United States Solid Waste and . EPA530-R-97-030
Environmental Protection Emergency Response NTIS: PB97-176 952
Agency (5305W) • , April 1997 •
.
v>EPA Regulatory Impact
Analysis of the
Phase IV Land Disposal
Restrictions Final Rule
for Newly Identified
Wood Preserving
Wastes
-•. . • X
-'01 r.; Ssreai, SW • /. •;
V^iS'?;n4}2onf DO 204S0 '' i
Printed on paper that contains at lest 20 percent postconsumer fiber
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§
V
REGULATORY IMPACT ANALYSIS
OF THE PHASE IV
LAND DISPOSAL RESTRICTION FINAL RULE
FOR NEWLY IDENTIFIED
WOOD PRESERVING WASTES
Prepared for:
U.S. Environmental Protection Agency
Office of Solid Waste
April 14,1997
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TABLE OF CONTENTS
BACKGROUND ....'........... , .. 1
REQUIREMENTS OF THE PHASE IV LDR RULE '. 2
NEWLY LISTED WASTES SUBJECT TO LDRs ....!...,...:................ 3
* , * /
AFFECTED UNIVERSE .'........, ;.... 5
Wastewaters ...:,' : 5
Nonwastewaters ...".....;. ; ; 8
COSTS OF LDRs FOR NEWLY LISTED WOOD PRESERVING WASTES ....:...:.:... 9
Methodology . 9
Results ..:.. :.,....... ............: ........'...:..-.. 14
r •
ASSESSING ECONOMIC IMPACTS.OF COMPLIANCE ..........,..; 16
Methodology .......: 17
New Compliance Costs to Total Revenues Analysis : : 17
New Compliance Costs to Total Profits Analysis 18
Approach .....; 18
Results :.:.,.'..: 20
ASSESSING SMALL BUSINESS IMPACTS OF COMPLIANCE 22
BENEFITS OF LDRs FOR NEWLY LISTED WOOD PRESERVING WASTES .......... 23
' ' ' ' • • • .
' Comparison of Current to Post-LDR Management Practices 24
j • *!. t '
Changes in Exposures to Hazardous Constituents . ' 25
it
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REGULATORY IMPACT ANALYSIS OF THE PHASE IV
. LAND DISPOSAL RESTRICTION FINAL RULE FOR
NEWLY IDENTIFIED WOOD PRESERVING WASTES
- This Regulatory Impact Analysis (RIA) estimates the costs, economic impacts, and benefits
of the wood preserving wastes provisions of the Phase IV Land Disposal Restriction (LDR) rule.
EPA is promulgating standards for newly-listed wood preserving wastes (F032, F034, and F035).
'< i . - ' .."•••
In accordance with the requirements of Executive Order No. 12866, EPA must develop and
.submit to the Office of Management and Budget (OMB) an RIA for any significant regulatory
action. The purpose of this document is to present the industries and wastes that will be affected by
the rule, estimate the costs associated with treating those wastes to comply with LDR standards,
determine the impact that these additional treatment costs will have on facilities' operating costs, and
evaluate the human health and ecological benefits attributable to reductions in pollutant discharges
required by the rule. This document also includes analysis of impacts on small businesses as
required of the Agency by the Small Business Regulatory Enforcement Fairness Act (SBREFA).
BACKGROUND
The Phase IV Land Disposal Restriction (LDR) rule is one in a series of regulations that
restricts the continued land disposal of hazardous wastes under the 1984 Hazardous and Solid Waste
Amendments (HSWA) to the Resource Conservation and Recovery Act (RCRA).1 Section 3004(g)
of RCRA outlines a schedule for the development of waste treatment and disposal practices for
wastes that EPA determines are hazardous. Under RCRA, waste is deemed hazardous either because
it demonstrates the characteristic of ignitability, corrosivity, reactivity, or toxicity (ICRT wastes),
or because it contains constituents listed as hazardous by EPA.2 ,
1 Land disposal includes any placement of hazardous waste in a landfill, surface impoundment,
waste pile, injection well, land treatment facility, salt dome formation, salt bed formation, or
underground mine or cave.
2 Appendix VIII of 40 CFR part 261 identifies these hazardous constituents, as well as the eleven
factors that EPA considers in determining whether the constituent poses significant human health
risks. ' • ., . . • - . "'.'••"'•'. '-• '
* ' / - - ' . . f _ . •
• ' " ' ' . i- • • • • • • v ' • :• • ;
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1 At the time HSWA was enacted, EPA'was required to promulgate treatment and disposal
standards by May 8, 1990 for wastes already identified or listed ,as hazardous. EPA established
treatment standards and waste management practices for these wastes in five rules promulgated
between 1986 and 1990 (the solvents and dioxins rule, the California list rule, and the First Third,
Second Third and Third Third rules).
Treatment standards for wastes subsequently identified or listed as hazardous must be
developed by EPA within six months of waste listing or identification. EPA is addressing these,
wastes in "phases." The Phase ILDR rule established standards for hazardous debris and several
newly, identified wastes. The Phase II LDR rule established treatment standards for newly identified
pesticide wastes (DO 12 through DO 17) and newly identified toxic organic wastes (DO 18 through
D043). The Phase II LDR rule also established Universal Treatment Standards (UTS) for 216
constituents in hazardous waste. UTS levels, which set a common treatment standard for a
constituent across all waste types, were developed for both wastewaters and nonwastewaters based
on the best demonstrated achievable.technology (BOAT) for reducing these contaminants. The
Phase III rule established treatment standards for two newly listed wastes (aluminum potliners and
carbamate wastes). In addition the Phase III rule established end-of-pipe discharge treatment
standards for underlying constituents in land-based wastewater treatment systems managing
"decharacterized" characteristic waste.
REQUIREMENTS OF THE PHASE IV LDR RULE
The Phase IV LDR rule finalizes treatment standards for three wood preserving wastes;
Pursuant to Section 3001 of RCRA, EPA listed as hazardous wastes those from wood preserving
processes that use either chlorophenolic, creosote, and/or inorganic preservatives. Exhibit 1 contains
descriptions of these wastes; In December 1990, EPA promulgated a final listing determination for
F032, FQ34, and F035 wood preserving wastes. The listing rule established that these wastes contain
a number of inorganic and organic toxic constituents, including in some cases dioxins and furans,
that could present human health risks. EPA is requiring that constituents of concern in these wastes
meet UTS levels. Alternatively, EPA has established BOAT for F032 and F034 organic wastes as
combustion, allowing affected facilities to incinerate these wastes and dispose1 of the residuals in a
Subtitle C unit rattier than meet UTS 'levels prior to disposal. For other waste forms, EPA has
determined that the treatment standards can be achieved using the following technologies:
• . Organics in wastewater - a single treatment technology or a normal wastewater treatment
train including technologies such as biological treatment, steam stripping, carbon adsorption,
or combinations of these technologies; . .
1 . ' . '_••/- -> ;
• Metals in wastewater - lime addition followed by sedimentation and filtration for arsenic,
and chemical precipitation followed by sedimentation for chromium; >
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• Metals in nonwastewaters -stabilization or vitrification for arsenic and stabilization for
chromium.
These treatment methods are not requirements under the promulgated rule. Therefore any type of
treatment other than impermissable dilution may be used to achieve UTS levels.1
Exhibit 1
NEWLY LISTED WOOD PRESERVING WASTES'
Wastecode
F032
F034
F035
• This lu
. Hazardous Waste Description
Wastewaters, process residuals, preservative drippage, and spent formulations from wood
preserving processes that currently use, or previously used, chlorophenolic formulations.
*• - S ' ' . ' ' ' ' ;i .•
Wastewaters, process residuals, preservative drippage, and spent formulations from wood
preserving processes that currently use, or previously used, creosote formulations, but have
never used chlorophenolic formulations.
Wastewaters, process residuals, preservative drippage, and spent formulations from wood
preserving processes that use inorganic preservatives containing arsenic and chromium.
..•'••' •.•...•••'•.' "
sting does hot include K001 bottom sediment sludge from treated wastewaters.
NEWLY LISTED WASTES SUBJECT TO LDRs
According to industry reports, the wood preserving industry uses one or a combination of the
following three preservative types to treat wood products: ! .
• Chlorophenols, ' .
• Creosotes, and
• inorganic formulations of arsenic and chromium. -'
Facilities routinely use these preservatives to protect wood products against rotting and insects and -
to extend the products' useful life. These compounds and their derivatives contain constituents with
known carcinogens or systemic toxicants, many of which are listed as hazardous under 40 CFR 261.
See the preamble to this rule for more details on the specific provisions of the final rule.
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. 1
Industry data indicate that inorganic formulations, and in particular chromated copper
arsenate (CCA), are the most frequently used preservative types. Other commonly used inorganic
.compounds include acid copper chromate (ACC), ammoniacal copper arsenate (ACA), and
chromated zinc chloride (CZC). Wastes resulting from inorganic formulations are listed as F035
waste. _• ; ' • '. < -
Unlike the waterborne inorganic preservatives, creosote compounds comprise heavy residual
oils collected from the 'distillation of tar or crude petroleum. Creosote-based formulations usually
consist of pure coal tar creosotes or creosote diluted with other preservatives (e.g., coal tars or
petroleum oils). The American Wood Preservers' Association limits creosote preservative use to
only coal-tar distillates. Also, many wood preserving facilities fortify their creosote-based
preservatives with insecticides (e.g., pentachlorophenol, arsenic trioxide, and malathion) prior to use.
Wastes generated from creosote-based preservatives are classified as F034 waste.
Chlorophenols are the least common organic preservative type used by'wood treating
facilities. Typically mixed with petroleum oils (e.g., butane and naphtha), chlorophenols represent
a group of synthetic organic compounds that include pentachlorophenol (PCP). PCP formulations
are used in a variety of wood preserving solvents and are often carcinogenic. Wastes generated from
chlorophenolic formulations are categorized as F032 waste.
In instances where facilities use mixed preservative formulations (e.g., chlorophenols and
creosotes or creosotes and inorganics), the equipment units can remain contaminated with F032 and
F034 hazardous constituents (e.g., PCP, polychiorinated dibenzo-p-dioxins, and polychlorinated
dibenzofiirans). Under such cross-contamination scenarios, F032 supersedes ~F034 waste
classifications and F034 supersedes F035 waste classifications.4
By applying chlorophenolic, creosote, or inorganic chemicals during the wood conditioning-
preserving-storage cycle, wood preserving facilities generate four distinct wastes. They are:
• Wastewaters generated during the wood preserving process, and again when
cylinders and tanks are cleaned; . .
• Process solid residuals, which typically include wood chips, sawdust, and dirt >
that has collected in the cylinders and work tanks; ', •
. • Preservative drippage, which occurs after the wood has been treated and
excess preservative "drips" and collects onto pads; and
i
4 Regulatory Impact Analysis for the Final Listing of Certain Wood Preserving Wastes- prepared
by ICF Incorporated for EPA1 s Office of Solid Waste, November 1990, Chapter!. .
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• Discarded spent formulations, which accumulate throughout the wood
preserving process and generally are discarded as work tanks are cleaned and
maintained.5 ' - . . '•. .;- ;' "
This analysis assesses the potential response of wood preserving facilities to LDRs for these wastes
by evaluating two treatability groups, wastewaters and nonwastewaters.
AFFECTED UNIVERSE ' ' ; .; . ...•;..:.:-'. ;.,':-.; \';\ -•,.';..''.": - .•'•>
According to 1993 industry statistics, 352 companies ownand.operate 471 domestic wood
preserving facilities.6 Of these 471 facilities, 469 operate pressure treating plants and two facilities
manage non-pressure processing plants.7 The two non-pressure wood treating facilities generate less
than 100 kilograms of hazardous waste per month.1 As small quantity generators, both facilities are
exempt from RGRA regulations, and are not affected by the proposed Phase IV restrictions. The
remaining 469 wood preserving facilities treat-their wood products using the "empty cell'* pressure
process or the "full cell" pressure process, and generate Phase IV restricted wastes.9
Wastewaters .' • . • • " '"'•'••''•. .• • •'"'' ••••••;•' ••,•-.-
According to data from the Micklewright report, 107 of the 469 affected facilities generate
organic wastewaters (i.e., F032 and F034 combined wastewaters and' drippage). Of these, 58:
facilities generate approximately 340,000 tons of F034 wastewaters and 49 facilities generate
5
! Regulatory Impact Analysis for the Final Listing of Certain Wood Preserving Wastes, p. 2-28.
Data gathered in support of the final listing rule suggests that the amount of spent formulations
generated by wood preserving facilities is mmimai, and will not be affected by the proposed Phase
IV rule. - , . :' •' ..-.'• ., ' '•"•'' • ;' ',, .•••'_./.: ' • ,' "••''-..,•
6 We were unable to use more recent data in our analysis because more recent estimates are
incomplete. ' '(•'•:.".'"'.' r .
7 Wood Preservation Statistics, 1993: A Report to the Wood-Preserving Industry in the United
States.prepared by James T. Micklewright for the American Wood Preservers' Association, May
1994. •• . -.;•'" -" -; "' ••;,.:--,;-.-: ' • -•.', ';• ;. :'
1 Regulatory Impact Analysis for the Final Listing of Certain Wood Preserving Wastes, p. 5-
11. '. " .-•• . '. . • •/' • .;'•.'.' •;'';.,,._ • -.'••-. •
9 For a more detailed description of pressure and non-pressure treating processes refer to
Regulatory Impact Analysis for the Final Listing of Certain Wood Preserving Wastes (Chapter 2):
.'.".''••-.- ' ' . 5 ,-'..''.' " ' "-' ' •
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approximately 200,000 tons of F032 wastewaters.10 The RIAfor the Final Listing of Certain Wood
Preserving Wastes indicates that facilities generating organic wastewaters generally treat and
discharge their wastewaters to publicly owned treatment works (POTW), and therefore are not
affected by EPA's land disposal restrictions.11 Bottom sediment sludges resulting from F032 and
FQ34 wastewater treatment processes are also not affected under the proposed Phase IV rule. These
sludges are already listed as K001 hazardous.12 Recent research, however, suggests that some
facilities may dispose of their F032 and F034 wastewaters through underground injection wells.
Underground injection wells disposing of F032 and/or F034 wastewaters are therefore potentially
affected facilities.
** ' . • .
Estimates for F032 wastewaters incorporate quantities of waste generated from using mixed
chlorophenolic/inorganic, chlorophenolic/creosote, and chlorophenolic/creosote/inorganic
formulations during the wood preserving processes. Under these cross-contamination scenarios,
equipment units can remain contaminated with F032 residuals. Therefore, wastes resulting from
mixed F032, F034, and F03S preservative use are classified and treated as F032 waste.
\ .•'•.' ' • -
:, Similarly, processes that require mixed creosote and inorganic preservatives can result in
equipment units that are contaminated with F034. Wastes resulting from these mixed formulations
are classified and treated as F034 waste. The quantity estimates for F034 wastewaters therefore
include quantities for wastes generated as a result of using mixed creosote/inorganic formulations.
Exhibit 2 provides a more detailed breakdown of these quantity estimates by preservative type.
.. Facilities that use inorganic preservatives employ a conditioning process that generates little
or no, wastewaters (F035 combined wastewaters and drippage). Any wastewater that is generated
is .immediately recycled and reused, and therefore is not affected by the proposed Phase IV
restrictions.13 The Micklewright report suggests that the majority of wood preserving facilities (362
facilities) use inorganic preservatives and recycle/reuse the resulting wastewaters. This estimate
includes pressure-treating facilities that use mixed inorganic/fire retardant formulations.
<° Estimates were derived from 1993 treated wood volume estimates in Wood Preservation
Statistics, 1993: A Report to the Wood-Preserving Industry in the United States (tables 7 and 8)
and waste generation rates listed in Regulatory Impact Analysis for the Final Listing of Certain
Wood Preserving Wastes ([Exhibit 2^17), p. 2-28.
11 Regulatory Impact Analysis for the Final Listing of Certain Wood Preserving Wastes, p. 2-
10. . . ' ; -, ; . '. ' • ' " • /•
12 Regulatory Impact Analysis for the Final Listing of Certain Wood Preserving Wastes, p, 2-
24. /•-. '.•'••.. • ":•'''..' - - • •
..-*•' i .'• • . " ' .-..,.• • ... . ^
13 Regulatory Impact Analysis for the Final Listing of Certain Wood Preserving Wastes, p. 2-
24. • ' • '•' •' • ••-.'• . '--:.•"-..
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' . . • ; '•• _ ' . Exhibit! - ' ':'". ' '•'.''.': ' . • , ;.
QUANTITY ESTIMATES FOR NEWLY LISTED WOOD
PRESERVING WASTES BY PRESERVATIVE TYPE
. Preservative Type (Wastecode)
• Number of
Generating
Facilities*
, Low-End,
Mlcklewright-baied
Quantity (tons)"
High-End,
BRS-based Quantity (tons)'
Wastewaters* ' . ,"-.'-. • '.'.".. . •. ;- . •
Creosote (F034) ' • ; x
Creosote/Inorganic (F034) .
Chlorophenol (F032)
Chlorophenbl/Inorganic (F032) .'""''.•
Chiorophenbl/Creosote (F032) , x
Chlorophenol/Inorganic/Creosote(F032)
Inorganic (F035) . '
TOTAL ' . .."'.,
Nonwastewaters'
Creosote (F034)
Creosote/Inorganic (F034) . ,
Chlorophenol (F032) • . " ' "
Chlorophenoi/lnorganic (F032) • -,
Chlorophenol/Creosote (F032)
Chlorophenol/lnorganic/Creosote(F032)
Inorganic (F035) ,
TOTAL ,
40
' 18
19
12
\ - •'•'•'*
.12
362
469
40
J
18
19
12
6
12
362
469
^284,375
55,220
- 56,754
' 34,632
37,193
77,835
; o*
5*6,009
1,086
':•:•'' 242
. • .348
240
- : - 170
424
1,350
3,860
*> • -440
• ^ .. 0
12.761
"• ' ' /
0
' ' 0
0
- , .59'
13,260
1.671
8,751
2,385«
• ' ' ' ' 'l.645»
1,165*.
2.907*
284
18.808
1 Number of active facilities data was taken from die 1993 Micklewright report; BRS data indicate a total estimate of over 200 '
facilities generating primary newly listed wood preserving wastes. -,'.'' -
11 Quantity estimates are based on data from Wood Preservation Statistics, 1993: A Report to the Wood-Preserving Industry in the
United States (Tables 7 and 8) and waste generation rates from Regulatory Impact Analysis for the Final Listing of Certain Wood
Preserving Wastes (Exhibit 2-17). . .
c . Quantity estimates are based on data from "Revised Wood Preserving Estimates," a memorandum from ICF Incorporated to HP A's
Capacity Programs Branch, June 18, 1996 and include an unknown amount of soil and debris. . ' ~
d ' Includes quantity estimates for wastewaters and preservative drippage. •-:•'•',. • . «
* iNo wastewaters/preservative drippage are generated. Facilities recycle/reuse all of ^^ their F035 wastewaters.
- r Includes quantity estimates for process solid residuals. Spent formulations are assumed to be minimal, and therefore are not
affected by the proposed Phase fV restrictions. ... . . , . . f
1 . In the BRS scenario, we were unable to directly classify all F032-bearing wastes. Therefore, we have allocated the total F032-
bearing waste quantity (8, 102 tons) according to the proportions in the Micklewright scenario.
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Nonwastewaters , •' ( . ' *
\ , , . '
Process residuals from many wood preserving processes contain high concentrations of
hazardous constituents;14 these nonwastewaters accumulate as wood particles and wood leaehate
derivatives m the wood preserving solutions and then settle in the processing cylinders (retorts),
tanks, drip pads, and other storage containers. All three preservative types generate process solid
residuals. Currently, wood preserving facilities are required to manage their process residuals
according to RCRA Subtitle C guidelines.15
In order to estimate the range of nonwastewater quantities, we considered low-end and high-
end scenarios.16 The low-end estimate was derived using 1993 data from the Micklewright report.
Estimated treated wood quantities were multiplied by waste generation rates, producing industry-
wide waste quantities.17 The high-end estimate is the total of primary, newly listed wood preserving
waste's as extracted from,the 1993 Biennial Reporting System (BRS) database.18
l* Regulatory Impact Analysis for the Final Listing of Certain Wood Preserving Wastes,
Chapter!. .
^ '
15 Regulatory Impact Analysis for the Final Listing of Certain Wood Preserving Wastes, p. 4-
26. ' . - . ••;.' • -: ''-. ' •'.'-.'
!6 The American Wood Preservers Institute (AWPI) compiled more recent quantity information
in the 1994 Wood Preserving Industry Production Statistical Report, published in September, 1995.
While this report contains industry-wide waste generation estimates, the data is based on a 30
percent response rate to an industry survey. By comparison, the 1993 Micklewright report based
industry statistics on responses from over 80percent of the facilities, the 1994 A WPI report,
therefore, may not accurately reflect waste generation quantities due to a comparatively low response
rate. _'."'' .• . - , .'.••-. '
i"... . • • „ i
17 Estimates were derived from 1993 treated wood quantity estimates in Wood Preservation
Statistics, 1993: A Report to the Wood-Preserving Industry in the United States (Tables 7 and 8)
and waste generation rates listed in Regulatory Impact Analysis for the Final Listing of Certain
Wood Preserving Wastes (Exhibit 2-17), p. 2-28.
18 Estimates for the high-end scenario were derived from "Revised Wood Preserving Estimates"
(Table 2), a memorandum from ICF Incorporated to EPA's Capacity Programs Branch, June 18,
1996.
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...•..- -.- ...
In the Micklewright scenario, data indicate that of the 469 Phase TV-affected wood preserving
facilities, 49 generate approximately 1,200 tons of F032 nonwastewaters and 58 facilities generate
approximately 1,300 tons of F034 nonwastewaters." FQ32 quantities include estimates for combined
chlorophenolic/inorganic, chlorophenolic/creosote; and chlorophenolic/inorganic/creosote
formulations. Likewise, F034 quantities include estimates for nonwastewaters that are generated as
a result of mixed creosote/inorganic formulations. Micklewright data also indicate that the 362
facilities using only inorganic compounds generate 1,350 tons of F035 nonwastewaters, annually.
i . •• -" - s ','•-,, ,*"".*,* • . •/..•"
Using the same categorization criteria, the BRS-based scenario indicates that Phase IV-
, affected wood preserving facilities generate approximately 8,100 tons of F032 nonwastewaters,
10,400 tons of F034 nonwastewaters, and 300 tons of F035 nonwastewaters.20 It is also important
to note that these BRS-based estimates contain an undetermined amount of soil and debris and
therefore represent an upper-bound quantity estimate. Exhibit 2 presents quantity estimates for both
scenarios according to preservative type. , ;'. ^ .. ' ;'
COSTS OF LDRs FOR NEWLY LISTED WOOD PRESERVING WASTES
Methodology - , .'
The incremental costs of treating the newly listed wood preserving wastes to meet Phase IV
treatment standards are based on data from: •- - - , '
..• Regulatory Impact Analysis for the Fined Listing of Certain Wood Preserving
Wastes prepared by ICF Incorporated for EPA's Office of Solid Waste •
(November 1990), ; , V
• Wood Preservation Statistics, 1993: A Report to the Wood-Preserving
Industry in the United States prepared by James T. Micklewright for the
. American Wood Preservers' Association (May 1994),
' ' • • '."-'.•''•* -^ •
• "Revised Wood Preserving Estimates" memorandum prepared by, ICF
. ' • ' Incorporated for EPA's Capacity Programs Branch, June 18,1996,
l9 Wood Preservation Statistics, 1993: A Report to the Wood-Preserving Industry in the United
States (Tables 7 and 8) and Regulatory Impact Analysis for the Final Listing of Certain Wood
Preserving Wastes (Exhibit 2-17), p.2-28.
20 "Revised Wood Preserving Estimates" (Table 2).
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• Baseline and Alternative Waste Management of Cost Estimates for.the Third
Third Land Disposal Restrictions prepared by DPRA Incorporated for EPA's
Office of Solid Waste (May 1990),
• Commercial incineration estimates provided by Rollins Environmental,
Incorporated to Paul Borst, EPA Office of Solid Waste, in a July 10, 1996
letter, and ;
• "Hazardous Waste Incineration 1995," £/£>/gesf, May 1995. .
To estimate the incremental cost of the Phase IV rule on the wood preserving industry, we evaluated
the incremental cost of requiring treatment prior to Subtitle C landfill disposal (i.e., the cost of
treatment and disposal under the, rule less the baseline cost of Subtitle C disposal without treatment).
As previously discussed, F032 and F034 organic wastewaters are treated and discharged to
a POTW, or treated and disposed of in a Class I underground injection well.2' F035 inorganic
wastewaters are recycled and reused, and therefore will not be affected by the Phase IV LDRs,
Likewise, F032 and F034 organic wastewaters which are sent to a POTW will hot be affected by the
Phase IV restrictions. Some wood preserving facilities, however, generate F032 and F034
wastewaters and contract with commercial facilities to treat and dispose of their listed organic, wastes
using underground injection wells. The commercial facilities receiving these wastewaters and
injecting them into Class I wells for disposal comprise the universe of UIC facilities potentially
affected by the Phase IV restrictions. . .
The Phase IV LDRs will prohibit facilities from disposing of F032 and F034 wastes in Class
. I underground injection wells unless the constituents of concern meet UTS, or the Class I facility can
.successfully petition for exemption from the ban by proving no-migration. Data indicate that six
Class I commercial facilities currently treat and dispose of F032 and F034 wastewaters using
underground injection wells. Further research indicates, however, mat all six Class I facilities have
modified their no-migration petitions to include F032 and F034 constituents in response to previous
LDR rulemaking efforts. In other words, all six facilities have anticipated the Phase IV restrictions
by incorporating waste analysis and modeling data for F032 and F034 restricted wastes in previous
21 This analysis assumes that wood preserving facilities are in compliance with the listing rule and.
treat F032 and F034 .wastewaters in RCRA exempt tanks or surface impoundments that meet Subtitle
C minimum technical requirements prior to discharge to a POTW. . .
10
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modifications to their existing no-migration petitions. Data further indicate that all six Class I
facilities successfully demonstrated no-migration of Phase IV wood preserving wastes. As a result,
none of these facilities will incur incremental costs under the current rulemaking effort.22
For F032 and F034 nonwastewaters, EPA will establish a treatment standard that includes
thermal destruction in a Subtitle C incinerator or cement kiln followed by residual stabilization and
disposal at a Subtitle C landfill.23 Most wood preserving facilities currently lack the technology to
incinerate these wastes on-site, and will likely send process solid residuals off-site to a commercial
treatment facility.24 . . , ; . "
Although cement kiln incineration is less expensive than commercial incineration, not all
facilities will be able to take advantage of this option. Three factors will affect whether'a wood
preserving facility will be able to send F032 and F034 wastes to the lower cost cement kilns: the
willingness of cement, kirns to accept the waste directly, rather than through a commercial fuel
blender; the distance between the wood preserver and the treatment facilities; and the available
capacity at the treatment facility. The first factor stems from the technical requirements of cement
kilns. Generally, cement kilns require a constant stream of homogenous fuel for proper operation.
Because the wood preserving universe represents many decentralized sources, each generating a
relatively small quantity of waste, it might be necessary to consolidate many wastestreams 'through
a commercial fuel blender to create a dependable fuel source for a cement kiln. Costs to generators
for fuel blending services are comparable to costs for commercial incineration.25 The second factor
is a cost issue; long travel distances would imply higher travel costs, effectively eliminating the cost
advantage of the cement kiln treatment. The third factor may not be a significant barrier for many
facilities. According to the Capacity Analysis completed for ^
22 'According to correspondence received from Robert Smith (USEPA, Groundwater Protection
Division) on March 26,1997, six commercial Class I facilities treat and dispose of F032 and F034
wastewaters using underground injection wells. All six facilities have approved no-migration
petitions that include F032 and F034 waste constituents. Conversations between Mr. Snuth and
Region VI representatives verify these data. :: ' '...-.
*• * Our analyses indicate that these treatment trains represent die least costly, most effective
treatment options available to the wood preserving industry: Other treatment standards considered
include incineration plus residual vitrification for F032 and F034 nonwastewaters and high
temperature metals recovery (HTMR) or vitrification plus disposal in a Subtitle C landfill for
F035 nonwastewaters. " .,
24 Regulatory Impact Analysis for the Final Listing of Certain Wood Preserving Wastes,
Chapter 2. . .
25 El Digest, October 1995. The average price paid to fuel blenders in 1995 was $1,360 per ton.
U
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the Phase IV LDRs, at least 20,000 tons of nonwastewater capacity exists at an Ash Grove Cement
Company kiln in Chanute, KS. This exceeds the high-end estimate for wood preserving waste
generated of 18,808 tons,26 :
. ' Our analysis suggests that those facilities located in the north-central and south-central
regions of the country will be able to send their F032 and F034 wastes to a cement kiln.27 These
regions account for 70 percent and 56 percent of total industry production volumes using creosote
and oil-borne solutions, respectively.28 It is unclear what wood preservers in other regions of the
country will do with F032 and F034 wastes, and it is possible that some wood preservers in the
north-central and south-central regions will send their wastes to commercial incinerators instead of
cement kilns. For these reasons, this analysis adopts the conservative assumption that 50 percent
of all F032 and F034 wastes will be treated through cement kilns and 50 percent through commercial
incinerators.29 ,
* * '
• i •
The cost of commercial incineration is $1,050 per ton for F032 and/or F034 wastes (organic-
only wastes) and $1,550 per ton for wastes mixed with F03 5.'These estimates include the cost of
treating and disposing of related waste residuals ($1,000 per ton for organic-only waste and $1,500
26 Proposed Phase IV Third Thirds Rule Background Document, prepared by ICF Incorporated
for EPA's Office of Solid Waste, February 1995. Information provided by ICF Incorporated and Ash
Grove Cement Company indicate that the Ash Grove facility in Chanute, KS is in the process of
being permitted to accept these wastes, will accept wood preserving wastes directly, and currently
has sufficient capacity (over 20,000 tons of nonwastewater capacity). ICF also indicated that an
additional 20,000 tons of capacity exists, although it is unclear whether other facilities would accept
wood preserving wastes directly. . .
1 " " ' i \
' 27 The northrcentral and south-central regions of the country fall almost entirely within a 600 mile •:
radius of this facility. •
2* 1994 Wood Preserving Industry Production Statistical Report, AWPli p. 8. ._.',.-
29 It is possible that more than 50 percent could be sent to cement kilns, but we were unable to
confirm information regarding other cement kilns permitted to accept these wastes with available,
capacity. > . -
12
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per ton for organic wastes mixed with F03530), and transportation costs to ship hazardous waste to
a treatment facility of $50 per ton.31 Alternatively, the cost of cement kiln incineration is only $831
per ton (including $680 per ton for treatment and $ 1S1 per ton for transportation costs).32
Baseline costs are estimated at $188 per ton and are based on a Subtitle C landfill disposal
cost of $138 per ton and the same transportation costs described above.33 Baseline cost estimates
also take into account a small amount of F032 waste (180 tons) that contains D037 waste
(pentachlorophenoi). According to the 1993 BRS, these F032/D637-mixed wastes are already sent
to incinerators, kilns, or fuel blenders to comply with the Phase II LDRs that require treatment to
UTS levels, therefore increasing the associated baseline treatment and disposal costs:
30 Incineration costs derived from correspondence from Rollins Environmental, Incorporated,
to Paul Borst, EPA Office of Solid Waste, July 10, 19%. The unit cost to incinerate organic-only
waste is $0.50 per pound ($0.50 x 2,000 = $1,000 per short ton) and mixed waste is $0.75 per
pound ($0.75 x 2,000 = $1,500 per short ton). The cost differential is a result of the presence
of metal constituents in inorganic formulations. / '..-•."
• • • •• . s*- •,,-• - - i
31 Estimating Costs for the Economic Benefits ofRCRA Noncompliance, prepared by DPRA
Incorporated for EPA's Office of Regulatory Enforcement, September 1994. Transportation cost
based on the commercial transportation price per ton-mile for bulk solid hazardous waste shipped
200 miles (data indicate that most wood preserving facilities are within a 200 mile radius of a
commercial incinerator). Costs in 1992 dollars inflated to 1995 using the GDP implicit price
deflator for services (source: Survey of Current Business, table,7.1, January/February 1996 and
July 1996) from 1992 to 1995: $45.85 x (1 + .099) = $50.39 per ton. ,
32
Treatment cost from El Digest, May 1995, p. 3. Transportation costs reflect the increased
travel distance of shipping wastes to cement kilns and were derived from the transportation costs
described above ($50.39 per ton-mile for bulk hazardous waste shipped 200 miles). The estimated
per ton-mile cost for shipping bulk hazardous waste 600 miles is $50.39 x 3 - $151,17.
33 Estimating Costs for the Economic Benefits ofRCRA Noncompliance, prepared by DPRA
Incorporated for EPA's Office of Regulatory Enforcement, September 1994. Disposal cost in
1993 dollars inflated to 1995 using,the GDP implicit price deflator for services (source: Survey
of Current Business, Table 7.1, January/February 1996 and July 1996) from 1993 to 1995: $130
x (1 + .061) = $137.93 per ton. .
13
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'<&
For F035 nonwastewaters, EPA assumes that facilities will implement stabilization followed
.by disposal in a Subtitle C landfill. Again, most pressure treating facilities are likely .to ship their
wastes off-site to a commercial vendor. The total treatment cost for these wastes is $495 per ton."
The baseline Subtitle C disposal costs are the same as those for F032 and F034 nonwastewaters (i.e->
$188 per ton, which includes transportation costs of $50 per ton and Subtitle C landfill costs of $138
per ton). : • . : • • . ''•"•'
Results
1 - .•'."'
To estimate incremental compliance costs, we divided wood preserving facilities into groups
by preservative use and wastecode. Then, we arrived at a combined LDR treatment and Subtitle C
disposal cost for each preservative type by multiplying the affected waste quantities presented in
Exhibit 2 by the estimated cost per ton for treatmeiu and cost per ton of disposal in a Subtitle C
landfill. .The baseline cost for each preservative type assumes that wood preserving facilities
currently comply with all other RCRA Subtitle C requirements.35 Finally, we subtracted these
baseline costs from the combined LDR treatment and Subtitle C disposal costs to arrive at the
incremental treatment cost attributable to the Phase IV LDRs. ' .
Exhibit 3 illustrates the incremental compliance costs for wood preserving facilities affected
by the proposed Phase IV LDRs. Generators of newly listed wood preserving wastes will incur an
estimated total annual incremental compliance cost of approximately $2.5 million in the low-end
Micklewright scenario and $17.1 million in the high-end BRS scenario to comply with the Phase IV
LDRs. In the low-end scenario, the 49 facilities generating F032 wastes will incur a total annual
incremental cost of approximately $1.1 million and the 58 facilities generating F034 wastes will
incur a total incremental cost of $1.1 million per year. The 362 facilities generating inorganic
nonwastewaters will incur a total incremental cost of approximately $400,000 per year. In the high-
34 Baseline and Alternative Waste Management Cost Estimates for Third Third Land Disposal
Restrictions: The total cost of $495 per ton includes $212 per ton for stabilization and $283 per
ton of raw waste for Subtitle C landfill disposal and transportation, reflecting the residual factor
of 150% associated with stabilization (i.e., the baseline Subtitle C disposal and transportation
!costs multiplied by 150%: $188.32 x 150% = $282.48 per ton). Stabilization treatment costs
in 1993 inflated to 1995 using the,GDP implicit price deflator for services (source: Survey of
Current Business, Table 7.1, January/February 1996 and July 1996) from 1993 to 1995: $200
x(l +,.061) = $212.20. . .
"- '
a Regulatory Impaa Analysis for the Final Listing.of Certain Wood Preserving Wastes, p. 1-5.
' ' ' " ' • . "'. 14 . ..-•'.
-------
end scenario, total annual incremental costs will be $7.0 million for facilities generating F032
wastes, $10.0 million for facilities generating F034 wastes, and $90,000 for facilities generating
F035 wastes.36 ' . .'..•..;'. ';..,..;'"..;. ."
i , . ' ,.•'•'''-,
It is important to bear in mind four factors wheh considering these cost estimates.. First, these
cost estimates are based on one vendor's quote for commercial incineration. Prices may vary
considerably by region and by vendor, and therefore individual generators may encounter different
prices. For example, generators that currently ship large quantities of wastes to a commercial facility
may face lower unit prices. Second, the high-end BRS-based scenario contains an unknown quantity
of soil and debris in the affected waste estimate. EPA's analysis of the effects of wood preserving
LDRs on contaminated soils (found elsewhere in the docket for this rule) suggests per-tbn
compliance costs will be much less for soils, which are not necessarily required to be incinerated.
Third, cement kiln incineration could emerge as a nationally viable alternative to commercial
incineration, further mitigating total incremental compliance costs. Fourth, this analysis is based on
continued usage of preservatives at their current rates and does not consider possible dynamic-
responses facilities could undertake to mitigate costs. In particular, a facility could respond to
additional compliance costs by switching to a different preservative product with lower per unit
treatment costs, such as an inorganic formulation." *
36 Because of cross contamination issues, F032 nonwastewater costs include estimates for
treating mixed chlorophenolic/inorganic, chlorophenolic/creosote, and
chlorophenolic/creosote/inorganic wastes. F034 nonwastewater costs include estimates for
treating mixed creosote/inorganic wastes. , :
/ - - . r_ - *
37 For example, pentachlorophenol (PCP) has long been preferred^by utility companies for poles
and crossanns, mainly because PCP-treated poles are easier for utility workers to climb. In 1985,
, Hickson Corporation developed the emulsion technology (ET) process specifically as ah alternative
to PCP. Since then, the percentage of poles treated with inorganic formulations has increased to 39
percent (1994 Wood Preserving Industry Production Statistical Report, AWPI). According to
Hickson and other industry representatives, the most significant cost associated with a wood
preserving facility switching from one preservative to another is the cost of cleaning the process
equipment of the old preservative. Wood preservers using PCP could chose to reduce compliance1
costs by adopting the ET process, although it is not clear whether the compliance cost savings would
justify investment in the ET process (ET is a proprietary process patented by Hickson). Assuming
all PCP-only wood preserving facilities switched .to inorganic formulations and similar waste
generation rates, incremental treatment costs could be reduced by a maximum of approximately $450
per ton of F032 waste. Possibilities also exist for substitution of inorganic preservatives for creosote
formulations.
"...'. ' " IS ; " ' •'
-------
Exhibit3
ESTIMATED INCREMENTAL TREATMENT COSTS OF THE PROPOSED RULE:
- NEWLY LISTED WOOD PRESERVING WASTES
"
Preservative Type (Wastecode) '
Creosote (F034)
Creosote/Inorganic (F034)
Chlorophenol (F032)
Chlorophenol/Inorganic (F032)
ChiorophenoI/Creosote (F032)
Chiorophenol/Inorganic/Creosote (F032)
Inorganic (F035)fc • • : : '
TOTAL*
i
/
Waste Quantity
Affected (tons)
1,086 to 1,671
• 242 to 8,751
348 to 2,385
240 to 1,645
170 to 1,165
424 to 2,907
1,350 to 284
3,860 to 18,808
Total Costs (in millions)
Combined LDR
Treatment and
Subtitle C
! Disposal*
$1.0 to $1.6
. $0.3 to $10.4
$0.3 to $2.2
$0.3 to $2.0
. .$0.2 to $1.1
, $0.5 to $3.5
$0.7 to $0.1
$3.3 to $20.9
« *
Subtitle C
' .Land
Disposal
(Baseline)
$0.2 to $0.3
$0.1 to $1.6
$0:1 to $0.6'
$0.1 to $0.3
$0.1 to $0.2
$0.1 to $0.5
$0.3 to $0.1
$0.7 to $3.7
Incremental
Treatment Cost
Attributable to
Phase [VLDRj
(in millions)
$0.8 to $1.3
$0.2 to $8.8
$0.3 to $1.6
$0.2 to $1.6
$0.1 to $0.9
S0.4toS2.9
$0.4 to SO. 1
$2.5 to $17.1
Note: Cost estimates are based on information from both the low-end, Micklewright and high-end, BRS-based scenarios and
are for Phase IV affected nonwastewaters only. F032 and F034 wastewaters are treated and discharged to a POTW and F035
wastewaters are recycled/reused. \ . ' ' ' ' . . ' .
* Incineration costs for F032 and F034 nonwastewaters assume a 99.99 percent destruction and removal efficiency rate.
b ' . '. The values in die F035 range appear in descending order to maintain the format within the range: the first value references
the low-end Micklewright scenario, while the second value references the high-end, BRS scenario. This is reflected in
the totals. '
c Totals may not add due to rounding. ' • • ' '' . •
* Baseline costs for F032 include incineration costs for 180 tons of F032/D037-mixed waste regulated by Phase II LDRs.
ASSESSING ECONOMIC IMPACTS OF COMPLIANCE
. . » • . , . " ' • . . - .. •
• This analysts assesses the relative magnitude of the compliance costs presented above and
gauges the impact of the Phase IV restrictions on wood preserving facilities. Specifically, we
examine the impacts of the Phase IV LDR rule on all affected wood preserving facilities using two
basic economic impact screens: the ratio of new compliance costs to total revenues and the ratio of
hew compliance costs to total profits. These analyses place compliance costs in context and allow
us to determine if costs may substantially affect wood preserving facility operations by
16
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illustrating the portion of current company sales and profits that could be diverted by the costs of
complying with the Phase IV rule. In the remainder of this section, we describe our methodology
and present the results of our analyses.
Methodology ' . .> . \ • . .
*.''-* ' '
, This assessment of economic impacts focuses first on the ratio of new compliance costs to
total revenues and then examines the ratio of new compliance costs to total profits. Each analysis
considers both the industry-wide effect of the Phase IV, rule and then examines impacts in greater
detail at the sector level (i.e., by preservative type). Specifically, we compare total incremental
compliance costs for the wood preserving industry to total revenues or profits, followed by a
comparison of estimated sector-level incremental compliance costs to industry sector revenues or
profits.38 • • V.;. "."'. . ' : . •••''•.
Wood preserving facilities will face the additional cost of record keeping requirements of
the Phase IV LDRs. The estimated financial burden associated with recordkeeping requirements of
Phase IV LDRs is $597,268 for all wood preserving facilities, or $1,273 per facility.39 taking this
cost into account, the total estimated cost of compliance for wood preserving facilities becomes $3.1
million in the low-end and $17.7 million in the high-end. _,'.-.
New Compliance Costs to Total Revenues Analysis.. • , . . . '
The incremental cost of compliance for the wood preserving industry equals less than 1.0
percent of total industry revenues. The 1992 Census indicates that the wood preserving industry had
shipments valued at $2.7 billion in 1992; or $3.0 billion inflated to 1995 dollars.40 Therefore, the
estimated cost of compliance for the wood preserving industry equals 0.10 percent of the value of
shipments in the low-end, Mcklewright scenario ($3.1 million/$3.0 billion) and 0.59 percent of
value of shipments in the high-end, BRS scenario ($ 17.7 million/$3.0 billion). , -. >
38 7992 Census of Manufactures; industry Series Wooden Containers and Miscellaneous Wood'
Products, Industries 2441,2448,2449,2401, 2492, 2499, Bureau of Census, U.S. Department of
Commerce, June 1995, Table. 1A, Historical Statistics for the Industry, 1992 and Earlier Years.
\ * '"
- ' ' ' ! - » - - . " - '- ' ' . '
39 Supporting Statement for EPA Information Collection Request 1442.14 LDRs Phase IV Mini-
Rule: Treatment Standards for Waste from Wood Preserving (Draft), prepared by ICF Incorporated,
January 6,1997.
40 Value of shipments inflated to 1995 dollars using the GDP implicit price deflator for services
from Survey of Current Business, Table 7.1, January/February 1996 and July 1996;
• '• •'-••' • •• ' , 17 . . ''"''•'..
-------
To perform the economic screening analysis at an industry sector level, it was fust necessary
to calculate the revenue for each sector (both single-preservative and multi-preservative) of the
industry. Revenues were derived from the Micklewright report and the 1992 Census of
Manufactures according to the following steps. '
• Line-items in the Census of Manufactures were classified by preservative
type using product descriptions in the Census and the 1994 Wood Preserving .
Industry Production Statistical Report published by the American Wood
: Preservers Institute (AWPI) (e.g., railroad crossties are almost exclusively
. - treated with creosote formulations). This provided an estimate of revenues
ascribed to single-preservative use.,
• . . t ' *
; • ' These single-preservative revenues were then divided by the total volume of
wood treated by each preservative, as found in the 1993 Micklewright report,
creating revenue for each preservative type per cubic foot of wood treated.
'' V . ' • ~ ' ' •*
• These revenue rates were then applied to the volume of wood treated by
preservative, by industry sector to reflect production rates in multi-
, . . preservative sectors.
Exhibit 4 shows the results of this sector analysis. In the low-end, Micklewright-based scenario, the
estimated cost of compliance is below one percent of revenues for each sector. In the high-end,
BRS-based scenario, estimated compliance costs are below one percent of revenues for F034 and
F035 facilities and above one percent for the other categories. There are 67 wood preserving
facilities in the categories exceeding one percent, or 14 percent of the 469 wood preserving facilities,
New Compliance Costs to Total Profits Analysis .
Approach . .
Profit data for the wood preserving industry sectors are not directly reported in any single
source. We determined that compiling profit data for 469 individual wood preserving facilities
would be infeasible, if only because many of the facilities are privately held and do not report their
profits in any publicly available source. Therefore we used two approaches to estimate profits
through indirect means:
18
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Results
Deriving profits based on publicly available data as reported in the 1992
Census of Manufactures. We estimated short-run profits as the total value
of shipments less the cost of materials, employment costs, rental payments,
and purchased services, and long-run profits as short-run profits less
depreciation. The advantage of this approach is that it is based on reported
data with a high response rate. One disadvantage is that, while value of
shipments can be disaggregated by formulation type, the costs are reported
only at the industry level — as a result, we are forced to assume a constant
profit margin across formulation type (for example, long-run profits
estimated with this method are approximately 10.0 percent of revenue). A
second disadvantage is that the resulting profit estimates may not account for
other categories of extraordinary expenses or other sources of profits at these
facilities. '
* • *
Estimating profits based on model plant analysis developed to support
the Regulatory Impact Analysis for the listing of wood preserving
wastes.41' The model plant analysis reflects .variability in costs of materials
and prices of finished products for 18 model plant types that consider three
classes of formulators, four geographic regions, and three size classifications.
The model plant analysis output includes price and short-run and long-run
profit estimates per cubic foot of production. The advantage of this "bottom-
up" approach is that the results provide information on the variation in profits
by formulation use, facility location and size. One disadvantage is that the.
price and operating cost data reflect conditions in the industry in 1987, and
regional and facility size-specific updates to the price and operating cost data
could not be developed within the time frame for this analysis. A second
disadvantage is that the model plants did not include multiple formulation
configurations. We use the results of these calculations primarily to evaluate
the reasonableness of the estimates developed from the Census of
Manufactures data, and to explore the potential effect of variations in
estimated profit on bur overall conclusions for the single formulator groups.
The results of our analysis based on Census of Manufactures data are summarized in the last
four columns of Exhibit 4. Under the low-end affected waste and cost scenario, costs make up less:
than two perceut of short-run profits and less than three percent of long-run profits in all industry
sectors. Under the high-end scenario, however, at least one industry sector (F034/F035) is likely to
41 Regulatory Impact Analysis for the Final Listing of Certain Wood Preserving Wastes, prepared
by ICF Incorporated for the Economic Analysis Staff, Office of Solid Waste, November 1990.
20
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incur costs over half of short-run profits and roughly three quarters of long-run profits, suggesting
that facility closures in this group are likely. For all other sectors, we estimate costs will not exceed
12 percent of .short-run profits and 17 percent of long-run profits/ !.,,
We used the 1987 model plant data to evaluate whether our profit estimates based on Census
of Manufactures data are consistent with the profit margins from the model plant analysis, and
discovered some important differences. Exhibit 5 indicates the range of the ratio of profits to price
from the model plant analysis. Note that the plants did not include multiple formulation models, so
our comparison relies on data from single formulation models, the 1987 data indicate profit
margins for pentachlorophenol and creosote formulation users were similar to each other, but profit
margins are lower for inorganic users. As noted above, based on Census of Manufactures data we
estimate the overall long-run profit to revenue ratio for the industry as a whole is 10.0 percent; the
comparable industry-wide estimate for short-run profits is 13.4 percent We therefore conclude that
the Census of Manufactures estimates of short-run profit may be conservatively low for F032 and
F034 in some cases, but may be high for F03S facilities/ The Census of Manufactures estimates of
long-run profit are in the middle of the range from the model plant analysis for F032 facilities, but
are high for F034 and F035 facilities.42 / ;/-:; _>-;;;•;. ,, >•>:'-'•:£. ":. •-'"•[ ...;••:'
It is also important to consider four factors which could further reduce the ratio of total
incremental treatment costs to revenues and profits. First, organic preservatives have accounted for
a steadily decreasing portion of production in the wood preserving industry. Second, the proportion
of F032 and F034 wastes sent to cement kilns could increase in the future as other cement kilns
amend their permits to accept these wastes. Third, this analysis is based on continued usage of
preservatives at their current rates and does not consider possible dynamic responses facilities could
undertake to mitigate costs, such as product substitution. Fourth, it is possible that facilities will
pass incremental treatment costs along to consumers in the form of higher prices, thereby increasing
revenues by an amount that might in some instances approach the incremental costs.
42 Because profit margins derived from the Census of Manufactures differ from those in the model
plant output, and because the model plant analysis results in significant variation in estimated profits
for different model plants that use the same formulation, we conducted a sensitivity test on the
results in Exhibit 4. Using the lowest possible profit margin estimate from the model plant analysis
for F035 facilities (1.4 percent) would a imply a compliance cost to profit ratio of 3.2 percent, which
we believe is highly unlikely to lead to plant closure. In addition, using the high-end cost estimate
and the lowest model plant profit margin estimates for the other two single formulation groups, the
cost to long-run profit ratios for F032 and F034 facilities are 26.0 percent and 6.9 percent,
respectively. These estimates suggest that economic impacts in these single formulator groups could
be higher than estimated in Exhibit 4, but would be unlikely to be large enough to lead to closures.
Unfortunately, profit estimates for the most affected sector of facilities, in the FQ34/F03S category,
could not be reliably estimated from the 1987 model plant data. •
-------
Exhibits
. RANGE OF PROFIT MARGINS IN MODEL PLANT ANALYSIS
Formulator Type :
F032
, F034 ••'.,'
.F035
Ratio of Short-Run
Profits to Revenue
12.2 to 20.5%
12,2toI8.3%
3:4 to 7(1%
Ratio of Long-Run
Profit to Revenue
4.7 to 16.4%
5.4 to 12.3%
1.4 to 4.9%
Source: Derived from Exhibit 4-19, page 4-27 of the Regulatory Impact Analysis for the Final Listing of Certain
Wood Preserving Wastes, prepared by ICF Incorporated for the Economic analysis Staff, 6ffice of Solid Waste,
November 1990. . ,
ASSESSING SMALL BUSINESS IMPACTS OF COMPLIANCE
We have also assessed EPA's requirements under the Small Business Regulatory
Enforcement Fairness Act (SBREFA). SBREFA amends the Regulatory Flexibility Act (RFA) of
1980, which requires Federal agencies to consider the impacts of proposed rules on small entities
(i.e., small businesses). Both acts require an assessment of whether the regulatory option will have
a "significant economic impact" on a "substantial number" of small entities. According to the size
standards established by the Small Business Administration (SBA), wood preserving facilities
employing fewer than 500 people are considered to be small. Research indicates that each of the 469
wood preserving facilities employs fewer than 249 people, implying they are all small entities.43
EPA guidance for analysis of small business impacts under SBREFA provide criteria for
assessing whether a "significant economic impact" would be imposed on a "substantial number" of
small entities as a result of the rule.44 The preferred test for evaluating whether a significant
economic impact is imposed on small business entities is the ratio of incremental compliance costs
to annual sales. .This measure is the same as that presented in Exhibit 4 in the previous section.
43 Two factors support the assumption that all wood preserving facilities in operation in 1993
were small First, the 1992 Census of Manufactures indicates that all wood preserving facilities in
operation in 1992 were small. Second, the Micklewright report documents a slight annual decline
in the total number of wood preserving facilities in operation between 1986 and 1993, suggesting
only minor annual adjustments in the industry.
I • ' • * i "
* EPA SBREFA Task Force, EPA Interim(Guidance for Implementing the Small Business
Regulatory Enforcement Fairness Act and Related Provisions of the Regulatory Flexibility Act,
February 5,1997. , v
22
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• I
According to the EPA guidance, the evaluation of "substantial number" should be based1 on
the absolute numbers of facilities and the percentage of affected small entities that would experience
a significant impact . . : v\.. , ;/' ,
Using criteria established by the EPA SBREFA Task Force, the wood preserving LDR rule
could be classified as a "Category 1" rule (implying that the rule would not have a significant
economic impact on a substantial number of small entities) for the, following reasons:
. _. ; , .. -• "' .. .".-,'; .:;-v;:^.-l "V •»-.' :-.:•-''V : '
• Our analysis indicates that no more than 67 of the 469 affected facilities, or
. approximately 14 percent, would incur costs in excess of one percent of
annual sales. Under the low-end cost scenario, no facilities would incur costs
greater than one percent of annual sales.These estimates of me number of
affected facilities are less than the thresholds for a "substantial number"
determination (i.e., 100 facih'tiesanoVor 20 percent of affected entities).
• • -.-''•'•',/•-.' ".•-'-;.;-:£*?=*ii£^<.-vo .'•':-....•. • -.
-, .,••-••... •;- '. . •.' ••..•^•••,t:f!;.ii)'j:.---'---'..,,; . • ' ; .. •
' ••* A total of 18 faculties, or less than 4 percentof affected small entities, would
, hicur costs under the high-end scenario in excessicf 3 percent of annual sales.
These costs could be as much as nme percent of annual sales. Although this
. ,, level of costs could represent a significant economic impact, the.number of
facilities affected at this level is small, and much less than the guideline
threshold of 100 facilities for a determination of a substantial number. In
addition, under the low-end scenario, none of these facilities would incur
, .. costs in excess of 1 percent of annual sales. .:- /T:} ., .
BENEFITS OF LDRS FOR NEWLY LISTED WOOD PRESERVING WASTES
This section of the RIA presents EPA's assessment of the benefits of land disposal
restrictions for newly listed wood preserving wastes. This assessment of the benefits of the LDR
requirements focuses on direct health benefits of the rule. We consider the cancer and non-cancer
health effects of drinking ground water contaminated by. the leaching of constituents from waste
management units. The rule, by requiring the destructive treatment of hazardous organic
constituents and the stabilization of metal constituents to prevent their igachfrg over time, may
also provide other environmental benefits. These other benefits categories include reduction of
toxic air emissions that could volatilize from land-based units, reductions of exposures to
hazardous constituents through indirect pathways (e.g., food-chain pathways for persistent or
bioconcentrated contaminants), recreational benefits, ecological benefits, and changes in non-use
values for natural .resources. • "
In general, we conclude from available information mat there are small human health risks
associated with baseline management practices for newly listed wood preserving wastes, and that
the rule may reduce those health risks by some unknown amount. The treatment requirements of •
the final wood preserving LDRs may reduce baseline risks by providing additional safeguards for
.'••'• -'•'•• .•':.'••• 23 '"'••" :; "••.".-.
-------
preventing human exposures to hazardous constituents, as well as long-tenn assurances of
exposure prevention through destructive treatment of organics.
Comparison of Current to Post-LDR Management Practices -
We evaluated current management practices to determine which wood preserving wastes
will be affected by the proposed Phase IV rule. As established in the Affected Universe section
of this chapter, wastewaters generated by the wood preserving industry will not be affected by the
LDR restrictions because current management practices for wastewaters are in compliance with
the new requirements. Nonwastewaters, which are currently managed in Subtitle C units but are
not required to meet treatment standards, could be affected by the proposed legislation. The
proposed Phase IV LDRs require treatment of nonwastewaters through combustion (for F032 or
F034 wastes) or stabilization (for F035 wastes). Residuals from these treatment processes would
be required to be disposed in a Subtitle C landfill. The current and post-LDR management
practices are summarized in Exhibit 6 below. '
Eihibit6
SUMMARY OF CURRENT AND POST-LDR MANAGEMENT PRACTICES
\
Waste Code and Form
F032,F034,andF035
wastewaten
F032andF034
nonwastewaters
F03S nonwastewaters
Constituents of
Concern
Various organics and
metals
• Primarily organics,
potentially some
dioxins and furans, .
potentially .
contaminated with
metals
Primarily metals
Current Management
Practice
• •
Wastewater treatment, -
discharge to POTW or
surface water, UIC well
Landfilling in a Subtitle
C landfill without .
treatment .
Landfilling in a Subtitle
C landfill without
treatment ' .
Post>LDR Management
Practice
Unchanged
Combustion in a RCRA-
permitted incinerator or ,
BIF, with disposal of
residuals in a Subtitle C
landfill
Stabilization or other
treatment to meet UTS
levels, followed by
disposal in a Subtitle C
landfill
Note: A Bff is a boiler or industrial furnace that meets RCRA requirements for hazardous waste incineration.
24
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9 • *
-,.- . -
Changes in Exposures to Hazardous Constituents . ."' ' * '
^^^B^BBB^P^HBp»Bpfci^HlH^pMBM^^™^Bfc«i«>fcii«M^^M^BfcaBlBiBMfciiiaKiaBBBiM^BP(>WpBB» ',,.•"'>
Changes in human exposures to hazardous constituents resulting from required changes
in management practices include the following: ' !.
• » • ^ ' - • ! '..'•'• i
• Reduction in potential exposures to organics (for F032 and F034
nonwastewaters) and metals (for F035 nonwastewaters) that might leach or,
in the case of organics, volatilize from Subtitle C landfills; and
• Increases in exposures to airborne pollutants from incineration.
The reductions in potential exposures from currently operated landfills are likely to be <
small. : RCRA Subtitle C landfills are subject to a wide range of requirements designed to prevent
leachate and air emissions from escaping from the ; landfill. These requirements are designed to
prevent releases, long after the landfills have closed. All of the Subtitle C landfill requirements
apply to current management practices. •_,.,;. .../=:.:.. • •'.;. : /
Nonetheless, through operator error, faulty operation or maintenance of release prevention
and detection equipment, spills of hazardous materials, and unforeseen natural events, releases
from Subtitle C landfills can occur. The 1JDR treatment standards provide an additional margin
of safety in the event a release of this type occurs, because the released material is likely to
contain a lower concentration of hazardous constituents. For example, mcineration in most cases
will result in a destruction and removal efficiency rate of 99.99 percent for organic constituents
present in F032 and F034 nonwastewaters. This suggests that the concentrations of organics in
.the residual will be sufficiently small to prevent significant risk should a release from a Subtitle
C unit occur. . ' " • - .'--'-.•••'•'•.•.•• •;..•';"'..' :'.--v -''••';••• . •/.••. •'
Increases in exposure to hazardous constituents from the irttineration process could occur,
but are unlikely to result in significant increases in risk: The Office of Solid Waste, working
jointly with the Office of Air and 'Radiation, is currently developing Maximum Achievable Control
Technology (MACT) standards for hazardous waste combustion facilities. As part of this effort,
, EPA has begun developing estimates of risks around incinerators and waste-burning kilns. While
risks to special subpopulations (e.g. , subsistence farmers) may be significant, risks to the typical
resident appear to be deminimis* '. , •' . • ' • .
4J Risk Assessment Support to the Development of Technical Standards for Emissions from
Combustion Units Burning Hazardous Wasted^.S. EPA, forthcoming. ^
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