-------
3.1.7 Employment
The total number of employees at iron and steel producing sites surveyed by EPA for the year 1997
is 144,981. Integrated facilities employ the most workers with 79,802 people. Non-integrated and stand-
alone facilities employ 44,825 and 20,354, respectively for a total of 145,000 employees in the regulated
community. The average number of employees at integrated sites exceed the average number of employees
at stand-alone sites by more than a factor of six. See Table 3-10 for a detailed look at employment data for
sites surveyed by EPA.
3.2 COMPANY-LEVEL INFORMATION
3.2.1 Companies in the Sample
The companies in the iron and steel industry fall into three coarse categories, similar to those used
for classifying the sites (Section 2.2):
Integrated. Traditionally, integrated steel companies performed all basic steelmaking
operations from cokemaking through finishing. Today, the term refers companies owning
blast furnaces or BOFs, many of the companies having closed their cokemaking and
sintering operations.
Non-integrated. Also known as "minimills," these companies have EAFs and do not have
blast furnaces or BOFs. Note that the reverse is not true. For example, Bethlehem
Steel—an integrated producer—owns EAF based plants in Coatsville, PA and Steelton, PA.
Stand-alone. Companies with stand-alone sites have no melting capability. This category of
companies is more heterogeneous than the first two categories because stand-alone sites
cover a wide range in operations from cokemaking to tube and pipe manufacture.
3-19
U.S. EPA Headquarters Library
Mail code 3201
1200 Pennsylvania Avenue NW
Washington DC 20460
-------
Table 3-10
Number of Employees in 1997
M inimum M aximum
Average
Total
Integrated Sites
Non-Integrated Sites
Stand-Alone Sites
54 8,426
20 3,099
16 1,652
1,900 79,802
650 44,825
283 20,354
3-20
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3.2.2 Type of Ownership
The 188 sites in the iron and steel database are owned by 115 companies. The global nature of the
industry is illustrated by 21 sites with foreign ownership; four of these sites are joint entities with U.S.
partners. Thirteen other sites are joint entities with only U.S. partners. Excluding joint entities and foreign
ownership, the data base contains 85 U.S. companies. Among these 85 U.S. companies,
• 73 are C corporations
» 8 are S/limited liability corporations
• 3 are limited partnerships
• 1 is a utility, public charitable trust
Approximately 55 percent of these 88 U.S. companies are privately owned; the EPA Survey is the only
source of financial information for these privately-held firms.
3.2.3 Number of Sites per Company
The public may believe the "Steel Industry" consists only of big multi-site firms, however, the vast
majority of the surveyed population are single site firms. In the surveyed population, only 3 firms have 10 or
more sites and 10 firms have from 5 to 9 sites. Not including joint entities, the most common arrangement is
a one site company (i.e., both the median and mode firms have one site).
3.2.4 Financial Characteristics
EPA examined three data sources for financial characteristics for the iron and steel industry:
• Industry (AISI)
• Census (Quarterly Report for Manufacturing, Mining, and Trade Corporations)
• EPA Survey
3-21
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Figure 3-4 and Table 3-11 summarize the net cash flow and depreciation from 1986 to 1998 from AISI data.
These data represent companies that account for about two-thirds of the raw steel production in the U.S.
Depreciation is relatively stable, ranging from SI .3 billion to SI.8 billion per year. Net cash flow, on the other
hand, swings widely from a loss of $2.8 billion in 1986 to a profit of $3.4 billion in 1993. A comparison of
1992 and 1993, when the industry went from a loss of $2.6 billion to a profit of $3.4 billion illustrates how
rapidly conditions can change. Figure 3-5 overlays capacity utilization rate (Figure 2-4) with cash flow from
Figure 3-4. There is a general concordance between the time series, with the exception of 1992 when cash
flow continued to decline while capacity utilization rate recovered. The increasing capacity utilization rate,
however, is a factor in the sharp increase in cash flow seen in 1993. The years 1986 and 1992 are nadirs in
the series. A six-year earnings cycle seems too short, however, given the 1992 to 1998 data. The
forecasting method used to project facility earnings, then, needs to address this cyclicaliry and the cycle
should be no shorter than six years and possibly seven to eight years in length (see Section 4).
Table 3-12 presents income statement data from the Quarterly Financial Report (QFR) for SIC
Industry Groups 331,332, and 339. It therefore includes more industry operations than those covered in the
EPA Survey but excludes nonferrous industries included in Primary Metal Industries (SIC 33). The cash
flow information for the four quarters of 1998 shows information consistent with that in Figure 3-5, i.e, a
steady decline. The drop in net income retained in business seen in the first half of 1999 actually began with
a loss in the 4Q 1998. The separation of the data into companies with assets under $25 million or $25 million
or more highlights some differences between the two groups. The smaller companies show higher rates of
return on assets and equity than the larger companies.
The data in Table 3-12 do not show a dramatic effect on financial conditions. This is because the
data include businesses that use semi-finished products as an input. That is, the increase in lower priced
imports would improve their financial condition by lowering input costs. This mix of companies indicates
that the QFR data are too aggregated to use in the forecasting models (see Adams, 1999; Bagsarian, 1999).
Table 3-13 presents balance sheet data for the same set of companies. The smaller companies show
higher current ratios than the larger companies but lower absolute amounts of working capital. (The first
variable—current ratio—is current assets divided by current liabilities. The second variable—working
capital—is current assets minus current liabilities.) Financial analysts sometimes use a combination of
3-22
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Table 3-11
Industry Cash Flow (in Millions)
Year
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
Depreciation,
Depletion &
Amortization
$1,301
$1,294
$1,311
$1,320
$1,337
$1,286
$1,435
$1,532
$1,564
$1,636
$1,664
$1,681
$1,755
Net Income
($4,150)
$1,077
($567)
$1,597
$54
($2,042)
($4,068)
$1,870
$1,285
$1,534
$442
$1,078
$960
Cash Flow
(Net Income Plus
Depreciation)
($2,849)
$2,371
$744
$2,916
$1,391
($756)
($2,633)
$3,402
$2,849
$3,170
$2,106
$2,759
$2,714
Source: AISI1998, 1995
3-24
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Table 3-13
Balance Sheet Data for Corprotions Included In
SIC IraJustnt'OBiips 331,2.9,and333-«: Iron and Steel
(in Million S)
IronandSteel
To 111 cash on hand and in U.S. banks
Total cash
Total current assets
Net property, plant, and equipment
Total Assets
Total current liabilities
Total liabilities
Stockholders' equity
Total Liabilities and Stockholders' Equity
Current Assets
Working Capital
Iron&Slecl
Assets Uxfcr $25 Ml
Total cash on hand and in U.S. banks
Total cash
Total current assets
Net property, plant, and equipment
Total Assets
Total current liabilities
Total liabilities
Stockholders' equity
Total Liabilities and Stockholders' Equity
Current Assets
Working Capital
Iron & Steel
331, 2 and 9
Assets OwrJZS Ml
Total cash on hand and in U.S. banks
Total cash
Total Receivables
Total current assets
Net property, plant, and equipment
Total Assets
Total current liabilities
Total liabilities
Stockholders' equity
Total Liabilities and Stockholders' Equity
Current Assets
Working Capital
1998:
1Q
II. 161
$3.645
$26,935
$30,753
$68,280
$14,915
$44,262
$24,017
$68,280
1.81
$ 12,020
Sift
$235
$2,125
$1.284
$3,471
$1,082
$1.619
51.851
$3.471
1.96
$1,043
$1.013
S3.410
$8.535
$24,810
$29,470
$64.809
$13.833
$42.643
$22.166
$64,509
1.79
$10,977
2Q
$1,446
$3,195
$27,477
$32,170
$72.675
$15,799
$47,417
$25,258
$72,675
1.74
$11.678
$167
$227
$1,785
$!.!57
$3.010
$935
$1,428
$1,583
$3,010
1.91
$850
$1,281
$2,968
$9.015
$25.692
$31.013
$69.665
$14,864
$45,990
$23,675
$69.665
1.73
$10.828
3Q
$1.151
$2,579
$26.937
$33,296
$73,187
$15,508
$48,145
$25.041
$73.187
1.74
$11.429
$158
$185
$1,877
$1,338
$3,284
$1,032
$1.553
$1,732
$3,284
1.82
$845
$995
$2,394
$8,396
$25.060
$31,958
$69.902
$14.477
$46.S92
$23.310
$69,902
1.73
$10.583
4Q
$1,240
$2,811
$25,638
$33,524
$72,321
$14,905
$48,104
$24,217
$72,321
1.72
$10.733
$183
$205
$1,666
$1.163
$2,914
$874
$1.325
$1,589
$2,914
1.91
$792
$1,058
$2,606
$7,655
$23.972
$32.361
$69,407
$14,031
$46.779
$22.628
$69,407
1.71
$9,941
1W9:
1Q
$1,316
$3,044
$26,376
$33,819
$73,170
$14.899
$49.240
$23,930
$73,170
1.77
$11.477
$247
$277
$1.697
$1.285
$3.183
$790
$1,312
$1,871
$3.183
2.15
$907
$1,072
$2,768
$8,160
$24.679
$32.533
$69.987
$14,109
$47,928
$22,059
$69,987
1.75
$10,570
2Q
$1.316
$3,053
$26,378
$33,767
$72.680
$14.463
$48,890
$23,790
$72,680
1.82
$11.915
$248
$291
$1.698
$1.131
$2,996
$730
$U51
$1,645
$2.996
2.33
$968
$1,069
$2.763
$8,185
$24.680
$32,635
$69,684
$13,733
$47,538
$22.146
$69.684
1.80
$10,947
3Q
$1.378
$3,183
$27.644
$35,036
$76.270
$15,506
$51,677
$24,592
$76,270
1.78
$12.138
$158
$230
$1.574
$1.087
$2,918
$937
$1,613
$1,305
$2.918
1.68
$637
$1,222
$2.953
$8,752
$26,070
$33.949
$73.352
$14,569
$50.064
$23.287
$73,352
1.79
$11,501
4Q
$1,283
$2,801
$28,309
$37,165
$81,352
$16,800
$55,632
$25,720
$81,352
1.69
$11,509
$252
$354
$1,916
$1,160
$3.207
$906
$1.555
$1,653
$3,207
2.11
$1,010
$1.031
$2.447
$8,750
$26,392
$36.005
$78,145
$15,894
$54,077
$24,068
$78.145
1.66
$10.498
Source: Quarterly Financial Report on Manufacturing, Mining and Trade Corporations, US Census
3-27
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financial ratios to gauge the health of a company. The baseline condition of the industry is discussed in more
detail in the economic methodology, Section 4.
3.3 REFERENCES
Adams, Chris. 1999. Geneva steel co. files for protection under Chapter 11. Wall Street Journal. 2
February, p. B5.
AISI. 1998. Annual statistical report. American Iron and Steel Institute. Washington, DC.
AISI. 1995. Annual statistical report. American Iron and Steel Institute. Washington, DC.
Bagsarian, Thomas. 1998. New DRI in the U.S. and Trinidad. New Steel. July. pp. 62-66.
DOC. 1998. Department of Commerce. 1997 Current Industrial Reports. Steel mill products-1997.
Document No. MA33B(97)-1. Washington, DC: U.S. DOC, Bureau of the Census. Issued 8 September.
U.S. Bureau of the Census, Quarterly Financial Report for Manufacturing, Mining, and Trade Corporations.
First Quarter, 1999, Series QFR-99-Q1, U.S. Government Printing Office, Washington, DC, 1999.
U.S. Bureau of the Census, Quarterly Financial Report for Manufacturing, Mining, and Trade Corporations.
Fourth Quarter, 1999, Series QFR-99-Q4, U.S. Government Printing Office, Washington, DC, 1999.
U.S. Bureau of the Census, Quarterly Financial Report for Manufacturing, Mining, and Trade Corporations.
Fourth Quarter, 1998, Series QFR-98-Q4, U.S. Government Printing Office, Washington, DC, 1999.
U.S. EPA. 1998. Collection of 1997 iron and steel industry data: Part A: Technical data. Part B: Financial
and economic data. Washington, DC OMB 2040-0193. Expires August 2001.
/'
U.S. EPA. 2000. U.S. Environmental Protection Agency. Development document for the proposed effluent
limitations guidelines and standards for the iron and steel manufacturing point source category. Washington,
DC. EPA821-B-00-011.
3-28
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CHAPTER 4
ECONOMIC IMPACT METHODOLOGY
This section provides a brief overview of the methodology used in the economic impact, regulatory
flexibility, and environmental justice analyses. The discussion follows the sequence from the smallest scale
(costs for specific configurations of option, subcategory and site) to the largest scale (market analysis):
• cost annualization model, Section 4.1
• site closure model, Section 4.2
• community and national impacts, Section 4.3
» corporate financial distress, Section 4.4
• market model, Section 4.5
The results of these analyses are located in Chapter 6.
4.1 COST ANNUALIZATION MODEL
The beginning point for all analyses is the cost annualization model, see Figure 4-1. Inputs to the
cost annualization model come from three sources—EPA's engineering staff, secondary data, and the 1997
EPA Survey. The capital, one-time non-equipment1, and operating and maintenance (O&M) costs for
incremental pollution control were developed by EPA's engineering staff. The capital cost, a one-time cost,
is the initial investment needed to purchase and install the equipment. The one-time non-equipment cost is
incurred in its entirety in the first year of the model. The O&M cost is the annual cost of operating and
maintaining the equipment; it incurred by the site each year.
'A one-time non-equipment cost is best explained by example, such as an engineering study that
recommends improved operating parameters as a method of meeting effluent limitations guidelines. One-
time non-equipment costs cannot be depreciated because the product is not associated with property that
wears out, nor is it an annual expense.
4-1
-------
Data Sources
Inputs
Outputs
Engineering
Incremental
Pollution Control
Costs
Secondary
Sources
Questionnaire
Capital Costs
One-Time
Non-Equipment Costs-
Annual Costs
Cost Deflator to
$ 1997
Depreciation
Method (MACRS).
Federal Tax Rate_
State Tax Rate
Discount Rate
Taxes Paid
(Limitation on Tax
Shield)
Tax Status
(Corporate or
Personal)
Cost
Annuitization
Model
Present Value
of
Expenditures
Annualization
Cost
Figure 4-1
Cost Annualization
4-2
-------
There are two reasons for the annualization of capital, one-time non-capital, and O&M costs. First,
the capital cost is incurred only once in the equipment's lifetime; therefore, initial investment should be
expended over the life of the equipment. The Internal Revenue Code Section 168 classifies an investment
with a lifetime of 20 years or more but less than 25 years as 15-year property. The cost annualization model
uses a 15-year depreciable lifetime for the capital cost. Second, money has a time value so expenditures
incurred at the end of the equipment's lifetime or O&M expenses in the future are not the same as expenses
paid today. A mid-year depreciation convention is used; i.e., an assumption of a six-month period between
purchase of equipment and time of operation. As such, the model covers a 16-year period with a six month
period in the first year and a six month period in the sixteenth year.
Secondary data provides the average inflation rate from 1987 to 1997 as measured by the Consumer
Price Index. The depreciation method used in the cost annualization model is the Modified Accelerated Cost
Recovery System (MACRS). MACRS allows businesses to depreciate a higher percentage of an investment
in the early years and a lower percentage in the later years. The average inflation rate is used to convert the
nominal discount rate to the real discount rate. Tax rates are determined by the national average state tax rate
plus the Federal tax rate.
The 1997 EPA Survey data provides discount rate or interest rate (the weighted average cost of
capital or the interest rate supplied by the site). If the site supplied neither a discount rate nor an interest rate
EPA assigned the median discount rate of all sites for this value. Taxable income, or earnings before interest
and taxes (EB1T), is also supplied by the EPA Survey. The value of EBIT determines the tax bracket for the
site. Average taxes paid is calculated from EPA Survey data using taxes for the years 1995,1996, and 1997.
The model ensures that the tax shield cannot be greater than the average taxes paid in these years. Corporate
structure estimates tax shields. A C corporation pays federal and state taxes at the corporate rate, an S
corporation or a limited liability corporation pays taxes at the individual rate (since EPA has no way of
determining how many individuals receive earnings or their tax rates, these rates are set to zero), and all other
entities pay taxes at the individual rate.
A sample cost annualization spreadsheet is located in Appendix A of this document. Section A.3 of
Appendix A describes the calculations used to determine annualized costs (before and after taxes) and present
value of costs (before and after taxes) in detail.
4-3
-------
The cost annualization model calculates the present value of the pre- and post-tax cost streams.
Then it calculates the annualized cost based on the site-specific discount rate. Thus, the model calculates
four types of compliance costs for each site: present value of expenditures (pre- and post-tax) and
annualized cost (pre- and post-tax). The latest year for which financial data is available is 1997, hence, the
model uses 1997 dollars.
The cost annualization model outputs feed into the other economic analyses, see Figure 4-2. From
top to bottom, the pre-tax annualized cost for all sites costed provides an initial estimate of the shock to the
market model (Section 4.5). An output of the market model is an estimate of the percentage of increased
costs that a producer could pass to its customers. The post-tax present value and the cost-pass-through
factor are inputs to the site closure model (Section 4.2). The results of the site closure model allow EPA to
identify sites with complete site-level data and no confounding factors (e.g., start-up site, captive site, or
unusual ownership such as joint entity or foreign ownership) projected to close before the regulation is
implemented. The site closure model also identifies sites projected to close as a result of the regulation.
Direct, regional, and national-level direct and indirect impacts flow from the sites projected to close (Section
4.3). The pre-tax costs are inputs to the corporate financial distress model (Section 4.4), compliance cost
share of revenue, and as a refined estimate of the shock to the market model. Pre-tax costs also figure in the
cost-effectiveness analysis (see Appendix C; not part of economic achievability).
4.2 SITE CLOSURE MODEL
EPA developed a financial model to estimate whether the additional costs of complying with the
proposed regulation rendered an iron and steel site unprofitable, If so, the site is projected to close as a result
of the regulation, leading to site-level impacts such as losses in employment and revenue. Hence, the site
financial mode] is also called the closure model within the report. The model is based on site-specific data
from the detailed questionnaire (U.S. EPA, 1998) because such data are not available elsewhere.
4-4
-------
Cost Annualization
Model
Present Value of
Expenditures
1
Post-tax
1
•I
,
Pre-tax
i
Sites Protected to
Close Before
Implementation
I
t
\
1
Sites Affected
by Regulation
]
' » 1
1
j
*-f Cost of Regulation j'j
.v^... .-.^..: I -:^ v: •.. "TT I
(not part of economic achievabifity)
!________ _ _ _
«T*":TT.*r'.tr?'rr.^r?--:r.^^r?^TT.a-l^,".».-"ar.r .;-.;!" .
Small Business Analyses
Figure 4-2
Interrelationship Among Cost Annualization and Other Economic Analyses
4-5
-------
In terms of perspective, the closure model focuses on the site. It attempts to answer the question
"does it make financial sense to upgrade this site?" using data and methodology available to corporate
financial analysts. The closure model interacts with the market model (Section 4.5); the latter estimates the
industry proportion of costs that the steel manufacturer passes through to its customers via price increases.
In contrast, the corporate financial distress model evaluates whether a company could afford to upgrade all
of its facilities (Section 4.4). In other words, each model provides a different perspective on the industry and
the impacts potentially caused by the effluent limitations guidelines requirements.
The model turns the question "does it make sense to upgrade this site?" into a comparison of future
cash flows with and without the regulation. The closure decision is modeled as:
Post-regulatory status
= Present value of future earnings
(Present value of after-tax incremental pollution control costs
* (1-percent cost pass-through))
The model calculates the long-term effects on earnings reduced by the added pollution control costs. If the
post-regulatory status is less than zero, it does not make economic sense for the site owner to upgrade the
site. Under these circumstances, the site is projected to close.2 Although simple in concept, the model
incorporates numerous choices, including:
• Whether or not to include salvage value
• Net income or cash flow for the basis of projecting future earnings
• Time frame for consideration
Section 4.2.1 reviews the decisions and their bases for the steel site financial model. Section 4.2.2 describes
the data preparation and forecasting methods used in this analysis. Section 4.2.3 presents EPA's
methodology for determining site closure when evaluating multiple approaches for estimating future earnings.
2 When a site is liquidated, EPA assumes that it no longer operates and closure-related impacts result. In
contrast, facilities that are sold because a new owner presumably can generate a greater return are considered
transfers. Transfers cause no closure-related impacts, even if the transfer was prompted by increased
regulatory costs. Transfers are not estimated in this analysis.
4-6
-------
4.2.1 Assumptions and Choices
4,2.1.1 Salvage Value
The closure decision equation can be modified to include consideration of the salvage value of the
site. That is, the post-regulatory status is zero if the present value of post-regulatory earnings exceeds the
salvage value of the site.
For the iron and steel industry, however, EPA determined that it was not appropriate to include
salvage value in the site financial model. First, individual pieces of equipment tend to be designed for specific
sites due to their scale. Because it is highly unlikely that individual components of a site could be sold, there
is no market value to fixed assets,3 An exception is if the entire plant could be transferred to a new location,
as was done for Tuscaloosa Steel. In these cases, the salvage value is still zero because the owner paid to
break down, transport, and re-assemble the site elsewhere. Second, it is not appropriate to calculate a
salvage value based solely on current assets because the value of cash, cash-equivalents, and inventory are
sufficiently liquid that the owner would not base a long-term decision on them. (That is, an owner would not
liquidate the site because it shows a relatively high cash position on the balance sheet. The cash could be
transferred to other corporate operations without such a drastic step as closing down operations.)
Third, excluding salvage value brings the site financial model into greater consistency with
econometric modeling approaches. That is, a site is assumed to remain in operation as long as its revenues
meet or exceed its operating costs. Sunk—i.e., capital—costs are not considered.
3Bethlehem Steel, for example, could have torn down everything at its home town location along the
Lehigh River but chose to develop part of the site into an industrial museum (Wright, 1999). Liquidating part
or all of the site was not mentioned as a possibility.
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4.2.1.2 Net Income Versus Cash Flow
EPA examined two alternatives for estimating the present value of future plant operations:
Net income from all operations, calculated as revenues less operating costs; selling, general,
and administrative expenses; depreciation; interest; and taxes (as these items are recorded on
the site's income statement).
Cash flow, which equals net income plus depreciation.
Depreciation reflects previous, rather than current, expenditures and does not actually absorb incoming
revenues, Brigham and Gapenski, 1997 note that—in capital budgeting—it is critical to base decisions on
cash flows or the actual dollars that flow into and out of the company during the evaluation period. The
Financial Accounting Standards Board, in SFAS Nos. 105,107 and 119 recommends the present value of
future cash flows as a means of identifying market value (FASB, 1996). EPA, therefore, selected cash flow
as the basis for measuring the present value of future site operations.
4.2.1.3 Time Frame for Consideration
EPA uses a 16-year time period for forecasting future income to correspond to the time period used
in the cost annualization model (see Appendix A). Although it might be appropriate to use the estimated
actual lifetime of the equipment rather than the depreciation period, the extended lifetime results in a lower
estimated annualized cost because of the greater number of years over which to spread the capital
investment. EPA preferred to use the more conservative (shorter) time frame. The first year's data are not
discounted, again to keep the cost annualization and forecasting projections on a consistent basis.
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4.2.2 Present Value of Future Earnings
4.2*2.1 Adjusting Questionnaire Data for Projections
Adjusting Earnings to an After-Tax Basis
Depending on the corporate hierarchy for the site, the earnings reported in the questionnaire may
have to be adjusted for taxes. A site may fall into one of several categories:
• It is part of a multi-site corporation. Site earnings before interest and taxes (EB1T) are
adjusted to an after-tax basis according to the taxable income of the business entity using the
appropriate corporate tax rate.
• It is part of a multi-site organization whose income is taxed at the rate for individuals (e.g.,
partnerships, sole proprietorships, etc.). Site earnings before interest and taxes (EBIT) are
adjusted to an after-tax basis according to the taxable income of the business entity using the
appropriate individual tax rate.
• The site is, or is part of, an S Corporation or Limited Liability Corporation,
• The site is the business entity; therefore, the complete income statement data is supplied for
the site. Because net income is presented on an after-tax basis, no adjustments need to be
made. These facilities have corporate hierarchy type "F" in the detailed questionnaire. For
sites that received the short form, the site was presumed to be the business entity if the data
for the site and company were identical.
• The site has a foreign owner. In these cases, the business entity information is not
appropriate to use because GAAP may differ from country to country. These sites are
treated as if they were independent companies, i.e., the site is the business entity.
Adjusting Earnings to After-Tax Cash Flow
For the first two categories (multiple facilities under the same ownership), cash flow is calculated as:
Cash Flow = |(EBIT) * (1 - (federal + state tax rates ))] + depreciation
where the federal and state tax rates are dependent on corporation type and income at the business entity
level, see Section A.I for more details. That is, EPA reduces operating earnings by estimated taxes. EPA
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does not make a similar adjustment for interest because interest is generally not held at the site level and it
may vary widely from company to company (while tax rates are consistent).
S corporations and limited liability corporations (the third category) do not pay taxes. They
distribute income to the partners and tax is paid by the partners at each partner's personal tax level. (That
is, the company doesn't pay taxes, the partners pay taxes.) Therefore, no adjustment is needed.
For the fourth and fifth categories—single site businesses, cash flow is calculated as:
Cash flow = net income + depreciation
4.2.2.2 Forecasting Methods for Future Cash Flow
Site cash flow must be forecast over the 16-year project lifetime. AH forecasting methods examined
for and used in the closure analysis incorporate the following assumptions and procedures:
• No growth in real terms.
« Constant 1997 dollars. Data from 1995 and 1996 are inflated using the change in the
Consumer Price Index (CEA, 1999).
The "no growth" assumption is made so that a site is not assumed to grow its way out of an economic
impact associated with additional pollution control costs; essentially, sites are assumed to be running at or
near capacity and significant growth is assumed to be unlikely without a major capacity addition.
Section 2.10 indicates that earnings in the steel industry sometimes show pronounced year-to-year
variations as well as an underlying cyclicality, see Figure 2-10. Table 4-1 summarizes AISI data for industry
cash flow from 1986 through 1998 (AISI, 1998). The cash flows are adjusted to 1997 dollars via the
Consumer Price Index (CPI). The last column in the table calculates the ratio of the cash flows to the 1997
value. The scaling factors are used in the forecasting model to adjust each site's earnings to the projected
value. The estimate for 1999 is based on the ratio of operating earnings for the first six months of 1999 and
1998 multiplied by the change from 1997 to 1998 (AISI, 2000).
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Table 4-1
Cash Flow (in millions) and Scaling Factors
Year
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
Cash Flow
(Scurrent)
($2,849)
$2,371
$744
$2,916
$1,391
($756)
($2,633)
$3,402
$2,849
$3,170
$2,106
$2,759
$2,714
CPI
109.6
113.6
118.3
124.0
130.7
136.2
140.3
144.5
148.2
152.4
156.9
160.5
163.0
Cash Flow
($1997)
($4,172)
$3,350
$1,009
$3,775
$1,709
($890)
($3,012)
$3,779
$3,085
$3,338
$2,155
$2,759
$2,673
Scaling Factor
(base=1997)
-1.51
1.21
0.37
1.37
0.62
-0.32
-1.09
1.37
1.12
1.21
0.78
1.00
0.97
0.06
Sources: A1SI, 1998; CEA, 1999; BLS, 2000a; and AISI, 2000.
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EPA examined several different forecasting methods to address site-specific variations:
• Three-year average (1995 through 1997) as best indicator of future cash flow.4 This
approach provides an "upper bound" because those three.years were healthy (see Figure
4-3) and it does not include the 1998 and 1999 downturn,
• Time-varying cash flow (called "Cycle 1")
1995 = 1995 cash flow
1996 = 1996 cash flow
1997 =1997 cash flow
1998 = Three-year average cash flow * 1998 industry adjustment
1999 = Three-year average cash flow * 1999 industry adjustment
2000 = Three-year average cash flow * 1988 scaling factor
2001 = Three-year average cash flow * 1989 scaling factor, etc.
2012 = Three-year average cash flow * 1986 scaling factor, etc.
• Time-varying cash flow (called "Cycle 2")
1995 = 1995 cash flow
1996 = 1996 cash flow
1997 = 1997 cash flow
1998 = Three-year average cash flow * 1998 industry adjustment
1999 = Three-year average cash flow * 1999 industry adjustment
2000 = Three-year average cash flow * 1992 scaling factor
2001 = Three-year average cash flow * 1993 scaling factor, etc.
2007 = Three-year average cash flow * 1992 scaling factor, etc.
Figure 4-3 illustrates the different forecasting methods. The section of data on the left-hand side of
the graph shows the actual 1996-1997 cash flow. The period from 1998-2001 is the rulemaking period and
the forecasting methods begin. Promulgation is scheduled for 2002; this is taken as the first year of
implementation and the beginning of the 16-year period over which to consider the impact on earnings. The
straight line is the average earnings. Cycle 1 assumes that the second half of 1999 is no worse than the first
half. The industry follows the 1988-1999 pattern with a short recovery, a decline over three years, a rapid
recovery (see 1992-1993), and a period of slow decline. Cycle 1 has the rule going into effect just as the
industry is hitting a downturn. Within the 16-year period, there are three years with net industry negative
cash flow. With its pessimistic assumptions, Cycle 1 is a counterbalance to the three-year average
forecasting method.
4EPA requested three years of data in the questionnaire to mitigate the uncertainty in the analysis
resulting from a single datum point. For new or newly-acquired facilities, however, one year of data may be
all that is available for analysis. For facilities with a trend in income, the most recent year may be the more
conservative estimate of future cash flow. If only two years of data are available, the model calculates the
average of the two values. If only 1997 data are available, that year's data is used.
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Cycle 2 assumes that the decline continues throughout 1999 and looks like 1992; the year in which
trade cases were also filed. Cycle 2 used the scaling factors for the 1992-1999 period (an eight-year cycle).
It incorporates the assumption that the industry learned from its 1989-1992 experience and will file trade
cases rapidly once it determines that imports play an important role in the downturn. Cycle 2 has the effect
of the industry hitting an upturn when the rule is promulgated. Within the 16-year period, there are two
years with net industry negative cash flow. Cycle 2 projections, then, lie between the three-year average and
Cycle 1 projections.
4.2.2.3 Discount Rate
The final step in estimating each site's preregulatory present value is to discount the cash flow stream
back to the first year in the time series. This step does not adjust the stream for inflation because the
projections are in constant dollars. Thus, the discount rate used for discounting must be a real discount rate,
obtained by adjusting the nominal discount rate for the expected annual rate of inflation (see Appendix A).
The same site-specific real discount rate is used in both the cost annualization and closure models.
4.2.3 Projecting Site Closures As A Result Of The Rule
With three forecasting methods, there are three ways to evaluate a site's status. If a site's post-
regulatory status is less than zero, the site is assigned a score of "1" for that forecasting method. A site,
then, may have a score ranging from 0 to 3.
Closure is the most severe impact that can occur at the site level and represents a final, irreversible
decision in the analysis. The decision to close a site is not made lightly; the business is aware of and
concerned with the turmoil introduced into its workers' lives, community impacts, and how the action might
be interpreted by stockholders. The business will likely investigate several business forecasts and several
methods of valuing their assets. Not only all data, assumptions, and projections of future market behavior
would be weighed in the corporate decision to close a site, but also the uncertainties associated with the
projections. When examining the results of several analyses, the results are likely to be mixed. Some
indicators may be negative while others indicate that the site can weather the current difficult situation. A
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decision to close a site is likely to be made only when the weight of evidence indicates that this is the
appropriate path for the company to take.
EPA emulated corporate decision-making patterns when determining when a site would close. A
score of 1 may result from an unusual year of data. When the score is 2 or 3, however, EPA deemed that
weight of the evidence now indicates poor financial health. EPA believes that this scoring approach
represents a reasonable and conservative method for projecting closures.
4.2.3.1 Pre-Regulatory Conditions
The closure analysis begins with an evaluation of the pre-regulatory status of each site. Several
conditions may lead to a site having a score of 2 or 3 under pre-regulatory conditions:
The company does not record sufficient information at the site-level for the closure analysis
to be performed.
The company does not assign costs and revenues that reflect the true financial health of the
site. Two important examples are cost centers and captive sites, which exist primarily to
serve other facilities under the same ownership. Captive sites may show revenues, but the
revenues are set approximately equal to the costs of the operation. (Cost centers have no
revenues assigned to them).
The site appears to be in financial trouble prior to the implementation of the rule.
Under the first two conditions, the impacts analysis defaults to the company level because that is the
decision-making level. For example, earnings data are held at the company level, not the site level or the
company has intentionally established facilities that will not show a profit but exist to serve the larger
organization. In either case, EPA does not have sufficient information to evaluate impacts at the site level as
a result of the rule.
The third condition identifies a site with complete site-level financial information and no confounding
factors (i.e., it is not a captive site, a start-up site, or a site with joint or foreign owners) to obscure the
financial condition of the site. If the site is unprofitable prior to the regulation, the company may decide to
close the site. This is likely to occur before the implementation of the rule to avoid additional investments in
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an unprofitable site. The projected closure of a site that is unprofitable prior to a regulatory action should not
be attributed to the regulation.
4.2.3.2 Estimation of Site Closures as a Result of the Rule
EPA considers the rule to have an impact when a site has a score of 1 or zero in the pre-regulatory
condition and a score of 2 or 3 after incurring the costs to respond to the regulation. That is, the site is
profitable before the regulation, but not after.
4.2.3.3 Direct Impacts
Closure represents a final, irreversible decision in the analysis.3 EPA estimates direct impacts from
site closures as the loss of all employment, production, exports, and revenue associated with the site. This is
an upper bound analysis, i.e., illustrating the worst effects because it does not account for other sites
increasing production or hiring workers in response to the closure of the first site.6 The losses are
aggregated over all sites to estimate the national direct effect of the regulation.
4,3 COMMUNITY AND NATIONAL IMPACTS
4.3.1 National Direct and Indirect Impacts
Impacts on the steel industry are known as direct effects, impacts that continue to resonate through
the economy are known as indirect effects {effects on input industries), and effects on consumer demand are
known as induced effects. The U.S. Department of Commerce, Bureau of Economic Analysis (BEA) tracks
these effects both nationally and regionally in massive "input-output" tables, published as the Regional Input-
Output Model (RIMS II) multipliers. For every dollar in a "spending" industry, these tables identify the
5Sites that are sold because a new owner presumably can generate a profit when the current owner
cannot are considered transfers. Transfers are not assumed to incur closure-related impacts.
6The market model, however, accounts for this effect.
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portion spent in contributing or vendor industries. For this analysis, EPA calculates direct and indirect
impacts with the national-level final-demand multipliers for
• output (2.993 dollars per dollar) and
• employment (24.131 full-time equivalents per $1 million in output in 1992 dollars7)
for BEA industry 37.0101 blast furnaces and steel mills (DOC, 1996).
4.3.2 Community Impacts
As mentioned in Section 4.2.2, all employment is considered lost if a site is projected to close. EPA
evaluates the community impacts of site closure by examining the increase in 1997 unemployment rate for
the county or metropolitan statistical area in which the site is located (Le Vasseur, 1998 and BLS 2000b).
4.4
CORPORATE FINANCIAL DISTRESS ANALYSIS
The closure analysis focuses on the question whether it makes financial sense to upgrade a given
site. It does not examine whether the company can raise the capital to make that investment. The corporate
financial distress analysis examines whether a company can afford the aggregate costs of upgrading all of its
sites." EPA selected a weighted average of financial ratios to examine the impacts of increased pollution
control on companies. Many banks use financial ratio analysis to assess the credit worthiness of a potential
borrower. If the incurrence of regulatory costs causes a company's financial ratios to move into an
unfavorable range, the company will find it more difficult to borrow money. Under these conditions, EPA
considers the company to incur financial distress.
'Employment multipliers are based on 1992 data, hence the loss in output needs to be in 1992 dollars.
8For a single-site company, the results of the closure analysis take precedence. That is, if the site is
determined likely to bear an impact based on the comparison of profitability before and after the regulation,
the company is not included in the corporate distress analysis.
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Financial ratios are calculated at the business entity or corporate parent level because:
Accounting procedures maintain complete financial statements (balance sheet and income
statement) at the business entity or corporate level, but not necessarily at the site level. The
survey data indicate that many companies do not keep complete financial statements at the
site level.
Significant financial decisions, such as expansion of a site's capacity, are typically made or
approved at the corporate level.
The business entity (or corporate parent) is the legal entity responsible for repayment of a
loan. The lending institution evaluates the credit worthiness of the business entity, not the
site.
The analysis includes both public and private entities. EPA's survey of the industry is the only source of
financial data for private companies (U.S. EPA, 1998). Section 4.4.1 describes the Altaian Z'-score, a
weighted average of financial ratios used to assess financial distress. Section 4.4.2 summarizes the-
preparation of the survey data for the analysis. Section 4.4.3 reports the preregulatory status of the industry.
4.4.1 Altman Z'-Score
EPA performed a literature search to review bankruptcy prediction literature from 1990 to 1998
(Kaplan, 1999). Although new approaches have been developed (such as, neural networks, logit models, and
multiple discriminant analyses), there is no one method that is clearly superior and no consensus on what is
the best approach. EPA determined that—for the purposes of selecting a methodologically sound,
reproducible, and defensible—a multiple discriminant analysis of financial ratios was appropriate.
EPA selected a multidiscriminant function (e.g., a weighted-average) of financial ratios, called the
Altman Z-score, to characterize the baseline and post-regulation financial conditions of potentially affected
firms. The Altman Z-score is a well accepted standard technique of financial analysis with nearly two
decades of use (see Brealy and Meyers, 1996, and Brigham and Gapenski, 1997). The Z-score has
advantages over consideration of an individual ratio or a collection of individual financial ratios:
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It is a simultaneous consideration of liquidity, leverage, profitability, and asset management.
It addresses the problem of how to interpret the data when some financial ratios look "good"
while other ratios look "bad."
There are defined threshold or cut-off values for classifying firms in good, indeterminate,
and poor financial health, "Rules of thumb" are available for some financial ratios, such as
current ratio and times interest earned, but these frequently vary with the industry (U. S.
EPA, 1995).
Altaian (1993) developed several variations on the multidiscriminant function. EPA selected the Z'-
score because it was developed to evaluate public and private manufacturing firms. The model is:
Z' = 0.717X, + 0.847Xj + 3.107X3 + 0.420X, + 0.998X5
where the pre-compliance components are:
Z' = overall index
X, = working capital/total assets
X2 = retained earnings/total assets
X3 = earnings before interest and taxes (EBIT)/total assets
X4 = book value of equity (or net worth)/total debt
X5 = sales/total assets
The iron and steel survey requested each piece of information for the analysis. (Working capital is equal to
current assets less current liabilities). Book value of equity is also called net worth (i.e., total assets minus
total debt). Total debt is the sum of current and non-current liabilities.
Taken individually, each of the ratios given above (X, through X5) is higher for firms in good
financial condition and lower for firms in poor financial condition. Consequently, the greater a firm's distress
potential, the lower its discriminant score. An Altman Z'-score below 1.23 indicates that distress is likely; a
score above 2.9 indicates that distress is unlikely. Z'-scores between 1.23 and 2.9 are indeterminate. In
order to focus on marginal firms that are most likely to be affected by the regulation, EPA has chosen to
consider an Altman Z'-score of 1.21 and below to indicate that distress is likely.9
'This is consistent with Airman's observation that the average U.S. firm has a lower Z-score today
than in the past and he has chosen to adjust cutoff scores or build new models rather than revising the
original weightings (Altman, 1993, pp. 179-180).
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EPA estimates financial distress based on changes in the Altman Z'-score as a result of pollution
control costs. Capital costs are those developed by the engineering staff for use in the cost annualization
model. The annualized pollution control costs for each option were calculated from the engineering estimates
of capital and operating and maintenance costs in the cost annualization model (see Appendix A). The
estimates of post-compliance scores are calculated as follows:
Z'
X
x,
overall index
working capital/(total assets + capital costs)
retained earnings/(total assets + capital costs)
(EBIT - pre-tax annualized compliance costs)/(total assets + capital costs)
book value of equity (or net worth)/(tqtal debt + capital costs)
sales/(total assets + capital costs)10
4.4.2 Survey Data Preparation
4,4.2.1 Baseline Year
The most recent year for which survey collected data is 1997. This is the baseline year for the
economic analysis. The iron and steel industry is cyclical. Therefore the pre-rulemaking condition of the
industry varies year-by-year. However, the intent of the economic analysis is to have a "snapshot in time" of
the industry and to examine the changes wrought by the imposition of additional pollution control costs,
rather than focus on the baseline value itself. The use of 1997 as the baseline year for the analysis does not
mean that EPA ignores the events of 1998 and 1999 (see Section 2); its focus, rather, is on the change
caused by the incremental costs."
'"Although the annualized compliance cost incorporates capital expenditures, one-time non-capital
expenditures, and yearly operations and maintenance costs, EPA performed a sensitivity analysis to evaluate
whether the one-time costs provided an extra shock to the company. In the sensitivity analysis, the post
compliance X3 parameter is calculated as (EBIT - pre-tax annualized compliance costs - one-time costs)/(lota\
assets + capital costs). The change made no difference to the post-regulatory status of any company.
"EPA explicitly addresses the 1998 and 1999 industry downturn in the forecasting methods for the
site financial analysis, see Section 4.3.
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4.4.2.2 Ownership Changes from 1997
EPA tracks changes in the industry since the survey. Site ownership changes since 1997 are
reflected in the aggregate costs for the new owner. That is, if a business entity had three iron and steel sites
in 1997 but purchased two more since {and these sites were surveyed), the aggregate costs for the business
entity reflects all five sites.
4.4.2.3 Determination of Which Level in the Corporate Hierarchy for Data to Use in Analysis
Corporate ownership in the iron and steel industry is frequently complex, reflecting mergers and
acquisitions that occurred over the years. EPA examined the survey data site-by-site to ensure that all sites
that could ultimately be tied to the same corporate parent were analyzed with the same data whether it might
have been entered as the business entity or the corporate parent. For all joint entities, the corporate financial
analysis was performed with Section 2 (site/joint entity) data rather than any of the owning entities. Section
3 data were used if they represented aggregate U.S. holdings of a foreign business entity. EPA did not use
financial information for foreign firms due to differences in generally accepted accounting principals among
countries.
4.4.2.4 Aggregation Of Site-level Regulatory Cost Data
EPA estimated costs on a site basis. EPA then aggregated site-level regulatory costs to the business
entity level in order to assess the impact of the total costs incurred by the business entity.
4.4.3 Evaluation of Pre-regulatory Altman Z' Scores
EPA calculated the pre-regulatory condition of the industry in order to evaluate the post-regulatory
impacts on an incremental basis. Of the 115 companies in the initial Altman Z' analysis:
• 27 fall into the "distress likely" zone
• 56 are in the indeterminant zone
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• 32 are in the "distress unlikely" zone.
Of the 27 companies in the "financial distress likely" zone,
• 2 took Chapter 11 since 1997 (i.e., declared bankruptcy).
• 4 changed ownership.
• 5 had just begun operations in 1997. These show all the startup costs, little revenues, and
no retained earnings.
• 6 are non-startup joint entities. The Altaian Z' calculation is based on the joint entity's
financial statements rather than those of any of the businesses that share ownership of the
site.
• 11 are owned by a foreign company. Because generally accepted accounting principles
(GAAP) differ from country to country, the Altaian Z' was calculated on the site financial
data rather than the owning company. It appears that some distortion may still be present in
the data.
Some companies may fall into two or more categories. The financial statements of other companies in the
zone frequently indicate various stages of financial distress such as shareholder deficits, inability to pay
dividends, certain (unspecified) operating problems, and not being compliant with debt covenants. In other
words, for a multitude of reasons, the Altaian Z'-score identifies a reasonable set of companies that might be
considered distressed.
4.4.4 Implications of a Z'-score Below The Cut-off
What does it mean for a company to have its Z'-score fall below the cut-off for "distress likely"?
It should be noted that Altman used the phrase "bankruptcy likely" rather than "distress." First, this does not
mean that a company will immediately declare bankruptcy once its score falls into that danger zone. It is a
warning flag. A company has the opportunity to change its behavior during this warning period to avoid the
projected bankruptcy. The Chrysler Corporation is an example; Altman, 1993 cites other examples.
Second, taking Chapter 11 (bankruptcy) is not the same as taking Chapter 7 (liquidation). A
company that takes Chapter 11 is protected from its creditors for a period of time while it reorganizes itself.
A company can continue to operate while it is in Chapter 11. Geneva Steel filed for Chapter 11 on February
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1, 1999 but continued to operate through the next year (Geneva Steel, 2000). Shenango Coke went into
Chapter 11 in 1992. A company has the chance to emerge from Chapter 11. In contrast, a firm is liquidated
when there is no hope for rehabilitation. Altman notes, "Economically, liquidation is justified when the value
of the assets sold individually exceeds the capitalized value of the assets in the marketplace." (Altman, 1993,
p. 33).
Third, other forms of response are possible and seen in the initial evaluation of the steel industry.
Shedding non-productive assets, merging with another company, or being purchased by another company
are all possible responses to financial distress.
What this means for the economic analysis is that:
a company that moves into the distress likely category as a result of added pollution control
costs is considered to be distressed as a result of the regulation. It does not mean that EPA
expects the company to liquidate immediately upon promulgation. The company, however,
will have to change the way it operates to respond to the regulation and remain out of
bankruptcy.
a company in the distress likely category before the rulemaking cannot be evaluated for a
change in status. It does not mean that EPA expects the company to liquidate in the very
near future.
4.5
MARKET MODEL
With the market model, the analysis moves to the larger-scale industry-wide impacts. When EPA
evaluates site closure impacts as the loss of all production at the site, this is a possible overestimate because
other sites could step up their production in response. The output from the market model, however,
incorporates such effects. In contrast, while the market model developed for the steel industry may estimate
the reduction in production due to higher costs, it does not specify at which sites the reductions might occur.
So the results from the various models are related but not necessarily identical.
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A market model is a set of equations designed to represent the behavior between steel producers and
steel consumers. Increased pollution control generally adds to the cost of production.'2 Steel producers then
ask for a higher price to cover their higher costs. Steel consumers may respond to higher prices by buying
less domestic steel and/or increasing imports. If consumers buy less steel, then producers may cut back
production, thereby leading to job losses. A purpose of a market model is to estimate the supply and demand
for steel in order to quantify these regulatory impacts.
EPA's approach to modeling the steel industry is to specify a cost function that can be estimated
econometrically and derive the market supply relationship from the cost function (Applebaum, 1982;
Considine, 1991; Kwack, 1991). EPA specified the cost function with the following characteristics:
• translog function
« one good
• two production factors (capital and materials)
• subject to technological change {continuous casting)
The steel market supply relationship is derived from the translog cost function and equilibrium conditions for
profit maximization. In general, a firm maximizes profits when the cost to produce an additional unit (i.e.,
marginal cost) equals the revenue earned from selling that unit (i.e., marginal revenue). Marginal cost is
derived by differentiating the cost function with respect to output. The marginal revenue, however, will vary
with the competitiveness of the market in which the firm sells. The formula expressing marginal cost
incorporates a parameter that measures the degree of market competitiveness.
The U. S. demand for steel is modeled as the sum of U.S. demand for domestic steel plus imports
(i.e., U.S. demand for imported steel). It is calculated as a function of the prices of domestic steel, imported
steel, and steel substitutes and measures of activity in major steel-using industries. Conversely, the total
demand for U.S. steel is modeled as the sum of U.S. demand for domestic steel plus exports (i.e., foreign
demand for U.S. steel). For the purpose of this study, EPA aggregated all other countries into a single entity
that trades steel with the U.S. EPA used the relations between key elasticities in the Armington specification
12Although not always, see Table 5-4. The regulatory options for stainless steel finishing operations
that include acid recovery lead to annual savings in material costs.
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trade model (Armington, 1969a; Annington, 1969b) to estimate the elasticity of demand for imported steel
with respect to a change in the price of U.S. steel and the elasticity of demand from the rest of the world for
U.S. steel with respect a change in the price of U.S. steel.
The steel market model consists of five equations:
• a translog cost function
• two conditional factor demand functions (capital and materials) derived from the cost
function,
• a supply relationship, and
• a domestic demand function.
EPA estimated all equations using nonlinear three-stage least-squares (NL3SLS). NL3SLS is a "full
information" econometric technique; all equations are estimated simultaneously, which allows the cross-
equation restrictions (e.g., between the cost function and the conditional factor demand equations) to
improve estimates of the parameters.13 EPA used 20 years of Census and industry data from 1977 to 1997 as
its sample time frame. The model estimates the supply shift, and the resulting changes in: domestic price,
domestic consumption, export demand, and import supply. A detailed discussion of the theoretical
foundation for the model, data sources, and indices is located in the rulemaking record.
4.6
REFERENCES
AISI. 1998. Annual statistical report. American Iron and Steel Institute. Washington, DC.
AISI. 2000. September 1999 selected steel industry data. American Iron and Steel Institute. Website.
downloaded 12 January.
Altman. 1993. Edward Altman. Corporate financial distress and bankruptcy. New York: John Wiley
and Sons.
Applebaum, Elie, 1982. The estimation of the degree of monopoly power. Journal of Econometrics, 19:287-
299.
13A "limited information" technique such as two stage least squares estimates each equation
separately; the "information" in the conditional factor demand equations, for example, has no effect on the
parameter estimates for the cost function.
4-25
-------
Armington, Paul S. 1969a. A theory of demand for products distinguished by place of production.
International Monetary Fund Staff Papers, 16( 1): 159-177.
Armington, Paul S. 1969b. The geographic pattern of trade and the effects of price changes. International
Monetary Fund Staff Papers, 16(2): 179-199.
BLS. 2000a. Consumerprice index—all urban consumers. Monthly data, January 1998—November 1999.
Bureau of Labor Statistics. <146.142.4.24/cgi-bin/dsrv> downloaded 13 January.
BLS. 2000b. Local Area Unemployment Statistics. 1997 data by Metropolitan Statistical Area. Bureau of
Labor Statistics, data extracted on 2 October.
Brealy and Meyers. 1996. Brealy, Richard a. and Stewart C. Myers. Principles of corporate finance
(5th ed.). New York: The McGraw-Hill Companies, Inc.
Brigham and Gapenski. 1997. Brigham, Eugene F. and Louis C. Gapenski. Financial management: theory
and practice (8th ed.). Fort Worth: The Dryden Press. Pp. 428-431.
CEA. 1999. Council of Economic Advisors. Economic report of the president. Washington, DC.
Table B-60.
Considine, Timothy J., 1991. Economic and technological determinants of the material intensity of use.
Land Economics, 67(1):99-115.
DOC. 1996. U.S. Department of Commerce. Bureau of Economic Analysis. Regional input-output
modeling system (RIMS II). Total multipliers by industry for output, earnings, and employment.
Washington, DC. Table A-24.
Financial Accounting Standards Board. 1996. Financial Accounting Standards: Explanation and Analysis.
SFAS No. 105 (Disclosure of information about financial instruments with off-balance sheet risk and
financial instruments with concentrations of credit risk), No. 107 (Disclosures about fair value of financial
instruments), and No. 119 (Disclosure about derivative financial instruments and fair value of financial
instruments). Bill D. Jarnagin, ed. 18th edition. CCH Incorporated. Chicago, IL. pp. 564-586.
Geneva Steel. 2000. Geneva Steel announces first quarter 2000 results. Press release.
downloaded 6 April.
Kaplan. 1999. Kaplan, Maureen F. Review of recent bankruptcy prediction literature. Memorandum to
William Wheeler, U.S. EPA, dated 12 February 1999.
Kwack, Mahnsoon, 1991. Measuring the market power of the U.S. steel industry. Unpublished Ph.D.
dissertation. The Pennsylvania State University.
Le Vasseur, 1998. State and County 1997 Annual Unemployment Rates. Electronic file sent to Carrie
Marotta, Eastern Research Group from Ken Le Vasseur, Bureau of Labor Statistics, 8 December.
4-26
-------
U.S. EPA. 1998. Collection of 1997 iron and steel industry data: Part A: Technical data. Washington, DC
OMB 2040-0193. Expires August 2001.
U.S. EPA. 1995. Interim economic guidance for water quality standards: workbook. EPA-823-B-95-002.
Washington, DC: U.S. Environmental Protection Agency, Office of Water.
Wright, Andrew G. 1999. Bethlehem rebuilds on its steel foundation. Engineering News-Record. 8
November, pp. 30-33.
4-27
-------
-------
CHAPTER 5
REGULATORY OPTIONS:
DESCRIPTIONS, COSTS, AND CONVENTIONAL POLLUTANT REMOVALS
EPA is proposing new effluent limitation and pretreatraent standards for the iron and steel industry.
EPA proposes a two-tier classification for the industry—subcategories and segments, see Table 5-1. There
are seven subcategories and five of them have multiple segments. The segments for three subcategories—
integrated hot forming operations/stand-alone hot forming mills {Subcategory D), non-integrated steelmaking
and hot forming operations (Subcategory E), and steel finishing operations (Subcategory F)—are based on
steel type. Stainless steel forms one segment while carbon and alloy steels for the other segment. For
simplicity, the term "carbon" refers to both carbon and alloy steels throughout the rest of this chapter.
Section 5.1 describes the technological bases for the proposed standards. Section 5.2 identifies the
cost associated with each option while Section 5.3 summarizes associated conventional pollutant removals
and cost per pound removed. A site may have operations in more than one Subcategory; combined costs are
discussed in Section 5.4 below. All costs discussed in this chapter are in 1997 dollars. Cost-effectiveness
results are presented in Appendix C.
5.1
DESCRIPTION
Table 5-2 presents the regulatory options for each of the seven subcategories: Cokemaking,
Ironmaking, Integrated Steelmaking, Integrated and Stand-Alone Hot-Forming, Non-Integrated Steelmaking
and Hot-Forming, Steel Finishing, and Other Operations. The final column describes the treatment
components for each option. More information on the regulatory options is located in the Development
Document (EPA, 2000).
The cokemaking Subcategory has two segments—one where the cokemaking by-products are
recovered and the second where they are not. The cokemaking Subcategory does not have subsegments.
EPA considered four regulatory options each for direct and indirect dischargers. BAT 1 includes tar
5-1
U.S. EPA Headquarters Library
Mail code 3201
1200 Pennsylvania Avenue NW
Washington DC 20460
-------
Table 5-1
Proposed Iron and Steel Manufacturing Subcategories and Segments
Subcategory
A.
B.
C.
D.
E.
F.
G.
Coke Making
Ironmaking
Integrated Steelraaking Operations
Non-Integrated Steelmaking and Hot
Forming Operations
Integrated Hot Forming Operations, Stand-Alone
Hot Forming Mills
Steel Finishing Operations
Other Operations
Segment
By-product
Other — Nonrecovery
Blast furnace
Sintering
Carbon & Alloy Steel
Stainless Steel
Carbon & Alloy Steel
Stainless Steel
Carbon & Alloy Steel
Specialty Steel
Direct Iron Reduction
Briquetting (HBI)
Forging
5-2
-------
t
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R
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H
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H
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e
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^
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a o.
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Q
o
W
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c«
—
Is
I
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E -§
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oil removal, hexavalent
id sedimentation and slu
• Diversion tank
precipitation, a
o
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u
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precipitation, s
tn
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PSESl
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-------
removal, ammonia stripping, biological treatment, liquid and solid separation, and temperature control
processes. BAT 2 adds cyanide and metals treatment to BAT 1, while BAT 3 adds two-stage alkaline
chlorination to BAT 1. Finally, BAT 4 adds filtration and granular activated carbon to BAT 3. PSES 1 utilizes
tar removal, equalization, and ammonia stripping. PSES 2 adds cyanide treatment to PSES 1. PSES 3 adds
biological treatment to PSES 1; that is, it is comparable to BAT 1. PSES 4 adds alkaline chlorination to PSES
3; that is, it is comparable to BAT 3.
EPA considered one regulatory option each for direct and indirect dischargers in the ironmaking
subcategory. The treatment unit is the components listed in the first bullet while the second bullet describes
the blowdown treatment.
EPA considered one regulatory option for direct dischargers and indirect dischargers in the integrated
steelmaking subcategory. Cooling towers are necessary only if a site employs vacuum degassing or
continuous casting.
Hot forming operations are found at both integrated sites and stand-alone sites. The only regulatory
option for all four types of sites (carbon/direct discharger, carbon/indirect discharger, stainless/direct
discharger, stainless/indirect discharger) includes a scale pit with oil removal, a roughing clarifier with oil
removal, media filtration, cooling, and high rate recycle.
Non-integrated steelmaking uses an electric arc furnace (EAF) rather than a basic oxygen furnace.
The technologies do not vary by whether the sites process carbon steel or stainless steels, but the costs and
pollutant removals do vary. The BAT 2 option, for stainless steel only, adds metals precipitation and filtration
to the treatment train.
Both carbon and stainless steel options in the finishing subcategory include a diversion tank, oil removal,
hexavalent chrome reduction, equalization, metals precipitation, and sedimentation and sludge dewatering.
The stainless steel segment has an added step of acid purification.
The other operations subcategory, is further subdivided into DRI operations and forging operations. {All
briquetting operations are zero discharge.) For DRI operations, BAT 1 and PSES 1 require solids removal, a
clarifier, a cooling tower, high rate recycle, and blowdown treatment. An oil-water separator is required for
both direct and indirect dischargers with forging operations.
5-6
-------
5.2 SUBCATEGORY COSTS
Table 5-3 summarizes the capital, annual operating and maintenance (O&M), and one-time non-
equipment costs for each of the regulatory options considered'. Cokemaking costs are presented in Table
5-3 for both direct and indirect dischargers. For direct dischargers, the capital costs range from S8.0 million
to $54.0 million while the post-tax annualized costs range from $1.0 million to SI 1.7 million. For indirect
dischargers, the capital costs range from none to S32.1 million while the post-tax annualized costs range
from $0.24 million to $6.4 million.
Ironmaking costs for direct and indirect dischargers are $25.8 million in capital costs while the post-tax
annualized cost is $4.3 million. Integrated steelmaking costs for direct and indirect dischargers are $16.8
million in capital costs while the post-tax annualized cost is $3.5 million. For these subcategories, costs are
presented on a combined basis because there are three or fewer indirect dischargers in each subcategory.
Integrated and stand-alone hot forming costs differ according to whether the site processes carbon
or stainless steel. The capital costs are $111,8 million for direct discharging carbon steel sites; there are no
costs associated with direct discharging stainless steel sites. The post-tax annualized costs are $20.4 million
for carbon steel sites. For indirect dischargers, the capital costs are $0.31 million for carbon steel sites and
$0.76 million for stainless steel sites. The post-tax annualized costs are $0.08 million for carbon steel sites
and $0.14 million for stainless steel sites.
Non-integrated steelmaking and hot forming costs also differ by whether the site processes carbon
or stainless steel. For carbon steel processors who are direct dischargers, the capital costs for BAT Option 1
are $18.3 million. The post-tax annualized costs for Option 1 are $2,7 million. There are two options for
sites with stainless steel operations and direct discharges—the BAT capital cost for Option 1 is $0.41 million
and $3.7 million for Option 2 while the post-tax annualized cost is $0.07 for Option 1 and $0.66 for Option 2.
For indirect dischargers, the capital costs for Option I are $2.5 million for carbon steel sites; there are no
capital costs associated with stainless steel sites. The post-tax annualized costs for Option 1 are $0.43
million for carbon steel sites and $0.02 million for stainless steel sites.
'Consultant mill services to conduct an evaluation of the water management practices and operations
is an example of a one-time non-equipment cost.
5-7
-------
Table 5-3
Regulatory Options Costs by Subcategory
(in Millions of $1997)
Subcategory . Segment
Cokemaking
Ironmaking
Integrated Steelmaking
Integrated
and Stand- Carbon
Alone Hot-
forming
Stainless
Non- Carbon
integrated
Steelmaking Stainless
and Hot-
Forming
Carbon
Stainless
Steel Carbon
finishing
Stainless
Carbon
Stainless
Regulatory
Option
BAT1
BAT 2
BAT 3
BAT 4
PSES1
PSES2
PSES3
PSES4
BAT 1 and
PSES1
BAT 1 and
PSES1
BAT1
PSES1
PSES1
BAT1
BAT1
BAT 2
PSES1
PSES1
BAT1
BAT1
PSES 1
PSES1
Capital
Costs
$8.0
$12.4
$34.4
$54.0
$0
$6.0
$18.6
$32.1
$25.8
$16.8
$111.8
$0.31
$0.76
$18.3
$0.41
$3.7
$2.5
$0
$14.2
$15.2
$6.0
$4.0
One-Time
Non-
O&M , Equipment
Costs Costs
$0.13 $0.30
$3.0 $0.30
$5.3 $0.30
$10.1 $0.30
$0.29 $0.15
$1.8 $0.15
$3.3 $0.20
$5.8 $0.20
$2.7 $0.55
$2.9 $1.9
$15.6 $0.97
$0.05 $0.13
$0.16 $0.08
$1.9 $3.7
$0.06 $0.21
$0.59 $0.21
$0.35 $0.84
$0 $0.38
$1.9 $1.6
($1.2) $0.69
$1.2 $0.83
$0.24 $0.39
Post-Tax Pre-Tax
Annualized Annualized
Costs Costs
$1.0 $.93
$3.9 $4.2
$6.9 $8.6
$11.7 $15.2
$0.24 $0.29
$1.7 $2.2
$3.9 $5.0
$6.4 $8.5
$4.3 $5.4
$3.5 $4.8
$20.4 $27.5
$0.08 $0.08
$0.14 $0.23
$2.7 $4.0
$0.07 $0.11
$0.66 $0.87
$0.43 $0.64
$0.02 $0.03
$2.8 $3.4
$0.24 $0.20
$1.6 $1.8
$0.36 $0.56
5-8
-------
Steel finishing is the third subcategory where costs differ according to the type of steel processed.
For both direct and indirect stainless steel processors, acid purification allows a site to reuse acid. This
reduces acid purchase and disposal costs for an overall savings in annual O&M {see negative entry). For
direct dischargers, the capital costs are S 14,2 million for carbon steel sites and $15.2 million for stainless
steel sites. The post-tax annualized costs are $2.8 million for carbon steel sites and S0.24 million for stainless
steel sites. For indirect dischargers, the capital costs are $6.0 million for carbon steel sites and $4.0 million
for stainless steel sites. The post-tax annualized costs are $ 1.6 million for carbon steel sites and $0.36 million
for stainless steel sites.
The other subcategory consists of DRI, forging, and briquetting operations. No costs are shown for
two reasons. First, none of the sites with briquetting operations discharge process wastewater. Second, for
DRI and forging, the costs for wastewater pollution control are BPT costs. Costs are presented on a
combined basis due to the small number of sites with these operations. No capital costs are involved; post-
tax annualized costs are $0.05 million.
5.3 COST REASONABLENESS
EPA is evaluating technology options for the DRI and forging segments of the Other Operations
Subcategory for the control of only conventional parameters at BPT. CWA Section 304(b)(l)(B) requires a
cost-reasonableness assessment for BPT limitations. In determining BPT limitations, EPA must consider the
total cost of treatment technologies in relation to the effluent reduction benefits achieved by such technology.
This inquiry does not limit EPA's broad discretion to adopt BPT limitations that are achievable with available
technology unless the required additional reductions are wholly out of proportion to the costs of achieving
such marginal reduction.
The cost-reasonableness ratio is average cost per pound of pollutant removed by a BPT regulatory
option. The cost component is measured as pre-tax total annualized costs. In this case, the pollutants
removed are conventional pollutants although in some cases, removals may include priority and
nonconventional pollutants. For the DRI segment, the evaluated BPT option 1 removes
5-9
-------
approximately 800 pounds of conventional pollutants with a cost-reasonableness ratio of $6, see Table 5-4.
For the forging segment, the evaluated BPT option 1 removes approximately 500 pounds of conventional
pollutants with a cost-reasonableness ratio of SI5. EPA considers the cost-reasonableness ratio to be
acceptable and the proposed option to be cost-reasonable in both segments.
5.4 COST COMBINATIONS
EPA proposes to divide the iron and steel industry into seven subcategories. These, in turn, are further
segregated into segment and discharge status (direct or indirect). The cokemaking subcategory has four
BAT regulatory options and four PSES regulatory options. Direct dischargers in the non-integrated
subcategory with stainless operations have two options. All other subcategory/segment/ discharge
combinations have one BAT or PSES regulatory option. This implies that there are 4 x 4 x 2 = 32 possible
cost combinations; 64 possibilities if a "no action" option is considered. EPA examined many of these
combinations and the information is located in the rulemaking record.
EPA is co-proposing two cost combinations, see Table 5-5. Cost Combinations A and B are the same
for all categories except indirect dischargers in the cokemaking subcategory. Cost Combination A includes
Option 1 and Cost Combination B includes Option 3 for indirect dischargers in the cokemaking subcategory.
Table 5-6 summarizes the industry costs for the co-proposed cost combinations. The capital costs for Cost
Combination A are $237.0 while capital costs for Cost Combination B are $255.5 million. The pre-tax
annualized cost for Cost Combination A is $54.3 million and $59.0 million for Cost Combination B. Note that
the pre-tax annualized costs for each of these cost combinations are well below the $100 million criterion for
considering the iron and steel effluent guideline a major rule under Executive Order 12866.
5.S REFERENCES
U.S. EPA. 2000. U.S. Environmental Protection Agency. Development document for the proposed effluent
limitations guidelines and standards for the iron and steel manufacturing point source category. Washington,
DC. EPA821-B-00-011.
5-10
-------
Table 5-4
Cost-reasonableness Ratio
Subcategory
Other
Other
Segment
DRI
Forging
Selected
Option
1
1
Removal of
Conventional
Pollutants (Ibs.)
747
444
Pre-tax
Annual ized
Cost
(Millions)
$0.005
$0.01
Cost Per Pound of
Conventional
Pollutant Removed
$6
$14
• 5-11
-------
Table 5-5
Summary of Cost Combinations
Subcategory
Segment
Cokemaking
Ironmaking
Integrated Steelmaking
Integrated Steelmaking
and Hot-Forming
Non-Integrated
Steel Finishing
Other Operations
Carbon
Stainless
Carbon
Stainless
Carbon
Stainless
DRI
Forging
Discharge
Status
BAT
PSES
BAT
PSES
BAT
PSES
BAT
PSES
BAT
PSES
BAT
PSES
BAT
PSES
BAT
PSES
BAT
PSES
BPT
PSES
BPT
PSES
Co-Proposal Options
A
3
1
1
1
1
No Regulation
1
No Regulation
No Regulation
No Regulation
1
No Regulation
1
1
1
No Regulation
1
No Regulation
1
No Regulation
1
No Regulation
B
3
3
1
1
1
No Regulation
1
No Regulation
No Regulation
No Regulation
1
No Regulation
1
1
1
No Regulation
1
No Regulation
1
No Regulation
1
No Regulation
5-12
-------
Table 5-6
Industry Costs
(in Millions $1997)
Capital Costs
Operating and Maintenance Costs
One-Time Non-Equipment Costs
Post-Tax Annualized Costs
Pre-Tax Annualized Costs
Cost Combinations
A
$237.0
$29.4
$10.6
$41.2
$54.3
B
$255.5
S32.4
S10.6
$44.8
S59.0
5-13
-------
-------
CHAPTER 6
ECONOMIC IMPACT RESULTS
Chapter 6 describes the economic effects resulting from the costs for complying with the proposed
iron and steel industry rule. The impacts are estimated with the models discussed in Chapter 4 and the costs
presented in Chapter 5. Section 6.1 reports the estimated impacts from the proposed BAT and PSES costs
for existing sources. The impacts are examined from the smallest scale (site closure by subcategory costs)
to industry-wide impacts (market and trade effects). EPA reports its findings for NSPS and PSNS for new
sources in Section 6.2
6.1 BEST AVAILABLE TECHNOLOGY/PRETREATMENT STANDARDS FOR EXISTING
SOURCES (BAT AND PSES)
6.1.1 Subcategory Costs
EPA examined whether the cost of upgrading pollution control in any subcategory was sufficient to
result in site closure1. For Cokemaking BAT Option 3 and BAT Option 4, the costs lead to one projected site
closure. No closures are projected for any other option in any other subcategory.
The projected closure is associated with s 500 employees. The closure would result in an increase
in the regional unemployment rate from 9.9 to 10.5 percent (i.e., an increase of 0.6 percentage points). For
reasons of confidentiality, revenue, shipment, and export data are not disclosed.
'The site closure methodology is presented in Section 4.2. For a site to be considered closed rather
than upgraded as a result of the regulation, its projected present value of future cash flow is neutral or
positive prior to regulatory costs and negative after inclusion of regulatory costs. Section 4.2.1.1 explains
why EPA did not include an estimate of salvage value in the calculation.
6-1
-------
6.1.2 Aggregated Subcategory Costs and Projected Site Closures
A site may have multiple operations—e.g., cokemaking, ironmaking, steelmaking, hot-forming, and
finishing—with regulatory costs associated with each option. The aggregated subcategory costs do not
result in any additional site closures. The only closure reported in this analysis is the same site closure that
occurred with only the subcategory costs (see Section 6.1.1).
The aggregated costs used in the site-level analysis are the two co-proposed cost combinations
described Section 5.4. Cost combination A has cokemaking PSES set to Option 1 while Cost Combination B
has cokemaking PSES set to Option 3. Because both cost combinations contain cokemaking BAT Option 3,
EPA projects the same site closure and direct impacts discussed in Section 6.1.1. However, no additional
sites close when the costs for all operations at the location are aggregated.
6.1.3 Corporate Financial Distress
The level above the site is the company that owns one or more iron and steel sites. The corporate
financial distress analysis identifies situations where it might make financial sense to upgrade each individual
site but the company cannot bear the combined costs of upgrading all of its sites.
One or more large companies move into the distressed category as a result of the added pollution
control with both cost combinations A and B. These companies report a total employment in excess of
14,000 people. The analysis incorporates both public and private entities; hence the analysis is based on
1997, the most recent supplied in the EPA survey.
EPA identified the hot-forming subcategory as having the highest capital costs of any proposed
regulatory option. In analyzing various cost combinations, EPA determined that, if hot-forming BAT is not
proposed, the companies would not move into financial distress. EPA then explored a 5-year delayed
implementation for the hot-forming subcategory. The delay would apply to all sites in the subcategory and
therefore to the firms that own them. The delay results in lower costs in 1997 dollars because of the time
value of money. The discount factor that reflects the reduction in cost is calculated as 1/(1 + K)" where K is
the discount rate (or what the company pays to raise capital for investments) and n is the number of years
6-2
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for the delayed implementation. For example, if a company has a discount rate of 9.72 percent and the
implementation is delayed for 5 years, the discount factor is 1/(1.0972)5 or 0.629. That is, the time value of
money would reduce the effective cost to the company by about 37 percent. Although the delay improved
the financial condition of the one or more companies in the post-regulatory period, it was not sufficient to
bring the Z'-score(s) to 1.21 or greater. EPA is not proposing a 5-year delayed implementation for the hot-
forming subcategory.
As mentioned in Section 4.4, taking Chapter. 11 (bankruptcy) is not the same as taking Chapter 7
(liquidation). EPA does not expect a company projected to move into financial distress to liquidate
immediately upon promulgation. The company, however, will have to change the way it operates to respond
to the regulation and remain out of bankruptcy. An analogy might be that the proposed costs move a sickly
patient into intensive care. The patient may or may not return to health but much effort will be spent in the
attempt. The site analysis indicates that all but one facility are projected to remain viable and open, thus the
distressed firm may sell assets rather than liquidate.
6.1.4 Market and Trade Impacts
Table 6-1 summarizes the market impacts for the co-proposed Cost Combinations A and B. The
pre-tax annualized cost of each combination is listed in the first row (see also Table 5-6). The difference in
pre-tax annualized costs between the two co-proposed cost combinations is $4.7 million. Each of the market
impacts presented in Table 6-1 are the same with the exception of domestic production and export demand.
Export demand differs by .02% among the co-proposed cost combinations. For each of the other
parameters, the co-proposed cost combinations are the same or vary by only .01%. Under both options,
imports increase by one-tenth of one percent (approximately $7.8 million), domestic prices increase by less
than one-tenth of one percent, and exports fall by less than three-tenths of one percent (approximately $9.5
million). For reference, 1997 imports are estimated to have totaled $6.5 billion in value while exports are
estimated to have totaled approximately S3.8 billion.
Pursuant to Executive Order 12898, EPA examined the effects of increased prices on low-income
consumers. EPA calculated the percentage of average expenditures per consumer unit spent on steel
products by income group using the Consumer Expenditure Survey. No category for steel products exists
6-3
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Table 6-1
Market Impacts
Parameter
Pre-tax Annualized Cost
(Millions, $1997)
Supply Shift (annualized cost as a percentage of
baseline price)
Domestic Price
Domestic Consumption
Domestic Production
Import Supply
Export Demand
Cost Combinations
A
$54.3
0.10%
0.08%
-0.11%
-0.15%
0.11%
-0.23%
B
$59.0
0.11%
0.08%
-0.12%
-0.16%
0.12%
-0.25%
6-4
-------
in the survey, instead EPA determined which products were potentially constructed of steel. The items
include the following: processed fruits, processed vegetables, miscellaneous foods, major appliances, small
appliances, and vehicles, see Table 6-2.
There are no significant differences among the percentage of average expenditures for all income
groups with the exception of the lowest income group—under $5,000. According to the Consumer
Expenditure Survey, this income group spends almost 69 percent of its income on vehicle purchases. This
income group, then, may be adversely affected by the rule because the automobile manufacturers may pass
on the higher steel cost to the consumers. All cost combinations examined by EPA lead to less than one-
tenth of one percent price increase (see Table 6-1), EPA does not consider minority and low-income
populations to be disproportionately affected.
6.1.5 Direct and Community Impacts
EPA evaluates community impacts by examining the potential increase in county or metropolitan
statistical area (MSA) unemployment. EPA assumes all employees of the affected facilities reside in the
county (if the county is not part of a larger metropolitan area) or the metropolitan area in which the facilities
are located.
In the case of the single facility closure associated with cokemaking BAT options 3 and 4, the
county unemployment rate increases by 0.6 percentage points. Pursuant to Executive Order 12898, EPA
examined whether the closure represented a disproportionately high and adverse impact on minority and low-
income populations. The projected site closure is located in a county with a lower than state average
minority population and higher than state average poverty rate and unemployment rate.
In the case of the BAT option for the carbon and alloy steel alloy segment of the integrated and
stand-alone hot-forming subcategory, EPA examined the effects if the one or more firms that become
financially distressed lay off all of its workers, i.e., a worst-case scenario. In this case, the increase in
unemployment rate ranges from less than 0.1 to 2.1 percentage points, depending on the prevailing
unemployment rate and the sizes of the affected facility and community.
6-5
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Table 6-2
Reported Typical Expenditures by Income-Level for Steel-Containing Products
Item
Less $5,000 $10,000 $15,000 $20,000 $30,000 540,000 $50,000 $70,000
than to to to to to to to and
Total $5.000 S9.999 $14,999 $19,999 $29,999 $39,999 $49,999 S69,999 over
lumber of
Consumer units
Average Income
3efore Taxes
Average Income
After Taxes
84,115 4,259 8,143 8,469 7,352 12,621 10,123 7,654 11,300 14,193
$41,622 $1,888 $7,735 $12,375 $17,464 $24,648 $34,473 $44,289 $58,516 $108,257
$38.358 S1.738 $7,636 $12,155 $16,951 $23,596 S32.393 $40.890 $53,802 $97,419
Average Expenditures Per Consumer Unit
Total Average
Expenditures:
Processed
'ruits:
'/o of Income (after)
'recessed
Vegetables:
Vo of Income (after)
Miscellaneous
oods:
Ya of Income (after)
vlajor
Appliances:
^ of Income (after)
Small
Appliances:
of Income (after)
Vehicle
>urchase:
/»of Income (after)
$37,260 $17,502 $14,838 $19,958 $22,810 $27,941 $33,616 $39,934 $49,376 $73,786
$104 $63 $59 $70 $81 $88 $100
0.27% 3.62% 0.77% 0.58% 0.48% 0.37% 0.31%
$78 S36 $49 $55 $64 $78 $78
0.20% 2.07% 0.64% 0.45% 0.38% 0.33% 0.24%
$408 $237 $235 $261 $280 $344 $413
1.06% 13.64% 3.08% 2.15% 1.65% 1.46% 1.27%
$172 $89 $72 $146 $121 $136 $195
0.45% 5.12% 0.94% 1.20% 0.71% 0.58% 0.60%
$87 $29 $35 $37 $45 $68 $75
0.23% 1.67% 0.46% 0.30% 0.27% 0.29% 0.23%
$3,043 $1,193 $829 $1,724 $1,876 $2,411 $2,588
7.93% 68.64% 10.86% 14.18% 11.07% 10.22% 7.99%
$120 $123 $169
0.29% 0.23% 0.17%
$80 $101 $109
0.20% 0.19% 0.11%
$473 $535 $627
1.16% 0.99% 0.64%
$144 $246 $268
0.35% 0.46% 0.28%
$91 $139 $171
0.22% 0.26% 0.18%
$3,274 $4,664 $5,732
8.01% 8.67% 5.88%
Source: U.S. Census, Bureau of Labor Statistics, Consumer Expenditure Survey, 1998
6-6
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6.1.6 National Direct and Indirect Impacts
If a site is projected to close, there are directs effects such as the loss in employment and output at
the closed facility. The impacts resonate through the economy. EPA used the Department of Commerce's
national final demand multipliers from the Regional Input-Output Modeling System to estimate these effects
(see Section 4.3). For subcategory costs, Cokemaking BAT 3 and BAT 4 each result in one closure. Both
options lead to an estimated loss in employment of less than 500 employees and a reduction in national output
of approximately $60 million.
Because Altman's Z-score is a measure of financial distress and not Chapter 7 liquidation, EPA
considered it imprudent to calculate a worst case estimate of the national direct and indirect impacts on
employment and output based on the output of the company that moves into financial distress with the co-
proposed cost combinations. The facility-level analysis indicates that virtually all facilities are going
concerns. In light of the facility analyses, EPA expects that a financially distressed firm would respond to
the distress by selling assets. The sale of assets (such as a facility) may include continuing operation by the
purchasing firm, resulting in limited job losses or secondary impacts.
6.1.7 Summary of Impacts on Existing Sources
Table 6-3 summarizes the economic impacts of the proposed regulation on existing sources. Note
that the aggregate subcategory costs do not close any additional sites beyond the one projected to close due
to subcategory costs alone2. EPA interprets the results of the subcategory and site analyses to indicate the
viability of virtually all facilities as going concerns. One or more companies with a total of at least 14,000
employees experience financial distress predominantly because of the high capital costs associated with the
hotforming pollution control option. The worst case assumption is that all the facilities would close. Under
this assumption, regional unemployment increases by 0.1 percent to 2.1 percent. Given the viability of the
individual sites, however, EPA expects that the company would respond to distress by selling assets. The
sale of assets (such as a facility) may include the continued operation by the purchasing firm, resulting in
limited job losses or secondary impacts.
2EPA ran the closure model with and without the "cost pass-through" factor estimated by the market
model. The results were the same for both sets of runs.
6-7
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Table 6-3
Economic Impacts of the Proposed Regulation on Existing Sources
Subcategory
Site
Firm
Direct Impacts
Site Closures/ Corporate Financial Distress
Direct Employment Losses
1
s500
1
*500
lor more
;>14,000
Community Impacts: Increase in Local Unemployment Rates
Percentage Points
0.6
0.6
<. 0.1 to 2.1
National Direct and Indirect Impacts
Employees
Output (S millions)
^ 500
$60
*500
$60
6-8
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6.2 NEW SOURCE PERFORMANCE STANDARDS (NSPS) AND PRETREATMENT
STANDARDS FOR NEW SOURCES (PSNS)
The technology options EPA considered for new sources are identical to those it considered for
existing dischargers. Engineering analysis indicates that the cost of installing pollution control systems during
new construction is less than the cost of retrofitting existing facilities. Because EPA projects the costs for
new sources to be less than those for existing sources and limited or no impacts are projected for existing
sources, EPA expects no significant economic impacts for new sources. Because EPA projects no impacts
for new sources, the regulation cannot be considered a barrier to entry.
Several technology options are zero discharge. All existing non-recovery cokemaking sources
currently meet a zero discharge requirement; hence no impacts or barriers to entry are projected to occur for
new sources. For non-integrated steelmaking and hot-forming operations, EPA added a zero discharge
option. EPA believes the zero discharge new source option would not present a barrier to entry because, as
of 1997, a total of 24 nonintegrated facilities of all types have been able to achieve zero discharge.
6.3
REFERENCES
DOC. 1998. U.S. Census. Bureau of Labor Statistics, Consumer Expenditure Survey, 1998.
downloaded 23 May 2000.
DOC.1998b. U.S. Census. Estimates of the population of counties by race and Hispanic origin: July 1,1997.
Washington, DC. downloaded 13
November 1998.
DOC. 1998c. U.S. Census. Small area income and poverty estimates: intercensal estimates for states and
counties- revised January 1998. Washington, DC.
downloaded 2 December 1998.
Le Vasseur, 1998. State and County 1997 Annual Unemployment Rates. Electronic file sent to Carrie
Marotta, Eastern Research Group from Ken Le Vasseur, Bureau of Labor Statistics. 8 December,
6-9
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CHAPTER 7
SMALL BUSINESS ANALYSIS
The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq., Public Law 96-354) as amended by the
Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) (Public Law 104-121) requires
agencies to analyze how a regulation will affect small entities. The purpose of the RFA is to establish as a
principle of regulation that agencies should tailor regulatory and informational requirements to the size of
entities, consistent with the objectives of a particular regulation and applicable statutes. If, based on an initial
assessment, a proposed regulation is likely to have a significant economic impact on a substantial number of
small entities, the RFA requires an initial regulatory flexibility analysis.1 The requirement to prepare an initial
regulatory flexibility analysis does not apply to a proposed rule if the head of the agency certifies that the
proposal will not, if promulgated, have a significant impact on a substantial number of small entities.
EPA performed an initial assessment and a small business analysis of impacts. The first steps in an
initial assessment are presented in Section 7.1. Section 7.2 describes the methodology for the small business
analysis and Section 7.3 presents the results of the analysis.
7.1
INITIAL ASSESSMENT
EPA guidance on implementing RFA requirements suggests the following must be addressed in an
initial assessment (EPA, 1999). First, EPA must indicate whether the proposal is a rule subject to notice-and-
comment rulemaking requirements. EPA has determined that proposed effluent limitations guidelines and
standards regulations are subject to notice-and-comment rulemaking requirements. Second, EPA should
develop a profile of the affected small entities. EPA has developed a profile of the affected universe of
entities—both large and small— in Chapter 2. Section 7.2 describes the data and procedures that EPA used
to identify the number of small entities and estimate the number of sites owned by small entities. Third, EPA
needs to determine whether the rule would affect small entities, have an adverse economic impact on small
entities, and determine whether the rule would have a significant impact on a substantial number of small
1 The preparation of an initial regulatory flexibility analysis for a proposed rule does not legally'
foreclose certifying no significant impact for the final rule (EPA, 1999). s^~~
7-1
-------
entities. Chapter 4 presents the economic methodology while Section 7.3 summarizes the findings for small
entities.
7.2 SMALL BUSINESS IDENTIFICATION
7.2.1 Classification
The Small Business Administration (SBA) sets size standards to define whether a business entity is
small and publishes these standards in 13 CFR 121. The standards are based either on the number of
employees or receipts. Prior to 1 October 2000, SBA set size standards according to the Standard Industrial
Classification (SIC) system. Accordingly, the EPA survey requested the respondents to identify different
levels in site's corporate hierarchy by SIC code. The rule, however, will be proposed after 1 October 2000
when SBA will identify size standards according to the North American Industry Classification System
(NAICS; FR, 1999). EPA examined both classification systems when identifying sites owned by small
entities. The remaining subsections walk the reader through the methodology steps to identify small entities
in the iron and steel industry.
7.2.7.7 SBA Guidance
When making classification determinations, SBA counts receipts or employees of the entity and all of
its domestic and foreign affiliates (13 CFR.121.103(a)(4))). SBA considers affiliations to include:
• stock ownership or control of 50 percent or more of the voting stock or a block of stock
that affords control because it is large compared to other outstanding blocks of stock (13
CFR121.103(c)).
• common management (13 CFR 121.103(e)).
• joint ventures (13 CFR 121.103(f)).
7-2
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EPA interprets this information as follows:
Sites with foreign ownership are not small (regardless of the number of employees or
receipts at the domestic site).
The definition of small is set at the highest level in the corporate hierarchy and includes all
employees or receipts from all members of that hierarchy.
If any one of a joint venture's affiliates is large, the venture cannot be classified as small.
EPA determined ownership from survey responses and determined affiliates not specified in
the survey from secondary sources. Corporate ownership of sites in the iron and steel
database is based on January 2000.
7.2,1,2 Data Used for Business Size Classification
EPA requested the respondent to identify the SIC code for the site, business entity that owns the site,
and the corporate parent that owned the business entity (or for as many levels in the corporate hierarchy that
exist). Determining the level in the corporate hierarchy at which to define whether a business entity is a small
business is site-by-site assessment because, in some cases, the respondent entered the number of employees
literally at the corporate headquarters and not for the entire company. The guidelines used to determine the
level in the corporate hierarchy by which to classify the site is summarized here:
• If a corporate parent exists,
If it is foreign, classify the site as such and remove from further analysis.
If the parent's classification depends on the number of employees and the number
for the parent exceeds that for the company, use the parent's data for classification.
If the parent's classification depends on revenues, use the parent's data for
classification.
If none of the above applies to the site, use the company information for
classification.
If a site is a joint entity,
If any of the joint owners is a large business, classify the site as such
and remove from further analysis.
If any of the joint entity partners are foreign, remove from further consideration.
At the company level,
If it is foreign, classify as such and remove from further consideration.
7-3
-------
If a company's classification depends on the number of employees and the number
of employees is the same as or exceeds that for the site, use the company's data for
classification.
If a company's classification is determined by revenues, use the company's data for
classification.
If the site is the company, no other levels in the hierarchy exist, the site data are used for
classification.
7.2.1.3 SIC Codes Reported in EPA Survey
Table 7-1 is a summary of the 28 4-digit SIC codes in EPA Survey data listed for the level at which
the size classification is made. Although the sampling frame for the EPA Survey focused on four SIC codes:
3312, 3315, 3316, and 3317, the SIC codes extend beyond iron and steel operations because corporate
parents hold operations in other sectors.
Several sites appear to be classified at the industry group level (3-digit code) and one site is classified
at the major group Jevel (2-digit code). Entries with a final zero are presumed to be classified at the 3-digit
level (e.g., 1520, 2870, 3310, 3370, 3440, 3470, and 3490) and an entry with a final double zero is assumed
to be classified at the 2-digit level (i.e., 3300).
Several of the 4-digit SIC codes provided by the respondents, however, do not exist in the 1987 SIC
classification Manual (i.e., 1516, 2998, and 6749). For these sites, EPA classified the site at the 2- or 3- digit
level. Table 7-1 lists the standards for each SIC code used in the small business analysis.
7.2.1,4 Updated Site Ownership Information
EPA searched secondary data to verify corporate ownership for each site and updated ownership to
January 2000. The supporting material is in the rulemaking record.
7-4
-------
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7.2.1.5 NAICSStandard
The North American Industry Classification System (NAICS) replaces the Standard Industrial
Classification (SIC) as of 1 January 1997. The Small Business Administration proposes to convert business
size standards to NAICS effective 1 October 2000 (FR, 1999). Appendix B cross-references the SIC codes
with the NAICS codes and size standards.
Table 7-2 is a subset of Appendix B, listing only those SIC codes that change size standards when
considered under NAICS. The following industries are potentially affected by the shift:
• SIC 4295 is part of NAICS 22121. The size standard changes from $5 million to 500
employees.
• Stand-alone coke ovens, formerly part of SIC 3312 (steel works, blast furnaces, and rolling
mills), are now classified in NAICS 324199. The size standard replaces 1,000 employees
with 500 employees.
• SIC 2865 is divided between NAICS 32511 and 325132. If the company shifts to the first
NAICS category, the size standard changes from 750 to 1,000 employees.
« SIC 3399, with a size standard of 750 employees- is split among four NAICS categories:
331111, 331492, 332618, and 332813. Only the first and last categories concern steel. If
the company shifts to NAICS 331111, the size standard becomes 1,000 employees. If the
company shifts to NAICS 332813, the size standard becomes 500 employees.
• SIC 3315 is split between NAICS 33122 and 332618. If the company shifts to the second
NAICS category, the size standard changes from 1,000 to 500 employees.
• SIC 3699- with a size standard of 750 employees- is split among NAICS categories 333319
and 333618. If the company shifts to the first category, the size standard becomes 500
employees. If the company shifts to the second category, the size standard becomes 1,000
employees.
EPA examines each site whose company's status could change as a result of the shift from SIC to NAICS.
No site changed classifications with the shift from SIC to NAICS.
7-6
-------
Table 7-2
Cross-reference Between NA1CS and SIC Codes
Size Standard Changes
1997
NAICS
code
1997 NAICS
industry
description
New,
Existing or
Revised
Industry
Proposed
size
standard
(S million
or emp #)
for NAICS
industry
Existing
size
standard
{$ million
or emp #)
for SIC
activity
1987 SIC
code (* =
part of
SIC code)
1987 SIC
industry
Sector 22 - Utilities
Subsector 221 - Utilities
22121
Natural Gas
Distribution
R
500
$5.0
500
S5.0
S5.0
S5.0
S5.0
*4923
4924
4925
*4931
4932
*4939
Natural Gas
Transmission and
Distribution
(distribution)
Natural Gas
Distribution
Mixed,
Manufactured, or
Liquefied Petroleum
Gas Production
and/or Distribution
(natural gas
distribution)
Electronic and Other
Services Combined
(natural gas
distribution)
Gas and Other
Services combined
(natural gas
distribution)
Combination
Utilities, NEC
(natural gas
distribution)
Subsector 324 - Petroleum and Coal Products Manufacturing
324199
All Other
Petroleum and
Coal Products
Manufacturing
R
500
500
1,000
2999
*3312
Products of
Petroleum and Coal,
NEC
Blast Furnaces and
Steel Mils (coke
ovens)
7-7
-------
1997
NAICS
code
1997 NAICS
industry
description
New,
Existing or
Revised
Industry
Proposed
size
standard
(S million
or emp #)
for NAICS
industry
Existing
size
standard
($ million
or emp #)
for SIC
activity
1987 SIC
code (* =
part of
SIC code)
1987 SIC
industry
Subsector 325 - Chemical Manufacturing
32511
Petrochemical
Manufacturing
N
1,000
25132
Synthetic
Organic Dye and
Pigment
Manufacturing
N
750
750
1,000
750
*2865
*2869
*2865
Cyclic Organic
Crudes and
Intermediates, and
Organic Dyes and
Pigments
(aromatics)
Industrial Organic
Chemicals, NEC
(aliphatics)
Cyclic Organic
Crudes and
Intermediates, and
Organic Dyes and
Pigments (organic
dyes and pigments)
Subsector 331 — Primary Metal Manufacturing
331111
Iron and Steel
Mills
N
1,000
331222
331492
Steel Wire
Drawing
Secondary
Smelting,
Refining, and
Allying of
Nonferrous Metal
(except Copper
and Aluminum)
R
N
1,000
750
1,000
750
1,000
750
*3312
*3399
*3315
*3313
Steel Works, Blast
Furnaces (Including
Coke Ovens), and
Rolling Mills (except
coke ovens not
integrated with steel
mills)
Primary Metal
Products, NEC
(ferrous powder,
paste, flakes, etc.)
Steel Wiredrawing
and Steel Nails and
Spikes (steel wire
drawing)
Electrometallurgical
Products, Except
Steel (except Copper
and Aluminum)
7-8
-------
1997
NAICS
code
1997 NAICS
industry
description
New,
Existing or
Revised
Industry
Proposed
size
standard
(S million
or emp #)
for NAICS
industry
•
Existing
size
standard
(S million
or emp #)
for SIC
activity
500
750
1987 SIC
code (* =
part of
SIC code)
*3341
*3399
1987 SIC
industry
Secondary Smelting
and Reining of
Nonferrous Metals
(except Copper and
Aluminum)
Primary Metal
Products, NEC
(except Copper and
Aluminum)
Subsector 332 - Fabricated Metal Product Manufacturing
332618
Other Fabricated
Wire Product
Manufacturing
R
500
332813
Electroplating,
Plating,
Polishing,
Anodizing and
Coloring
R
500
500
1,000
750
500
750
500
*3499
*3315
*3399
3496
*3399
3471
Fabricated Metal
Products, NEC (safe
and vault locks)
Steel Wiredrawing
and Steel Nails and
Spikes (nails,
spikes, paper clips
and wire not made in
wiredrawing plants)
Primary Metal
Products, NEC
(nonferrous nails,
brads, staples, etc.)
Miscellaneous
Fabricated Wire
Products
Primary Meta!
Products, NEC
(laminating steel)
Electroplating,
Plating, Polishing,
Anodizing, and
Coloring
7-9
-------
1997
NAICS
code
1997 NAICS
industry
description
New,
Existing or
Revised
Industry
Proposed
size
standard
(S million
or emp #)
for NAICS
industry
Existing
size
standard
($ million
or emp #)
for SIC
activity
1987 SIC
code (* =
part of
SIC code)
1987 SIC
industry
Subsector 333 — Machinery Manufacturing
333319
Other
Commercial and
Service Industry
Machinery
Manufacturing.
R
500
333618
Other Engine
Equipment
Manufacturing
R
1,000
500
500
500
750
1,000
750
*3559
3589
*3599
*3699
*35I9
*3699
Special Industry
Machinery, NEC
(automotive
maintenance
equipment)
Service Industry
Machinery, NEC
Industrial and
Commercial
Machinery and
Equipment, NEC
(carnival amusement
park equipment)
Electrical
Machinery,
Equipment and
Supplies, NEC
(electronic teaching
machines and flight
simulators)
Internal Combustion
Engines, NEC
(except stationary
engine radiators)
Electrical
Machinery,
Equipment and
Supplies, NEC
(outboard electric
motors)
Source: Federal Register, 22 October 1999
7-10
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7.2.2 Number of Small Entities
EPA evaluates the number of small entities as the number of sites belonging to small businesses. EPA
conducted a survey, not a census, of the iron and steel industry. That is, the Agency sent questionnaires to some
but not all sites in the iron and steel industry. Because EPA drew the sample on the basis of site characteristics, the
Agency could develop statistical weights for sites but not for companies.
EPA identified 115 companies in the survey of which 34 are small. Based on the statistical weights for the
sites owned by these companies, EPA estimates that approximately 60 sites nationwide are owned by small entities.
Because the number of companies cannot exceed the number of sites, the approach is conservative.
7.3
IMPACTS ON SITES OWNED BY SMALL ENTITIES
7.3.1 Subcategory Impacts—Site Closure
Section 6.1 summarizes the impacts by subcategory. Cokemaking BAT Options 3 and 4 each lead to the
closure of one site owned by a small company. No closures, large or small, are seen with any other subcategory
costs.
7.3.2 Site Cost Impacts—Site Closure
EPA is co-proposing two sets of regulatory options (see Chapter 5 for description). Both sets include
Cokemaking BAT Option 3, hence one site closure owned by a small company is incurred under each set.
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7.3.3 Corporate Financial Distress
To avoid double-counting impacts, the results of the pre-regulatory site closure analysis take precedence
over the company analysis, see Section 4.4, footnote 8. No small entities move into financial distress as a result of
either set of co-proposed options.
7.3.4 Compliance Cost Share of Revenue
The Agency evaluated the annualized compliance cost as a percentage of 1997 revenue. Over two-thirds
of the small entities incur no costs under either proposed option. The projected annualized compliance costs to
revenue shares range from 0 percent to 1.59 percent for proposed option set A and from 0 to 1.91 percent for
proposed option set B. Two and three firms incur costs in excess of 1 percent of revenues under co-proposed
option set A and B, respectively.
7.3.5 Summary
EPA examined the impacts of subcategory and site costs on sites owned by small entities and of aggregate
site costs on small firms. EPA found one site owned by a small entity closed under both co-proposed option sets.
No small firm is projected to incur financial distress as a result of either co-proposed option sets. EPA then
evaluated the compliance cost share of revenue to identify any other potentially significant impacts and found the
shares range from 0 percent to 1.59 percent for proposed option set A and from 0 to 1.91 percent for proposed
option set B. Further, only two and three firms incur costs in excess of 1 percent of revenues under co-proposed
option set A and B, respectively. As a result of the analyses, EPA has determined that the proposed rule does not
impose a significant impact on a substantial number of small entities.
7-12
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7.4
REFERENCES
FR. 1999. Small Business Administration. 13 CFR Part 121. Small business size regulations; size standards and
the North American Industry Classification System. Proposed Rule. Federal Register 64:57188-57286. 22
October 1999.
7-13
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CHAPTER 8
ENVIRONMENTAL BENEFITS
8.1
OVERVIEW
An environmental assessment quantifies the water quality-related benefits associated with
achievement of the Best Available Technology (BAT) and Pretreatment Standards for Existing Sources
(PSES) proposed by the U.S. Environmental Protection Agency (EPA) to regulate iron and steel facilities
(EPA, 2000; summarized here). Using site-specific analyses of current conditions and changes in discharges
associated with the proposed regulation, EPA estimated in-stream pollutant concentrations for 60 priority and
nonconventional pollutants from direct and indirect discharges in seven industry subcategories (cokemaking,
steel finishing, nonintegrated steelmaking and hot forming, integrated and stand-alone hot forming,
ironmaking, integrated steelmaking, and other) using stream dilution modeling.
EPA assessed the potential impacts and benefits to aquatic life by comparing the modeled in-stream
pollutant concentrations to published EPA aquatic life criteria guidance or to toxic effect levels (Section 8.2).
EPA projected potential adverse human health effects and benefits by (1) comparing estimated in-stream
concentrations to health-based water quality toxic effect levels or criteria, (2) estimating the potential
reductions of carcinogenic risk and noncarcinogenic hazard (systemic) from consuming contaminated fish or
drinking water, and (3) estimating the potential reductions of lead exposure from consuming contaminated
fish (Section 8.3).
The assessment estimated upper-bound individual cancer risks, population risks, and systemic
hazards using modeled in-stream pollutant concentrations and standard EPA assumptions. The assessment
evaluated modeled pollutant concentrations in fish and drinking water to estimate cancer risk and systemic
hazards among the general population (drinking water only), sport anglers and their families, and subsistence
anglers and their families. The assessment also evaluated modeled pollutant concentrations in fish to estimate
human health effects from exposure to lead among sport anglers and their families, and subsistence anglers
and their families. EPA used the findings from the analyses of reduced occurrence of in-stream pollutant
concentrations in excess of both aquatic life and human health criteria or toxic effect levels to assess
8-1
U.S. EPA Headquarters Library
Mai! code 3201
1200 Pennsylvania Avenue NW
Washington DC 20460
-------
improvements in recreational fishing habitats that are impacted by iron and steel wastewater discharges
(ecological benefits; Section 8.4). EPA expects that these improvements in aquatic habitats will improve the
quality and value of recreational fishing opportunities and nonuse (intrinsic) values of the receiving streams.
The assessment also evaluated potential inhibition of operations (i.e., inhibition of microbial
degradation processes) at publicly owned treatment works (POTWs), and sewage sludge contamination (here
defined as a sludge pollutant concentration in excess of that permitting land application or surface disposal of
sewage sludge), at current and proposed pretreatment levels (Section 8.5). The assessment estimated
inhibition of POTW operations by comparing modeled POTW influent concentrations to available inhibition
levels. The assessment estimated contamination of sewage sludge by comparing projected pollutant
concentrations in sewage sludge to available EPA regulatory standards for land application and surface
disposal. EPA based estimates of economic productivity benefits, if applicable, on the incremental quantity of
sludge that, as a result of reduced pollutant discharges to POTWs, meets criteria for the generally less
expensive disposal method, namely land application and surface disposal.
In addition, this report presents the potential fate and toxicity of pollutants of concern associated
with iron and steel wastewater on the basis of known characteristics of each chemical (Section 8.6). The
report also includes reviews of recent reports and databases that provide evidence of documented
environmental impacts on aquatic life, human health, and the quality of receiving water (Section 8.7).
The assessment included analyses of discharges from representative sample sets of the 150 iron and
steel facilities (103 direct dischargers and 47 indirect dischargers) identified as being within the scope of this
proposed regulation. EPA extrapolated results, where applicable, to the national level using the statistical
methodology for estimating costs, loads, and economic impacts. This report provides the results of those
analyses, organized by the type of discharge (direct and indirect). Section 8.8 summarizes the findings.
8-2
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8.2 COMPARISON OF IN-STREAM CONCENTRATIONS WITH AMBIENT WATER QUALITY
CRITERIA (AWQC) AND IMPACTS AT POTWS
8.2.1 Direct Discharging Facilities
8.2.1.1 Sample Set
The water quality modeling results for 103 iron and steel facilities directly discharging 60 pollutants
to 77 receiving streams indicate that—at current discharge levels—in-stream concentrations of 7 pollutants
will exceed acute aquatic life criteria or toxic effect levels in 25 percent of the receiving streams (19 of the
total 77). The analysis projects that modeled in-stream concentrations of 16 pollutants will exceed chronic
aquatic life criteria or toxic effect levels in 48 percent of the receiving streams (37 of the total 77). The
proposed iron and steel guidelines will reduce acute aquatic life excursions to 3 pollutants in 17 percent of the
receiving streams (13 of the total 77) and chronic aquatic life excursions to 12 pollutants in 40 percent of the
receiving streams (31 of the total 77). Additionally, the analysis projects that the modeled in-stream
concentrations of 12 pollutants at current and 11 pollutants at proposed BAT discharge levels (using a target
risk of 10"6 (1E-6) for carcinogens) will exceed human health criteria or toxic effect levels (developed for
consumption of water and organisms) in 35 percent (27 of the total 77) and 25 percent (19 of the total 77) of
the receiving streams, respectively. It also projects that the modeled in-stream concentrations of 6 pollutants
(using a target risk of 10"6 (1E-6) for carcinogens) will exceed the human health criteria or toxic effect levels
(developed for consumption of organisms only) in 21 percent of the receiving streams (16 of the total 77) at
current discharge levels. The proposed iron and steel guidelines will eliminate excursions of the human health
criteria or toxic effect levels (developed for consumption of organisms only) in 3 of the receiving streams.
The proposed guidelines also will reduce pollutant loadings by 23 percent.
8.2.1.2 National Extrapolation
Extrapolation of the modeling results of the sample set yields 131 iron and steel facilities discharging
60 pollutants to 100 receiving streams. The analysis projects that extrapolated in-stream pollutant
concentrations will exceed acute aquatic life criteria in 23 percent of the receiving streams (23 of the total
100) at current discharge levels. The proposed regulation will reduce excursions to 16 percent of the
receiving streams (16 of the total 100). The analysis projects that extrapolated in-stream pollutant
8-3
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concentrations will exceed chronic aquatic life criteria in 47 percent (47 of the total 100) and 41 percent (41
of the total 100) of the receiving streams at current and proposed BAT discharge levels, respectively.
Additionally, the analysis projects that extrapolated in-stream pollutant concentrations will exceed human
health criteria or toxic effect levels (developed for consumption of water and organisms) in 30 percent of the
receiving streams (30 of the total 100) at current discharge levels and in 20 percent of the receiving streams
(20 of the total 100) at proposed BAT discharge levels. The analysis projects excursions of human health
criteria or toxic effect levels (developed for consumption of organisms only) in 17 percent of the receiving
streams (17 of the total 100) at current discharge levels. The proposed iron and steel guidelines will reduce
the excursions of human health criteria or toxic effect levels (developed for consumption of organisms only)
from 17 to 14 receiving streams. The proposed guidelines also will reduce pollutant loadings by 23 percent.
8.2.2 Indirect Discharging Facilities
8.2.2.1 Sample Set
The water quality modeling results for 47 indirect iron and steel facilities discharging 56 pollutants to
43 POTWs located on 43 receiving streams indicate that at current and proposed PSES discharge levels, in-
stream pollutant concentrations will not exceed acute aquatic life criteria or toxic effect levels. Because the
analysis projects no excursions, EPA does not extrapolate these results to the national level. The analysis
does project that modeled in-stream concentrations of 2 pollutants at current discharge levels will exceed
chronic aquatic life criteria in 7 percent of the receiving streams (3 of the total 43). The proposed iron and
steel guidelines will reduce excursions of the 2 pollutants to 2 receiving streams. Additionally, the analysis
projects that modeled in-stream pollutant concentrations (using a target risk of 10~*(iE-6) for carcinogens)
will not exceed human health criteria or toxic effect levels (developed either for the consumption of water
and organisms or for the consumption of organisms only). Therefore, EPA does not extrapolate these results
to the national level. The proposed iron and steel guidelines also will reduce pollutant loadings by 6 percent.
In addition, the analysis evaluates impacts on POTW operations and contamination of POTW
sludges. The analysis projects that no inhibition of POTW operations or sludge contamination problems will
occur at any of the POTWs. Because the analysis projects no impacts at POTWs, EPA does not extrapolate
these results to the national level.
8-4
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8.2.2.2 National Extrapolation
Extrapolating the modeling results of the sample set yields 67 iron and steel facilities discharging 56
pollutants to 61 POTWs with outfalls on 61 receiving streams.1 The analysis projects that extrapolated in-
stream pollutant concentrations will exceed only chronic aquatic life criteria or toxic effect levels in 7 percent
of the receiving streams (4 of the total 61) at current discharge levels. The iron and steel proposed guidelines
will eliminate excursions in 2 of the 4 receiving streams at proposed PSES discharge levels. The proposed
guidelines also will reduce pollutant loadings by 6 percent.
8.3 HUMAN HEALTH RISKS AND BENEFITS
8.3.1 Direct Discharging Facilities
Projections for the sample set show that the proposed iron and steel guidelines will reduce total
excess annual cancer cases from the ingestion of contaminated fish by l.OE-2 cases. The monetary value of
benefits to society from these avoided cancer cases ranges from $24,000 to $126,000 (1997 dollars).
Results, extrapolated to the national level, project a reduction of 2.0E-2 excess annual cancer cases and
monetized benefits ranging from $48,000 to 5252,000 (1997 dollars). The analysis projects that no excess
annual cancer cases will result from the consumption of contaminated drinking water. In addition, using the
estimated hazard calculated for each receiving stream, the analysis projects that the proposed guidelines will
eliminate the hazard to approximately 900 subsistence anglers and their families potentially exposed to
systemic toxicant effects from contaminated fish for both the sample set and the national extrapolation of
iron and steel facilities. The analysis projects no systemic toxicant effects from exposure to contaminated
drinking water.
Projections for the sample set also show that the proposed guidelines will reduce the ingestion of
lead-contaminated fish by children (ages 0-6) of sport and subsistence anglers at 39 receiving streams. The
analysis projects a potentially exposed population of 15,000 children. The monetary value of benefits to
society from avoided loss of IQ points (55.83 points) is $542,000 (1997 dollars). Results, extrapolated to the
'The national estimate for the number of iron and steel sites potentially affected by the proposed
regulation is 254 with 56 zero discharge sites, see Chapter 3.
8-5
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national level, project reductions for a potentially exposed population of 17,000 children at 46 receiving
streams, with monetary benefits from avoided loss of IQ points (57.26 points) estimated at $556,000 (1997
dollars). Additionally, ingestion of lead-contaminated fish by adult sport and subsistence anglers is reduced at
55 receiving streams. The analysis projects a potentially exposed population of 371,000 adults and neonates.
Based on the reductions in blood pressure (0.035 cases), as it relates to adult and neonatal premature
mortality, the monetary benefits to society from avoided mortality ranges from $83,000 to $435,000 (1997
dollars). Results, extrapolated to the national level, project reductions (0.036 cases) for a potentially exposed
population of 388,000 adults and neonates at 68 receiving streams, with monetary benefits estimated from
$86,000 to $451,000 (1997 dollars).
8.3.2 Indirect Discharging Facilities
,1
Projections for the sample set show that the proposed iron and steel guidelines will reduce total
excess annual cancer cases from the ingestion of contaminated fish by 3.0E-6 cancer cases. The monetary
value of benefits to society from these avoided cancer cases is less than $100 (1997 dollars). Results,
extrapolated to the national level, project a similar reduction in excess annual cancer cases and similar
monetized benefits. The analysis projects that no total excess annual cancer cases will result from the
consumption of contaminated drinking water. Projections also indicate no systemic toxicant effects from the
consumption of contaminated fish or drinking water.
Projections for the sample set also show that the proposed guidelines will reduce the ingestion of
lead-contaminated fish by children (ages 0-6) of sport and subsistence anglers at 4 receiving streams. The
analysis projects a potentially exposed population of 800 children. The monetary value of benefits to society
from avoided loss of IQ points (0.026 points) is $250 (1997 dollars). Results, extrapolated to the national
level, project reductions for a potentially exposed population of 1,000 children at 5 receiving streams, with
monetary benefits from avoided loss of IQ points (0.030 points) estimated at $290 (1997 dollars).
Additionally, the ingestion of lead-contaminated fish by adult sport and subsistence anglers is reduced at 24
receiving streams. The analysis projects a potentially exposed population of 352,000 adults and neonates.
Based on the reductions in blood pressure (3.6E-5 cases), as it relates to adult and neonatal premature
mortality, the monetary benefits to society from avoided mortality ranges from $85 to $450 (1997 dollars).
Results, extrapolated to the national level, project reductions (4.1E-5 cases) for a potentially exposed
8-6
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population of 542,000 adults and neonates at 37 receiving streams, with monetary benefits estimated from
$99 to $520 (1997 dollars).
8.4 ECOLOGICAL BENEFITS
The analysis projects ecological benefits resulting from improvements in recreational fishing habitats
for both direct and indirect wastewater discharges. According to the projections for the direct sample set,
the proposed regulation will completely eliminate in-stream concentrations in excess of aquatic life and human
health ambient water quality criteria (AWQC) in 2 streams receiving direct wastewater discharges. The
analysis estimates the monetary value of improved recreational fishing opportunities by first calculating the
baseline value of the receiving stream using a value per person-day of recreational fishing and the number of
person-days fished on the receiving stream. It then calculates the value of improving water quality in this
fishery, based on the increase in value to anglers of achieving contaminant-free fishing. The resulting
estimate of the increase in value of recreational fishing to anglers on the 2 improved receiving streams ranges
from $107,000 to $382,000 (1997 dollars). Results, extrapolated to the national level, project that the
proposed regulation will completely eliminate in-stream concentrations in excess of AWQC at 2 receiving
streams. The resulting estimate of the increase in value of recreational fishing to anglers ranges from
$109,000 to $389,000 (1997 dollars). In addition, the estimate of the nonuse (intrinsic) benefits to the
general public, as a result of the same improvements in water quality, ranges from at least $53,500 to
$191,000 (1997 dollars). Results, extrapolated to the national level, project an increase in nonuse values
ranging from $54,500 to $194,500 (1997 dollars). These nonuse benefits are estimated as one-half of the
recreational benefits and may be significantly underestimated.
Projections for the indirect sample set indicate that the proposed regulation will completely eliminate
in-stream concentrations in excess of aquatic life and human health AWQC in 1 receiving stream receiving
indirect wastewater discharges. The resulting estimate of the increase in value of recreational fishing to
anglers on the 1 improved receiving stream ranges from $81,000 to $289,000 (1997 dollars). Results,
extrapolated to the national level, project that the final regulation will completely eliminate in-stream
concentrations in excess of AWQC at 2 receiving streams. The resulting estimate of the increase in value of
recreational fishing to anglers ranges from $143,000 to $511,000 (1997 dollars). In addition, the estimate of
the nonuse (intrinsic) benefits to the general public, ranges from at least $40,500 to $144,500 (1997 dollars).
8-7
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Results, extrapolated to the national level, project an increase in nonuse values ranging from $71,500 to
$255,500 (1997 dollars). As with direct discharges, these nonuse benefits are estimated as one-half of the
recreational benefits and may be significantly underestimated.
The estimated benefit of improved recreational fishery opportunities is only a limited measure of the
value to society of the improvements in aquatic habitats expected to result from the regulation. Additional
benefits, which cannot be quantified in this assessment, include increased assimilation capacity of the
receiving stream, protection of terrestrial wildlife and birds that consume aquatic organisms, maintenance of
an aesthetically pleasing environment, and improvements to other recreational activities such as swimming,
water skiing, boating, and wildlife observation. Such activities contribute to the support of local and State
economies.
8.5 ECONOMIC PRODUCTIVITY BENEFITS
The analysis projects no potential economic productivity benefits from reduced sewage sludge
contamination and sewage sludge disposal costs at the POTWs receiving iron and steel discharges. No
sludge contamination problems are projected at any of the 43 POTWs receiving wastewater from 47 iron and
steel facilities.
8.6
POLLUTANT FATE AND TOXICITY
8.6.1 Direct Discharging Facilities
EPA identified 70 pollutants of concern (28 priority pollutants, 4 conventional pollutants, and 38
nonconventional pollutants) in waste streams from direct discharging iron and steel facilities. EPA evaluates
these pollutants to assess their potential fate and toxicity on the basis of known characteristics of each
chemical.
Most of the 70 pollutants have at least one known toxic effect. Using available physical-chemical
properties and aquatic life and human health toxicity data for these pollutants, the analysis determines that 23
8-8
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exhibit moderate to high toxicity to aquatic life, 16 are classified as known or probable human carcinogens,
39 are human systemic toxicants, 23 have drinking water values, and 28 are designated by EPA as priority
pollutants. In terms of projected partitioning among media, 16 of the evaluated pollutants are moderately to
highly volatile (potentially causing risk to exposed populations via inhalation), 25 have a moderate to high
potential to bioaccumulate in aquatic biota (potentially accumulating in the food chain and causing increased
risk to higher trophic level organisms and to exposed human populations via consumption of fish and
shellfish), 18 are moderately to highly adsorptive to solids, and 8 are resistant to biodegradation or are slowly
biodegraded.
8.6.2 Indirect Discharging Facilities
EPA also identified 66 pollutants of concern (27 priority pollutants, 35 nonconventional pollutants,
and 4 conventional pollutants) in waste streams from indirect discharging iron and steel facilities. EPA
evaluates these pollutants to assess their potential fate and toxicity on the basis of known characteristics of
each chemical.
Most of the 66 pollutants have at least one known toxic effect. Using available physical-chemical
properties and aquatic life and human health toxicity data for these pollutants, the analysis determines that 22
exhibit moderate to high toxicity to aquatic life, 15 are classified as known or probable carcinogens, 38 are
human systemic toxicants, 23 have drinking water values, and 27 are designated by EPA as priority
pollutants. In terms of projected environmental partitioning among media, 16 of the evaluated pollutants are
moderately to highly volatile, 22 have a moderate to high potential to bioaccumulate in aquatic biota, 16 are
moderately to highly adsorptive to solids, and 8 are resistant to biodegradation or are slowly biodegraded.
Evaluations do not include the impacts of the 4 conventional and 6 nonconventional pollutants when
modeling the effects of the proposed regulation on receiving stream water quality and POTW operations or
when evaluating the potential fate and toxicity of discharged pollutants. These pollutants are total suspended
solids (TSS), 5-day biological oxygen demand (BOD5), oil and grease (measured as hexane extractable
material [HEM] and silica gel-treated HEM), chemical oxygen demand (COD), total organic carbon (TOC),
total recoverable phenolics, total kjeldahl nitrogen, amenable cyanide, and weak acid dissociable cyanide. The
discharge of these pollutants may adversely affect human health and the environment. For example, habitat
8-9
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degradation may result from increased suspended paniculate matter that reduces light penetration, and thus
primary productivity, or from accumulation of sludge particles that alter benthic spawning grounds and
feeding habitats. Oil and grease can have lethal effects on fish by coating the surface of gills and causing
asphyxia, by depleting oxygen levels as a result of excessive BOD, or by reducing stream reaeration because
of surface film. Oil and grease can also have detrimental effects on waterfowl by destroying the buoyancy
and insulation of their feathers. Bioaccumulation of oily substances can cause human health problems
including tainting offish and bioaccumulation of carcinogenic polycyclic aromatic compounds. High COD
and BODj levels can deplete oxygen concentrations in water, which can result in mortality or other adverse
effects in fish. High TOC levels may interfere with water quality by causing taste and odor problems in the
water and mortality in fish.
8.7 DOCUMENTED ENVIRONMENTAL IMPACTS
This assessment also summarizes documented environmental impacts on aquatic life, human health,
and receiving stream water quality. The summaries are based on a review of reports, State 303(d) lists of
impaired waterbodies, and State fishing advisories.
States identified at least 17 impaired waterbodies, with industrial point sources as a potential source
of impairment, that receive direct discharges from iron and steel facilities (and other sources). States also
issued fish consumption advisories for 12 waterbodies that receive direct discharges from iron and steel
facilities (and other sources). The advisories are for mercury, an iron and steel pollutant of concern. Over
25 fish consumption advisories were issued for waterbodies that receive wastewater discharges from iron
and steel facilities. However, the vast majority of advisories are for chemicals that are not pollutants of
concern. In addition, EPA identified significant noncompliance (SNC) rates (most egregious violations under
each program or statute) for iron and steel facilities. Of the 27 integrated mills inspected in fiscal years (FY)
1996 and 1997, 96 percent were out of compliance with one or more statutes, and 65 percent were in SNC.
In FY 1998, of the 23 integrated mills inspected, 39.1 percent of the facilities were in SNC with their water
permits, 72.7 percent with air violations, and 30.4 percent with Resource Conservation and Recovery Act
(RCRA) violations. SNC rates for 91 mini-mills were 21.2 percent for air, 2.7 percent for water permits, and
4.5 percent for RCRA. Key compliance and environmental problems include groundwater contamination
from slag disposal, contaminated sediments from steelmaking, electric arc furnace dust, unregulated sources,
SNCs from recurring and single peak violations, and no baseline testing.
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8.8 SUMMARY OF POTENTIAL EFFECTS/BENEFITS FROM PROPOSED EFFLUENT
GUIDELINES
EPA estimates that the annual monetized benefits resulting from the proposed effluent guidelines will
range from $1.07 million to $2.61 million (1997 dollars). Table 8-1 summarizes these effects/benefits. The
range reflects the uncertainty in evaluating the effects of this proposed rule and in placing a monetary value
on these effects. The reported benefit estimate understates the total benefits expected to result under this
proposed rule. Additional benefits, which cannot be quantified in this assessment include improved ecological
conditions from improvements in water quality, improvements to other recreational activities, reduced
noncarcinogenic (systemic) human health hazards, additional health benefits due to reduced lead exposure,
reduced POTW costs, and reduced discharge of conventional and other pollutants.
8.9 REFERENCE
EPA. 2000. Environmental Assessment of the Proposed Effluent Limitations Guidelines and Standards for
the Iron and Steel Manufacturing Point Source Category. U.S. Environmental Protection Agency.
Washington, DC. EPA-821-B-00-009. October.
8-11
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Table 8-1
Summary of Potential Effects/Benefits from the
Proposed Effluent Guidelines for the Iron and Steel Industry'
(National Level)
Loadings (million
lbs/year)b
Number of in-stream
pollutant concentrations
that exceed Ambient
Water Quality Criteria
(AWQC)
Excess Annual Cancer
Cases'1
Population/Streams at
Risk to Lead Exposured
Population Exposed to
Systemic Effects'1
Total Monetized Benefits
Current Discharge
Levels
253.2
269 at 55 Receiving
Streams
0.31
948,000 at 104
Receiving Streams
900
-
Proposed BAT/PSES
Discharge Levels
197.6
175 at 51 Receiving
Streams
0.29
948,000 at 104
Receiving Streams
0
-
Summary
22 percent Reduction
4 Streams Become
"Contaminant Free"c
Recreational/Intrinsic
Monetized Benefits =
$0.38 to $1.35 million
0.02 Cases Reduced
Each Year
Monetized Benefits =
S0.05 to $0.25 million
Annual Benefits:
• Reduction of 0.036
Cases of Premature
Mortality
• Prevention of 57 IQ
Point Loss in children
Monetized Benefits =
$0.64 to $1.01 million
Health Effects to
Exposed Population are
Reduced
Monetized Benefits =
Unquantified
$1.07-52.61 million
(1997 dollars)
Modeled results represent 131 direct facilities discharging 60 pollutants to 100 receiving streams and 67
indirect facilities discharging 56 pollutants to 61 POTWs with outfalls on 61 receiving streams.
Loadings are representative of priority and nonconventional pollutants evaluated; 4 conventional and 6
nonconventional pollutants are not evaluated. Loadings account for POTW removals.
"Contaminant free" from iron and steel discharges; however, potential contamination from other point
sources and non-point sources is still possible.
Based on exposure through consumption of contaminated fish tissue.
8-12
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CHAPTER 9
COST-BENEFIT COMPARISON AND
UNFUNDED MANDATES REFORM ACT ANALYSIS
9.1 COST-BENEFIT COMPARISON
The pre-tax annualized cost ranges from $54.3 million to $59 million for the co-proposed options.
The pre-tax cost is a proxy for the social cost of the regulation because it incorporates the cost to industry
(post-tax costs), and costs to State and Federal governments (i.e., lost income from tax shields).1 In other
words, the cost part of the equation is well-identified and estimated.
The estimated quantified and monetized benefits of the rule range from $1.1 million to S2.6 million.
This, however, is an underestimate because EPA can fully characterize only a limited set of benefits to the
point of monetization. Chapter 8 focuses mainly on identified compounds with quantifiable toxic or
carcinogenic effects. This potentially leads to a large underestimation of benefits, since some significant
pollutant characterizations are not considered. For example, the analyses do not include the benefits
associated with reducing the paniculate load (measured as TSS), or the oxygen demand (measured as BOD,
and COD) of the effluents. TSS loads can degrade an ecological habitat by reducing light penetration and
primary productivity, and from accumulation of solid particles that alter benthic spawning grounds and
feeding habitats. BOD, and COD loads can deplete oxygen levels, which can produce mortality or other
adverse effects in fish, as well as reduce biological diversity. Finally, the benefits estimates do not include
improved POTW operations and reduced costs at POTWs. Therefore, the reported benefit estimate
understates the total benefits of this proposed rule.
'All sites are currently permitted and permits are reissued on a periodic basis, so incremental costs
administrative costs of the regulation are negligible.
9-1
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9.2 UNFUNDED MANDATES REFORM ACT ANALYSIS
Title II of the Unfunded Mandates Reform Act of 1995 (Public Law 104-4; UMRA) establishes
requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal
governments as well as the private sector. Under Section 202(a){l) of UMRA, EPA must generally prepare a
written statement, including a cost-benefit analysis, for proposed and final regulations that "includes any
Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate or
by the private sector" of annual costs in excess of $100 million.2 As a general matter, a federal mandate
includes Federal Regulations that impose enforceable duties on State, local, and tribal governments, or on the
private sector (Katzen, 1995). Significant regulatory actions require Office of Management and Budget
review and the preparation of a Regulatory Impact Assessment that compares the costs and benefits of the
action.
The proposed iron and steel industry effluent limitations guidelines are not an unfunded mandate on
state, local, or tribal governments because industry bears the cost of the regulation. The cost estimate to
industry does not exceed $100 million/year; hence, the proposed rule is not an unfunded mandate on industry.
EPA, however, is responsive to all required provisions of UMRA. In particular, the Economic Analysis (EA)
addresses:
• Section 202(a)(l)—authorizing legislation (Section 1 and the preamble to the rule);
• Section 202(a)(2)—a qualitative and quantitative assessment of the anticipated costs and
benefits of the regulation, including administration costs to state and local governments
(Sections 5 and 8);
• Section 202(a)(3)(A)—accurate estimates of future compliance costs (as reasonably
feasible; Section 5);
» Section 202(a)(3)(B)—disproportionate effects on particular regions or segments of the
private sector. EPA projects one iron and steel site to close as a result of the costs of the
proposed combination of options and one large company to move into a financially
distressed position but no disproportionate effects on a particular region or segments of the
private sector (Chapter 6);
• Section 202(a)(3)(B)—disproportionate effects on local communities. EPA projects one
iron and steel site to close as a result of the costs of the proposed combination of options
2 The $100 million in annual costs is the same threshold that identifies a "significant regulatory action" in
Executive Order 12866.
9-2
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and one large company to move into a financially distressed position but no disproportionate
effects on local communities (Chapter 6).
• Section 202(a)(4)—estimated effects on the national economy (Chapter 6);
• Section 205 (a)—least burdensome option or explanation required (this Chapter).
The preamble to the proposed Rule summarizes the extent of EPA's consultation with stakeholders including
industry, environmental groups, states, and local governments (UMRA, sections 202(a)(5) and 204).
Because this rule does not "significantly or uniquely" affect small governments, section 203 of UMRA does
not apply.
Pursuant to section 205(a)(l)-(2), EPA has selected the "least costly, most cost-effective or least
burdensome alternative" consistent with the requirements of the Clean Water Act (CWA) for the reasons
discussed in the preamble to the rule. EPA is required under the CWA (section 304, Best Available
Technology Economically Achievable (BAT), and section 307, Pretreatment Standards for Existing Sources
(PSES)) to set effluent limitations guidelines and standards based on BAT considering factors listed in the
CWA such as age of equipment and facilities involved, and processes employed. EPA is also required under
the CWA (section 306, New Source Performance Standards (NSPS), and section 307, Pretreatment
Standards for New Sources (PSNS)) to set effluent limitations guidelines and standards based on Best
Available Demonstrated Technology. EPA determined that the rule constitutes the least burdensome
alternative consistent with the CWA.
9.3 REFERENCES
Katzen. 1995. Guidance for implementing Title II of S.I., Memorandum for the Heads of Executive
Departments and Agencies from Sally Katzen, Ad, OIRA. March 31, 1995.
9-3
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APPENDIX A
COST ANNUALIZATION MODEL
Figure A-l provides an overview of the cost annualization model. Inputs to the model come from
three sources: 1) the capital, one-time non-equipment, and operating and maintenance (O&M) costs for
incremental pollution control developed by EPA, 2) financial data taken from the Collection of 1997 Iron and
Steel Industry Data, Part B: Financial and Economic Data (1997 Questionnaire; U.S. EPA, 1998), and 3)
secondary sources. The cost annualization model calculates four types of compliance costs for a site:
• Present value of expenditures—before-tax basis
• Present value of expenditures—after-tax basis
• Annualized cost—before-tax basis
• Annualized cost—after-tax basis
There are two reasons why the capital and O&M costs should be annualized. First, the initial capital
outlay should not be compared against a site's income in the first year because the capital cost is incurred
only once in the equipment's lifetime. That initial investment should be spread over the equipment's life.
Second, money has a time value. A dollar today is worth more than a dollar in the future; expenditures
incurred 15 years from now do not have the same value to the firm as the same expenditures incurred
tomorrow.
The cost annualization model is defined in terms of 1997 dollars because 1997 is the most recent
year for which financial data are available from the survey. Pollution control capital and operating and
maintenance costs are estimated in 1997 dollars and used to project cash outflows. The cash outflows are
then discounted to calculate the present value of future cash outflows in terms of 1997 dollars. This
methodology evaluates what a business would pay in constant dollars for all initial and future expenditures.
Finally, the model calculates the annualized cost for the cash outflow as an annuity that has the same present
value of the cash outflows and includes the cost of money or interest. The annualized cost is analogous to a
mortgage payment that spreads the one-time investment of a home into a defined series of monthly payments.
A-l
-------
Data Sources
Inputs
Outputs
Engineering
Incremental
Pollution Control
Costs
Secondary
Sources
Questionnaire
Capital Costs
One-Time
Non-Equipment Costs
Annual Costs
Cost Deflator to —
$1997
Depreciation Method
(MACRS)
Federal Tax Rate
State Tax Rate
Discount Rate
V V
Cost Annualization
Model
Taxes Paid
(Limitation on Tax Shield)
Tax Status
(Corporate or Personal)
Present Value
of Expenditures
Figure A-l
Cost Annualization Model
A-2
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Section A. 1 discusses the data sources for inputs to the cost annualization model. Section A.2
summarizes the financial assumptions in the model. Section A.3 presents all steps of the model with a sample
calculation.
A. 1 INPUT DATA SOURCES
A.1.1 EPA Engineering Cost Estimates
The capital, one-time non-equipment, and operating and maintenance (O&M) costs used in the cost
annualization model are developed by EPA's engineering staff. The capital cost is the initial investment
needed to purchase and install the equipment; it is a one-time cost. Unlike capital costs, a one-time non-
equipment cost cannot be depreciated because it is not associated with property that can wear out. An
example of such a cost is an engineering study that recommends improved operating parameters as a method
of meeting effluent limitations guidelines. No capital cost is associated with the plan's implementation. Such
one-time costs are expensed in their entirety in the first year of the model. The O&M cost is the annual cost
of operating and maintaining the equipment. O&M costs are incurred every year of the equipment's
operation.
A. 1.2 Questionnaire Data
The discount/interest rate is the either the weighted average cost of capital or the interest rate that a
site supplied in the 1997 Questionnaire—whichever is higher (as long as it falls between 3 and 19 percent). It
is used to calculate the present value of the cash flows. The discount rate represents an estimate of a site's
marginal cost of capital, i.e. what it will cost the site to raise additional money for capital expenditure whether
through debt (a loan), equity (sale of stock), or working capital (opportunity cost). The discount rate or
weighted cost of capital is calculated as:
Discount rate = (interest rate * % of capital raised through Interest) +
(equity rate * % of capital raised through equity {stock])
A-3
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For companies that do not use a discount rate, or provide a discount rate less than 3 percent or greater than
19 percent, the interest rate is used in the calculations. If no information was provided or if both the
discount and interest rates fall outside the 3 percent to 19 percent range,' the median discount rate is used in
the cost annualization model. The discount rate is assumed unaffected by the need to finance the purchase of
pollution control equipment in order to comply with the regulation; in other words, the capital structure of the
firm is assumed to be unchanged by the regulation (Brigham, 1997). Nineteen sites did not report either a
discount or an interest rate. These sites finance expenditures through working capital. For these sites, we
assign the median discount rate as the opportunity cost of capital.
Corporate structure is derived from survey data for the purpose of estimating tax shields on
expenditures. A C corporation (corporate structure = 1) pays federal and state taxes at the corporate rate.
An S corporation or a limited liability corporation (corporate structure = 3) distributes earnings to the partners
and the individuals pay the taxes. Unfortunately, we do not know either the number of individuals among
whom the earnings are distributed or the tax rate of those individuals. For the purpose of the analysis, the tax
rate for S corporations and limited liability corporations is presumed to be zero.2 All other entities (corporate
structure = 2) are assumed to pay taxes at the individual rate.
Taxable income is the business entity's earnings before interest and taxes (EBIT). The value sets the
tax bracket for the site.
Average taxes paid is calculated from the 1995, 1996, and 1997 taxes paid by the business entity. It
is used to limit the tax shield to the typical amount of taxes paid in any given year.
1 A rate less than 3 percent is suspiciously low given that, in 1997, banks charged a prime rate of 8.44
percent and the discount rate at the Federal Reserve Bank of New York was 5 percent (CEA, 1999). A rate
greater than 19 percent is more likely to be an internal "hurdle" rate—the rate of return desired in a project
before it will be undertaken. All but one of sites provided a discount rate that fell into the accepted range.
2The effect of this assumption is to assume there is no tax shield for S corporations and limited liability
corporations (LLCs). S corporations and LLCs will see no change in tax shield benefit because they do not
pay taxes. The persons to whom the income is distributed, however, will see the change in earnings due to
incremental pollution control costs; there is no tax shield benefit.
A-4
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A. 1.3 Secondary Data
The cost annualization model is developed in terms of constant 1997 dollars, so the discount/interest
rate must be adjusted for inflation before used in the model. That is, we need to change the discount rate
from the nominal value supplied in the questionnaire to the inflation-adjusted real value. Table A-l lists the
average inflation rate from 1987 to 1997 as measured by the Consumer Price Index. The 10-year average
inflation rate of 3,5 percent is used in the cost annualization model as the expected average inflation rate over
the 15-year life of the project to convert the nominal discount rate to a real discount rate. The nominal
discount rate is deflated to the real discount rate using the following formula (OMB, 1992):
Real Discount Rate = (1 + Nominal Discount Rate) -1
(1 + Expected Inflation Rate)
The median nominal discount rate for the industry (8.2 percent) is equivalent to a real discount rate of 4.5
percent using this formula.
Table A-2 lists each state's top corporate and individual tax rates and calculates national average state
tax rates (CCH, 1999a). The cost annualization model uses the average state tax rate because of the
complexities of the industry; for example, a site could be located in one state, while its corporate
headquarters are located in a second state. Given the uncertainty over which state tax rate applies to a given
site's revenues, the average state tax rate—rounded to three decimal points—is used in the cost annualization
model for all sites, i.e., 6.6 percent corporate tax rate and 5.6 percent personal tax rate.
The cost annualization model incorporates variable tax rates according to the type of business entity
and level of income to address differences between small and large businesses. For example, a large business
might have a combined tax rate of 40.6 percent (34 percent Federal plus 6.6 percent State). After tax
shields, the business would pay 59.4 cents for every dollar of incremental pollution control costs. A small
business, say a small sole proprietorship, might be in the 20.8 percent tax bracket (15 percent Federal plus
5.8 percent State). After tax shields, the small business would pay 79.2 cents for every dollar of
A-5
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Table A-l
Inflation Rate 1987-1997
Year
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
Average Inflation Rate
Consumer
Price
Index
113.6
118.3
124.0
130.7
136.2
140.3
144.5
148.2
152.4
156.9
160.5
Change
4.1%
4.8%
5.4%
4.2%
3.0%
3.0%
2.6%
2.8%
3.0%
2.3%
3.5%
Source: CEA, 1999, Table B-60.
A-6
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Table A-2
Stale Income Tax Rales
State •
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
M assachuselts
VI ichigan
V) innesota
Mississippi
Vl issourt
Montana
Nebraska
Nevada
New Hampshire
New Jersey
Slew Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island *
South Carolina
South Dakota
Tennesee
Texas
Utah
Vermont *
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Average:
Corporate Income
Tax Rate
5.00%
9.40%
8.00%
6.50%
6.65%
4.75%
7.50%
8.70%
5.50%
6.00%
6.40%
8.00%
4.80%
3.40%
12.00%
4.00%
8.25%
8.00%
8.93%
7.00%
9.50%
2.20%
9.80%
5.00%
6.25%
6.75%
7.81%
0.00%
8.00%
7.25%
7.60%
7.50%
7.50%
10.50%
S.50%
6.00%
6.60%
9.99%
9.00%
5.00%
6.00%
6.00%
0.00%
5.00%
9.75%
6.00%
0.00%
9.00%
7.90%
0.00%
6.58%
Basis tor States
With Graduated
Tax Tables
$90,000+
$100,000+
$100,000+
$250,000+
$250,000+
$200,000+
$250,000+
$10,000+
$50,000+
$lMillion+
$50,000+
$50,000+
$250,000+
Personal Income Tax
Upper Rate
5.00%
0.00%
5.04%
7.00%
9.30%
4.75%
4.50%
6.40%
0.00%
6.00%
8.75%
8.20%
3.00%
3.40%
8.98%
6.45%
6.00%
6.00%
8.50%
4.80%
5.95%
4.40%
8.00%
• 5.00%
6.00%
11.00%
6.99%
0.00%
0.00%
6.37%
8.20%
6.85% .
7.75%
12.00%
7.30%
7.00%
9.00%
2.80%
10.40%
7.00%
0.00%
0.00%
0.00%
7.00%
9.45%
5.75%
0.00%
6.50%
6.77%
0.00%
5.59%
Basts tor Mate!
With Graduate!
Tax Tables
$3,0004
$150,000-*
$25,000-1
$47,000
$10,000-1
$60.0004
$10,000-1
$40,000-1
$20,000-1
$52,000-t
$30,000-1
$8,000+
$50,000-*
$33,000-*
$3,000-1
$50,000-1
$i 0,000-1
$9,000-1
$71.000-*
$27,000-*
$75,000-1
$42,000-1
$20,0004
$60,000-*
$50,0004
$200,000-1
$5,000-1
$250,000-1
$12,000-1
$7.500-1
$250,000-1
$17,000-1
$60,000-1
$15,000-1
Notes: Basis for rates is reported to nearest $ 1,000.
Personal income tax rates for Rhode Island and Vermont based on federal tax (not taxable income).
Tax rates given here are equivalents for highest persona! federal tax rate.
Source: CCH, 1999a. 2000 State TaxHandbook. Chicago, 1L: CCH.
A-7
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incremental pollution control. The net present value of after-tax cost is used in the closure analysis because it
reflects the long-term impact on its income the business would actually experience.
All costs will be deflated to 1997 dollars, if necessary, for the cost annualization model. The
Construction Cost Index published by the weekly Engineering News Report, is the indexed used for this
purpose (ENR, 2000).
A J FINANCIAL ASSUMPTIONS
The cost annualization model incorporates several financial assumptions:
Depreciation method is the Modified Accelerated Cost Recovery System (MACRS).3
MACRS applies to assets put into service after December 31, 1986. MACRS allows
businesses to depreciate a higher percentage of an investment in the early years and a lower
percentage in the later years.
There is a six-month lag between the time of purchase and the time operation begins for the
pollution control equipment. A mid-year depreciation convention may be used for equipment
that is placed in service at any point within the year (CCH, 1999b, 1J1206). EPA chose to
use a mid-year convention in the cost annualization model because of its flexibility and the
likelihood that the equipment considered for pollution control could be built and installed
JEPA examined straight-line depreciation, Internal Revenue Code Section 169 and 179 provisions as well
as MACRS for depreciation. Straight-line depreciation writes off a constant percentage of the investment
each year. MACRS offers companies a financial advantage over the straight-line method because a
company's taxable income may be reduced under MACRS by a greater amount in the early years when the
time value of money is greater.
Section 169 provides an option to amortize pollution control equipment over a 5-year period (RIA,
1999). Under this provision, 75 percent of the investment could be rapidly amortized in a 5-year period using
a straight-line method. The 75 percent figure is based on the ratio of allowable lifetime (15 years) to the
estimated usable lifetime (20 years) as specified in Section 169, Subsection (f). Although the tax provision
enables the site to expense the investment over a shorter time period, the advantage is substantially reduced
because only 75 percent of the capital investment can be recovered. Because the benefit of the provision is
slight and sites might not get the required certification to take advantage of it, the provision was not included
in the cost annualization model.
EPA also considered the Section 179 provision to elect to expense up to $24,000 if the equipment is
placed into service in 2001 or 2002 (RIA, 1999). The deduction increased to $25,000 if the equipment is
placed into service in 2003 or later. EPA assumes that this provision is applied to other investments for the
business entity. Its absence in the cost annualization model may result in a slightly higher estimate of the
after-tax annualized cost for the site.
A-8
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within a year of initial investment. Because a half-year of depreciation is taken in the first
year, a half-year needs to be taken in the 16th year of operation. Consequently, the cost
annualization model spans a 16-year time period.
The pollution equipment has an operating lifetime or class life between 20 and 25 years. It is
considered 15-year property.
The depreciable life of the asset is based on, but is not equivalent to, the useful life of the asset. The
Internal Revenue Service (IRS) establishes different "classes" of property. For example, a race horse is 3-
year property. The Internal Revenue Code Section 168 classifies an investment as 15-year property if it has a
class life of 20 years or more but less than 25 years. Section 168(e)(3)(E) lists a municipal wastewater
treatment plant as an example of 15-year property (CCH, 1999b, 1J1240; RIA, 1999). The cost annualization
model, therefore, incorporates a 15-year depreciable lifetime. Thus, for the purpose of the calculating
depreciation, most components of the pollution control capital costs considered in this analysis would be 15-
year property. According to IRS requirements, pollution control equipment can be depreciated, but the total
cost of the equipment cannot be subtracted from income in the first year. In other words, the equipment
must be capitalized, not expensed (CCH, 1999b, 1J991; and RIA, 1999, Section 169).
A.3 SAMPLE COST ANNUALIZATION SPREADSHEET
In Table A-3, the spreadsheet contains numbered columns that calculate the before- and after-tax
annualized cost of the investment to the site. The first column lists each year of the equipment's life span,
from its installation through its 15-year depreciable lifetime.
Column 2 represents the percentage of the capital costs that can be written off or depreciated each
year. These rates are based on the MACRS and are taken from CCH (1999b). Multiplying these
depreciation rates by the capital cost gives the annual amount the site may depreciate, which is listed in
Column 3. Depreciation expense is used to offset annual income for tax purposes; Column 4 shows the
potential tax shield provided from the depreciation expense—the overall tax rate times the depreciation
amount for the year.
Column 5 is the annual O&M expense and the one-time non-equipment cost. In this example, Year 1
shows the one-time non-equipment investment cost ($10,000) plus six months of O&M ($1,000 •*• 2
A-9
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= $500) for a total of $10,500. Year 1 and Year 16 show only six months of O&M expenses because of
the mid-year convention assumption for depreciation. For Years 2 through 15, O&M is a constant
amount. Column 6 is the potential tax shield or benefit provided from expensing the O&M costs.
Column 7 lists a site's annual pre-tax cash outflow or total expenses associated with the
additional pollution control equipment. Total expenses include capital costs, assumed to be incurred
during the first year when the equipment is installed, any one-time non-equipment cost, plus each year's
O&M expense.
Column 8 is the adjusted tax shield. The potential tax shield is the sum of the tax shields from
depreciation (Column 4) and O&M/one-time costs (Column 6). If the potential tax shield for any year
exceeds the 3-year average taxes paid, the tax shield is limited to the average taxes paid by the company.
In Table A-3 example, the potential tax shield in Year 1 is $1,080 plus $2,268 = $3,348. The exceeds the
average taxes paid over the last three years ($2,333). Hence, the tax shield is limited to $2,333. The limit
is not invoked in any of the remaining years in the cost annualization model. This approach is
conservative in that the limit is applied every year when a company may opt to carry losses forward to
decrease tax liabilities in future years. An alternative approach is to limit the present value of the tax
shield to the present value of taxes paid for the 15-year period. Should the first approach appear to
overestimate cost impacts, the second approach may be examined as a sensitivity analysis.
Column 9 lists the annual cash outflow less the adjusted tax shield (Column 7 minus Column 8);
a site will recover these costs in the form of reduced income taxes. The sum of the 16 years of after-tax
expenses is $125,000 (1997 dollars), i.e., the sum of the capital expense ($1,000,000), the one-time
expense ($10,000) and 15 years of O&M ($15,000). The present value of these payments is $121,811
The present value calculation takes into account the time value of money and is calculated as:
Present Value of Cash Outflows =
cash outflow, year.
(1 + real discount rate)1
The exponent in the denominator is i-1 because the real discount rate is not applied to the cash outflow
in Year 1. The present value of the after-tax cash outflow is used in the closure analysis to calculate the
post-regulatory present value of future earnings for a site.
A-ll
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The present value of the cash outflow is transformed into a constant annual payment for use as
the annualized site compliance cost. The annualized cost is calculated as a 16-year annuity that has the
same present value as the total cash outflow in Column 9. The annualized cost represents the annual
payment required to finance the cash outflow after tax shields. In essence, paying the annualized cost
each year and paying the amounts listed in Column 8 for each year are equivalent. The annualized cost
is calculated as:
Annualized Cost = Present value of cash outflows * real discount rate
1 - (real discount rate + 1)""
where n is the number of payment periods. In this example, based on the capital investment of
$100,000, a one-time expense of $10,000, O&M costs of $1,000 per year, a tax rate of 21.6 percent, and
a nominal discount rate of 7 percent, the site's annualized cost is $9,983 on a pre-tax basis and $8,254 on
a post-tax basis.1
The pre-tax annualized cost is used in calculating the cost of the regulation. It incorporates the
cost to industry for the purchase, installation, and operation of additional pollution control equipment as
well as the cost to federal and state government from lost tax revenues. (Every tax dollar that a business
does not pay due to a tax shield is a tax dollar lost to the government.) Post-tax annualized costs are
used to shock the market model because they reflect the cost to industry.
A.4 REFERENCES
Brigham. 1997. Brigham, Eugene, F and Louis C. Gapenski. Financial management: theory and
practice. 8th edition. Chicago, IL: The Dryden Press.
CEA. 1999. Council of Economic Advisors. Economic report of the president. Washington, DC.
Tables B-60 and B-73.
CCH. 1999a. Commerce Clearing House, Inc. 2000 State tax handbook. Chicago, IL.
CCH. 1999b. Commerce Clearing House, Inc. 2000 U.S. master tax guide. Chicago, IL.
1 Note that post-tax annualized cost can be calculated in two ways. The first way is to
calculate the annualized cost as the difference between the annuity value of the cash flows
(Column 7) and the adjusted tax shield (Column 8). The second way is to calculate the annuity
value of the cash flows after tax shields (Column 9). Both methods yield the same result.
A-12
-------
ENR. 2000. Engineering News Record. Construction cost index.
OMB. 1992. Guidelines and discount rates for benefit-cost analysis of federal programs. Appendix A.
Revised circular No. A-94. October 29. Washington, DC: Office of Management and Budget.
RIA. 1999. The Research Institute of America, Inc. The complete internal revenue code. New York, NY.
July 1999 edition.
U.S. EPA. 1998. Collection of 1997 iron and steel industry data. OMB No. 2040-0193. Washington, DC:
U.S. Environmental Protection Agency, Office of Water.
A-13
-------
-------
Appendix B
Cross-reference Between NAICS and SIC Codes
1997 NAICS code
1997 NAICS
industry
description
Now, Existing
or
Revised
Industry
Proposed size
standard
($ million
or cmp #)
for NAICS
industry
Existing size
standard
($ million or
cmp #) for
SIC
activity
1987 SIC code
C =
part of
SIC code)
1987 SIC
industry
Sector 21 -Mining
Subsecior 212 - Mining (except Oil and Gas)
212111
21221
Bituminous Coal
and Lignite Surface
Mining
Iron Ore Mining
E
E
500
500
500
500
1221
1011
Bituminous Coal and
Lignite Surface Mining
Iron Ores
Sector 22 - Utilities
Subsector 221 - Utilities
22121
Natural Gas
Distribution
R
500
$5.0
500
$5.0
$5.0
$5.0
$5.0
*4923
'4924
4925
•4931
4932
*4939
Natural Gas Transmission
and Distribution
(distribution)
Natural Gas Distribution
Mixed, Manufactured, or
Liquefied Petroleum Gas
Production and/or
Distribution (natural gas
distribution)
Electronic and Other
Services Combined (natural
gas distribution)
Gas and Other Services
combined (natural gas
distribution)
Combination Utilities, NEC
(natural gas distribution)
B-l
-------
Appendix B (cent.)
Cross-reference Between NAICS and SIC Codes
1997 NAICS code
1997 NAICS
industry
description
New, Existing
or
Revised
Industry
Proposed size
standard
($ million
or cmp #)
for NAICS
industry
Existing size
standard
(S million or
emp #) for
SIC
activity
1987 SIC code
r-
partof
SIC code)
1987 SIC
industry
Sector 23 — Construction
Subsector 233 - Building, Developing and General Contracting
23321
Single Family Housing
Construction
R
$17.0
$17.0
$17.0
1521
*1531
General conttactors-Singlc-
Family Houses
Operative Builders (single-
family bousing construction)
Subsector 324 - Petroleum and Coal Products Manufacturing
32411
324199
Petroleum Refineries
All Other Petroleum
and Coal Products
Manufacturing
E
R
\4\ 1,500
500
\4\ 1,500
500
1,000
SubttCUr 315 - Chimlol M murmuring
32511
Petrochemical
Manufacturing
N
1,000
25132
Synthetic Organic Dye
and Pigment
Manufacturing
N
750
750
1,000
750
2911
2999
*33!2
Petroleum Refining
Products of Petroleum and
Coal, NEC
Blast Furnaces and Steel
Mils (coke ovens)
•2865
•2869
•2865
Cyclic Organic Crudes and
Intermediates, and Organic
Dyes and Pigments
(aromatics)
industrial Organic
Chemicals, NEC (aiiphatics)
Cyclic Organic Crudes and
Intermediates, and Organic
Dyes and Pigments (organic
dyes and pigments)
Subsector 331 - Primary Metal Manufacturing
331111
33121
33122!
Iron and Steel Mills
Iron and Steel Pipe and
Tube Manufacturing
from Purchased Steel
Cold-Rolled Steel
Shape Manufacturing
N
E
E
1,000
1,000
1,000
1,000
750
1,000
1,000
*3312
•3399
3317
3316
Steel Works, Blast Furnaces
(Including Coke Ovens),
and Rolling Mills (except
coke ovens not integrated
with steel milts)
Primary Metal Products,
NEC (ferrous powder, paste,
flakes, etc.)
Steel Pipe and Tubes
Cold-Rolled Steel Sheet,
Strip and Bars
B-2
-------
Appendix B (cont.)
Cross-reference Between NAICS and SIC Codes
1997 NAICS code
331222
33142!
331491
331492
1997 NAICS
industry
description
Steel Wire Drawing
Copper Rolling,
Drawing and Extruding
Nonfcrrous Metal
(except Copper and
Aluminum) Rolling,
Drawing and Extruding
Secondary Smelting,
Refining, and Allying
of Nonferrous Metal
(except Copper and
Aluminum)
New, Existing
or
Revised
Industry
R
E
R
N
Proposed size
standard
($ million
or emp tt)
for NAICS
industry
1,000
750
750
750
•
331511
331512
331513
Iron Foundries
Stcc! Investment
Foundries
Steel Foundries, (except
Investment)
R
E
E
500
500
500
Existing size
standard
($ million or
emp #) for
SIC
activity
1,000
750
750
750
500
750
500
500
500
500
1987 SIC code
C =
part of
SIC code)
*3315
3351
3356
•3313
•3341
•3399
3321
3322
3324
3325
1987 SIC
industry
Steel Wiredrawing and Steel
Nails and Spikes (steel wire
drawing)
Rolling, Drawing, and
Extruding of Copper
Rolling, Drawing and
Extruding of Nonfcrrous
Metals, Except Copper and
Aluminum
Electrometallurgies!
Products, Except Steel
(except copper and
aluminum)
Secondary Smelting and
Reining of Nonfcrrous
Metals (except copper and
aluminum)
Primary Metal Products,
NEC (except copper and
aluminum)
Gray and Ductile Iron
Foundries
Malleable Iron Foundries
Steel Investment Foundries
Steel Foundries, NEC
Subsector 332 - Fabricated Metal Product Manufacturing
332117
Powder Metallurgy Part
Manufacturing
N
500
500
•3499
Fabricated Metal Products,
NEC (powder)
U.S. EPA Headquarters Library
Mail code 3201
1200 Pennsylvania Avenue NW
Washington DC 20460
B-3
-------
Appendix B (cont.)
Cross-reference Between NAICS and SIC Codes
1997 NAICS code
332439
1997 NAICS
industry
description
Other Metal Container
Manufacturing
New, Existing
or
Revised
Industry
R
Proposed size
standard
($ million
or emp #)
for NAICS
industry
500
33251
Hardware Manufacturing
R
500
#
332618
Other Fabricated Wire
Product Manufacturing
R
500
332812
332813
332991
Metal Coaling,
Engraving (except
Jewelry and
Silverware), and Allied
Services to
Manufacturers
Electroplating, Plating,
Polishing, Anodizing
and Coloring
Ball and Roller Bearing
Manufacturing
R
R
E
500
500
750
Existing size
standard
(S million or
emp #) for
SIC
activity
500
500
500
500
750
500
500
1,000
750
500
500
750
500
750
1987 SIC code
(* =
part of
SIC code)
3412
•3429
•3444
•3499
*3537
•3429
•3499
•3315
*3399
3496
•3479
•3399
3471
3562
1987 SIC
industry
Metal Shipping Barrels,
Drums, Kegs, and Pails
Hardware, NEC (vacuum
and insulated bottles, jugs,
and chests)
Sheet Metal Work (metal
bins and vats)
Fabricated Metal Products,
NEC (metal boxes)
Industrial Trucks, Tractors,
Trailers, and Stackers (metal
air cargo containers)
Hardware, NEC (hardware,
except hose nozzles, and
vacuum and insulated
bottles, jugs and chests)
Fabricated Metal Products,
NEC (safe and vault locks)
Steel Wiredrawing and Steel
Nails and Spikes (nails,
spikes, paper clips and wire
not made in wiredrawing
plants)
Primary Metal Products,
NEC (nonferrous nails,
brads, staples, etc.)
Miscellaneous Fabricated
Wire Products
Coating, Engraving, and
Allied Services, NEC
(except jewelry, silverware,
and flatware engraving and
etching)
Primary Metal Products,
NEC (laminating steel)
Electroplating, Plating,
Polishing, Anodizing, and
Coloring
Ball and Roller Bearings
B-4
-------
Appendix B (cont.)
Cross-reference Between NAICS and SIC Codes
1997 NAICS code
1997 NAICS
industry
description
New, Existing
or
Revised
Industry
Proposed size
standard
(S million
or emp #)
for NAICS
industry
Existing size
standard
($ million or
cmp #) for
SIC
activity
1987 SIC code
(* =
part of
SIC code)
1987 SIC
industry
Subsector 333 - Machinery Manufacturing
333319
Other Commercial and
Service Industry
Machinery
Manufacturing
R
500
33361S
Other Engine
Equipment
Manufacturing
R
1,000
500
500
500
750
1,000
750
•3559
3589
•3599
*3699
•3519
*3699
Special Industry Machinery,
NEC (automotive
maintenance equipment)
Service Industry Machinery,
NEC
Industrial and Commercial
Machinery and Equipment,
NEC (carnival amusement
park equipment)
Electrical Machinery,
Equipment and Supplies,
NEC (electronic teaching
machines and flight
simulators)
Internal Combustion
Engines, NEC (except
stationary engine radiators)
Electrical Machinery,
Equipment and Supplies,
NEC (outboard electric
motors)
Subsector 334 — Computer and Electronic Product Manufacturing
334413
Semiconductor and
Related Device
E
500
500
3674
Semiconductors and Related
Devices
Subsector 339 — Miscellaneous Manufacturing
33991 1
Jewelry (except
Costume)
Manufacturing
R
500
500
500
•3469
*3479
Metal Stamping. NEC
(stamping coins)
Coating, Engraving, and
Allied Services, NEC
(jewelry engraving and
etching, including precious
metal)
B-5
-------
Appendix B (cont.)
Cross-reference Between NAICS and SIC Codes
1997 NAICS code
1997 NAICS
industry
description
New, Existing
or
Revised
Industry
Proposed size
standard
($ million
or cmp #)
for NAICS
industry
Existing size
standard
($ million or
emp #) for
SIC
activity
1987 SIC code
(* =
part of
SIC code)
1987 SIC
industry
Sector 42 - Wholesale Trade
Subsector 421 - Wholesale Trade, Durable Goods
4215!
42193
Metal Service Centers
and Offices
Recyclable Material
Wholesalers
E
E
100
100
100
100
5051
5093
Metals Service Centers and
Offices
Scrap and Waste Materials
Subsector 422 - Wholesale Trade, Nondurable Goods
42251
Grain and Field Bean
Wholesalers
E
100
100
5153
Grain and Field Beans
Sector 55 — Management of Companies and Enterprises
Subsector 551 - Management of Companies and Enterprises
551111
551112
Offices of Bank Holding
Companies
Offices of Other Holding
Companies
E
E
$5.0
$5.0
$5.0
$5.0
6712
6719
Offices of Bank Holding
Companies
Offices of Holding
Companies, NEC
Source: Federal Register, 22 October 1999
B-6
-------
APPENDIX C
COST-EFFECTIVENESS ANALYSIS
C.I INTRODUCTION
This cost-effectiveness (CE) analysis presents an evaluation of the technical efficiency of pollutant
control options for the proposed effluent limitations guidelines and standards for the iron and steel
manufacturing point source category based on Best Available Technology Economically Achievable (BAT)
and Pretreatment Standards for Existing Sources (PSES). BAT standards set effluent limitations on toxic and
nonconventional pollutants for direct dischargers prior to wastewater discharge directly into a water body
such as a stream, river, lake, estuary, or ocean. Indirect dischargers send wastewater to publicly owned
treatment works (POTW) for further treatment prior to discharge to U.S. surface waters; PSES set
limitations for indirect dischargers on toxic and nonconventional pollutants which pass through a POTW.
Section C.2 discusses EPA's cost-effectiveness methodology and identifies the pollutants included in
the analysis. This section also presents EPA's toxic weighting factors for each pollutant and discusses
POTW removal factors for indirect dischargers. Section C.3 presents the cost-effectiveness analysis.
Section C.4 contains supplementary data tables while Section C.5 lists references.
C.2 COST-EFFECTIVENESS METHODOLOGY
C.2.1 Overview
Cost-effectiveness is evaluated as the incremental annualized cost of a pollution control option in an
industry or industry subcategory per incremental pound equivalent of pollutant (i.e., pound of pollutant
adjusted for toxicity) removed by that control option. EPA uses the cost-effectiveness analysis primarily to
compare the removal efficiencies of regulatory options under consideration for a rule. A secondary and less
effective use is to compare the cost-effectiveness of the proposed options for the iron and steel
manufacturing industry to those for effluent limitation guidelines and standards for other industries.
C-l
-------
To develop a cost-effectiveness study, the following steps must be taken to define the analysis or
generate data used for calculating values:
" Determine the pollutants effectively removed from the wastewater.
• For each pollutant, identify die toxic weights and POTW removal factors. (The first adjusts
the removals to reflect the relative toxicity of the pollutants while the second reflects the
ability of a POTW or sewage treatment plant to remove pollutants prior to discharge to the
water. These are described in Sections C.2.2 and C.2.3.)
• Define the regulatory pollution control options.
• Calculate pollutant removals for each pollution control option.
• Calculate the product of the pollutant removed (in pounds), the toxic weighting factor, and
the POTW removal factor. The resultant removal is specified in terms of "pound-
equivalents" removed.
« Determine the annualized cost of each pollution control option.
• Rank the pollution control options in order of increasing pound equivalents removed.
• Identify and delete from consideration ineffective options.
• Calculate incremental CE for remaining options.
Table C-l presents the pollutants, their toxic weights, and POTW removal factors used in the CE
calculations.
C.2.2 Toxic Weighting Factors
Cost-effectiveness analyses account for differences in toxicity among the pollutants using toxic
weighting factors. Accounting for these differences is necessary because the potentially harmful effects on
human and aquatic life are specific to the pollutant. For example, a pound of zinc in an effluent stream has a
significantly different, less harmful effect than a pound of PCBs. Toxic weighting factors for pollutants are
derived using ambient water quality criteria and toxicity values. For most industries, toxic weighting factors
are developed from chronic freshwater aquatic criteria. In cases where a human health criterion has also
been established for the consumption of fish, the sum of both the human and aquatic criteria are used
C-2
-------
Table C-l
Toxic Weighting Factors and POTVV Removal Factors for Pollutants
Pollutant Name
1,2,3,4,6,7,8-Hcptachlorodibenzofuran
1,2,3,4,7,8-Hcxachlorodibcnzofuran
1,2,3 A7,8-Hcxachlorodibcnzofuran
1 ,2,3,7,8-Pentachlorodibcnzofuran
2-Methylnaphthalcnc
2-Phcnylnaphthalcnc
2,3,4,6,7,8-Hcxachlorodibenzofiiran
2,3,4,7,8-Pentachlorodibcnzofuran
2,3,7 ,8-Tetrachlorodibcnzofuran
2,4-Dimcthylphcnol
4-Nitrophenol
Acetone
alpha-Tcrpineol
Aluminum
Ammonia As Nitrogen (NH3-N)
Aniline
Antimony
Arsenic
Barium
Benzene
Bcnzo(a)anthraccne
Bcnzo(a)pyrenc
Benzo(b)fluoranthenc
Benzo(k)fluoranthcne
Bis(2-«thylhcxyl) Pbthalate
Boron
Cadmium
Chromium
Chromium, Hcxavalcnt
Chrysene
Cobalt
Copper
Dibcnzofuran
Fluoranthcnc
Fluoride
• Kcxanoic Acid
Iron
Lead
Magnesium
Manganese
Mercury
Molybdenum
Naphthalene
n-Decane
n-Dodecane
• n-Eicosanc
n-Hexadccane
Nickel
Nitrate/Nitrite (NO2 + NO3-N)
n-Octadccanc
o-Crcsol
o-Toluidine
p-Cresol
Phcnanthrcnc
Phenol
Pyrcnc
Pyridine
Selenium
Silica Gel Treated-HEM (SOT-HEM)
Silver
Thallium
Thiocyanatc
Tin
Titanium
Total Cyanide
Vanadium
Zinc
Toxic
Weighting-
Factor
6.70E+05
6.70E+06
6.70E+06
3.30E+06
8.00E-02
1.50E-01
6.70E+06
3.30E+07
6.70E-HJ6
5.30E-03
9.40E-03
5.00E-06
1.10E-03
6.40E-02
1.80E-03
1.40E+00
4.80E-03
3.50E-I-00
2.00E-03
I.80E-02
1.80E+02
4.30E+03
4.20E-H)2
4.20E+01
4.20E+01
1.80E-01
2.60E+00
7.60E-02
5.10E-01
2.10E+00
1.IOE-OI
6.30E-01
2.00E-01
7.00E-OI
3.50E-02
3.70E-04
5.60E-03
2.20E+00
8.70E-04
7.00E-02
1.20E+02
2.00E-01
I.50E-02
4.30E-03
4.30E-03
4.30E-03
4.30E-03
I.10E-01
6.20E-05
4.30E-03
2.70E-03
1.30E-01
4.00E-03
2.90E-OI
2.80E-02
1.10E-01
1.30E-03
K10E+00
1.60E+01
l.OOE+00
3.00E-01
2.90E-02
1.10E+00
6.20E-01
4.70E-02
POTW
Removal
Factor
0%
0%
0%
0%
28%
85%
0%
0%
0%
51%
0%
95%
94%
91%
39%
93%
67%
66%
55%
95%
98%
95%
93%
93%
93%
24%
90%
80%
6%
97%
10%
84%
98%
42%
54%
S4%
82%
77%
14%
36%
90%
19%
95%
9%
95%
92%
71%
51%
90%
71%
53%
84%
72%
95%
95%
84%
95%
34%
87%
88%
50%
70%
43%
92%
70%
8%
79%
C-3
-------
to derive toxic weighting factors. The factors are standardized by relating them to a "benchmark" toxicity
value, which was based on the toxicity of copper when the methodology was developed.1
Examples of the effects of different aquatic and human health criteria on freshwater toxic weighting
factors are presented in Table C-2. As shown in this table, the toxic weighting factor is the sum of two
criteria-weighted ratios: the former benchmark copper criterion divided by the human health criterion for the
particular pollutant and the former benchmark copper criterion divided by the aquatic chronic criterion. For
example, using the values reported in Table C-2, four pounds of the benchmark chemical (copper) pose the
same relative hazard in freshwater as one pound of cadmium because cadmium has a freshwater toxic weight
four times greater than the toxic weight of copper (2.6 divided by 0.63 equals 4.13).
C.2.3 POTW Removal Factors
Calculating pound equivalents for direct dischargers differs from calculating for indirect dischargers
because of the ability of POTWs to remove certain pollutants. The POTW removal factors are used as
follows: If a facility is discharging 100 pounds of chromium in its effluent stream to a POTW and the POTW
has a 80 percent removal efficiency for chromium, then the chromium discharged to surface waters is only
20 pounds (1 minus 0.8 equals 0.2). If the regulation reduces chromium discharged in the effluent stream to
the POTW by 50 pounds, then the amount discharged to surface waters is calculated as 50 pounds multiplied
by the POTW removal factor (50 pounds times 0,2 equals 10 pounds). The cost-effectiveness calculations
then reflect the fact that the actual reduction of pollutant discharged to surface water is not 50 pounds (the
change in the amount discharged to the POTW), but 10 pounds (the change in the amount actually
discharged to surface water). A pollutant discharge that is unaffected by the POTW has a removal factor of
1.
1 Although the water quality criterion has been revised (to 9.0 |ig/l), all cost-effectiveness analyses for effluent
guideline regulations continue to use the former criterion of 5.6 ng/I as a benchmark so that cost-effectiveness
values can continue to be compared to those for other effluent guidelines. Where copper is present in the
effluent, the revised higher criterion for copper results in a toxic weighting factor for copper of 0.63 rather than
1.0.
C-4
-------
TABLE C-2
EXAMPLES OF TOXIC WEIGHTING FACTORS
BASED ON COPPER FRESHWATER CHRONIC CRITERIA
Pollutant
Copper*
Cadmium
Naphthalene
Human Health
Criteria
(ug/1)
1,200
84
21,000
Aquatic
Chronic
Criteria (ug/1)
9.0
2.2
370
Weighting Calculation
5.6/1,200 + 5.6/9.0
5.6/84 + 5.6/2.2
5.6/21,000 + 5.6/370
Toxic
Weighting
Factor
0.63
2.6
0.015
* The water quality criterion has been revised (to 9.0 ug/1). Formerly, the weighting factor calculation led
to a result of 0.47 as a toxic weighting factor for copper.
Notes: Human health and aquatic chronic criteria are maximum contamination thresholds. Units for
criteria are micrograms of pollutant per liter of water.
C-5
-------
C.2.4 Pollutant Removals And Pound-equivalent Calculations
The pollutant loadings have been calculated for each facility under each regulatory pollution
control option for comparison with baseline (i.e., current practice) loadings. Pollutant removals are
calculated simply as the difference between current and post-treatment discharges. These pollutant
removals are converted into pound equivalents for the cost-effectiveness analysis. For direct
dischargers, removals in pound equivalents are calculated as:
Removals = Removals^^ x Toxic weighting factor
For indirect dischargers, removals in pound equivalents are calculated as:
Removals = Removals ^ x Toxic weighting factor x POTW removal factor
Total removals for each option are then calculated by adding up the removals of all pollutants included
in the cost-effectiveness analysis for a given subcategory.
C.2.5 Calculation Of Incremental Cost-effectiveness Values
Cost-effectiveness ratios are calculated separately for direct and indirect dischargers and by
subcategory. Within each of these many groupings, the pollution control options are ranked in
ascending order of pound equivalents removed. The incremental cost-effectiveness value for a
particular control option is calculated as the ratio of the incremental annual cost to the incremental pound
equivalents removed. The incremental effectiveness may be viewed primarily in comparison to the
baseline scenario and to other regulatory pollution control options. Cost-effectiveness values are
reported in units of dollars per pound equivalent of pollutant removed:
For the purpose of comparing cost-effectiveness values of options under review to those of
other promulgated rules, compliance costs used in the cost-effectiveness analysis are adjusted to 1981
dollars using
C-6
-------
Engineering News Records Construction Cost Index (CCI), see ENR 2000. The adjustment factor is
calculated as follows:
Adjustment factor = 1981 CCI/1997 CCI = 3535/5826 = 0.607
The equation used to calculate incremental cost-effectiveness is:
CE _ATCk-ATCVl
k PE, - PE, ,
where:
CEk= Cost-effectiveness of Option k
ATCk= Total annualized treatment cost under Option k
PEk= Pound equivalents removed by Option k
Cost-effectiveness measures the incremental unit cost of pollutant removal of Option k (in pound equivalents) in
comparison to Option k-1. The numerator of the equation, ATCk minus ATCM, is simply the incremental
annualized treatment cost in moving from Option k-1 (an option that removes fewer pound equivalents of
pollutants) to Option k (an option that removes more pound equivalents of pollutants). Similarly, the denominator
is the incremental removals achieved in going from Option k-1 to k.
C.3 COST-EFFECTIVENESS ANALYSIS
Chapter 5 presents the options and costs for each of the subcategories. Pre-tax annualized costs
are used in the CE calculations. Section C.4 contains the supplementary pound and pound-equivalent
tables for the analysis. The total pounds removed in these tables may differ from those presented in the
Technical Development Document because the costs and removals for sites projected to close prior to
the implementation of the rule have been deleted from the analysis. For a site which is projected to close
as a result of the rule, the compliance costs are included but the removals are the entire discharge of the
site.
C-7
-------
C.3.1
Subcategory Cost-effectiveness
Table C-3 shows the incremental CE tables for direct (BAT) and indirect (PSES) dischargers in
all subcategories that regulate toxic and nonconventional pollutants. That is, the "other operations"
subcategory considers the removal of only conventional pollutants and is not included in Table C-3. For BAT
cokemaking, the cost ranges from $ 10 to $38,300 per pound-equivalent. For PSES cokemaking, the CE
ranges from $39 to $729 per pound-equivalent. The non-integrated steelmaking and hot-forming operations
for direct discharging stainless steel processors is the only other segment or category with more than one
option. In this case, the CE ranges from $35 to $439,945 per pound-equivalent. AH other subcategories have
one BAT and one PSES option.
C.3.2
Industry Cost-effectiveness
Tables C-4, C-5a, and C-5b list the incremental annualized cost and the incremental removals for
the proposed options for each subcategory. The incremental values are totals to provide the industry cost-
effectiveness ratios. Table C-5 has two parts because EPA is co-proposing two options for PSES
cokemaking. Table C-5a shows industry cost-effectiveness with cokemaking PSES 1 while the Table C-5b
shows industry cost-effectiveness with cokemaking PSES 3. For BAT, the industry CE ratio is $66 per
pound-equivalent. For PSES, the industry CE ratio ranges from $40 to $53 per pound-equivalent.
Tables C-6 and C-7 summarize the cost-effectiveness of the proposed options for the iron and steel
manufacturing industry relative to that of other industries for direct and indirect dischargers, respectively.
C.4
SUPPLEMENTAL TABLES
Tables C-8 to C-15 present pollutant removals for all options for direct dischargers. Tables C-16
through C-23 show pollutant removals for indirect dischargers. Baseline loads for each subcategory are
illustrated in Tables C-24 through C-3 9. All tables in this section present pounds removed and pound
equivalents removed.
Co
-o
-------
C.5
REFERENCES
Engineering News Record. 2000. Construction cost index history, 1907-2000. Engineering News Record.
March 27.
C-9
-------
Table C-3
Results of Cost-Effectiveness Analyses by Subcategory
Subcategory
Segment
Cokemaking
Ironmaking
Integrated Steelmaking
Integrated and
Stand-Alone Hot-
Forming
Non-Integrated
Steelmaking and Hot-
Forming
Steel Finishing
Carbon
Stainless
Carbon
Stainless
Carbon
Stainless
Carbon
Stainless
Carbon
Stainless
Regulatory
Option
BAT1
BAT 2
BAT 3
BAT 4
PSES1
PSES2
PSES3
PSES4
BAT1
PSES 1
BAT1
PSES1
BAT1
PSES1
PSES1
BAT1
BAT1
BAT 2
PSES1
PSES1
BAT1
BAT1
PSES1
PSES 1
Pre-Tax Annualized
Costs
(Millions of $1997)
$0.93
$4.21
$8.56 •
$15.22
$0.29
$2.22
$4.98
$8.50
$5.19
$0.17
$4.85
$0
$27.47
$0.08
$0.23
$3.98
$0.11
$0.87
$0.64
$0.03
$3.43
$0.20
$1.80
$0.56
Pollutant Removals
(Pound Equivalents)
56,329
71,192
147,546
147,648
3,398
5,614
48,511
51,441
61,883
1,168
102,645
0
87,200
148
11
39,092
1,873
1,874
42
1,779
16,563
69,732
372
650
Pre-Tax Incremental Cost-
Effectiveness ($1981 Per
Pound-Equivalent Removed)
$10
$134
$35
$38,300
$52
1
$527
$39
$729
$51
$90
$29
$0
$391
$319
$12,041
$62
$35
$439,945
$9,124
$11
$126
$2
$2,929
$525
C-10
-------
Table C-4
Incremental Cost-Effectiveness of Pollutant Control Options
Iron and Steel Manufacturing Point Source Category
Direct Dischargers
Subcategory
Segment
Cokemaking
Ironmaking
Integrated Steelmaking
Integrated Steelmaking
and Hot-Forming
Non-Integrated
Steel Finishing
Carbon
Stainless
Carbon
Stainless
Carbon
Stainless
Industry Total
Incremental
Pre-Tax
Annualized Cost
(Millions of
$1997)
$4.35
$5.19
$4.85
$27.47
$0
$3.98
$0.11
$3.43
$0.20
$49.58
Pound
Equivalents
Removed
76,354
61,883
102,641
87,200
0
39,092
1,873
16,563
69,732
455,338
Cost-Effectiveness
($1981/Pound
Equivalents)
$35
$51
$29
$191
No Regulation
$62
$35
$126
$2
$66.08
C-ll
-------
Table C-5a
Incremental Cost-Effectiveness of Pollutant Control Options
Iron,and Steel Manufacturing Point Source Category
Indirect Dischargers- Cost Combination A
Subcategory
Segment
Cokemaking
Ironmaking
Integrated Steelmaking
Integrated Steelmaking
and Hot-Forming
Non-Integrated
Steel Finishing
Carbon
Stainless
Carbon
Stainless
Carbon
Stainless
Industry Total
Incremental
Pre-Tax
Annualized Cost
(Millions of
$1997)
$0.29
$0.17
SO
$0.08
$0
$0
$0.03
$0
$0
$0.57
Pound
Equivalents
Removed
3,398
1,168
0
148
0
0
1,779
0
0
6,493
Cost-Effectiveness
($1981/Pound
Equivalents)
$52
$90
No Regulation
$319
No Regulation
No Regulation
$11
No Regulation
No Regulation
$53.27
C-12
-------
Table C-Sb
Incremental Cost-Effectiveness of Pollutant Control Options
Iron and Steel Manufacturing Point Source Category
Indirect Dischargers- Cost Combination B
Subcategory
Segment
Cokemaking
Ironmaking
Integrated Steelmaking
Integrated Steelmaking
and Hot-Forming
Non-Integrated
Steel Finishing
Carbon
Stainless
Carbon
Stainless
Carbon
Stainless
Industry Total
Incremental
Pre-Tax
Annualized Cost
(Millions of
$1997)
S2.76
$0.17
$0
$0.08
$0
SO
$0.03
SO
$0
$3.04
Pound
Equivalents
Removed
42,897
1,168
0
148
0
0
1,779
0
0
45,992
Cost-Effectiveness
(S/1981 Pound
Equivalents)
$39
$90
No Regulation
$319
No Regulation
No Regulation
$11
No Regulation
No Regulation
S40.ll
C-13
-------
TABLE C-6
INDUSTRY COMPARISON OF BAT COST-EFFECTIVENESS
FOR DIRECT DISCHARGERS
(Tonic and Noncpnventional Pollutants Only; Copper-Based Weights'; S 1981)
Industry
Aluminum Forming
Battery Manufacturing
Can making
Centralized Waste Treatment'
Coal Mining
Coil Coating
Copper Forming
Electronics I
Electronics 11
Foundries
Inorganic Chemicals I
Inorganic Chemicals II
Iron & Steel
Leather Tanning
Metal Finishing
Metal Products and Machinery*
Nonferrous Metals Forming
Nonferrous Metals Mfg I
Nonferrous Metals Mfg II
Oil and Gas: Offshore"
Coastal— Produced Water/TWC
Drilling Waste
Organic Chemicals
Pesticides
Pharmaceuticals' A/C
B/D
Plastics Molding & Forming
Porcelain Enameling
Petroleum Refining
Pulp & Paper1
Textile Mills
TEC: TB/CHEM&PETR
TT & RT/CHEM&PETR
Pound Equivalents
Currently Discharged
(thousands)
1,340
4,126
12
3,372
BAM3PT
2,289
70
9
NA
2,308
32,503
605
1,740
259
3,305
140
34
6,653
1,004
3,809
951
BAT = Current Practice
54,225
2,461
897
90
44
1,086
BAT=BPT
61,713
BAT=BPT
BAT=BPT
1
Pound Equivalents
Remaining at Selected
Option
(thousands)
90
5
0.2
1,261-1,267
BAT=BPT
9
8
3
NA
39
1,290
27
1,214
112
3,268
70
2
313
12
2,328
239
BAT = Current Practice
9,735
371
47
0.5
41
63
BAT=BPT
2,628
BAT=BPT
BAT=BPT
ND
Cost-Effectiveness of
Selected Option(s)
($/ Pound Equivalents
removed)
121
2
10
5-7
BAT=BPT
49
27
404
NA
84
<1
6
66
BAT=BPT
12
50
69
4
6
33
35
BAT = Current Practice
5
14
47
96
BAT=BPT
6
BAT=BPT
39
BAT=BPT
BAT=BPT
323
'Although toxic weighting factors for priority pollutants varied across these rules, this table reflects the cost-effectiveness at the time of regulation.
'Produced water only; for produced sand and drilling fluids and drill cuttings, BAT=NSPS.
ND: Nondiscloscd due to business confidentiality.
C-14
-------
TABLE C-7
INDUSTRY COMPARISON OF PSES COST-EFFECTIVENESS
FOR INDIRECT DISCHARGERS
(Toxic and Nonconventional Pollutants Only; Copper-Based Wei-ghts'; S 1981)
Industry'
Aluminum Forming
Battery Manufacturing
Canmaking
Centralized Waste Treatment'
Coal Mining
Coil Coating
Copper Penning
Electronics I
Electronics II
Foundries
Inorganic Chemicals I
Inorganic Chemicals II
Iron & Steel
Leather Tanning
Metal Finishing
Metal Products and Machinery
Nonferrous Metals Forming
Nonferrous Metals Mfg I
Nonferrous Metals Mfg II
Organic Chemicals
Pesticide Manufacturing
Pesticide Formulating
Pharmaceuticals'
Plastics Molding & Forming
Porcelain Enameling
Pulp & Paper*
Transportation Equipment Cleaning
Pound Equivalents
Currently Discharged
(To Surface Waters)
(thousands)
1,602
1,152
252
689
NA
2,503
934
75
260
2,136
3,971
4,760
74
16,830
11,680
1,115
189
3,187
38
. 5,210
257
7,746
340
NA
1,565
9,539
81
Pound Equivalents
Discharged at Selected
Option (To Surface
Waters)
(thousands)
18
5
5
328-330
NA
10
4
35
24
18
3,004
6
22-68
1,899
755
234
5
19
0.41
72
19
112
63
NA
96
103
43
Cost-Effectiveness of
Selected Option(s)
Beyond BPT
($/Pound Equivalents
removed)
155
15
38
70-110
NA'
10
10
14
14
116
9
<1
40-53
111
10
127
90
IS
12
34
18
<3
1
NA
14
65
148
'Although toxic weighting factors for priority pollutants varied across these rules, this table reflects the cost-effectiveness at the time of
regulation,
'No known indirect dischargers at this time for offshore oil and gas and coastal oil and gas.
'Proposed.
C-15
-------
TaWeC-8
Pollutant Removals
Cokemaking Subcategory
Direct Dischargers
Pounds Removed
Chemical Name
2,4-Dimethylphenol
2-Methylnaphthalene
2-Phenylnaphthalene
Acetone
Ammonia As Nitrogen (NH3-N)
Aniline
Arsenic
Benzene
Benzo(a)anthracene
Benzo(a)pyrene
Benzo(b)fluorantf]ene
Benzo(k)fluoranthene
Boron
Chrysene
Dibenzofwan
Fhioranthene
Mercury
n-Eicosane
n-Octadecane
Naphthalene
Nitrate/Nitrite (NO2 + NO3-N)
o-Cresol
o-Toluidme
|>QESOI
'henanthrene
Phenol
Pyrene
Pyridins >
Selenium
Total Cyanide
Total
Option 1
5.7
48.0
62
32.5
335416.6
6.9
66.7
24.9
5.7
10.5
3.1
3.0
190.8
6.4
5.7
5.7
02
5.7
5.7
3.6
11,697.6
93
5.7
72
5.7
49.6
5.7
7.5
2,413.4
4,5892
354,745
Option 2
5.7
48.0
62
32J
335,516.6
6.9
66.6
24.8
5.7
103
3.1
3.0
190.8
6.4
5.7
5.7
02
5.7
5.7
3.6
11,697.6
93
5.7
72
5.7
49.6
5.7
7.5
2,413.4
18,081.0
368237
Option3
25.3
67.7
11.5
47.4
356,626.8
12.3
70.4
26.4
253
21.7
223
22.6
455.6
23.7
253
253
03
11.1
11.1
7.6
102^25.4
17.4
11.1
25.5
253
67.7
253
12.9
2,7822
32,040.9
495,073
Option4
253
67.7
11.5
47.4
356,626.8
123
70.4
26.4
253
21.7
223
22.6
455.6
23.7
253
253
12
11.1
11.1
7.6
102,525.4
17.4
11.1
25.5
253
67.7
253
12.9
2,7822
32,040.9
495,074
Toxic
Weighting
Factor
530E-03
g.OOE-02
1JOE-01
5.00E-06
I.80E-03
1.40E-KX)
3.50E-KK)
I.80E-02
I.80E+02
430E-KJ3
420E+02
420E-KJI
I.80E-01
2.10E-KX)
2.00E-01
8.00E-02
120E-K2
430E-03
430E-03
UOE-02
620E-05
2.70E-03
130E-OI
4.00E-03
2.90E-01
2.80E-02
1.10E-01
130E-03
1.10E-+00
I.10E-HX)
Pound Equivalents (PE)
Removed
Option]
0.0
• 3.8
0.9
0.0
603.9
9.7
2333
0.4
1,027.0
452633
1282J
1252
343
13.5
1.1
0.5
20.8
0.0
0.0
0.1
0.7
0.0
0.7
0.0
1.7
1.4
0.6
0.0
2,654.8
5,0482
56329
Option 2
0.0
3.8
0.9
0.0
603.9
9.7
2332
0.4
1,029.6
45279.0
12852
125.6
343
13,5
1.1
0.5
21.6
0.0
0.0
0.1
0.7
0.0
0.7
0.0
1.7
1.4
0.6
0.0
2,654.8
19,889.1
71,192
Option3
0.1
5.4
1.7
0.0
641.9
172
246.5
OS
4,5612
93267.0
93492
949.6
82.0
49.7
5.1
to
40.8
0.0
0.0
0.1
6.4
0.0
1.4
0.1
73
1.9
23
0.0
3,060.4
35245.0
147,546
Option 4
0.1
5.4
1.7
0.0
641.9
17.2
246.5
M
4,5612
93267.0
93492
949.6
82.0
49.7
5.1
10
142.8
0.0
0.0
0.1
6.4
0.0
1.4
0.1
73
15
2.8
0.0
3,060.4
35245.0
147,648
C-16
-------
Table C-9
Pollutant Removals
Ironmaking Subcategory
Direct Dischargers
Chemical Name
1,2,3,4,6,7 ,8-Heptachlorodibenzofuran
1, 2,3,4,7 ,8-Hexachlorodib en zofuran
1, 2,3,6,7 ,8-Hexachlorodibenzofuran
1,2,3,7,8-Pentachlorodibenzofuran
2,3,4,7,8-Pentachlorodibenzofuran
2,3, 7,8-Tetrach lore dib en zofuran
2,4-Dimethylphenol
4-Nitrophenol
Aluminum
Ammonia As N itrogen (NH 3-N )
Arsenic
Boron
Cadmium
Chromium
Copper
Fluoranthene
Fluoride
iron
Lead
Magnesium
Manganese
Mercury
Molybdenum
Nickel
Nitrate/Nitrite (NO2 + NO3-N)
o-Cresol
p-Cresol
Phenanthrene
Phenol
* y r id in e
Selenium
Thallium
Fhiocyanate
Titanium
Total Cyanide
Zinc
Total
Option 1
3.4E-04
2.4E-04
2.0E-04
2.3E-04
1.5E-04
3.5E-04
2.6E-04
53.6
625.9
12,526.0
206,747.8
39.4
53,455.3
59.2
383.7
444.1
26.1
337,282.4
75,407.3
1,089.9
2,619,788.3
81,347.5
0.8
1,816.2
937.8
5,802.8
24.6
30.1
35.4
0.0
307.1
277.2
1,283.1
377.3
191.8
6,250.2
12,023.7
3,418,634
Toxic
Weighting
Factor
6.70E-I-05
6.70E+06
6.70E+06
3.30E+06
6.70E+06
3.30E+07
6.70E+06
5.30E-03
9.40E-03
6.40E-02
1.80E-03
3.50E+00
1.80E-01
2.60E+00
7.60E-02
6.30E-01
8.00E-01
3.50E-02
5.60E-03
2.20E+00
8.70E-04
7.00E-02
1.20E+02
2.00E-01
1.10E-01
6.20E-05
2.70E-03
4.00E-03
2.90E-01
2.80E-02
1.30E-03
l.lOE-t-00
l.OOE+00
O.OOE-i-00
2.90E-02
1.10E+00
4.70E-02
Pound Equivalents (PE
R e mo v e d
Option 1
227.1
1,574.5
1,340.0
772.2
1,031.8
11,550.0
1,755.4
0.3
5.9
801.7
372.1
137.8
9,621.9
153.8
29.2
279.8
20.9
11,804.9
422.3
2,397.7
2,279.2
5,694.3
98.4
363.2
103.2
0.4
0.1
0.1
10.3
0.0
0.4
304.9
1,283.1
0.0
5.6
6,875.2
565.1
61,883
C-17
-------
Table C-10
Pollutant Removals
Steelmaking Subcategory
Direct Dischargers
Chemical Name
Aluminum
Ammonia As Nitrogen (NH3-N)
Antimony
Cadmium
Chromium
Cobalt
Copper
Fluoride
Iron
Lead
Magnesium
Manganese
Mercury
Molybdenum
Nitrate/Nitrite (NO2 + NO3-N)
Phenol
Silver
Tin
Titanium
Vanadium
Zinc
Total
Pounds
Removed
Option 1
100,695.6
0.0
3,703.7
471.8
889.0
880.3
1,630.6
1,479,924.0
542,707.4
6,077.9
1,741,535.5
27,949.0
17.6
33,624.5
0.0
0.0
538.5
689.5
618.0
1,151.1
78,519.4
4,021,623
Toxic
Weighting
Factor
6.40E-02
I.80E-03
4.80E-03
2.60E+00
7.60E-02
1.10E-01
6.30E-OI
3.50E-02
5.60E-03
2.20E+00
8.70E-04
7.00E-02
1.20E+02
2.00E-01
6.20E-05
2.80E-02
1.60E+01
3.00E-01
2.90E-02
6.20E-01
4.70E-02
Pound Equivalents (PE
Removed
Option 1
6,444.5
0.0
17.8
. 1,226.6
67.6
96.8
1,027.3
51,797.3
3,039.2
13,371.5
1,515.1
1,956.4
2,114.8
6,724.9
0.0
0.0
8,616.3
206.8
17.9
713.7
3,690.4
102,645
C-18
-------
Table C-ll
Pollutant Removals
Integrated and Stand-Alone Hot-Forming Subcategory
Carbon Segment- Direct Dischargers
Chemical Name
Ammonia As Nitrogen (NH3-N)
Fluoride
Iron
Lead
Manganese
Molybdenum
Zinc
Total
Pounds
Removed
Option 1
0.0
0.0
4,738,700.6
20,199.9
63,449.1
49,014.4
42,116.6
4,913,481
Toxic
Weighting
Factor
1.80E-03
3.50E-02
5.60E-03
2.20E+00
7.00E-02
2.00E-01
4.70E-02
Pound Equivalents (PE
Removed
Option 1
0.0
0.0
26,536.7
44,439.9
4,441.4
9,802.9
1,979.5
87,200
C-19
-------
TableC-12
Pollutant Removals
Non-Integrated Steelmaking and Ffot-Forming Subcategory
Carbon Segment- Direct Dischargers
Chemical Name
Ammonia As Nitrogen (NH3-N)
Iron
Lead
Manganese
Silica GelTreated-HEM (SGT-HEM)
Zinc
Total
Pounds
Removed
Option 1
0.0
217,195.8
14,624.4
24,779.7
489,788.3
84,422.5
830,811
Toxic
Weighting
Factor
1.80E-03
5.60E-03
2.20E+00
7.00E-02
O.OOE+00
4.70E-02
Pound Equivalents (PE
Removed
Option 1
0
1,216
32,174
1,735
0
3,968
39,092
C-20
-------
TaUeC-13
Pollutant Removals
Non-Integrated Steelmaking and Hot-Forming Subcategory
Stainless Segment- Direct Dischargers
Pounds Removed
Chemical Name
Aluminum
Ammonia As Nitrogen (NH3-N)
Antimony
Boron
Chromium
Chromium, Hexavalent
Copper
Fluoride
Iron
Lead
Manganese
Molybdenum
Nickel
Nitrate/Nitrite (NO2 + NO3-N)
Silica GelTreated-HEM (SGT-HEM)
Titanium
Zinc
Total
Option 1
305
0
14
543
100
21
89
0
5,359
4
543
6,771
1,067
0
7,688
4
2,844
25,350
Option 2
305
0
14
543
100
21
89
0
5,359
4
543
6,771
1,067
0
7,688
4
2,844
25,352
Toxic
Weighting
Factor
6.40E-02
1.80E-03
4.80E-03
1.80E-01
7.60E-02
5.10E-01
6.30E-01
3.50E-02
5.60E-03
2.20E+00
7.00E-02
2.00E-01
1.10E-01
6.20E-05
2.90E-02
4.70E-02
Pound Equivalents (PE)
Removed
,
Option 1
19.5
0.0
0.1
97.8
7.6
10.5
56.2
0.0
30.0
7.9
38.0
1,354.1
117.4
0.0
0.0
0.1
133.7
1,873
Option 2
19.5
0.0
0.1
97.7
7.6
10.7
56.1
0.0
30,0
8.8
38.0
1,354.2
117.4
0.0
0.0
0.1
133,7
1,874
C-21
-------
TaHe C-14
Pollutant Removals
Steel Finishing Subeategory
Carbon Segment- Direct Dischargers
Pound Equivalents (PE)
Chemical Name
Acetone
alpha-Terpineol
Aluminum
Ammonia As Nitrogen (NH3-N)
Antimony
Arsenic
Bis(2-ethylhexyl) Phthalate
Boron
Chromium
Chromium, Hexavalent
Copper
Fluoride
Iron
Lead
Manganese
Molybdenum
n-Decane
n-Dodecane
n-Hexadecane
Nickel
Nitrate/Nitrite (NO2 + N03-N)
Silica Ge!Treated-HEM (SOT-HEM)
Tin
Titanium
Zinc
Total
Pounds Removed
Option 1
0.0
0.0
17,678.7
0.0
6,262.5
239.0
0.0
14,857.3
1 1,802.5
1,571.0
1,588.5
0.0
134,699.1
1,757.7
11,442.0
5,250.3
0.0
0.0
0.0
8,832.7
0.0
743,961.2
3,054.6
628.1
17,301.2
980,926
Toxic
Weighting
Factor
5.00E-06
UOE-03
6.40E-02
1 .80E-03
4.80E-03
3.50E+00
9.50E-02
1.80E-01
7.60E-02
5.10E-01
6.30E-01
3.50E-02
5.60E-03
2.20E+00
7.00E-02
2.00E-OI
4.30E-03
4.30E-03
4.30E-03
1.10E-01
6.20E-05
O.OOE+00
3.00E-OI
2.90E-02
4.70E-02
Removed
Option 1
0.0
0.0
1,131.4
0.0
30.1
836.4
0.0
2,674.3
897.0
801.2
1,000.7
0.0
754.3
3,866.9
800.9
1,050,1
0.0
0.0
0.0
971.6
0.0
0.0
916.4
18.2
813.2
16,563
C-22
-------
Table C-15
Pollutant Removals
Steel Finishing Subcategory
Stainless Segment- Direct Dischargers
Chemical Name
Acetone
Aluminum
Ammonia As Nitrogen (NH3-N)
Antimony
Arsenic
Barium
Boron
Chromium
Chromium, Hexavalent
Cobalt
Copper
Fluoride
Hexanoic Acid
Iron
Lead
Magnesium
Manganese
Molybdenum
n-Dodecane
n-Hexadecane
Nickel
Nitrate/Nitrite (NO2 + NO3-N)
Silica Gel Treated-HEM (SGT-HEM)
Tin
Titanium
Total Cyanide
Zinc
Total
Pounds Removed
Option 1
0.0
1,948.4
0.0
371.3
39.5
497.7
3,738.7
2,721.2
1,236.5
273.7
589.8
1,794,014.2
0.0
15,389.1
151.8
642,385.9
4,983.9
11,459.7
0.0
0.0
3,545.7
11,193,865.2
149,040.1
137.9
108.8
0.0
320.1
13,826,819
Toxic
Weighting
Factor
5.00E-06
6.40E-02
1.80E-03
4.80E-03
3.50E+00
2.00E-03
1.80E-01
7.60E-02
5.10E-01
1.10E-01
6.30E-01
3.50E-02
3.70E-04
5.60E-03 '
2.20E+00
8.70E-04
7.00E-02
2.00E-01
4.30E-03
4.30E-03
1.10E-01
6.20E-05
O.OOE+00
3.00E-01
2.90E-02
1.10E+00
4.70E-02
Pound Equivalents (PE)
Removed
Option 1
0.0
124.7
0.0
1.8
138.1
1,0
673.0
206.8
630.6
30.1
371.5
62,790.5
0.0
86.2
334.0
558.9
348.9
2,291.9
0.0
0.0
390.0
694.0
0.0
41.4
3.2
0.0
15.0
69,732
C-23
-------
Table C-16
Pollutant Removals
Cokemaking Subcategory
Indrect Dischargers
Pounds Removed
QranicalName
2,4-DJmethylpheno!
2-Methylnaphthalene
2-Phenyhapnthalenc
Acetone
Ammonia As Nitrogen (NH3-N)
AnSn;
Aisenic
Benzene
Benzo(a)anthracene
Benzo(a)pyrene
Benzo(b)fluoianthene
Benzo(k}fluoranthene
Boron
Chrysene
Dtenzo&ran
Fhnanthene
Mercuiy
n-Eicosane
n-Octadecane
Naphthalene
Nitrate/Nitrite (NO2+NO3-N)
o-Oesol
o-ToMdine
pOesol
Phenanthrene
Phenol
Pyrene
PyriSne
Selenium
Total Cyanioe
Total
Option!
0.0
0.0
0.0
0.0
181,891.9
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
2,791.5
184,683
Options
0.0
0.0
0.0
0.0
175,4963
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
4316.0
180,312
Option 3
2307.6
53.4
•235
1.4
255^56.0
545.6
49.7
1.8
3.2
83
9.7
63
56.5
53
13
115.4
0.5
385
290.9
6.5
1,220,2
15,421.5
113.9
53338.0
62
17,489.8
24.4
20.1
1,869.8
3,210.9
351,796
Option 4
2307.6
53.4
23.5
1.4
261360.6
545.6
49.7
1.8
3.2
83
9.7
63
565
53
13
115.4
0.5
38.9
290.9
6.5
1,220:2
15,421.5
113.9
53338.0
62
17,489.8
24.4
20.1
1369.8
5365.0
360,255
Toxfc
Weighting
''Factor
5.30E03
8.00E02
1.50E0I
5.00&06
1.80&03
1.40E-KW
3.50E+00
1.80B02
1.80E-HG
430E+03
420E+02
4^0E-+01
1.80E01
2.10E+00
ZOOB01
g.OOE-01
1^0Et02
4.30E-03
4.30Efl3
1.50E02
6.20E05
2.70BD3
130E*1
4.00B03
2.90E01
2.80E02
1.10E01
1.30E-03
l.IOE-KK)
1.IOE-KM
Pound Equivalents (PE)
Removed
Option 1
0.0
0.0
0.0
0.0
327.4
0.0
0.0
0.0
0.0
00
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
OX)
0.0
0.0
0.0
0.0
0.0
3J070.7
3398
Option 2
0.0
0.0
0.0
0.0
315.9
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
OX)
0.0
0.0
0.0
0.0
5,297.6
5,614
Option 3
122
43
.3.5
0.0
460.0
7635
174.0
0.0
5742
35,647.0
4,074,0
264.6
10.2
11J2
03
923
64$
02
13
0.1
0.1
41.6
143
213.4
13
489.7
2.7
0.0
2,056.8
3.53ZO
48,511
Option4
1Z2
43
3.5
OX
470.4
763.9
174.0
OX
574.2
35,647-C
4,074.0
264.6
102
11.2
03
923
643
OJ
13
0.1
0.1
41,6
143
213.4
1.8
489.7
17
O.C
21)56.8
6,451.5
51,441
C-24
-------
TaWeC-17
Pollutant Removals
Ironmaking Subcategory
Indirect Dischargers
Chemical Name
Aluminum
Ammonia As Nitrogen (NH3-N)
Boron
Chromium
Copper
Fluoride
Iron
Lead
Magnesium
Manganese
Molybdenum
Nickel
Nitrate /Nitrite (NO2 + NO3-N)
Selenium
Titanium
Total Cyanide
Zinc
Total
Pounds Removed
Option 1
33.29
0
2124.28
3
2.27
9863.94
1738.46
53.75
116619.64
2630.83
71.95
23.28
0
4.3
0.69
0
36.44
133,206
Toxic
Weighting
Factor
6.40E-02
1.80E-03
1.80E-01
7.60E-02
6.30E-01
3.50E-02
5.60E-03
2.20E+00
8.70E-04
7.00E-02
2.00E-01
1.10E-01
6.20E-05
1.10E+00
2.90E-02
1.10E+00
4.70E-02
Pound Equivalents (PE
Removed
Option 1
2.1
0.0
382.4
0.2
1.4
345.2
9.7
118.3
101.5
184.2
14.4
2.6
0.0
4.7
0.0
0.0
1.7
1,168
C-25
-------
TableC-18
Pollutant Removals
Integrated and Stand-Alone Hot-Forming Subcategory
Carbon Segment- Indirect Dischargers
Chemical Name
Ammonia As Nitrogen (NH3-N)
Fluoride
Iron
Lead
Manganese
Molybdenum
Zinc
Total
Pounds
Removed
Option 1
0.0
0.0
20,196.3
2.7
170.3
74.2
53.4
20,497
Toxic
Weighting
Factor
I.80E-03
3.50E-02
5.60E-03
2.20E+00
7.00E-02
2.00E-01
4.70E-02
Pound Equivalents (PE
Removed
Option !
0.0
0.0
113.1
5.9
11.9
14.8
2.5
148
C-26
-------
TableC-19
Pollutant Removals
Integrated and Stand-Alone Hot-Forming Subcategory
Stainless Segment- Indirect Dischargers
Chemical Name
Antimony
Chromium
Copper
Fluoride
Iron
Manganese
Molybdenum
Nickel
Titanium
Zinc
Total
Pounds
Removed
Option 1
1.6
0.7
6.6
0.0
896.1
7.5 •
3.3
8.9
0.0
2.4
927
Toxic
Weighting
Factor
4.80E-03
7.60E-02
6.30E-01
3.50E-02
5.60E-03
7.00E-02
2.00E-01
1.10E-01
2.90E-02
4.70E-02
Pound Equivalents (PE
Removed
Option 1
0
0
4
0
5
1
1
1
0
0
11
C-27
-------
Table C-20
Pollutant Removals
Non-Integrated Steelmaking and Hat-Forming Subcategory
Carbon Segment- Indirect Dischargers
•
Chemical Name
Ammonia As Nitrogen (NH3-N)
iron
Lead
Manganese
Silica GelTreated-HEM (SGT-HEM)
Zinc
Total
Pounds
Removed
Option 1
0.0
885.8
14.1
38.0
1,498.2
70.4
2,506
Toxic
Weighting
Factor
1.80E-03
5.60E-03
2.20E+00
7.00E-02
4.70E-02
Pound Equivalents (PE
Removed
Option 1
0.0
5.0
31.0
2.7
0.0
3.3
42
C-28
-------
Table C-21
Pollutant Removals
Non-Integrated Steelmaking and Hot-Forming Subcategory
Stainless Segment- Indirect Dischargers
Chemical Name
Aluminum
Ammonia As Nitrogen (NH3-N)
Antimony
Boron
Chromium
Chromium, Hexavalent
Copper
Fluoride
Iron
Lead
Manganese
Molybdenum
Nickel
Nitrate/Nitrite (NO2 + N03-N)
Silica Gel Treated-HEM (SOT-HEM)
Titanium
Zinc
Total
Pounds
Removed
Option 1
32.7
0.0
6.1
462.0
25.9
14.6
20.6
0.0
1,424.8
2.2
505.9
7,497.7
758.0
0.0
1,401.6
0.4
850.3
13,003
Toxic
Weighting
Factor
6.40E-02
1.80E-03
4.80E-03
1.80E-01
7.60E-02
5.10E-01
6.30E-01
3.50E-02
5.60E-03
2.20E+00
7.00E-02
2.00E-01
1.10E-01
6.20E-05
2.90E-02
4.70E-02
Pound Equivalents (PE
Removed
Option 1
2.1
0.0
0.0
83.2
2.0
7.5
13.0
0.0
8.0
4.8
35.4
1,499.5
83.4
0.0
0.0
0.0
40.0
1,779
C-29
-------
Table C-22
Pollutant Removals
Steel Finishing Subcategory
Carbon Segment- Indirect Dischargers
Chemical Name
Acetone
alpha-Terpineol
Aluminum
Ammonia As Nitrogen (NH3-N)
Antimony
Arsenic
Bis(2-etnylhexyl) Phthalate
Boron
Chromium
Chromium, Hexavalent
Copper
Fluoride
Iron
Lead
Manganese
Molybdenum
n-Decane
n-Dodecane
n-Hexadecane
Nickel
Nitrate/Nitrite (NO2 + NO3-N)
Silica Gel Treated-HEM (SGT-HEM)
Fin
Titanium
Zinc
Total
Pounds
Removed
Option 1
0.0
0.0
209.0
0.0
15.1
7.6
0.0
143.5
55.2
265.4
23.9
0.0
624.3
24.6
93.3
92.1
0.0
0.0
0.0
154.3
0.0
2,084.1
164.0
0.9
64.5
4,022
Toxic
Weighting
Factor
5.00E-06
1.10E-03
6.40E-02
1.80E-03
4.80E-03
3.50E-H)0
9.50E-02
1.80E-OI
7.60E-02
5.10E-01
6.30E-01
3.50E-02
5.60E-03
2.20E+00
7.00E-02
2.00E-01
4.30E-03
4.30E-03
4.30E-03
1.10E-01
6.20E-05
3.00E-01
2.90E-02
4.70E-02
Pound Equivalents (PE
Removed
Option 1
0.0
0.0
13.4
0.0
0.1
26.7
0.0
25.8
4.2
135.4
15.1
0.0
3.5
54.0
6.5
18.4
0.0
0.0
0.0
17.0
0.0
0.0
49.2
0.0
3.0
372
C-30
-------
Table C-23
Pollutant Removals
Steel Finishing Subcategory
Stainless Segment- Indirect Dischargers
Chemical Name
Acetone
alpha-Terpineol
Aluminum
Ammonia As Nitrogen (NH3-N)
Antimony
Arsenic
Barium
Bis(2-ethylhexyl) Phthalate
Boron
Chromium
Chromium, Hexavalent
Cobalt
Copper
Fluoride
Hexanoic Acid
iron
Lead
Magnesium
Manganese
Molybdenum
n-Decane
n-Dodecane
n-Hexadecane
Nickel
Nitrate/Nitrite (N02 + NO3-N)
Silica GelTreated-HEM (SGT-HEM)
Tin
Titanium
Total Cyanide
Zinc
Total
Pounds
Removed
Option 1
0.0
0.0
3.2
0.0
3.3
3.7
6.2
0.0
47.4
30.8
14.4
1.6
0.8
15,677.5
0.0
2662
9.1
8,038.2
66.9
89.9
0.0
0.0
0.0
152.8
6,648.2
388.4
1.0
0.2
0.0
7.8
31,457
Toxic
Weighting
Factor
5.00E-06
1.10E-03
6.40E-02
1.80E-03
4.80E-03
3.50E+00
2.00E-03
9.50E-02
1.80E-01
7.60E-02
5.10E-01
1.IOE-01
6.30E-01
3.50E-02
3.70E-04
5.60E-03
2.20E-HJO
8.70E-04
7.00E-02
2.00E-01
4.30E-03
4.30E-03
4.30E-03
1.10E-01
6.20E-05
3.00E-01
2.90E-02
1.10E+00
4.70E-02
Pound Equivalents (PE
Removed
Option 1
0.0
0.0
0.2
0.0
0.0
13.0
0.0
0.0
8.5
2.3
7.3
0.2
0.5
548.7
0.0
1.5
20.0
7.0
4.7
18.0
0.0
0.0
0.0
16.8
0.4
0.0
0.3
0.0
0.0
0.4
650
C-31
-------
Table C-24
Baseline Pollutant Discharges
Cokemaking Subcategory
Direct Dischargers
Chemical Name
2,4-Dimethylphenol
2-Methylnaphthalene
2-Phenylnaphthalene
Acetone
Ammonia As Nitrogen (NH3-N)
Aniline
Arsenic
Benzene
Benzo(a)anthracene
Benzo(a)pyrene
3enzo(b)fiuoranthene
3enzo(k)fluoranthene
3oron
Chrysene
Hibenzofuran
"luoranthene
Mercury
n-Eicosane
n-Octadecane
Naphthalene
Nitrate/Nitrite (NO2 + NO3-N)
o-Cresol
o-ToIuidine
p-Cresol
'henanthrene
Phenol
Pyrene
Pyridine
Selenium
Total Cyanide
Total
Pounds of Pollutants
Discharged
at Base line
245.0
289.6
115.1
467.5
359,475.4
115.8
150.0
48.9
245.0
148.8
223.7
225.4
4,371.9
224.0
245.0
245.0
3.0
114.5
114.5
81.2
1,073,761.7
157.5
114.5
234.5
245.0
417.3
245.0
116.4
7,003.9
43,849.2
1,493,295
Toxic
Weighting
Factor
5.30E-03
8.00E-02
1.50E-OI
5.00E-06
1.80E-03
1.40E+00
3.50E+00
1.80E-02
1 .80E+02
4.30E+03
4.20E+02
4.20E+01
1.80E-01
2.10E+00
2.00E-01
7.00E-01
1.20E+02
4.30E-03
4.30E-03
1.50E-02
6.20E-05
2.70E-03
1.30E-01
4.00E-03
2.90E-01
2.80E-02
1.10E-01
1.30E-03
1.10E+00
1.10E+00
Pound
Equivalents (PE)
Discharged
at Base line
1.3
23.2
17.3
0.0
647.1
162.1
525.0
0.9
44,103.9
640,039.8
93,957.9
9,468.3
786.9
470.5
49.0
171.5
361.1
0.5
0.5
1.2
66.6
0.4
14.9
0.9
71.1
11.7
27.0
0.2
7,704.3
48,234.1
846,919
C-32
-------
Table C-25
Baseline Pollutant Discharges
Ironmaking Subcategory
Direct Dischargers
Chemical Name
1,2,3,4,6,7,8-Heptachlorodibenzofuran
1,2,3,6,7,8-Hexachlorodibenzofuran
1,2,3,7,8-Pentachlorodibenzofuran
2,3,4,6, 7,8-Hexachlorodibenzofuran
2,3,4,7, 8-P en tachlorodibenzofuran
2,3,7,8-Tetrachlorodibenzofuran
2,4-Dimethylphenol
4-Nitrophenol
Aluminum
Ammonia As Nitrogen (NH3-N)
Arsenic
Boron
Cadmium
Chromium
Copper
Fluoranthene
Fluoride
Iron
Lead
Magnesium
Manganese
Mercury
Molybdenum
Nickel
Nitrate/Nitrite (NO2 + NO3-N)
o-Cresol
3-Cresol
Phenanthrene
Phenol
Pyridine
Selenium
Thallium
Thiocyanate
T itanium
Total Cyanide
Zinc
Total
Pounds of Pollutants
Discharged
at Baseline
0.0
0.0
0.0
0.0
0.0
0.0
0.0
82.9
772.4
15,197.5
1,184,837.2
52.8
56,310.0
77.6
451.6
494.2
55.4
417,002.8
92,089.4
1,130.4
2,818,725.3
84,085.7
1.5
1,966.7
1,002.2
182,926.4
53.8
59.4
64.7
85.5
363.6
312.6
1,452.2
7,656.3
203.7
9,229.3
12,273.7
4,889,017
Toxic
Weighting
Factor
6.70E+05
6.70E+06
6.70E+06
3.30E+06
6.70E+06
3.30E+07
6.70E+06
5.30E-03
9.40E-03
6.40E-02
1.80E-03
3.50E+00
1.80E-OI
2.60E+00
7.60E-02
. 6.30E-01
8.00E-01
3.50E-02
5.60E-03
2.20E+00
8.70E-04
7.00E-02
1.20E+02
2.00E-01
1.10E-01
6.20E-05
2.70E-03
4.00E-03
2.90E-01
2.80E-02
1.30E-03
1.IOE+00
1 .OOE+00
O.OOE+00
2.90E-02
1.10E+00
4.70E-02
Pound
Equivalents (PE)
Discharged
at Baseline
326.3
2,566.1
2,331.6
1,260.6
2,023.4
16,434.0
1,976.5
0.4
7.3
972.6
2,132.7
184.9
10,135.8
201.7
34.3
311.4
44.3
14,595.1
515.7
2,486.9
2,452.3
5,886.0
176.4
393.3
110.2
11.3
0.1
0.2
18.8
2.4
0.5
343,9
1,452,2
0.0
5.9
10,152.3
576.9
80,124
C-33
-------
Table C-26
Baseline Pollutant Discharges
Integrated Steelmaking Subcategory
Direct Dischargers
Chemical Name
Aluminum
Ammonia As Nitrogen (NH3-N)
Antimony
Cadmium
Chromium
Cobalt
Copper
Fluoride
Iron
Lead
Magnesium
Manganese
Mercury
Molybdenum
Nitrate /Nitrite (NO2 + NO3-N)
Phenol
Silver
Tin
Titanium
Vanadium
Zinc
Total
Pounds of Pollutants
Discharged
at Base line
116,291.5
43,214.9
4,561.0
541.0
1,102.8
1,089.7
1,939.5
2,910,515.8
631,620.8
6,987.1
2,142,726.3
32,416.4
21.8
41,681.1
101,080.8
2,542.0
655.7
817.2
764.2
1,422.6
90,862.3
6,132,855
Toxic
Weighting
Factor
6.40E-02
1.80E-03
4.80E-03
2.60E+00
7.60E-02
1.10E-01
6.30E-01
3.50E-02
5.60E-03
2.20E+00
8.70E-04
7.00E-02
1.20E+02
2.00E-01
6.20E-05
2.80E-02
1.60E+01
3.00E-01
2.90E-02
6.20E-01
4.70E-02
Pound
Equivalents (PE)
Discharged
at Baseline
7,442.7
77.8
21.9
1,406.6
83.8
119.9
1,221.9
101,868.1
3,537.1
15,371.5
1,864.2
2,269.1
2,616.5
8,336.2
6.3
71.2
10,491.2
245.2
22.2
882.0
4,270.5
162,226
C-34
-------
Table C-27
Baseline Pollutant Discharges
Integrated and Stand-Alone Hot-Forming Subcategory
Carbon Segment- Direct Dischargers
Che mica! Name
Ammonia As Nitrogen (NH3-N)
Fluoride
iron
Lead
Manganese
Molybdenum
Zinc
Total
Pounds of Pollutants
Discharged
at Baseline
571,086.7
5,662,446.4
5,336,311.3
21,979.4
69,860.1
61,543.7
48,810.1
11,772,038
Toxic
Weighting
Factor
1.80E-03
3.50E-02
5.60E-03
2.20E+00
7.00E-02
2.00E-01
4.70E-02
Pound
Equivalents (PE)
Discharged
at Base line
1,028.0
198,185.6
29,883.3
48,354.7
4,890.2
12,308.7
2,294.1
296,945
C-35
-------
Table €-28
Baseline Pollutant Discharges
Non-Integrated Steelmaking and Hot-Forming Subcategory
Carbon Segment- Direct Dischargers
Chemical Name
Ammonia As Nitrogen (NH3-N)
Iron
Lead
Manganese
Silica Gel Treated-HEM (SGT-HEM)
Zinc
Total
Pounds of Pollutants
Discharged
at Baseline
98,419.3
236,782.0
14,636.5
26,672,0
525,910.3
86,994.7
989,415
Toxic
Weighting
Factor
1.80E-03
5.60E-03
2.20E+00
7.00E-02
O.OOE+00
4.70E-02
Pound
Equivalents (PE)
Discharged
at Baseline
177.2
1,326.0
• 32,200.2
1,867.0
0.0
4,088.8
39,659
C-36
-------
Table C-29
Baseline Pollutant Discharges
Non-Integrated Steelmaking and Hot-Forming Subcategory
Stainless Segment-Direct Dischargers
Chemical Name
Aluminum
Ammonia As Nitrogen (NH3-N)
Antimony
Boron
Chromium
Chromium, Hexavalent
Copper
Fluoride
Iron
Lead
Manganese
Molybdenum
Nickel
Nitrate /Nitrite (NO2 + NO3-N)
Silica GelTreated-HEM (SGT-HEM)
Titanium
Zinc
Total
Pounds of Pollutants
Discharged
at Base line
590.1
1,119.8
26.1
1,085.4
200.3
51.4
159.0
20,324.7
9,628.7
6.5
952.8
11,629.2
1,883.0
257.9
14,128.8
7.9
4,884.8
66,936
Toxic
Weighting
Factor
6.40E-02
1.80E-03
4.80E-03
1.80E-01
7.60E-02
5.10E-01
6.30E-01
3.50E-02
5.60E-03
2.20E+00
7.00E-02
2.00E-01
1.10E-01
6.20E-05
O.OOE+00
2.90E-02
4.70E-02
Pound
Equivalents (PE)
Discharged
at Base line
37.8
2.0
0.1
195.4
15.2
26.2
100.2
711.4
53.9
14.3
66.7
2,325.8
207.1
0.0
0.0
0.2
229.6
3,986
C-37
-------
Table C-30
Baseline Pollutant Discharges
Steel Finishing Subcategory
Carbon Segment- Direct Dischargers
Chemical Name
Acetone
alpha-Terpineol
Aluminum
Ammonia As Nitrogen (NH3-N)
Antimony
Arsenic
Bis(2-ethylhexyl)Phthalate
Boron
Chromium
Chromium, Hexavalent
Copper
Fluoride
Iron
Lead
Manganese
Molybdenum
n-Decane
n-Dodecane
n-Hexadecane
Nickel
Nitrate/Nitrite (NO2 + N03-N)
Silica GelTreated-HEM (SGT-HEM)
Tin
Titanium
Zinc
Total
Pounds of Pollutants
Discharged
at Baseline
41,034.7
6,898.0
28,690.6
440,173.7
9,439.8
403.1
2,335.0
23,139.7
18,498.2
2,593.3
2,589.5
395,497.6
214,253.8
2,990.2
17,872.2
7,894.1
2,334.0
2,363.4
2,441.0
17,070.8
367,172.0
1,256,414.1
4,816.0
1,053.5
25,557.6
2,893,526
Toxic
Weighting
Factor
5.00E-06
1.10E-03
6.40E-02
1.80E-03
4.80E-03
3.50E+00
9.50E-02
1.80E-OI
7.60E-02
5.10E-01
6.30E-01
3.50E-02
5.60E-03 •
2.20E+00
7.00E-02
2.00E-01
4.30E-03
4.30E-03
4.30E-03
1.10E-01
6.20E-05
O.OOE+00
3.00E-01
2.90E-02
4.70E-02
Pound
Equivalents (PE)
Discharged
at Base line
0.2
7.6
1,836.2
792.3
45.3
1,410.9
221.8
4,165.1
1,405.9
1,322.6
1,631.4
13,842.4
1,199.8
6,578.4
1,251.1
1,578.8
10.0
10.2
10.5
1,877.8
22.8
0.0
1,444.8
30.6
1,201,2
41,898
C-38
-------
Table C-31
Baseline Pollutant Discharges
Steel Finishing Subcategory
Stainless Segment- Direct Dischargers
Chemical Name
Acetone
Aluminum
Ammonia As Nitrogen (NH3-N)
Antimony
Arsenic
Barium
3oron
Chromium
Chromium, Hexavalent
Cobalt
Copper
Fluoride
Hexanoic Acid
Iron
Lead
Magnesium
Manganese
Molybdenum
n-Dodecane
n-Hexadecane
Nickel
N itrate /N itrite (N O 2 + N O 3-N )
Silica GelTreated-HEM (SOT-HEM)
Fin
Titanium
Total Cyanide
Zinc
Total
Pounds of Pollutants
Discharged
at Base line
2,753.5
4,087.3
905,317.6
694.1
84.0
972.9
7,397.8
5,509.2
2,189.6
592.7
1,197.0
3,662,601.7
783.1
25,041.5
329.6
1,047,784.4
8,047.8
22,662.8
980.3
1,340.1
5,909.0
24,630,080.9
323,829.5
264.3
228.4
114,007.3
632.6
30,775,319
Toxic
Weighting
Factor
5.00E-06
6.40E-02
1.80E-03
4.80E-03
3.50E+00
2.00E-03
1.80E-01
7.60E-02
5.10E-01
1.10E-01
6.30E-01
3.50E-02
3.70E-04
5.60E-03
2.20E+00
8.70E-04
7.00E-02
2.00E-01
4.30E-03
4.30E-03
1.10E-01
6.20E-05
O.OOE+00
3.00E-01
2.90E-02
1.10E+00
4.70E-02
Pound
Equivalents (PE)
Discharged
at Base line
0.0
261.6
1,629.6
3.3
294.1
1.9
1,331.6
418.7
1,116.7
65.2
754.1
128,191.1
0.3
140.2
725.2
911.6
563.3
4,532.6
4.2
5.8
650.0
1,527.1
0.0
79.3
6.6
125,408.0
29.7
268,652
C-39
-------
Table C-32
Baseline Pollutant Discharges
Cokemaking Subcategory
Indirect Dischargers
Chemical Name
2,4-Dimethylphenol
2-Methylnaphthalene
2-PhenylnaphthaIene
Acetone
Ammonia As Nitrogen (NH3-N)
Aniline
Arsenic
Benzene
Benzo(a)anthracene
Benzo(a)pyrene
Benzo(b)fhioranthene
Benzo(k)fluoranthene
Boron
Chrysene
Dibenzofuran
-luoranthene
Mercury
n-Eicosane
n-Octadecane
Naphthalene
Nitrate/Nitrite (NO2 + NO3-N)
o-Cresol
o-To!uidine
p-Cresol
Phenanthrene
Phenol
Pyrene
'yridine
Selenium
Total Cyanide
Total
Pounds of Pollutants
Discharged
at Baseline
2,328.0
83.4
29.8
11.7
262,064.6
548.6
60.4
2.2
4.0
9.9
12.4
9.0
1,104.7
6.6
2.2
139.6
0.6
42.3
302.9
8.7
7,554.3
15,447.4
120.5
53,349.6
8.3
17,497.2
31.0
22.2
2,168.5
7,244.0
370,214
Toxic
Weighting
Factor
5.30E-03
8.00E-02
I.50E-01
5.00E-06
1.80E-03
1.40E+00
3.50E+00
I.80E-02
1.80E+02
4.30E+03
4.20E+02
4.20E+OI
1.80E-01
2.IOE+00
2.00E-01
8.00E-01
1.20E+02
4.30E-03
4.30E-03
1.50E-02
6.20E-05
- 2.70E-03
I.30E-OI
4.00E-03
2.90E-01
2.80E-02
1.10E-01
1.30E-03
1.10E+00
1.10E+00
Pound
Equivalents (PE)
Discharged
at Baseline
12.3
6.7
4.5
0.0
471.7
768.0
211.2
0.0
723.6
42,441.0
5,208.0
378.4
198.9
13.8
0.4
111.7
76.8
0.2
1.3
0.1
0.5
41.7
15.7
213.4
2.4
489.9
3.4
0.0
2,385.3
7,968.4
61,749
C-40
-------
Table C-33
Baseline Pollutant Discharges
Ironmaking Subcategory
Indirect Dischargers
Chemical Name
Aluminum
Ammonia As Nitrogen (NH3-N)
Boron
Chromium
Copper
Fluoride
Iron
Lead
Magnesium
Manganese
Molybdenum
Nickel
N itrate /N Write (N O 2 + N O 3-N )
Selenium
Titanium
total Cyanide
Zinc
Total
Pounds of Pollutants
Discharged
at Base line
36.4
51,674.2
2,180.3
3.3
2.5
10,780.7
1,832.1
54.5
121,318.3
2,670.6
78.3
24.9
580.9
4.7
0.7
184.9
39.8
191,467
Toxic
Weighting
Factor
6.40E-02
1.80E-03
1.80E-01
7.60E-02
6.30E-01
3.50E-02
5.60E-03
2.20E+00
8.70E-04
7.00E-02
2.00E-01
1.10E-01
6.20E-05
1.10E+00
2.90E-02
1.10E+00
4.70E-02
Pound
Equivalents (PE)
Discharged
at Baseline
2.3
93.0
392.4
0.2
1.6
377.3
10.3
120.0
105.5
186.9
15.7
2.7
0.0
5.2
0.0
203.4
1.9
1,519
C-41
-------
Table C-34
Baseline Pollutant Discharges
Integrated and Stand-Alone Hot-Forming Subcategory
Carbon Segment- Indirect Dischargers
Chemical Name
Ammonia As Nitrogen (NH3-N)
Fluoride
Iron
Lead
Manganese
Molybdenum
Zinc
Total
Pounds of Pollutants
Discharged
at Base line
1,815.2
11,554.6
23,852.6
4.2
209.3
114.0
71.8
37,622
Toxic
Weighting
Factor
1.80E-03
3.50E-02
5.60E-03
2.20E+00
7.00E-02
2.00E-01
4.70E-02
Pound
Equivalents (PE)
Discharged
at Base line
3.3
404.4
133.6
9.2
14.7
22.8
3.4
591
C-42
-------
Table C-35
Baseline Pollutant Discharges
Integrated and Stand-Alone Hot-Forming Subcategory
Stainless Segment- Indirect Dischargers
Chemical Name
Antimony
Chromium
Copper
Fluoride
Iron
Manganese
Molybdenum
Nickel
I" Itanium
Zinc
Total
Pounds of Pollutants
Discharged
at Baseline
1.7
0.8
7.0
387.1
955.2
8.2
3.7
9.9
0.0
2.7
1,376
Toxic
Weighting
Factor
4.80E-03
7.60E-02
6.30E-01
3.50E-02
5.60E-03
7.00E-02
2.00E-01
1.10E-01
2.90E-02
4.70E-02
Pound
Equivalents (PE)
Discharged
at Base line
0.0
0.1
4.4
13.5
5.3
0.6
0.7
1.1
0.0
O.I
26
C-43
-------
Table C-36
Baseline Pollutant Discharges
Non-Integrated Steelmaking and Hot-Forming Subcategory
Carbon Segment- Indirect Dischargers
Chemical Name
Ammonia As Nitrogen (NH3-N)
Iron
Lead
Manganese
Silica Gel Treated-HEM (SOT-HEM)
Zinc
Total
Pounds of Pollutants
Discharged
at Baseline
1,552.2
1,341.1
14.6
121.2
2,164.0
83.9
5,277
Toxic
Weighting
Factor
1.80E-03
5.60E-03
2.20E+00
7.00E-02
4.70E-02
Pound
Equivalents (PE)
Discharged
at Base line
2.8
7.5
32.0
8.5
0.0
3.9
55
C-44
-------
Table C-37
Baseline Pollutant Discharges
Non-Integrated Steelmaking and Hot-Forming Subcategory
Stainless Segment- Indirect Dischargers
Chemical Name
Aluminum
Ammonia As Nitrogen (NH3-N)
Antimony
Boron
Chromium
Chromium, Hexavalent
Copper
Fluoride
Iron
Lead
Manganese
Molybdenum
Nickel
Nitrate/Nitrite (NO2 + N03-N)"
Silica GelTreated-HEM (SGT-HEM)
Titanium
Zinc
Total
' Pounds of Pollutants
Discharged
at Baseline
35.4
592,3
6.8
503.4
27.2
16.0
21.6
836.4
1,530.4
2.3
543.5
8,044.9
803.2
53.6
1,509.3
0.5
891.1
15,418
Toxic
Weighting
Factor
6.40E-02
1.80E-03
4.80E-03
1.80E-01
7.60E-02
5.10E-01
6.30E-01
3.50E-02
5.60E-03
2.20E+00
7.00E-02
2.00E-01
1.10E-01
6.20E-05
2.90E-02
4.70E-02
Pound
Equivalents (PE)
Discharged
at Baseline
2.3
1.1
0,0
90,6
2.1
8.2
13.6
29.3
8.6
5.1
38.0
1,609.0
88.3
0.0
0.0
0.0
41.9
1,938
C-45
-------
Table C-38
Baseline Pollutant Discharges
Steel Finishing Subcategory
Carbon Segment- Indirect Dischargers
Chemical Name
Acetone
alpha-Terpineol
Aluminum
Ammonia As Nitrogen (NH3-N)
Antimony
Arsenic
Bis(2-ethylhexyl) Phthalate
Boron
Chromium
Chromium, Hexavalent
Copper
Pluoride
Iron
Lead
Manganese
Molybdenum
n-Decane
n-Dodecane
n-Hexadecane
Nickel
Nitrate/Nitrite (NO2 + NO3-N)
Silica GelTreated-HEM (SGT-HEM)
Tin
Titanium
Zinc
Total
Pounds of Pollutants
Discharged
at Baseline
40.4
21.3
375.1
8,980.3
51.7
25.3
92.4
384.6
127.8
590.6
87.7
2,856.1
1,196.2
84.8
186.5
248.8
304.4
16.5
92.1
410.9
410.4
6,683.6
571.4
2.6
221.5
24,063
Toxic
Weighting
Factor
5.00E-06
1.10E-03
6.40E-02
1.80E-03
4.80E-03
3.50E-I-00
9.50E-02
1.80E-01
7.60E-02
5.10E-OI
6.30E-01
3.50E-02
5.60E-03
2.20E+00
7.00E-02
2.00E-01
4.30E-03
4.30E-03
4.30E-03
1.10E-01
6.20E-05
3.00E-OI
2.90E-02
4.70E-02
Pound
Equivalents (PE)
Discharged
at Base line
0.0
0.0
24.0
16.2
0.2
88.7
8.8
69.2
9.7
301.2
55.3
100.0
6.7
186.6
13.1
49.8
1.3
0.1
0.4
45.2
0.0
0.0
171.4
0.1
!0.4
1,158
C-46
-------
Table C-39
Baseline Pollutant Discharges
Steel Finishing Subcategory
Stainless Segment- Indirect Dischargers
Chemical Name
Acetone
alpha-Terpineol
Aluminum
Ammonia As Nitrogen (NH3-N)
Antimony
Arsenic
Barium
Bis(2-ethylhexyl) Phthalate
Boron
Chromium
Chromium, Hexavalent
Cobalt
Copper
Fluoride
Hexanoic Acid
Iron
Lead
Magnesium
Manganese
Molybdenum
n-Decane
n-Dodecane
n-Hexadecane
Nickel
Nitrate /Nitrite (NO2 + NO3-N)
Silica QelTreated-HEM (SGT-HEM)
Tin
Titanium
Total Cyanide
Zinc
Total
Pounds of Pollutants
Discharged
at Baseline
10.5
0.2
17.3
22,090.6
8.4
8.0
36.7
2.1
232.3
68.6
62.6
16.8
209.5
168,026.4
3.7
603.4
29.5
22,383.1
108.7
439.1
3.0
1.5
11.2
204.4
90,138.3
1,675.6
11.4
0.7
526.6
20.4
306,951
Toxic
Weighting
Factor
5.00E-06
1.10E-03
6.40E-02
1.80E-03
4.80E-03
3.50E+00
2.00E-03
9.50E-02
1.80E-01
7.60E-02
5.10E-01
1.10E-01
6.30E-01
3.50E-02
3.70E-04
5.60E-03
2.20E+00
8.70E-04
7.00E-02
2.00E-01
4.30E-03
4.30E-03
4.30E-03
1.10E-01
6.20E-05
3.00E-01
2.90E-02
1.10E+00
4.70E-02
Pound
Equivalents (PE)
Discharged
at Baseline
0.0
0.0
1.1
39.8
0.0
27.9
0.1
0.2
41.8
5.2
31.9
1.9
132.0
5,880.9
0.0
3.4
64.8
19.5
7.6
87.8
0.0
0.0
0.0
22.5
5.6
0.0
3.4
0.0
579.3
1.0
6,958
C-47
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