September 1982
ECONOMIC ANALYSIS FOR THE FINAL RULE
TO EXCLUDE CLOSED AND CONTROLLED PROCESSES
FROM THE PCB BAN
by
Amy Moll
Economics and Technology Division
OFFICE OF PESTICIDES AND TOXIC SUBSTANCES
U.S. ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
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CONTENTS
DIS CLAIM ER
LIST OF TABLES
EXECUTIVE SUMM ARY
I.
II.
III.
IV.
INTRODUCTION
ALTERNATIVES
GENERIC COSTS OF SELF-CERTIFICATION, REPORTING, AND
PROCESSING EXn1PTION PETITIONS
BENEFITS AND COSTS OF ALTERNATIVE EXCLUSION OPTIONS
REFERENCES
APPENDICES
A.
B.
C.
D.
E.
F.
End-Products of Manufacturing Processes in Which
PCBs are Incidentally Generated
Summary of Inadvertent Production of PCBs by
Concentration in Process and Process Category
Air Sampling - Breakdown of Costs
Estimated Costs to Industry of Filing an
Exemption Petition
Description of Sampl es to be Tested for PCB
Concentration
Calcul ation of Wage Rates for EPA Personnel
iii
Page
ii
iv
v
1
10
15
30
47
48
50
51
52
54
56
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Tabl e 1
Table 2
Tabl e 3
Tab 1 e 4
Tabl e 5
Tabl e 6
Tabl e 7
Tab 1 e 8
Tabl e 9
Tabl e 10
Tabl e 11
Table 12
Table 13
Tabl e 14
LIST OF TABLES
Summary Table: Aggregate Incremental Benefits and
Costs for Final Excl usion Rul e for Clo.sed/
Gontrolled Processes
Page
viii
Number of Closed, Controlled, and Uncontrolled
Proc esses by PFM Category
8
One Time Costs of Testing for Self-Certification
20
Costs of Recordkeeping and Reporting for Self-
Certification on a Per-Test and Per-Petition Basis
23
Cost of Making a Theoretic al Calc ul ation of the
Level of Incidental PCB Production and Release
25
Estimated Gosts to Industry of Filing an Exemption
Petition (including research and testing costs)
26
Estimated Gost to EPA of Processing Exemption
Petitions (per petition)
29
Present Val ue of Sel f-Certific ation Gosts Over 10
Years (Per Process)
32
Recordkeeping Gosts to Industry for Sel f-Certific ation 34
(Per Process)
Costs of Reporting for Self-Certification
36
(Per 37
41
Gosts to Industry of Filing Exemption Petitions
Process)
Inc remental Benefits and Gosts Per Proc ess for
Exclusion Options
Aggregate Incremental Benefits and Gosts for Excl usion 42
Options
Summary Tabl e:
45
Aggregate Net Benefits
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EXECUTI VE SUMM ARY
EPA is promulgating a final rule to exclude certain closed
systems and controlled waste processes from the PCB ban rule
where only minute quantities of PCBs are released into products,
air, or water streams.
The purpose of this paper is to estimate
and discuss the incremental costs ahd benefits associated with
this exclusion rule as well as the other alternatives considered
byE P A.
In May, 1979 EPA promulgated the original PCB ban rule which
permitted the manufacture, processing, distribution, and tlse of
PCBs in concentrations less than 50 ppm.
The Court remanded the
rule to EPA because EPA did not pFesent sufficient evidence to
justify the 50 ppm cut-off decision.
Since the effect of this
remand would have been to ban all PCBs, including those generated
in very minute concentrations, serious disruptions could have
resulted.
Therefore, the Court granted a stay of the mandate
until October, 1982, and has since extended the stay until
December, 1982.
Until that date the May, 1979 rule remains in
effect.
The COurt ordered that the PCB rule dealing with the
incidental generation of PCBs in closed and controlled
manufacturing processes be promulgated by October 13, 1982.
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This paper discusses four options for regulating PCBs
incidentally generated in closed or controll ed processes.
The
first option is the use of the exemption petition process.
This
option is used as the baseline against which to measure the costs
and benefits of the other three options, i.e. zero ~osts and
benefits are implicitly associated with this alternative.
The
second alternative considered is one in which EPA would only
require that theoretical assessments be made of the level of PCB
release from a process.
The third alternative considered is the
one chosen by EPA for this final excl usion rul e.
Under this rul e
EPA has given companies the option of doing either a theoretical
assessment or testing for self-certification.
EPA will hol d
companies to a standard o~ proof achievable through the
recommended testing.
Under the fourth alternative only testing
would be acceptable for self-certification.
The estimates of the inc remental costs and b enefi ts of this
exclusion rule are presented in Summary Table 1.
It should be
noted that thes..e estimates are sub ject to a great deal of
uncertainty for the following reasons:
1.
Uncertainty over the appropriate baseline from which to
measure costs and benefits -
Since EPA has not
established a policy for dealing with exemption
petitions, there is uncertainty over the appropriate
baseline from which to measure incremental costs and
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benefits of any exclusion policy.
For purposes of this
analysis EPA has assumed that exemption requests for PCBs
generated in closed/controlled processes would be
granted.
2 .
Uncertainty over the number of processes affected - Since
only rough estimates have been made of the numbers of
processes which might be affected by this rulemaking the
total cost estimates are very uncertain.
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Table 1:
Summary Table: Aggregate Incremental Benefits and Costs for
Final EPA Exclusion Rule for Closed/Controlled Processes
Number of processes affected:
51 processes 175 processes
Benefits
INDUSTRY:
Exemption petition cost savings
$5.8m-$45.9m
$20.0m-$157.5m
Costs saved by not haviny to
alter or cease production*
Added certainty*
EPA:
Petition processing savings
$2.6m
$8.9m
Total
$8.4m-$48.5m
$28.9m-$166.4m
COSTS
INDUSTRY:
Self-certification costs
-Sampling Testing/Theoretical
Calculation
$6.1m-$8.6m
$20.8m=$29.7m
-Recordkeeping
$.04m-$.14m
$.14m-$.47m
-Reporting
$.03m-$.09m
$.09m-$.32m
EPA
-Report Review
$.Olm-$.02m
$.03m-$.70m
-Enforcement*
$6.2m-$8.9m
$21.0m-$31.2
Total
*For purposes of this analysis these costs have not been quantified.
viii
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3.
Uncertainty over component costs - Estimation of the unit
costs which will make up the total cost of any policy is
difficul t since this testing is not commonpl ace; since
there was never a need to do such testing and monitoring
before now, there is little or no historical basis for
"estimating testing costs.
Based on the estimates presented in Table 1, a 8onc1usion
c an be drawn that the b enefi ts of the excl usion pol icy -- which
include avoidance of the costs of filing exemption petitions
and/or of altering or ceasing production processes -- will exceed
the costs imposed by requiring comp~nies to self-certify" to
qualify for the exclusion.
ix
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I .
INTRODUCTION
EPA is promulgating a final rule to exclude certain closed
systems and controlled waste processes from the PCB ban rule
where only minute quantities of PCBs are released.
The purpose
of this paper is to estimate and discuss the incremental costs
and benefits associated with this rule and the other alternatives
considered by EPA for PCBs generated in closed processes and
processes in which all wastes go to an EPA-approved landfill or
are incinerated in an EPA-approved incinerator.
Background
A.
Section 6(e) of the Toxic Substances Control Act (TSCA)
prohibits all manufacture, processing, distribution in commerce,
. and use of PCBs after July 1, 1979.
EPA promulgated regulations
under 40 CPR Part 761, published in the FEDERAL REGISTER, of May
31, 1979 (4~ FR 31514), to implement section 6(e) of TSCA.
The
regulation~ excluded PCBs in concentrations less than 50 ppm from
the 6(e) ban, thus permitting their cOntinued manufacture,
processing,
distribution in commerce, and use.
The Environmental Defense Fund (EDF) petitioned the U.s.
Court of Appeals for the District of Columbia Circuit to review
three aspects of the PCB regulations, including the 50 ppm
regulatory cut-off as it applies to the manufacturing,
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processing, distribution,
and use of PCBs (EDF v.EPA, No. 79-
1580) .
In an October 30, 1980 decision, the Court found that
there was not sUbstantial evidence in the record to support this
50 ppm regulatory cut-off.
The Court remanded this portion of
the regul ations to EPA for further ac tion.
The effect of the court I s decision would be to make the
,
manufacture, processing, distribution in commerce,
and use of
PCBs in concentrations below 50 ppm a violation of section 6(e)
of TSCA unless an exemption petition for these activities is
fil ed and approved by EPA.
An exemption petition must
demonstrate that 1) the company generating PCBs has made a good
faith effort to develop sUbstitutes for PCBs, and 2) that no
unreasonable risk is attributable to the PCBs generated in
process or released from the process.
Requests for exemption can
be granted for a maximum of one year, i.e. petitions must be
refiled annually.
On February 20, 1981, EPA, EDF, and certain industry
intervenors in EDF v. EPA filed a joint motion with the Court
requesting an eighteen-month stay of the Court's mandate for the
50 ppm regul atory cut-off.
During the period of the stay, EPA
agreed to promulgate regulations relating to the manufacture,
processing, distribution in commerce, and use of low levels of
PCBs, begihning with the publication of two Advance Notices of
Proposed Rul emaking (ANPRs).
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First, EPA agreed to publish an..ANPR requesting comments on
the possible exclusion of PCBs from the section 6(e) ban when
generation occurs in a closed or controlled manner which presents
little or no risk to human health or the environment.
These
processes are the subject of this economic analysis.
In the
ANPR, closed manufacturing processes were defined as processes in
which PCBs are yenerated, but from which no PCBs are released.
Such proc€sses yenerate PCBs within closed reaction equipment,
and the chemical reactions within the processes destroy those
PCBs continuously as they are produced.
Controlled waste
processes were defined in the ANPR as processes in which PCBs are
generated, and from which PCBs are released only as constituents
of wastes which are either incinerated in EPA approved
incinerators, disposed of in EPA-approved PCB landfills, or
stored for such disposal or landfilling.
Second, EPA agreed to publish an ANPR requesting information
on the manufacture, processing, distribution in commerce, and use
of PCBs in low concentrations which might present risk;
i.e.
activities that are not considered closed or controlled.
This
rulemaking is only discussed here as it affects the
closed/controlled manufacture rulemaking.
On April 13, 1981, the Court granted the requests of. the
joint motion and entered an order.
The text of the Court's order
is set forth in the FEDERAL REGISTER of May 20, 1981, along with
EPA's two ANPRs on the 50 ppm regulatory cutoff (46 FR 27615; 46
--,._._"-
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FR 27617; 46 FR 27619 re~pectively).
The Court's April 13, 1981
order stays the mandate of the court, and leaves the 50 ppm
regulatory cutoff in place until October 13, 1982.
The Court
recently extended the stay to December 1, 1982.
The effect of
this order is that the regulations promulgated on May 31, 1979,
regarding the 50 ppm regulatory cutoff, remain in effect for the
duration of the stay.
Therefore, persons manufacturing,
processing, distributing in commerce, and using PCBs in
concentrations less than 50 ppm may continue these activities
until December 1, 1982.
EPA intends to request additional stays
of the mandate beyond that date.
The Court's order requires EPA
to promulgate a final rule for closed manufacturing processes and
controlled waste manufacturing pro?esses by October 13, 1982.
B. The Magnitude of the I~cidental Generationl Problem
The magnitude of this incidental generation of PCBs has been
documented by the Chemical Manufacturers Association (CMA)
(A
Report of a Survey on the Incidental Manufacture, Processing,
Distribution, and Use of Polychlorinated Biphenyls at
Concentrations Below 50 PPM), and by Versar, Inc..
Both CMA and
Versar have estimated the number of processes in which PCBs are
incidentally generated in concentrations less than 50 ppm.
Versar has also made rough estimates of the extent to which PCBs
are incidentally generated in concentrations greater than 50 ppm
lThe term "incidental generation" refers to inadvertent
production of PCBs (e.g., as by-product or impurities) in
manufacturing processes for other end-products.
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using information gathered from exemption petitions.
(Versar
Materials Balance Information on Inadvertently Generated PCBs)
A
list of end-products of manufacturing processes in which PCBs are
incidentally generated is given in Appendix A.
The survey conducted by the Chemical Manufacturers
Association (CMA) provided data which indicate that 26 chemical
firms (of 85 respondents to the survey) generate approximately
13,800 pounds of PCBs in 135 manufacturing processes where the
in-process concentration of PCBs is less than 50 ppm.
An
estimated .69 pounds of PCBs are reportedly generated in 4 closed
manufacturing processes, and approximately 6,900 pounds of PCBs
are generated in 40 controlled waste manufacturing processes.
CMA does not give its criteria for closed and controlled waste
manufacturing processes with these estimates.
97.5% of the PCBs
generated in controlled waste processes are reportedly
incinerated, and 2.5% are disposed of in EPA-approved chemical
waste landfills (CMA 1981).
The 85 chemical firms responding to
the CMA survey represent 37.6% of industrial chemical sales.
However, since these 85 firms represent a large per?entage of
basic industrial chemical sales, and since incidental generation
of PCBs is most apt to occur in that industry segment, CMA
assumed that most of the incidentally generated PCBs are
accounted for by these 85 surveyed firms.
The CMA went on to
estimate that "up to thousands" of processes may generate PCBs in
concentrations under 50 ppm.
However,
the justification for that
estimate was not given.-
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Versar estimates that there are between 130 and 500
processes where the in-process concentration of PCBs is less than
50 ppm. (Versar 1982a)
Of these, from 4 to 15 processes are
considered closed, and generate a total of between .7 and 1.8
pounds of PCBs.
Between 40 and 153 processes are considered
"controlled waste processes", i.e. all wastes from these
processes are disposed of in EPA-approved PCB landfills or
incinerated in EPA-approved incinerators (i.e., PCB approved
incinerators,
certain RCRA approved incinerators, and EPA-
approved high efficiency boilers).
These "controlled waste
processes" generate between 6,926 and 18,006 pounds of PCBs.
The
87-332 "other than closed or controlled processes" generate from
6,856 to 17,830 pounds of PCBs (Versar 19~2).
(See Appendix B)
Data provided in the .26 manufacturing petitions for
exemption from the-May 31, 1979 rule were used by Versar .to
estimate 1) the number of processes in which PCBs are generated
in concentrations greater than 50 ppm and 2) the total pounds of
PCBs generated in those processes.
Appendix B gives the
breakdown of these exemption petitions in terms of numbers of
processes that are closed, controlled, or uncontrolled, and in
terms of the pounds of PCBs contained in such processes.
Depending upon the ppm in-proce.ss limit, and on the "no-PCB"
level used to define closed and controlled processes, more or
fewer manufacturers and processes may be affected by the policies
being considered.
Assuming that 1) a "closed process" is defined
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as one in which "no PCBs" are released to air, water, and waste
streams, and ~50 ppm are released to products, and 2) a
"controlled process"
is defined as one in which "no PCBs" are
released to air and water streams, <50 ppm are released to
products, and all wastes go to EPA-approved incinerators or EPA-
approved PCB landfills, then Versar estimates that among the
submitters of exemption petitions there ,is one closed process
generating an unknown amount of PCBs and six controlled processes
generating at least 9,125 pounds of PCBs where in process
concentrations of PCBs are greater than 50 ppm (Versar 198~).
See Table 2 below.
Aggregating the estimates of the number of processes and
associated poundage from the ~50 ppm and ~50 ppm categories, the
total number of closed and controlled processes which may be
eligible for the exclusion being considered is estimated to be
between 51 and 175.
The total number of pounds of PCBs generated
annually in these processes is estimated to be between 16,051 and
27,131 pounds.
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Tab l..e 2:
No. of Closed, Controlled,
by PFM Category
and Other Processe~
PH.., Category
Closed
Co nt ro,l 1 ed
Uncontroll ed '
<50 ppm 4-15 40-153 87-332
>50 ppm 1 6 19
To tal 5-16 46-159 106-351
Sourc e:
Vers ar Inc., "M ateri al s Bal anc e Information on
Inadvertentl y Gener ated PCBs ", 1982.
Methodology
C.
The in<;:remental costs and benefits associated with this
rulemaking are calculated against a baseline case of an immediate
ban on all manufacture, processing, distribution 'and use of
PCBs.
The incremental costs associated with the exclusion
options are considered 1) the additional heal th risks resul ting
from any exposure to PCBs from processes which would have been
sub j ec t to the b an had they not been excl uded, and 2) the
additional costs incurred by manufacturers and EPA due to self-
certification requirements imposed by EPA.
The exposure risks
will not be discussed here sinc e a separate exposure anal ysis is
being prepared by EPA.
However,
if the assumption is made that
all manufacturers and processors sub ject to the b an would fil e
exemption petitions if there is no exclusion rule, and that all
such petitions woul d be granted without any conditions, then
there would be no incremental costs in terms of PCB exposure in
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the short run.
In the long run there might be additional costs
in terms of PCB exposure since companies would be relieved of the
annual exemption petition requirement that they make a "good
faith" effort to develop PCB substitutes.
Incremental benefits are considered the savings which would
accrue to:
1) compani~s which woul d be t"el i eved of the burden 0 f
filing exemption petitions, altering processes, and/or ceasing
certain production processes, 2) companies which would be
relieved of the uncertainty resulting from the annual exemption
proc e s s ,
and 3) government which would only ~ave to review brief
exclusion reporting forms rather than lengthier exemption
petitions from companies whose processes had been excluded.
D.
Organization of Report
Section II discusses the al ternatives avail able to EPA for
dealing with the incidental manufacture of PCBs, given the
mandate of the Toxic Substances Control }let (TSCA).
Section III
discusses the generic costs of testing, recordkeeping, and
reporting which might be incurred by industry under any exemption
or exclusion policy.
It also discusses the costs which would be
incurred by EPA under such a policy.
Section IV presents EPA
estimates of the total costs and benefits of various exclusion
policies.
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II.
ALTERNATIVES
The final excl usion r.ul e will all eviate the burden of the
PCB ban where little or no risk is posed by the generation. of
PCBs as a byproduct or impurity.
EPA proposes to exclude from
the PCB ban certain processes from which "no PCBs" are released
into the air, water, or end-products, and from which all wastes
are disposed of in EPA-approved landfills or EPA-approved
inc inerators.
The rationale for the exclusion is that such
processes pose a "de minimis", or trivial risk.
Since it is often impossible to totally prevent PCBs from
escaping from a process,
and since PCBs that may escape are often
difficult to detect, EPA is proposing to issue guidelines on
appropriate analytical techniques to use to detect and monitor
PCB releases to air, water, and end-products of controlled waste
processes at the practical limit of quantification.
Sinc e the
actual minimum quantitatable level for a particular sample
depends on the sensitivity of the detector, the amount of
original sample extracted and condensed for analysis, and the
extract and injection volumes, the practical limit of
quantitation of PCBs is a function of the economic
characteristics of each of the inputs to the analysis.
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The major policy variables considered by EPA in developing
the rule included the appropriate ppm cutoffs for PCB release to
various media, the content of the test guidelines, and the
associated recordkeeping and .reporting requirements EPA would
impose on industries.
For example, EPA considered requiring that
a company, in order to be eligible for exclusion from the ban,
perform tests, and record and report test results, on a monthly,
quarterly, semi-annual, or annual basis, or whenever significant
process changes were made.
In addition, EPA considered giving
companies the option of making a theoretical calculation on the
concentration of PCBs in their processes.
The rule being promulgated by EPA will exclude closed and
controlled processes from the PCB ban as long as PCB releases to
air, water, and end-products are at or below the practical limits
of quantification.
EPA has set these limits of quantification at
10 micrograms per cubic meter.per resolvable gas chromatographic
peak in air emissions, 100 micrograms per liter per resolvable
gas chromatographic peak in water effluents, and 2 micrograms per
gram per resolvable peak in an organic waste stream.
In order to
be eligible for the exclusion companies will have to certify that
PCB releases from their suspect processes are at or below the
limits of quantification.
The certification can be
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made by testing and recording the results, or by making a one-
time theoretical calculation showing that PCB releases will not
exceed limits of quantification.
The testing and/or theoretical
calculation will have to be redone each time a firm's process
changes significantly.
This report presents costs and benefits of four regulatory
options.
The cost and benefits of other options can be easily
calculated using the tables given.
The first alternative is the
use of the exemption petition process to deal with all
incidentally generated PCBs, including those in closed and
controlled processes.
Zero costs and benefits are implicitly
associated with this alternative since it is used as the baseline
against which to measure incremental costs and benefits of the
other three alternatives.
The second alternative considered is one in which EPA wQuld
only require that a firm perform a theoretical calculation to
certify that a suspect process qualified for the
closed/controlled exclusion.
EPA would not hold the firms to any
stricter standards of proof than the theoretical assessment
results to show that their process qualified.
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The third alternative is the regulatory alternative chosen
by EPA.
That alternative requires that a firm with a suspect
process perform a theoret~cal calculation and/or analytical
testing to certify that their process qualifies for the
closed/controlled exclusion.
Under this regulatory strategy EPA
will hold firms to a stricter standard of proof than under the
second alternative to assure that PCB releases are below
designated levels; EPA has set up a testing protocol which it
will use for enforcement purposes--i.e. firms will be held to'
this standard of proof.
The fourth alternative is one in which EPA would require the
testing described in the third alternative f.or all processes
which attempt to qualify for the exclusion.
In other words,
under this regulatory strategy a theoretical calculation could
,not be used to certify a process for exclusion.
The incremental costs and benefits of each of the last three
alternatives are calculated with and without a reporting
requirement.
Under each of these regulatory alternatives
recertification would be ,required each time there was a
"significant process change".
The greatest amount of , uncertainty in calculating
incremental costs and benefits is associated with the third
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alternative,
1. e .
the one chosen by EPA.
Since firms have the
choice whether to test or to perform a theoretical calculation
the total impact will depend largely on how many choose each
option.
Section III presents and discusses the component costs of
each of these policy options as well ~s others considered by
EPA.
Section IV aggregates those costs and benefits over the,
applicable number of processes and over time to get a rough
estimate of the total cost of each policy considered.
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GENERIC COSTS OF SELF-CERTIFICATION, REPORTING, AND
III.
PROCESSING EXfl~PTION PETITIONS
This section discusses and estimates the costs which would
be incurred by industry and by EPA under various policy
options.
The costs of sampling, testing, recordkeeping, and
reporting are considered.
Most estimates are very rough; the
problems encountered in making these estimates are discussed
individually.
A.
Sampl ing Costs
The costs of sampling each medium of release should be added
to the costs of testing to calc ul ate total costs of tes,ting.
The
costs of gathering water and product samples are so small that
they are assumed to be zero for purposes of this analysis.
However,
the cost of taking air sampl es from stac ks is
signific ant,
so these have been included in the analysis.
The cost of gathering air samples for the testing
recommended by EPA are estimated to be $32,770.
This estimate
includes the costs of sampling equipment preparation, site
preparation, 1 abor and overhead costs for a four man sampling
crew working for 5 days, travel costs, and report writing
costs.
(See Appendix C)
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B.
Testing Costs
Estimating the costs of detecting and testing for
incidentally generated PCBs is very difficult for a number of
reasons.
First,
analytic al techniques for such testing are still
being developed.
Second, the test protocol, and therefore the
individual test costs, may be different for every process and
product.
Third, total testing costs may be different for each
proc ess b ec ause 'the sequential testing scheme recommended by EPA
calls for 2-7 testsl to make each determination of the level of
PCB release,
and b ec ause the frequency of II signi fic ant changes II
in processes (which require recertification) will vary from one
process to another.
The technical problems in detecting and
measuring small quantities of PCBs in various media are discussed
at 1 ength
in a
G1 A study:
The Analysis of Chlorinated Biphenyls
(August 1981).
Following is a list and brief discussion of the
technical problems discussed in that G1A study:
1.
Lack of chlorobiphenyl standards - The chlorobiphenyl s
which occur in chemical process streams are generated by
chemic al reactions which do not produc e fixed patterns of
isomers which can be used to identify the presence of
chlorobiphenyl s.
Since the chlorobiphenyls are comprised
of 209 individual chemic al isomers, the anal ysis of
chlorobiphenyls in process streams involves the difficul.t
problem of having to detect, identify, and measure each
IThe 2-7 tests should be done on sampl es which are each from a
separate cycle in the manufacturing process.
---- ~
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isomer individudlly.
The quantitative analysis of
specific chlorobiphenyl isomers is hampered because
standards necessary to calibrate analytical equipment are
not commercially avail abl e for all of the isomers.
2 .
Matrix interference - Process stream analyses for
incidentally generated chlorobiphenyls are severely
inhibited by the matrix of other substances in which they
are dispersed.
The matrix interferes with the analysis
by hiding the presence of chlorobiphenyl s, by decreasing
the sensitivity of the instruments to the presence of
chl orob iphenyl s, or by incorpor ating the chl orob iphenyl s
so that they cannot be extracted -for anal ysis.
These
matrix effects make it difficult to develop appropriate
analytical methods to detect and measure chlorobiphenyls
in process streams.
3.
Limits of quantification - The limit of an instrument's
ability to reliably measure the quantity of
chlorobiphenyl s' present in a process stream may be 3 to
JY2 times greater than the limit of detection.
4.
Analytical equipment limitations - Gas Chromatography
(GC) with the electron capture detector (EC) and gas
chromatography combined with mass spectrometry (MS) are
the most suitable methods for the detection,
identification, and measurement of chlorobiphenyls.
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However, these instruments are limited in their ability
to measure low levels of chlorobiphenyls,
.
and both
methods show variations in response to isomers within the
same homolog, i.e. isomers with the same number of
chlorine atoms.
ALso, the GC/EC increases in
responsiveness, while the GC/MS decreases in
responsiveness,
as the number of chlorine atoms
increases.
ALthough the a~A. study points out several limitations in
detecting incidentally generated PCBs, it now appears that, with
sufficient resources for engineering research and development, ~t
is technologically feasible to detect very low concentrations of
PCBs in processes and products.
A number of variables are involved in estimating test
costs.
These are discussed above in the CMA study excerpts.
They incl ude:
1.
the complexity of the matrix in which the PCBs are
dispersed,
2.
the type of testing equipment used,
3.
the size of the sample tested (which also affects the
limit of detection), and
.4.
the extent of sample extraction and "clean-up" required.
Depending on the combination of variables, the cost of an
individual gas chromatography/mass spectrometry test for
incidentally generated PCBs ranges from $120 - $770 per sample
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when sent to an outside lab (SRI 1982).
These costs refl ec t both
the direct costs of operating testing equipment, and the indirect
costs to recover overhead expenses ~uc'h as deprec i ation of
capital equipment, maintenance costs, etc.
The costs of testing
for PCB releases in air ranges from $120 to $595 per sample.
(This does not incl ude the costs of coli ecting air s ampl es. )
The
cost of testing for PCB releases in water ranges from $180 to
$595.
Testing for releases to products ranges from $122 to
$770.
See Appendix E for a description of sample products and
associated extraction and clean-up requirements for testing.
Table 3 presents the one-time costs of testing for self-
certification for each suspect process.
Since the estimated test
costs per sample span a fairly wide range, and since anywhere
from two to seven tests will have to be performed on each medium
of release, the range of total costs is very wide; total costs
range from $840 to $13.,-7-2-0.
C.
Costs Associated with Recordkeeping and Reporting for
Sel f-Certific ation
The costs of recordkeeping and reporting associated with any
exclusion policy will be dwarfed by the costs of testing and/or
performing a theoretical c alcul ation for certific ation.
The
costs of recordkeeping and reporting~for self-certification are
assumed to be the same for each of the exclusion options; i.e.
the recordkeeping and reporting requirements are assumed to be
the same as those specified by EPA in the final rul e.
The final
-19-
-------
Table'3:
One Time Cbsts of Testing for Self-Certification
No. of Tests
Required on Each
Medium of Releasel
Air2
$120-$595/Test
To tal
vJater
$180-$595/Test
Prod uc t
$122-$770
Two
Four
Seven
$240-$1,190
$480-$2,380
$840-$4,165
$360-$1,190
$720-$2,380
$1,260-$4,165
$244-$1,540
$488-$3,080
$854-$5,390
$844-$3,920
$1,688-$7,840
$2,954-$13,720
IThe sequential sampling scheme specified in the EPA testing guidelines requires that 2-7
tests be done on each medium of reI ease
2The costs of air s ampl ing are not inc1 uded here
Source:
SRI 1982
-------
rul e requires that all firms which have a proc ess which qual ifies
for the exclusion report their determination, and the basis of
the determination, to EPA.
Al so, records of the the9retic al
calc ul ation and/or the testi ng must be kept for s even years or
for at least three years after the particular process being used
at the facility ceases operations.
A new certification must be
filed and renotification of EPA must occur each time a
significant process change occurs.
A significant process change
is defined as one which is likely to change the concentration of
PCBs in releases from the processes (except in controlled
wastes) .
Records of the theoretical assessment must include (1) a
descrlption of the reaction or reactions believed to be producing
the PCBs,
(2) the levels of PCBs generated and released,
( 3 )
documentation of the basis for estimates of PCB concentrations in
releases, and (4) the name and qualifications of the person or
persons performing the analyses.
Records of actual monitoring of PCB levels must include (1)
a description of the method of analysis,
(2) documentation of the
results of the analysis, including data from the quality
ass ur anc e pi an ,
(3) the name of the analyst or analysts, and (4)
the date and time of the analysis.
-------
The costs of recordkeeping and reporting are estimated here
in terms of manageri al hours, technic al hours, and cl eric al hours
required to carry out those tasks.
The estimated burden on
industry and EPA is given in Table 4 below.
-22-
-------
Table 4:
Costs of Recordkeeping and Reporting for Self-Certification
t1anagerial Technic al Cl eric al Total
hours costs ho ur s costs hours costs cost
Industry
Recordkeeping
-per test round* 2 $134 4 $172 4 $68 $374.00
-for each theo-
retic al calcu-
1 ation 2 $134 4 $172 4 $68 $374.00
Reporting 2 $134 2 $86 2 $34 $254.00
(per report)
EPA
Report review .5 $20.0 1 $26 1 $10 $56.00
(per report)
I.
,
(Average hourly wage rates used for industry: managerial - $67,
$43, clerical - $17). Average hourly wage rates used for EPA:
managerial: $40, technical: $26, clerical: $10. See Appendix F
for calculation of wage rates).
technic al -
*A "test round" includes one set of tests on each medium of concern:
water, and end-product
air,
Sourc e :
EPA estimates
-------
Cost of Making a Theoretic al Calcul ation of the Level of
D.
Inc idental PCB Produc tion and Rei ease
As mentioned earlier, EPA plans to allow companies the
option of making' a one time theoretic al c alcul ation of the 1 evel
of incidental PCB production and release in place of testing.
However, companies wO,uld be held to staying below the
concentration limits specified by EPA.
The threat of enforcement
action might cause companies, particularly those with PCB levels
near the quantification limit, to forego the option of making a
theoretic al calc ul ation.
The cost of making a theoretical calcul ation has been'
estimated by EPA to be approximately $1,014.
(EPA 1982)
(See
Table 5)
This cost includes the direct labor and overhead costs
of technic al and cl eric al staff to perform and doc ument a.
theoretic al c alcul ation.
It is estimated that it would take an
experienc ed chemic al engineer approximatel y 22 hours to 1) gather
data on raw materi al s, 2) anal yze the reac tion and reac tion
conditions to determine whether PCBs were incidentally generated,
3) survey the reactor and other equipment to identify where, and
to what extent, PCBs could be released to
air I
water,
and end-
products, and 4) to document the calculation.
Four hours of
clerical time is also estimated to be necessary for the
documentation of this theoretical calculation.
-24-
-------
T<'Iblp. 5:
CORt of Making a Theoretical Calculation of the Level of Incidental PCB
production and Release (Per Process)
Technicall Clerical2 Total
Hou rs Costs Hours Costs Hours Costs
1. Gather data on raw materials, 8 $344 8 $344
e.g. inform<'ltion on
composi~ion and impurities
2. Analyze reaction, reaction 8 $344 8 $344
conditions to determine
whether PCBs may be
incidentally generated;
do mass balance calculation;
3. Su:("vPy reactor, reaction 2 $86 2 $86
conditions to identify
where PCBs may be water3
released to air,
4. Documentation 4 $172 4 $68 8 $240
Total 22 $946 4 $68 26 $1,014
I
1Assumes that an experienced chemical engineer performs the analysis at a cost of $43 per hour.
2Assumes clerical wage rate @ $l7/hour.
3Assumes that it will take one half hour per reaction
to survey the equipment for potential releases. Each
separation and/or purification steps.
step for an experienced chemical engineer
reaction step is assumed to include
SOURCE:
EPA Estimates
-------
Tabl e 6:
Estimated Oosts to Industry of Filing an Exemption Petition (including
research and testing costs)
M anageri al Technic al Cl eric al Total Oost
hours costs hours costs hours costs (per petition)
Oompany 1* 1768 5200 --- 208 $126,000
Company 2* $4,500 $11,500 $16,000
Company 3 * 280 $18,760 120 $5,160 60 $1,020 $24,940
Sourc e:
Industry estimates
[ No t e :
The companies contacted to estimate costs of. filing exemption petitions
did not give detailed breakdowns of cost estimates. Specifically, the
wage rates used by Oompany 1, and hours estimated by Oompany 2 were not
given. Company 3 provided hour estimates of the cost; the wage rates
used here to calculate total costs were: $67/managerial hour,
$43/technical hour, $17/clerical hour.]
*See Appendix D for a more detailed breakdown of exemption petition Gosts.
-------
E.
Costs of Exemption petitions
For purposes of this analysis EPA surveyed three petitioners
to gather rough estimates of the cost of filing an exemption
petition.
Rough estimates of the costs to EPA of processing
exemption petitions are also presented here.
Table 6 summarizes the reported costs to individual
companies of developing the data necessary, and documenting the
results, in order to file an exemption petition.
More detailed
breakdowns are given in Appendix D.
It is evident from the
estimates received that the effort expended by companies in
making a "good faith" attempt to develop PCB-substitutes and
documenting their cases for "no unreasonable risk" may vary
significantly.
For the three companies surveyed here the exemption petition
development cost ranged from $16,000 to $126,000.
It should be
noted that these costs could change if EPA decides to revise the
information requirement or the standard of proof to demonstrate a
"good faith effort" to d~velop substitutes and of "no
unreasonable risk" to file exemption petitions in the future.
-------
The costs to EPA of processing exemption petitions on an
annual basis will depend on the numb er submitted and on the
scrutiny given to each petition.
Since there are likely to be
"economies of scale" in processing petitions,
uni t costs will
probably fall as the number of petitions submitted rises. Rough-
estimates of the numb er of manageri al, technic ai, and cl eric al
hour.s required to process an exemption petition are presented
here. These are broken down by function and presented in Table 7
b el ow .
The functional cost categories include the costs of EPA
review,
preparation for public hearings, federal register notice
preparation, and correspondence costs.
The total estimated cost
of processing each exemption petition is estimated to be $7,12.6.
-28-
-------
Table 7: Estimated Oost to EPA of Processing Exemption Petitions (o~ a Per-
Petition Basis)
r1 anageri al Technic al Cl eric al Total
hours costsl hours costs2 hours costs3 ho ur s costs
EPA review 10 $400 100 $2600 10 $100 120 $'3100
PUO 1 ic Hearing 1 $ 40 10 $ 260 1 $ 10 12 $ 310
Preparation
Federal Reg- 1 $ 40 100 $2600 50 $500 151 $3140
ister Notic e
Preparation I
0'\
N
Correspondence 2 $ 80 16 $ 416 8 $ 80 26 $ 576 I
'Ib tal 14 $560 226 $5876 69 $ 690 309 $ 7,126
.
lassuming managerial wage rate @ $40/hour
2assuming technical wage rate @ $26/hour
3assuming clerical wage rate @ $10/hour
(See !\ppendix F for calculation of wage rates for EPA personnel)
Sourc e: EPA estimates
-------
IV.
BENEFITS k~D COSTS OF ALTERNATIVE EXCLUSION OPTIONS
As mentioned in the introduction, the incremental costs and
benefi ts estimated here will be calc ul ated using as a basel ine
the scenario in which all PCBs would be banned unless an
exemption request were approved by EPA.
The implicit assumption
made here is that all processes which would qualify for the
exclusion would also be granted their exemption requests, and
would be subject to the same disposal requirements and process
control requirements under both policies.
The incremental costs associated with excl usion options are
1) the additional health risks resulting from any exposure to
PCBs in processes which would have been subject to the ban had
they not been excluded, 2) the costs incurred by companies to
self-certify and report that the level of PCBs in various media
are below designated levels, and 3) the costs incurred by EPA to
spot check records of companies which certify themselves.
Costs of Self-Certification (Per Process)
A.
.
The incremental costs of self-certification will vary
significantly depending on how a company certifies itself.
Companies that make a theoretic al c alcul ation will incur the
lowest costs to self-certify.
Companies that test to determine
PCB concentrations could incur very high costs depending on the
number and complexity of processes affected, and on the necessary
frequency and sophistication of tests performed.
The sequenti al
-30-
-------
Table 8: Present Value of Testing Costs Over 10 Years (Per process)*.
,
(using a 10% discount rate)
No. of Tests
Required on Each
Medium of Release
No. of Significant Process Changes3
Four
1 per year 1 per 2 years 1 per 4 years
$6,030-$28,007 $3,313-$15,390 $1,814-$8,426
$12,060-$56,013 $6,627-$30,780 $3,628-$16,852
$21,105-$98,023 $11,597-$53,864 $6,350-$23,091
I
N
(V)
I
Two
Seven
1The sequential ~amp1ing scheme specified in the EPA testing guidelines requires that 2-7
tests be done on each medium of release
2TIle costs of air sampling are not included here.
3It is estimated that "significant" process changes will occur every 1 to 5 years.
1982a)
(EPA
-------
The costs of self-certification would be significantly less
if a company makes a theoretical assessment(s) to show that PCB
releases are below a certain level.
The cost of making that
calculation has been estimated to be $1,014 per process.
(See
Table 5)
The present value of the costs of conducting
theoretical assessments over 10 years range from $7,244, assuming
that significant process changes occur every year, to $2,180,
assuming that a significant process changes only happen once
every 4 years.
Given the ch0ice between doing a theoretical
calculation and testing for certification, not all companies that
have processes in which PCBs are generated would be willing to
self-certify using a theoretical calculation, especially if they
feel that the level of PCBs in their processes may be variable
and/or near the maximum allowable concentration of PCBs.
But
manufacturers and processors that are reasonably certain that
PCBs that are generated in their processes remain below the
limits of quantification may not feel that testing is necessary.
Table 9 shows the recordkeeping costs to industry associated
with testing and/or theoretical assessments for self-
certification.
Discounting the stream of recordkeeping costs
which could be incurred annually over a 10 year period, total
recordkeeping costs per process range from $804 assuming that
significant process changes occur once every four years, to
.$2,672, assuming th~t significant process ch~nges occur once
every year.
-------
Table 9: Recordkeeping Costs to Industry For Self-Certification
(per-process)**
Frequency of Significant
Proc ess Changes
Present Val ue*
10 Years
One per Year **
One per two years **
$2,672
$1,468
One per four years **
$804
*Using a 10% discount rate
**Assuming testing will be required on air releases, water
releases, and end-products.
-34-
-------
-_._----~-_. ----~----
Table 10 presents the costs of reporting assuming that
significant process changes occur everyone to four years.
The
present valu~ of the combined reporting costs to industry and EPA
range from $665 per process if one report must be filed every
four years, to $2214 if one report must be submitted each year.
B.
Benefits Derived From an Exclusion Policy (Per Process)
The benefits associated with the various exclusion policies
include 1) th~ cost savings to industry from not having to shut
down or alter processes, or file exemption petitions, 2) the
added certainty for industry in not having to file annually for
exemption from the PCB ban rule, and 3) the savings to EPA by not
having to process exemption petitions each year.
We have not
attempted to quantify the potential savings to industry from
added certainty or Erom not having to shut down or alter
processes.
However, these benefits should not be ignored in
considering alternative options.
Only the costs of filing an
exemption petition are quantified here.
Table 6 shows that the
annual cost of filing an exemption petition may range from
$16,000 to $132,440 (see. Section III).
Assuming that these
same
costs woulQ have to be incurred by a company each year over the
next 10 years for each process which does not fall within the
criteria for exclusion, then the total cost of filing exemption
petitions over that period range from $114,313 to.$946,226 per
process.
(See Table 11)
c.~
-------
Tabl e 10:
Costs of. Reporting for Self-Certification
Present Val ue* Over 10 Years
**Industry **EPA Review
No. of Reports Cost per Costs Per
Required proc es s Proc es s Total
1 Report/Year $1,814 $400 $ 2,214
1 Report/2 Years $997 $220 $ 1,217
1 Report/4 Years $545 $120 $ 665
*assuming a 10% discount rate.
. **see Table 2 for detailed calculation of these costs
-36-
-------
Table 11:
process)
Costs to Industry of Filing Exemption Petitions (per
annual cost per p~tition**
10 Years
*present value
Company 2
$16,000
$.114 , 313
Company 3
$24,940
$178,185
Company 1
$132,440
$946,226
*using a 1U% discount rate
**see Table 6 for detailed calculation of these costs
-37-
-------
C.
Total Incremental Costs and Benefits of Exclusion
Policy Options
(Per Process)
The incremental costs and benefits of thre~ exclusion policy
options are quantified here using as a baseline the costs and
benefits associated with an exemption petition procBss.
Obviously, many more policy options could be constructed with
various combinations of self-certification requirements.
The
cost of options not given here can be easily calculated using the
tables given.
The first alternative which is implicitly considered here is
the use of the exemption petition process to deal with all
incidentally generated PCBs including those in closed and
controlled processes.
This alternative is used as the baseline
against which to measure costs and benefits of the other three
alternatives,
i.e. zero costs and benefits are implicitly
associated with this option.
The second alternative considered
is one in which EPA would only require that a firm perform a
theoretical calculation to certify that a suspect process
qualified for the closed/controlled exclusion. ,Under this
alternative EPA would not hold the firms to any stricter
standards of proof than the theoretical assessment results to
show that a process qualified for exclusion.
The third
alternative -- the regulatory option chosen by EPA -- requires
that a firm with a suspect process perform a theoretical
calculation and/or analytical tests to show that their process
"qualifies for the closed/controlled exclusion.
Under this
-_.
=38~-
-------
regulatory strategy EPA will hold firms to a stricter standard of
proof than under the second alternative to assure that PCB
releases are below designated levels; EPA has set up a testing
protocol which it will use for enforcement purposes under this
regulatory strategy.
The fourth alternative is one in which EPA
would require that testing be done for all processes attempting
to qualify for exclusion.
Theoretical calculations would not be
acceptable to qualify for the exclusion under this regulatory
approach.
The incremental costs and benefits of each of the last three
alternatives ar~ calculated including a recordkeeping and
reporting requirement.
Under each of these regulatory
alternatives recertification would be required each time there
was a "significant process change".
.The greatest amount of uncertainty in calculating
incremental costs and benefits is associated with the third
alternative, i.e. the one chosen by EPA.
Since firms have the
choice whether to test or to perform a theoretical calculation
the total impact will d~pend largely on how many choose each
option.
Since there was no data from which to estimate the
percentages of firms which will choose each option EPA has
. assumed that roughly 40-60% of the processes which file for
exclusion will perform theoretical assessments of th~
concentrations of PCB releases rather than doing testing.
-39-
-------
Table 12 presents the estimated incremental benefits and
costs per process for each of the three alternatives
considered.
The present value of the incremental benefits per
process 1S the same for each alternative.
Discounted over 10
years at a 10% rate, incremental benefits ranye from $165,225 to
$951,127.
The present value of' the incremental costs per process
range from $3,649 to $337,036.
The low end of the range
represents the costs of performing a theoretical calculation
initially, and once every four years thereafter when the process
changes.
The high end of the range represents the costs of
testing annually to recertify.
A major cost component in that
total is the costs of doing air sampling to determine PCB
releases to air.
The net benefits for the three alternatives considered here
range from $0 to $947,478 per process.
It is assumed that net
benefits would never be negative since firms would choose the
least costly alternative available to them to comply with the
rule,
i.e. if it were going to cost them more to certify for
exclusion than to file an exemption petition each year then the
,firm would choose to utilize the exemption petition
alternative.
Because of the discretion allowed firms under EPA's
exclusion rule (Alternative 3) the range of net benefits for that
alternative is very large) Le. net benefits range from $0 to
$145.4 million.
The wide range is bounded at the high end by
estimates of net benefits for firms that only have to do
infrequent the~~etical calculations, and at the low end by
-------
T,,1>I(' 17.: ""er"'Je
over 10 Year.s)
111'~ rnm,..."ti1'
Bp.llefits
",1<' Cn",I.S
1'('>1' I'r.OCP.Sf1 for Excl us ion opt in liS
( "rp."'(1
$114.31.3-$900.7.l<;
$114.313-$900.21.5
Ce}sLs Si'lverl t)y lint
h;wing tn '31. t pr.ocluction
lVl,le,l c er. t <1 i n ty
F.P"
Petition Processing
S'3vings (per petition)
$50.912
$50.91.2
$1.65.27.9-$951. 127
$1.65.7.25-$951.127
$165.225-$951.127
----
Tot'3l
Costs
~;e1 f Cer.tificiJtion ('osts to:
!.NDUSTRY
Si1mpling & Testing/
'n,eoretical. Cal cul "tinn
$2,180-$332.150
$2.180-$ 7.244
$804-$ 2.672
$545-$ 1.814
$120-$ 400
$804- $2.672
$545- $1. 814
$]20- $400
Reconlkeeping
Repor.t ing
EP/\
-Report Review
-'~nforcement
$3.649-$337.036
Total
-'
$3.649-$12.130
$114.31.3-$900.215
$50.912
$235.941r$332.150
,
~
""
,
$804- $2.672
$545- $1. 814
$120- $400
$237.410-$337.036
lUsi IIg <1 10% discount r.'lte
2ro.ter.native 2: Only theor.etical i1ss. zer.o costs i'lnd benefits are implicitly associated with this
~ltp.rnative)
The range of costs is vp.ry lar.ge since undpr this alternatJ.ve firms are given the choice whether to
tp.st or. per.fonn i'I thenrpf:lc'll. calculi'ltion to qIJ"Ilify for. the exclusion
."" ......-..... ,,"'....)'.." .......
~,-....<;~..,;;t-',., 1:,"--1;t1'""".~'-"(,Oo"""~~",,,,,,,"""""''''''1I!rr- 1
... -AI
.,....Ą---
'....,....~ 1 -1
-------
Table 13:
Aggregate Incremental Benefits and Costs for Exclusion Op~ions2 (Present valuel over 10 years)
(in millions of dollars)
..- ,__.A_"
/'
Alternative 2
51 processes-175 processes
Alternative 3
51 processes-175 processes
Alternative 4
51 processes-175 processes
Benefits
INDUSTRY
Exemption Petition 5.8-45.9 20.0-157.5 5.8-45.9 20.0-157.5 5.8-45.9 20.0-157.5
Costs Saved
Costs Saved by not
having to alter
or cease process
Added certainty -..-
EPA 2.6 8.9 2.6 8.9 2.6 8.9
Petition Processing
Savings
Total 8.4-48.5 28.9-166.4 8.4-48.5 28.9-166.4 8.4-48.5 28.9-166.4
I
..,..
N Costs
I -serf Certification
Costs to:
INDUSTRY
-Sampling & Testing/
Theoretical
Calculation .1-.4 .4-1.3 6.1-8.6 20.8-29.73,4 12.0-16.9 41.3-58.1
-Recordkeeping .04-.14 .14-.47 .04-.14 .14-.47 .04-.14 .14-.47
- Reporting .03-.09 .09-.32 .03-.09 .09-.32 .03-.09 .09-.32
EPA
-Report Review .01-.02 .02-.7 .01-.02 .03-.7 .01-.02 .02-.7
-Enforcement
Total .18-.69 .65-1.8 6.2-8.8 21.0-31.2 12.1-
15.0 41. 6-59.6
lusing a 10% discount rate
2Alternative 2: Only theoretical assessments required fot exclusion
Alternative 3: Theoretical assessm~nt and/or testing acceptable for excluslon,
Alternative 4: Only testing acceptalbe for exclusion
(Alternative l--the alternative in which only the exemption pe~ition process wa~ _~~r -~ ~~dl with closed
and controlled processes -- is used as the baseline against which to measure costŁ ~nc b6~a[it~ ?f the other
~lternatives; i.e. zero costs and benefits are implicit~y ass~ciated with this alte~aative;
The range of costs is very large since under this alt3r~ative firms are given the chJice ~:~~:~~~ to test
~erform a theoretical calculation to qualify for the exclusion
The range of costs presented here assumes that 50% of firms will perform theor8t-ca~ r";seSsmentR and ~O~ w
]., ;- ( .~;. i t! I'.,,;, ',1' I f - u,. I ;., . (; .
-------
estimates of net benefits for firms that must do frequent testing
(including air sampling) t~ qualify for exclusion.
It is
important to note that these net benefit figures do not include
the benefits in cost savings from added certainty and from not
having to alter or cease production, .nor the costs of enforcement
for EPA.
It is likely that inclusion of these unquantified
benefits and costs would result in larger net benefits since the
enforcement costs to EPA are not likely to outweigh the benefits
of added certainty and avoidance of production changes.
The net benefits of Alternative 2 -- the regulatory strategy
in which EPA would only require that theoretical calculations be
I'
I
done for certification -- are obviously a lot hi~her than for
either of the other two alternatives.
The present value of net
benefits for that alternative ranges from $153,095 to $947,478
per process, whereas net benefits range from -$0 to $947,478
under the alternative chosen by EPA, and from -$0-$713,717 under
the alternative where only testing would be permitted to qualify
for exclusion.
D.
Aggregate Incremental Costs and Benefits of Exclusion
Policy Options
Table 13 aggregates the incremental costs and benefits of
the three exclusion alternatives over the total number of
processes which may be affected by the exclusion.
The cost
ranges within each category represent the 10 year discounted (10%
real rate) pre~~nt value of benefits and costs for 51 processes
-13-
-------
to 175 processes.
Aggregate incremental benefits, range from
$8.4 million for 51 processes, to $166.4 million for 175
processes.
Incremental benefits will be the same under all of
the alternatives considered.
The incremental costs range from .$18 million under the
second alternative (where only theoretical calculations need be
done for self-certification), to $59.6 million under Alternative
4, where only testing would be acceptable for certification for
exclusion.
The range of incremental costs for the alternative
chosen by EPA is given assuming that 50% of the firms which
certify will do a theoretical calculation, and the other 50% will
conduct testing for certification.
Under that assumption the
incremental costs asso~iated with the EPA policy (Alternative 3)
range from $6.18 million to $31.2 million.
Assuming 175 processes take advantage of this rulemaking,
net benefits range from -$0 under Alternatives 3 and 4, to $166
million under Alternative 2 (where theoretical calculations would
be sufficient for self-certification).
For the alternative
chosen by EPA net benefits range from $0 to $145.4 million if 175
processes take advantage of the exclusion (assuming one~half of
the firms affected do theoretical assessments and the other half
conduct tests to qualify for exclusion).
If 51 processes take
advantage of the exclusion net benefits range from $0 to $44.6
million.
(See Table 14)
~44
-------
Table 14:
Summary Table: Aggregate Net Benefitsl
(in millions of dollars)
Number of processes affected:
51 processes
175 processes
Al ternati ve 2 (theoretic al
assessments only)
7.71-48.32
27.1-165.75
Alternative 3 (testing and/
or theoretic al assessments)
2
0-42.3
3
0-145.4
Alternative 4 (only testing
permitted)
0-36.44
0-124.85
lAs measured here, NET BENEFITS = [(Exemption petition Cost
Savings to Industry) + (EPA petition processing savings)] -
(Self-Certification Costs to Industry)
2,3,4,5It is assumed that Net Benefits will never be negative
since firms will choose the least cost alternative in order to
continue manufacturing, i.e. if certification costs associated
with the exclusion rule are greater than the costs of filing
exemption petitions annually then firms will choose to file
exemption petitions rather than certify for exclusion.
-45-
-------
As has been mentioned before I the range of net b enefi ts
estimated here does not include the benefits derived from the
added certainty associated with an exclusion policy nor the
benefits from not having to cease or alter certain types of
processes.
Al so I
enforcement costs to EPA (outside of report
review costs) have not been quantified.
It is prob ably safe to
say that if these b enefi ts and costs coul d be quantified the net
benefits of all of the alternatives would be increased
signific antl y.
'4r;~
-------
REFERENCES
G1A. 1981a. Chemical Manufacturers Association. Comments in
re,sponse to two advanc ed notic es of proposed rul emaking rel ating .
to the manufacture of PCBs below 50 ppm. November 25.
Washington, D.C.: Office of Toxic SUbstances, u.S. Environmental
Protection Agency. EPA Docket Nos. OPTS - 62013 and OPTS-62014.
G1A. 1981b. Chemical Manufacturers Association. "The Analysis
of Chlorinated Biphenyl s". August 21. Washington, D. C.: Office
of Toxic SUbstances" u.S. Environmental Protection Agency. EPA
Docket No. 62017.
EPA. 1982a. Environmental Protection Agency. Notes from
Economics and Technology Division Meeting to discuss chemical
process changes for purposes of PCB Closed/Controlled
Rulemaking. September 9, 1982. Washington, D.C.
EPA. 1982b. Environmental Protection Agency. Notes from
telephone conversation between George Wall ash, OAQPS, EPA, and
Amy Moll, OTS, regarding costs of doing stack sampling.
September 14, 1982. Washington, D.C.
MRI. 1982a. Midwest Research Institute. Methods of Analysis
for Incidentally Generated PCBs - Literature Review and
Prel iminary Recommendations" (Draft Interim Report). April 7.
Washington, D.C.: Office of Toxic SUbstances, u.S. Environmental
Protection Agency. EPA Docket No. 62013.
SRI. 1982. SRI International. Cost Estimates for
Impl ementation of MRI Anal ytic al Protocol for Incidentally
Generated PCBs. August 23, 1982. Washington, D.C.: Office of
Toxic SUbstances, U.S. Environmental Protection Agency.
Versar. 1982a. Versar Materials Balance Information in
Inadvertently Generated PCBs. April 22. Washington, D.C.:
Offic e of Toxic SUb stanc es, U. S. Environmental Protection Agency.
Versar. 1982b. Versar List of Pi ants and Chemical Manufacturing
Processes Known or Suspected to Generate PCBs as Impurities.
September 8, 1982 Memo to Liz Bryan, et. ale Office of Toxic
SUbstances, u.S. Environmental Protection Agency.
-47-
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Appendix A
End-Products of Manufacturing Processes in Which PCBs are
Incidentally Generated
(Versar, 1982a,b)
Dyes
diarylide yellow
dyes/pigments made with halogenated solvents
halogenated dyes/pigments
halogenated solvents, unspecified
phthalocyanine
Org anic Chemic al s
al kyl benzene
alkyl chlorophosphine derivatives
benzene chlorination (process)
benzene phosphorous dichloride
biphenyl derivatives
carbon tetrachloride
chlorinated aryl phosphines
chlorinated naphthalene derivatives
chlorinated phosphate ester
.
chlorobutane derivatives
chlorosilane derivatives
chloroxylene derivatives
diphenyl oxide and derivatives
ethyl benzene
halogenated solvents, unspecified
~48-
-------
monochlorinated butylated diphenyl
monochlorinated terphenyls
organa phosphorus trichloride derivative
pentachloranitrobenzene
phenyl chlorosilanes
phenyl siloxanes
polychlorinatea terphenyls
tetrachloraethylene
aluminum chloride
-------
I'
1'<: II d
C, "..:cut r., t lOll
III l'l'oe<.l:.l'" «('1'10)
0-25"."
25-50"""
Suhtota 1
50-200
:WO-500
'10n-120n
I
U1
o
I
12(11)-10,000
10,11')0-1 no, 000
Sul.tota 1
T.1t :,1
Appentll:
Sumillary of Inadvertent Productloll of I'COIi by Cuncent rat 1011 In Proceafl alld ProcelHt Category
Type of Nusllbe r of Proce aau a
pl'OC6dS Seena rlo 1." Scona rio 2.....
C10aed 4 - 15
Controlled 40 - 153
Oth., r than 81 - 332
C lotu~" 4 - 15
Controlled 40 - 153
Other than 87 - 332
<50 ppm 1 ~l - 500
Cloaed 1 1
Controlled I) - 1 0 - 5
Other than 8- 16 1 - 12
I Closed 0 0
\ Controlled 0 - 1 0 - 5
) Othe r t.han 6 - 14 6 - 10
i Cloaed 0 0
Controlled 0 - 1 0 - 4
I. Othur tl"\an 0 - 3 0
Cloaed 0 0
Controlled 1 - 2 1 - 5
Ot he r than 0 - 3 0
Close" 0 0
Controlled 0 1 - 4
OthttC t.han 1 - 4 0
>50 26
157 - 5~6
Ave r.1']o QII"'lIt 1 ty of
Qualltlty of PCUs (H.u)
Sccllarlo 1 Scenurlo 2
PCBs per. Process (lba)
Scenarlo 1 Scenarlo 2
0.2
113
18
0.2
113
18
UNK liNK
o - 125 0 - 826
1259 - 920 1440 - 903
o 0
0 - 125 0 - 826
192 - 422 192 - 191
o 0
0 - 125 0 - 10]1
o - 1333 0
0 0
5000 - ~563 5000 - 1825
o - 1333 0
o 0
o 25000 - 7250
25000 - 1250 0
. II,,: lu.h:.1
0.7-1.6
6926 - 18,006
6656 - 17,8]0
0.1 - 1.0
6926 - 18,006
6949 - 11,810
\3,783 - 35,037
liNK
o - 125
10,008 - 14710
UNI(
o - 4131
10,008 - 10,164
In Ulont than one ppm cate'Jory tJecau;Jtt t.horo 1s inbufflciont. Infonllat10o to tlete,-1II1ne the COl-rect P.>l1I cato~ory.
o 0
0 - 125 0 - 4131
1149 - 5911 1149 - 1905
o 0
0 - 125 0 - 4,125
o - 4,000 0
0 0
5000 - 5125 5000 - 9125
o - 4000 0
o
25000 - 29000 .
25000 - 2~OOO 0 .
" 6 . 044
59,621 - 61,601
o
o
. "I.. Lloi:J b';UII.;J("iu tllU "colI~rolled" category -'Iay Includu prOCtHladB Wh.Hu thu product cont.i1ns up t.o 25 p('ao PClJa; proccas.:.s
whuc... I,C.),)uctll eOllta1n >25 ppm tijll Into the "othar thao" cat6'}ory.
11'0)1111.1:1 ."JUoe lated \~lth the process unl(no\~o
11111 llll!! ::ACullarlo the "cont.rolled" catu'Jory Inay 1nclll.1e proceuftott where tho product coutalna <50 ppl1lJ procu::uUHt whure
l,r...t'I.;1 ti contaln >50 pp1n ara Included In "othec t.han" eat.6Yocv.
"" "",".; ,I"t<, for thude catogorloe An~ from CMA BurvOy.
-------
Appendix IZ
AIR SAMPLING (from stacks)
Cost Breakdown
Activity
Hours
Costs
1.
Sampliny Equipment Preparation
100
160
200
$4,300
$10,000
$6,880
$800
$1,500
$690
$2,990
$~,600
2.
Site Preparation/Equipment Installation
$32,770
3.
Four-Man Sampling Crew for
S Days (includes travel time)
4 .
Travel Costs
a. Round-trip airfare @ $200 each
b. 5 nights hotel @ $75/night
c. S days of meals @ $34. SO/day
s.
Data Reduction/Report Writing
TUTAL
SOURCE:
EPA 1982b
. -
.--
-51-
-------
---
~.dix D
Es""~ti..'1a e:s-..s to L~ust::v of Filina an
Exe:!Icticn Petit.icn - ~ 1 -
- -
~J,;J.Vl'r! ABU EFFORT (Person Years) A?:'R
'I:ech'!'li ~a1 I Secre!:ari4l I Managen.u cos~
-
,
I
[L. Deve.lo-pmeu: of an Anal~iC31 Me1:hcd to
Quand.::4:e PC3s in Org~ l'~gmena -
:z.. AnaJ.yd.cal Tesd.ng P=og::am c:4 ~ 0.50 -
I Ma:erlals &.F~uisbed P:=duc!:s
I f ' ,
3. ?:oc:ess ReŁe:::ul.ad.Dn fer hcciuc:: .
CQmp' ~ :::I'!'I~~ .
.
4. Reco~ E:ee-ping rl:h Ma::wŁac:-on-ad 0.1
~. & Purc~ed. b:w Ma.!:a~ .
..oCtUC:3 .
5._!lStom2:" A3su:anc2 Da.!:a. P~ed O.:~ I 0.1
I.
on ?=oduc:s 1 -
-
I
I
0.1 "
6.
Adm.m..s~-=ad:v~ ':it:e
7.
L4pl. Draf.d.n;' ~~FUj,ng
0.,1
0.1
I' . . .1 : I
... ::~n: Su..~e7 for ~csu:e Level.s 0.;1
0.
I -. I I
9. CQ~a.ny & 'trade Asscc:ia:icn Mee~gs ,- ' 0.1
-
TO'tAI.. ACJ.:l v ~n IN ~ :a.mc ~'rION .' Z .SO 0.1 0.85
APl'!.!Cd..~ON
- .
JSrote: Spacific .hourly ar.d ~ btmien estimates a-~ r..ot
aiven .here to m:::d~~~i 1'1 c::orrf-i ~=T-i::-1 i"t:v
---05"(2,=
-------
Appendix D (cont.)
Estimated Costs to Industry of Filing an
Exemption Petition
Company 2
Hours
Cost
$4,500
Man ageri al
Technic al
An al ytic al
Travel
Testing
$9,500
$2,000
$16,000
'Ib t al
Company 3 Ho ur s Cost*
Managerial 280 $18,760
Technic al 120 $5,160
Cl eric al 60 $1,020
'Ibtal $24,940
*Wage rates used to arrive at cost estimates:
$67/managerial hour, $43/technical hour, $17/clerical hour
, 53,
-------
Appendix E
Description of Samples to be Tested for PCB Concentration
SIMPLE PRODUCT-l
Description: Clear Liquid
Extraction: None
Cleanup: None
An al ys is: Di rec t in j ec tion/ CGC/ EL'1 S
Anticipated Levels of PCB's: 1-100 ug/g. ALl homo~ogs
Anticipated Levels of Interferents: Negligible
present
SM1PLE PRODUCT-2
Description: Opaque, viscous oily liquid
Extraction: Dilute 1/100, filter off solid (F2)
Cleanup: Liquid (Fl) - Florisil column cleanup
Solid (F2) - Digest with acid, refilter
PCBs into hexane
and extr ac t
Analysis: CGC/Ell1S
Anticipated-Levels of PCBs:
presents
Anticipated Levels of Interferents: Twenty-five chlorinated
species from chloroform through C6C16 are known to be
present. C4C16 is present at about 40%; all
chlorobenzenes are present, including C6C16 at 10%.
Sample assays at SO% chlorine
100-1,000 ug/g, C12HSCl - C12HSC1S
SIMPLE PRODUCT-3
Description: Colored Powder
Extraction: Dissolve in heated H2S04' extract three times with
hexane, dry on Na2S04 column, concentrate the
appropriate volume
Anal ysis : CGC/EIMS
Anticipated Levels of PCBs:
isomers
Antic ipated Level s of Interferences: Minimal Chlorinated; may
semivolatile hydrocarbons, aromatics, and nitrogen
b as es
100 ug/g total; mixture of C12HSC1S
SIMPLE WATER-l
Desc ription: Industrial wastewater
Extraction: Method 608
Cleanup: Method 608
Analysis: CGC/EIMS
Anticipated Levels of PCBs:
all homologs
Anticipated Levels of Interferences: 100-1,000 ug/Liter each of
10 PNAs, 6 chlorinated pesticides, and 4 chlorophenols
SO ug/Liter total, SO isomers over
-54-
-------
1.
II.
Appendix F
Calculation of Wage Rates for EPA Personnel
Managerial hourly wage rates:
o
Assumed GS-15 (step 5) annual salary based on "Proposed
Pay Schedule for Federal White Collar Employees"
(August, 1982): $55,025
o
Allow 50% overhead costs:
$55,025 x 1.5 = $82,537
o
2,080 manhours/year
$ 8 2 , 5 3 7";- 2, 0 8 0 h r s. = $ 4 0 /h au r
Technical hourly wage rates:
o
Assumed GS 12/13 (step 5) annual salary based on
"Proposed Pay Schedule for Federal White Collar
Employees" (August, 1982): $33,290 + 39,586)
2 = $36,438
o
Allow 50% overhead costs:
$36,438 x 1.5 = $54,657
o
2,080 manhours/year
o
$54,657-:- 2,080
$26/hour
III. Clerical hourly wage rates
o
Assumed GS 4/5 (step 5) annual salarly based on
"Proposed Pay Schedule for Federal White Collar
Employees" (August, 1982): ($13,541 + 15,153)
2 = $14,347
o
Allow 50% overhead costs:
514,347 x 1.5 = $21,520
o
2,080 manhours/year
o
21 , 520 -:- 2, 080 :: $1 0 /h ou r
-56-
-------
.....--;: 72 -, 0'
REPORT DOCUMENTATION !.1--REPORT NO.
PAGE i
12.
,
13. Recipient's Accession No.
4. Title and Subtitle
"
Economic Analysis for the Final Rule to Exclude Closed
and Controlled Processes from the PCB Ban Rule
5. Report Date
S~pternber, 1982
6.
_.
7. Author(s)
Amv E. Moll
8. Performing Organization Rept. No.
9. Performing Organization Name and Address
10. Project/Task/Work Unit No.
.
11. Contract(C) or Grant(G) No.
-
(C)
N/A
(G)
12. Sponsoring Organization Name and Address
U. S. Envirol1IreJltal Protection Agency
Office of Toxic Substances
401 M Street, S.W.
Washington, D.C. 20460
13. Type of Report & Period Covered
Fin::!'
14.
15. Supplementary Notes
This report updates and revises the Cost Analysis for the proposed rule to exclude
closed and controlled processes fran the PCB ban.
--.-..---.....
. --...-.-
.16. Abstract (Limit: 200 words)
In May, 1979 EPA promulgated the original PCB ban rule,
which permitted the manufacture, processing, distribution, and
use of PCBs in concentrations less than 50 ppm. The Court
remanded the rule to EPA because EPA did not present sufficient
evidence to justify the 50 ppm cut-off decision. The Court
ordered that a rule dealing with the incidental generation of
PCBs in closed and controlled manufacturing processes be
promulgated by October 13, 1982. EPA is promulgating a final
rule which excludes closed and controlled processes from the PCB
ban. This report estimates the costs and benefits of the final
rule as well as the other regulatory alternatives considered by
EPA.
17. Oocument Analysis
a. Oescripton
Polychlorinated Biphenyls Economic Irrpact Analysis
Economic Irrpact Analysis
PCB Closed/Controlled Rulemaking
b. Identlfiers/Qoen.Ended Terms
~ c. COSATI Field/Group
Unlimi. ted Availability
\19. Security Class (This Report)
Unclassified
I, 20. Security Class (This Page)
TT1"I,..l",c::c::i-!=io:>r'1
121. No. of Pages
I 65
I 22. Price
I
OPTIONAL FOR". 272 (4-1"
(Formerly NTI>35)
rk:X.i 1".",1 ,o,f Cl'lmmu<::"
18. A"ai1abillty Statement
(See ANSI-Z39.18)
See Instructions on Reve,.e
------- |