United States        Office of
            Environmental Protection     Pesticide and Toxic Substances
            Agency          Washington. DC 20460
            Office of Pesticide and Toxic Substances
&EPA      Mieroeconomic
            Impacts of the
            Proposed "PCS Ban
            Regulation"

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EPA 560/6-77-035
                    MICROECGNCMIC IfiPACIS OF THE PROPPED
                                      REGULATIONS'
                              FINAL TASK REPORT
                                 Sutxnittsd to:

                     U.S. Environmental Protection Agency
                       Office of Planning and' Management
                               Washington, D.C.

                        Attention:  Mr. Steven B.-.Malkenson
                                    Project' Officer  •
                           Contract No. 63-01-4771
                                 Sufcmitted by:

                                  VERSAR INC.
                             6621 Electronic Drive
                         Snringfield, Virginia  22151
                                (703) 750-3000
                                  May 16, 1978

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     This document is available in Limited Quantities  through the U.S.
Environmental Protection Agency, Office of Toxic Substances (WH-794), 401
M Street, S.W., Washington,  D.C.  20460.
     This document will subsequently be available through  the National
Technical Information Service, Springfield, Virginia   22151.
     This,. ra|s3jst, has been reviewed by the Office of Planning and iManage-
rnent-, U.SS. Environmental Protection Agency,  and approved for publication.
Approval dp<3S'> not- signify that the contents necessarily rerlect the via^s
and pjo.l;i,j;:^]ei5-of, the -Environmental Protection Agency, nor does mention, of _
trade naraess oy  coctnercial products constitute ardorsanent or rsconnendation

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                                    .HHEE&CE              ' '     :  •          -. •

     This report was prepared by Versar inc. for the Office of Planning
and Management of the U. S. Environmental Protection Agency.   The report
svamsarizes Versar *s estimates of the probafale costs and impacts of com-
plying with  the proposed "PCS Ban  Regulations. "  These  regulations were
prepared by  the EPA Office of Toxic  Substances and the • Interagency PCS
Work. Group to implement the requirements of Sections 6 (e) (2)  and 6 (e) (3)
of the Toxic Substances Control Act  (Appendix A) .
     This economic analysis program  was sponsored by the  EPA,  but the re-
sults reported are tfic.se of Versar Inc.   This report was  prepared- in
partial fulfillment of the requirements of Contract No. 63-01-4771.  The
report is not a statement of EPA policy*  However, this study does meet
the requirements of an economic impact analysis of the  proposed regula-
tion.
     This repOCt. WaS pT'gTi;jTi3(4 ITTK^PT*  •{•fro s.1 ir >CT^H en ftp rrf  Mj~  PrJ^r**- frtog^n n  .
Principal Investigator.  Major contributors were:   •         "  •
         Louis Fcurt, Ph.D.  Ceconomic methodology, waste  oil, ; railroads) ,.
         Sofaert Westin, P.E,  (transformers, dry pigments)
         David Berkey  Ccapacitors , mining  '
                           machines)
         Bruce Woodcock (hydraulic systems, turbifiels)
be given  for..
             11 i ^' —'^i • «'-j»-^ —i m  . _--j-«l" •^-i'.-.. j^'--.»iii.._« J; A -. _
                                          >'•
from- Mr.-:StHven Bt.rMaHoenscajrsearTtoj8eft*ierr±Bar^^
EPA Regulations- Development-
factual xfrr'HTUjHtJ^of Hrf g ''-ntaBrrrt;  ar° ^10 tr> t-ho -r»1r;i^a orv^p^T^^ ^--.rja^^tgfefj ,.^- ,,^. -;, «._;. _• --- .-
              3              -                      '"•-••     B  :  ~  . ..-:^-i-..-.^-'jt . <.; '-. . --;.- -.-.• • .
from industry, particularly representatives of the transformer! a
tor manufacturers and the electric utilities.

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     This report is being released and circulated prior to the public
hearing on the proposed regulation,  it will be considered along with- the
information received during the hearing in establishing the final regula-
tions.  Prior to ^'p*i promulgation of the regulations, this study shall
have standing in any EPA proceeding or court proceeding only to the extent
that it represents the views of Versar Inc.  It cannot be cited, referenced,
or represented in any respect in any such proceeding as a statement of
EPA's views regarding t±e inpact of the proposed regulations.

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                          'TABLE'QF CONTENTS
PREFACE                    .
1.0  INTRODUCnON ...................    1
     1.1  Purpose and Scope . ,	    1
     1.2  PCBs Usage'in tne United States	    2
        .. 1.2.1  Production of PCBs .  .  .	    4
         ' 1.2.2  Imports of PCBs	'.  .    5
          1.2.3  Hydraulic System, Heat Transfar
                 System, and Compressor Use	    5
          1.2.4  Transformer 'Manufacturing and
                 Maintenance ,,.'	 .  .  ;  »    7
          1.2.5  Electromagnets^.	 .  .  .8
          1.2.5  Capacitors . .. .-'v-.	  .    9
   •  1.3  PCS Restrictions in the'-Toxic Substances
          Control Act	....... .^.  ...    9
     1.4  Summary of Proposed Ban Regulations	10
     1.5 . Effects of the Proposed Regulations
          by PCS Use	12
2.0  METHODOLOGY FOR ECONOMIC IMPACT ANALYSIS
     OF THE PTOPCSZD "PCS BAN REGULATIONS1'  .'.....   14
     2.1  General Approach	14
     2.2  Definition of Economic Impact .  .  . ... ....   16
3.0  IMPACTS OF BANS ON THE DISTRIBUTION OF
     PCS CAPACITORS AND EQUIPMENT .. '	17
     3.1  Effect of the Ban Regulations	17
     3.2  Summary V .';  .	18
4.0  IMPACTS ON USERS. OF ASKAREL TRANSFORMERS ......'  19
     4.1  Requirements of the Proposed Regulations.  .  .   19
     4.2  Compliance Costs	•.   19
     4.3  Economic Impact of Cost Increases	22
     4.4  Summary	22
                                iii

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                      TABLE OF CCMTENTS  (Cont'd.)
5.0  D4P.ACI5 CN TRANSFORMER SERVICE COMPANIES ....... .23
     5.1  Bnpacts of the Proposed Regulations ...... .  23
     5.2  Stannary . .  . .  .............  ....  25
6.0  RAILBQAD LOCOMOTIVE TRANSFORMERS .  .  ,  ........ -26
     6.1  Requirements of  the Proposed. Regulations  ....  26
     6.2  Present Ownership and Use .........  . . .  27
     .6.3  Technical Alternatives  for PCBs  in
          Railroad Transformars .....  ..........  27
     6.4  Cost Impacts of  the Proposed Regulations.  .  .• . .  30 ,
     6.5  Economic Impacts of the Proposed Regulations. . .  33
     6.6  Surnnary .....................  33
7.0  OIL FILLED t^weR 2ND DISTKEBUTICN TRANSFORMERS ....  36
     7.1  Requirements of the Proposed Regulations .....  36
     7,2  Estimation of the Extent of Trans-
          former Oil Contamination by PCBs  ....... .  36
     7.3  Costs of Corolying with  the Pi.ut.osed
        '  Regulations ......  ..... .  .  .  . ..... -.  41
     7.*  Sxamary ............  ' ........ .  49
8.0  MINING MACHINERY ......... ' ..........  51
     8.1  .Requiransits. of; tiie Proposed Regulations .....  51
     8;2  Cwnership and Use of PCS Mining Machinery ....  51
     8.3 ". Compliance fy^*+s  ..................  54
     8.4.  SurntHry .~r -.-;:..• ..............  59
9.0  .EIECTKCMAGNETS . . . t ................  60
     $:lr- • Rgepairemants of .the Proposed' Regulations .....  60
     ,9;;2' Cpnpliance Costs" .....  .  .......  ...  61
     9.3. Sinrcary . . . ..................  62

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                       TREES-QF-GDOTSMS-  CCent'd.)
                                                             '•'Pace-
10.0  HYDRAULIC SYSTEMS  .................  .  .  64
      10.1  Requirsments of the Proposed Regulations .....  84
      10.2  Cwnersnip and Use of Contaminated
           . Hydraulic Systems ... . . ..............  63
      10.3  Compliance Costs ............  - .  .  .  .  66
      10.4  Sumnary .....................  73
H.O  HEAT TRANSFER, SYSTSS .................  75
      11.1  Requirements of the Proposed Regulations .....  75
      11.2  Ownership and Use of Contaminated
            Bieat Transfer Systems . . . .  .......... ' 7.6_
      11.3  O.v.'iM. 1 ^TVT0 Cosfe?  ................  76
      11.4  Sunnary .....................  77
12.0  COMPRESSORS  ....... ...............  78
      12,1  Requirements of the Proposed Regulations.  .  T .- .  78'
      12.2  ' O?m>Tf'PTy!* Qy^t"g  ,..............'.»  78
      12.3  Sunrnary .....................  -79'
13.0  RIELUMI3 OIL ......... . .......  .  . .  ...-.'^j1
      13.1  Requirements of the Proposed Regulations •  /-.. .  . '  84
      13.2  Sources and amounts of Contaminated Waste  Oil/...  84
      13.3  Compliance Costs  . .'. . • ........ .  ...•-.  :..,.;•.:;.,  86
      13.4  Sumnary .... ..............  .'••.. v- "91;
14.0  PCBs ^S ONBIfiiWllOJaL -PEDECCT GDNTMmffiNTS ..... : .  . -92;/
      14.1  Requirements of the Proposed Regulations.  . .... .••;.: -9'2
      14.2  Compliance Costs  ............  .  .'.v;;;"'  92
      14.3  Suimary ........ . ........... ;.:,...  95

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                      TABLE'OF'OCNTSMS  (Cont'd.)
15.0  CAPACITOR MA1TOEAC11JRIMG	   96
      15.1  Requirements of  the Proposed Regulations.  ...   96
      15.2  Capacitor Production, and Sales.  .........   97
      15.3  Cdcpliance Costs  ...............   98
      15.4  Sunnary  ....................  108
15.0. TRANSFORMER MRNCEACItJRING	109
      16.1  Requirements of  the Proposed Regulations.  .  .  .  109
      16.2  Industry Structure, Production,  and Sales  .  .  .  109'
      16.3  Substitutes for  PCS TransforsBrs;  .  '.  .  .-- .  .  .  lH
      16.4 ' Relative Prices  of Non-PCB Transformers  ....  116
      16.5  COTpT t'artCQ Costs  ...............  117
      16.6  Sumnary	US
17.0  TOTAL CCST AND ECONOMIC  IMPACTS	120
      17.1  Transitional Cost  Inpacts	.....".•  120
      17.2  long Term Cost Impacts   . .  .  .  .  ...  .  ..  .  . •.  123
      17.3  EtoloyitEnt Impacts	'	123
      17.4  Other Economic Irtpacts	  124

APPENDIX A - TOXIC STESiaNCES  CONTROL ACT
REFERENCES

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                               LIST.OP TABLES

Table No.                   .                     .         .

1.2-1    Estimates of Cumulative PCBs' Production, Usage, and Gross
         Environmental Distribution in the United States Over  the
         Period 1930-1375 in. Millions of Pounds	
1.5-1    Effect of the Proposed PCS Ban Regulations on Various
         Uses of PCBs ........................    13

5.2—1    Railroad PC3 Transformers  ..................    28

6.4-1    Cost of Processing Retrofilled 3a-iimari Transformer Liquid
         to Reduce the Concentration of PCBs   ...  .........    .32

6.5-1    1976 Operating Losses of Railroads Using PCS  Transformers  .    34

6.5-2    Labor and Overhead Costs of Retrofill and Processing Program
         for Railroad Transformers  ...  ......... '...'..'    35

7.2-1    Number of Liquid Cooled Transformers Manufactured:  1972  . .   37

7.2-2    Annual Sales of 'Transformer' Oil in- •die U.S.  .  .  .  . . .  . .'"38
 7.3-1    'Preliminary Cost Estimate for a 'Chemical Waste Incinerator
          for Transformer Oil Contaminated with Lew. Concentrations •-
          of PCBs  ...........................   43

 7.3-2     Annual Operating Costs for Contaminated Oil Incinerator  .  .  "44

 7.3-3     Testing and Disposal Costs for Transformer' Oil ..... '.  .   47

 7.3-4     Testing and Disposal Costs for'- Transformer Oil .......   48

 8.2-1     Production Statistics & Present Use Status of PCS-Ccoled
          Mining Machines  ........ . ..............   52
 3.3-1    Cost Impact of Forced Retirement of PCS Continuous Miners  .   5
 10.3-1  ' Present PCS Levels" in Die "Casting Machine Hydraulic ......
          Systems  .......  ................. ...   67

 10.3-2  . Industry Estimates, of. -the. Cost -of.- Draining,- Flushing-/ -and- --- •  ••
                    Die Casting. -Machine Hydraulic Systems  ........   68
 10,3-3    Estimated Cost of Decontaminated Hydraulic Systems .....   70

 13.0-1    New Oil Usage and Waste Oil Availability for Recycling
          in 1975  . .  ................... .......   81

 15.2-1    PCS Capacitor Production, and Sales:  1972  .........   97
                                       V3J.

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                           LIST OF TaHTiBS, CQNTDftlED

Table Mb.                          ...          ,        "'.'•.   " Pace

IS.2-2   PCS Capacitor Sales - by Year  ...'...'.	     98

IS.3-1   Currently Available Non-PCB Power Factor Correction    •  "
         Capacitors	    101

IS.3-2   Manufacturers of PCB Industrial Capacitors in  1976   ....    102

IS.3-3   iManufacturers of Snail ^ionicl Dielectric AC  Capacitors   .  .    103

16.2-1   U.S. Transformer Manufacturers Which Used PCBs After 1970  .    HO  -

16.4-1   -Relative Transformer Prices  	    116

17.1-1   Transitional Cost Impacts	*  .  •  •  •.
                                       viii ..

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                               .LIST OF FIGURES  .        .     -     •' '  "

Figure No.              ._....••    . :   . • ~             .               • page

7.3-1    Decision Criteria for Analyzing Transformer Oil for
         PCBs Before Disposal	.-	.-.'..   46

13.0.-1  Distribution and Utilization of Waste Oil in the
         United States During 1970-71 	   82

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 l.o  ETIFQDUCIICN                 ...                   ••••;.    .      ••,..-.

      1,1''Purpose'and'Scope
           The purpose of this study was  to  evaluate the economic iirpacts
 of the proposed "PC3 Ban Regulations."   These  regulations were prepared
 by' the Office of Toxic Substances of  the U. S.  Environmental Protection
 Agency with the technical support of  the Interagency PC3 Wark Group.  These
 regulations implement the bans on various PC3  activities which were estab-
 lished by Congress in Section SCe) of the Tbxic Substances Control Act -
 Public Law 94-469 Csee Appendix A).
           The economic costs reported herein are those directly and- in-'
 directly attributable to these changes in- future PCS activities which would
 be caused by inplensntaticn of the proposed regulations.  From the wording
 of Section 6 (ej, it is clear that the intent of Contress was to ban the
 manufacture of PCBs after Decercber 31, 1978, and to ban the distriiiution of
 polychlorinated biphenyls  (PCBs) after June 30, 1979.  Therefore, the long
 term costs-of• tsing"substitatas for-FCBs -w±H- •be-a-.ccnsequence-of this - — '—•'
 legislated ban on the nanufacture of  PCBs and  not a consequence of dis-
 cretionary regulatory actions taken'by the  Environmental Protection Agency. •
           The effect of the authorizations  in  Section 761.31 of the pro-
-gssed regulations will/ in each case/ be to reduce the-ecsRenao iroacts	
 Which- <*fMl^ ftsrr» nagi'l-fro^ f^Mii +-h«a  i IHTMC^ ai*o ^npT ir'jp-hi'rri nf the.banS— Set-
 •fnvih in <4^
                                           l inns -MPt.'ta Iht* -f-ntirmnprrfcai rnst^s-
 r^fr^cL on "^p*3* pys^^S?/ n^^^r ^n*^ pp'fc .tJT<3 ^n^^r^** F?*^ni ^^Q^^^oh^ir cc€^s^._ _.__._
 which would result in the..absence of  these.authorizations.   Hcwever, the
 assumptions behind ttie analysis of  the individually identified impacts, are
 explicitly identified, and the analysis should support the evaluation of
 alternative regulatory approaches.
                                     -1-

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          This analysis of tne proposed regulations considered both, the
direct costs of conplying with, the requirements and the indirect effects
of these requirements on price levels, capital needs/ employment, energy
consumption, and the availability.of strategic materials.  The calculated
economic impacts were the incremental impacts of the proposed regulations
on a base of 1316 practices as modified by the previously promulgated PC3
effluent standards and the marking and disposal regulations. • The costs
of these other PCS' regulations were considered during their development
and are not considered to be a result of these proposed, ban regulations.  .

     1,2' PC3s'Usage in the- United'States
          PCBs have been used in the United "States since 1929.   2fejor"uses
of frhig chemical have included transformer-cooling'"liquids; capacitor di-
electric liquids;' heat transfer and hydraulic liquids; as a dye carrier
in carbonless oopy paper? as a plasticizer in paints, adhesives and
cauUcing compounds; and as a filler in investstent casting wax.   A previous
EPA contractor report    estimated the usage and -distribution of PCBs to  -
be as shewn in Table 1.2-1.
(1)  Versar Inc.  PCBs in the United States:  Industrial Use and Environ-
     mental Distribution.  Springfield,  Va.:   NE*-H.T*I
     ticn Service {NTIS PB 252 402/3WP).  February 1975.
                                  -2-

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                                     Table 1.2-1
     EatUrvjtes of Cumulative PCBs Production,  Usage,  and Gross  Environmental
Piatribiitlfti Jn the United States Over the Period 1930-1975  in  Mil lions of  Pound;
** 1
' t
•
i ' '"
U.S. KM Production i

Total U.S.; KB Iii|X>ria
U.S. fCB Canestlc Usfitja
L »
•total U.S< KB Exports
KB by Ouo Oiteyoryi
Fetroleiin JkUUline
Heat Tcaisfer
Misc. Inhiatrlal
Caitxjuloas Copy Pa
llyilraul^ca oiifj pub
Oilier FlaaUcizcr
Cai>acltd!r>

i


«r
•Icanta
Jaes

Trans (oiWra
Usea OUiej$ Uion Elecicleal
KB De«jrd4eJ or' lacljporatcdt
f^tvliumajtituilly Petji'twloi)
liiclncrdtixi ..
|i - ^
i i
L^iiKlfllla.anJ PCBa In Oiii|>3)
Cap. aikl IToita. Ptlxluctloii

Ctisolet^ Cle. EVjuijmait
Oil 10 r (|>apcr. pln^llc. etc.)
llrce lOJa 'in Uta Enviromiiait
(&oll, inter, air.
6odin«nt)

Total i


Oamiarclal
Piuductlui
1.400

3

,





















1,403

Camerclal
Sdlea



1.253

150
















1



1.403

• Jdliiatriol
Purdkisea of I'd!



•



1
20
27
45
60
115
630
335
,.




i




i

1,253 .

rCUs Currently
In Servlco












450
100
8











'758

KDs Currently
In OivUxjiment









.




.





110
ao
100

150

440

fCUa
DeatioyoJ



f












30
25








SS
tst Inaltxl
lUjllrtlilllly
of Values
+ 51
- 201
1 301
' + 5»
'- 201
t 20% '
"'
> 501
I 101 •
r 151
i it
t lOt
,t 151
t 201
i 20t
« 601

i 701
t 101

•
t 20t
i 401
i 401

t 101
1


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          3-2.1  Production'of PC3s   ~         '   •
                 TSe major U.S. manufacturer cf PC3s has been .Msnsanto.
Since 1972, Msnsanto has limited sales of PCSs to manufacturers of trans-
formers and capacitors,  Msnsanto ceased iranufacturing PCBs in mid-1977,
and shipped the last remaining inventory by October 31, 1977.  A previous
EPA sponsored study    indicated that about 'one millicn pounds of PCBs
were also manufactured By a small chemical company from 1972 through 1974
for use as a heat transfer t •? pprf <3,
                 PCBs may also be made as unintentional by-products of
other chemical processes.  For instance, the manufacture'of the dry pig-  •
ment phthalccyanine blue by reaction of precursors dissolved in- trlchloro-  •
benzene may result in the. formation of PCBs from reactions involving the
trichlorobenzene..  These PCSs may contaminate the pigment at PCS concen-
trations from parts per million to as'much as 0.1 percent.  Production of
diarylide yellow pigments also results in the formation of dichlorofaiphenyl
due to a side reaction involving the pigment precursor dichlorobenzidir.e...
This results in PC3 concentrations in the yellow pigment of up to several
hundred parts per million.  Chlorination of. water which contains appreciable
concentrations of biphenyl  (which is used as a dye carrier in dying poly-
ester fibers and which is a ojiiuoi pollutant of water /discharged fron dying
plants)  can result in the unintentional formation of PCBs to a concentra-
tion of several parts per millicn.  No natural (non-industrial) sources of
FCSs have been identified.
 (1)  Versar Inc.  Usage of PCBs in Open and Semi-CLcsed Systems and
     the Resulting"l5sses of PCSs to' the EnvlronnentI  EPA 560/6-77-
     009 (unpublished Draft Beport)September 1, 1976.

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           1.2.2  Imports of PCSs '             •                  "         •••
                                                                       -(...'•
                  PCBs have been. imported for use in investment casting
wax,  for maintenance of certain mining machinery, and as the coolant in
electrical transformers,^                   '                "        .
                  Decacnlorobiphenyl was imported fron Italy, for several
years for use as a filler in investanent .casting wax; this use was ended in
mid-1976. ^    Several manufacturars of investment casting wax are presently-
using imported polycSlorinated terpnenyls- CPCTs}' in their products.  The  .
U.  S,  distirnutor of FCEs has- given assurances that PC3s are present only
at  concentrations celcw 0.005 percent, ^ but no data are available, on the.
actual concentration of PCSs found in these. PCTs.        .' .    . .  •
                  Over 700,000 pounds of PCBs have been imported since 1972
to  maintain certain mining machines which, use PCBs as a motor coolant,
No  additional PCBs will be imported for this use as existing U.S. inven-
tories are reported to be sufficient to meet maintenance requirements for
the remaining service life of the machines.
                  PC3s have also been imported as components "of transformers
and capacitors.  This source of PCBs does not seem.to be significant at
present.
                  Hydraa2±c~~SystSm,  Heat Transfer
                  System,  and Ccnpressor Use
                  PCBs ha\e not been '.r^^^rr^^T^y available for open system
 uses since 1974.   Leakage of iBCB- hydraulic- fluid was replaced by PCBs taken-
" from' r'emanlhg~maintanance"slpplies and, after these were exhausted, by
 (1)   Versar Inc.   Assessment of the Environmental and Econcmic Impacts of
                                                                  '
- -.-» - •  the- .Banvon~atTOrts--c^°*g^s;^~gp^^6C?7^                     ""• """ '
 (2)   Personal ccmmunication,  Mr.  L.  M.  Argueso (M.  Argueso and Co.,
      Martaronedc,  N.Y.),  August 30,  1977.
 (3)   Versar Die.   Assessment of the Environmental and Economic Impacts of
      the Ban on Bncorts  of PCSs"   EPA 560/6-77-007, July, 1977, pp 9, 10.

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compatible non-PCS fluids-.- • As a result,- the FCBs  in service in these ma-
chines in the early 1970's have been'diluted.  Information obtained during
the course of this study through a phone survey of users of these systens
indicates that the fluid presently in the machines may  contain from 60 pern
to 50 percent PC3s, depending on the amount of leakage  and replacement over
the past five, years.
              .  When Monsanto discontinued the manufacture of PC3 based
heat transfer liquid in 1972, they recommended that  existing systens be
drained and flushed and the liquid replaced with a ncn-PC3 liquid.   A num-
ber of systens were maintained through. 1974 with PC3s manufactured .by a •
small chemical company, but no PCS heat  transfer fluids were manufactured
or imported after 1974, and it is believed that all  systens have been  •
drained and converted to non-PC3 fluid.  The effectiveness of the initial  ~"
flushing procedure is kiswn for only one system which" was flushed in 1972
and presently is using a fluid which is  contaminated by two percent  •
PCBs.
                PC3s were used as a working fluid  in a  number of turbine
compressors on natural gas pipelines in  the early  1970's.   Although the -
PC3 oil has since been drained and the turbines flushed and refilled,
resioua3r PC3s"~a~re "present' to ** ^.g»»%»»T^>.t"
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unintentional contamination of waste oil,  but -no information is ^available.
on the extent of PC3s in. transmission  fluids.          "      '    •   ..'"•"'
                 Contaminated oils have not been segregated fron the flew
of oil collected for reclamation.  As  a result,  much of the oil presently
handled by the waste oil collectors, processors, and re-refiners appears
to be contaminated' with, lew levels of  PCBs,

         ' '1.2.4  Transformer 'Manufacturing and Maintenance               • •
                 Mast1 large electric5!! transformers are-designed to operate
with, the current-carrying coils iitinarsed in a dielectric liquid.  This
liquid provides electrical  insulation  between the -windings by filling in
any pinholes- in the enamel  or pacer  insulation.   The liquid also performs
as a heat transfer media By absorbing  heat frah  the coils and conducting
it to the outer shell or heat transfer surfaces  by  natural or forced 'con- „.
vecticn.  Most liquid-filled  transformers  are cooled.with mir.erai oil.  This
oil can present a  significant fire hazard  in the event of a short circuit
within the transformer.  -.Therefore,  oil-filled transformers are not allowed
to be used in hazardous locations such as  buildings except, when installed -in •
a fire resistant ccncrets vault.
                 .In the past, most transformers  used in hazardous locations
have been filled with non-flacnable  coolant liquids containing ?C3s as,a,-	
      cuitxjzifcint:  Tfisse PCS' transformer ,i..i'.qui.cs  are known ay the generic
                                                  »iiS 19 3o"^"S m
transformer-appHcatiori^; — Mthough • tfaer P€3- f±iiei-traBsformers'nave"*cost ---
                                                 ^

              ____ .The. manufacturers^of ,
factoring EC3. .transformers--by'the end of -1977.' 'There are presently in use "
approximately 140,000 PCS transformers which contain an average of 300
gallons of liquid  (2,150 ]£ PC3).  The average  service life of these

-------
askarel transfOCTETS is  about 40 "years,  if certain routine iTsir.tenar.ee is.
performed.                   .    •• •    .          ..'•'•'    •    .."'""''
                 The electrical properties of askarel are significantly
degraded by the presence of mis-tare.   Thermal cycling of the" transformer
during normal use can draw air' into  the transformer through minor leaks in
bushings, and the, askarel will acsorrj  moisture from this air.  It is routine
practice to check, the electrical properties- of the askarel periodically at
intervals from 1 to  5 years- depending, on ambient air moisture.  If moisture
is detected', the askarel is drained  and filtered Cto remove the moisture),
and the bushings are repaired.   This maintenance, usually performed in the
field, is necessary  to assure continued safe operation of the transformer
as severe degradation of the askarel can cause major arcing within -the.
transformer.
                 Similar maintenance has been routinely performed cri the
several million oil-filled  transformers.  The oil in"many of these units
may be ccntamined with PCSs to a concentration of several hundred parts
per million due to past  use of the same equipment to service both oil-filled
and askarel transformers.   It is also  possible that PC3 contamination" of  the
ail may have occurred in the manufacturing -process where plants- made both .
oil-filled and askarel transformers.   Disposal of transformer oil has been
through 'r»'"»-'T'*1. ™*s+* <•".! h?"'1 -T' -increased
levels of PCS contamination of reprocessed and reclaimed oils.

          1.2.5  Electromagnets
                 --Several - hendred-eiec Liaiia
-------
          1.2.6  Capacitors       -:.          .        ".'•'•    -.•'-•'•
                 PCBs have teen used as the liquid dielectric in  almost all
X,  (alternating current) capacitors  made in the. United States since  the mid-
1930 *s.  PC3s are unexcelled in-their properties of-chemical stability/
fire resistance, and high dielectric strength.  Although, no other dielec-
tric liquids equivalent in performance to PCBs have been developed,  other
liquids are being used successfully  in capacitors which perform the  sane  • •
function as PCS capacitors.  All of  the manufacturers of.large  pcwer factor
capacitors have switched to non-PC3  substitutes.  Mast of the manufacturers
of small capacitors have either stopped using PCBs or announced their in-
tention to switch, to other liquids early in 1978.        •  •     ' •

     L.3' 'PCS--Restrictions-in the "Toxic Substances Control Act      .  '
       .   Prior to the enactment of  the Toxic Substances Control  Act,  the
only authority of the EPA with, respect to PCBs dealt with discharge  of con-
taminated water fron industrial point sources.  Cn February 2,  1977,  the
EPA proimlgated regulations under Section 307(a) of" the Federal Water-
Pollution Control Act which banned the direct discharge of water,  contami-
nated with PCBs by electrical transformer and capacitor manufacturers  after
February 1, 1978.  ^                     •                   .
          The enactment of the Toxic Substances Control Act  (in October,
1976)  placed additional requirements on the use of PCBs and required that
certain actions be-.taken-by the.EPJU—Section-4(ei-CD- of -the_Act  required ....
that the-'EPA: pr
regulations were promulgated--on February -tfr 1978. ^ ''---The regulations- re~	
quire tiiat special warning. laKaig fcg jappi-ieyj-^rL P<~^ yj^ip^ntr
 C1J  EPA "Final Decision" Federal Register, Feb.  2, 1977, pp.  6531-6555.
 (2)  EPA, "Polychlorinated Biphenyls  (PCBS): Disposal and Marking,"
    ' Federal Pegister, February 17, 1978, pp.  7149-7164.

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and storage areas.  The regulations also 'require that disposal of ?C3
liquids, materials and equipment by by approved methcds  (generally high
temperature ircineration-or.chenical' waste landfill) and establish" approval
criteria for the disposal facilities.

           The Toxic Substances Control Act also established cutoff dates
 for certain PCS activities as follows:
           January 1, 1978:  All manufacturing, processing, costributicn
                             and use must be in a totally enclosed manner.
           January 1, 1979:  No further manufacturing or importing of
                             PCSs allowed*
           July 1, 1979:     No further processing or distribution in com-
                             merce of PCSs allowed.
           The proposed PCS Ban Regulations implement these requirements
 of the Act and also authorize the ccntinuaticn of specific activities
 where the EPA has determined that such activities will not present an  ..
 unreasonable risk of injury to health, or the. environment.

      1.4 'Summary of Proposed Ban Regulations
           The continued manufacturing/ processing/ distribution in commerce/
 and use of PCSs has been regulated by Congress.  Section 6 (e) of the Toxic  .
 Substances Control Act (Public L. 94-469, 90 STAT 2025), established
 various restrictions on PCS activities and the dates on which- these re-
 strictions become effective.  EPA is required by Section 6(e) to establish
 by rule several technical findings regarding PCS activities.  These find-
 ings must establish:
           (.1)   The level of exposure of human beings and the environ-
                ment to PCEs that may be considered insignificant •
                [Section 6(e)(2) CCJ].  This level of exposure is the
                basis for .judging whether any 'activity' or' use is in
                "a totally enclosed manner."
                                     -10-

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           (21   Wietfier certain uses present an unreasonable risk to
                health or the environment.  Tnis. criterion is to be  -
                used as the basis- for authorizations of'activities,
                that ara-rat conducted i» a totally enclosed manner, '  •
                and in evaluating petitions for one year exampticns
                from the mandated bans on the manufacturing, processing,
                and distribution in commerce of PC3s.  [Section- 6(e)
                C3IQ3I].        ...

           OI   TScse activities which, although not conducted in a
                totally enclosed manner,  nevertheless will not pre-
                sent an unreasonable risfc of injury to health or the
                environment.  [Section 6(e)(21 (BJ].

           The  proposed "PCS Ban Regulations" state these'findings, incor-
 porate the mandatory requirements established by Congress, and would grant

 authorizations for continuation of certain activities based on the findings.

 These regulations were prepared by the EPA Office of Toxic Substances  in

 cooperation with the Intsragency PCS VforJc. Group.   The basis for the proposed

 regulations is the finding that there is no identifiable level of PG3 -re-  -

 lease to the environment that can be considered insignificant.  Therefore,
 only totally enclosed activities such as continued usage of existing trans-


 1977.                                              '

           The  Tbxic Substances Control Act grants the SPA authority to  -

 permit other PCS activities after the end of 1977 if the activities do not
-jr-f^imr nn nrnTrn^nnihl-r Trink rn hrnltih -MT frhn nTTgnmrrvh.  flrttjfyj -.avirTT—•—

 this authority, the SPA in the proposed ban regulations wculd permit the

 following PCS  activities in other than a totally enclosed manner.

           (a)   Continued minor maintenance' of PCS transformers to
                premature -retirement and-lack- of replacement units . •
                railroad Icccmptive power transformers.
                                     .-11-

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          (cj  Continued use and scheduled phase-out of use of PC3-
               filled maters used on certain raining equipment.

          Cd)  Continued' use of certain "hydraulic systems contami-
               nated witS. PCBs if efforts are periodically made  to
               dftcontaronate the systsns.

          Cel  Use of waste oils contaminated with PCBs below a  con-
               centration of 50 ppm, except as a sealant, coating
               or dust control agent.  This could ban the use of
               oil contaminated with any measurable amount of PC3
               for oiling roads or as a pesticide carrier.


     1,5''Effects of the Proposed Regulations by PCS Use

          The economic impacts resulting from, the proposed regulations were

detennined by evaluating the effects of the regulations on each"  identifiable

PCS use.  The report of the-analysis also addresses' each-use in  a separate

chapter, and the format of the':|;'eportf therefore, dees not parallel.the

format of the regulation.  A guide to the discussion of the various sections

of the proposed regulations is presented in Table 1.5-1.  The various cost

and economic inpacts are summarized in Chapter 17.
                                    -12-

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                     Table 1.5-1              ..

Effect of the* Proposed PCS Bah Regulations • en Various
                     Uses of ?C3s
                      Chapter of Report Discussins Intacta















































Subpart of Proposed
PCS Ban Regulation
A2 Definitions
(q) PCSs
(w) Mixture
(cc) Oust Control Agent
(dd) Process
(hh) Totally End. Manner
(ii) Wasta Oil
9 Disposal " ~
(C) (1) (B)
Transformer, PCS '• '
less than 500 ppo
C MarJQJig
(a) (3) (i)
Transformer, PCS
less than 500 ppra
0 Prohibitions '
761.30 Tot. aid. Manner
(a) Manuf . & Use Ban
except in totally
enclosed manner
ID) 1-J.-/3 Mania!. s"Use Ban
(c) 7-1-79 Distrlb. ban
761.31 Authorizations
(a) Transformer Servicing
(b) Transformer Distribu-
tion in Coiueiue
(c) ftiilroad Transfomsrs
f ,|^ jj. ••Jjii IB Lfi 1 ' r

(e) Hydraulic Systems
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Plans

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                         - -13-

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2.0  METHODOLOGY FOR ECONOMIC IMPACT ANALYSTS OF THE PROPOSED "PC3. SAN
     HESITATIONS1'         '
     2.1  General Approach' '      ;    "~
          The approach used in developing the economic impact analysis of
the proposed "PC3 Ban Regulations"  is summarized below:
     (1)  Each industry significantly affected by the draft regulations is
          considered separately.- The analytical methodology used is the
          same for each industry, and the results are presented in a format
          permitting aggregation.
     (2)  Analysis is limited to. impacts expected to result from the
          proposed ban regulations.   The impacts are the incremental changes.  •
          from a base condition  assumed to be the industry practices in 1975
          as modified by the PC3 effluent standards, and the PCS Disposal and
          Marking regulations.                1

     (3)  Increased industry costs  due  to the use of substitutes for ?C3s
          and the resulting product development costs or the costs of dis-
          continuing certain products are the basis' of the . calculation of  •••   •
          cost impacts.  The resulting  price and product quality effects are
          used to calculate expected changes 'in demand and market shifts
          among competing products.   The impact of these market effects on-
          individual industries  is  used to calculate employment changes.
     (4)  Each industry is  regarded as  a link in an input-output chain or
          web.  Thus, changes in output affect customer industries and,
                   j '• i '* "~i ' »ijf'~. *~  , i \—i i i.»-r -. '.  "T|i .m'i--.i- •
          analysis is extended only to the first tier customers,' and second-
          ary ilTDaCtS iaaT*o .agsajrcpiaH— ^n...frya... ngg^ •jlq4hl
-------
      (5)  The chain effects are also traced backward at least one stage to
          suppliers;  price,  quality and delivery effects are considered as-
          determinants, of
      (6)  At each  stage (supplier,  directly impacted producer, custonar) ,
          impacts  on  the various factors of production were considered.
          Physical factors of  production at each stage include labor,
          materials,  equipment,  factory space and land.  There may also be
          impacts  on  fixed' and working capital requirements and capital
          markets,  including rental -or- leasing arrangements.
      (7)  Significant externalities are considered in the analysis.
      (8)  The analysis  considers only the costs incurred by the regulations.
          No estimates  are made  of  the benefits to health or the environment
          achieved by banning  the use of PCBs.
          •                **.                                   '
      (9)  Distinction is made  between transitional and long term effects.
          Transitional  effects include .the costs of premature obsolescence
          of production facilities  and equipment,- retooling, research and
          Long term effects  include  increased prices and changes in aggre-
          gate market demand.        '       '       •              •        -  •

                                **"^1   --ppr^-pH  i f>4ngf-T-T/ at-o <-a'miT a^-ri        '
following rormat:
    Variable               •   Transitional  Impact         Dong Term. Impact
price of output
                                     -IS-

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     Secondary economic effects  which are discussed where. relevant include "
wages paid/ materials used, product redesign,  new investment, space require-
ments, servicing costs,..product  reliability,  fire safety, and analytical
testing costs.

     2.2  Definition of Economic Impact
          Enpact is defined as the changes resulting from the implementation
of the regulation.  Calculaticn  of the impact .requires that the base con-
dition be carefully defined to exclude the effects of the proposed regu-  •
lation but to include the:effects of standard industry practices and ether-
relevant regulations and laws.   In the present case, the base period used to
define industry practices is assumed to be 1975.   Thus, the effects of the
voluntary ban on open system, uses of PCSs that was taken by Monsanto in 1972
is fully reflected in the base condition, but other" actions taken by
industry in anticipation of the  requirements  of the Toxic Substances.Control
Act do not affect this base condition.   The impact analysis then distin-
guishes the impacts of the proposed ban regulations from, the effects of the
PC3 Effluent Discharge Regulations,- the PC3 Disposal and Marking Regulations,
and the ban provisions of the Act which caused Monsanto to cease PC3 -
production in 1977.                         .                  •
          Versar used two major  data resources to establish the base
conciticn:                     -                        -
     (1)  Testimony at the public hearings in'Washington (July 15, 1977)
          and in Chicago  (July 19, 1977); and
    ..(2).... Trrt-gry-i^vg tj-i-hh ^-Ff «ar-(-p^ parfjpg, pprvrnr^-pri jnpsfrly hy-fealgyhone ______
          with information •contacts established by Versar during: previous
          PCBs study tasks;
                                     -16-

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   3.0  IMPACTS OF BANS ON -THE DISTRIBUTION OF ?C3 CAEOTOFS
       AND S
       The proposed ban regulations would^require that PCS capacitors not' be'
  installed in newly manufactured products after December 31,  1978, and that
  new equipment containing PCS capacitors not be distributed in comerce after
  June 30, 1979.   The ban on manufacturing would apply not only to the instal-
  lation of a capacitor in a piece of electrical apparatus, but also to the
  installation of any 'PC3 Equipment'- in a larger assembly.  For instance, the
  December 31 ban would apply to the assembly of a PCS capacitor into a
  lighting ballast, the assembly of a PCS ballast into a lighting fixture, am
  to  the assembly of a PCS lighting fixture into a subway car.   Buildings con-
  taining PCS capacitors ,  however, are specifically defined as not being 'PCS
  Equipment1 .   The ban on distribution of newly manufactured goods' in cotmsrce
  would  also apply to all of the varieties of  'PCS Equipment' .

       3.1  Effect of the Ban Peculations
             Most manufacturers of ac capacitors switched to substitutes for the
  PC3 dielectric liquids by early 1978. .  No PCS capacitors are expected to be
  manufactured after August, 1978, when Aerovox Corporation expects to exhaust
  its inventory of PCS liquids.  Manufacturers who use PCS capacitors as com-
  ponents of 'PCS Equipment' will generally be able to use up their inventories
  of  PCS capacitors by the end of the year, and little inventory loss is
             The greatest impact of this portion of  the ban regulations may be
.... on  r&t-ai 1  i nv^rvhm-i jac; nf acpl i anf o
-------
inventories.  The  "M *"+•*** number of PCS  items  still in inventory could not -.
easily be identified, and the,practical  difficulty of enforcement, would
limit the real impact of the regulation.  Should any special situations--... •  .
result in large numbers of new PCS appliances  in wholesaler's or retailer's
inventories on June 30, 1979, the owners of  the units could apply to the EPA
for a temporary exemption from the provision of the ban regulations similar
to that which is discussed in the preamble to  the proposed regulation for  the
continued use of FC3 capacitors in the repair  of electrical equipment.

     3.2  Summary
          The only impacts of the proposed bans on 'distribution in commerce'
may be the obsolescence of certain retailer  inventories of PC3 appliances.
Options available  to such imDacted p*rt* i**^ include the replacement of PC3
capacitors with non-PC3 units, or the application to the..EPA for an excep-
tion to the ban regulation.  Total costs' are unlikely to exceed a few.hundred
dollars per affected g^t-ahi i ghn^ntr / and  would "likely total less than one
million dollars.   The practical difficulty in  enforcing this part of the
regulation will probably result in real  impacts considerably lower than these
estimated amounts.
                                      -18-

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'4.0  IMPACTS ON USERS OF ASKABEL tSANSFOBMEPS
      Versar estimates that' there are about 140,000 askarel transformers  in-
 use.   About 1/000 of these are being useti. on railroad locomotives and can-
 muter cars; the impact of the draft regulations on these railroad locomotives
 is discussed in detail in Chapter 6.  Of the remaining units, most are pad
 mounted distribution and power transformers located in buildings and electric
 generating stations, with a substantial number of askarel precipitator transr-
 formers being mounted on stacks.'  The distribution of ownership of these
 transformers is summarized in Table 4.0-1.  -With -an estimated average of
 2,500 pounds of PC3s in each -transformer, the total in-service inventory of
 PC3s in transformers is approximately 300,000,000 pounds.  The transformers
 are owned1 and, .maintained by either the utility or the user-, depending on- the
          ., ..   ;«            •          '                   '•'.'•
 business arraijgsments made at the time of each installation.
                 '' ' ••<
               V-V.'/'i'-..--.         Table 4.0-1                  '         •
               Estimated Number of PC3 Transformers in.. Service
                           .
 Category of User    •              Number of Units.         PCS Content-Pounds
 Utilities                   "           42,000                 105,000,000
 Industrial and Commercial              97,000                 191,000,000
 Railroad                            '    1,000      '             4,000,000
                                      . 140,000                 300,000,000
      "4.1
           The proposed ban regulations forbid the major rebuilding of askarel
 transformers.  Therefore, failed askarel transformers would have to be
                                                                                 T
 Increased costs -will -be •incurred- at the time of failure of all-140,600 exist-
 ing. askarel transformers..!' ____ ......  ___________ ..... . ________  _... . ....... ________ ..... .... .. ____
      4.2  Conpl lance Costs
           Foregone Sowings from
           If it is assumed that a replacement transformer of a  satisfactory
 high fire point liquid cooled design -would cost the same as the historical
                                     -19-

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 price for an askaral transformer (.see Chapter 16), and that rebuilding would
 cost 70% of the cost of the new transformer if allowed,( '  then the foregone
 savings from banning rebuilding of askarel transformers would be 30% of.the
 cost of the units.   Based on an average cost of 520,000 per transformer, fore-
 gone savings will be $6,000 per askarel transformer.
           Total foregone savings will depend on' the proportion"of askarel
 transformers which are scrapped because of non-repairable failures or obso-
 lescence rather than because of repairable failures..  An active market  in used
 askarel transformers existed in the past, but this market has become much less
 active over the past year because the provisions of the water pollution control
 regulations and the OSSA regulations on worker exposure to PCBs-have increased
 the risk of using askarel transformers.  No data is available on the proportion
 of askarel transformers, that are removed from service prior to failure,, and .  •
 even if historical data were available it.could_be misleading because most
 askarel transformers have not. been in service long enough for. aging of  the
 insulation to increase the risk of failure- of-the units.  It is likely,- based "  -
 on Versar's estimates rather than on hard data,  that "one-third to two-thirds
 of the existing askarel transformers will be retired due to obsolescence prior
 to failure.  The total foregone savings would therefore be $6,000 per unit x
 1/3 to 2/3 of the 140,000 units in service, or a total of $230'million  to
 $560 million.  '      .......        ''      '             '           •

           Timing of these foregone savings will  depend on the rate at which.
""a.sRareT~Sransfb'rmers' 'faTl~  PreserSTfailure"ra€eir^re~Tcw~Eecause "or" tSa
 relatively young age of most existing units.  A  previous EPA sponsored
 study(2) estimated that approximately 80,000 gallons of PCBs were used  in
  (1) Based on a consensus of industry estimates obtained by Versar during a
     telephone survey of transformer manufacturers and rebm Triers'.
  (2) Versar Inc., PCSs in -the United States;  Industrial Use and Environmental
     Distribution.Springfield, VA;National Technical Information Service,
     (NTIS PB 252 402/3WP), February, 1976.  p. 114.
                                     -20-

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the repair of askarel transformers in 1974.  Assuming an average transformer
capacity of 240 gallons, of PCBs  (300- gallons of  'askarel'  mixture)  this  ...
implies  that a total of .J3.S askarel : transformers were repaired during that year.
This would have to be considered a lower bound estimate of the future impacts
of the ban on rebuilding as the rate of failure. of  askarel transformers- is
expected to increase as the average age increases.  An upper bound estimate
might reasonably be based on an average expected remaining service life.  If
it is assumed, for example, that, one-half of the existing askarel transformers
will be  removed from service over the next twenty years due to failure or •  •
obsolescence, an average rate of removal fron service of .3.4% of existing •      i
units is implied.  If the probability of failure or removal were independent
of the age of the unit,- it would be expected that 3.4% of the 140,000 existing
units would be 'retired in 1979, or a total of 4,760 units removed, of which '
1/3 to 2/3 (1,587 to 3,173) would have failed.  'The' range of expected failures'
would therefore be about 335 to 3,173 transformers  per year, resulting in annual
costs due to foregone savings of $2 million to $19  million per year during the
next few years.  At an average failure rate of 4760 units per year and an
average  rebuilding ratio of 50%, foregone savings" would be $14,280,000 in 1979.
           Lest Sewice Time                         '         ••  .       -     v • •  _
           Transformers can be rebuilt and returned  .to service in. three to
four weeks, compared to a delivery time of 12 to  16 weeks for nev units.  In
                           of ~t-he~ nctoir for fhg fa^ry^^afieg3-gQ3tg-LLj ' I '* IM- •. g.-Jiin.amp.g-rna-mta-Tf i i n.L) I J I
. UnitS ^irifir_ 1 P'71'jj-^^g"^ prrifjag; t-n -t-i^ia_jigfaT-<;_ .i^rf-m.,^, 1 1 __ ho .wi -1 1 i nrj . frn _ rurz.- nT?T?a— ^70
avoid prolonged -loss -of electric- service.  'There  is' no information available
as to the costs of renting replacement  transformers,  but assuming a reasonable
monthly rental of 2% of the cost of the unit, total costs due to the longer
                                     ..-21-

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 lead times for replacement transformers could increase by the cost of two
 to three month's rental of an average $20,000 unit or $300 to $1,.20Q per
 failed transformer.   Based on the assumed number and frequency of askarel."
 transformer failures, total'costs due to lost service time would be  ($300 x
 140,000/3 = $37 million)  to ($1,200 x 140,000 x 2/3 = $112 million), and
 annual costs of ($800 x 335 units = $268,000) to ($120 x 3,173 units =
 $3,800,000)  would be expected, with an average cost of (.3 x 4760 units x
 $1000 rental per unit = $2,380,000) expected in 1979.

      4.3   Econonic Imcact of Cost Increases
          The increased costs  to  users of askarel transformers will be' borne
by the owners of  the units.  Approximately one-half of the units are owned
by utilities, and their increased costs are expected to be factored into the .
rate base and passed along to  the users of electricity.   The other half of
the  units are owned  by major office and apartment buildings and by shopping
centers, factories,  and'other  establishments.-  Increased facility maintenance
costs would be incurred by a large number of facilities.   Significant micro-
econcmic impacts  are not anticipated,  and no changes in the level of employ-
ment from micrcecononic effects is expected.
      4.4  Summary
Compliance Costs                     1979   '                     Total
Foregone savings from       $2,000,000 to $19,000,000         $230 million 'to
   rebuilding	 -  	($14,280,-QGO best-estimate)-  -  •••---    $560 million
lost service time           $268,000 to $3,800,000            $37 million to
                          •  ($2,380,000 best estimate)            $112 million
   Total                    $2.3 million to $23 -million       $317 million to
                                                                 $672 million
Employment effects:  Some short term lay-offs possible due to lack of back
       up transformers.  Impact may be limited to stall manufacturing firms.
                                      -22-

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    5.0  IMPACTS CN TSaNSFOBMER SE5VICS COMPANIES
         Maintenance of askare'l transformers is usually contracted out to
                                      • .                         •           *«.-'•
    specialized service shops- or to the manufacturer of the unit.   Major rebuild-
    ing is usually performsd by the manufacturer.  There are approximately 250
    small service companies which can perform routine transformer  'servicing such
    as gasket replacement and testing of the liquid.
         Based en a telephone canvass of independent companies  which service and
    repair transformers and on information obtained during visits  to GE and
    Westinghcuse service shops , it is apparent that exising PC3 transformer re-
    quiring in-shcp repair work are being serviced only by the  GE  and Westing-
    house service operations.  These two companies have reduced the number of
    shops presently permitted- to service PC3 transformers to -13 and 8 , • respec-  •
    tively, for a total of 23 shops nationwide.  ' • These shops are • performing
    the 'major warantee maintenance for both GE and Westinghcuse and for. the
    ether transformer manufacturers.  There are approximately 250  small electric
    apparatus service shops which repair transformers. ^ '  These shops no longer
    work on askarel transformers because of the risks of major  cleanup costs and
    worker exposure that would be incurred by any accidental spill.      ...     •.  .
         5.1  Impacts of the Proposed Regulations      •             •        .
              The effect of the proposed regulations would be to end the practice
           i Irving' h^ar^rpTrrvaT-jg f i-urh htya-rpj ur-fli,')^ Ka pn fyynst-ra i n-h.^ nn ron-*- i
    minor field maintenance.  The effects would, therefore  be  limited to a de-

  .  the manufacturers.  These same companies would 'be  faced with an increased
— •(!)— Versar--Ine.--K3--Act±vity-ftn^                                     —
         July 11, 1977.
         St. Louis, i^D:  1977.
                                         -23-

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demand for nev transformers.  Assuming  that manufacturing and rebuilding ara
equally labor intensive, there would be a change of anplcyment from the service
shops to the central manufacturing plants,  but no  net change in employment.
          A rough estimate of the employment effects ray be calculated from
the total of the transformer rebuilding business.   It was estimated in
Chapter 4 that a minimum of 335 askarel transformers are rebuilt each year at
an estimated cost of $14,000 each  (70%  of an average $20,000 per unit replace-
ment cost) .  Assuming that one half .of  the  cost was due  to direct and indirect
labor, the annual payroll resulting from this  activity would be equal to (335
x $14,000 / 2 - $2,345,000).  Assuming  an average  burdened labor rate of $30,000.
per year, this payroll is equivilant to 78  full time jobs.   Since the estimates
of percent labor and annual wages are rough estimates, the employment impacts
might be better stated as ranging from  50 to 100 jobs.   It 'should be noted  •
that increased employment at the manufacturing plants -will offset these job
losses, so any structural unemployment  must be considered to be a transitional
cost of the regulation.
          The PC3 disposal regulations  require that units be drained and
flushed prior to disposal.  Survey of a number of  users  has indicated that
this will usually be contracted out to  experienced reliable . transformer    •,  .
service organizations.  This increased  demand  for  the services of the larger
(usually manufacturer owned) service shops  may offset most of the business  "  ' .
lost by the ban on rebuilding of askarel transformers.   Therefore, the draft
.ban . regulations_are .. not .expected. _tz2_bavje_a_ significant .economic . impact., on. _the. . . ._
transformer service and maintenance industry.
          The only directly -identifiable- impact- of -the- draft- regulations on-
                                   i 
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maximum total ccst of $100,000.  If proforaa plans were prepared under  the
sponsorship of a trade .association or made available by a major manufacturer,
the only costs to a small operator- would be one day of services from .a /•-'' '
registered professional engineer to adapt, revisw,' and approve the plans.  The
cost of this service should run about $250, reducing the total costs to. a
range of $25,000 to $100,000 for spill control plans.
     5.2  Summary

                                Annual Costs  (1979)          Total Ccst
Lost wages  (temporary           $0 to $2,345,000         -$0 to $2,345,000
 structural unemployment)

Spill prevention and   .         $25,000 to $100,000      $25,000 to  SIQQ.,000  .
 control plans            '
   Total                      $25,000 to $2,500,000'   $25,000 to' $2,500,000
                                     -25-

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6.0  RAULaDAD LOCOMOTIVE TPMSFOK-EPS           _                  .- • -

          The railroads -in the northeastern. Chi tad States  from Washington,
D. C. to New York and nearby areas are electrified.  The power to  the loco-
motives and self-powered cars is carried to the -equipment  through  high vol-
tage ac catenaries.  Transformers on the locomotives and cars  reduce the
voltage to that required by the traction motors.   It has been  standard prac-
tice to use askarel  (PCS based) liquid in these transformers due to- the
risks that would result from spills of .flammable liquid following  an acci-
dent in a tunnel.
          "Die transformers in the railroad locomotives and transit cars are
known to be a maintenance problem because of the design limitations . imposed .
by space requirements and because of the severe shock/, vibration, .and
mechanical impacts encountered in. service.  Leakage of PCSs is not an unusual
occurrence , and control 'and disposal of this leakage is impossible as" it' is "
usually sprayed on a well-drained road bed.  Therefore, the railroad trans-
formers present a significantly more severe risk of loss of PCBs 'to the
environment than do stationary transformers.

     6.1  Requirements of the Proposed Pegulations
          The proposed PC3 ban regulations will allow continued use and
maintenance of railroad locomotive and car ' transformers for five years,  but
with the following limitations:
          1.  Each owner of a PCS railroad transformer must report the
              liquid volume of each transformer to the EPA within  90
              days after the effective date of the regulation.
          2.  Each, person -who- uses- a^PQ-CT 11 road .transforfflsr-must.de-... -
              velop and implement a formal spill prevention and. control
              plan.    ....
          3.  The concentration of PCBs in the dielectric liquid in
              PCS railroad transformers, must be reduced to below four
                                     -26-

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               percent within 15 months after the effective data of' '
               tfie regulation.  This will  require that the transformer  ,,...  .
               be drained- and flushed to -remove the PCS liquid and re-^  •
               filled with a non-PCB liquid.'

           4.  Transformer liquid must be  analyzed inmediately after the'
               'transformer is retrofilled  or the liquid is. processed to '
               decrease the concentration  of PCBs.   This analysis must
               be repeated between 12 and  24 months after each such ser-
               vicing to determine whether PCSs leaching out of the wind-
               ings have increased the concentration to greater than the
               maximum allowed by ...the, regulation.	...

           5.  The concentration of PCSs in  the dielectric liquid must
               be reduced to less than 0.1 percent within three years of
               the effective date of the regulation.

      6.2  Present Ownership and Use

           The ownership and use of PCS transformers installed- in railroad

 locomotives and connuter cars is summarized in Table 6.2-1. ' Present plans

 are to convert the electric pcwer on the  Northeast Corridor from Washington,
 D. C. to New York City to 60 hz 25 XV by  the mid-1980s.  The New Haven line
 north of New Yozic may Ly erimental locomotive on the Northeast Corridor (built  in Sweden by ASEA)
                                     -27-

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TABLE 6.2-1
Railroad PCU Transformers
•
1 Omkii" ticpilp. Identification* IJ|til|>. 'IV|
sti-rA K 6 aw.
SliPTA Uilvurllnar 1 OW.

stiTA si.iueriiitai: 2 aw.

iiUTA iillvc:rlliiMr 3 aw.
'
tilil-TA $Uuerlir«ir 4 OW.
-(lluaiui. war M 2 ' aw.

\ m. tor p 60 ' iduo
i ,
; Oinritll (i G 1 mi)
O Jiu all ii 33 . I//2O

' • 1
1 a)inall |i 44 UXX)
1 . '
! ) Aiuliak (i G I HO)
Aiutral; (i 60 l/U)
Aiiitrak KiLiollnur aw.
j
'IViFialU CatliLi'-l'ai'^Ltiui, (£l«»:li Ji: Mtlt\l£*jii Unit
Draft UL:IILH-|- l- Capacity,
ki* Mmi«i* taiju Cltarvja* Oallon
46 ijci-ap iit inl4 UOa
5 Scrap or replace
trans in uiid lOUpa
37 Ik^ildco Irana mlU -
1'JUOu
'20 lliMj«j ti*aaa uiitl -
1'JOOa
13U Unw
.17 >».>i»u -
104 t*tik»
34 MHUJ —
70 1*->IV4
1} tjcrap in nld IDUOu -
121 IttploCu traiut lota
in 19UO
121' Ibjplacii trans lulu
in I'JIIO
U Nbnti 710
53 &:io|) in mi 14 1'JUUa
10 iluplacu traiui in 500
; uilii lilUOu
66 Ituplocu traika in 500
mid I'jQUi.
40 acu.p In inlj' ISliOd
54 MIIIL: • 710
60 IUi|>l<«ju 4 trana 255
Ity uiitl lOHOd, ic tit ok
Car uivt lixxmiii iv/u OrMivi'.raion for IXial Voltu'
jptuiix^r, 1977. ;
Tiftna former Traitsfoniier Ikr-
ilatroflll Oast pU
$ 5.000
5.000

5.000

5.000

• 5,000
5,000
5.000
5.000
5.000
15.000
' 5.000

5.000

14.000
15,000
10.000

10.000

15.000 /
14,000
5.000

M - Ikiul l'i«-»i>R!iii;y C

tcciimnt Oout
$ 50 j 000
134.000

6^,000
'.
64.000
•
65,000
63,000 '
63,000
65,000
65.000
105,000
52.000

.52,000

160,000
1U5.000
157.000

142, 000

105.000 '
160,000 .
ua,ooo
r
\)ciati<>af


-------
which uses  silicone as  a transformer coolant; the tests have not revealed
any problens  due to the use of silicone.               "    "  •    -   ."-•'•
          The Federal Railroad Administration has sponsored research by
Wsstinghouse     and General Electric    to determine the feasibility of re-
trofilling  existing PCS railroad transformers with silicone.  The work per-
formed under  these contracts included the performance characterization of  a
418 KVA  transit car transformer which contained 163 gallons of askarel;
draining/ flushing/ and retrofilling the transformer with silicone? and    • •
characterization of the transformer performance when filled with silicone, •
The tests conducted under these prcgraiis indicated that draining and flushing
could reduce  the amount of residual PCS in a transformer to a level lew-
enough to assure that the concentration of PCS in the silicone liquid would '
remain below  four percent.  The use of silicone -as a replacement for PC3 re-
sults in a  transformer  that runs hotter by perhaps five to ten degrees C.
This increase in tanperature will not necessarily decrease the service life
of a transformer, as the solid insulation used in transformers may degrade
less rapidly  in silicone than in PCSs.
          ?CBs and trichlorcbenzene are selectively • adsorbed- frcm silicone •-•
liquid by activated carbon.  Dow Corning recently demonstrated that filtra-
tion of  silicone frcm a retrofiiled-PCB transformer that had been in service
   i
for tan  months reduced  the concentration of PCBs frcm 2.53% to 472 parts
            —For-these Lramafora-ers-equagped with a ?ui|v-it-may-fee	
 (1)  Walsh/  E.J.;  Vcytik,  D.E.;-Pearce, H.A. (Vfestinghouse Electric Corp.)
	• • Evaluation' of "Siiicane' "Fluid- for~Repiaoaiait- of~PCS~eooldu Is - ±n~Railway	
 . -  .. industry vrCiraft'/Etrgi^sgpor'F? • -Qpprirfc-?^nn;ffi^K^.fc394.^iM.i.ypr i-9«7.5L,.-v« -'*> -,'.^...
 42)  Foss r • Stephen- D, •;- .aiggJasT-John-By^ctamstor^flnna^^^            r-Janes— ^-i
     M.  (General Electric.-Co..) , .Hetro filling.. of-Bailroad Trans formers,.. Draft .
     •Final -Seport>'• -Contract--D0f-€5G-i-29-3?'1 OPui77-i&9?r-	'-"--• — •• - ;i-•   • •'-; ^ • -'-••'•'-
                                                                  (R)
 (3)  Dow Corning Corporation/'Bemoval of PCS from Dew Coming 561    Trans-
     former  Liquid by Charcoal Filtration/ undated.
                                     -29-

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 possible to install a cartridge filter containing activated carton in the
 liquid circulation piping.  'The filter would continually scavenge residual PC3s
 from the silicone after most of the. K3s had already been replaced when -the
 transf outer was retrofilled.   This procedure might assure that the concentra-
 tion of PC3s in the silicone would not increase to concentrations above the
 1000 ppm required by the proposed regulation.
            The decontamination of silicone transformer liquids is still in
 the experimental testing stage.  Westinghouse Zlectric Corporation has re-
 portedly applied for a patent on the process of using activated carbon to
 raiove PC3s from silicone.   No results have been made public on techniques
 to remove PC3s from hydrocarbon transfonrver liquids, although RTS Corporation
 is reportedly doing research in this area.                 .                    .
       6.4  Cost Impacts of the Proposed Regulations •  .         .  . •
            It is not known at this time whether the liquid used to replace  _  .
 the PC3s will be silicone or a high fire point hydrocarbon liquid.  However,
 silicone has been extensively tested and is the most expensive of the altar-
 natives; accordingly, costs based on. the use of siiicone provide an upper
 bound estimate of the costs of ratrof oiling.        •         ..        ._     ....
            Silicone liquid prices range from $11.00 to $14.50 per. gallon.  Re-
 cent charges for field retrofilling of transformers have run from $20 to $40
 per installed gallon, including disposal of the PCBs and contaminated flushing
-liquid- and-analysis-of the"Tetrofi3±e*-i±=uid--f or-PCSs^ — S-inc»-±he--retrofiiling-
 of locomotive transformers will be done only in a few well-equipped shops, the
 installed costs should not exceed $20 per gallon of silicone.
                                                     '--the1 -average- 'service' -iif
 of railroad transfoiiners~is' -freer four—tzr IQ-years."" Failed ' transformers" are
 presently
 a new transformer.   Rebuilding "requires 'approximately 4-6 weeks while de-
 liveries of new replacement transformers require 12 to 18 months.
                                      -30-

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            The major cost impact is expected to result from the  retrofilling and
 decontamination of the transformers.  The concentration of PCBs can be reduced
 to'the required limit of 4%'by 'draining the askaral, flushing the  transformers,
 and replacing the liquid-with a suitable -high fire point transformer liquid
 such as  silicone.  Based on the retrofill costs presented in Table 6.2-1,  the
 costs incurred  by the rajimarfg in the first 15 months following the effective
 date of  the regulation will total $7,043,000.
            Reduction of the concentration of PCBs to 1000 ppm by three years
 after the effective date of the regulation would require that a transformer
 be retrofilled  an add •''Moral .to-o times or that the liquid be processed at
 least twice to  remove PCBs.  Jto estimates have been made by transformer com-
 panies as to the cost of processing to remove PCBs.  The cost should be similar
 to the cost of  retrofill less perhaps 90% of the cost of the replacement liquid.
 The cost of processing as calculated in Table 6.4-1 would, therefore be about
 37% of the cost of retrofilling.  Additional analyses would be.  required 12 to  .
 24 months after each retrofilling or processing at a cost of -about $75 per  "
 analysis.  The  total cost of reducing the PCB concentration in  the ratrofiiled
 transformers would therefore include both the cost, of the processing and the
    111—Tonal r.t"T«!(''Tvr •an.q'! rryn-ifT -f-Ha ]itTT-tir1 x~\up M \u !-_• u;iu. fcif |i^-.-ji-_ f j^jT-^fryr—I
  service.   The additional cost to the railroads of achieving this  lew level of
  PCBs  is calculated in Table 6:4-1 to be $5,460,000. • These costs  will be in- ,
  curred during the years 1980 and 1981.
        1- "'sP^r^j;eventdon'and~conrrol plans wiU have.'to..be._prppqr'gd 'by_
 each of the  seven owners.   Because of the complexity of railroad operations,
 these plans  will  cost several thousand dollars to prepare and implement  for
 a total industry  expense of-perhaps -$20yOOO'.~	—
. ..  ..     ..   Finally,,  t-hf initial xepoaffeing-o^-fehe--identi-ty-of- -the. PCS -equip—- -
 ment and the liquid capacity of. each transformer will cost several dollars
""per"unit, for ah  additional cost of perhaps "$5,000.             "~"  '
                                       -31-

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                                TABLE  6.4-1

             Cost of Processing Retrofilled Railroad Transfocser .
                         to Sednca 'the Concentration of PCBs
Cost of ratrofill              •       •                 $  20.00  per gallon
   less cost of silicone                    •             12.00   "      "
  ' less cost of flushing liquid                     -      . 42   "      "
   less cost of incineration of -2 gallons    .       -     3. 00   "
                                                                      "
labor, overhead, and analysis costs   •           •         4.58 par- gallon

   plus .1 gal silicone per gal of transf oncer
      capacity .1 x 12.00 =                               1.20
   plus 2 Ib carbon per gal @ .60/lb             '         1.20
   plus: disposal of 3 Ib wet carbon per gal  @  ,15/lb      . '.45  • •  •

TOISL PBCCSSSING COST                     .      '       $ ''7.43 per gallon
Cost of processing as a' fraction of cost of ratrofiliing =

                                              7.43/20.00 = 37%


Cost .of processing retrofilled transformers;       •         -

Analysis for PCBs* 1,009 units (§ $75       '•       -    $    75/675
Processing       57,043,000 x .37            •          2,616,000
Analysis*                                                  75,675
Second processing                         -             2,616,000
Analysis*						-  ... 75,675

Total cost of processing to meet 1,000 ppm limit
           on PCBs                                     $5,460,000
*Analysis conducted' 12'to~24 months" folicwing-
 previous retrofill. or. processing... 	.
                                     -32-

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         The proposed regulation authorizes continued use of the retrofilled
transformers for only five years from the effective data of the registration.
It is assumed that a review of the environmental  impact of losses from the-
retrofilled units will result in this authorization being extended indefinitely.

    6.5  Economic Impacts of  the Proposed Regulations          •..     •.  .
         The required retrofill- and processing program should cost less than  •
20% of a comparable program to replace all of the transfcasters within the next
several years, and the retrofi.ll program should avoid any significant dis-
ruptions of railroad service  on the Northeast Corridor.
         All of the affected  owners of PC3 railroad transformers are govern-
mental or seni-oovernmental corporations which are running operating deficits
as summarized in Table 6.5-1.  These  deficits, of over $30.0 million per .year,.
are presently being covered by subsidies from tax revenues.
         The retrofill and processing program is  not expected to result'in
significant service disruptions, and  no  effect.on railroad'operating employ-
ment is anticipated.  The retrofill and  processing programs are expected to
generate a considerable demand for labor.  Calculated total labor and overhead
costs are summarized- in-Table- 6r5-2-;—This uculd  be ilm equivalent ul 165 uidn —
years of employment, assuming a burdened labor rate of $30,000 per man year.   *~
Additional employment would result fron  the' increased production of the -siliccne
liouid and activated, carbon  and, increased disoosal. .incineration services.
   —6-rB - Suuniarv-
         Cost Irrrsacts:
                                          •. Amount    ...  .Timing
                  r rsepsfin-program	S77OT370DO	T979"	!
          - Cost- of pracessincf-pregrsm	5-,-460-,-&09	1980-1981	
           Reporting     - -                     5,000     1979
          -Spiil- preve
                                         $12,528,000
                                    -33-

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                                 TABLE 6.5-1

                  1976 Operating Losses of Railroads Using PCB
                     '           ' Transformers
  Rail mad              1976 Operating Results          Total loss  1976
                              $'"millions                .    S millions
CONN DOT(1)               19.1 operating deficit             22.3
                           3.2 MEA depreciation

                           ..25
                           «<3o
SEPTA/                    1.25 operating loss  :               7.6
NJ DCTC3)                 38.5 subsidy    •                   38.5

AMTPAKC4/S1                441 total loss other tfcan       . 478.5  (Est.)
                          •      NE corridor maint.        •      • •  '
                          37.5 1/2 of $75 million loss
                               for NE Corridor operation "

CCNEAIL(6)              . 205.5 losses for 9 months,         280    (Est.k
                                April-Dec. 1976
                                Total lasses              $ 826.9
 (1)  Metropolitan Transit Authority/'Annual Report/1976f p. 44. '

 (2)  SEPIA, Report to the Public and 'Financial Statements for 1974
     and 1975 - Statement'of'Operations    '.   .

 (3)  NJ Department of Transportation, Hichlicnts of Activities/ 1976, p. 14

 (4)  Amtrak, 1976 Annnal Report, pp. 6, 7, 28.

 (51  Amtrak, Five-year Corporate Plan, 1977, p. 153.

 (6)
                                    -34-

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                                TABLE 6.5-2

                T>hnr and Overhead-Costs of Retrofill am
               Processing Program; for P* •inroad Transformers
Total capacity of transformers:-
    $7,043,000 retrofill cost/520 per gallon  =            352,150 gallons

Labor and overhead cost of. each retrofill or .
    processing @ 4.58 per gallon = 352,150 x 4.58  =      $1,613,000

Total labor costs for one retrofill and f/ro
    processing of each transformer          .               4,839,000

Labor and overhead costs of 3 additional analyses
    per transformer 3 50%. of $75 test price:              ' •    •  •  -
         1,009 units x 3 tests per unit x $75 per text x. 50% = 113,000
         TOTAL LABOR AND OVERHEAD COSTS             --$4,952,000
         TOTAL rapnB nFMarcn -3 $.^nfnQQ
             BURDENED MAN XEAR                     •   165 nan years

         Economic  Impacts:          .       .        .          '   .

            Increased costs  are  expected to be paid from government
         Employment:

           An  increased- employment totaling at least 161 man years
         is.
                                   -35-

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 7.0  OIL FILLED POKES. AND DISTRIBUTION TPRNSFC3EMEES

           PCB-faased askarel liquids have historically been offered as a
 higher priced alternative to the petroleum based transformer oil used in
 most liquid pooled transformers.  The PCS  and oil filled transformers were
 nenufactured in the sane far-ill ties, and many opportunities were present for
 the contaminaticn of transformer oil with  PC3s.   In addition, field servicing
 of PCS and oil filled transformers has been performed using the same equip-
 ment providing additional potential for contamination of the oil by ?CBs
 residual in the equipment fron previous uses.
           There are no reported incidents  where  PCBs have been intentionally
 added to oil filled trans formers , and such an occurrence would.be unlikely .  -
'because of the higher cost of PC3s relative to oil.  However,, analysis of
 oil taken from transformers has indicated  that a significant number are- con-
 taminated with PCBs at 'a concentration above :50  ppnu  These contaminated
 transformers would, be subject to certain requirements under the provisions
 of the proposed regulations,

      7.1  Requirements of the Proposed Regulations '        •- ' .
           Transformer oil contaminated with- PCSs 'in concentrations above  . .
 50 ppm will have to be disposed of by high temperature chemical waste in-
                                                  yj t*i pfOg ir\ t4*ig> range. Of "
"5d'"to~SOO"ppm will not nave~to~~be marked", nor" will" there "be any restrictions"
 on servicing, rebuilding, or disposal of the drained transformers.

      7.2  Estimation of -foe ••Extant of Transformsr-Qil •• •-  •      __
           Contamination byPCBs" ------ --^
           HSwnbe.T of Trczisfdrmers
                  l o Ag-t-a. ,nrv .TTS •J^-^ncj-Frirrna-r', . pmHrit-fi on  anr^  ^aT&g; f°n ro-t-  ....
 differentiate between oil filled and askarel transformers,  but indicate only
 the total production of liquid ^"i 1 «=^ units of various sizes and types'.  The
                                     -36-

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 nest recent data, for 1972, are summarized in Table 7.2-1, belcw:.   •


                                 TABLE 7.2-1  (1)
              Nutter of Liquid Cooled Transformers Manufactured:   1972

            Class                                            Quantity
 rri gf-rv"hrcrH rn Transformers
     Overhead and Pola Mounted                    •          1,253,400
     Pad Mounted                                          '    231,600
 Small Power Transformers (less than
     10,000  KVA)         '   .                                 ' •  13,000'
 Secondary Chit Substation Transformers          •    •  •   -.      3,400
 large Power Transformers (above 10,000 KVA)                     3,400.
                                   Total             ....     1,504,800
           The number of overhead -and pole mounted transf oners .Currently  in •••
service-is not accurately kncwn, but an estimate of 30,000,000 units is
usually accepted, in the industry.  These transformers- contain an average  of
about 16 gallons  of oil each.   Very few of .these transformers have ever been
       wi>h  prgfif  *nr? many nfthap >^er^--bialu in manvi
made^cnly J±ds _type._of
it is
 factured, • and-^fehe- units -are--seldatt--aervicad- in the fseJb±r"ThB failure "rate-
                           _______ _____ .  _ ........ . _____ _________ -    •   -.'%i... •• -
'of "tSese ~pble~
units  are  rebuilt.   Mb data, hare been found concerning the extent of PC3
 (1)  Bureau of- the. Census,  Electrical ^Measurement and Distribution Equip-
     ment,  Peport No.  MC72(2J-36A,  Table 6A.
 (2)  Consensus  of opinions  of transformer manufacturers contacted by Versar
     by phore,  1978.
                                       -37-

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contamination of this type, of .transformer.     •         •         "'
          The remaining-250,000 liquid- cooled transformars manufactured in
1972 included about 5,000 askarel units.  Assuming that there are 140,000
askarel units in service and that the ratio of oil coooled to askarel  trans-
formers has always been 40 to 1, as was the case in 1972, then the calculated
number of oil cooled transformers other than pole mounted would be 6,850,000.
          Alternatively, it could be argued that since the ratio of  the
total number of pole mounted transformers to the 1972 production of  this type
of unit is 30,000,000 to 1,253,000, that this ratio times the 1972 production
of other types of liquid filled transformers would give the number of  other
                                              r-."
transformers presently .in use.  3y this irstbsd ' of v calculation, there are-    . •
                                             i .*  '*        •  '
6,000,000 non-pole mounted liquid filled transformers in use, minus  the
140,000 askarel units, or a total of 5,850,000 oil iiiled units.
          Another method of deriving the total number of oil- filled  trans-
formers ' is to calculate the production of transformers from available  data
on sales of transformer oil.  The annual sales of' transformer oil fron 1968
through 1977 are summarized in Table 7.2-2, below:
                                      7.2-2
                 Annual Sales of .Transfgrmer Oil. in the'U,.;S,
              Year                    .      Sales;  Mil lien Gallons
              1968         .                           70
              1969                                    72
              1970                         '     '      75
              1971    •r:—    ........                   76
              1972             '                       82
              1973                                    94
              1974    .-   1'     •                       96
              1975                                    70
              1976                                    75
              1977 .........                     78  (est.)
(1)  Pouse, T.; Paab, E.  (General Electric Co.), U. S. Transformer Oil
     Supply and Demand, 1975-1985, Interim Beport, Palo Alto,.Calif.;
     Electric Fewer Besearch Institute  (Report No. EL-303), Nov. 1976.
                                     -38-

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           These data suggest that the sales  of transformer oil have increased
 geometrically at a rate of'5.4% per year  (average increase)  from 1968 through
 1974.  Assuming that this growth rate describes oil sales prior to 1968,
 total oil sales through 1974 would have been 1.8 billion gallons, or a total
 sale of two hi 11 inn gallons up to the present.   Since few transfonrers have
 ever been scrapped and since transformer oil has been routinely reclaimed for
 reuse, the total amount of oil in service  is probably about 90% of the total
 amount produced, or 1.3 billion gallons.
           Assuming that the pole mounted- transformers require an average of
 16 gallons of oil per unit, the 1972 transformer production required 20
 mill-inn gallons of oil for the pole mounted  transformers and 60 to 62 million
 gallons (depending on the amount of oil used in transformer maintenance )• 'to  • '
 fill the remaining 245,000 oil filled transformers. '. Thi\.gives an average oil •
 capacity for non-pole mounted transformers of 250 gallons.'.oar unit which-is
 not significantly different than the 300 gallons per askarsl transformer" used
 in previous calculations.  The thirty million- pole mounted transformers con-
 tain about 500 million gallons of oil at 16  gallons per unit.  The remaining
 1.3 billion gallons of oil-would fi 11 5^200,000 transformervIiavi:j.j an aveieUjbr"
 capacity of 250 gallons.  Since improved transformer designs naive reduced the
 quantity of oil'required per transformer over the years, this figure perhaps •
 overstates the number of transformers in service, but an estimate of 5,000,000.
                        _pp] pjpT'nt*3^.j^-i' ^ '-•i-g~-fpr*V]7g Tnrifmrhilrbibnrnfi srv n'm
 the aval Table "data.'
           Ownership of Transformers
          . Most of the pcwer and substation  trans formers... are, .owned, and ..mains. -
        by tl-ri; 1 f -H (a^-^Tfop- :(^n-yBT-gh-iri-^f rJ*yvfgma.'l ^^ff^ar-^^Trgar^finTTPojgaa^aiaiA-^^feio..-.--.
 pad mounted distribution transformers depends on  the policies of individual
"utilities," and "there does not' appear to be  any standard policy that applies
 across the country.  Almost all the large distribution transformers are
 owned by utilities; those owned by industrial plants and  large buildings are
                                        -39-

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generally smaller units.  -Estimates by knowledgeable industry  representatives
contacted by Versar suggest that perhaps 80% of the total volume 'of oil" in
transformers other than pole mounted units is in units cwned by utilities.
          dumber of Contaminatsd Oil-Pilled Transformers
          The oily available informaticn on the extent of PC3  contamination
of oil-filled transformers is the results obtained by one major transformer
manufacturer which analyzed the oil frcm 55 units.  This oil was taken frcm
distribution transformers and power transformers, and in a few cases from
bushings on  transformers.  Based on the results of quantitative analysis for
PCSs in the  oil,  25 of the 55 transformers were contaminated with PCSs in
excess of 50 ppm in the oil.  The concentratian of PCSs in .the .samples. •    .  •
varied from  5 ppm to 155  pan.  This sample was .taken on.the  basis of conven- .
ience, and probably does  not represent an unbiased sample of all oil filled
transformers presently'in use.  In addition, :it is not known how any" biases'
may affect the accuracy of extrapolating the above data to all oil filled
units.  If this  sample were unbiased, it would indicate that 45% of all oil
filled transformers were  contaminated witk-PCSs- in excess of 50 ppm.   The
95% confidence interval for this estimate is from 32% to 59% of the irrans-'
formers presently contaminated with- PCSs above 50 ppm.       '   -        ...
          No data is available on possible contamination of  the 30 million
pole top--transfoiiiHis",~-arg3~i:t"liJ"nuitr possible" tcrcalcalatsrtne" effect of the
PCS ban regulations on these units until this informaticn is available.
Eased on the results of the .grail  and possibly biased sample described above,
it would appear  that possibly as many as 2,200-,-000 oil filled  transformers  -  •-
<^QIT 1 o OS 'OO^^^Tn i *p^'fc^*ij"''t*^v7Jlx' "E^i^S*" ^SCfc "COniC^ii 1 ^»r
-------
     7.3  Costs of Complying with- the Proposed Peculations   .
          The proposed- regulations. do not affect the continued use and main-
tenance of oil filled transformers: that are contaminated with  PC3s in con-
centrations below 500 ppnu  Disposal of oil contaminated with  PC3s . in excess
of 50 ppm will be allowed only by approved chemical waste incineration.   Con-
pliance with these regulations would require ttiat contaminated transformers
be identified by analyzing the oil for PC3s, and that the oil  from these
transformers be disposed of in a special incinerator.  Costs will  be incurred
for 'sampling, analysis, and disposal.
          Die cost of disposal of PCS liquids was investigated in  an EPA
sponsored study of the economic inpacts of the PCS Marking and Disposal
Regulations. ^ '  The following costs for disposing of contaminated •trans-
former oil are developed from these previously reported costs.
          'Sam ling end 'Analysis           .    .                      •_..._.
          Determination of the PCS content of transformer oil  requires that
a sample of the oil -be analyzed by an experienced, laboratory using a gas
Chroratograph, pqmpr*v*..Mi>h .Jm-ialagfrmn^ranfaira rte-t-P«-4-nT-^_ Mns-h 1 -i.
fi,1 1 pd transformers have a provision for obtaining a sample of -the oil.
Assuming that a transf oncer has a drain cock- which can be used  to obtain, a  .
sample of the oil, the cost of obtaining the sample should be little different
than the cost of applying a label calculated. for.. the.. marking regulations.^. ______
Present commercial charges for the required analysis are $60 per  sample  for
quantity orders of six to eleven, samples 'analyzed at one time.      Order
processing and shipping costs of $50 per order of ten samples would be in-'
$67 tO $80 per transf QCT*?r'-lP~ 4~-VQ' ' HTTP- a^iiit iH n
-------
52 to $15 sampling;  $5 order processing;  -$60 analytical, services.
          Piano sal          •                     '
          The incineration 'of oil  contaminated with. PC3s in the range of. 50
to several hundred parts .per million would not require any aAH-H_oTV*l fuel,
but the costs of  facility  amortization, maintenance,  operation, 'and capital
would be the same as for a unit burning pure PCBs.   The cost of incinerating
the ; oil depend.? critically on the  value of the material as fuel in an incinerator
handling fuel-poor materials such' as pure PCBs'or shredded <"^p»r!lt!Qrs ^   Pre-
sent practice is  to  fuel such inrHptaraho-rg! with chemical wastes which have a
high fuel value.  Present charges  for  the incineration of 'PCS solids run about
$0.15/lb. ,    which reflects the availability of  essentially free fuel.   There-
fore, under present conditions, there  is  little demand for  the PCS contaminated
oil as a fuel for PC3 incinerators, and the oil has  no economic value as a fuel.
in such units.  It is possible that the demand  for incineration of cacacitors
will increase to such an- extent that the  fuel requirements  cannot be met -by -  '
waste solvents; the contaminated transformer oil  may .then have sense economic
value as a fuel, and, the incineration  costs would be expected to decrease to
reflect this value.
          The use of the contaminated oil in any chemical waste incinerator'"'  '
other than one which is  burning PCBs would result in additional analytical
costs and record keeping requirements. Because of the limited number of PCS
incinerators that will be  in use,  it  is. not.. Likely that a. ccroetitive. market. .
for contaminated oil for use as fuel  in PCS incinerators  will develop and
tiie charges for incinerating contaminated' oil would then be controlled by
the price that could be  charged fay a  special  purpose oil  incineration unit.
A cost analysis,.f or. such_a~ special, purpose- ineacesato-Ewiss. summarized- in; •-• . — — ^
Tables 7.3rl.and 7.3-2....: This": unit .is" o£_a -size ..equivalent .to-the-. incinerator
used to evaluate the disposal costs for PCBs  and capacitors, resulting from
 (1)  ENSCO, General  Information ENSCO-PC3-001 Rev.  3-78,  El Dorado,
     Arkansas: ivSarch,  1978.
                                      -42-

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                             •TAEEE'7.3-1
        Prelisiiaary Cost Satirists fear a Ghanical Wasts. Incinerator fcr
         Transformer  Oil Contaminated with lev Ccncarttraticns af PC2s
Plant. Capacity:   4,QOQ  2Jb oil/hr.. C500 gal/hr.)
     Sguionent
                                          Installed Ccst
Ecuisnsttt,
                               P\3ncs
Stack, FcundaticKS ,  s.^** gyy^ g'f -t-
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                                 T5HLS 7.3-2
           Annual Cpgrg^'ing Posts for 0:n'|"^nuaat'3d. pi'l
Plant Capacity:  50Q. gal/Tir.  (4,000 Ib/hr.l
Ceerating Factor:   7,300  beurs/year
       Capacity:   3/650,000 gal/year (  30/000/000 Ib oil/year)
        Investment:   $3,210,000
         Cests:
     Direct Ccerating Later,  2 aen/shift S $10/hr.             $  175,000
     Supervisioi  & Acoiaistratica S 30% of direct
       operating  lafccr                    •      •    •  •   -.        • • 87,000
     Activated Carfccn Systaa^                                    122,000'
                   20% oi cacitaJL uwestaHOt                      640,000
     Pc«er:  100,000  SHH 8 3«?/SKH                   "               3,000
     Sampling and 'analysis                        "           .     100,000
                                                             ^•51,127,000
Fixed' Costs:
     Setum on Invested  Capital (10%)  '        •                    321,000
             Recovery (10 years 9 10%)      .                       321,000
     "Haxes *r4 Insurance (4% of capital cost)                     128,000
                                        Total Fixed Costs       $   770/OOQ

     Total Annual Costs                     .     .               $1,897,000
                              7^_^.-,.^.,^...^.. •-.^....;...--  .......       $     .0632
     Cost/cal. .osntaminatad oil-'-'. ---------- '---                       $  •   .51
 (1)  This ^nr-ii-r»gg  rsplacscsnt of 43,000 Ib/yr. of spent activated caricn and
     incineration of  the spent itaterial by a general purpose chsnical.waste
                                      -44-

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the "PC3 Disposal Fegulaticns,"  The incineration ccst of $.0632 'per pound
of contaminated oil is similar to the lower bound estimates of- probable'^- •  •
market prices reported informally by presently operating chemical waste in-
cineration catpanies.  Transportation costs incurred in delivering the oil
to the incinerator would be about $.02 per pound based on costs previously
calculated for askarels,
          Tne effect of the proposed regulations 'will be to require  the in-
cineration of oil contaminated with PCEs.  Control of the disposition and
use of used transformer oil will require the analysis of oil for PCBs.
Analysis of oil for PCBs will only be economically justified if . the-  expected-
value of the savings in disposal costs if .the oil is r»t ^contaminated exceeds
the cost of analysis.  For instance, it would ccst $75 to sample and analyze
the oil in a transformer that has a 45% expectation of being' contaminated
with PCBs at a concentration in excess of 30 ppm.  The value of oil  to  the
transformer owner is zero if the concentration of" PCBs is less than  50  ppm
(i.e. , a commercial collector will be willing to pick it up and haul if away .
for free) .  Disposal would cost $0.0832 per pound for transportation and in-
cineration if the oil is contaminated above 50 ppm..'' The expected savings
to be obtained by analyzing the oil would be equal to  (0.0832/lb * number of
pounds of oil * probability the oil is- not contaminated 'with 'more than '50
ppm PCBs) minus the cost of the analysis.  .Analysis is therefore a good in-
vestment for large transformers and those transformers less likely to be
contaminated with PCBs.  -This relationship- .is presented in graphical form
in Figure 7.3-1.
 CD  Versar Inc., Microeconpniic Impacrs of the Proposed Marking  and
     Disposal aagulations for PCBs, (EPA Report No.' 56Q/6-77-Q13) ,
     Springfield, Va.:  NatSnaTlechnical Information Service  (NTIS
     No, PB-267 833/2WT1 April 26,  1977, pp.  3-19.
                                      -45-

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                          100
I

T
cc
UJ


UJ
cc
e»

2
                 S

               <==
               0)
               O
               CC
               o.
                           80 -
                        59
                           60 _^
         45   —

            40 -



         32




            20 -
                                          SO         100         150          200         260


                                                GALLONS OF OIL IN TRANSFORMER @ 8.1 lb/0al.
                                                                                       «
                                                                                     300
                                   FIGURE  7.31    DECISION CRITERIA FOR ANALYZING TRANSFORMER

                                                   OIL FOR PCBs BEFORE DISPOSAL	

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          Although the average anoint of oil per transformer has been calcu-
lated to be about 250 gallons, no information is available on'the-distribution
of transformers by oil capacity.  As a reasonable guess, the median trans-
former capacity might be 150 gallons.  A lower bound estimate of ..the fraction
of transformers contaminated is 32%.  At *•*•*'« level, testing would be justi-
fied for approximately one-half of the oil filled transformers other than
pole mounted units.  These larger transformers would account for perhaps
75% of the total oil.  Incineration would therefore be the required disposal
method for all of the 25% of the oil in the small transformers and 45%.of  .
the rest of the oil.  The resulting analytical and disposal costs would then
be calculated as shewn in Table 7.3-3, below:


                              • • TREES'7.3-3
                  Testing and Disposal Costs for Transformer Oil
                      Assume:  32% of all transformers con-
                    ''  .         tain more than 50 ppra PCSs.
                                             'Size- of Transformer
   Number of transformers
   Analytical Costs @ $75
   Oil in transformers  		
   Oil ream', ring incineration
   Incineration cost 3 $.0832
  >  150  gal.
 2,500,000
 $187.5  million
•7.9 billion  Ib.
 2.5 -billion  Ib,
 $210 million
< 150 gal.
 2,500,000
    0
 2.6 billion Ib.
 2.6 billion li.
 $215 million
         Total analytical and incineration costs: $612.5 million

          The upper bound estimate of the fraction of transformers that- are
contaminated was calculated to be 59%.  At this level of contamination,
testing would be justified only for transformers containing irore than.  270
                                    -47-

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gallons of oil.  This criteria may- result in the testing of perhaps  20%  of..
all transformers containing 50% of all of the oil.  The calculation  of .the
resulting analytical and disposal costs are surmarized in Table 7.3-4:


                                ' ' 'TABES"7.3-4
                   Tasting and Disposal Costs for Transformer Oil
                      Assure:  59% of all transformers con-
                               tain more than 50 ppm FCEs.
                                                 Size of Transformer
   Number of transformers
   Analytical Costs @ $75
   Oil in transformers
   Oil requiring incineration
   Incineration cost' <§ $.0832
 > 270 gal,
1,000,000  '
$75 million
5.25 "billion Ib.
3.1 billion Ib.
$257 minion
< 270. gai.
4,000,000
   0  .  '
5.25 billion UD.
5.25 billion Ib,
$437 million
         Total analytical and incineration costs:  $769 million
          By comparison, arbitrarily incinerating all 10.5 billion pounds of
possibly contaminated transformer oil would cost $380 million.  Assuming
that no additional contamination of transformer oil by PCBs will occur, re-
placement of the oil in any contaminated oil filled transformer would be
expected to reduce the concentration-of -.residual -SC3s-. to- weil^unde-g-oO-'-ppms - - •
          The rate at which these disposal 'costs will be incurred depends" en
the rate of disposal of contaminated -transformer-oil.• -The regulations do  -
not prohibit the processing of- contaminated oil so long as it is returned to
the same transformer it was taken from.  Processing losses are expected to
be low, so most of the contaminated oil would not be disposed of until the
                                      -48-

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transformers are ratirad  from service due to failure.  If one-half of the  ?C3
contaminated transformers will be scrapped or refilled with new oil within the
next twenty years, and  the  rate of such oil disposal dees not depend on the ace
of the transformers,  the  rats of disposal would be 3.4% per year  (i.e., a
failure rate of 3.4%  per  year irolies a 20-year half life).  Based on these
assumptions, annual analytical and disposal costs would be from $21.4
million to $26.1 million  in 1979, and decrease in future years by 3.4% per
year as the number of contaminated transformers in service decreases by
ttn.s fraction.                                                               • •

     7.4 ' 'Summary

          Analytical  and  Disposal Costs:                    •         .    .     .  •
                1979  -             $21.4 million to S-26-.1 million  '
                Succeeding  Yrs -  3,4% less each year
                Total -          ' $612 million" to $769 million

          577Dlovrnsnt  Effects:
                Analytical services —Assuming that 50%-of-the-cost-of  the"
                analysis is for labor and that the burdened labor rate  is
                '$30,000  per year,  the analytical costs of $75 million to .
                $187 million iroly a total labor demand of 1250 to  3117 man
                years,   .Initial_derrendlwciild.J2e_3-.4i..of .this,._cr-2n_inr	:...
                creased  erolcyment in 1979 of 42 to 106 jobs.
                Disposal - The disposal cost analysis presented in  Table
                7.3-2 --assumed that -direct-labor-and-supear/isor-iaijor • costs
                were 14%- cf-the^cost-bf -'disposal-:—ftf-fahe labor-ratss— -—-=
                assumed  in the table, disposal demand'of $425 million to'"
                $69.4 mil i.cn-would-inply- a^ labor- aemancV-a-t-- •an^average>---r3=te-=:
                of $30,000 per year of C$435 million x .14/S30,000/man  year  =
                20301 to C$694 million x .14/$30,000/man year = 3239) man
                                    -49-

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years of labor.. At a demand rate of 3.4% during the first
year, this implies an increased employment of  69 to  110
jc£s in the disposal industry in 1979.
                     -50-

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8.0  MINING MACHINE      '                             .

          The only known use of PCSs in electric motors was  fay Feliance
Electric Conpany of Cleveland, Chio, which used PC3s  as a coolant in certain
specialized rotors.-  These motors were used by Joy Manufacturing Corpany of
Franklin, Pa. , in several types of mining machines built  during the late
1960s and early 1970s.  The motors require rebuilding every  few years.   Al-
though PCBs are seldom lost from the motor housing when the1  motor fails , such
loss of fluid would result in substantial exposure of the machine operator
to PCBs.  The proposed regulations allow a limited period of time for conver-
sion of the machines to motors which do not use PCBs.

     8.1  Requirements of the Proposed Regulations
          All of the' PCS motors must be removed from service in mining
machines by December 31, 1981.  The motors on the continuous miners may be
rebuilt as PCS motors for one year after the effective date  of the regula-
tions.'  The motors" on" the~locidtdLS. &uatr'be rsbccrit «ib  Ja.y  t^ue- noucirs wiiiri trie —
motors are returned to the shop for servicing.  Continued "use of PC3 motors on
mining machines' must be reported to EPA within 90 days after the effective
cats of the regulation, and a spill response plan must be developed and
    8.2  Ownership and Use of PC3 Mining Machinery
         Joy Manufacturing- Company was- the -sole- CJ.Sv producer- of- mining
equipment .which used.. PCSs. as a_motor coolant. __ an^j-LrrrrHT^-OTng  m-inor-
loaders were built using -PCS motors;  Table  8 . 2-1  summarizes -the production
statistics and the present use status of these machines.
         One small coal mining operation located in Pennsylvania is
operating the three remaining model CU43 continuous miners known to be
                                   -51-

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                                                                    Table 0.2-1
                                         Production Statistics  C. Present Use Status  of PCB-Cooled
                                         	Mining Machines	
ui
K)
 I
                                     I'lt-XllKJtlOi!
                    OL.nliii.iL.ua Milker   1961-1966
                    Mxlel OKI

                              Miner   1UU/-1970
                                     »971-1!)7J
                    Kxlul lul 14UUIO
                                                         Of
                                                         lluilt
                                                    5JI
                                                   J4 uoLora
                                                     of
                                                   s tit ill
                                              in Ueivice
                                                                   -  15
                                                                                          of
                                                                  .i^£_

                                                                  3
                                                                                                          of
              Nunliar of Ga
In tioivice   of K'U thkxl 1'ur

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still, in servica.  Two of  these machines presently  use siliccne-ccoled motors
while the third machine..has only one" PCS-motor remaining - i.e.,  two of the
three motors are silicore-ccoled.
          Fifty-four of the fifty-seven model  9G4 continuous miners built
by Joy Manufacturing have  been located in  the  course  of this investigation.
Thirty-five of those located are idle  (standby service or stored  as a source
of snare parts), thirteen  are being used to  mine coal, three are  in uses
other than coal production (e.g., cutting  overcasts and clearing  air courses),
two are used as spare equipment, and one is  being used in a training program
at a vocational school.  TWo of the three  model 9CM continuous miners that
have net been accounted for were reportedly  sold.   Therefore, it  is estimated .
that a total of approximately fifteen  units  are still in service.
          The PC3 loaders were sold  to eighty-eight different mining opera-
tions, the majority of them small coal mines. " Sixty  of these mines use"
three or fewer loaders and, based on a survey of thirty-six mines,  it is esti-
mated that nearly all of these loaders are still in service.
          The motors in loaders generally  require rebuilding, every IS to 24..  .
months,, the tains to failure depending  upon operating  conditions.   The motors
used in continuous miners  usually require  rebuilding  every 12 weeks because
continuous miners are operated under relatively severe conditions.   Pebuilc-
ing, from the time the motor is removed from service  until the machine is
returned to service, usually requires  one  to two weeks.
          Both the continuous miners and the loaders  are used in  underground •
mines.  Joy Manufacturing—reported. ±hat,..a_ few_ of., the-.machines, .were, nrf gi na IT y.....
sold for use in potash mines, but all  of the mines  that were•identified in
the course of this survev.were coal mines.   The continuous miners ccuce
                        •                                          •*  •«
the coal off the face of the seam and  continuously  load it onto shuttle
cars which haul it to a conveyor.   After the miner  has driven into the seam
about twenty feet, it is moved to a nearby section  while the roof that it

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exposed is bolted.  The'leaders  are used in conventional raining in which the
coal face is drilled and undercut fay a drilling machine.  After the coal is
blasted, the leader scccps  it up and leads it into a shuttle car*  Pcof
bolting is also required in this type of mining operation.  In either con-
tinuous or conventional  mining,  an entire section with all associated equip-
ment will be idle if the miner or loader is out of service and there is no
stand-by capacity, as is generally the case for small mining operations.
          The output of  conventional and continuous mining operations has
been conservatively estimated at 250 tens of coal per section per shift
(eight hour working day).   Given two shifts per day, each coal mining tech-
nique produces ever $10,000 worth of coal per day (valued at current prices).
Conventional coal mining operations generally require eleven to thirteen    . .
men; continuous mining operations require only eleven men.

     3.3  Conpliance Costs                 •   -              -        •-   ,    -

          Loaders
          The PC3-cooled motors presently used in loaders can be readily
replaced or converted  to air-cooled (i.e., dry)  motors when •serviced every '
18 to 24 mantis.  The  cost of  replacement with a new air-cooled .unit is
$6,258 per motor or $12,516 per leader.   However,  conversion kits are avail-
able from Reliance Electric Company,  sole motor supplier to Joy Manufacturing
Company, for $3,100 per kit.   Each kit converts one motor, and each loader
uses two motors.
          Over the past few years,  Jcy Manufacturing has been converting
the motors'T3T TfvAa-rg -try-ayrrf^nl^?;' •r--g^''a-tpr^-'^ar^;naf' rrr-rv-fgygn-nrr• .Tirly -: —
19, 1977, Joy Manufacturing stated that  they had converted- 353 of -these -
motors.  .An additional 95'motors had  been converted..as .of the middle of	
Noveirber, 1977, leaving 652 loader motors  to be converted (nets that this
figure includes the thirty-four spare loader motors).   Jcy Manufacturing
estimates that all remaining PC3-ccoled  loader motors can be converted to
                                      -54-

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air-cooled by the end of 1981.  The cost of this conversion  is  S3100  per.
motor/ resulting in a total cost of 'about 52 million to convert the regain-
ing 652 motors,

          Continuous Miners
          The PC3 and s11Icons-cooled motors in miners present  transition
problems.  As a result of the proposed regulations, the market  for used
PCB-ccoled continuous miners equipment will virtually disappear.   Therefore,
various mining operations will be confronted with obsolete equipment  perhaps
prematurely, resulting in substantial capital  losses which, depend upon the
rertaining useful life of the equipment.
          All but one of the nine motors .in. the. Joy. Manufacturing Msdel CU43
continuous miners that are still in service have been converted to silicons
coolants by the cwner. ' However, it has recently been found  that silicone
vapors may deactivate the electrodes in methane detectors which are used to
monitor the ambient air conditions in underground mines.  Thus, silicbre
fluids may not be acceptable where such detectors are used.
          Model 9CM continuous miners cannot be refitted with air-cooled
motors due to space limitations, nor can such'equipment house converted .
motors.  Therefore, unless a satisfactory replacement heat transfer liquid
can be developed for use in motors, this equipment  must-be scrapped-.^nd .ne^ ...
equipment purchased.
          The value of the continuous miners is best approximated by  its
value of $40,000 on the used equipment market. -"The'TSw replacement.machirss"'
will have a much higher' price,"but will--be'more productive' and  require less
maintenance.  Historically, mining equipment has become obsolete after about
ten -years of service, and rrcst mining operations" •tsnd-'tD'- axii'dus- their'-^qgiy
ment prior to the end of its useful life.  Since 1970 was the last production
date of PCB-ccoled continuous miners by Joy Manufacturing Company, all such
                                     -33—

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equipment is likely to reach obsolescence-by the proposed compliance cats -
i.e., 1981.  Replacement of .this equipment, therefore, may occur regardless
of the proposed ?C3 ban regulation.  -However, mining operations  wil-l no  longer
be able to employ the obsolete equipment as spare equipment  to take up the
slack resulting from machine servicing, nor will they be able to sell it in
the used equipment market.  Forced scrapping of this equipment prior to  the
end of its useful life can result in significant costs  (losses)  to  a mining
operation, depending upon the remaining useful life of such  equipment.
          Six of the eight, companies using the PC3 miners are relatively small,
with, production of  from .7  to  4.2 million tons per year.  -The other PCS
miners are  in  use in mines  owned by conglomerates  which produce  considerably
greater tonnage of  coal.  Any  costs "which are likely to be  borne by these
companies as a result of  the lost opportunity to sell  their PCS  equipment in
the  used market will have little or negligible impact  on the market price of
coal.  This stems from  the  small market  share-of U.  S.  coal new  mined. by ..PCSr.
cooled continuous miners  and the ability of competitors,  to  expand operations.
Furthermore, Versar estimates  that  whatever costs  are  incurred by..these eight
mining companies will not result in company closures and subsequent losses of
employment.                                                   •  .       .      ••   •
          Table 8.3-1 summarizes the possible economic costs of  the proposed  .
?C3  ban regulation  to the eight  mining companies using the  continuous miners.
Note that only ?C3-ccoled continuous miners that are still  in service are
considered in  this  analysis because it is not known how many of  the remaining
forty-one continuous miners located have a positive market  value and useful
life.  Assuming that forty  of  these miners can be  sold in the used equipment
market  (i.e., .emitting  the.  one continuous-miner-.-that.-is- -beiag-used-by -the-; -   -
vocational school), the additional  economic costs .<*ould be  a-maxunum or—  --
 C$40,QOG x 40  = $1,600,000)-.   In no  case does the  economic  impact en any
company exceed one  percent  of  the annual value of  the  coal  mined by the.
company.
                                     -56-

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                                       '8,3-1

Company
NO.
1*
2*
3*
4*
5
6*
7
8*
Cost L-ncact of Forced Retirement of ?C3
Number of Number of
Continuous Continuous
Miners Miners
Model CU43 Model 9CM
• in Service
1 (1) 0
3
2
1
1
1
2
5
'Continuous .Miners
Opportunity '
Cost Due to
Absence of
Used Equipment
Market
5 40,000
• $ 120,000 '
$ 30,000
? 40,000
$ 40,000
'• $ 40,000
$ 80,000,' .. ..
S 200,000
TCT&L
15
$ 640,000
(1)   Note that company no. 1 operates three ncdel CU43  continuous  mines
     but cnly one machine still uses PC3s as a rrotor coolant;  and  only
     one motor of the three used to operate the machine does contain
     ?C3s - i.e., the other two motors employ silicone  as  a coolant.

*    Small, producer  (less than five million tons per year  total  ccirpany
     production).
                                     -57-

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          Reporting Casts
          The proposed regulations would require that the SPA be  informed of
the identity and ownership of each FC3 mining machine within 90 days of  the
effective data of the regulation, and that the owners maintain, current
records of the machinery and report changes of ownership to the EPA.   There
are approximately 96 mining cocpanies which own PC3 machines.  The  informa-
tion required for the initial report should be available from inventory  .
records, and preparation of the r^ort should require no more than  one to •
two days per corrpany.  Assuming an average of one and one-half man  days  per
company report, and an average burdened labor rate of $30,000 per man  year/
the. reporting rsquirsrent will result in costs of  (96 corpanies x 1.5  nan
days.,pea? company x $30,000 per man year/240 man days per man year = $18',000)'.
The other' record keeping requirements are similar in scope to normal inven-
tory prccscfratas :and should not result in significant additional costs  to
the mining corrpanies.

          Sti'CZl Prevention and Control Plans
          A formal contingency plan will be required of each,.carpany which -.
operates PC3 mining machines.  This plan will have to be specific for each.
company, and will have to be reviewed and approved by a registered profes-
sional engineer.  A sample plan for these machines will be prepared by
Versar Inc. under a contract sponsored by the U. S. Bureau of Mines.  Using
this published plan as. a basis for the preparation of a specific company plan
should reduce the effort to one day of company time and ore day of profes-
sional engineering services per corpany.  This will result in costs to  the
mining ccirpanies of (1 man day x $30,000 per man year/240 man days per  man
year + 1 day consulting x $250 per day = $375 per company).  For the entire
industry, total costs will-be '(96 cotpanies x $375' per company = $36,000),
                                     -58-

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     8.4  Sunxnarv
          Cost Lmoacts:
               Loaders -
                 Febuild: 652 motors  @  53100            $ 2,021,000
               Continuous Miners -
                 Premature scrapping: 16 operating
                 miners @ $^0,000                           640,000
                 40 other miners § 0  -  $40,000                 0    - 1,600,000
               Reporting Costs  -                          '   13,000
                 Spill prevention and control plans          36,000
                        Total                          $  2,715,000
                         [Plus up  to  $1,600,000  additional.   All  •
                         costs will  be  incurred in the period
                         1979 through 1981.]  ._
                      
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9.0  EJZCTH2M&Q3EIS       .    .                 .                  .

          Large electromagnets are installed ever conveyor belts to remove
train? iron from non-magnetic commodities such as coal and grain.  Most of
these electromagnets are cooled with 100 to 150 gallons of mineral oil.
Where increased fire safety was required, the magnets were often filled with
PCBs.  The three magnet manufacturers who used ?C3s were:
                         Sterns Magnetics, Cudahy, Wls.
                         Eriez Magnets, Erie, Pa.
                         Dings Co., Milwaukee, Wis.
          Dings Co. stopped using PCBs in mid-1976; the other two manufac-
turers have rot used PCBs since 1971 or 1972.  A total of about- 250- PCS-
magnets were manufactured; approximately 200 of these may still be in use
in the Chited States.  Most of the FC3 magnets are being used in coal mines,
coal preparation plants; and in coal-fired generating stations.  It is
possible, but not confirmed, that sons of the PCS magnets may be used on
grain conveyors because of the flarnrability of grain dust.
          The electromagnets are of completely welded construction, and
very few leakage incidents have occurred with either oil filled or PCS
filled magnets.  Based en design considerations, electromagnets would be*
expected to be less likely, to fail than would transformers.  Those leaks
which have occurred have been caused' by physical abuse or lack of adequate
maintenance.  Maintenance requirements do not expose workers or the environ-
ment to contact with PCSs.•

     9.1  Reouirements of the;" PrcDOsed~ Peculations- •
          Cnly transformers and capacitors are defined as "totally enclosed
uses" of PCBs.  All other PCS equipment, inclining PCS'electromagnets, must
be rsroved from service by the effective date of the regulation, and dis-
posed of in accordance with the "PCS Disposal and Marking" regulations..
                                       -60-

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Since incineration of the electromagnets is not feasible, each, owner will
.be required to submit a written application to the Regional Administrator
requesting permission to- dispose of the -units in a chertrLcai waste landfill.

      9.2  Compliance Posts
           The PC3 electromagnets could be replaced with oil filled units at
an average cost of $3,000 per magnet.   Ecwever, use of mineral oil in these
applications would significantly increase fire risks.  All of  the manufac-
turers regularly furnish, magnets filled with, siliccre fluid for  use where
                                                                                   [
fire characteristics superior to transformer oil are required.   Such, silicone
filled transformers are 40 to- 50% more expensive than oil filled units, i.e.,
$12,000 per average unit.                                  .     ...       .
           Eriez also offers a proprietary air cooled electromagnet which
has Underwriters laboratory approval for use in dirty and dusty  environments.
This unit costs about 30 percent more than an oil filled magnet,  i.e.,
$10,400 per average unit.
           Seplacement costs for suitable magnets would be $10,400 to $12,000
x 200 units = $2,080,000 to $2,400,000. •  Delivery and installation costs would  _
be an' additional ten to twenty percent.  As in the case of mining machines
 (chapter 8) , the increased costs would be expected to be absorbed by the coal
mines as reductions in profits.  These costs should not result in anv loss of
            nr PTTYTI y*11 nn T
                    'QjL 200
                                                       au   ~s~ — WVAJ.  — J
     i-iS". '     ' *F^ r ^ ^T ' "*t ' Or" l~>'*~  f_ii^l  i : r i !gr%j_r -^ WLllVjiiL prril — i2.'"i.r;n  LTJ LgJuiiT
TTvaf-?>1  rrmTr? rpcnl ^ in ^ hirrh  r-j clc nf r^^rnacp nf *-h«a nr'ghta'rs run'^K s^ir^j-ar.t"! al
                        Fadio  rjLwJUfei^cy - uBi.rt'lr'dtriLiScLjrs can cetcOL rrcta*! ar.c
 shut down a conveyor belt until  the metal is removed manually.   These systems
 CD.   Consensus of industry opinion obtained through a phone
      survey by Versar Inc.
                                      -61-

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are expensive  in terms of manpower and lost production compared to the use
of separator magnets, but  metal detsctors could provide the temporary pro-
tecticn needed until replacement magnets were delivered.  Detector syststis
which are presently in use are not manned continually, so it must be assumed
that the lost  production from belt stoppages is less expensive than manning
would be.  Assuming that a two-month delay would be experienced in obtaining
replacement magnets, full tins (3-shift cceraticn)  manning of the detectors
at a burdened  labor rate of  $30,000 would cost (60  days x 24 hours per day.
x $30,000 per  man year/1920  man hours per man year  = $22,500 per magnet) .
Actual labor requirements might reasonably be 10% of this figure.  This labor
requirement would have to be added to the cost of a detector system.  All of
these additional costs are very dependent on the timing of the effective    • •
date of the regulation,  and  would be eliminated if  the industry had six
months notice  of the intention of the Agency.                        .  •

     9.3  Smeary
          Cast Impacts:
             •  Replacement cost - 200 electromagnets - $2,080,000 to 2,400,000
               Delivery-  and  installation costs - 200
                         electromagnets - $208,000 to 480,000            .    -  .
               Labor cost increases due to short term lade
                         of reolacement macnets - $0 to $4,500,000 (probabiv
                                                                 $500,000)
          Production cnd.Pr-ise Irrrpacts: • .
               COStS .are* (ayy^ar^-ty?  t-n  r>a  afasrft*^*  hv frrija rftal  Tiinirig; _ •fp
as a reduction in profits.
           Employment Effects:
               .No loss of employment  at  the mines is  anticipated.   Assuming
that one-third of the manufacturing and  installation costs of the replacement
units represents labor at $30,000  per man year, distressed labor of
                                      -62-

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(52,238,000 to S2,380,000/ 330,000 cer man year x 1/3 dollar later per
dollar cost = 25 to 32 roan years 1. would be required in' late-1978 -and early
1979.  Extra labor due to a lack of replacement units might increase em-
ployment by ($500,000/530,000 per nan year = 17 nan years) during the first
few norths of 1979.
                                    -63-

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10.0  EXDPHJLIC SYSTEMS
      PC3 fluids were used In a large number of hydraulic systems,  particra-
larly in die-casting machines ard in steel ijxiustry applications where high-
tanperature stability and fire resistance were important considerations.   In
1972, when ?C3 hydraulic fluids, were no longer available,  users were forced
to switch to substitute fluids.  Since the substitutes were compatible with
the PCS fluids, the machines were not drained and  flushed but were  simply
topped off as required with the new fluid.  Topping off  usually requires
addition of new fluid at the rate of 2 to 10 times the system capacity per •'
year to replace leakage losses.
      Available data on residual PCS levels in die casting machine  hydraulic
systems indicate that many of the tested machines  contained PCSs in concentra-
tions of 60 ppm to as high as 50% in a few cases.  The differences  in cph-
                                                                      '''..•;*
centration apparently reflect differences in the rate of leakage from various
machines and differing company maintenance policies regarding periodic tetaJL.:' •-.
replacement of hydraulic fluid.                       _.                   ' •
      10.1  Requirements of the Proposed Peculations
            The proposed PC3 ban regulations would prohibit the use of fluids
which contain over 50 ppm PCSs in open or semi-closed  systems.   However,
hydraulic systems on metal die casting machines which contain fluid with  more'
than 50 ppm PCSs would be allowed to remain in service if they ars  drained,
flushed with clean solvent, and refilled-with uncontaminated hydraulic fluid.
The fluid must be re-processed or replaced at intervals  of six months to
remove ?C3s until the concentration of PC3s remains below 50 ppm.   In addition,
users of contaminated systems would have to- report such  use to EPA  and petition
annually1' 'for3 exempt±cns"TST ccntintETisintr arxi~ periodically" 'decontaminating the""'
equipment.
            The provision"fcr~cont±nneS-TJse"''CTf--these"'systems'Is-limited to
five years in the proposed regulation.  However, it is anticipated  that the
required periodic decontamination of the systems will  reduce the concentration
of PCSs to below 50 ppm before the provision expires.  Hydraulic systems  en
                                      -64-

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 other types of machines would, not be allowed, to continue in service if the
 fluid contains more than 50 pan PC3s. .The machines would have to 'be removed
 fron service by the effective date of the regulation and not used until the
 PC3 level in the fluid is reduced to a concentration below 50 pan.
       10.2  Ownership and Use of Contaminated Hydraulic Systans'
             A previous EPA sponsored study reported that sales of ?C3 hydraulic
 fluid during the period 1970-1971 totaled over 13.5 million pounds to 585
 different firms.     Except for a ' few companies with contaminated die casting
 systems which have been identified through statements at public hearings on
 PCBs, little information is available on the ownership of contaminated systems
 or the levels of PCBs in the fluid.
             Based on statements''made, by several die casting companies and by '
 a representative of the American Die-.Casting Institute,  •  PCBs were used as
 a premium priced alternative fluid"--ih. the''hydraulic systems of die casting
 machines used to form aluminum, magnesium, and zinc castings.  There are
 apparently few barriers to entry in this industry/ and the constant entry
 of new die casting companies has provided a ready market for used machines.
             A review of the Monsanto customer list reveals that about 30% of
 the 40 largest companies purchasing PCS hydraulic fluid in 1970 and 1971 were
 die casting ixauianies.     Assuming that die casting companies purchased 30%
 of the fluid sold and used it in die casting machines, a total of  (13.5
 (lt~' Versar •£ncT7"gsage of~PCSs"ia Oce:i and1 3e.Ti"clcsed-Svstams— and-the- -Re	
•^ .—-—suiting: Jasses?o3Ss~.£o^feteB£rCT3in^^                                    .•
.. — 4EPA^ntr^t-fe.-.^H}l~32Si7-ye£sa^.Ste^	
      1976, p.  13.
__(2)	Telephone. conversation, Mr.. Gomel  (American pie ..Casting Institute^  Inc.)	
      with Robert Westin  (VersarT," April "25, '1978"."	       ""  ~"	"	   •
                                       -65-

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million lb x 0.3 / 11 lb per gallon =  1 million gallons)  of PCS fluid was used
in these cnachir.es during the two year  period.   Assuming further that each
machine had a hydraulic system containing  300 gallons  and required* that amount
each year to replace leakage, the total one million gallons of fluid could have
been used by 1000 machines which used  1000 gallons  each.
            The remaining 20% of the largest purchasers of ?C3 hydraulic fluid
were steel mills.  PCS hydraulic fluid was reportedly  used as  a standard fluid
in many plants in those applications'where leakage  would present a fire hazard.
Representative uses would include steel furnaces, ladles,  strip mills,  vacuum
degasers, and continuous casting machines.  There is no information available
on the total number of hydraulic systems in the steel  industry that used PCS
fluids, nor is there any information available  as to the present concentration
of ?C3s in these systems.
      10.3  Compliance Costs
            Die Casting Machines
            Most die casting machines  were flushed  and refilled with a^ ron-PCB
hydraulic fluid after the owners became aware of the environmental and health
hazards associated with ?C3s.  The hydraulic fluid  recommended by .Monsanto  .
as a replacement for the PCS fluid in  1971 was  based on polychlorinated ter-
phenyls (PCTs).  -The manufacturing of  PCT fluid was discontinued in 1972 or
1973 and the product.lines were, replaced with other types of hydraulic liquids.
            The refilled hydraulic systems have been -raintained in use by
topping off when necessary to replace  leakage losses,  and in some cases by
periodic replacement of the fluid.  As a result of  the continual removal of
contaminated fluid, the concentration,  of. PC3s has..been, .graduaIly. r°dncari .to	,~
low levels-, although in many cases the- residual -?C3s exceed the 50 • pair limit— •
proposed by the regulation.  The available information on present levels of
PC3s in the hydraulic systems of die casting machines  is summarized in Table
10.3-1.

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                                Table  10 .'3-1
         Present ?C3 Levels* in Die Casting Machine Hydraulic Systems

            Company                                PC3 Level (pan)
            Cast Forge Co. (1)                             80
            Caterpillar Tractor               below detection limit (systems
                                               are drained twice a year)
            Outboard Marine          '         90-6000 (currently average 500)

            Outboard Marine  Corporation owns  approximately 130 die casting
machines that at one time used FC3 hydraulic  fluid.   These machines each
contain an average of 500 gallons of fluid ,    and are all contaminated with
?C3s in concentrations above 50 pern. '                              '

            Several companies provided estimated costs for replacing hydraulic
fluid, although rot all of the figures were  for the permitted draining and
flushing procedure.  Outboard Marine estimated a cost "of $340,000 to drain
their machines, flush them twice with .mineral oil,- and refill them with r.ev
           1 ' I "i " , __ if
                                                            (40
avoid flatiroability problems  the cost would be $1.2 million.

            General Motors stated that the cost of materials  for replacing
the fluid in their hydraulic systems would be as follows :
(1)  Telephone conversation, Tom Grover  (Cast Forge 'Co.) with Brace r»vcccccck
     (Versar) , September 22, 1977.
(2)  Telephone' co^wersatiTsrrrTtm 3arl5tr~(Catsrpillar- Tractor)  with' Bruce
     -Thonas , Hugh- (Gutbea^d-Maglfie-Corp-.->- ,-Pgeser.ta-tien-5-t-the'EP.ar Inf
     Hearings on the PCS 3an Regulations, Washington, D.C. , July 15,  1977
     (p.. 91 of. transcript) . _   ._                 ....
(4)  Telephone conversation, Hugh Thomas (Outboard Marine Corp.)  with 3ruce
     Woodcock (Versar), September 23, 1977.
(5)  Ward, William  (General .Motors Corporation) , Presentation at the  EPA
     Hearings on the PCS San Regulations, Chicago, Illinois,  July 19,  1977,
     (p. 201 of transcript) .

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            Item                                   Material Cost
                                              (?/gal of replaced  fluid)
            Solvent      ~                             $.2.26
            Nev Hydraulic Fluid                         7.57
            Disposal                                    0.57
                 Total                                $ 9.40

Chevrolet estimated that it would cost $500,000 to replace the hydraulic  fluid
                                                                               0 A
in the 25 systems  (29,000 gal total capacity) in their Bay City  (Mich.) plant.
            Representatives of two companies stated that if they were  forced
to use hexane or some similar solvent they would be severly affected as the
seals in their machines would have to be replaced.  Also, there  was .concern  .  •
among those who have already flushed their machines .that further flushing
would rot significantly lower the ?C3 level in their machines.
            All of the available industry cost estimates are. summarized in
Table 10.3-2.
                                Table 10.3-2
Industry Estimates of the Cost of Draining,. Flushing, and
Refilling Die Casting Machine Hydraulic Systems
No. of
Machines
: 25
totors
Marine 130
No. of
Gallons
29,000
65,000
Total Cost
$
500,000
340,000
$/Gallon
17.24
9.40*
12.92
Company            Machines    fumnng        $	    $/Gallon     S/lMachine
Chevrolet             25       29,000      500,000       17.24         20,000

                                                                        6,500
          "Material cost only.
(1)   Michigan Departnent. of Natural Resources,  File Memo,  undated.
                                     -63-

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             The industry cost estimates are  roughly comparable to the cost
 estimate irade by Versar and presented  in Table 10.3-3.  .Since the Versar
 estimates do not include "inventory costs ~or  the cost of decontaminating the
 waste liquid truck, a figure of $14 per gallon might be a .Tore realistic
 estimate of the average price of decontaminating  hydraulic  systems.
             The effectiveness of the decontamination procedure will  depend en
 hew thoroughly the system can be drained of  both  the contaminated liquid and
 the flushing liquid and also on the amount of  PC3s which  are absorbed into
 gaskets and other porous material.  Assuming that the draining and flushing
 procedure will remove 80% of the total PC3s , a system originally contaminated
 with PC3s at 1000 ppm will still be contaminated  with 200 ppm six months
 after the first flushing/ but the level of PC3s after the second flushing will'
 never exceed 40 ppm.  Since there will probably be considerable leakage and
 topping off between the flushings, the concentration of PC3s is likely to be
 even lower than these calculations indicate.   -
             Assuming that each of the  1000 presently contaminated systems must
 be flushed and refilled twice, and that chemical  analysis for PCSs is required
 six months after each flushing, the total  costs involved  will be:     .      •.  .
             First flushing  500 gal. @ ?14/gal     . $  7,000  •
             Chemical analysis                             300
             Second flushing                .             7,000
             Chemical analysis •                            300
             Total per machine             .           $14,600
             Total for 1000 machines                  $14,600,000
	A- major—sactSE-ia-^he-csst-of deeeRt5iTiiaa^dag-hyerau±±c--systgns--±s	
 the cost of
..-steed -that- both--Gutbcara-Mar-iae-aM-geRe£al--M3tsr3^ have-eerdacted- ca

 methods  to  remove  PCSs  from hydraulic  fluids .   It is  not known whether these
 methods  involve distillation or adsorption.  The feasibility of such pro-
 cessing  may have a substantial  effect  on the costs of decontaminating hydraulic
 systems  and on those companies  which reclaim hydraulic fluid.
                                       -69-

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                       •  '       Table 10.3-3
            Estimated Cost: of Decontaminating Hydraulic Systems
c Fluid (1)
sphate ester)
id(1) - 1 gal/gal
Cost per
500 gallon
system
7.80
1.15
gallon
2700 gallon
• ••'. system
7.60
1.15
Flushing Fluid
        (lew viscosity mineral   •
        oil without additives)

Transportation          .                         .41                   ..41
        (400 miles, includes
        flushing fluid)

Incineration - $.15/Lb                          2.85                  2.85
        (includes flushing fluid)

Labor                                           •
        (2 man days per machine                  .48                   .09
        at $15 per burdened man hour)
                              Total           "12.69                 12.10
(1) 'Telephone .conversation, John Colucci (E.F. Hcughton) with Brace Woodcock
     (Versar).   April 27, 1978.                     .
(2)  Versar Inc., Microeconcmic Impacts of the Proposed Marking and Disposal
     Regulations for K3g> Sprungrxeld, Va.: National Technical Infonration
     Service (OTIS PB 267 833/2NP), April, 1977, p. 3-20.
                                     -70-

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              Other Hydraulic Systems
              Approximately 20% of the firms purchasing PCS hydraulic fluid in
  1970 and 1971 were steel-companies and other  firms rot engaged in die casting.
  It is therefore likely that 20% of the usage  of PCS  hydraulic fluid was in
  systems other than in die casting trachines.   Although there is little informa-
  tion available on the use of this material, apparently not all of the systems
  are still contaminated with significant concentrations of PCBs.   Budd Co.
  stated that their operations should not be significantly affected by the pro-
  posed ban regulations since the hydraulic systems on each of•their welders
  have been drained and refilled on the order of 120 times over the last five
  years.(1)
              The procedure of draining, flushing, and refilling any of these  • '
  other hydraulic systans to reduce the level of PCBs  should • cost approximately
  the same per gallon of fluid as a similar procedure  performed on a die casting
  machine hydraulic system'.  As a rough estimate'" based on the proportion of PC3
  hydraulic fluid used in such systems, the cost of decontaminating these other
  hydraulic systems should cost 25% as nuch as  the cost of decontaminating the
  die casting machines, or a total of $3,650,000.
              The proposed regulations would require that the level of PCBs in
  these other hydraulic systems be reduced to less than 50 ppm by the affective
  date of the regulations or the- systems removed
                         1 *-< ^ I 7^"*
  additional costs due to disrupted production in steel mills,  as the hydraulic
  systems are central to the operation of  the  large equipment used in these
• - facilities-; — Sewever; — there  is r.ot  sufticiaiiL infcrmaLioii availciLli=! Lo~ y
— 'Whether' •the~rsqu2-red~ '•^•"-"'n^ni^'gt "nii-r^f1 \-&* acciiiiuicLslitsi L/y tlm bjI_»jt_i.'
  of the regulation, nor to estimate what  the  costs  due to production intsrrup-
   (1)  Telephone conversation, C.W. Habitz  (Budd Co.) with Bruce vvcccccck
        (Versar), September 22, 1977.
                                       -71-

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                        P.sau.'irsmants
              The proposed regulations would require that owners of die casting
  machines having hydraulic systems contaminated with over 50 pan PCSs report
  the identity of each contaminated machine and the concentration of ?C3s in
  the fluid.  This will require the identification of all machines that ever used '
  ?C3 fluid and those that may have used  PCB-contaminated reclaimed hydraulic
  fluid and the chemical analysis of  the  present fluid in these machines for the
  presence of ?C3s.  This sampling and' analysis .program may cover as many as
  2500 machines and must be completed within 90 days of the effective date of
  the regulation.                             :
              Chemical analysis for the quantification of ?C3s in hydraulic
  fluid would be considerably more complex  and  expensive than that required to
  determine the concentration of PC3s in  10-C transformer oil.   This is be-
  cause the presently used hydraulic  fluids may be based on 'chemicals such as
  phosphate esters which require that the FC3s  be extracted from the sample   ..  •
  prior to analysis.  The possible presence of  PCTs in the fluid could interfere
               ""                          .         *
  with the analysis for ?C3s, and discrimination between these similar chemicals
  would require the use of a gas chrcnatograch/mass spectrometer rather than
  the simpler gas chromatograph usually used for PC3 determinations.  Versar
  estimates that the complete analysis of contaminated hydraulic fluid for PCBs
  may cost as much as $300 per sample on  the average.
              Review of the. records.-..to dfftprmip.e-vrJ.ch.machLne.s..3ay hf»_con-=.-_ ____
  taminated with PCBs and the preparation of the- report to EPA would be expected
  to require an average of three days for each  of the 335 firms which purchased
  PCS hydraulic fluid in 1970 and 1971.   This would result in a net •employment
•--demand of -(585 cmitjanies-x-3 iays..pqr-*ggss^y--^240 -aaa~days .ger-iaan-.-year-gfr • --?.a
  7.3 man years).  At -a. burdened- rats. -of-. ^30^000  per -man year r- this -would •
  result in total . reporting costs of  (7.3 x $30,000 = $220,000).
              Total costs attributable to the reporting requirsnent would be
  ($300 per sample x 2500 machines =  $750,000)  + $220,000 clerical = $970,000.

              Spill Prevention end Control  Plans
              Each ccmpany which uses or  services a die casting machine that is
  contaminated with ?C3s will be required to develop and implement a formal

                                       -72-

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spill prevention and control plan.  Because of the complexity of the machines
and the assumed requiranent for periodic flushing and decontamination, the'
plan will be rather complex and may require the services of a registered pro-
fessional engineer for one week at $250 per day.  Preparation of these plans
by all 585 affected companies could cost a total- of  (585 plans x 5 days x
$250 per day = $730,000).  This cost could be reduced by perhaps one half
if a pro fonna plan were developed under the sponsorship of a trade association
or major manufacturer and made available to all affected firms.
            Total expected cost of this part of the regulations would therefore
be expected to be $365,000 to $730,000.

      10.4  Summary
            Identification of Contaminated Die Casting Machines
            Analysis and Sampling                      $   750,000
            Clerical - Report to EPA          "            220,000
            Spill Prevention and Control Plans       $365,000 to $730,000
            Decontamination of Die Casting Machines     14,600,000
            Decontamination of Other Hydraulic      .    3,650,000
              Systems
            Cost of Production Interruptions when         ? (potentially
              other Hydraulic Systems Removed from             large)
              Service                                  	
                              Total                    $19,720,000

            Employment Effects
            T^bor equals (.43/12.50 = 3.3%)'-of per gallon cost.  Total labor
cost = (.038 x 13,250,000 = $693,000).  At $30,000 per man year, this is equal
to 23.1 man years of labor, or 12 jobs for 2 years.  Spill prevention plans
would require 5 man years of effort.  Reporting requirements would require an
additional 7 man years.
                                      -73-

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                  Effects
            The impact of these regulations may effect almost all die. casting
and steel companies.  Increased costs would therefore be expected to be passed
along to the consumers in higher product prices, although no individually
significant price increases are expected.
                                     -74-

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11.0  HEAT TRANSFER SYSTEMS
      PCBs have been extensively used, as heat transfer liquids- because of.  -
their excellent thermal stability and inherent fire safety.  Although the
heat transfer systems are usually quits tight, leakage can occur.due  to
mechanical damage of the system or because fittings have loosened  as  a result
of thermal cycling.  The Yusho incident in Japan in 1963 caused  the PCS
poisoning of 1001 people due to the leakage of PCBs from a heat  transfer
system into rice oil that was being heated by the system.
      A previous EPA sponsored study estimated that total usage  of PCBs  in
                                                                            (2)
heat transfer systems in the United States has been over 21 mil linn pounds.
Most of this material was manufactured by Monsanto and distributed under the
trade name Therminol.  Monsanto stopped producing PCS based heat transfer
liquid in 1971 and advised its customers to drain and flush their  -systems
before replacing the fluid with a non-PCB based liquid.  An additional• one
million pounds of PCB heat transfer liquid was "manufactured during the period
1971-1973 by Geneva Industries of Houston, Texas.     There was  at least one
                                                                 •  (4)'
company still using PCB based heat transfer liquid as late as  1976.
      11.1  Requirements of the Proposed Regulations-
            As of the effective date of the regulation, heat transfer systems.
containing a liquid contaminated with more than 50 pern PCBs could  not be used until
the concentration of PCBs is reduced to less than 50 ppm.
 (I)  Kuratsune, Masanori, et. al., "Yusho, a poisoning caused by  rice oil  con-
     taminated with polychlorinated biphenyls", RKSMHA Health Reports,  Vol.  36,
     No. 12  (December, 1971), pp. 1083-1091.
 (2)  Versar Inc., Usage_of PCBs in Open and'Senu^-closed Systems and  the
     Resulting losses of PCBs to  the Environment, Unpublished Draft  Report,
      (EPA Contract No.  68-01-3259, Versar Report No.  474-5C), September 30,
     1976','p.'13.
 (.3)  Ibid.
 04)  Ibid, p. 26.
                                      -75-

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      11.2  Ownership ard Use of Contaminated Heat Transfer Systems
            There is no data available on the total number of heat, transfer.
systems which have used PC3 based fluids in the past.  However, a  review of
Monsanto 's customer list for 1970 and 1971 indicated that 8.2 million pounds
of PCS based heat transfer fluid was sold by Monsanto during those years to
a total of 533 different fians. (1)
            The present concentration of PCBs in the heat transfer fluid in
any of the systems which previously used PCBs depends on how thoroughly each
system was flushed when the PCS fluid was replaced and the amount  of leakage
and topping off that has occurred since then.  Data on present PG3 levels is
available for only one system: a 14,000 gallon capacity PC3 heat transfer
system was drained and flushed in 1972 and refilled with a ron-PCB fluid;
the system has been in constant use since 1972 and presently contains fluid
that is contaminated with two. percent PCBs. ( '                        -  '
            Lacking any addi-Hopa! information, it must be assumed that most
of the 533 companies which purchased PCS heat transfer fluid are still operating
the systems and that most of these systems are contaminated with PCBs in
excess of 50 ppm.  It must further be assumed that the use of these systems
is central to the iranufacturing processes in which they are used, whether
for drying, heating, or temperature control in exothermic processes.
      11.3  Compliance Costs
            It is not possible to estimate the total costs of decontaminating
the existing heat transfer systems to comply -with the requirements of the pro-
posed regulation because neither the total number of systems nor their
capacity is known.  In principle, the costs of draining, flushing, and re-
filling the systems should be about the same per gallon for heat transfer
systems as for hydraulic systems (see Section 10.3).
 UJVersar Inc., Usage of PCBs in Open and Semi-closed Systems and the
     Besulting Lssses of PCBs to the Environment, Unpublished Draft Report,
      (EPA Contract No. 68-01-3259, Versar Report No. 474-5C), September 30,
     1976, p. 9.
 (2)  Confidential information obtained from the user of the  system by Versar
     during a telephone survey of major users of PCS heat transfer systems.
                                      -76-

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            The disruption of industrial 'production caused by the requirement
that contaminated heat transfer systems be removed from service inrnediately
upon the effective date of the regulation may result in far larger" costs than
will the requirement to decontaminate the systems.  Here again, the available
information will not support even a guess at the magnitude of the economic
impacts of the disruption on costs, production, and employment.
      11.4  Summary
            Over 500 heat transfer systems may be contaminated with PC3s in
concentrations exceeding 50 pan, but available data is rot sufficient to
support an analysis of the costs of decontaminating the systems or the economic
iinpacts resulting from disruption of related industrial production.
                                     -77-

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12.0  CCMPPESSOBS                               .
      Turbirol 153, a PCB-faased fluid, was tried as a turbine lubricant and
working fluid in natural gas pipeline compressors by several companies during
the late 1960s and early 1970s.  Monsanto ceased producing this product in
1972, and the companies that were using it switched to alternate-fluids at
that time.                                                   .
      12.1  Requirements of the Proposed Regulations
            The proposed regulation would prohibit the use of any systems which
contain liquids contaminated with ECBs in concentrations exceeding 50 ppm after
the effective date of the regulation.
      12.2  Compliance Costs
            TWo purchasers of Turbinol 153, Columbia Gulf Transmission and
Texas Eastern Transmission, were contacted fay phone.  Neither company had
information available on the residual levels of PCBs in the turbine fluid/  _.  •
but both indicated that the systems were relatively tight, and there was
seldom the requirement to top off the systems.  Based on data available for
hydraulic systems and heat transfer systems, it must be assumed that the
compressor fluids are probably contaminated with PCBs in excess of 50 ppm.
            There are perhaps ten gas pipeline compressor turbines in use that
have their oil contaminated with PCBs.  The proposed regulations would require
that these turbines be removed fron use until the concentration of PCEs is
reduced to below 50 ppm.  It is not known what costs would be involved nor the
disruption to the delivery of natural gas- that would result from removing
these turbines from use.  Assuming that the complexity of the turbines is
similar to that of the hydraulic systems discussed in Chapter 10, a cost of
perhaps $20,000 and $40,000 per machine may be involved in the decontamination
of the oil systems.  Total costs might be several hundred thousand dollars
plus the cost of disruption of the gas delivery system.
            The cost of shipping gas by pipeline is established by long term
contracts.  Additional costs resulting from the provisions of the draft
regulations would have to be absorbed by the pipeline companies.
                                     -78-

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12.3  Stannary




      Decontamination Costs   • -             ~ $200,000.
                               -79-

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13.0  RECLAIMED OIL
      Approximately 1.3 billion gallons per year of used oil.is collected.for
use as road oil, fuel oil, re-refined hydraulic oil, and re-refir.ed lubricating
oil.  Much of the waste oil previously used in applications other than auto-
motive lubrication has been contaminated with lew levels of PCBs, and dissipative
uses of this contaminated oil can introduce PC3s directly into the environment.
      A total of 2,376 million gallons of new oil were sold during 1975,  the
major conrercial uses being automotive lubrication  (50.8 percent); industrial
and aviation lubrication  (30.5 percent); and other industrial uses primarily     ,
in materials processing  (17.4 percent).  The amount available for collection
and recycle was estimated to be 1,154 million gallons, or 48.6 percent of
total sales.  Data on U.S..usage of new  (virgin) refined oil and availability
of used oil for recycling are presented for the year 1975. in Table 13.0-1.     '   •
                                      (2)
      Data generated by Recon Systems    for a.12-month period during. 1970-71  •
indicate that, out of a total U.S. production of 2,480 million gallons per
year, approximately 901 million gallons, or about 36.3 percent, were actually
collected for recycling or use as fuel.  An additional 601 million gallons
were estimated to be used on roads (application for dust control and possibly
in asphalt)  or as fuel oil; this used oil could conceivably have been col-
lected for recycle so that the maximum amount of oil available for collection,
based on the Recon Systams estimates for 1970-71, may be as much as 60 per-
cent of that produced.
      A flow chart shewing the distribution and utilization of waste oil  in the
United States, based on the 1970-71 data of Recon Systems, is presented on
Figure 13.0-1.  Summary data for disposition and usage frcm Figure 13.0-1 are
as follows:
 (1)  Adapted from Table 1, page 24 of Assessment of Industrial Hazardous Waste
     Management Practices, a document prepared for E?A's Office of Solid
     Waste and presented with testimony of H. I^nier Hickman, December 12, 1977.
 (2)  Weinstein, Norman J., (Recon Systems, Inc.), Waste Oil Recycling and Dis-
     posal, ZPA-670/2-74-052, Princeton, N.J.:  August, 1974.
                                     -80-

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                              Table  13.0-1
New Oil Usage and Waste Oil Availability for Recycling in '1975


Tvee of Oil Outlet or Use
Autcnctiva Lube Oil Service Stations
fj^wwo**^* a j *sp«'Ti T?^
-r- _ -L tmy MI i i
fleets
Mew car dealers
Auto Hast and ctr-jsr
iebe oil uses
Hetail qalips far COB-
nercial engi-es
Garaqes, auto supply
stsss
Discount stores
Factory ?-m« (auto i
fa r^n ectiianBnt)
. Subcotais
yl^fJ-?«P*^*-* 3^1 4 Aviation
Luba Oils SYrfraalic a cirsi-
lac.in? syststa oils
vjetal -«czjci.-^5 oils
Aviation 4 cr±er
Gas engine oils
Stri'rmrt scc^a cils
Suctatals
,-it^o^ T^A'», 	 i»l rH1i r-1a< 	 i-,^ «jjj
?rccess oils
assrigeration cils .
Subtotals
L-cca Oils P'jrsrASPd
iy 'J.3. Gavessnent
C3UJO TdALS
"Traction avaiiaoie :cr sscyclisg after
losses in use and to environment.
'11 •J»i-gr°inr Jtorsan J. , (Secon Systsns, -T:.),
0. 3. S-tLna
1375
(gal x ID"4)
239

22S
103

131

95

90
250

54
OJT
.

314
145
147
SO
53
724'
52
240
1 1
~TIT

	 32.
2,375

Fraction
.\vailabls*
for Sac-^le
.53

.30
.90

.20

.S3

.63
.22
*
.30



.^
.70
.50
.90
.53

.90
.10
.50


.50


rfeor} .-ni
Available
:sr Secvciirs
150

112
93-

75

oO

• • ' 57 '
55

49
651
• _

132
101
7.3
54
31
-3sT
56
• 34
	 S_
9o

	 1£
1,154

Waste Oil ?ac^cli.T= ard
OisBosal, 3A-o70/2-74-352, ?rirceton, X.J.:  August.
                                                 15/4.
                                    -81-

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                           Figure 13.0-1.  Distribution  and Utilization of Waste  Oil  in
                             	the United States  During  1970-71	

I'nxluctJori of
Virgin Oil
(241)0 x JO6
gal/yr.)


	 ^
Sales
(2234 x 106 qol/yi.)
I'roJuctlon HrtuLaiii
Spain
(2<6 x 10° -
nunk Aftur Use
(HIS x I06yal/yr)
OlnulfiatoJ to Uie
tlwitr« ntuil , Mrtstua,
iuxl Spills
(1365 x 106 ijol/yr)
oo
K)
                  Somuu; Adapted turn Table 26, i>.  12U of Htiinatelii, llomun J., (Ifecxxi SyaLuna, Iiw.J.
                         Uaate Oil l^c-ycHny atid t)ls|Xaal, B'A-670/2-74-052, Prlnodtoii, H.J.i August, 1974.

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            Fate of Oil After     •      _          Percentage of New
               Primary Use                         Oil Production
            Used as fuel           . .          .         • 41.5:
            Dissipated to environment                   42.3
              and waste disposal
            Applied to roads
            Ee-refined lube oil products
                                                       100.0
      The general distribution portrayed in Figure 13.0-1 is believed to be
valid at present, although the magnitudes of the specific flows have fluc-
tuated as prices of virgin lube oil and fuel oil have varied.  The value of
fuel oil has increased since 1970-71,  and virgin lube oil was scarce during
the period of the Arab boycott and during a portion of the period- of price   •
controls.  One result of these factors has been -increased use of waste oil
as fuel, either internally by industrial concerns which generate waste- oil
or via processors.
      Ihe primary sources of waste oil available to collectors are service
stations and other automotive-related facilities.  Industrial and avaiaticn
facilities are also significant sources.  A significantly larger fraction
of available oil is collected in urban areas than in suburban-or rural areas.
Based on studies in the Pittsburgh area, spills and other wastes frou product
pipelines are a locally significant source of waste oil for collection.
      The use pattern of processed or rerefined waste oil.is extrsnely dif-
fuse.  Users include states and municipalities  (road application), indus-
trial and caranercial facilities (fuel, re-refined lube oils, read oil),
utilities (fuel), and the consuming public (re-refined motor oil).
      A small portion of the collection and processing of used hydraulic
oils does not follow the general pattern of scattered sources, many re-
claimers, and numerous users indicated for the waste lube oils.  Reclamation
of used hydraulic oil, performed in most part by four companies, results in
a product which is marketed as hydraulic oil.
                                     -33-

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      13.1  Requirements of the Proposed Regulations
            The disposal of oil contaminated with ?C3s in excess of  500  ppm is
regulated by the  'PCS Marking and Disposal Regulations'.  The proposed  'PC3'
Ban Regulations' would change the definition of  'PCS Mixture1 used in the
Marking and Disposal Regulations to  include all mixtures containing  more than
50 ppm PCSs.  This will affect the allowable uses and disposal of oil con-
taminated with lower concentrations of PCBs.
            Under the provisions .of -the proposed ban regulations, oil con-
taminated with PCBs in excess of 50 ppm would have to be identified, segregated
for purposes of disposal, and burned in an approved chemical waste incinerator.
Oil containing measurable amounts of PCBs less than 50 ppm could be  processed
for any use including as fuel, or reclaimed lubricating or hydraulic  oil,  but
could not be used as road .oil -or as a constituent of any sealant,- coating,
or dust control agent.       "  -4         '      '
      13.2  Sources and Amounts''of Contaminated Waste Oil            •_ . ,   -  •
            Eydr
-------
            Monsanto manufactured almost. all  the FCB-based hydraulic fluids;
When Monsanto discontinued manufacturing PCB-based hydraulic fluids in 1971 ,
they did rot recoimerd draining or flushing of hydraulic  systems but that  •
replacement fluids should be added to the remaining  PC3 fluids in the system.
As a result/ hydraulic systans which used PC3s in 1972  and prior, years new
contain replacement fluids contaminated with  .006 to 50%  ?C3s as discussed
in Chapter 10.  The total amount of contamination is a  function of the system
leakage and dilution during the past five years.
            A portion of the available used industrial  hydraulic oil is refined
 and sold for reuse as hydraulic oil.  This special: zed reclaiming service is
 furnished by the following four companies which reclaim  a total of about
 150,000 gallons of hydraulic fluid per year.                          ••
            E. F. Houghton and Co.,. Philadelphia, Pennsylvania  • .  •    ' J , '"
            Radco Corporation, LaFox, Illinois  •    • -         .  • •          "'"" v,y-
            Findett, Inc., St. Charles, Missouri                       •  '   ••.••.,••.•'•;
            Wai lover Corp., East Liverpool, Ohio            ' "                 - .
            Autamob'its and Industrial Lubin.aizti.na 0-1,2.  The amount of usqd oil
collected for reuse in 1970-71 was about 900 million gallons per year,  with
an additional 600 million gallons used  internally for fuel or dust control
on roads.     Thus, about 60 percent of the amount of new oil sold was  reused.
Major uses of this oil were as fuel  (1028 million gallons) , road oil (319
million gallons) , and feedstock  for- re-refined lubricating oil (138 million
gallons) .
            The  extent of PCS contamination of this oil was studied on  a
limited basis by the EPA National Enforcement  Investigation Center (NEIC)  in '
        (2)
Denver.     Samples of oil were  taken from selected tank truck lots of  used
oil that had been collected in Virginia,  Maryland,  and North Carolina.   This
oil had been delivered to Continental Forest Industries in Hopewell, Virginia,
 (1)Weinstein, N.J.  (Becon  Systems,  Inc.), Waste Oil  Recycling and Disposal,
     EPA-670/2-74-052, Princeton, N.J.: August,  1974.
 (2)  Magruder, Robert S.  (Continental Forest  Industries),  testimony presented
     at the US EPA  informal  hearings  on the PC3  ban regulations, Washinoton,
     D.C., July 15, 1977.
                                     -85-

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for use as supplemental fuel in a steam boiler of a paper mill.  The oil had
been collected primarily fron automobile service stations, although it is ..
possible that some industrial oil, including hydraulic oil, had been included
in some of the lots.  PC3s were found in the samples of oil at concentrations
ranging fron 3.2 ppm to 19.4 ppm.  Although these oil samples were collected
from a restricted area, the extent of PC3 contamination is probably repre-
sentative of waste oil collected throughout the United States.
            The PCS contamination of the waste oil could come from contaminated
industrial hydraulic oil or transformer oil or from PCS additives used in
lubricating oils prior to 1973.  In applications such as railroad car journal
box oils, PCBs may have been used as lubricant additives.     PCBs may also
have been added to automobile transmission fluids to control the swelling of
oil seals.
            It would not be expected that PCBs would be destroyed during- re-
refining of waste oils.  PC3s were reported to"-be present in-concentrations"
of several parts per million in reclaimed oil used to lubricate whetstones.

      13.3  Compliance Costs
            Collection of any waste oil likely to be contaminated with PCSs
for a controlled use would not be attractive financially unless the oil were .
known to contain PCBs at levels belcw the control amount.  Analytical costs
for determining low levels of PCBs will be'considerably higher than the
costs quoted for transformer oil because naturally occurring sulfur and
chlorine ccnpcurds in petroleum oils cause interferences in the use of electron
capture gas chromatography at concentrations of 5 ppm PCBs or belcw.     These
 (1)  Monsanto Chemical Company, Arcclors for 	/ St. Louis, tfc.: undated.
 (2)  Weems, George, (United States Department of Interior, Denver, Colorado),
     "Polychlorinated Biphenyls", File HLS 3-3-10h, June 13, 1977.
 (3)  Hbfstader, R.A.  (Exxon Research and Engineering Co.); Lisk, D.J., Bache, .
     C.A.  (Cornell University), "Interference in the Electron-Capture Technique
     for Determination of Polychlorinated Biphenyls by Sulfur-Containing Corn-
     rounds in Petroleum Products", Bulletin of Environmental .Contamination and
     Toxicology.  Vol.  11, No. 2, 1974.
                                    -86-

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interferences result in false positive indications of the presence of PCBs.'
The PC3 components can only be resolved through.complex clean-up procedures
or the use of gas chrcmatography/inass spectronvstry, techniques that wold- •
cost up to several hundred dollars per sample.
            Road Oiling                         .               . '        .  •
            The most recent data indicates that road oiling consumes 319
million gallons of waste oil per year (Figure 13.0-1).  At an application rate
of 1/2 gallon per square yard, this is sufficient to oil 45,000 miles of
roadway 24 feet wide.  The proposed ban regulations would forbid the use  of
oil containing detectable amounts of PCBs for dust control.  Fluids from  trans-
formers are likely to have detectable amounts and other industrial sources are
at least somewhat suspect.  Currently these industrial oils are collected along
with used motor oil.  Although virgin motor oil has no PC3s, used motor oil
may have PCBs from previous recycling which included industrial oil sources
among the feedstocks or from old transmission oils which contained PCBs as an •
additive.  Nevertheless, used motor oil unmixed with industrial sources is
unlikely to contain as ntuch as 10 pan PCBs, and may have PCS concentrations
that are undetectable without unusually elaborate and expensive analysis.  None
of the reported analyses of waste oil for PCBs was based on used motor oil
without•any possibility of industrial contamination.  Presumably waste oil
solely from automotive sources would contain fewer PCBs.  It is doubtful  that
road oiling could stand the costs of even "simple" tests at $70 per sample.
Prospective road oilers therefore would be safer using waste oil if they  take
precautions to ensure that it does not contain industrial oils  (and certainly
no electrical oils).
            Compliance with the requirements of the proposed regulations  could
be achieved by either of the following strategies:
            (1)  Avoid all waste oil and substitute virgin oil at considerable
monetary and energy cost where the customer is willing to pay the increased
price.  At an average price of $.375 per gallon for 22 fuel oil vs $.03 per
gallon collection costs for used crank case oil, the cost of road oiling
would increase (.375 - .08) x 139 million gallons = $94 million per year.
                                     -87-

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             (2)  Use synthetic road stabilization chemicals which both reduce
dust and provide surface stabilization.  The increased cost of this type of
material is presently offset by lower road maintenance costs, on heavily  •
traveled dirt roads at mines and other industrial facilities.   Savings in
maintenance on lightly traveled roads would be less significant and would
only partially offset the increased material costs.  A typical synthetic
material is "Coherex", manufactured by Witco- Chemical Co.  This material is
an organic resin in a water emulsion which is sold for $1.25/gallon,  and
applied after a 5 to 1 water dilution at a rate of one gallon  per square yard.
Increased costs.incurred by the use of this material would be:
            Coherex:  1/6 gallon per square yard 3 1.25 =  .203
   minus:   Used Oil:  1/2 gallon per square yard
                           @ .08                        »  .04       .
   equals:  increased material cost per square yard.     ._  .168
            x 14080 so. yds. per mile of road 24                       .
                feet wide                  .   -.          = $2365 per mile   -•  •  .
            x 45,000 miles                              = $106 million per year.
            These increased costs will be incurred until the concentration of
PCBs  in  used motor oil crops below detectable levels.  In perhaps five years,  it
may be possible to use waste motor oil for road oiling with  little chance of
releasing PCBs  to the environment/ provided that care is taken to avoid using .
waste industrial oil.  The diverted industrial oil can be made up at modest
added costs by more, extensive collection efforts particularly  in rural areas.
The costs of obtaining this replacement motor oil for road oiling consists of
costs to persuade service stations to accept used oil from persons who change
oil themselves, and perhaps either greater .storage capacity at stations or more
frequent collections.  Alternatively, collectors could travel  further in rural
areas and rtins visit- rnnrs* sertrioa s-ha-Honff nrrtr nnw part o£ the racyclinrj systems.
These extra costs will not be incurred unless road oilers will accept necessary
price increases to cover these costs.  Total.costs might reasonably be expected
to increase  .02 per gallon  ($6.4 million per year) plus the risk of inadver-
tently using contaminated oil in occasional instances.  After  an additional ten
years, it may no longer be necessary to segregate the industrial oil,  and
costs would return .to their present levels.
                                    -88-

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            Users Other tnan Road Oilers'
            About 27 mil] ion gallons ?er year of transformer- oil will not. be
available to collectors, thus initially reducing the total supply.  Other
industrial oils may or nay not be contaminated with PCBs; to be absolutely
safe, the recycling industry would avoid them.  'Individual industrial firms
can probably continue to use their own waste oil as fuel oil if they make
initial and occasional later spot check laboratory analyses to make sure their
oils continue to contain less than 50 ppm PCBs.
            The impact on re-rsfiners  (who make re-refined lube oil) and
external processors (who process waste oil for use as fuel oil) will depend
on what happens to road oiling.  A strict enforcement policy with occasional
all-out efforts to find PCBs in waste oil could prevent its use as road-oil. •
Diversion of waste oil from this use would- create a -large increase in supply
for processors and re-refiners*  Probably most of this would originally go to
fuel oil use since the capacity of re-refiners" is limited and the consumer
acceptance of used rotor oil is limited.  later/ a majority of the increase
might go to re-refiners if the Frost and Sullivan market projections of 23
percent growth per year until 1985 proves to be even roughly accurate.
Ihis would provide an extra use as lube oil while retaining most of the heat
value for later use.
            Collectors
            If collectors avoid transformer and industrial oils, their total
business will decrease.  However, haulage of the contaminated oils to chemical
waste incinerators will be required and could offer new market opportunities
to the collectors.
            Processors
            Waste oil for fuel use should become more- plentiful as use for
road oiling is discouraged or made impossible by the regulation.  The effect
of a larger supply of waste oil on the price to processors theoretically would
 (1)  Maugh, T.W., "Rerefined Oil: An Option That Saves Oil, Minimizes Pollution"
     Science 193, p. 1108-1110, September 17, 1976.
                                    -39-

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be to lower the price.  However, since use on coal in boilers is relatively
troublefree and expendible, this use is probably very eleastic.  Consequently
if coal burning plants can absorb the increased supply,' 'which seems likely,
the price decrease should be negligible.
            Re-refiners                         .            •.'"'•
            Re-refiners of lubricating oils should be operated at capacity and
thus be more profitable.  The recycling ethic potentially can be used to
expand the market for used lube oil faster than industry capacity.  This will
be especially true for industrial and commercial fleets, but might be extended
to personal cars.  Similarly, increases in domestic crude oil prices would
increase the market for all uses of waste oil.
            Information-collected through telephone interviews indicates
that at least three of the companies which re-refine hydraulic, fluid receive   •
hydraulic fluids which are contaminated with PCBs.  These fluids are sometimes
contaminated to the extent of 6000 ppm.  In most cases, the reclaiming process
removes no more than 10% of these PCBs.* '  It is also reported that the con-
centration of PCBs in sane of the hydraulic fluid applications encountered
by these companies remains at approximately 2000 ppm despite repeated flushings
and drainings.  In such cases, Icwer PCS levels may be achievable through the
use of activated carbon filtration.                                      -    -  .
            Those hydraulic systsns contaminated with PCBs will be identified
as required by other provisions of the draft regulations.  Cnce this is done,
waste oil from- these machines and from the oil separators in plants using the
machines will probably have to be diverted from fuel use to chemical waste
incinerators.
            The price differential between re-refined and virgin hydraulic
fluid is about four dollars per gallon.  The requirement that contaminated
hydraulic oil be incinerated may reduce the supply of re-refined oil from
150,000 gallons per year to 50,000 gallons per year.  This would result in
increased costs of  ($4.00 per gallon x 100,000 gallons per year = $400,000
(1)  Telephone conversation, Dwain Fcwkes (BADCO Corp.) with L. Pourt  (Versar)
     September 19, 1977.
                                     -90-

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    year) , arid could force the closing of three small  firms with a total
    .ovment of 12 to IS persons-.
            Industr-ial Waste Oil Generators
            Those industries whose waste oil contains  more than 50 ppm. PC3s.
will have to incur disposal costs of $.0832/lh.  Even  industrial oil  con-
taminated with less than SO ppn PCBs may be avoided by waste oil collectors.
This will not be a big problem for coal burners.  Fuel oil burning conpanies
can use a mixture of waste and virgin oil but there are technical problems
to be mastered in this use.  Continental Forest Industries indicated  that up
to 14 percent waste oil mixed with £6 residual oil is  feasible.   The  result
may be the; development of a separate market for industrial oil with lew levels
of PCBs' fqr use as fuel.  Long term economic impacts should not be significant.
          ' • r ** '
      13 . 4  'Sunanary

                      Costs
            Bead Oil - 'increased costs of virgin or
               synthetic material (years 1-53              $100 million/year
            Bead Oil - increased cost of obtaining
               adequate  supplies of segregated used
               motor oil (years  6-15)                      $6.4 million/year
            Lost production of re-refined hydraulic
               fluid                                      $ .4 million/year

            Employment Effects
            Three  small  re-refiners may close with a loss of 12 to 15 jobs.
 Shifts  will occur in the  collection segment of the industry,  but will probably
 have little net impact  on employment.
                                    -91-

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14.0  PCBS AS UNiOTEtfncNAL PBCDUCT
      Although most of the PCSs in use were produced by Monsanto as  the primary
product of  a reaction process , other  chemical  reactions can produce  PCBs as by-
products, resulting in contamination  of commercial  chemicals.   Similarly, contam-
ination of existing material may result in PC3 contamination of products made
by recycling  these materials.  Recycled paper is known  to be contaninated with
PCBs at lew levels, but a detailed study of this industry indicated  that it would
not be affected by the 50 ppm limit on PC3 contamination.     Polychlorinated
terphenyls have also been reported to be contaminated 'with PCBs formed  as a side
                              (2)                                                 '
reaction during manufacturing,    but the sole U.S. distributor of this material
has reportedly assured its major customer that it would warrant that future
shipments will contain less than 50 ppm PCS.  '              ....
      The only chenicals known to be contaminated; with  PCBs  in.  concentrations
exceeding 50 ppm are certain phthalccyanine blue and green pigments  and the
diary lide yellow pigments.
      14.1  Bequirements of the Proposed Pegulations
            The regulations ban the continued manufacture of PCBs after
December 31,  1978.  This ban also applies to mixtures containing rrcre than
50 ppm PCSs regardless of whether the- PCBs were added intentionally  or  formed  . .
during manufacture as an unintenticnal by products.
      14.2  Compliance Costs
             Phthalo cy
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copper used in the reaction, apparently catalyzes the dehydrochlorination of the
trichlorobenzene  (TC3) solvent used' in. the process to form varying amounts of
trichloro and pentachloro biphenyl residue in the product.  Further chlorinaticn
of phthalo blue to make phthalo green pigment results in the formation of FG3s
residues in the green product.  Domestic and foreign manufacturers of phthalo
pigments, using the TGB solvent process, have tested these pigments for PC3s
level.  Results indicate that this process consistently produces pigments with,
PCBs residues in the 100-300 ppm range.  One analysis from a domestic manufacturer
reported concentrations as high as 1000-2000 ppm.  Several U.S. companies manu-
facture the phthalo pigments from the basic raw materials,. while the other U.S.   i
companies marketing these pigments import foreign TC3-based crude pigments and
purify them for sale in the United States.  Under the proposed PC3 ban regulations,
all of these manufacturers are in effect producing a PC3 mixture which could riot
be sold or distributed in conmerce effective 30 days 'after- promulgation of the
draft regulations.            '  •                                     . '
                  Discussions with the domestic phthalo pigment manufacturers
have disclosed that only one manufacturer dees not use the TC3 solvent process
(kerosene is used as the solvent in a proprietary process and the pigment pro-
duced has essentially zero PC3s) .  All other domestic ard foreign manufacturers
use TC3 solvent, .-and are accordingly faced with major process revisions to comply
with the proposed 50 ppm PCBs limit in their product.
                  The concentration of PCBs in the phthalocyanine blue and green
pigments can reportedly be reduced to below 50 ppm by a change in the solvent
used in the manufacturing process.  Such a change will require modifications of
the process and quality control procedures, and may cost $100,000 for each of the
five or so manufacturers and iirpcrters of the material.  Sinca uncontaminated
pigment is available from one U.S. manufacturer, there is sufficient price com-
petition to prevent these increased costs from being passed along in higher
product prices.  The effect would therefore be a decrease in corporate profits.'
                                        -93-

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             Dior./lids- Zellcw Pigments     ...
                  Diarylide pigments are the major yellow pigments used in
 printing inks.  These pigments are made fay reactions of precursors T«hich indues
 didilorobenzidine.  A minor side reaction results in the  examination of the
 benzidene resulting in the formation of 3,3'dachlorcbiphenyl.   According to
 Don Morgan of the- Dry Color Manufacturers Association,     most diarylide yellcw
 pigments ars contaminated with PCBs  at concentrations of  several hundred parts
 per million. Although a few batches of pigment have been found to contain less
 than  50  ppm  PCBs, the industry is net  yet able to control the  manufacturing
 process  to reliably achieve this lew level of  PC3 contaninaticn.
                  Sales of diarylide yellow pigment in  1976 were accut 12.66
 million  pounds having a value in excess cf $52 mill ion.(~'   This pigment .was  .
.contaminated with perhaps several thousand pounds, of .3,3'dichlorcbiphenyl, which
 is  a  relatively bicdegradible iscmer cf PCS.   If the proposed  PC3 ban regulations
 result in an effective ban on the manufacture  of this yellcw dye, -rest" colored
 printing inks will  have to be reformulated, resulting in  some  lest production
 while technical changes are made in  the $690 million/year ink  industry 'and the
 $43 billion  per year  graphic arts industry.
                  There is no technology available that can reliably reduce the
 concentration of PCBs in diarylide yellcw pigments to belcw 50 ppm.  If the ban •
 en  the manufacture  of PCSs after December 31,  1978,  results in an effective ban
 en  the manufacture  of this pigment,  lost sales of this  material will be about
 $52 million  per year.   Alternative pigments are available,  but their use results
 in  higher ink costs as the alternative materials are less effective and/cr more
 expensive.   Increased costs due to the conversion to substitute materials may
 equal 20 percent to 50 percent of the  value of the discontinued yellcw pigments,
 or  $10 million to $25 million per year.  There should be  no net employment effects
 as  the production of  substitute materials will offset the losses from the discon-
 tinuation of manufacture of the diarylide yellcw.  However, several hundred jobs
 may be affected at  the impacted manufacturing  facilities, and  an unknown amount
 of  production equipment would lose economic value.

 TT5   Telephone ccnversaticri, Don Morgan (Attorney for the Dry  Color Manufacturers
      Association) with R.  Westin (Versar), September 22,  1977.
                                       -94-

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      14.3  Sunmary       •               ...

            Complianse Costs                            •       .    ."-,..••
                  Phthalccyanine Blue - Production changes   $500,000 - 1978
                  Diaxylide Yellow - Increased costs of      $10 million to
                                     substitute pigments     $25 million per year
            Employment Effects
                  Several hundred, jobs would be affected if the manufacture of
diarylide yellow pigments were banned.  These would be offset by employment
increases in the segments of the pigment industry supplying the substitute  •     i
materials.
                                       -95-

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15.0  CAPACITOR MHiGEACEUKENG
      The use of PC3s in the manufacture of new capacitors is .expected to. end
by mid 1978 due to a number of factors including the ending of production
of PCBs by Monsanto in October, 1977 and the zero PC3 discharge requirements
imposed on the manufacturing plants by the EPA under authority of the Federal
Water Pollution Control Act.(1^  However, the decision of the capacitor manu-
facturers to discontinue the use of PC3s without attempting to develop
alternate sources of supply after Monsanto stopped production was made in
anticipation of the iirolementation of the Ban Regulations of Section 6(e) of
the Toxic Substances Control Act.  Although the EPA apparently has no dis-
cretion in the implementing the ban en the use of PCSs in the manufacture of
capacitors, the economic impact of the change to alternate materials and
designs is undoubtedly the result of the provisions of the Act as imple-
mented by the proposed regulations.
    15.1  Requirements of the Proposed Regulations
          The proposed regulations would ban the manufacture of capacitors
containing PC3s after December 31, 1978 as the EPA has determined that the
ban in Toxic Substances Control Act on the manufacture of PCBs applied also
to the manufacture of items which are considered to be "PC3 Articles" or
"PC3 Equipment."

    15.2  Capacitor Production and Sales
          PCBs have been used as a dielectric liquid in most of the alternating
current capacitors manufactured since 1930.  PCBs provided the advantage of
ncn-flammability which is not available with electrically suitable alternative
liquids.  The development and carmercial introduction of non-PCB capacitors
started in 1975 in response to growing concern over the environmental effects
of PCBs.  The time required to develop various types of non-PCB capacitors    . •
 (1)  EPA,  "Final Decision," Federal Register, February 2, 1977, pp. 6531-6555.
                                     -96-

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has been a  function of the  fire hazard which would result  from the  failure of
     type of capacitor.  Segmentation of this industry by  type of capacitor  is
         to calculate the impacts of. the draft regulations.
          PC3 capacitors have been made in many different  sizes and in designs
suitable for many different voltages and applications.  For the purpose of this
analysis, all of the various types of PC3 capacitors will  be classified as
either power factor capacitors or industrial capacitors.   Fewer factor capacitors
are those large high voltage .units used by utilities to correct for lagging
 i
power factor in electric transmission and distribution systems.  Industrial
capacitors 'include all other types of FC3 units which are  used in association
with specific types of equipment such as electric motors,  fluorescent  light
ballastsr   and electronic circuitry.
          Census figures for capacitors are collected by the U.S. Deparurjent
of Connerce on the basis of seven digit SIC codes.  The most recent data  at  this
level of disaggregation was obtained in 1972 and is summarized in Table,15.2rl-
belcw.  More information at this level will be obtained in 1378, but will not be
available for several years.
                                Table 15.2-1
                PC3 Capacitor Production and Sales: 1972(1)
              Type                         'Production-Units   Sales-Million ?
Shunt and Series Power Factor Correction         192,700           41.1
General Purpose Motor Control            "     22,100,000           39
Fluorescent Light Ballast Capacitors          not available        32.3
and other capacitors except electronic
(1)  Source:  U.S. Department of Comerce, Electrical Measurement, and Distribu-
              tion Equipment, Publication MCU-3SA).
                                     -97-

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            Annual estimates of capacitor sales volume ara available on an  -
aggregate basis from a 20% survey of manufacturers at the five digit SIC cede
level.  The recent information available from this source is summarized.in .
Table 15.2-2.
                              Table 15.2-2(1)
                       PCS Capacitor Sales - by Year
                     Year        Sales - Million Dollars
                     1972                 112.4
                     1973                 143.1
                     1974                 157.3
                     1975                 119.3
                     1976                 149.0
(1)  Source:  U.S. Department of Commerce

      15.3  Compliance Costs
            There are two basic technological alternatives available to capac-
itor manufacturers who must develop ncn-PC3 capacitor product lines.  The
direct, and probably short term, solution to the problem is to develop a di-
electric liquid'which can be used as.a direct replacement for'PCBs within the
presently 'used technology of capacitor production involving aluminum foil and
paper as a solid dielectric.  This type of construction has been developed to
maximize the advantages achievable using PCBs as a liquid dielectric.  An
alternative approach would be to develop a new technology which makes optimum
use of the materials remaining available to product designers.
            Much effort has been spent in evaluating materials for use as
PCS substitutes in both .the U.S. and in foreign countries.  No substitute
liquid has been developed which equals PCS in dielectric properties, fire
resistance, and stability.  Any trade-off entails enhancing electrical per-
formance at the expense of environmental or safety considerations.  Impregnating
capacitors with alternative dielectric fluids and/or redesigning them may
                                     -98-

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 result in substantial retooling, research and development, and other production-
    kated costs.  Such costs are normally high at first,, since the  industry  is
    entially characterized as infant; .i.e., it is facing' a nev •learning curve
 due to the production of technologically new capacitors.  However, since all
 manufacturers are developing non-?CB capacitors, and since these  nev products
 will be introduced essentially simultaneously, there will be substantial ccra-
 petition which will prevent the rapid recovery of development and tooling  costs
 through market skiirming.  Therefore, it is expected that the initial product
 prices will closely approximate the long term competitive price structure  of
 the capacitor industry.  A review of the present status of each of the irajor
 segments of the capacitor industry should provide an accurate picture of the
 response of this industry to the PCS ban regulations.
             Power Factor Cc&ac'itors
             large power factor correction capacitors which operate at voltages
 above 2000 volts are used by electric utilities to compensate for inductive-
 current lags caused by inductive motors and other similar machinery.  These
 capacitors are usually mounted out of doors in substations or on..power poles,
•wd little risk of significant fire losses is incurred by the use of a
 flammable dielectric liquid in these units.
             Prior to 1977, there were four manufacturers of ?C3 power factor .  .
 capacitors.  All four of these manufacturers discontinued the use of ?C3s  during
 1977 and introduced non-PC3 capacitors having the same functional specifica-
 tions as replacement products.  Table 15.3-1 lists the manufacturers of
 these large capacitors and summarizes the technology used in the  new products
 introduced by each manufacturer.  The selling prices of these large capac-
 itors are negotiated on the basis of large orders, and no published price
 lists are available.  However, Versar estimates that the prices of the capac-
 itors manufactured by Westinghouse, General Electric, and Sangaino increased
 10% to 15% following the introduction of npn-PCB units, and the price of the
 McGraw Edison capacitors increased 15% to 20%.  McGraw Edison claims exceptional
 product life and efficiency for their product, and the higher price has
 apparently not had a significant impact on their share of the market.
                                        -99-

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          Sales of ?C3 power factor correction -capacitors in 1976 are estir
mated to have been approximately $54.5 million.  Assuming relatively-
constant output and demand, a ten to twenty percent price increase of can-
parable ncn-?C3 power factor correction capacitors will result in sales of
approximately $60.0 to $65,4 million (using constant cellars).  Hence,
utilities and other users of power factor capacitors are expected to pay
approximately $5.5 to $10.9 million-more.
          Utilities employ approximately ninety-five percent of all power
factor correction capacitors.  The ability of utilities to pass all of the
additional costs associated with non-PC3 capacitors on to residential and
eumercial users in terms of higher prices will depend upon state regulatory
conmissions'  attitudes toward rate structures.  Total revenue for all
electric utilities was $46.2 billion in 1975.  It is estimated that total
revenue for all utilities in 1976 will have been approximately $50.0-billion. •
If all the utilities additional costs associated with using ncn-?C3 capacitors
is passed on to residential consumers, and that their average monthly electric
bill is fifty dollars, it is estimated that residential consumers will incur
an increase in their electric bills of approximately .02 percent, or one cent
per month.  [Note that this is the long run effect; in the short run the
extra costs of non-?C3 capacitors will appear as a capital item in the rats
base.  If depreciation and replacement are both straight-line functions, over
a ten year period, the rate base and the return on it will rise until the
tenth year at which point a small return- on capital will be obtained as well
as capital replacement costs.]  Since part of the costs will be passed on to
industrial users, the relative price impacts will be even less, and are not
expected to significantly impact either the price or demand for electricity.
                                    -100-

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                                Table  15,3-1
                  Currently Available *ton-?CB Power Factor
                            Correction Capacitors
Manufacturer
Westinghouse

General Electric
Sangamo Electric Co.
McGraw Bdison
                           Solid Dielectric
                           Paper and plastic film
                           confaination
                           Paper
                           Paper•
                           Plastic film
Liquid Dielectric*
Iscpropyl biphenyl

Phthalate ester**
Phthalate ester**
Butylated monochloro-
diphenyl ether •
*  All of the liquid dielectric materials contain small amounts of additives
   as free radical scavengers, etc.  The identity of these minor constituents
   is proprietary information.            .      .    .    • .         .
** The phthalate ester based" liquids reportedly contain a significant amount
   of trichlorobenzene as an additive to raise, the.corona extinction-.voltage..
             Industrial Cc3G.ci.tors
            PC3 capacitors have been used in  a  number of  diverse industrial,
appliance, and lighting applications including  arc welders,  induction heating
furnaces,  fluorescent  light ballasts, and television sets.   Table 15.3-2
lists  the  manufacturing plants known to have  used PC3s  in the manufacture of
this type  of  capacitor in the early 1970s.  Versar contacted these manu-
facturers  in  September, 1977 to determine whether they  were  still using PCBs,
and if so, when they anticipated  ending their use of PCBs.   The results of
these  contacts are  suntnarized in  Table  15.3-3.
            All of these manufacturers plan to  introduce  rr>n-PC3 capacitors
to replace the discontinued PC3 products.  In all cases,  the  new capacitors
will use liquid phthalic acid esters (phthalatas) as a direct substitute for
PCBs.   As a result of this material change, an  increase of 6% in the  size of  the
                                     -101-

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                          TKELE 15.3-2
   N&nufacturers .of PCS Industrial Capacitors  in  1976

Company Name                           location of  the  Plant
General Electric Corcany               Hudson  Falls , N.Y.
                                       Ft. Edward,  N.Y.
Aercxox                           .     New Bedford, Jfess.
Universal Mmufacturiiig Corp.          Bridgeport,  Conn.
                                       Ibtcwa, N.J.
Cornell Dubilier                       New Bedford, Mass.
P. R. Mallory & Co., Inc.              Waynesfccro,  Tenn.
Sprague Electric Co.                   North Mams, Mass.
Electric Utility Co.                   laSalls, 111.
Capacitor Specialists Inc.'             Escondido, Calif.
Jard Corp.                             Benningtbn,  Vt.
York Electronics                    ..   Brooklyn,  N.Y.     -. .
RF Intercnics                          Bayshore,  L.I./  N.Y.
Axel Electronic, Inc.                  Janaica, N.Y.
Tbbe Deutschmann Labs.                 Canton, Mass.
Electro i^gnetic Filter Co.            Sunnyvale, Calif.
Source:  Versar Inc., PC3s in the United States;   Industrial
         Use and Environmental Distribution, Springfield, Va.:
         'National Technical Infornation Service,  (NTIS P3 251 402/3WP) ,
         "February_25,  1976, p. 89.   Updated by Versar in later
          studies, Contract 68-01-3259.
                          -102-

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                             Table 15.3-3
         Manufacturers of Small Liquid Dielectric AC Cacacitors
Company
General Electric
Aerovox

Universal Mfg.
P. R. Mallory

Cornell Dubilier
Jard Corporation

Electric Utility Co.

Others
                       Small Capacitor
                        Sales (1975)*
                       MI n^on $/year
                             30
                             24.   •

                             13
                             10

                              7
                              4

                              3

                              3
Status of PC3 Use as of Late 1977
No PC3s used
PCBs inventory sufficient until
June 1978
Will end PCS use by mid  1978
PCBs inventory sufficient through
March 1978
No information available
Will end use of PCBs during first
quarter, 1978
PCBs inventory sufficient 'throuch
mid 1978                 -  -   -•
No use of PCBs after 1977
Source:  Office of Environmental Affairs, U.S. Dept. of Commerce
                                    -103-

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capacitor is required to provide the same electrical function.  As a result of
the size increase/ sore manufacturers who use capacitors in their products will
have to redesign to allow room for the larger capacitors.  Capacitors using
metallized plastic film and phthalic acid ester liquid dielectrics are being
tested; if successful, such units would bs the same size as equivalent ?CB
capacitors.
            The phthalates are more_flammable than PC3s, and satisfactory
fire safety can be achieved only by incorporation of adequate circuit breakers
(pressure or thermal types) which will prevent rapture of the capacitor case
following electrical failure of the capacitor.  Substantial testing has been
required to prove the adequacy of these circuit breaker devices to the satis-
faction of the users of.the capacitors because of the possibility of sub-
stantial product liability claims should a fire problem develop with the non-  •
PCS units.  The development and testing requirements have delayed the intro-
duction of the non-?C3 capacitors.  However, rone of the manufacturers'of
small capacitors contacted anticipate using PCBs after mid 1978.  Use of PCBs
until then will be based on existing inventories, as Monsanto stopped' shipping
PCBs in October, 1977, and no importation of PCBs is planned by any capacitor
manufacturer.
            The switch to phthalic acid esters will increase the demand for  "  •
this class of chemical by approximately twenty million Ib/year, compared to
a total production of about one billion Ib/year.  This two percent increase in
demand will not significantly affect either the availability or price of this
material.

            Estimation of the unit cost impacts of the PC3 ban regulations on
the industrial capacitor segment of the market is.difficult for several reasons.
First,. Monsanto significantly increased the price of PCBs during 1976 and 1977.
These price increases reflected greater production costs due to environmental
percautions in handling and shipping the material, plus costs incurred through
Monsanto participation in the regulatory process.  Monsanto was also in the
                                      -104-

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  sition of supplying a unique product having a lew price elasticity of
         The anticipated regulations presented a high barrier, to entry -into
this market for other possible manufacturers of PCBs, so Monsanto was in a
monopoly position, and their pricing may have reflected this market condition
in addition to general inflationary pressure on all comcdity prices during
this period.  The net effect was to increase the price of PC3 capacitors
above what would have been expected under long term competitive conditions
had there not been the threat of regulatory action on the manufacture and
use of PCBs.
            At present/ both PC3 capacitors and ron-PCB capacitors are
available/ although from different manufacturers.  The non-PC3 industrial
capacitors are selling for about ten percent more than the PC3 units having •
the same functional characteristics.  Since the•manufacturers of 'non-PCB
capacitors do not have the option of producing PC3 units, this price in-
crease may reflect the premium which users are willing to pay for avoiding
any possible impacts of the ban regulations on their operations and inven-
tory rather than reflecting increases in 'manufacturing costs.  Equilibrium.
pricing would not be expected to result until PC3 capacitors were no longer
available.
           The demand for capacitors is highly inelastic, because close sub-
stitutes are not available and the number of uses to which capacitors ray
be put are limited.  Consequently/ capacitor users will be confronted with
prices for non-PCB units which reflect'the additional costs of production
of such units due to the proposed regulation.  The increased price of PC3
capacitors and the present competitive pressure' on the pries of non-?C3
capacitors suggests that the long term price increase due to the banning of
PCBs will be more than the present differential of 10 percent.  A total
price increase of 50 to 20 percent is perhaps a more reasonable estimate of
the price increase for non-PCB cacacitors.
                                     -105-

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           Sales of PC3 industrial capacitors in 1976 are estimated to  have
been approximately $51.7 million.  Assuming relatively-constant output .and.
demand, a fifteen to twenty percent price increase for comparable non-?C3
industrial capacitors will result in sales of from $59.5 to  $62.0 million
(using constant dollars).  This suggests that users of industrial capacitors.
will pay approximately $7.8 to $10.3 million more for non-PC3 units.
           Manufacturers of electrical equipment which will  use ncn-?C3
industrial capacitors may face various redesign problems.  For example, manu-
facturers of miniature electrical equipment, who specialize  in optimizing
space in the construction of their products, may find that the production of
a new, larger capacitor makes the continuation of their miniaturized product
line uncertain.  Apart•from the market for miniature equipment,, most
electrical equipment can be redesigned to.acccmodatje the. sonewhat larger
non-PC3 capacitors at relatively little cost.                        .  '
           Capacitors represent a very small fraction of the total  production
(i.e., input) cost of a given appliance.  Any price increases in final  prod-
ucts due to employing ncn-?C3 capacitors will be imperceptable to consumers  -
i.e., the increase in price per unit will be so small that the percentage
change .in quantity demanded will be very close to zero.  It  is expected that
sales of electrical appliances will not be affected appreciably nor will"
there be any dramatic effects on employment in the capacitor production in-
dustry nor in the electrical appliance manufacturing industry.
           Users of non-PC3 industrial capacitors may face greater  risks of
fire as they switch to such units.  Insurance rates will increase to reflect
any increased fire losses, but only after a tiae lag sufficient for new
risks to be incorporated into the experience record.
           Any decrease in the expected service life of industrial  capacitors
will have a disproportionate effect on economic impacts due  to the  proposed
regulations.  It is estimated that fewer than two percent of all small
capacitors fail before the equipment is scrapped due to obsolescence.   The
                                     -106-

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   t of replacing these capacitors includes cut of service time and high
      costs, and may total ten times the retail price of the replacement.
capacitor.  The cost of replacing failed capacitors may therefore be
equal to 20 percent of annual industrial capacitor sales.  If shortened
service life results in an increase of the rate of failure to 5 percent of
the non-?CB units prior to obsolescence, the increased replacement costs
could be 50 percent of the value of the total small capacitor market.
                                     -107-

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15.4  Summary

                   Costs:
          Redesign of equipment-to acconcdate
            larger capacitors
      Long Term Costs:

          Power factor capacitors

             Price increase for ncn-PC3 capacitors    $5.5 to 10.9 million
                                                          per vear
          Industrial capacitors:

            'Price increase for ncn-?C3 capacitors  .  $7.8. to-10.3 million
                                                          per year

             Increased fire risk                        •      *  .  '

             Decreased service life                           *


      Employment Effects:     Not expected to be significant
      *Insufficient data available to support estiirate of impact.
                               -108-

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16.0  TRANSFORMER
      Liquid filled transformers containing a PCS based liquid known generically
as 'askarel1 have been used for many years in those installations "where'the
risk of fire justified the usa of a fire resistant fluid.  Askarel transformers
have been .allowed to be installed in hazardous locations such as "in buildings  '
without the requirement for a fire proof vault or fire sprinklers. No sub-
stitute transformer liquids have yet been developed which have fire resistant
properties equal to the PC3 based askarel.
      16.1  Requirements of the Proposed Regulations
                                                                                i
            The proposed regulations would prohibit the manufacture of new
PC3 tranformers after December 31/ 1978, but classify continued use of existing
PCS transformers except, those used in railroad locomotives as use in a totally
enclosed Tanner.  The regulations would authorize certain minor maintenance of-
existing transformers for five years after the effective date of the regulation
but would prohibit major rebuilding of failed-'units.  It is 'assumed that
authorization for minor maintenance would be granted on request after the five
year servicing authorization has expired as such maintenance decreases the
risk of catastrophic failure of transformers and minimizes the risk of loss of
?C3s to the environment.  Disposal requirements for failed askarel transformers
are specified by the PC3 Marking and- Disposal Regulations, and these require-?  .
ments would not be changed by the proposed PCS Ban Regulations.
      16.2  Industry Structure, Production, and Sales
            A review of Monsanto's customer list for PCBs in the early 1970s
indicated thirteen companies which used PCBs to manufacture askarel trans-
formers.  These companies and the location of their transformer manufacturing
plants are listed in Table 16.2-1.  Production of askarel transformers averaged
5000 units per year in the early 1970s.  When these companies were contacted
by Versar in September, 1977, only-one manufacturer was still producing askarel
transformers, and it anticipated' ceasing production of this type of unit prior
to the end of 1977.  All of these manufacturers produced both oil filled and
askarel transformers in the same plants.  Oil filled transformers are inter-
                                     -109-

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                       Table  16.2-1
  U.S. Transformer Manufacturers Which Used PC3s After  1970

Company Name                        Plant Location
Westinghouse Electric Corp.         South Boston, Va.
                                    Sharon, Pa.
General Electric Company            Home, Ga.
                                    Pittsfield, Mass.
Pesearch-Cottrell                   Findeme, N.J.
Niagara Transformer Co.   :          Buffalo, N.Y.
Standard Transformer Co.            Warren, Chio
                                    Medford, Oregon
Helena Corp.                        Helena/-Alabama
Hevi-Duty Electric                  Goldshnrs, N.C.
Kuhlman Electric Co.                Crystal, Scrings, Miss.
Electro Engineering Works         •  San Leandro,. Calif.    '- • -  •
Envirotech Buell                    Lebanon, Pa.
R..S. Uptegraff Mfg. Co.             Scottsdale, Pa.
H.K. Porter                         Belmont, Calif.
                                    Lynchburg, Va.
Van Tran Electric Co.               Vandalia, 111.
                                    Waco, Texas

Source:  Versar Inc., PC3s in the United States;  Industrial Use
         and Environmental Distribution, Springfield, Va.: National
         Technical Information Service (NTIS P3 251 402/2WP),
         February 25, 1976,  p. 89.
                            -110-

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changable with askarel transformers in new applications provided that the
installation is properly engineered.  Other substitutes for askarel transformers "
are also available.  The 140,000 askarel transformers presently in service.total  .
only two percent of the total number of power and distribution transformers in use.

           16.3. Substitutes for PCB Transformers            •'•"•'
                  The askarel transformers presently in service were  specified
because this type of liquid filled transformer offered advantages  in  size,
reliability, and fire safety-that were not available with other types of trans-
formers.  Alternatives to PCS transformers have always been available, although
all of the other types of transformers have different design characteristics
and none are direct substitutes for the PCS units.  Therefore,  eventual re-
placement of the existing PCB transformers will require that each of  the pre-
sent installations be re-evaluated and that the necessary engineering changes
be made to allow use of the best available replaceirent::uni£i,r  New transformer
                                                      ' ", •*•'"'*'-."
installations will be designed to make optimumaise of. trie avail-able rten-PCBs--- '  -
transformers.  The choice among the available alternate transformer types and
materials depends on the requirements of each specific application and-the
characteristics of the available non-PC3 units.
                  A number of alternatives to the use of PC3s  in fire resistant
liquid filled transformers and to the- use of transformers which contain any   . .
dielectric liquid have been developed and are conmercially  available.  These
substitutes for PCB transformers differ in-, their performance characteristics,
applicable fire code installation requirements, and cost.   The following sections
discuss the major types of substitute units which are available.
           3-igh Fire Po'int Lion-id Insulated.-Trimsformers
                  The 1975 National Electrical Code and previous issues allowed
only the use of askarel and dry type transformers in hazardous locations with-
out vault- protection.  Askarel was essentially defined as PCB  based liquid.
The 1978 NBC has added a specification  (Article 450-23) for 'High Fire Point
Liquid Insulated Transformers' which can be used under these same conditions.
The 'High Fire Point Liquid1 must have a fire point of at least 300°C,. and
must not propogate flames.
                                     -Ill-

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                  Underwriters Laboratory, presently  lists  three liquids as
meeting the  'High Fire Point1 property requirements  for transformers operating
at voltages below 600V:              • -                             -    .  "• •
                           Dow Corning 561
                           General Electric SF-97  (50)
                           SWS Silicones  Corp. F-190      .  .

                  Factory Mutual Research has not yet completed developing
formal approval requirements and procedures for  'High Fire Point Transformer
Liquids'.  However, based on preliminary  tests,  Factory Mutual  has issued
interim guidelines to its field offices that six silicone 'liquids and three
hydrocarbon liquids could be accepted at  Factory Mutual insured locations
without special fire protection.  The list of Factory Mutual accepted liquid
includes:

Supplier                      ' •       Designation                Type .of Fluid
Dow Coming                           DC  561                     Silicone
Dew Corning                           DC  200                     Silicone
General Electric                      SF-97                      Silicone
Union Carbide                         L-305          '            Silicone
SWS Silicones   •                      . F-101                   '   Silicone
SWS Silicones                         F-190   •                   Silicone
KTE Corporation                       RTEmp-                   .  Hydrocarbon
Gulf Oil Chemicals Co.                EF  Dielectric              Hydrocarbon
                                       Fluid
Uniroyal         •          '           PAO-20E                    Hydrccarbon
           Mineral Oil-Filled Transformers
                  If fire safety were not a consideration, there '.vculd be  no  rea-
son why oil-filled transformers could not be used in all applications.   In the past,
PC3-filled transformers have cost about 1.3 times as much  as oil-filled units
of the same capacity, and thus most  users preferred  the oil-type where possible.
The oil-filled transformers are the  same  size as the askarel units,  and are
considerably lighter in weight.  Also, mineral oil has  somewhat better heat
                                    -112-

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transfer characteristics .than askarel, and an electrical arc in mineral oil"
results in breakdown products that are non-corrosive.
                  The major disadvantage to mineral oil is flairmability; trans-
former mineral oil has a flash point of 145°C.  If an arc occurs with the
transformer, the breakdown products will be hydrogen and methane /'both of which
are flammable.  Detailed records of such failures are maintained by the
electrical industry.  Fire Underwriters dees not approve of the use of oils and
other flaimahle liquids for indoor applications.  Where oil-filled transformers
are not specifically prohibited as on-site replacements for PCS-filled units,
the National Electrical Code imposes certain restrictions- upon their mode of     '
installation.
                  Oil-filled transformers are used in almost all power trans-
former applications and for most substation distribution applications where
the transmission .line high voltage is reduced to 12.8 kv for local distribution.
Most rural pole-mounted transformers which reduce the voltage to 220"-volts are '  -
also oil-filled.  The issue of flammability only beccmes important where the
distribution transformer must be buried, as in many urban applications-, or
located close to, within, or on the roof of the building it serves.  PCS-filled
transformers have, in the past, been used in most such applications.  Oil-fill^
transformers can be used in these applications only if they are suitably iso-
lated from flaimable structures or if these structures are suitably safeguarded
against fires.  When transformers are located outside the building they service, •
the low-voltage power must be brought into the building via cables or insulated
buses.  This causes additional energy losses due to heating in the low-voltage
transmission 1 ^«=»g from the transformer to the point of use.
           Oven A-Lv-Cooled Transformers
                  Transformers can be built without the use of a liquid cooling
medium.  One type of dry transformer that is quite successful, under limited
conditions, is the open air-cooled transformer.  In this design, cooling air
is driven through the transformer by either natural convection or forced circu-
lation.  In those sizes where air-cooled transformers are available, they are
                                      -113-

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about equal in pries to askarel-filled transformers of the same kva rating.  '
However, the following limitations prevent open-air-cooled transformers from
being considered for many applications using askarel-filled transformers; •  •
                  Heat capacity;  The power drawn from a transformer usually
varies over a wide range.  The rating of a transformer is established by the
power it can handle continuously without over-heating.  If a liquid-filled
transformer is operated at overload conditions for a short period of time, the
liquid will act as a heat sink, absorbing the excess heat produced in the trans-
former without a rapid increase in temperature.  The result of this thermal'
inertia is that liquid-filled transformers can operate at-outputs of up' to 200
percent of rated capacity for a period of one to two hours without damage.
Air-cooled transformers do not have this heat sink effect and are limited to
operating at a maximum service rating not much higher than the continuous
rating.  Where the current draw on the transformer does not vary greatly during
the day, this limitation is not a problem.  However/ in most cases the varia-  .
tion in load requires dry transformer to have a 20 to 30 percent greater capac-
ity than liquid-filled transformers in the same application.
                  Dielectric strength;  The liquid coolant in a liquid-filled
transformer also provides a significant level of electrical insulation between
the various current carrying components within the transformer.  Air has a much
lower dielectric strength, and open-air-cooled transformers are limited to a
maximum voltage of 25 to 40 kv.
                  The problem of electrical insulation is even more severe
if the open-air-cooled transformer only operates intermittently.  When the
transformer is operating, the heat generated within the windings keeps the
insulation dry, and maintains a high dielectric strength of this solid insula-
ting material.  However, when the transformer is net operating, the coils cool
to ambient temperatures and the insulation can absorb moisture from the air
which reduces its dielectric strength.  Open air-cooled transformers must be
thoroughly.dried before being put into service after each cool period.
                                       -114-

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                  One other problem with air-cooled transformers is the tendency "
of dust to be attracted from the air to the coils by electrostatic forces.' Dust
can build up in the coils and block the flew of air, or it can form conductive
paths and cause short circuits.
                  Cpen-air-ccoled transformers are generally limited to dry,
clean locations where the load requirements are fairly even and constant,  and
where the maximum voltage dees not exceed 30 kv.  Such transformers are being
successfully used in large office buildings, particularly tall buildings where
the transformers are located every few floors.  Even in this application,  though,
conditions arise that exceed the capabilities of the transformer; for  instance,
in the Sears Tcwer in Chicago, which is over 1400 feet tall, the electric  power
is brought into the building and up to the distribution transformers at .128 kv,
which is beyond the voltage limitations of open-air-ccoled transformers.
           Closed Gas-^Zlsd Trans formers
                  Transformers can be built with dry inert gas  (usually at an
elevated pressure) as a heat transfer medium.  These transformers, avoid the
maintenance problems caused by moisture and dust in open air-cooled transformers,
but they are similarly limited in overload capacity because of reduced thermal
inertia (-oompared to liquid-filled transformers.
                  Closed gas-filled transformers must be installed in  pressure-
tight containers due to the changes in gas pressure caused by changes  in temper- '
ature.  However, the maximum voltage ratings of gas-filled transformers can
be equal to that of liquid-filled units.
                  A number of different gases have been used as heat transfer
media in closed gas-filled transformers.  The most camion gas used in  the  U.S.
is the fluorocarbon hexafluoroethane  (CjFs).  Nitrogen and sulfur hexafluoride
have also been used successfully in certain applications.  Helium has  not  been
found to be a satisfactory gas for this application because its low dielectric
strength results in corona discharges within the transformer.  Hydrogen is un-
satisfactory as any leak in the transformer would result in a severe fire
hazard.
                                      -115-

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                  Because' of the necessity for a pressure vessel container/
gas-cooled  transformers are- 30 'to  40 percent heavier than PCB-filled transformers,
and cost two-thirds more  (and twice as men. as oil-filled transformers).   In ad-
dition, the gas-filled transformers must be sized larger than oil-filled units  .
to allow for the expected heavy load peaks of power ccnsunpticn,
             16.4   Relative Prices of Nsn-PCS.Transformers
                  The relative prices of distribution transformers of the size
and type commonly installed in office buildings are summarized in Table  16.4-1.
If the KTSnp high fire point liquid filled transformer proves to be acceptable  (
for installation without  auxiliary fire  protection,  there should be no cost
increases for new transformer installations resulting frcm the ban on the
manufacture of PCS transformers.   The open dry type transformers are also quite
cost conpetitive with the PC3 units for  most applications,         •

                               Table 16.4-1(1) .-.             ..        '-   -.    - • -
                          Relative  Transformer Prices

Type of Unit                 Price; 1000  KVA Unit          Price: 2000 KVA Unit
Oil filled                       $ 15,300           '           $ 23,300
FCB             -   .                19,900                    •    30,300
SlSnp                              18,400                        28,000
Siliccne                           22,300                        34,500
Open air cooled                    20,700                        35,000
Sealed gas  cooled                  30,600-                        46,600
Source:  MCC Engineers, "Distribution Transformer Status -. wn Project",
         Memorandum to U.S. General Services Pdministraticn, June 1, 1977.
                                       -116-

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       16.5  Compliance Costs
             Clean-uv Costs.
             The only costs incurred by transformer manufacturers due to the
ban on the use of PCSs will be clean up and disposal costs incurred in flushing  •
PCBs from storage and material handling equipment prior to using this equip-
ment to store high fire point liquids.  This equipment consists primarily of
storage tanks, filters, pumps, and piping.  Clean up costs, including disposal
of contaminated solvents, should not exceed $10,000 per plant, or a total one
time cost impact of perhaps $100,000 in 1977 and 1978.
                                                                                 i
             Cost of Subati.tu.tes
             The 'high fire point liquid cooled transformers' and air cooled  •
transformers will cost about the same to 10% more than askarel units' depending
on the acceptability of hydrocarbon base high fire point transformer liquids.
Based on past sales of 5000 askarel units per year at an average price -of
$20,000, a 10% cost increase would increase to sales and costs to the users by
(5000 x $20,000 x 10% = $10,000,000 per year).  There should be no effect on
total demand for transformers for new applications.  The ban on rebuilding askarel
transformers may increase the demand for new transformers by 1000 to 2000 units
per year.  This additional demand should be easily supplied as the transformer
manufacturing industry as it has recently been operating at only about 60% of"
capacity.
             Market structure should not be significantly affected as all of
the former manufacturers of askarel transformers will have equal access to
the 'high fire point transformer liquid' materials and technology.  Access to
this market segment will open to those transformer manufacturers who did not
offer askarel as an alternative to oil. This will primarily afford a marketing
opportunity to RIE Corporation which has never supplied askarel units but which
has a strong market position in the high fire point liquid transformer market .
segment.  The increased sales by RIE will probably be less than the total
increase in transformer sales, so this small shift in market structure should
not result in a net decrease in the sales by any of the other manufacturers.
                                     -117-

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           .  Increased ?£re Losses '                                          '
             It was implicitly -assumed above that the high  fire point liquids
are satisfactory replacements for PCBs in tenns of performance and  fire  saftey.
In fact, the high fire point liquids can burn under certain conditions including .
exposure to an external fire, and can release flammable gases if an electrical
arc occurs within the transformer.  It will be several years until  a  complete
evaluation of the relative transformer fire risks is conpletsd by the Fire
Safety Division of the National Bureau of Standards under a research  project
currently being funded by the U.S. Department of Energy.
             It will not be possible to accurately predict  the increased fire
losses that may result fron the use of substitutes for PC3s transformers until
the work of the Bureau of Standards is conplete.  Any estimates made  at  .this
time must necessarily be based on rather crude assumptions.  It could be  assumed,
for example, that the 20% price premium for askarel transformers vs oil filled
transformers was justified by a decrease in-fire losses.  The- use of a- high-  fire •
point transformer liquid might achieve 95% of the additional fire safety  that
would otherwise be achievable by using askarel.  The increased fire losses re-
sulting fran the use of the high fire point liquid filled units v*3uld then be
one percent of the 'cost of the units.   Based on a production of 7000 new  and
replacanent units per year at an average price of $20,000 each,  this loss _
would be $1,400,000 per year.

       16.6  Summary
             Transitional Costs
                Clean up costs for manufacturers.       $100,000  1978 only
             Lang Term Costs
                Increased cost of ncn-PC3 transformers  $0  to $10 million
                                                            per year
                Additional fire losses frcra use of
                  ncn-PC3 transformers                  $1,400,000  per year
                                                        (very rough estimate)
                                    -118-

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             Employment  •         '      •
             Increased demand for replacement transformers should generate
employment equal to that lost in the transformer rebuilding segment of the
industry (see Chapter 5).   An additional 78 jobs would be expected in 1979.
                                        -11?-

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17.0   TOTAL COST AND ECONOMIC IMPACTS   ...
      • The preceding chapters have discussed the' various costs which will  •• •
result from compliance with the proposed regulations.  Costs of decontaminating
or scrapping existing equipment, preparation of spill control plans, and the
costs associated with the. ban on rebuilding askarel transformers are all'
transitional costs — the annual costs will eventually decrease to zero, though
this may require 20 years or more.  Cost increases due to the increased prices
for non-PC3 capacitors and transformers will be long term costs — they will be
expected to continue indefinitely.
       Bconcmic impacts, as distinct from cost impacts, include employment
effects, changes in market structure, and impacts on energy demand and the
international balance of trade.  These impacts, too, can be both transitional.
and long term.                                         .
       17.1  Transitional Cost Impacts
             See Table 17.1-1.
                                     -120-

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                                              Table 17.1-1

 Itam (O tauter)
 PCU Tranafonnerat
    Manufacturer clean up coats (16)
    Ban on Rebuilding (4)
      Foregone Savings

      loot Service Tline

    Transformer Service (5)
      Lost Kagea
      Spill Prevention Plan
    locomotive 'IVaiibfoimert (6)
      Retrofill Pctxjrun  .
      Proceaalivj Program
      Final Analyaia for KBa
      Spill Prevention Plan
 PCB Capacltora
      &jtil(iieiit Rolealcjn (15)
      Inventory Ct>aoleaceix:a (3)
 Oil Filial Trans fonnara (7)
      1CU Analysis aid
Transitional Cost
Impacts
$ Million Per Year
1979
.» -1
14.3

2.4

1
' 1
7
0
0
.005
.02 "
Succeeding $ Million
Years Ibtat
0 $ .1
3.4% less 420
per year
3.4% leaa 75
per yuar
0 1
0 1
0 7
2.7 (2 yeara) 5.4
.1 (1983) .1
0 .005
0 .02
Estimated
I(el lability
of 'lUtal
-50% +500%
150%

150%
•
1100% '
1100%
120%'
120%
120%
1100%
150%
 Mining Machines (0)
      Heliuilt] loadera
      Scrap Continuous Mineru
      RiL-|ortii>j Coat a
      Spill Prevention Plaita
                    3.4%  lesa
                    per year
         Ly Doc. 31, 1901
OD»i>lete lv Due. 31, 1901
  .02         .          '0
             i
  .04        .           0
                                           700
.6
.02
.04
                                                             1100%
                                                             130%
120%
150%.
1100%
1501
*Data not available to aupport eatinptoi probably tanall coat  lic|iact.

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                                           Table 17.1-1  (Con't)
                                         Transitional Cost Impacts
  Itvm (Clvapter)
  Kluctranagneta (9)
    Replacement Coat
    Increased  Labor  Coata
  Hydraulic  Systems  (10)
    Die Casting Machines
      Analysis ai
            Prevention Plans
      Decontamination
    OtJier llyilraulic Syutema
      Decontamination .
      Production Inter nipt ions
  Heat Transfer byatuus (11)
  Ouui-uressora (12)
  Reolaiinud Oil (13)
      Increased (lust  of Syritlietic: Road
        Oil Material
      Increased Cost of Kotui Oil
      lost 1'iixlictloii of
        Hydraulic FluM
  Plitlialocyanine l'l<)ii«aita (14)
      Process

1979
$ 3.5
.5
.a
.2
.5
7.3
3.6
«•

• *
.2
100

.4
.5
$168.3 millkiu
Succeeding
Years
0
0
0
0
0
7.3 (1980)
0
0 *
I'
0
0
100 (yeara
6.4 (yeara
.4 (1980)
0

$ Million
Tt>tal
$ 3.5
.5
.a
.2
.5
14.6
3.6
*•

*»
.2
2-5)**** 500
6-15) 64"*
.8
.5
$1,802 million
caiiuauBa
Reliability
of total
120%
-100% 1900%
150%
150%
140%
-30% 1200%
-30% +100%
A*

. **
-50% 1100%
-80% 110%
-80% 1200%
120%
-50% +200%
-60% 140% ,
  ••[vita not available to support eatiiitate.  (oteiitlally larue coat ln|joct.
 •••Ooatu to continue Indefinitely until waste  iuliiatrlal oil no loivjev oontaina maasurabla amounts of
••••Hipper bouiKl estimate.  Decreased ilaiuiiJ nuy result ill alcjnlCicantly roJucttl

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      17.2  long Term Cost Impacts

Transformers:   (Chapter 16)'                             •       ..-...••

    Increased cost of non-PCB transformers            $0 to  10 mi11.-i.on/year
    Increased fire losses                             Data not available

Capacitors;  (Chapter 15)

    Increased cost of non-PC3 power factor
        capacitors                   .                 $5.5 to 10.9 million/year
    Increased cost of non-PCB capacitors              $7.8 to 10.3 million/year
                                                           (± 50%)           '    -
    Increased fire losses                             Data not available
    Decreased service life                            Data not available

Diarylide Yellow Pigment  (Chapter 14)
                                      ? .
    Increased cost of substitute pigments             $10 to 25 million/year^ '

                   Total                              $23 to 56 million per year

                   Present value of long term cost iinpacts assuming
                   10% discount rate = $230 to 560 million

       17.3  Bnployment Impacts


Item  (Chapter)      :  	    '        tto. of Jobs '• (1979)    Total Man Years

PC3 transformers                      '                                    -    • •

    Rebuilding                                -50                  -1470  •

Railroad transformers  (6)

    Ketrofill•and decontamination
      program                             -    +5s                  + 165

Oil Filled Transformers  (7)
    Analysis                                +42 to 106         +1235 to 3118
    Disposal services                       +69 to 110   •      +2029 to 3235

Mining Machines  (8)
    Spill Prevention Plans                    +2                  +2

Electromagnets  (9)

    Increased demand                         +50                  +25 to 32
    Additional  T^hnr for  Operations
      without Magnets                         +50                  +  17

Hydraulic Systems  (10)
    Decontamination  Program                   +12                  +  24
                                       -123-

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Item  (Chapter)
Nb. of Jobs  (1979)
 Total Man Years
   lost Production frcm
   closing of facilities during
   decontamination
potential for thou-
sands of layoffs early
in 1979 in the steel
industry for several
months
       -500?
   Spill prevention plans
   Reporting requirements
Heat Transfer Systems (11)
   Decontamination program
Compressors (12)
   Decontamination program
Reclaimed Oil (13)
   Ban on reclamation of contaminated
   hydraulic fluid
Diarylide Yellcw Pigments (14)
   Loss of jobs in manufacture of pigments
Capacitor Manufacturing  (IS)
Transformer Manufacturing (16)
       +5
       +7
       +1
     -12 to'15
       -200
       0
       -i-15
          5
          7
     -24 to 30
Job losses offset
by"increased employ-
ment in manufacture
of substitute
materials.
        0 -
       +1470
       17.4  Other Scoromic Impacts
             No significant-market shifts are anticipated to result from the ban
on the use of PCBs in the manufacture of capacitors or transformers.
             The only significant impact on energy demand will be for the oil
required to replace the contaminated transformer oil, hydraulic fluid, heat
transfer fluid, and compressor fluid which must be drained and incinerated as
part of the decontamination program.  This requirement will be insignificant
when compared with total oil consumption, particularly since the increased
demand for transformer oil will be spread over 20 years or more.
                                     -124-

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             A number of minor effects on the balance of trade may be
anticipated.  The ban on the importation of PC3 capacitors in foreign made •
electrical equipment might decrease 'the availability or slightly increase
the price of imported appliances.  The restriction on the PC3 contamination
of diarylide yellow pigments might end the importation of this material,-
However/ the ban on recycling contaminated transformer oil would be expected
to result in an increased demand for new oil, and the ban on the rebuilding •
of transformers will increase the. number of new transformers being manufactured
resulting in an increased demand for bauxite to make the aluminum wire used"
in their construction.  Sufficient data is not available to support a qoantita-
tive analysis of these effects, and the total impact on the balance of trade
is not expected to be significant.
             No significant impacts on supplies of strategic materials were
identified in the course of this study.
                                     -125-

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                  APPQDIX A
         TOXIC SUBSTANCES CONTROL ACT

              Public Law 94-469"

            90 Stat. 2003 et aeq
Page A-2:  Section 6(e):  Polychlcrinated
                             Biphenyls


Page A-3:  Section 6(a):  Scope of Regulation
                    A-l
                                                             \

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                PUBLIC LAW 94-469—OCT. 11, 1976
90 STAT. 2025
   (e)  PoLTCHtoRt^ATTD BiPHE>tTxs.—(1) Witliia sis months after  Rule*.
 the affective date of this Act the  Administrator ahull promulgate
 rules to—   •
       (A)  prescribe methods for  the  disposal of polychlorinated       • ..  -
     biphenyis, and                                 •               '    •    '
       (B) require polychlorinated biphenvls to be marked with clear
     and adequate warnings, and instructions with respect co their
     processing, distribution in commerce, use. or disposal or with
     respect to any combination of such activities.
 Requirements prescribe^ by ntles under this paragraph shall be con-
 sistent with the requirements of paragraphs (2) and (3).
   (2) (A) Except as provided  under subparagniph (B), effective  one
 year after the effective date of this  Act  no person may manufacture,
 process, or distribute in commerce or use any polychlorinated biphenyl
 in any manner other than in a totally enclose'd manner.
   (B) The  Administrator may by  rule authorize che manufacture,
 processing, distribution in commerce or use  (or any combination of
 such activities) of any polychlorinated biphenyl in a manner other than
 in a totally enclosed manner if the Admuustmtor finds that such manu-.  .     . ,  •
 facture, processing, distribution in commerce, or use (or combination
 of such activities) will not present a-n unreasonable risk of injury to     -  •  •
 health or the environment.
   (C) For the purposes of chis paragraph, the term "totally enclosed "Totally enclosed
 manner" means any  manner which  will  ensure ahac any exposure of manner."
 human beings or the environment to a polychlorinated biphenyl will
 be insignificant as determined  by  the Administrator by rule.
   (3) (A) Except as provided  in subparagraphs (B) and (C)—
       (i) no person  may manufacture any polychlorinated biphenyl
     after two years after the effective date of this Act, and
       (ii) no person may-process or distribute in commerce any poly-
     chlorinated biphenyl after two'and one-half years after such date.
   (B) Any person may petition the Administrator for an exemption Pearioo for
 from the requirements of subparagraph  (A), and  the  Administrator exemption.
 may grant .by rule  such  an exemption if the Administrator finds
 that—
       (i) an unreasonable risk of injury to  health or environment
     would not result, and
       (ii) good faith efforts have been  made  to develop  a chemical
     substance which does not present an unreasonable  risk or  injury
     to health or the  environment  and which may  be substituted  for
     such polychlorinated biphenyl.
An exemption granted under this subpaitigraph shall be subject to Terms »d
such terms and conditions as the  Administrator may  prescribe  and  condition*.
shall be in effect for such  period (but not more than one year from
the date it is granted) as  che Administrator may  prescribe.
  (C)  Subparagraoh (A) shall not  apply to the "distribution in com-
merce  of any polychlorinated biphenyl if  such  polychlorinated
biphenyl  was sold for purposes other than  resale before two and one
half vears after the date of enactment of this Act.            "  •
  (4) Any rule under paragraph (1), (2)(B), or (3) (B) shall be
 promulgated  in accordance with'paragraphs (2), (3), and (-1) of sub-
section (c).
  (5) This subsection does not limit the authority of  the  Adminis-
trator, under any other provision of this Act or any  other Federal law.
to take action respecting any polychlorinated biphenyl.
                                 A-2

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              SEC 8. REGULATION  OF HAZARDOUS CHEMICAL SUBSTANCES  AND
                       MIXTURES.
IS USC 2605.      (a) SCOPS OP REon-moN1.—If the Administrator finds that there is
          __  a, reasonable basis to conclude that the manufacture, processing, dis-
              tribution in' commerce, use, or disposal of  a  chemical substance or
              mixture,  or that  any combination  of such activities,  presents, or-will
              present an unreasonable risk of injury to health or the environment.
              the  Administrator shall by rule apply one or  more of the following
              requirements to such substance or  mixture to the extent necessary to
              protect adequately against such  risk using  the least  burdensome
              requirements:
                    (1) A requirement (A) prohibiting the manufacturing, process-
                  ing, or distribution in commerce of such substance or mixture, or
                  (B)  limiting the amount of such substance or mixture which may
        .          be manufactured, processed, or distributed in commerce.
                    (2) A requirement—
                        (A) prohibiting the manufacture, processing, or distribu-
                     tion in  commerce of such substance  or mixture  for  (i)  a
                     particular use or (ii) a-particular use in a concentration in
                     excess of a  level specified by the Administrator in  the rule
                     imposing the requirement, or
                        (B) limiting the  amount of  such  substance or  mixture
                     which may be manufactured, processed, or distributed in
                     commerce for (i)  a  particular  use  or  (ii) a particular use
                     "in. a concentration in excess of a level specified  by th"e
                     Administrator in the rule imposing the requirement.
                    (3) A requirement  that  such substance  or mixture or 'any
                  article containing such substance or  mixture be marked  with or
                  accompanied by  clear  and adequate warnings and  instructions
                  with  respect  to its use, distribution in commerce, or disposal or"
                  with  respect  to any combination of such  activities. The form and
                  content of such warnings and instructions shall be prescribed by
                  the Administrator.
                    (4) A requirement that manufacturers and processors of'sucn
                  substance or mixture make and retain  records of the processes
                  used, to  manufacture or process such substance  or mixture and
                  monitor  or conduct tests which  are reasonable and necessary to
                  assure compliance with the requirements of any  rule applicable
                  under this subsection,.

                    (5) A requirement prohibiting or otherwise  regulating  any
                  manner  or  method of commercial  use of  such  substance or
                  mixture.
                    (6) (A)  A requirement prohibiting or  otherwise regulating any
                  manner  or method of disposal of such substance or mixture, or
                  of any article containing such substance  or mixture, by its manu-
                  facturer or processor or oy any other person who uses, or disposes
                  of, it for commercial purposes.
                    (B) A requirement under subparagraph (A)  may not require
                  any person to take any action which would be  in  violation of
                  any law or requirement of,  or in effect  for, a State or  political
                  subdivision,  and shall require  each person subject to it to notify
                  each  State and political subdivision in which a required  disposal
                  may occur of auch disposal.                      .'"*•
                  •  (7) A requirement directing manufacturers or processors of
                  such  substance or mixture (A)  to give notice of such unreasonable
                  risk of injury to distributors  in commerce of such substance or
                  mixture  and. to the extent reasonably ascertainable, to  other per-
                  sons in possession of such substance or mixture or exposed to such
                  substance or  mixture, (B)  to  give public  notice  of such risk of
                  injury,  and  (C)  to  replace  or repurchase such  substance or
                  mixture  as elected by the person to which  the requirement is
                  directed.
              Any requirement (or combination  of requirements)  imposed under
              this subsection may be limited in application to specified geographic
              areas.
                                     A-3

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Assessment of Industrial Hazardous Waste Management Practices,  a document pre-
pared for EPA's Office of Solid Waste and presented with testimony of H.
Tinier Hicknsn, December 12, 1977.

flnttrak, 1976 annual Report.

Aratrak, Five-Year Corporate- Plan, 1977.

Bureau of the Census, Electrical Measurement and Distribution Eouicment,
Report No. MT72(2)-36A, Table  6A.

Consolidated Rail Corporation, Annual Report,  1976.
                                                             /m
Dow Corning Corporation, Removal of PG3 from Dow Coming 56V   Transformer
T igni^, by Ctv*'T|!?ev*V F^ ltra.t"^on, updated.

Electrical Apparatus Service Association Inc.,  1977-1978 Yearbook; St. Louis
MO:  1977.                        •               ••--.-•

ENSCO, General Information  ENSCO-PC3-001 Rev.  3-73, El Dorado,  Arkansas:
March 1973!~

  PA, "Final Decision", Federal Register, February 2,  1977,  pp.  6531-S555,

  PA, "Polychlorinatsd Biphenyls  (PCBs): Disposal and  Marking",  Federal
   rister, February -17, 1978, pp. 7149-7164.

Foss, Stephen D.; Higgins,  John B.; Johnston,  Donald  L.; McQuade,  James 'Ji.:
 (General Electric Co.), Retrofilling of Rai.lroad Transformer, Draft Finail
Report, Contract DOT-TSC-1293, July 1977.                               :;":"

Hofstader, R.A.  (Exxon Research and Engineering Co.); Ldsk,  D.J.,  Bache,  C.A.
(Cornell University), "Interference in the Electron-HCapture Technique for
Determination of Polychlorinated Biphenyls by Sulfur-Containing Compounds  in
Petroleum Products",  Bulletin of Snvironrental Contamination  and Toxicology,
Vol. 11, NO. 2, 1974.

Kuratsune, Masanori, et. al. /  "Yusho, a poisoning caused by rice oil con-
taminated with polychlorinated biphenyls", RHSMHA Health Reports,  Vol.  86,
No. 12  (December 1971), pp. 1083-1091.

Lapp, T.W.  (Midwest Research institute), The-Manufacture and  Use of Selected
Aryl and Alkyl Aryl Phosphate Esters, EPA 560/6-76-008,  February i97lT

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                            REFERENCES, CXUTINOED

         y- Robert ^."^Continental Forest Industries) , testimony presented at
              infernal hearings on the PCS ban regulations/ Washington,  D.C. ,
JUly IS,            .
        • , v' -'•'7'',"*'*""    • " "                            '
Majaeh,. T.W. ,  "Rerefined Oil:  An Option That Saves Oil, Minimizes Pollution",
       e -193..,  p.  1108-1110, Septsnber 17, 1976.
        '
                     Authority, Annual Report, 1976.
Michigan, Department of Natural Resources, File MSno, undated.
          ,';•'"' ': ••'.'.  •.-"«•'                                           '
Jtoisanto Chemical Conpany, Arcclors for — -, St. Louis, Mo.:  undated.

              of .Transportation, Hichliohts of activit-ies, 1976.
      */ T.'; ..Faab,  E.  (General Electric Co. ) , U. S . Transf cnner '_ Oil.' Supply and
       , ,197S-l;985,  Interim Report,- Palo Alto /Calif.: Electric. Power" Research
••-Ihstsl-tiite -(Report No.  EL-303) ,  Nov. 1976.                     .           .

 SS^CIA,; ..-gegort .to  the Public ard Financial Statements for 1374 and 1975  - -
 Staite?nent qt Operations.
              (Outboard J'larine Corp.) , Presentation at the EPA Informal ' Hearings
on the PCS; San' Regulations ,  Washington, D.C. , July 15, 1977.

U.S.  Department of Agriculture M Hoc Group on PC3s.  Agriculture's  Responsi-
bility Concerning Polychlorinated Biphenyls (PCSs) Washington, D.C. : Orrice
of Scieraee and Education, U.S. Departrnent of Agriculture, 1972.

U.S.  Departinent of Comierce, Electrical Measuranent and Distribution Squipnaent,
Publication tC(2-36A) .

Versar; Inc. , Assessment of the Environigntal and Sconanic impacts of the San or.
Imports of; PC3s, EPA 560/6-77-007, February 22, 1977.

Versar Inc., Involvement of PCSs in the Pulp ard Paper Industry, EPA 560/6-77-005,
February 25,, 1977.

Versar Inc;.., MicrcecDTxinic Impacts of the Proposed Marking and Disposal Regu-
lations for PCBs, (EPA Report .No. 560/6-77-013), Springfield, Va.:'  National
Technical Information Service (NTIS No. PB-267 333/2vP) , April 26, 1977.

Versar Inc., PCS Activity Analysis Papers, Special Report, EPA/OTS,  July 11, 1977.

Versar Inc., PCBs^in the United States; Industrial Use ard Snyironnental Sistrihu-
tion.   Springfield, Va. :  National •Technical Information Ser/ice  (NTIS  ?S
23T"402/3WP) .  February 1976.

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                            REFERENCES, CCOTTOUED


Versar Inc., Price Schedule'— Quantitative Analysis of PCSs in 10-C Transfpaner.
Oil  (Price Sheet 100),  Springfield, Va.: May 1/1978.                   "  •:\>:  ^

Versar Inc., Usage of PC3s- in Cpen and Semi-Closed Systems and the" Resulting  y''%:-
Dosses of PCBs  to the Environment.  EPA 560/6-77-009 (unpublished Draft Repjiart).,...
September 1, 1976.                            .                          f'-~ ''^  : -^

Walsh, E.J.; Voytik,  D.S.;  Pearce, H.-A. (Westinghouse Electric Corp.) Svaluajt^jQji.,
of Silioone Fluid for Replacement of PCB Coolants  in Railway Industry,
Final Report, Report No."DCT-TSC-1294, July, 1977.
Ward, William (General i^totors Corporation), Presentation at the EPA Hearings---'ori:-.
the PC3 Ban Regulations, Chicago, Illinois, July.19,  1977.              .'/• '•• :•'..• ->.^-
       George (United States Department of Interior,  Denver, Colorado),  &.
"Polychlorinatad Biphenyls", File HLS 3-3-10h, June 13,  1977.

Weinstein, N.J.  (Recon Systans, Inc.), Waste Oil Recycling and Disposal,••••JP'  "     v" ":""^
670/2-74-052,  Princeton,  N.J.: August, 1974.   .                       •_ .
                                                                             • -   -.*.'<: «'\
                                                                             • .-^-t^-
                                                                             '•?*+%•  , , •;;•?"' *:
                                                                             ,•-'•' . v v.  •""'£ **J^'.

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