high end of the compliance-cost spectrum.
(2) Production volume distribution — in order to accurately
represent the SOCMI, the range of production levels in the
industry as a whole should, ideally, be mirrored in the selected
chemicals. (3) Feedstocks — synthetic organic chemicals are
produced from eight basic feedstock chemicals. Each of these
eight feedstocks, should, ideally, be represented.
7.2.1.1 HON Compliance costs
Compliance costs were calculated for model plants in the
SOCMI.31 In some instances, chemical manufacturers are already in
compliance, and are not subject to controls. In other cases,
cost increases can be in excess of 100 percent of market price.
Since costs vary widely, an attempt was made to cover the gamut
of costs. In addition, a particular effort was made to ensure
coverage of chemicals with relatively high compliance costs.
Biasing the selection in favor of high cost chemicals is
justifiable, since these are the chemicals where impacts are
likely to be most severe.
7.2.1.2 Volume of Production
The volume of production is calculated for each of the
compounds. Annual output levels range from less than ten
7-8
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kilograms to greater than six billion kilograms. It is apparent
that qualitative differences exist between chemical production,
and are to some extent reflected in different levels of
production. Styrene, for example, is the ninth largest synthetic
organic chemical manufactured in the United States, with 1989
production in excess of 3.5 billion kilograms. Its market
characteristics are likely to be different than those of
hydroquinone, a specialty chemical with two U.S. manufacturers,
and a 1989 output level of 10.9 million kilograms. For example,
hydroquinone producers are apt to possess more pricing discretion
than styrene producers, due to less competition and more
specialized end-uses. On the other hand, styrene producers,
because of their large size, are liable to realize economies of
scale in unit compliance costs. It follows that economic impacts
resulting from HON controls are likely to be different as well.
Thus, when ranking chemicals, attention is paid to adequate
coverage of the scope of production volumes in the SOCMI.
7.2.1.3 Basic Feedstock Chemicals
Synthetic organic chemicals are ultimately derived from
eight basic feedstock chemicals, which serve as the building
blocks for the SOCMI. They are: benzene, toluene, xylenes,
methylene, naphthalene, ethylene, propylene, and butylenes. Each
feedstock has different supply and demand conditions, as well as
qualitative and quantitative differences in emissions. Thus,
economic impacts will vary among chemicals derived from different
feedstocks. Accordingly, consideration was paid to covering the
range of feedstocks.
7.2.1.4 Selected Chemicals
Given the preceding factors, final selections were made
based on the additional consideration of breadth of available
market data. Chemical compounds which presented easy access to
comprehensive information were given precedence, so as to convey
up-to-date and accurate profiles and impacts. The sample of
chemicals chosen, and their respective chapters in the economic
impact analysis, is presented in Table 7-2.
7.2.2 Methodology for Selected Studies
This section presents a broad overview of the methodology
employed for assessing the impact of HON controls. For a more
detailed discussion the reader is directed to Appendix A of the
HON Economic Impact Analysis.
An industry profile was assembled for each of the chemicals
chosen for analysis. The purpose of the industry profile is to
detail historical, current, and future market characteristics.
SProfiles introduce the chemicals, discuss and analyze supply and
7-9
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demand conditions, and summarize and forecast trends into the
mid-1990's.
This information forms the basis for the economic impact
analysis.
7.2.2.1 The Model
A traditional supply and demand model, assuming a downward-
sloping demand curve, is employed to evaluate the impact of HON
controls. A demand curve with an exponential form is utilized:
0 = aP" . (1)
where P (market price in dollars) and Q (quantity in kilograms)
are variables, and a and e are parameters, with e = price
elasticity of demand.
A comparative statics approach is applied, comparing the
equilibrium price and quantity before and after the assessment of
control costs. Figure 7-1 illustrates the influence of control
costs on chemical markets in the short run. The initial
equilibrium point is at P0 and Q0. This point represents the
baseline, which is where the market is situated at the time the
regulation takes effect. Basically, the installation of
pollution control equipment causes an increase in the cost of
production, represented by a leftward shift of the industry
supply curve, from S0 to Sr. The vertical distance cd is equal to
the annualized per-kilogram cost of installing and operating
pollution control equipment. As shown, HON controls result in a
market clearing price P, which is higher than in the baseline,
and a market clearing quantity Q, which is lower than in the
baseline.
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Table 7-2. Sample Of Twenty SOCMI Chemicals
Chapter Number Chemical
1 Butadiene
2 Polybutadiene
3 Styrene-Butadiene Rubber
4 Ethylene Dichloride
5 Ethylene Oxide
6 Cyclohexylamine
7 Hydroquinone
8 Ethylene Glycol
9 Styrene
10 Formaldehyde
11 Acetone
12 Chloroform
13 Triethylene Glycol
14 Bisphenol-A
15 Terephthalic Acid
16 Propylene Glycol
17 Methyl-Tertiary Butyl Ether
18 Phthalic Anhydride
19 Benzoic-Acid
20 Acrylonitrile
7-11
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7.2.2.2 Compliance Costs
Compliance costs have been provided for the total industry
control option. TIC costs represent are the maximum HON control
costs that an industry will incur.
Calculating HON compliance costs (CO per unit of output
essentially involves four steps. (1) Fixed and variable CC are
identified for each emissions source in each facility. Fixed
costs are constant over all levels of output of a process, and
usually entail plant and equipment. Variable costs will vary as
the rate of output changes. (2) Last Link and raw material CC
are accumulated. In this analysis, last-link CC are those costs
(fixed and variable) which are attributed to only the last step
in the process chain. Raw-material CC are those costs (fixed and
variable) that have accumulated in all steps prior to the last-
link. (3) As the equilibrium analysis discussed above takes
place at the market or industry level, a meaningful notion of
average industry CC is developed. Since different facilities
have different CC, it seems reasonable to "weight" these
different costs by the share of total industry output that they
are attributable to. Industry CC (ICC) can be written:
ICC = £ [CC, (.&)] , (2)
where there are J facilities, CCj is the compliance cost of
facility j , Qj is output of facility j, Q is total industry
output, 0 s Qj/Q s 1, and Qj/Q are the weights, which sum to 1.
(4) Overall industry CC is divided by total industry output to
get the per-unit industry CC.
In some cases, chemicals are produced by more than one
process, and cost differentials between processes are of
interest. Calculating CC for each process is done in the same
way as for each facility.
7.2.2.3 Pricing
Chemical prices have been provided, and are used in the
baseline. Impacts are assessed using the 1989 average realized
price. A brief examination of pricing is presented in each
chapter for the chemicals that are analyzed. If the baseline
price is lower than the 1989 price, the impacts based on the
higher price will be understated.
7-13
-------
7.2.2.4 Elasticities
The concept of elasticity is a general one, measuring the
sensitivity of a dependent variable to a change in an independent
variable, holding other variables constant. Elasticity
coefficients (e) are broadly categorized into three ranges: (l) 0
< e < -1 is considered inelastic; (2) e = -1 is unit elastic; and
(3) -1 < e < -co is elastic (°o -» infinity). The price elasticity
of demand measures the percentage change in quantity demanded
resulting from a percentage change in price. This is refferred
to here as the demand elasticity. In this analysis, chemicals
are factors of production. Demand for factors of production are
said to be derived, i.e., the need for factors derives from the
demand for the products which are produced by the factors. The
major determinants of demand elasticity for factors are concisely
defined by Alfred Marshall, and are known as Marshall's rules.
Two of them are relevant to this analysis.32 In the case of two
factors,33 the demand elasticity varies directly with the
following:
-The demand elasticity for the product the factor produces.
For example, the easy availability of close substitutes for
styrene-butadiene rubber (i.e. relatively elastic demand) in
the manufacture of automobile tires will flatten the demand
curve for the factor butadiene, making demand more price
elastic.
-The share of the factor in the cost of production. If
a factor comprises a substantial share of the cost of
production, an increase in its price contributes
markedly to an increase in the product price. Hence,
the proclivity for substitution.
In general, demand for factors tends to be inelastic in the
short-run. This is due to the fact that firms are "locked into"
a technology process, and speedy substitution is difficult.
The import elasticity of supply measures the percentage
change in the quantity of imports supplied resulting from a
percentage change in domestic price. The import elasticity of
supply is referred to as the import elasticity.
Demand elasticities for each chemical are estimated on the
basis of available substitutes for each chemical, substitutes for
end-uses, and the cost share comprised by the chemical. No
quantitative estimate of import elasticities is undertaken. If
imports appear to be significant, the ability of domestic
producers to raise prices without considerable loss in output
will be hindered.
7-14
-------
7.2.2.5 Estimating Market Adjustments
Once cost, price, and elasticity data are quantified, price
and quantity adjustments can be estimated. Of particular
interest is the maximum percentage price increase necessary to
fully recover compliance costs. On a per-unit basis, the maximum
percentage price increase is the annualized cumulative compliance
cost per kilogram divided by revenue per kilogram (revenue per
kilogram = price).
Quantity adjustments are calculated by solving the demand
equation (equation 1) for the percentage change in quantity,
given the baseline price and the estimated demand elasticity.
Impacts on total revenue (TR) and employment in the chemical
industry are estimated as well.
7.2.2.6 Market Structure
Market structure has important implications for the size of
the price increase that will occur as a result of HON controls.
If the market is perfectly competitive, and a long-run horizontal
market supply curve is assumed, the imposition of HON controls
will shift up the supply curve from S0 to S, by the amount of the
per-unit compliance cost, as shown in Figure 7-2. Thus, the
price increase is exactly equal to the cost increase, and firms
do not absorb any of the cost increase. However, if the market
is characterized by pure monopoly, some costs are absorbed. The
demand curve faced by a pure monopolist is the same as the market
demand curve, because the monopolist is the only producer. Since
price is a declining function of output for the monopolist, the
marginal revenue curve lies below the demand curve. Increasing
output by one unit leads to a lower price not only for the one
additional unit, but for all of the other units as well. A
profit-maximizing monopolist prices its product on the demand
curve vertically above where marginal revenue (MR) is equal to
marginal cost. An upward shift of the monopolist's marginal cost
(MC) curve resulting from HON controls is illustrated in Figure
7-3. Since the marginal revenue curve has a steeper slope than
the demand curve, the price increase resulting from compliance
costs is less than in the competitive case. The monopolist,
therefore, absorbs some of the cost increase associated with HON
compliance.
In actuality, the market structure probably lies somewhere
between the two extremes of perfect competition and pure
monopoly. In general, it can be said that if a market structure
is not perfectly competitive, firms in the industry will absorb
some portion of compliance costs, and raise prices less than they
would in the perfectly competitive case.
7-15
-------
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The extent of market power is based on the following
factors:
• The number of firms: the larger the number of firms, the
smaller the magnitude of market power, other things being
equal.
• The importance of foreign competition: if a chemical is
produced by overseas competitors, pricing discretion by
domestic manufacturers is hindered, and market power is
lessened.
• Vertical integration: for the majority of chemicals, data
on captive consumption are available. Captive consumption
suggests vertical integration, and enhances market power.
In some cases, additional market information is available
on vertical integration.
•• Market concentration: two measures of market concentration
are computed. (1) The four-firm concentration ratio
measures the sum of the market shares of the top four •
firms in the industry. Studies have shown an upsurge in
profitability as four firm concentration ratios exceed
from 45 percent to 59 percent.34 (2) The Herfirtdahl-
Hirschman index (HHI) estimates industry concentration by
emphasizing the firms with the largest market shares, and
is estimated in the following way:
T
HHI = ]T St x 10,000 (3)
where there are T firms, Sc is the market share of the tth
firm. The HHI places the greatest weight on the largest
firms by squaring the market shares. When the industry is
a pure monopoly, the HHI = 10,000. If, on the other hand,
100 firms each control one percent of sales, then the HHI
would be 100. Thus, the HHI declines as the number of
firms in the industry rises or the firms become more
unifrom in size. The Justice Department uses HHI to
evaluate mergers, ignoring mergers where the resulting HHI
is less than 1800. For this study, an HHI in excess of
1800 is regarded as an indication of significant market
power.
The market structure section in the economic impact analysis
utilizes these four factors to determine the extent of market
power in the industry, and the influence of this power on the
impact of HON controls.
7-18
-------
7.2.3 Results of Studies
The economic impacts of HON controls on the SOCMI derive
from three possible outcomes; the closure of a facility, a
reduction in the level of output of a facility, and the
substitution of one process for another. When discussing process
substitution, the reference is to the substitution of less costly
methods of producing chemical inputs. For example, a process
might be altered if a chemical can be produced with raw materials
that are not subject to the HON, thus realizing a cost advantage
over the existing process.
Table 7-3 summarizes the market adjustments of the sample.
The changes in the level of output are based on the upper bound
of the estimated price elasticity of demand, which forecasts the
maximum decline in output. It should be noted that the change in
price is an increase, and the change in output is a decrease.
Table 7-4 summarizes the likelihood of closure and process
substitution for the sample. Closure is possible for 30 percent
of the sample. In only one case is closure probable. Process
substitution is possible for 20 percent of the sample, and
probable for one chemical.
It should be noted that the closure forecasts are extreme
cases. Given the dynamic and flexible nature of the SOCMI, it is
likely that the majority of these closures can be avoided. Also,
since the majority of parent companies are very large, there
appears to be the ability to sustain control costs without
shutting down.
7-19
-------
Table 7-3. Summary of Market Adjustments
Chemical Name
(CAS Number)
Butadiene
(106990)
Styrene-butadiene rubber
(00043)
Polybutadiene
(00045)
Ethylene Dichloride
(107062)
Ethylene Oxide
(75218)
Cyclohexylamine
(108918)
Hydroquinone
(123319)
Ethylene Glycol
(107211)
Styrene
(100425)
Formaldehyde
(50000)
Acetone
(67641)
Chloroform
(67663)
Triethylene Glycol
(112276)
Bisphenol-A
(80057)
Terephthalic Acid
(100210)
Propylene Glycol
(57556)
Methyl tert-
butyl Ether
(1634044)
Phthalic Anhydride
(85449)
Benzoic Acid
(65850)
Facility 1A
Facility 2A
Facility 3A
Acrylonitrile
(107131)
Total Industrv Control
% A Price* % A
0.97
0.28
0.31
1.24
0.65
2.01
0.97
0.94
0.49
2.81
1.07
2.87
0.55
0.91
1.85
0.75
0.31
4.84
0.91
1.45
4.13
0.92
Quantity6
(0.96)
(0.28)
(0.31)
(0.82)
(0.22)
(1.33)
(0.96)
(0.63)
(0.48)
(1.84)
(0.71)
(0.96)
(0.37)
(0.61)
(1.22)
(0.74)
(0.10)
(3.12)
(0.90)
(1.42)
(3.96)
(0.61)
7-20
-------
The percentage price increase is based on the
production-weighted average compliance cost. (See Chapter 2 of
the Economic Impact Analysis for methodology).
'The percentage change in quantity is based on the most elastic
estimate of demand elasticity, which forecasts the higher
percentage
change in quantity.
A = Change in
7-21
-------
Table 7-4.
Likelihood Of Closure And Process Substitution
Under TIC
Chemical
Name
Butadiene
Styrene-butadiene rubber
Polybutadiene
Ethylene Dichloride
Ethylene Oxide
Cyclohexylamine
Hydroquinone
Ethylene Glycol
Styrene
Forma Idehy de
Acetone
Chloroform
Triethylene Glycol
Bisphenol-A
Terephthalic Acid
Propylene Glycol
Methyl tert-butyl Ether
Phthalic Anhydride
Benzoic Acid
Acrylonitrile
Likelihood Of
Closure
Possible
Unlikely
Unlikely
Possible
Unlikely
Unlikely
Unlikely
Possible
Possible
Probable
Possible
Possible
Unlikely
Unlikely
Possible
Unlikely
Unlikely
Possible
Unlikely
Unlikely
Likelihood Of
Process Subst.
Unlikely
N.A.
N.A.
N.A.
N.A.
Possible
Unlikely
N.A.
Possible
Probable
Possible
Unlikely
Unlikely
N.A.
Unlikely
N.A.
Unlikely
Possible
N.A.
N.A.
N.A. - not applicable, since only one process is used.
7-22
-------
7.3 Distribution of Cumulative Costs
This section examines the distribution of HON control costs.
Costs have been compiled by the size of the cost as well as the
volume of production. The reader is reminded that the low volume
chemicals are not represented in the sample. Thus, comparisons
of the sample HON control costs and the population HON control
costs will be based only on those chemicals with annual
production greater than 10 million kilograms. This includes 19
chemicals from the sample, and 330 chemicals from the population.
Table 7-5 presents the distribution of compliance costs
under the TIC options. For the range of cost increases less than
2 percent, the correlation is the strongest. Sixty-eight
percent of the population is included in this range, as compared
with 85 percent of the sample. The cost range of 3 to 5 percent,
which includes 23 percent of the population and only 10 percent
of the sample is less strong. For costs greater than 5 percent,
17.6 percent of the population is included, and 5 percent of the
sample is included. Of note is the fact that four categories are
not represented in the sample. These four categories make up
10.8 percent of the population.
7.4 implications for the Rest of the Affected Chemical Industry
Table 7-6 categorizes the sample chemicals in three ranges
of percentage cost increase, and compares this to the number
andpercentage of the population of chemicals that fall within the
same range. Comparisons are based on the TIC option. The cost
ranges are classified as low, intermediate, and high; less than 2
percent, 2 to 5 percent, and greater than 5 percent,
respectively. If the sample is representative of the population,
it follows that the results of the economic impact analyses can
be extended to the rest of the affected chemical industry.
7.4.1 Low Cost Impacts
The low cost range includes 80 percent of the sample and 68
percent of the population. Since this range represents the
majority, it is useful to try and extend the results of these
impacts to the population. For the low cost chemicals in the
sample, maximum quantity adjustments range from .10 percent to
1.22 percent of industry output. For six of these chemicals, the
decline in output is less than 5 percent of the smallest size
firm. For two others, it is less than 20 percent. In six cases,
closure is possible, and in one, closure is probable.
Three of the low-cost chemicals are produced by more than
one production process. For two of these, the cost differential
is large enough to predict possible process changes.
7-23
-------
One qualification is necessary: of those chemicals in the
low cost range of the population, 21.8 percent have annual
production of less than 10 million kilograms. All of the
chemicals in the sample exceed this level of production for the
low cost range. Thus, little can be said about the low volume
chemicals in the population.
7.4.2 Intermediate coat Impacts
The intermediate cost range includes 20 percent of the
sample, and 14.5 percent of the population. Maximum quantity
adjustments range from .96 percent to 3.96 percent of industry
output. The decline in output ranges from 3.1 percent to 25
percent of the smallest size facility for the sample. Closure is
possible for chloroform and phthalic anhydride, and unlikely for
the other two chemicals. One important condition which mitigates
against closure is that several chemicals are produced in the
majority of facilities in this cost range. Chloroform facilities
average nine chemicals each, which makes closure difficult to
predict even though the decline in output is significant.
Two out of four of the intermediate-cost chemicals are
produced by more than one process. In each case, the cost
differential is large enough to predict process changes.
It is important to note that, of those chemicals in the
intermediate cost range of the population, 38 percent have annual
productions of less than 10 million kilograms. All of the sample
chemicals in this range exceed this level of production. Thus,
little can be said about the low volume chemicals in the
population.
7.4.3 High Cost Chemicals
No chemicals in the sample are high-cost, and so no
conclusions can be drawn for this range.
7-24
-------
Table 7-5. Distribution of HON Chemicals By Percentage Cost
Increase And Annual Production (106 kg) : TIC Option
% Change In Cost* Number
The Population Chemicals
Distribution
% Of Bv Annual Production (IP6 kg)
Total <1 1-5 5-10 >10
Less than 1.00
1.00 - 2.00
2.00-3.00
3.00-4.00
4.00-5.00
5.00-7.00
7.00-10.00
Greater than 10.00
Total
237
96
48
16
7
11
19
56
490
48.4%
19.6%
9.8%
3.3%
1.4%
2.2%
3.9%
11.5%
100.0%
20
0
0
0
0
0
3
41
64
9
1
0
3
3
3
8
6
33
10
20
13
6
2
4
4
4
63
198
75
35
7
2
4
4
5
330
% Of Total
100%
13.1% 6.7% 12.9%
The Sample Chemicals
67.3%
% Change In Cost* Number
% Of
Total
Distribution
Bv Annual Production (IP6 kg)
1 1-5 5-10 >10
Less than 1.00 11 55%
1.00 - 2.00 6 30%
2.00-3.00 2 10%
3.00-4.00 0 0%
4.00-5.00 0 0%
5.00-7.00 0 0%
7.00-10.00 1 5%
Greater than 10.00 0 0%
Total 20 100%
% Of Total 100%
0
0
0
0
0
0
0
0
0
0%
0
0
0
0
0
0
0
0
0
0%
0
1
0
0
0
0
0
0
1
5%
11
5
2
0
0
0
1
0
19
95%
'Cost increase based on control costs at the 50th percentile of
industry output.
7-25
-------
Table 7-6. Summary of HON Control Costs For Sample Chemicals
And Percentage of Total HON Chemicals In The Same
Cost Range*
Cost Range/
Chemical Name
Percentage Cost Increase
Total
Industry
Control
Number
(Percentage)
Of Total
HON Chemicals
In Same Range
Hioh Cost; Over 5 Percent
None
Intermediate Cost; 2 to 5 Percent
Phthalic Anhydride
Benzoic Acid 3
Chloroform
FormaIdehyde
Cyclohexylamine
Low Cost: Below 2 Percent
4.84%
4.13%
2.87%
2.81%
2.01%
86 (17.5%)
71 (14.5%)
333 (68%)
Terephthalic Acid
Benzoic Acid 2
Ethylene Dichloride
Acetone
Butadiene
Hy dr oqu inone
Ethylene Glycol
Acrylonitrile
Bisphenol-A
Benzoic Acid 1
Propylene Glycol
Ethylene Oxide
Triethylene Glycol
Styrene
Polybutadiene
Methyl tert-Butyl Ether
Styrene-butadiene rubber
1.85%
1.45%
1.24%
1.07%
0.97%
0.96%
0.94%
0.92%
0.91%
0.91%
0.75%
0.65%
0.55%
0.49%
0.31%
0.31%
0.28%
The range of percentage cost increases is based on total
industry control costs.
7-26
-------
7.5 Small Business Impacts
The RFA (Public Law (96-354, September 19, 1980) requires
Federal agencies to give special consideration to the impact of
regulation on small businesses.
The RFA specifies that a regulatory flexibility analysis
must be prepared if a proposed regulation will have (1) a
significant economic impact on (2) a substantial number of (3)
small entities. (It should be noted that new RFA guidance was
provided on April 9, 1992; however, the SAN for the HON was filed
before the date, thus leaving the HON subject to the old RFA
guidance). Regulatory impacts are considered significant if:
• Annual compliance costs increase total costs of
production by more than 5 percent,
• Annual compliance costs exceed 10 percent of profits for
small entities,
• Capital cost of compliance represent a significant
portion of capital available to small entities,
• The requirements of the regulation are likely to result
in closures of small entities.
A "substantial number" of small entities is generally considered
to be more than 20 percent of the small entities in the affected
industry.
A first step in determining small business impacts is
assigning an appropriate definition for what constitutes a small
entity in the SOCMI. The Small Business Administration (SBA)
defines small businesses in the chemical industry as having
employment from under 500 to under 1,000, depending on the SIC.35
There is reason to believe that this employment cut-off is
too high. Firms in the SOCMI tend to be capital-intensive, and
large amounts of revenue are generated with a limited labor
force. The 1987 census of manufacturers provides data on
employment and revenue for the affected SIC categories. From
this data, is estimated that each employee, on average, accounts
for $367,000 in total sales. Using this relation, an average
firm with 500 employees will generate sales of $183.5 million.
This doesn't seem "small." A company employing 100 will generate
sales of $36.7 million, which might be considered small.
Therefore, it is offered here that an appropriate employment cut-
off for a small business in the SOCMI is 100.
Table 7-7 lists 1990 sales and employment figures for those
companies in the SOCMI which produce the 20 chemicals selected
for the HON analysis. This is a comprehensive list of sample
chemical producers, totaling 66 companies. Data was compiled
from a collection of 1991 annual reports, the 1991 Million Dollar
7-27
-------
Directory, and standard and Poor's Register of Corporations.
Directors, and Executives.
As shown, 2 of the 66 companies falls below the 100 employee
cut-off. One of these — Diamond-Shamrock — has 1990 sales in
excess of $1 billion, and so cannot be considered a small entity.
Spurlock, however, does indeed appear to be small given our
definition. Thus, given this sample, only one firm in 66, or 1.5
percent, of the SOCMI can be classified as small. Thus, even if
this firm experiences significant impacts, it seems difficult to
argue that only one firm is a substantial number.
The 1988 Handbook of Small Business Data, which provides
information on the nature of businesses which typify different
SIC categories, supports this assertion. Each of the SIC
categories affected by the HON are listed as "Large-Business-
Dominated." This classification is based on the more conserva-
tive definition of small entities that the SBA uses. Thus, it is
argued here that a substantial number of small entities will not
be impacted, and that an RFA is therefore unnecessary.
7-28
-------
Table 7-7. 1990 Sales And Employment of Selected SOCMI Members
Company
Air Products
Allied Signal
American Cyanamid
American Petrofina
American Synthetic
Rubber Corp.
American Synpol
AMOCO
ARCO
Ashland Oil, Inc.
Atlantic Richfield
BASF
B.F. Goodrich
Borden
British Petroleum
BTL Specialty Resins
Corp.
Champlin Refining
Chevron
Citgo
Conoco
Copolymer Rubber and
Chemical
Deltech
Diamond-Shamrock
Dow
DuPont
Eastman-Kodak
Exxon
Firestone
Sales ($106)
2,895
12,343
4,574
3,978
93
N.A.
31,581
18,808
8,994
1,590
4,023
2,470
7,633
33,039
(£ mil.)
64
974
41,540
4,940
12,330
250
20
1,118
19,773
40,028
18,908
115,794
3,867
Number of Employees
14,000
105,800
32,012
3,997
311
2,600
54,524
27,300
33,400
26,600
133,759
11,892
46,300
118,050
200
800
54,208
3,300
19,000
710
•
200
84
62,100
134,450
104,000
53,500
7-29
-------
Company
Formosa Plastics
GE
General Tire
Georgia Gulf
Georgia Pacific
Goodyear
Hanlin Group
Hercules
Hill Petroleum
Hoechst Celanese
Kalama
Koppers
Marathon (USX)
Mobil
Monsanto
Mt. Vernon Phenol*
Occidental Petroleum
Olin
Oxy Petrochemicals
P.O. Glycol
Pfizer
Phillips Petroleum
Polysar
PPG
Quantum
Questra (Rhone-
Poulenc Data)
Rexene
Shell Oil
Spurlock
Stepan Co.
Sales ($106)
625
55,300
1,300
1,110
12,665
11,273
1,110
3,200
4
1,500
N.A.
426
20,659
64,472
8,995
56,279
1,500
25,300 .
322
26
6,406
12,500
643
5,820
2,656
2,278
553
24,460
11
346
Number of Employees
1,700
292,000
9,600
1,350
63,000
107,671
1,350
19,867
1,070
2,400
N.A.
1,900
51,523
67,300
41,081
292,043
12,500
15,400
1,320
185
42,500
21,800
1,200
•
35,500
N.A.
91,571
1,300
41
1,150
7-30
-------
Company
Sterling Chemical
Sun Co.
Texaco
Texas Olefins
Union Carbide
Velsicol
Vista Chemicals
Vulcan Materials
Sales ($106)
581
13,270
41,822
300
8,740
100
779
1,080
Number of Employees
926
20,926
39,000
300
45,000
500
1,750
6,250
*Joint venture of General Electric, Champlin Petroleum, and
JIM Industries.
7-31
-------
7.6 control Device Manufacturing Industry
The EPA is proposing a three year compliance period
commencing in November 1992 for the Synthetic Organic Chemicals
Manufacturing Industry (SOCMI) to comply with regulations
mandated by the Clean Air Act Amendments of 1990. SOCMI has
expressed concern that its member companies may be unable to meet
a three year compliance period because of delays in permitting,
limitations in the available engineering resources and the
ability of the control device manufacturing industry to supply
the equipment. The third of these concerns, the ability of the
control device industry to supply the controls in time to meet
the compliance deadline was investigated.
The investigation was made by telephoning a limited number
of leading emission control device manufacturers. The major
supply limitation is not fabrication capacity but the
availability of design engineers for customized versus off-the-
shelf systems.
This analysis was performed as if the HON standard
represented the only demand for the control systems.* The
demands of other industries that were not considered, such as
coatings, that will also require emission control devices make
the results overstate the availability of controls. However the
results also understate the availability of controls because of
the ability of about half of the member firms of the SOCMI to
provide their own detailed engineering and design for control
devices which can then be fabricated in local shops, because some
waste minimization via process modification will occur, because
the industry can shift from a control which may be in short
supply to one which may be more available, because long delivery
times may force a trend towards standardization and because EPA's
early reduction program will stretch out the time for control
procurement for those firms which take advantage of it.
For the reasons discussed in the preceding paragraph
definitive conclusions were difficult to reach. At the least the
results indicate that delivery times for the control devices will
lengthen as a result of the demand anticipated as a result of the
forthcoming regulations. The results as they pertain to each
emission source are discussed in the following paragraphs.
Process Vents. The proposed control device for non-
halogenated emissions from process vents is a flare.
*EPA is in the process of procuring an existing study that shows
demand for control systems from other industries and will
provide another source of capacity data.
7-32
-------
Flares are also the proposed control device for emissions
from transfers of non-halogenated chemicals. The results
indicate that flare manufacturers will require 1.7 years to fill
the combined demand. Non-halogenated process vent emissions can
also be controlled by incineration in the plant boiler or by an
absorber. Absorbers, which are applicable to both halogenated
and non-halogenated emissions, are readily available if the
chemical manufacturer can supply the engineering design.
Transfer operations emissions can be controlled by vapor
balancing, adsorbers and refrigerated condensers and use of these
controls can be expected to free-up flare manufacturing capacity
for other sources. Incinerators with stack scrubbers are
proposed for halogenated process vent emissions, and the results
indicate capacity is adequate to fill the need.
Transfer operations. The proposed control device for non-
halogenated emissions is a flare, which, as noted above, is also
proposed for non-halogenated process vent emissions. The
combined demand is estimated to be filled in 1.7 years. In
addition, transfer operations can be controlled by vapor
balancing, refrigerated condensers or adsorbers, use of which
will ease the demand for flares. Incinerators with stack
scrubbers are proposed for halogenated transfer operation
emissions and manufacturing capacity appears adequate.
Storage Tanks. Internal floating roofs are the proposed
control device for non-halogenated storage tank emissions. The
survey indicates that 3.3 years will be required to fill the
demand. Refrigerated vent condensers and adsorbers can also be
used to control storage tanks emissions. Even with these
additions the supply will be tight.
Refrigerated condensers and adsorbers are proposed for
halogenated emissions from storage tanks. If refrigerated vent
condensers were applied exclusively for halogenated storage tank
emissions, the estimated demand would be filled in 1.6 years, but
some systems will be applied elsewhere (e.g. for non-halogenated
storage tank emissions as mentioned above), reducing
availability. In-house or consultant design and engineering with
local shop fabrication of adsorbers or condensers could be used
to augment the supply.
Wastewater Streams, steam strippers are the principal
control system. Compared to the demand, the supply of wastewater
steam strippers is extremely limited; it is estimated that over
1,500 years will be required to fill the anticipated need if the
supply comes from only commercial venders. However, steam
strippers are readily designed in-house or by consultants and can
easily be fabricated by local shops. Other means, specific to
the VOC, process and plant can also be expected to be used to
destroy or remove VOCs in wastewater.
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Equipment Leaks. This source was not investigated because
of the myriad number of pieces of process equipment such as
valves and pumps that may have to be replaced were assumed to be
inadequate supply.
7.7 Conclus ions
Price and quantity adjustments have been calculated for 20
select compounds which will be regulated by the HON. The
majority of price increases — 78 percent — are below 2 percent.
91 percent of reductions in output are below 2 percent. In
general, impacts on the selected compounds are small. Since the
selection does not adequately represent the population of
controlled compounds, the same cannot be said for all controlled
compounds. Nevertheless, given the cost increases from
Table 7-6, it is safe to say that impacts for the SOCHI are, in
general, small.
Given the dynamic and flexible nature of the SOCMI, as well
as the oligopolistic market structure, closure in the .majority of
cases is unlikely.
The notable impacts of the HON will be the stimulation of a
shift to already existing chemical production processes, the
ushering in of processes which were previously uncompetitive, or
stimulation of research and development into new production
processes. It is likely that each of these will take place in
response to HON controls.
Small business impacts appear to be negligible.
In conclusion, the SOCMI is a dynamic industry which
responds quickly to changes in the economic environment.
Increasing costs driven by the HON will serve to reinforce moves
to lower-cost production processes, plants engineered for
flexibility in feedstock choice, and facilities capable of
producing a variety of chemical substitutes depending on costs
and market demand.
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References
1. This section synopsizes an appendix to the HON BID, an
appendix to be identified later.
2. United States International Trade Commission. Synthetic
Organic Chemicals — United States Production and Sales,
1988. Washington, D.C. September 1989, p. 3.
3. U.S. Environmental Protection Agency, Office of Air Quality
Planning and Standards. "Reactor Processes in Synthetic
Organic Chemical Manufacturing Industry — Background
Information for Proposed Standards." Research Triangle
Park, N.C. June 1990, p. 9-1.
4. Reference 3, p. 9-19.
5. "Petrochems Floating in a Sea of Plenty." Chemical
Marketing Reporter, April 2, 1990. p. SR 4.
6. "Specialty Chemicals: Not a Safe Haven." Chemical Marketing
Reporter, April 30, 1990. p. SR 4.
7. U.S. Environmental Protection Agency. SBR Production Source
Category Concurrance Assessment. Research Triangle Park,
N.C. ESED Project No. 84/24. January 1986. Appendix B-l.
8. Reference 3, p. 9-19.
9. U.S. Department of Commerce, Bureau of the Census. 1987
Census of Manufactures.
10. U.S. International Trade Commission. Synthetic Organic
Chemicals. September 1989.
11. Chemical & Engineering News, June 24, 1990. p. 30.
12. U.S. Department of Commerce, International Trade
Association. 1990 U.S. Industrial Outlook.
13. "1990 Forecast." Chemicalweek. January 3/10, 1990. p.19.
14. "Top 50 Chemicals Production Slowed Markedly Last Year."
Chemical & Engineering News, April 9, 1990. p. 12.
15. "Facts and Figures for the Chemical Industry." Chemical &
Engineering News, June 18, 1990. p. 60.
16. Reference 15, p. 62.
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17. Standard & Poor's Corp. Industry Surveys. "Chemicals —
Basic Analysis." New York, NY, November 2, 1989. pp. C16,
C17.
18. Reference 17, pp. C16, C17.
19. Reference 17, p. C27.
20. Reference 3, p. 9-15.
21. "Soaps and Detergents — New Opportunities in a Mature
Business." Chemicalweek, January 31, 1990. p. 20.
22. Reference 12.
23. Reference 17, p. C43.
24. U.S. Department of Commerce, Bureau of Economic Analysis,
Survey of Current Business, July 1990.
25. Reference 17, pp. C17.
26. Reference 3, p. 9-32.
27. Reference 15, p. 45.
28. Reference 15, p. 48.
29. Reference 15, p. 54.
30. For a detailed discussion of the literature consulted, see
Chapter 2 in the Economic Impact Analysis.
31. Reference 30.
32. For a detailed discussion of how compliance costs were
generated, see Chapter 9.
32. Layard, P.R.G. and Walters, A.A. Microeconomic Theory.
McGraw-Hill, New York. 1978. p. 263.
33. The analysis can be extended to cases with more than two
factors of production.
34. Scherer, F.M. Industrial Market Structure and Economic
Performance. Rand McNally & Co., 1980. Second Edition.
35. "Small Business Administration: Small Business Size
Standards; Final and Interim Rules." 13 CFR Part 121,
Federal Register, December 21, 1989.
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CHAPTER 8
BENEFITS
8.l Introduction
This chapter discusses the potential benefits associated
with air toxics regulation under the HON regulation. Various
limitations prevent a formal, quantitative benefits analysis. A
formal benefits assessment requires analysis of the full
pollutant path, tracing from the change in emissions to
atmospheric dispersion through population exposure, effective
dose, physical effect manifestation considering mitigating and
averting behavior, and ultimately to economic valuation.
Ideally, this analysis should be conducted for each of the air
toxic chemicals regulated under the HON. Lack of information on
an individual chemical basis, such as the quantity and location
of emissions and chemical-specific physical effect and exposure
data, as well as a significant time requirement preclude such a
detailed benefit analysis.
Because of the above limitations, a qualitative analysis of
the potential benefit categories is given that identifies the
direct use and non-use benefits of the regulation. The physical
effect categories that are associated with HON emission
reductions include health and welfare responses that have been
documented for HAPs, ozone, and particulate matter.
Furthermore, option value, existence value, and bequest value are
potential benefits creditable to this rule making.
The HON rule regulates 149 of the 189 hazardous air
pollutants listed in Section 112(b). A general understanding of
the physical and chemical nature of these compounds, including
their potential toxicity and environmental fate, makes possible
the categorization of physical effects from HAP emissions.
Hazardous air pollutant emissions may occur in both gaseous and
particulate form. Of the gaseous HAPs, the majority are volatile
organic compounds (VOCs), which are precursors in the formation
of ozone. The VOC HAPs may also condense or react to form
particulate matter. HAPs may enter terrestrial and aquatic
ecosystems through atmospheric deposition. HAPs can be deposited
on vegetation and soil through wet or dry deposition. HAPs may
also enter the aquatic environment from the atmosphere via 1) gas
exchange between surface water and the ambient air, 2) wet or dry
deposition of particulate HAPs and particles to which HAPs
adsorb, and 3) wet or dry deposition to watersheds with
subsequent leaching or runoff to waterbodies.l
Human exposure to HAPs may occur directly through inhalation
or indirectly through ingestion of food or water contaminated by
HAPs or through dermal exposure. In general, the reduction of
8-1
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HAP emissions resulting from promulgation and implementation of
the HON will reduce human and environmental exposure to these
pollutants and thus, reduce potential health and welfare effects.
This chapter provides a general discussion of the various
components of total benefits that may be gained from a reduction
in HAPs through the HON rule. Figure 8-1 lists the range of
potential physical health and welfare effects categories that may
be associated with HAP emissions and also with ambient
concentrations of ozone and particulate matter secondarily formed
by VOC HAPs.
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Figure 8-1. POTENTIAL PHYSICAL EFFECTS CATEGORIES FOR RON
Categories may be applicable for hazardous air pollutants and
ozone and PM secondarily formed by VOC HAPs.
Human Health Effects
Mortality Due to Chronic Exposure
Mortality Due to Acute Exposure
Morbidity Due to Chronic Exposure
Morbidity Due to Acute Exposure
Human Welfare Effects
Worker Productivity Losses
Odors
Non-Human Biological Effects
Agriculture
Forestry
Recreational/Commercial Fishing
Ecosystem
Soiling and Materials Damage
Residential/Commercial/Industrial Facilities
Miscellaneous Materials
Climate and visibility Effects
Local Visibility
Non-local Visibility
Climate
Visibility at Parks
Transportation Safety
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8.2 Hazardous Air Pollutant Benefits
8.2.1 Health Benefits of Reduction in Hazardous Air
Pollutants
The HON will regulate 149 of the 189 air toxics listed under
Title III. Exposure to ambient concentrations of these
pollutants may result in a variety of adverse health effects
considering both cancer and noncancer endpoints. In an effort to
better understand the "big picture" of hazardous air pollutant
exposures, EPA undertook broad studies in the 1980s to evaluate
the releases of these pollutants and the relative implication of
the resulting exposures to human health.
The first study assessed the magnitude and nature of
potential cancer risks associated with exposure to hazardous air
pollutants. Originally conducted in 1985J and updated in 19903,
the work broadly assessed long-term exposures to HAPs and
estimated potential cancer risks associated with these
pollutants, without chemical and site specific exposure and risk
assessment, it is not possible to estimate the excess expected
cancer cases attributable to HON emission sources.
A second EPA study4 assessed ambient concentrations of HAPs
in relation to their potential to elicit adverse noncancer
effects. This project utilized several approaches to
characterizing potential noncancer risks including review of case
reports, evaluation of State, local and Federal agencies'
experiences, and review of available health and exposure data.
Although the magnitude of noncancer risks could not be estimated,
the broad implications of this study indicated -that areas of
concern may be the following: short-term as well as long-term
exposures, multiple chemical exposures, and the combined impact
of an individual chemical emitted from multiple sources in the
same geographic area. The major health endpoints of concern in
this study were respiratory effects, developmental and
reproductive toxicity, and neurotoxicity.
In general, noncancer health effects can be grouped into i^he
following broad categories5:
o Genotoxicity - a broad term that usually refers to a
chemical that has the ability to damage DNA or the
chromosomes.
o Developmental toxicity - adverse effects on a
developing organism that may result from exposure prior
to conception (either parent), during prenatal
development, or postnatally to the time of sexual
maturation. Adverse developmental effects may be
detected at any point in the life span of the organism.
Major manifestations of developmental toxicity include:
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death of the developing organism; induction of
structural abnormalities; altered growth; and
functional deficiency.
o Reproductive toxicity - harmful effects on fertility,
gestation, or offspring, caused by exposure of either
parent to a substance.
o Systemic toxicity - affects a portion of the body other
than the site of entry.
o Irritant - causes irritation of eyes, skin, and
respiratory tract.
Exposure to HAPs may occur directly through inhalation as
well as indirectly through oral or dermal exposure to food or
water contaminated through deposition of HAPs. The Lake Michigan
Fish-Eating Study provides evidence of adverse health effects due
to indirect exposure to HAPs. Atmospheric deposition of HAPs
into the Great Lakes is a major cause of the deteriorated water
quality of this aquatic system. High concentrations of toxics
have been observed in a number of commercial and recreational
fish species. The Lake Michigan Fish-Eating Study revealed that
the total amount of fish consumed by mothers in all years prior
to conception and the amount of PCBs measured in umbilical cord
serum is associated with decreased visual recognition memory—a
measure of neurological development—in offspring. There is also
evidence of developmental effects such as reduced birth weight
and smaller head and skull circumference when compared to
controls.6
Exposures related to routine emissions of HAPs may be acute
(isolated or repeated events) or continuous in nature. Most
commonly, populations are exposed to more than one pollutant at a
given time. Consideration must be %given to potential additive,
synergistic, or antagonistic effects resulting from exposures to
chemical mixtures. Adverse effects resulting from these
exposures may be reversible or irreversible depending upon the
magnitude of the exposure and the mechanism of action eliciting
the effect. A wide range of responses may be seen from mild
irritation to mortality.
For the 149 HAPs covered under the HON, evidence on the
potential toxicity of the pollutants varies tremendously. Given
sufficient exposure conditions, all of these pollutants have the
potential to elicit adverse health or environmental effects in
the exposed populations. It can be expected that emission
reductions achieved through the HON regulation will decrease the
incidence of adverse health effects.
8.2.2 Welfare Benefits of Reduction in Hazardous Air
Pollutants
Environmental Impacts
8-5
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Emissions of hazardous air pollutants may also bring about
adverse, non-human biological effects such as ecosystem and
recreational and commercial fishery impacts. Atmospheric
deposition of toxics is believed to significantly contribute to
the presence of hazardous compounds in the environment. The
presence of toxic compounds in relatively pristine areas and
around large point sources such as smelters provides a strong
linkage between long and short-range transport of HAPs and the
bioaccumulation of these compounds in terrestrial and aquatic
systems. For example, atmospheric loading is estimated to
account for approximately 80 - 90% of all pollutant inputs to the
upper Great Lakes, an area considered relatively pristine and
with few major sources of toxics. Similarly, short-range
atmospheric deposition is thought to be responsible for 90 - 99%
of lead inputs to the mid-lower Chesapeake Bay.7
Hazardous air pollutants may be directly harmful to
organisms due to their presence in the ambient air. For example,
experts believe that major declines in the lichen flora of urban
and industrial areas worldwide are caused by atmospherically-
derived metals and gaseous phytotoxicants.*
Atmospheric deposition of HAPs directly to land may affect
terrestrial ecosytems. For example, there is documented evidence
of terrestrial ecosystem impacts such as plant toxicity, changes
in species composition, bioaccumulation, and inhibition of enzyme
activity due primarily to atmospherically-derived metals . These
effects may result in the loss of sensitive species and declines
in ecosystem productivity.9 Specifically, there is evidence of
impacts on mammal populations near to and downstream of a mining-
smelting complex in northern Idaho. Population declines in mink,
muskrat, and other small mammals are believed to be due to the
direct toxicity of atmospherically-derived metals as well as
secondary effects on cover and food supply.10
Atmospheric deposition of HAPs also contributes to adverse
aquatic ecosystem effects. Much of the documentation on the
aquatic impacts of HAPs has focused on the Great Lakes,. Many of
the HAPs deposited to the Great Lakes are persistent toxics that,
through the process of biomagnification, tend to accumulate in
toxic concentrations in the tissues of species high on the food
chain. This not only has adverse implications for individual
wildlife species and ecosystems as a whole, but also the humans
who may ingest contaminated fish and waterfowl. The Great Lakes
is the largest freshwater fishery in the world. In 1985, more
than 4 million people fished in the Great Lakes basin.11
Recreational and commercial fishing is estimated to be worth $4.2
billion annually.12 High tissue contaminant levels, however, have
forced the closure of some commercial fisheries and the issuance
of fish advisories for some recreational fish species.
Therefore, atmospheric deposition of HAPs to the Great Lakes may
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impose significant costs to the area's recreational and
commercial fishing industries.
Toxic pollutants in the Great Lakes ecosystem are believed
to be responsible for a number of specific problems in organisms
at the top of the Great Lakes food web such as the following13:
o reproductive problems and population decline
o metabolic changes
o birth deformities
o hormonal changes
o tumors
o generational effects
o behavioral changes.
Additionally, large increases (outside normal variation for
vertebrate species) in the populations of cormorants and ring-
billed gull indicate the occurrence of fundamental changes in the
balance of the Great Lakes ecosystem.14 Experts believe that
these ecosystem changes are indirectly due to the presence of
toxic compounds in the Great Lakes ecosystem.
The extent to which other ecosystems outside of the Great
Lakes are adversely impacted by hazardous air pollutants is not
yet known, although toxics loading appears significant. For
example, loadings to the Chesapeake Bay are at least as high or
higher than loadings to the Great Lakes on a per unit area basis.
Because there is a proportionally larger watershed around the
Chesapeake Bay than the Great Lakes, there is greater potential
for indirect loading of HAP's into the Chesapeake Bay. In
general, HAP emission reductions achieved through the HON should
reduce the associated adverse environmental impacts.
Additional Welfare Effects
There is evidence of materials damage that may occur as a
result of emissions of hazardous air pollutants. Acidic
compounds may corrode or decay metals, stone, and automotive
finishes.13 Additionally, odor threshold concentrations have been
reported for a number of hazardous air pollutants.16 However,
without site specific air quality modeling, it is not known the
extent to which ambient concentrations of these air toxic
compounds exceed the odor threshold level.
8.3 Ozone Benefits
8.3.1 Health Benefits of Reduction in Ambient Ozone
Concentration
Ozone benefits may be attributable to this regulation as
ozone is a product of VOC and nitrogen oxide emissions reacting
8-7
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in the presence of sunlight. VOCs are a major pollutant for
those sources/processes that will be regulated under HON.
Consequently, reductions in the emissions of VOCs will also lead
to reductions in the types of health and welfare impacts that are
associated with elevated concentrations of ozone.
Approximately 47.7 million people live in nonattainment
areas (classified as marginal, moderate, serious, severe and
extreme) that contain a HON process unit and are potentially
exposed to ozone levels above the standard. VOC emissions from
HON process units therefore may contribute to some degree to the
adverse health effects experienced by exposed individuals in
those nonattainment areas. Furthermore, it is estimated that
approximately 57% of the VOC reductions achieved by the HON may
occur in ozone nonattainment areas.
There are sensitive subpopulations that are more at risk of
adverse health effects from elevated ozone concentrations. These
groups include people with the following conditions17:
o chronic bronchitis (3.5 percent of US population);
o asthma (3.5 - 5 percent of US population);
o allergies (7 percent of US population);
o emphysema (1 percent of US population);
o any individual exercising heavily during ozone
exposure. Heavy exercise increases breathing frequency
and depth of breathing resulting in a larger ozone dose
to lungs and deeper penetration of ozone to the most
sensitive lung tissue.
The health effects associated with increased ambient ozone
concentrations have been well documented in EPA's recent review
of the ozone standard and presented in the Office of Air Quality
Planning and Standards Staff Paper on ozone. The major ozone
health effects of concern to health scientists are the
following18:
o Alterations in Pulmonary Function - modifications in
such pulmonary measurements as forced expiratory
volume, total lung capacity, and breathing frequency;
o Symptomatic Effects - eye, nose and throat irritation,
chest discomfort, cough, headache, chest pain on deep
inspiration, chest tightness, wheezing, lassitude,
malaise and nausea;
o Exercise Performance - reduced workload and
performance;
o Bronchial Reactivity - increased sensitivity of airway
to agents such as histamines with subsequent initiation
of an inflammatory response;
8-8
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o Aggravation of Existing Respiratory Disease -
aggravation of existing asthma, chronic bronchitis or
emphysema conditions;
o Morphological Effects - occurrence of lesions in lung
tissue of exposed animals;
o Altered Host Defense System - alteration of host
defense system rendering sensitivity to respiratory
infection;
o Extrapulmonary Effects - blood enzyme, central nervous
system, liver, endocrine, cardiovascular, reproductive
and teratological effects.
8.3.2 Welfare Benefits from Reduction in J^p^ient Ozone
concentration
Elevated concentrations of ambient ozone are also associated
with adverse welfare (non-health) impacts. The welfare effects
of concern are the following19:
o decreased worker productivity;
o crop damage resulting in yield losses and undesirable
quality effects20;
o forest damage manifested as growth retardation or
foliar injury;
o materials damage of elastomers, textile fibers, dyes,
and paints.
Reduction of VOCs through the HON regulation is another
mechanism - in addition to Title I and II control measures - by
which the ambient ozone concentration may be reduced and in turn
reduce the incidence of the adverse health and welfare effects
discussed above.
8.4 Particulate Matter Benefits
In addition to acting as precursors to ozone formation, VOC
emissions may also condense or react to generate secondarily-
formed aerosols, elevating ambient concentrations of particulate
matter (PM). Based on available conversion factors,
approximately 1 to 2 percent of VOC emissions condense or react
to form secondary particulate matter. The 986,000 Mg of VOC
emissions reduction under the HON will therefore cause a
reduction of 9860 Mg to 19,720 Mg of secondary PM formation.
These particles are respirable and contribute to impairment of
visibility.
PM-related health effects include chronic and acute
morbidity and mortality. PM-related welfare impacts encompass
soiling and materials damage and climate and visibility effect.21
Therefore by reducing VOC emissions, decreases in the adverse
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health and welfare effects associated with elevated PM
concentrations may be achieved.
8.5 Additional Benefits
There are additional benefits that may be attributable to
the HON regulation above and beyond the direct use value as
represented by the health and welfare benefits associated with
HAP reductions as discussed above. Theoretical analysis of the
value of non-market environmental amenities (i.e. air quality,
visibility) or disamenities (i.e. Superfund sites, nuclear power
plants) has led to the decomposition of willingness to pay into
several components. One important distinction relevant to the
HON that is made in the literature is that some portion of the
value one places on air toxics reductions is related to one's own
exposure to air toxics while some portion of the value may not be
related to one's own exposure to air toxics. Use values are the
values associated with an individual's desire to avoid his or her
own exposure to an environmental risk, or in the case of the HON,
toxic air pollutants. Non-use values are values an individual
may have for lowering the concentration of toxic air pollution or
level of risk unrelated to his or her own exposure. Non-use
values may be related to the desire that a clean environment be
available for the use of others now and in the future, or may be
related to the desire to know that the resource is being
preserved for its own sake, regardless of human use.
Several different categories of use and non-use values
have been developed and rigorously defined in the literature.22
These include:
o Option price. Option price is a measure of total value
that reflects uncertainty regarding future use of a
resource. It equals the expected value of current and
future use plus a risk premium, which may be positive,
negative, or zero. The risk premium is related to
uncertainty regarding desired future use and its sign
(positive or negative) depends on whether the
individual prefers to err toward preserving the
resource (reduced-toxic atmosphere) that may not be
wanted for use in the future, or toward losing the
resource that may be wanted for use in the future. The
risk premium associated with option price is referred
to as option value.
o Bequest value. This is the component of non-use value
that is related to the use of the resource by others
now and in the future. This value is typically thought
of as altruistic in nature. Bequest value may be more
significant to the HON regulation when considering the
value an individual may have to reduce the risk of air
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pollutant exposure to others (outside of one's family
and friends) now living rather than future generations.
o Existence value. This is the component of non-use
value that is related to preservation of the resource
for its own sake, even if there is no human use of the
resource. In practice, bequest and existence values
are difficult to distinguish and are often together
referred to as existence value. In the case of the HON
regulation, existence value would incorporate an
individual's willingness to pay for the preservation of
a reduced-toxic atmosphere.
These value categories may apply to changes in the quality
of a resource. Freeman explicitly included this in his
analysis.23 With air emissions under the HON regulation, the
issue is typically the concentration of air emissions to which
people are exposed, not whether or not any emissions exist at
all. These value categories may also be components of the total
use and non-use values of a reduction in ambient ozone and PM
concentrations that may also be achieved through the HON.
Option price differs from use value because it is an ex ante
measure rather than an ex post measure of value related to
exposure. As the ex ante measure, option price is the
appropriate measure for analysis of proposed regulatory decisions
that may affect the availability or quality of a resource.
Option price may differ from use value due to differences between
expected and actual use of the resource as well as due to any
risk premium.
8.6 Conelus ion
Because of various limitations, the benefits associated with
the HON regulation have not been monetized. However, there are
health and welfare improvements that could be gained through a
reduction in air pollutants regulated under HON that have been
qualitatively discussed. In summary, air toxic reductions may
reduce mortality and morbidity from exposure directly to HAP's
and secondary PM. Similarly, VOC reductions in ozone
nonattainment areas will decrease ambient concentrations of ozone
and therefore reduce morbidity effects. Because approximately
47.7 million people reside in ozone nonattainment areas with at
least one HON process unit, any decrease in ambient ozone
concentrations as a result of HON control will directly benefit
these individuals. In fact, it is estimated that approximately
57% of the VOC reductions achieved by the HON will occur in ozone
nonattainment areas. Human welfare benefits from HON control may
include improvements in worker productivity and a decrease in
odors.
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The HON regulation may also result in beneficial biological
effects such as agricultural crop yield increases, and beneficial
forestry, fishing, and ecosystem impacts. A decrease in soiling
and materials damage is another potential benefit of this
rulemaking. Climate and visibility may also be improved through
decreases in secondary PM associated with HAP reductions.
Finally, potential benefits from the HON regulation may also
include existence value, bequest value, and components of option
price.
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References
1. ICF, Inc. "Focus Chemicals for the Clean Air Act Amendments
Great Waters study." Draft Report. Prepare for Office of
Air Quality Planning and Standards, U.S. Environmental
Protection Agency, Research Triangle Park, NC. August 1991.
2. U.S. EPA, Offices of Air and Radiation and Policy Planning
and Evaluation. The Air Toxics Problem in the United
States: An Analysis of Cancer Risks for Selected
Pollutants. EPA 450/1-85-001. May 1985.
3. Office of Air Quality Planning and Standards, Cancer Risk
From Outdoor Exposure to Air Toxics. EPA-450/l-90-004a.
U.S. Environmental Protection Agency, Research Triangle
Park, NC. September 1990.
4. Office of Air Quality Planning and Standards. Toxic Air
Pollutant and Noncancer Health Risks: Screening Studies.
External Review Draft. U.S. Environmental Protection Agency,
Research Triangle Park, NC. September 1990.
5. U.S. EPA. Air Risk Information Support Center. Glossary of
Terms Related to Health, Exposure, and Risk Assessment.
EPA/450/3-88/016. March 1989.
6. Colborn, Theordora E. Great Lakes Great Legacy? The
Conservation Foundation and The Institute for Research on
Public Policy, Washington, DC. 1990. pp. 172-173.
7. ICF, Inc. Atmospheric Deposition of Toxic Chemicals to
Surface Waters: Identification and Summary of Recent
Literature. Draft Report. Prepared for Office of Air
Quality Planning and Standards, U.S. Environmental
Protection Agency, Research Triangle Park, NC. August 1991.
p. ES-7.
8. Ref. 13, p. ES-10.
9. Ref. 13, p. ES-10.
10. Ref. 13, p. ES-12.
11. Environment Canada. Toxic Chemicals in the Great Lakes and
Associated Effects. Toronto, Ontario. March 1991.
12. Personal Communication with Wayne Wilford, Great Lakes
National Program Office, U.S. EPA. January 1992.
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13. Ref. 17.
14. Ref. 12, pp. 132-140.
15. U.S. National Acid Precipitation Assessment Program. Acidic
Deposition: state of Science and Technology, Volume III,
Terrestrial, Materials, Health and Visibility Effects. 1991.
16. Office of Research and Development. Reference Guide to Odor
Thresholds for Hazardous Air Pollutants Listed in the Clean
Air Act Amendments of 1990. EPA/600/R-92/047. March 1992.
17. Environmental Criteria and Assessment Office. Air Quality
Criteria for Ozone and Other Photochemical Oxidants. U.S.
Environmental Protection Agency, Research Triangle Park, NC.
1986.
Office of Air Quality Planning and Standards, '"Summary of
Selected New Information on Effects of Ozone on Health and
Vegetation: Draft Supplement to Air Quality Criteria for
Ozone and Other Photochemical Oxidants," U.S. Environmental
Protection Agency, Research Triangle Park, NC. November
1988.
18. Ref. 4.
19. Adams, R.M., et. al. The Economic Effects of Ozone on
Agriculture. Office of Research and Development, U.S.
Environmental Protection Agency, Corvallis, OR. EPA-600/3-
84-090. 1984.
20. Shortle, James S., et. al, "Economic Assessment of Crop
Damages Due to Air Pollution: The Role of Quality Effects."
Environmental Pollution 53:377-385. 1988.
21. Office of Air Quality Planning and Standards, "Regulatory
Impact Analysis of the National Ambient Air Quality Standard
for Particulate Matter," U.S. Environmental Protection
Agency, Research Triangle Park, NC. December 1983.
22. Office of Air Quality Planning and Standards, Regulatory
Impact Analysis of a Revision of the Federal Implementation
Plan for the State of Arizona to Include SO2 Controls for
the Navajo Generating Station, U.S. Environmental Protection
Agency, Research Triangle Park, NC. January 1991,
23. Freeman, A.M., III. "Non-use Values in Natural Resource
Damage Assessment." Paper prepared for the Resources for
the Future Conference on Assessing Natural Resource Damages,
Washington, D.C., June 16-17, 1988.
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CHAPTER 9
BENEFIT-COST ANALYSIS
9.l Introduction
This chapter provides an illustration of the economic
efficiency framework for evaluating regulatory options under the
proposed HON rulemaking. Unfortunately data paucities and time
constraints preclude a formal quantification of the allocative
efficiency aspects of this rule.
This chapter also identifies the overlap of the HON
rulemaking with VOC emission reduction requirements for ozone
nonattainment areas. The complementarity of these regulatory
requirements may result in control cost savings in these areas.
9.2 Economic Efficiency Considerations
The adoption and implementation of air toxics regulations is
not free. There is a reallocation of society's resources to
address the negative spillover of air pollution. In the course
of internalizing the air pollution externality, the cost of
reducing emissions through the HON rulemaking is reflected in the
production, distribution, and consumption of synthetic organic
chemicals. This additional cost is in contrast to the
improvement in society's well being from a cleaner environment
and concomitant reductions in adverse health effects and other
risks.
As displayed in Figure 9.1, the existence of a regulation to
internalize the air pollution externality does not guarantee an
allocatively efficient outcome. An allocatfvely efficient
regulation maximizes the net benefits to society. In a
mathematical sense, allocative efficiency requires that the
marginal benefits of the rule be equal to the marginal cost and
that marginal costs are rising at a rate greater than marginal
benefits.
Because of the inability to compare in a quantitative sense
both the benefits and the costs of the regulatory alternatives,
the economic efficiency aspects of this rule cannot be assessed.
9.3 Cost-Effectiveness of HON VOC Emission Reductions in
Ozone Nonattainment Areas
Environmental quality enhancement programs are not always
independent of one another. In the course of accomplishing the
objectives of Title III through the HON requirements, the
regulation also reduces emissions of ozone precursors (VOC's) in
ozone nonattainment areas. In the year 1995, HON VOC emission
reductions for the most stringent regulatory option (TIC) are
9-1
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Figure 9.1 Optimal Regulation
and Net Benefit Levels
$
Positive Net
Benefrts
Total Cost
Negative Net
Benefits
Optimal Regulation Level
Q HON VOC Emission Reductions
$
Marginal Benefits
Marginal Costs
Optimal Regulation Level
HON VOC Emission Reductions
-------
estimated to be 56 percent of the total VOC emission reductions
required in nonattainment areas (classified as marginal,
moderate, serious, severe, and extreme) for the ozone NAAQS.
Some of the VOC emission reductions for ozone nonattainment
areas are achieved through nondiscretionary control measures.
Some of these control measures include VOC emission reduction
requirements based on new control techniques guidelines
documents. One of the source categories for these new documents
is the SOCMI. Consequently, there is some overlap between the
HON VOC emission reductions and those reductions from
nondiscretionary control requirements for ozone nonattainment
areas.
There are additional VOC emission reductions from the HON
rulemaking that will occur in moderate, serious, severe and
extreme ozone nonattainment areas. Further emission reductions
are required in these areas; however, the means of achieving
these additional VOC emission reductions is discretionary.
Consequently, the prudent regulatory authority may use the
additional VOC emission reductions from the HON rules to replace
the emission reductions from high cost discretionary controls.
This replacement may result in a "savings" or avoided cost of the
discretionary controls that are replaced by HON controls.
For example, the average cost of the HON VOC emission
reductions for total industry control in nonattainment areas is
estimated at $1,061 per Mg. The average cost of discretionary
controls in the moderate, serious, severe, and extreme
nonattainment areas is estimated to be $4,540 per Mg.1 If a
megagram of HON VOC emission reductions replaced a $4,540
discretionary control measure megagram, the savings would be
$3,479. This is a potential control cost savings of nearly 77
percent.
The exact amount of savings resulting from the HON rule
cannot be calculated due to uncertainties regarding the potential
overlap of emission reductions resulting from rules derived from
the control techniques guidelines documents for SOCMI sources and
the HON rulemaking.
9.4 Conclusion
The economic efficiency aspects of HON regulatory options
cannot be assessed because of the inability to quantify the
benefits associated with the rule.
There is overlap between the emission reductions and
environmental quality enhancement objectives of the nonattainment
and air toxics titles of the Clean Air Act. This overlap may
9-2
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result in a potential cost savings in selected ozone
nonattainment areas.
9-3
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