PB83-159731
       Economic  Analysis for the Final
       Rule  to Exclude Closed and
       Controlled  Processes from the PCB
        (Polychlorinated Biphenyls) Ban  Rule
        (U.S.)  Environmental Protection  Agency
        Washington,  DC
        Sep 82
Sex
        partment of Cenmswct
        ! Technical bifena&taa Service

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                                   September 1932
                                  EPA  540/4-82-006
   ECONO.-1IC ANALYSIS  FOR THE FINAL RULE
TO EXCLUDE CLOSED  AMD CONTROLLED PROCESSES
              FRO.-1  THE PCB BAN
                     oy

                  Aniy Mol 1
     Economics  and  Technology Division
OFFICE OF PESTICIDES AND TOXIC SUBSTANCES
   U.S.  ENVIRONMENTAL  PROTECTION  AGENCY
          WASHINGTON, D.C.   20460

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REPORT DOCUMENTATION >._*£?ORT NO.
PAGE
.4.- 7. tie ana SuDtitle
PB33
5. 3*oo
1597? i
rt Date
    Economic Analysis for the Final Rule to Exclude Closed
    and Controlled Processes from the PCB Ban Rule
7. AutnoHs)

    Amy S.  Moll
                                                                 September,  1S82
                                                                8. Performing Organization Reot. No
9. Performing Or^a

      <">
                                                                10. Proiect/Taik/Worn Un.t No.
                                                                11. Contract(C) or Granl(G) No.

                                                                (C!

                                                                (G)
           N/A
12- Sponsoring Organization Na<-n« *nd Address
    U.S.  Environmental Protection Agency
    Office of Toxic Substances
    401 M Street, S.K.
    Washington,  D.C.  20460	'
j 13. Type of Report & Period Covered
f
!    Final Report-	
i u"
i
IS. Suoolementary Notes
    Thi- report updates and revises  the Cost Analysis .for the proposed rule  to exclude
    closed and controlled processes  from the PCB ban.  •
16. Abstract .(Limit: 200 wores)
           In May,  1979  EPA promulgated the  original  PCB ban rule,
     which.permitted  the manufacture,  processing,  distribution,  and
     use  of PCBs in concentrations  less than 50 ppm.   The  Court  ,
     remanded  the  rule  to EPA because  EPA did not  present  sufficient
     evidence  to justify the  50 ppm  cut-off decision.  The Court
     ordered that  a rule dealing with  the incidental  generation  of
     PCBs in closed and controlled manufacturing processes be
     promulgated by October  13, 1982.   EPA  is promulgating a final
     rule which excludes closed and  controlled processes from the  PCB
     ban.  This report  estimates the costs  and benefits of the final
     rule as well  as  the other regulatory alternatives considered  Dy
     EPA.
 17. Oocument Analysis  a. Descriptors
    Polychlorinated Biphenyls Economic Impact Analysis
    Economic Impact Analysis
    PCB Closed/Controlled Rulemaking
   C. 1d«ntlfi«n/Qo«irv£fHi«d Terms
   c. COSATI
IB. AvaiUDilitY Statement
Unlimited Availability
19. Security Clan (This Report)
Unclassified
20. Security Class (This Page)
, I!. No. o< Pages
:. fiS
i 22. P-ct

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                              CONTENTS


                                                               Page
DISCLAIMER

LIST OF TABLES                                        .          iv

EXECUTIVE SUMMARY                                               V

I.    INTRODUCTION                                              1

II.   ALTERNATIVES                    .                         10

III.  GENERIC  COSTS OF SELF-CERTIFICATION7,  REPORTING,  A\TD    15
      PROCESSING  EXEMPTION PETITIONS

IV.   BENEFITS  AND COSTS OF ALTERNATIVE EXCLUSION OPTIONS    30

REFERENCES                                                      47

APPENDICES

      A.  End-Products of Manufacturing Processes in Which   48
          PCBs  are Incidentally Generated
      B.  Summary of Inadvertent  Production of PCBs by       50
          Concentration in Process  and Process Category
      C.  Air  Sampling - Breakdown  of Costs                   51
      D.  Estimated Costs to Industry of Filing an            52
          Exemption Petition
      E.  Description of Samples  to be Tested for PCB         54
          Concentration
      F.  Calculation of Wage Rates for EPA Personnel         56
                                ILL

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                           LIST OF TABLES
Table 1     Summary Table:  Aggregate  Incremental Benefits and
            Costs for Final Exclusion  Rule for Closed/
            Controlled Processes
Tab 1 e 2


Table 3

Table 4


Table 5


Table 6


Tab le 7


Table 8


Table 9


Table 10

Table 11


Table 12


Table 13
                                                         Page
                                                         viii
.\\nober of  Closed,  Controlled, and Uncontrolled          8
Processes  by  PPM  Category

One Time Costs  of Testing for Self-Certification       20

Costs of Recordkeeping and Reporting  for  Self-         23
Certification on  a Per-Test and  Per-Petition Basis

Cost of Making  a  Theoretical Calculation  of the        25
Level of Incidental  PCB Production  and  Release

Estimated  Costs to Industry of Filing  an  Exemption     26
Petition (including  research and testing  costs)

Estimated  Cost  to EPA of Processing Exemption          29
Petitions  (per  petition)

Present Value of  Self-Certification Costs Over 10  -    32
vears (Per Process)

Recordkeeping Costs  to Industry  for Self-Certification 34
(Per Process)
Costs of  Reporting  for Self-Certification
36
Costs to  Industry of Filing Exemption  Petitions (Per   37
Process)
Incremental  Benefits and Costs Per Process  for
Exclusion Options
41
Aggregate Incremental  Benefits and Costs  for  Exclusion 42
Options
Table 14   Summary Table:  Aggregate Net  Benefits
                                                         45
                                 IV

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                         EXECUTIVE SUMMARY-






      EPA  is  promulgating a final rule to  exclude certain  closed




systems and  controlled waste processes from the PCBban  rule




where only minute  quantities of PCBs are  released  into products,




air, or water  streams.  The purpose of this paper  is  to  estimate




and discuss  the incremental costs and benefits associated with




this  exclusion rule as well as the other  alternatives considered




by EPA.








      In May, 1979  EPA promulgated the original PCB ban rule which




permitted the  manufacture,  processing, distribution,  and  use  of




PCBs  in concentrations less than 50 ppm.  The Court remanded  the




rule to EPA because EPA did not present sufficient evidence to




justify the  50 ppm cut-off decision.  Since the effect of this




remand would have  been to  ban all PCBs,  including  those generated




in very minute concentrations,  serious disruptions could  have




resulted.  Therefore,  the  Court granted a stay of  the mandate




until October,  1932,  and has since extended the stay until




December, 1982.  Until  that date the May,  1979 rule remains in




effect.  The Court ordered that the PCB rule dealing with che




incidental generation  of PCBs in closed and controlled




manufacturing  processes be promulgated by October  13, 1982.

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              / I
      This  paper discusses four options for regulating PCBs




incidentally  generated in closed or controlled processes.  Tire




first option  is the use of the exemption petition process.  This




option  is  used  as  the baseline against which to measure the costs




and benefits  of the other three options,  i.e. zero costs and



benefits are  implicitly associated with this alternative.  The




second  alternative considered is one in which EPA would only




require that  theoretical  assessments be made of the level of PCB




release from  a  process.   The third alternative considered is the




one chosen by EPA  for this final exclusion rule.  Under this rule




EPA has given companies  the option of doing either a theoretical




assessment or testing for self-certification.  EPA. will hold




companies  to  a  standard  of proof achievable through the




recommended testing.   Under the fourth alternative only testing




would be acceptable for  self-certification.








      The estimates  of the incremental  costs and benefits of this




exclusion  rule  are  presented in Summary Table 1.   It should be




noted that these estimates  are subject to  a great deal of




uncertainty for the following  reasons:




    1«  jJncertainty over  the appropriate baseline from which to




        measure costs  and benefits -  Since EPA has  not




        established a policy for dealing with exemption




        petitions,   there  is  uncertainty over  the appropriate




        baseline from which  to measure incremental, costs and




                                vi

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    benefits of any  exclusion policy.   For purposes of this




    analysis EPA has  assumed  that exemption requests for PCBs




    generated in closed/controlled processes would be




    granted.








2.   Uncertainty over  the  number of processes affected - Since




    only rough estimates  have been made of the numbers of




    processes which  might be  affected  by this rulemaking the




    total cost estimates  are  very uncertain.
                           vn

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Table 1:  Summary TaDle:  Aggregate Incremental Benefits and Costs  for
          Final EPA Exclusion Rule for Closed/Controlled Processes
                                       Number of processes affected:
                                      51 processes       175 processes
Benef its

INDUSTRY:

  Exemption petition cost savings

  Costs saved by not having to
    alter or cease production*

  Added certainty*

EPA:

  Petition processing savings

       Total

COSTS

INDUSTRY:  Self-certification costs

  -Sampling Testing/Theoretical
   Calculation

  -Recordkeeping

  -Report ing

EPA

  -Report Review

  -Enforcement*
$5.8m-$45.9m
   $2. 6ra
$8.4m-$48.:>m
$6.1m-$8.6m

$.04m-$.14m

S.03m-?.09m



$.01m-$.02m
$20.0m-$157.5m
    $8.9m
$28.9m-$166.4m
$20.8m-$29.7m

 $.14m-$.47m

 $.09m-$.32m



 $.03m-$.7Om
          Total
$6.2m-$8.9m
:? 21.0m-:? 31.2
'For purposes of this analysis these costs have not been quantified,
                                 VI 1 1

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r,*' r fTTw^gn-v'i ^' ,'.*.*? '~* k vw. -' .'*
               3.  Uncertainty over component costs - Estimation of the unit




                   costs which will make  up the total cost of any policy is




                   difficult since this testing is not commonplace; since




                   there was never a  need to do such testing and monitoring




                   before now, there  is little or no historical  basis for



                   estimating testing costs.








                Based on the estimates presented in Table 1,  a conclusion




           can be drawn that the benefits  of  the exclusion policy -- which




           include avoidance of the costs  of  filing exemption petitions




           and/or of altering or ceasing  production processes -- will  exceed




           the costs imposed by requiring  companies to self-certify to



           qualify for th._ exclusion.
                                           IX

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I.   INTRODUCTION








     EPA  is  promulgating a final rule to exclude certain  closed




systems and  controlled waste processes from the PCB ban rule




where only minute quantities of PCBs are released.  The purpose




of this paper  is to estimate and discuss the incremental  costs




and benefits associated with this rule and the other  alternatives




considered by  EPA for PCBs generated in closed processes  and




processes in which all wastes go to an EPA-approved landfill  or




are  incinerated  in an EPA-approved incinerator.








     A.   Background
     Section  6(e)  of  the Toxic Substances Control Act  (TSCA)




prohibits  all manufacture,  processing, distribution in commerce,




and use of PCBs  after July  1,  1979.  EPA promulgated regulations




under 40 CFR  Part  761,  published in the FEDERAL REGISTER, of May




31, 1979 (44  FR  31514),  to  implement section 6(e) of TSCA.  The




regulations excluded  PCBs in concentrations less than 50 ppm frorr




the 6(e) ban, thus permitting their continued manufacture,




processing, distribution in commerce,  and use.








     The Environmental  Defense Fund (EOF) petitioned the U.S.




Court of Appeals for  the District of Columbia Circuit to review




three aspects of the  PCB regulations,  including the 50 ppm




regulatory cut-off as  it applies to the manufacturing,

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processing,  distribution, and use of PCBs  (EDF  v.EPA,  No.  79-




158r>).   in  an October 30, 1980 decision, the  Court  found  that




there  was  not substantial evidence in the  record  «-.o  support this




50 ppm regulatory cut-off.  The Court remanded  this  portion of




the  regulations -to EPA for further action.








     The effect of the court's decision would be  to  make  the




manufacture,  processing, distribution in commerce,  end use of




PCBs in concentrations below 50 ppm a violation of  section 6(e)




of TSCA unless an exemption petition for these  activities  is




filed  and  approved by EPA.  An exemption petition must




demonstrate  that 1) the company generating PCBs has  made  a good




faith  effort  to develop substitutes for PCBs, and 2)  that  no




unreasonable  risk is attributable to the PCBs generated in




process or  released from the process.  :  --(uests for  exemption can




be granted  for a maximum of one year, i.e. petitions  must  be




refiled annually.








     On February 20, 1901, EPA,  EDF,  and certain  industry




intervenors in EDF v.  EPA filed a joint motion  with  the Court




requesting  an eighteen-month stay of the Court's  mandate  for the




50 ppm regulatory cut-off.  During the period of  the  stay,  EPA




agreed to promulgate regulations relating to the  msnufacture,




processing, distribution in commerce,  and use of  low  levels  of




PCBs,  beginning with the publication of two Advance  Notices  of




Proposed Rulemaking (ANPRs).
                                — 2 —

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     First, EPA agreed to publish an AN PR  requesting comments on




the possible exclusion of PCBs  from the section 6(e) ban when




generation occurs  in a closed or controlled manner which presents




little or no risk  to human health or the environment.  These




processes are the  subject of this economic analysis.  In the




ANPK, closed manufacturing processes were defined as processes in




wnich PCBs are generated, but from which no PCBs are released.




Such processes generate  PCBs within closed reaction equipment,




and the chemical reactions within the processes destroy those




PCBs continuously  as they are produced.  Controlled waste




processes were defined in the ANPR as processes in which PCBs are




yenerated, and from which PCBs  are released only as constituents




of wastes which --jre either incinerated 5.n EPA approved




incinerators, disposed of in EPA-apprcved PCB landfills, or




stored for such disposal or landfilliny.








     Second, EPA agreed  to publish an ANPR requesting information




on the manufacture, processing, distribution in commerce, and use




of PCBs in low concentrations which might present risk;  i.e.




activities that are not considered closed or controlled.  This




rulernaking is only discussed here as it affects the




closed/controlled manufacture rulemakiny.








     On April 13,   1981, the Court granted the requests of the




joint motion and entered an order.  The text of the Court's order




is set forth in the FEDERAL REGISTER of May 20, 1981, along with




EPA's two ANPRs on the 50 ppm regulatory cutoff (46 FX 27615; 46

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FR 27617; 46 FR  27619 respectively).  The  Court's  April  I >,  1981

order stays the  mandate of  the court, and  leaves the  50  ppm

regulatory cutoff  i.i place  until October 13,  1982.  The  Court

recently extended  the stay  to December  1,  1982.  The  effect  of

this order is  tnat  the regulations  promulgated on  May 31,  1979,

regarding the  50 ppm regulatory cutoff, remain in  effect  for the

duration of the  stay.  Therefore, persons  manufacturing,

processing, distributing  in commerce, and  using PCBs  in

concentrations less than  50 ppm may continue  these  activities

until December L,  1982.   EPA intends  to request additional stays

of the mandate beyond that  date.  The Court'.s order requires EPA

to promulgate  a  final rule  for closed manufacturing processes and

controlled waste manufacturing processes by October 13,  1982.



     B. The Magnitude of  the Incidental Generation  Problem

     The magnitude of this  incidental generation of PCBs  has been

documented by  the Chemical  Manufacturers Association  (CMA) ^A_

Report of a Survey on the Incidental Manufacture,  Processing,

Distribution,  and Use of  Polychlorinated Biphenyls  at

Concentnations Below 50 PPM), and by Versar,  Inc..  Both  CMA and

Versar have estimated the number of processes in which PCBs  are

incidentally generated in concentrations less than  50 ppm.

Versar has also  made rough estimates of the extent  to which  PCBs

are incidentally generated  in concentrations greater  than 50 ppm
 The term "incidental generation" refers to inadvertent
production of PCBs (e.g., as by-product or impurities) in
manu Lecturing processes for other end-products.
                               -4-

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using  information gathered  from exemption petitions.   (Versar

Materials Balance Information  on  Inadvertently Generated  PCBs)  A

List of end-products of manufacturing processes  in which  PCBs are

incidentally generated is given in Appendix A.



     The survey conducted by the  Chemical Manufacturers

Association (CMA) provided  data which indicate that 26 chemical

firms  (of 85 respondents to the survey) generate approximately

13,8UO pounds of PCBs in 135 manufacturing processes where the

in-process concentration of PCBs  is less than 50 ppm.  An

estimated .69 pounds of PCBs are  reportedly generated  in 4 closed

manufacturing processes, and approximately 6,900 pounds of PCBs

are generated in 40 controlled waste manufacturing processes.

CMA does not give its criteria for closed and controlled waste

manufacturing processes with these estimates.  97.5% of the PCBs

generated in controlled waste processes are reportedly

incinerated, and 2.5% are disposed of in. EPA-approved chemical

waste landfills (CMA 1981).  The  85 chemical firms responding to

the CMA survey represent 37.6% of industrial chemical sales.

However, since these 85 firms represent a large percentage of

basic industrial chemical sales,   and since incidental generation

of PCBs is most apt to occur in that industry segment, CMA

assumed that most of the incidentally generated PCBs are
                                  N
accounted for by these 85 surveyed firms.   The CMA went on to

estimate that "up to thousands" of processes may generate PCBs in

concentrations under 50 ppm.  However, the justification for  that

estimate was not given.
                               -5-

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     Versar estimates  that  there are between  130 and 500



processes where  the  in-process concentration  of PCBs is less than



50 ppm.  (Versar  1982a)  Of  these,  from 4 to 15 processes are



considered closed, and generate a  total of between  .7 and 1.8



pounds of PCBs.  Between 40 and 153 processes are considered



"controlled waste processes", i.e. all wastes from  these



processes are disposed of in EPA-approved PCB landfills or



incinerated in EPA-approved incinerators (i.e., PCB approved



incinerators, certain RCRA  approved incinerators, and EPA-



approved high efficiency boilers).  These "controlled waste



processes" generate  between 6,926 and 18,006 pounds of PCBs.  The



87-3.42 "other than closed or controlled processes" generate from



6,856 to 17,830 pounds of PCBs (Versar 1982).  (See Appendix B)








     Data provided in the 26 manufacturing petitions for



exemption from the May 31,  1979 rule were used by Versar to



estimate 1)  the number of processes in which PCBs are generated



in concentrations greater than 50 ppm and 2}  the total pounds of



PCBs generated in those processes.  Appendix B gives the



breakdown of these exemption petitions in terms of numbers of



processes that are closed, controlled,  or uncontrolled,  and in



terms of the pounds of PCBs contained in such processes.



Depending upon the ppm in-process limit,  and on the "no-PCB"



level used to define closed and controlled processes,  more or



fewer manufacturers and processes may be affected by the policies



being considered.  Assuming that 1) a "closed process"  is  defined
                               -6-

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as one  in which  "no PCBs" are  released  to  air, water, and waste




streams, and j£50 ppm ar<"  --eleased  to products, and  2) a




"controlled process" is defined as one  in  which  "no PCBs" are




released to air and water streams, <50  ppm are released  to




products, and all wastes yo to EPA-approved  incinerators or EPA-




approved PCB landfij'is, then Versar estimates that among the




submicters of exemption petitions  there is one closed process




yeneratiny an unknown amount of PCBs and six controlled processes




generating at least 9,123 pounds of PCBs where in process




concentrations of PCBs are greater than 50 ppm (Versar 19B2).




See Table 2 below.








     Aggregating the estimates of  the number of processes and




associated poundage from the _<50 ppm and _X>0 ppm cateyorie.~i, the




total number of closed and controlled processes which may be



eligible for the exclusion being considered  is estimated to be




between 51 and 175.  The total number of pounds of PCBs generated




annually in these processes is estimated to be between 16,051 and




27,131 pounds.
                               -7-

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      ?abl..e 2:  No. of  Closed,  Controlled,  and Other Processes
                          by PPM Category
PPM
<50
>50
Category
ppm
com
Total
Closed
4-15
1
5-16
Control 1 ed
40-153
6
46-159
Uncontroll ed
87-332
19
106-351
Source:   Versar  Inc.,  "Materials Balance Information on
          Inadvertently Generated PCBs", 1982.

     C.  Methodology

      The  incremental costs and benefits associated with this

rulemaking  are calculated against a baseline case of an immediate

ban  on  all  manufacture,  processing, distribution and use of

PCBs.   The  incremental  costs associated with the exclusion

options are considered 1) the additional health risks resulting

from any  exposure  to PCBs from processes which would have been

subject to  the ban had they not been excluded, and 2) the

additional  costs incurred by manufacturers and EPA due to self-

certification requirements imposed by EPA.  The exposure risks

will  not be discussed  here since a separate exposure analysis is

being prepared by  EPA.   However, if the assumption is made that

all  manufacturers  and  processors subject to the ban would file

exemption petitions if there is no exclusion rule, and that all

such  petitions would be granted without any conditions, then

there would be no  incremental  costs in terms of PCB exposure in
                                -8-

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the short  run.   In  the long run there might be additional costs




in terms of  PCB  exposure since companies would be relieved of the




annual exemption petition requirement that they make a "good




faith" effort to develop PCB substitutes.








     Incremental  benefits are considered the savings which would




accrue to:   1) companies which would be relieved of the burden of




filing exemption petitions, altering processes, and/or ceasing




certain production  processes,  2)  companies which would be




relieved of  the  uncertainty resulting from the annual exemption




process, and  3)  government which  would only have to review brief




exclusion  reporting  forms rather  than lengthier exemption




petitions  from companies whose processes had been excluded.








    D.  Organization of Report




     Section  II  discusses the alternatives available to EPA for




dealing with  the incidental manufacture of PCBs,  given the




mandate of the Toxic Substances Control Pet (TSCA).  Section III




discusses  the generic  costs of testing, recordkeeping,  and




reporting which  might  be incurred by industry under any exemption




or exclusion  policy.   It also discusses the costs which would be




incurred by EPA  under  such a policy.   Section IV presents EPA




estimates of  the  total  costs and  benefits of various exclusion




policies,
                                -9-

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II.   ALTERNATIVES








      The  final  exclusion rule will alleviate the burden of  the




PCB ban where little or no risk is posed by the generation  of




PCBs  as a byproduct or impurity.  EPA proposes to exclude from




the PCB ban certain processes from which "no PCBs" are released




into  the  air, water,  or end-products, and from which all wastes




are disposed of in  EPA-approved landfills or EPA-approved




incinerators.   The  rationale for the exclusion is that such




processes pose  a "de minimis",  or trivial risk.








      Since it is often impossible to totally prevent PCBs from




escaping  from a process,  and since PCBs that may escape are often




difficult to detect,  EPA is proposing to issue guidelines on




appropriate analytical  techniques to use to detect and monitor




PCB releases to air,  water,  and end-products of controlled  waste




processes at the practical  limit of quantification.  Since  the




actual minimum  quantitatabl e level for a particular sample




depends on the  sensitivity of the detector,  the amount of




original  sample extracted and condensed for analysis, and the




extract, and injection volumes,  the practical limit of




quantitation of PCBs  is a function of the economic




characteristics of  each of the inputs to the analysis.
                               -10-

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     The major policy variables considered by EPA in developing


the rule included the appropriate ppm cutoffs for PCB release to


various media, the content of the test guidelines, and the


associated recordkeeping and reporting requirements EPA would


impose on industries.  For example, EPA considered requiring that


a company, in order to be eligible for exclusion from the ban,


perform tests, and recot1 and report test results, on a monthly,
                                                            \

quarterly, semi-annual, or annual basis, or whenever significant


process changes were made.  In addition, EPA considered giving


companies the option of making a theoretical calculation on the


concentration of PCBs in their processes.




     The rule being promulgated by EPA will exclude closed and


controlled processes from the PCB ban as long as PCB releases to


air, water,  and end-products are at or below the practical limits


of quantification.  EPA has set these limits of quantification at


10 micrograms per cubic meter per resolvable gas chromatographic


peak in air emissions, 100 micrograms per liter per resolvable


gas chromatographic peak in water effluents, and 2 micrograms per


gram per resolvable peak in an organic waste stream.   In order to


be eligible  for the exclusion companies will have to certify that


PCB releases from their suspect processes are at or below the


limits of quantification.   The certification can be
                              -11-

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made by testing and recording the results, or by making a one-




time theoretical calculation showing that PCB releases will not




exceed limits of quantification.  The testing and/or theoretical




calculation will have to be redone each time a firm's process




changes significantly.








     This report presents costs and benefits of four regulatory




options.  The cost and benefits of other options can be easily




calculated using the cables given.  The first alternative is the




use of the exemption petition process to deal with all




incidentally generated PCbs, including those in closed and




controlled processes.  Zero costs and benefits are implicitly




associated with this alternative since it is used as the baseline




against which to measure incremental costs and benefits of the




other three alternatives.








     The second alternative considered is one in which EPA would




only require that a firm perform a theoretical calculation to




certify that a suspect process qualified for the




closed/controlled exclusion.  EPA would not hold the firms to any




stricter standards of proof than the theoretical assessment




results to show that their process qualified.
                              -12-

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     The third alternative is the regulatory alternative chosen




by EPA.  That alternative requires that a firm with a suspect




process perform a theoretical calculation and/or analytical




testing to certify that their process qualities for the




closed/controlled exclusion.   Under this regulatory strategy EPA




will hold firms to a stricter standard of proof than under the




second alternative to assure that PCB releases are below




designated levels; EPA has set up a testing protocol which it




will use for enforcement purposes—i.e. firms will be held to




this standard of proof.








     The fourth alternative is one in which EPA would require the




testing described in the third alternative for all processes




which attempt to qualify for the exclusion.  In other words,




under thitj regulatory strategy a theoretical calculation could




not be used to certify a process for exclusion.








     The incremental costs and benefits of each of the last three




alternatives are calculated with and without a reporting




requirement.  Under each of these regulatory alternatives




recertification would be required each time there was a




"significant process change".








     The greatest amount of uncertainty in calculating




incremental costs and benefits is associated with the third
                              -13-

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alternative, i.e. the one chosen by EPA.  Since firms have the



choice whether to test or to perform a theoretical calculation



the total impact will depend largely on how many choose each



option.








     Section III presents and discusses the component costs of



each of these policy options as well as others considered by



EPA.  Section IV aggregates those costs and benefits over the



applicable number of processes and over time to get a rough



estimate of the total cost of each policy considered.
                              -14-

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III.   GENERIC COSTS OF SELF-CERTIFICATION,  REPORTING.  AND-


       PROCESSING EXEMPTION PETITION'S
      This  section discusses and estimates  the costs  which would

be  incurred by industry and by EPA  under various  policy

options.   The costs of sampling, testing,  recordkeeping,  and
         !
reporting  are considered.  Most estimates  are very  rough; the>

problems encountered in making these  estimates are  discussed

individually.




    A.  Sampling Costs

      The costs of sampling each niedium of  release should  be added

to  the costs  of testing to calculate  total costs  of  testing.  The

costs of gathering water and product  samples  are  so  small that

they  are assumed to be zero for purposes of this  analysis.

However, the  cost of taking air samples from  stacks  is

significant,  so these have been included in the analysis.




     The cost of gathering air samples for the testing

recommended by EPA are estimated to be $32,770.   This estimate

includes the  costs of sampling equipment preparation, site

preparation,  labor and overhead costs for  a four  man sampling

crew working  for 5 days,  travel costs, and report writing

costs.  (See  Appendix C)
                             -15-

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    B.   Test.tr.g Costs

      Estimating the costs of detecting  and  testing for

incidentally generated PCBs is very difficult  for a number of

reasons.   First,  analytical techniques  for  such testing are still

being developed.   Second, the test protocol,  and therefore the

individual  test costs, may be diffexant for every process and

product.   Third,  total testing costs nay be different for each

process because the sequential testing  scheme  recommended by EPA

calls for  2-7 tests  to make each determination of the level of

PC3 release,  and because the frequency  of  "significant changes"

in processes (which require recerti fieation)  will vary from one

process  to  another.  The technical problems in detecting and

me. Curing  small quantities of PCBs in various  media are discussed

at length  in a CM A study:  The Analysis  of  Chlorinated Biohenyls

(August  1981).  Following is a list and  brief  discussion of the

technical problems discussed in that CM A study:



    1.  Lack of chlorobiphenyl  standards -  The chlorobiphenyl s

        which occur in chemical process  streams  are generatri by

        chemical  reactions which do not  produce  fixed patterns of

        isouers which can be used to identify  the presence of

        chlorobiphenyl s .   Since the chlorobiphenyl s are comprised

        of  209 individual chemical isomers,  the  analysis of

        chlorobiphenyl s in pro'cess streams  involves the difficult

        problem of having to detect,  identify,  and measure each
     2-7 tests  should be done on samples which  are  each from a
separate cycle  in  the manufacturing process.
                                -16-

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    isoner  individually.   The quantitative analysis  of




    specific chlorobiphenyl  isomers is hampered because




    standards  necessary to calibrate analytical equipment  are




    not coinmerci ally available for all of the  isomers.








2.  Matrix  interference - Process stream analyses  for




    incidentally  generated chlorobiphenyls are severely




    inhibited  by  the matrix of other substances in which they



    are dispersed.   The matrix interferes with the analysis




    by hiding  the presence of chlorobiphenyls, by decreasing




    the sensitivity  of  the instruments to the  presence of




    chlorobiphenyls,  or by incorporating the chlorobiphenyls




    so that they  cannot be extracted for analysis.   These




    matrix  effects make it difficult to develop appropriate




    analytical methods  to detect and measure chlorobiphenyl s




    in process streams.








3.  Limits  of  quantification - The limit of an instrument's




    ability to reliably measure the quantity of




    chlorobiphenyls  present in a process stream may be 3 to




    3V2 times greater than the limit of detection.








4.  Analytic al equipment  1 imitations - Gas Chromatography




    (GC) with  the electron capture detector (EC) and gas




    chrcmatography combined with mass spectrornetry (MS) are




    the most suitable methods for the detection,




    identification,  and measurement of chlorobiphenyls.
                             -17-

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         However,  these instruments are limited  in  their  ability

         to  measure  low levels of chlorobiphenyl s,  and both

         methods  show variations in response to  isomers-within the

         same homolog,  i.e.  isomers with the same number  of

         chlorine atoms.   Also, the GC/EC increases  in

         responsiveness,  while the GC/MS. decreases  in

         responsiveness,  as  the number of chlorine  atoms

         increases.



     Although  the CM A study points out several  limitations in

detecting incidentally generated PCBs, it now appears that,  with

sufficient  resources for engineering research and  development,  it

is technologically  feasible to detect very low  concentrations of

PCBs in  processes and  products.



     A number  of  variables  are involved in estimating test

costs.   These  are discussed above in the CM A study  excerpts.

They include:


    1.   the complexity of the matrix in which the  PCBs are
         dispersed,

    2.   the type  of  testing equipment used,

    3.   the size  of  the  sample tested (which also  affects  the
         limit  of  detection),  and

    4.   the extent of  sample  extraction and "clean-up" required.


     Depending on the  combination of variables,  the cost of  an

individual gas chromatography/mass spectrometry test for

incidentally generated PCBs ranges from $120 -  $770 per  sample
                                -18-

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when sent to  an outside  I ab  (SRI 1982).  These costs reflect both




the direct costs of  operating  testing equipment, and the indirect




costs to recover overhead  expenses such as depreciation of




capital equipment, maintenance costs, etc.  The costs of testing




for PCB releases in  air  ranges from $120 to $595 per sample.




(This does not include the costs of collecting air samples.)  The




cost of testing for  PCB  releases in water ranges from $180 to




$595.  Testing for releases  to products ranges from $122 to




$770.  See Appendix  E  for  a  description of sample products and




associated extraction  and  clean-up requirements for testing.








     Table 3  presents  the  one-time costs of testing for sel f-




certification for each suspect process.  Since the estimated test




costs per sample span  a  fairly wide range, and since anywhere




from two to seven tests  will have to be performed on each medium




of release, the range of total costs is very wide; total costs




range from $840 to $13,720.








    C.  Costs Associated with  Recordkeeping and Reporting for




        Self-Certi fication




     The costs of recordkeeping and reporting associated with any




exclusion policy will be dwarfed by the costs of testing and/or




performing a  theoretical calculation for certification.  The




costs of recordkeeping and reporting for self-certification are




assumed to be the same for each of the exclusion options; i.e.




the recordkeeping and reporting requirements are assumed to be




the same as those specified by EPA in the final rule.  The final
                                -19-

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Table 3:  One Time Costs of Testing for Self-Certificaiion
No. of Tests
Required on Each
Medium of Release
Two
Four
Seven
Air^
$120-$595/Test
$240-$!, 190
$480-$2,380
$840-$4,165
Water
$180-$595/Test
$360-$!, 190
$720-52,330
$1,260-$4,165
Product
$122-$770
$244-?!, 540
$438-$3,030
$854-?5,390
Total
$344-$3
$l,688-$7
$2,954-$!

,920
,840
3,720
 The sequential sampling scheme specified in the CPA testing guidelines requires that 2-1
tests be clone on each medium of release

 The costs of air sampling are net included here


Source:  SRI 1932

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rule requires  that all firms which have  a  process  which qualifies




for the  exclusion report their determination,  and  the basis of




the determination, to EPA.  Also, records  of  the  theoretical




calculation  and/or the testing must be kept  for seven years or




for at least three years after the patticular process being used




at the facility  ceases operations.  A new  certification must be




filed and  renotification of EPA must occur each time a




significant  process change occurs.  A significant,  process change




is defined as  one which is likely to change the concentration of




PCBs in  releases from the processes (except in controlled




wastes).








     Records of  the theoretical assessment must include (1) a




description  of the reaction or reactions believed  to be producing




the PCBs,  (2)  the levels of PCBs generated and released,  (3)




documentation  of the basis for estimates of PCB concentrations in




releases,  and  (4)  the name and qualifications  of the person or




persons  performing the analyses.








     Records of  actual monitoring of PCB levels must include (1)




a description  of the method of analysis, (2)  documentation of the




results  of the analysis,  including data  from  the quality




assurance plan,  (3)  the name of the analyst or analysts,  and (4)




the date and time of the analysis.
                                -21-

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     The costs of  recordkeeping and reporting are estimated  here




in terins of managerial  hours,  technical hours, and clerical  hours




required to carry  out  those tasks.  The estimated burden  on




industry and EPA is  given  in Table 4 below.
                               -22-

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Table 4:  Costs of Recordkeeping  and  Reporting  for  Self-Certification
Managerial Technical
hours costs hours costs
Industry
Recordkeeping
-per test round* 2 $134 4 $172
-for each theo-
retical calcu-
lation 2 $134 4 $172
Reporting 2 $134 2 $BG
(per report)
EPA
Report review .5 $20.0 1 $26
(per report)
Clerical Total
hours costs cost

4 $63 $374.00


4 $68 $374.00
2 $34 $254.00

1 $10 $5G..OO
(Average hourly wage rates used  for  industry:   managerial  -  $67,  technical
$43, clerical - $17).  Average hourly wage  rates  used for  EPA:
managerial: $40, technical:  $26, clerical:  $10.   See  Appendix F
for calculation of wage rates).

*A "test round" includes one  set of  tests on  each medium of  concern:   air,
water, and end-product
Source:  EPA estimates

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      D.   Cost of Making a Theoretical  Calculation of the Level of




          Incidental PCD Production  and  Release




      As  mentioned earlier, EPA plans  to allow companies the




option of making a one tir.ie theoretical  calculation of the level




of incidental PCH production and release in place of testing.




However,  companies would be held to staying below the




concentration limits specified by EPA.   The threat of enforcement




action might  cause companies, particularly  those with PCB levels




near  the quantification limit, to forego the option of making a




theoretical calculation.








      The cost of making a theoretical calculation has been




estimated by  EPA t<-> be approximately  $1,014.  (EPA 1982)  (See




Table 5)   This cost includes the direct labor and overhead costs



of technical  and clerical staff to perform  and document a




theoretical calculation.  It is estimated that it would take an



experienced chemical engineer approximately 22 hours to 1) gather




data  on  raw materials,  2) analyze the reaction and reaction




conditions to determine whether PCBs were incidentally generated,




3) survey the reactor and other equipment to identify where, and




to what  extent,  PCBs could be released  to air,  water,  and end-




products,  and 4)  to document the calculation.   Four hours of




clerical  t?rne is  also estimated to be necessary for the




documentation of  this theoretical calculation.
                                -24-

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Table 5:  Cost of Making a Theoretical Calculation of the Level of Incidental PCB
          Production and Release (Per Process)
                                         Technical
                                       Hours    Costs
                                                            Clerical''
                                                          Hours    Costs
    Total
Hours     Costs
1.   Gather data on raw materials,
      e.g. information on
      composition and impurities

2.   Analyze reaction, reaction
      conditions to determine
      whether PC^s may be
      incidentally generated;
      do mass balance calculation;

3.   Survey reactor, reaction
      conditions to identify
      where PCBs may be
      released to air, water
                                                $344
                                                $344
                                                 $86
           $344
           5344
            $86
                                                                                                in
                                                                                                
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Table 6:  Estimated Costs to Industry of Filing an Exemption Petition (including
          research and testing costs)
Managerial Technical Clerical . Total Cost
hours costs hours costs hours costs (per petition)
Company 1* 1763 	 5200 	 208
Company 2* 	 $4,500 	 $11,500 	
Company 3* 280 $18,760 120 $5,160 60
Source: Industry estimates
[Note: The companies contacted to estimate costs of
	 $126,000
	 $16,000
$1,020 $24,940

filing exemption petitions
        did not give detailed breakdowns of cost estimates. Specifically, the
        wage rates used by Company 1, and hours estimated by Company 2 were not
        given.  Company 3 provided hour estimates of the cost; the wage rates
        used here to calculate total costs were:  $67/inanagerial hour,
        $43/technical hour, $17/clerical hour.]
*See Appendix D for a more detailed breakdown of exemption petition costs.

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    E.  Costs of Exemption Petitions



     For purposes of this analysis EPA surveyed three petitioners



to gather rough estimates of the cost of filing an exemption



petition.  Rough estimates of the costs to BPA of processing



exemption petitions are also presented here.








     TaOle 6 summarizes the reported costs to individual



companies of developing the data necessary, and documenting the



results, in order to file an exemption petition.  More detailed



oreakdowns are given in Appendix D.  It is evident from the



estimates received that the effort expended by companies in



making a "good faith" attempt to develop PCB-substitutes and



documenting their cases for "no unreasonable risk" may vary



significantly.








     For the three companies surveyed here the exemption petition



development cost ranged from $16,000 to $126,000.   It should be



noted that these costs could change if EPA decides to revise the



information requirement or the standard of proof to demonstrate a



"good faith effort" to develop substitutes and of  "no



unreasonable risk" to file exemption petitions in  the future.
                            -27-

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     The costs  to  EPA of processing exemption petitions on an




annual basis will  depend on the nuiriber submitted and on the




scrutiny given  to  eau'n petition.   Since there are likoLy to be




"economies of scale"  in processing petitions, unit costs will




probably fall as the  number of petitions submitted rises. Rough




estimates of the number of  managerial,  technical, and clerical




hours required  to  process an exemption petition are presented



here. These are broken down by function and .presented in Table 7




below.  The functional  cost categories include the costs of EPA




review, preparation for public hearings,  federal register notice




preparation, and correspondence costs.   The total estimated cost




of processing each exemption petition is estimated to be $7,126.
                              -28-

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Table 7:  Estimated Cost to EPA of  Processing  Exemption  Petitions  (on  a Per-
Petition Basis)
Managerial
hours costs
EPA review 10
Public Hearing 1
Preparation
Federal Reg- .1
ister Notice
Preparation
Correspondence 2
Total 14
$400
$ 40
$ 40

$ 30
$560
Technic al
hours costs
100
10
100

16
226
$2600
? 260
$2600

$ 416
$5876
Clerical Total
hours costs hours costs
10 $100 120
1 $ 10 12
50 $500 151

8 $ 00 26
69 $ 690 309
$3100
$ 310
$3140

$ 576
$ 7,126
         assuming managerial wage  rate  $  $40/hour
         assuming technical wage rate @ $26/hour
         assuming clerical wage rate f?  $10/hour
        (See Appendix F  for calculation of wage rates  for  EPA personnel)
Source:  EPA estimates

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..V.   BENEFITS  AND COSTS OF ALTERNATIVE  EXCLUSION OPTIONS






      As mentioned in the introduction,  the  incremental  costs and




benefits  estimated here will be calculated  using as a baseline




the scenario in which all PCBs would be banned  unless an




exemption request were approved by EPA.   The  implicit assumption




made  here is that all processes which would qualify for the




exclusion would also be granted their exemption requests,  and




would be  subject to the same disposal requirements  and  process




control requirements under both policies.









      Tne  incremental costs associated with  exclusion options are




1) the additional health risks resulting  £\. j;n any exposure to




PCBs  in processes which would have been subject to  the  ban had




they  not  been  excluded, 2) the costs incurred by companies to




self-certify and report that the level  of PCBs  in various  media




are below designated levels, and 3) the costs incurred  by  EPA to




spot  check records of companies which certify themselves.









    A.  Costs  of Self-Certification (Per  Process)
     The  incremental  costs of self-certification  will  vary




significantly  depending on how a company certifies  itself.




Companies  that make a theoretical calculation will  incur the




lowest costs to self-certify.  Companies that test  to  determine




PCB concentrations could incur very high costs  depending on the




number and complexity of processes affected, and  on the necessary




frequency  and  sophistication of tests performed.  The  sequential
                           -30-

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sampling  scheme recommended in the  EPA  test guidelines which




accompany the final  rule calls for  2-7  tests to be perfor.-ned on




each  sample  from each medium of concern (i.e.,  air releases,




water  effluents,  and products).   Also,  under the final rule




testing and/or the theoretical assessments  will have to be




repeated  each time there is a significant process change such




that  the  concentration of PCBs in release might change.  It is




estimated that a significant process change could be expected to




occur  once every 1-5 years.  (EPA 1982a)  Since so many variables




are invol.ved in these cost calculations,  the estimated range of




costs  fcr self-certification which  are  presented here are very




1arge.








      The  costs of testing a process range from  $844 per year,




assuming  the lowest  estimates of  testing costs  and assuming that




only  2 tests need to be performed on each medium of release, to




$13,720,  assuming the highest estimate  o£ testing costs to be




applicable,  and that 7 tests need to be done on each medium of




release.   (See Table 3)  If a significant process change occurs




once  T year,  so that annual recertification is  necessary,  then




the present  value of costs over 10  years ranges from $6,030 to




$98,023.   If a significant process change occurs only once every




four years then the  present value of testing costs for




recertification .rauld range from $1,814 to  $23,091.   (See Table




3)   The costs of  air sampling must be added to  the costs of




testing to calculate total certification costs.
                       -3?.-
                                                                 ^ _, jt^jpsjc^vcwf&mi*-*  ..j

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Table 8:  Present Value of  Testing  Costs  Over 10 .Year's (Per Process)*
 (using a 10% discount rate)
NTo. of Tests                  No.  of  Significant Process 'Changes
Required on Each
Medium of Release
                       .1  per  year         1  per 2 years       ]  per 4 years


Two                    ?6,030-$28,007     $3 , 313-$15 , 390     $1,814-58,426

Four                   $12,060-$56,013     $6, 627-S30, 730     $ 3 , 628-$16, 852

Seven                  $21 , 105-S38, 023    $11, 597-$53, 864     $6, 350-$23 , 091                        ,
                                                                                                  (N
 The sequential sampling  scheme  specified in the EPA testing guidelines requires that 7-1
tests be done on each medium  of  release
"Hie costs of air sampling are not  included here.

 It is
1982a)
3It is estimated that  "significant"  process changes will occur every 1 to 5 years.   (EPA

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     The costs of self-certification would be significantly less




if a company makes a theoretical assessment(s) to show that PCB




releases are below a certain  level.  The cost of making that




calculation has been estimated to be S1,U14 per process.   (See




Table 5)  The present value of the costs of conducting




theoretical assessments over  1U years range from $7,244, assuming




that significant process changes occur every year, to 52,180,




assuming that a significant process changes only happen once




every 4 years.  Given the choice between doing a theoretical




calculation and testing for certification, not all companies that




have processes in which PCBs  are generated would be willing to




self-certify using a theoretical calculation, especially it" they




feel that the level of PCBs in their processes may be variable




and/or near the maximum allowable concentration of PCBs.   But




manufacturers and processors  that are reasonably certain that




PCBs that are generateu in their processes remain below the




limits of quantification may  not feel that testing is necessary.








     Table y shows the recordkeeping costs' to industry associated




with testing and/or theoretical assessments for self-




certification.  Discounting the stream of recordkeeping costs




which could be incurred annually over a 10 year period, total




recordkeeping costs per process range from $804 assuming that




significant process changes occur once every four years, to




52,672, assuming that significant process changes occur once




every year.
                             -33-

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                            PREAMBLE

The following guidelines describe methods for performing testing
of chemical substances under the Toxic Substances Control Act
(TSCA).  These methods include the state-of-the-art for
evaluating certain properties, processes and effects of chemical
substances.  They are intended to provide guidance to test
sponsors in developing test protocols for compliance with test
rules issued under Section 4 of the TSCA.  They may also provide
guidance for testing which is unrelated to regulatory
requirements.  Support documentation is included for some of
these guidelines.  It is expected that additional guidelines and
support documentation will be incorporated later as the state-of-
the-art evolves or the need for them warrants.

Since these guidelines are divided into three sections which
cover the diverse areas of health effects, environmental effects
and chemical fate testing, there are some differences in the ways
they are presented.  These differences are explained in an
introduction prepared for each section.

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Table 9:  Recordkeeping Costs to Industry  For  Self-Certification
{Per-Process)**
Frequency of  Significant                 Present  Value*
Process Changes                              10  Years


One per Year  **                             $2,672

One per two years  **                        $1,468

One per four  years **                         $804
*Using a  10% discount  rate
**Assuming testing  will  he required on air  releases,  water
releases, and  end-products.
                           -34--

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     Table 10 presents  the costs of  reporting assuming  that




significant process changes occur every one  to  four years.  The




present value of  the combined  reporting costs to  industry and EPA




range from $665 per process if one report must  be  filed every




four years, to $2214 if one report must be submitted each year.








    B.  Benefits  Derived b'rom  an K".c lus ion Policy  (Per  Process)




     The benefits associated with the various exclusion policies




include 1) the cost savings to industry from not  having to shut




down or alter processes, or -file exemption petitions, 2) the




added certainty for industry in not  having to file annually for




exemption from the PCti  ban rule, and 3) the savings to  KPA by not




having to process exemption petitions each year.  We have not




attempted to quantify the potential  savings to  industry from




added certainty or from not having to shut down or alter




processes.  However, these benefits  should not  be  ignored in




considering alternative options.  Only the costs of filing an




exemption petition are quantified here.  Table 6 shows  that the




annual cost of filing an exemption petition may range from




S16,OOU to $132,440 (see Section III).  Assuming that these same




costs would have to be  incurred by a company each year over the




next 10 years for each process which does not fall within the




criteria for exclusion,  then the total cost of filing exemption




petitions over tnat period range from $114,313 to $946,226 per




process.   (See Table 11)
                            -35-

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Table 10:  Costs of  Reporting  for Self-Certificat ion

No
1
1
1
Present Value*
* *Industry
. of Reports Cost per
Required process
Report/Year $1,814
Report/2 Years $997
Report/4 Years $545
Over 10 Years
**EPA Review
Costs Per
Process Total
$400 $ 2,214
$220 $ 1, 217
$120 $ 665
 *assuming a 10% discount  rate
**see Table 2 for detailed calculation of these costs
                         -36-

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Taole 11:  Costs to Industry of Filing Exemption Petitions (per
process)
                                              1U years
              annual cost per petition**    *present value
Company
Company
Company
2
3
1
$16
524
$132
,000
,940
,440
$1
91
$9
14
78
46
,313
,185
,226
 *using a 1U% discount rate
**see Table 6 for detailed calculation of these costs
                            -37-

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    C•  Total  Incremental Costs  and Benefits of  Exclusion




        Policy Options   (For Process)




     The  incremental costs and benefits of  three exclusion policy




options are quantified here usiny as a baseline  the costs and




benefits  associated with an exemption petition process.




Obviously, many more policy options could be constructed with




various combinations of  self-certification  requirements.  The




cost of options not given here can be easily calculated using the




tables given.








     The  first alternative which is implicitly considered here is




the use of the exemption petition process to deal with all




incidentally generated PCUs including those in closed and




controlled processes.  This alternative is used as the baseline




against which  to measure costs and benefits of the other three




alternatives,  i.e. zero costs and benefits are implicitly




associated with this option.  The second alternative considered




is one in which EPA would only require that a firm perform a




theoretical calculation to certify that a suspect process




qualified for  the closed/controlled exclusion.  Under this




alternative EPA would not hold the firms to any stricter




standards of proof than the theoretical assessment results to




show that a process qualified for exclusion.  The third




alternative — the regulatory option chosen by EPA — requires




that a firm with a suspect process perform a theoretical




calculation and/or analytical tests to show that their process




qualifies for the closed/controlled exclusion.  Under this
                            -38-

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regulatory strategy EPA will hold  firms  to a stricter standard of



proof than under  the second alternative  to assure  that PCB



releases are below designated  levels; EPA has set  up a testing



protocol which  it will use for enforcement purposes under this



regulatory strategy.  The fourth alternative is one in which EPA



would require that testing be done for all processes attempting



to qualify for  exclusion.  Theoretical calculations would not be



acceptable to qualify for the exclusion  under this regulatory



approach.








     The-incremental costs and benefits  of each of the last three



alternatives are calculated including a  recordkeeping and



reporting requirement.  Under each of these regulatory



alternatives recertification would be required each time there



was a "significant process change".








     The greatest amount of uncertainty  in calculating



incremental costs and benefits is associated with  the third



alternative,  i.e. the one chosen by EPA.  Since firms have the



choice whether  to test or to perform a theoretical calculation



the total impact will depend largely on  how many choose each



option.   since  there was no data from which to estimate the



percentages of  firms which will choose each option EPA has



assumed  that  roughly 40-60% of the processes which file for



exclusion will perform theoretical assessments of the




concentrations of PCB releases rather than doing testing.
                            -39-

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     Table  12 p>"esen.ts  the  estimated  incremental  benefits  and




costs per process  for each  of  f~.j  three  alternatives




considered.  The present  value of  the  incremental  benefits  per




process  is  the same  for each alternative.   Discounted over  10




years at a  10% rate, incremental benefits  range from $165,225 to




$951,127.   The present  value of the incremental costs per  process




range from  $3,64y  to $337,036.  The low  end of the  range




represents  the costs of performing a  theoretical  calculation




initially,  and once every four years  thereafter when the process




changes.  The high end  of the  range represents the  costs of




testing annually to recertify.  A major  cost component  in  that




total is the costs of doing air sampling to determine PCB




releases to air.








     The net benefits for the  three alternatives  considered here




range from  $U to $y47,478 pe»- process.   It  is assumed that  net




benefits would never be negative since firms would  choose  the




least costly alternative available to them  to comply with  the




rule, i.e.  if it were going to cost them more to certify for




exclusion than to file an exemption petition each year  then the




firm would  choose to utilize the exemption petition




alternative.  Because of the discretion allowed firms under EPA's




exclusion rule (Alternative 3) tne range of net benefits for that




alternative is very large, i.e. net benefits range from  $0  to




$145.4 million.  The wide range is bounded at the high  end by




estimates of net benefits for firms that only have  to do




infrequent  theoretical calculations, and at the low end by
                           -40-

-------
T-ib.l <•  17:    Avor.i'jo  I re- ?'«'Mi'Mti ril  IV'tiori's  .'iii.l  < \ m t M I'.
( )v c i  I O  Yi-> .1 t r, )
                                                                            f'»r
                                                                                                               ,1  v.i I i
                                      Al tern-it- i vo  7
                                                                   Al t/>rn.it. I vo  .3
                                                                                                Al I >-i ii.il. j v
jlenof i Is
 "~f Nfiir;;Tnv

   KxiMiipt inn  IV r. it inn'
     (1 >•> t :i ft n wl'

   Cont.51  Snvorl by  no I:
     h.ivi nq  in .i\ tor
     r> r r«ns^ pr^xlnc t i (>n

   A'l'tP'l  cor t: .*>i nt y

   Kl'A
   I'ot. i tion  I'rocesr, i ny
     nnvin'j.s  (per  p^fit: inn)

              "Tnt. .TT"
                                      SIM, 11 J-$O, 'M 7.
 Co 3 t 3
   SoT'f Cc-rl:l f ir.-.Tf inn (t)r-   $ i. on
                                                                                                     $r.(),9!2
                                                                                                              1 , 127
                                                                                                    $r,4r, -

                                                                                                    $120-
    ir>0

$2,C>72

$1,01 4

  $400
                                                                                                                                                 f
                                                                                                                                                  I
 1
    i ri'.j  .1  !(>$ (lisc:onnt  rn
  Al t T n.ih i vo 2:   Only MiO'T et ic ol  .ir.ROsnirionr.s  r^-jui r-?'l  fijr oxolusinri
  Al t orn.it i v«? .3 '   Tllorlro^ Jo ol   .ir^Respment.  ami/or  f^-Jhinf}  .T:t:opt..-il)l p  Tnr  exclusioti,
  Al tprri.it I V" 4:   Only f^Bhinq  nrcepK.-ilil o  for »x':l union
  ( Al ( ^r n.ih i vo  1 — t If  .il t «»r-ii,Tt i vo  in winch nnl y  M»o  oxompfinti  p'.»Htif»n  pro'/onn W.TM nsoil  (
wiMi   (?lr>.qo^J .itifl con t. r« )l | .-.-I  pro<:»3sos  —  if  tno-l ns  Mio b.?^p| iti^  .T|.iinpf. whi<:h  tn m«-..T5Mt
bonorits of  the  ntti"r ,il I «rn.ir i vns : i . *> .  ?.orn C;/->S|;B  nn'l bonofits  .iro  i mpl iv i tl y  .if snr I nl <
al t orn.i t i ve )
  Tho r.in'jo of costs  in v-i y  1 ,irqo  R i nc o  mielor  this  .il tornnl: i uo  f i rmR  .iro 'livon  I ho <-lmi.-
tor.i  nr  porrnnn  .1 thoor "t i«- .il c ,il cnl .11 i n?i f> '(ii.il i  fy for  tlio  exclusion
                                                                                                             rl  with  this

                                                                                                              vlioilior to


-------
           Table  13:   Aggregate Incremental Benefits and Costs for Exclusion Options2 (Present value1 over 10 years)
                        (in millions of dollars)



                                           Alternative 2             Alternative 3                 Alternative 4
                                  51 processes-175 processes   51 processes-175 processes    51 processes-175 processes


!J           Benefits
!              INDUSTRY

i              Exemption Petition   5.8-45.9   -   20.0-157.5    5.8-45.9   -  20.0-157.5     5.8-45.9   -  20.0-157.5
i                Costs Saved
s
I*             Costs Saved by not    	           	              	         	               	       	
                having to alter
                cr cease process

              Added certainty       	           -—              -—•         —•               	       	

l-             EPA                       2.6   -    8.9               2.6   -   8.9                2.6   -   8.9
j).             Petition Processing
|'|       -      Savings
                  Total            8.4-48.5   -   28.9-166.4    8.4-48.5   -  28,9-166.4     8.4-48.5   -  28.9-166.4
 ij     '        Self Certification
                Costs tos
              INDUSTRY

              -Sampling &  Testing/
               Theoretical                                                                                                                    ft.
               Calculation          .1-.4     -     .4-1.3      6.1-8.6    -  20.8-29.73,4  12.0-16.9   -  41.3-58.1

              -Recordkeeping       .04-.14    -    .14-.47      .04-.14    -   .14-.47       .04-.14    -    .14-.47
              - Reporting           .03-.09         .09-.32      .03-.09    -   .f9-.32       .03-.09    -    .09-.32

            EPA

              -Report Review       .01-.02    -    .02-.7       .01-.02    -   .03-.7        .01-.02    -    .02-.7

              -Enforcement                  -—                           	                           	
                                           Total        .18-.69    -    .65-1.8            6.2-8.8    -  21.0-31.2  12.1-
                                                                   15.0   -  41.6-59.6



            fusing a 10% discount rate
            ^Alternative 2:   Only theoretical assessments required fot exclusion
             Alternative 3:   Theoretical assessment and/or testing acceptable for exclusion.
             Alternative 4:   Only testing acceptalbe for exclusion
             (Alternative 1 — the alternative in which only the exemption petition process vas _ ••    ,-. .-:-0l with  closed
            and  controlled processes -- is used as the baseline against which to measure cos'.s ;"ic D«=-srr.tr ^f the other
            Alternatives; i.e.  zero costs and benefits are implicitly associated with this alternative.
            JThe range  of costs is very largo since under this alternative firms are given the c^sicc ••••'••»:.•.•...• to tes1; ..'.
            yerEorm a theoretical calculation to qualify for the 'jxclusion
             The rarnje. oE costs presented hert assumes that 5U'i oE firms will pertorm thoorer. . .M , .  jVfSRmunts .im) lot w

-------
estimates of net Dene Cits. Cor firms* that must do frequent testing




(including air sampling) to qualify for exclusion.  It is




important to note that these net benefit figures do not include




the benefits in cost savings from added certainty and from not




having to alter or cease production, nor the costs of enforcement




for EPA.  It is likely that inclusion of these unquantified




benefits and costs would result in  larger net benefits since the




enforcement costs to Kt"A are not likely to outweigh the benefits




of added certainty and avoidance of production changes.








     The net benefits of Alternative 2 -~ the regulatory strategy




in which EPA would only require that theoretical calculations be




done for certification -- are obviously a lot higher than for




aither of the otner two alternatives.  The present value of net




benefits for that alternative ranges from $153,uys to $947,478




per process, whereas net benefits range from -$0 to $947,478




under the alternative chosen by EPA, and from -$0-$713,717 under




the alternative where only testing would be permitted to qualify




for exclusion.








    D.  Aggregate Incremental Costs and Benefits of Exclusion




        Policy Options




     Table 13 aggregates the incremental costs and benefits of




the three exclusion alternatives over the total number of




processes which may be affected oy the exclusion.  The cost




ranges within each category represent the 1U year discounted (10%




real rate) present value of benefits and costs for 51 processes
                            -43-

-------
to  175 processes.   Aggregate  incremental  benefits,  range  from




$8.4 million  for  51 processes,  to  $166.4  million  for  175




processes.  Incremental  benefits will  be  the  same  under all  of




the alternatives  considered.








     The  incremental costs  range from  .$18  million  under  the




second alter.-ative  (where only  theoretical  calculations need be




done for  self-certification),  to $59.6 million  under  Alternative




4, where  only testing would be  acceptable for certification  for




exclusion.  The range of  incremental costs  for  the  alternative




chosen by EPA is  given assuming that 50%  of the firms which




certify will do a theoretical calculation,  and  the  other  50% will




conduct testing for certification.  Under that  assumption  the




incremental costs associated with  the  EPA policy  (Alternative 3)




range from $6.18  million  to $31.2  million.








     Assuming 175 processes take advantage  of this  rul<;; n'< ing,




net benefits range  from -$0 under  Alternatives  3 and  4, to $166




million under Alternative 2 (where  theoretical  calculations  would




be sufficient for self-certification).  for the alternative




chosen by EPA net benefits  range from  $0  to $145.4  million if 175




processes take advantage of the exclusion (<.:•''lining one-half  of




the firms affected 
-------
        Table 14:  Summary Table:   Aggregate Net Benefits
                     (in millions of  dollars)
                                                         .,1
                                     Number of processes affected:

                                     51 processes   175 processes
Al ternative 2
(theoretical
7.71-48.32 27.1-165.75
assessments only)
Alternative 3
or theoretical
Alternative 4
permitted )
(testing and/
assessments )
(only testing

0-42. 32 0-145. 43

0-36. 44 0-124. 85

iAs measured here,  NET BENEFITS = [(Exemption Petition Cost
Savings to  Industry)  + (EPA petition processing savings)] -
(Self-Certification Costs  to Industry)

 '  ' 'It is assumed  that  Net Benefits will never be negative
since firms will choose the least cost alternative in order to
continue manufacturing,  i.e. if certification costs associated
with the exclusion  rule are greater than the costs of filing
exemption petitions annually then firms will choose to file
exemption petitions rather than certify for exclusion.
                                 -45-

-------
     As has been mentioned before, the range of net benefits




estimated here  does  not include the benefits derived  from  the




added certainty associated with an exclusion policy nor  the




benefits  from not having to cease or alter certain types of




processes.  Also,  enforcement costs to EPA (outside of report




review costs) have not  been quantified.  It is probably  safe to




say that  i€ these benefits and costs could be quantified the net




benefits of all  of the  alternatives would be increased




significantly.
                           -46-

-------
REFERENCES

G-1A.  1981a.   Chemical Manufacturers  Association.   Comments in
response  to  two advanced notices of  proposed rulemaking relating
'to the  manufacture of PCBs below 50  pprn.  'November 25.
Washington,  D.C.:   Office of Toxic Substances,  U.S.  Environmental
Protection  Agency.  EPA Docket Nbs.  OPTS  -  62013  and OPTS-62014.

G-1 A.  1901b.   Chemical Manufacturers  Association.   "The Analysis
of Chlorinated Biphenyls".  August. 21.  Washington,  D.C.:  Office
of Toxic  Substances,  U.S. Environmental Protection Agency.  EPA
Docket  No.  62017.

EPA.   1982a.   Environmental Protection  Agency.   Motes from
Economics and Technology Division Meeting.to discuss chemical
process changes for purposes of PCB  Closed/Controlled
Rulemaking.   September 9, 1982.  Washington,  D.C.

EPA.   1982b.   Environmental Protection  Agency.   Notes from
telephone conversation between George Wall ash,  OAQPS, EPA, and
Amy Moll, OTS,  regarding costs of doing stack sampling.
September 14,  1982.  Washington, D.C.

MHI.   1982a.   Midwest Research Institute.  Methods of Analysis
for Incidentally Generated PCBs - Literature Review and
Preliminary  Recommendations" (Draft  Interim  Report).  April 7,
Washington,  D.C.:   Office of Toxic Substances,  U.S.  Environmental
Protection  Agency.  EPA Docket No. 62013.

SRI.   1982.   SRI International.  Cost Estimates for
Implementation of  MR I Analytical Protocol^  for Itic identally
Generated PCBs.  August 23, 1982.  Washington,  D.C.:  Office of
Toxic 3ubstances,  U.S. Environmental Protection Agency.

Versar.   1982a.  Versar Materials Balance  Information in
Inadvertently Generated PCBs.  April 22.  Washington, D.C.:
Office  of Toxic Substances, U. S.. Environmental  Protection Agency.

Versar.   1982b .  Versar List of Plants  and  Chemical  Manufacturing
Processes Known or Suspected to Generate PCBs as  Impurities.
September 8,  1982  Memo to Liz Bryan, et. al.  Office  of Toxic
Substances,  U.S.  Environmental  Protection  Agency.
                                   -47-

-------
                            Appendix A

    End-Products of Manufacturing Processes in Which PCBs are
                      Incidentally Generated
                         (Versar,  1982a,b)
Dyes

    diaryl ide yellow

    dyes/pigments made with  halogenated  solvents

    halogenated dyes/pigments

    halogenated solvents,  unspecified

    phthalocyanine



Organic Chemicals

    al kyl benzene

    alkyl chlorophosphine  derivatives

    benzene chlorination (process)

    benzene phosphorous dichloride

    biphenyl derivatives

    carbon tetrachloride

    chlorinated aryl phosphines

    chlorinated naphthalene  derivatives

    chlorinated phosphate  ester

    chlorobutane derivatives

    chlorosilane derivatives

    chloroxylene derivatives

    diphenyl oxide and derivatives

    ethyl benzene

    halogenated solvents,  unspecified
                              -48-

-------
monochlorinated butylated diphenyl



monochlorinated terphenyls




oryano phosphorus trichloride derivative



pentachloranitrobenzene



ph.enyl chlorosiianes




phenyl siloxanes



polychlorinatea terphenyls



tetrachloraethylene



  uiTi chloride

-------
                   Summary  of Inudvortont Product Ion of I'CDu >>y  Concunt ri.»:uud (ppin)
2«i-SO*««
Sulitota 1
50-200


2ml -SOI)


500-1 200


1 2l)0-IO,OOO


HOI) -) 00,000


Sul, lota 1
.1 1
Typo of Number of
I'lui.-oaa Scenario I*
Cloaud 4 -
Controlled 4O -
Othef than 87 -
Clouud 4 -
Controlled 40 -
Othor than 87 -
<50 ppca T31 -
ClouoJ
Controlled
Olliar than
1 Closed
Control led
Othar tlian
CloBod
Controlled
Othur than
CloauJ
Control led
Other than
Clouud
Controlled
Othur than
>50


0
8

0
6

0
0

k
0


1



-
-
0
-
-
0
-
-
0
-
-
0
0
-

157
1
1
16

1
14

1
3

2
3


4
26
—
Prncuaauo
* Suunut to 2 t
15
153
332
15
153
332
•"§60

0
7

0
6

0


1


1


526
1
- 5
- 12
O
- 5
- 10
0
- 4
0
0
- 5
0
0
- 4
0


Quantity of I'Clla (Ilia)
t Ui:ciiatlo 1 Scunnrlo 2
0.7 - 1.0
6026 - 10,006
6056 - 17,030
0.7 - 1 U
6026 - 18,006
6049 - 17, (HO
1'CDa pur I'MK.'utia (lliu)
iicuiiiirlo 1 Scenario 2
0.2
173
78
0.2
173
70
(INK IIIIK
0
10,008

0
1140
•
0
0

5000
0


25000

59
-
-
0
-
-
0
-
-
0
-
-
0
0
-
/
125
14770 1O,

125 0
5011 1149

125 0
4,000

5125 5000
4000

25000
2'JOOO
r?, 044
0 - 4131
008 - 10,764
0
- 4131
- 1905
0
- 4.125
0
0
- 9125
0
0
- 29000
0 '

0
1259
0
0 -
192 -
0
0 -
0 -
0
5000 -
0 -
0
0
25000 -

(INK
- 125
- 92U

125
422

125
1333

2563
1333


7250

tINK
0
1440
0
0 -
192 -
0
0 -
0
0
5000 -
0
0
25000 -
0

- 026
- 903

826 ,
191

IOJ1


1825


7250


,027 - 81,081
* t nv: I u-lu-l In nioi'o  than one plin  category t>ucuu:iu thora  lu lii«.uf fluiuitt Inform^t ion to ileturminu thu coi'ruct III*D oatu«jory .

'•In i iii^ uijuiuiio tnu "control led" category -my Include (iroouauos  who to thu  (iro>luut cont ilna up to 25  ;.    I'CUa ( [iioi.eu
wliont  i>ru.liu:tu contain >2£ ppm  fall Into  the "oUior  than" catuwi  i>rocuuuuu uhuru
[.i •! l.i.;i :, ciintaln >50 [n'
-------
                            Appendix C

                    AIR SAMPLING (from stacks)
                          Cost Breakaown
         Act ivity
Hours
    5 Days (includes travel time)

    Travel Costs
    a.  Round-trip airfare y $200 each
    b.  5 nights hotel y $75/night
    c.  5 days of meals ? $34.50/Cay
    Data Reduction/Report Writing
200
Costs

1.
2.
3.
Sampling Equipment Preparation 100
Site Preparat ion/Equ ipment Installation
Four-Man Sampling Crew for 160
$4,300
S10,000
$6,880
   $800
 $1,500
   S 6 90
 $2,990

 $t 600
        TOTAL
         $32,770
SOURCE:  EPA 1982b
                                 -51-

-------
                         Appendix 3

            Zst±sa-£ir^r Ccsts ts Industry cf Filir.c an


-
1» Development of an Analytical Method to
Quantitate ?C2s in Organic Pigments
2,
2.
4.
5.
6.
7.
2.
9.
Analytical Testing Progvan ca Raw
Materials &. Finished Products
Process Heforaulation for Product
Compliance '
Record Seeping with Manufactured
Products i Purchased 2aw Materials "
Custocer Assurance Data Provided
en Products
Administrative Tine
Legal Drafting and Filing
riant Survey for Ixposure Levels
Coopany & Trade Association Meetings
TOTAL ACTIVITY IS FTLIXG EXEMPTION .
APPLICATION
EFTORT CPersor. Tears)
Technical

0.50


Q.2C


.

2.50
Secretarial



0.1


0.1
•
•
0.1
Managerial


.

0.1
0.1
0.1
0..1
0.1
0.85
A??
cc


•



•



Bote:  Specific hourly and financial  burden es-tiitatas are not
riven  here tn imin.tain. ccnfidentikli-tv
                                      -52-

-------
                         Appendix D (cont.)

             Estimated  Costs  to Industry of Filing  an
                         Exemption Petition
Company  2
                             Hours    Cost
Managerial                    —       $4,500
Technical
  Analytical  Testing         --       $9,500
  Travel                      —       $2,000
Total                                 $16,000
Company  3                    Hours    Cost*

Managerial                   280      $18,760
Technical                    120       $5,160
Clerical                      60       $1,020

Total                          ^  !     $24, 940
          '*Wage rates used to arrive  at cost  estimates:
    $67/managerial hour,  $43/technical hour, $17/clerical hour
                                     -53-

-------
                            Appendix  E

    Description of  Samples to be Tested for PCB Concentration


SAMPLE PRODUCT-1
Description:   Clear  Liquid
Extraction:   None
Cleanup:  None
Analysis:  Direct  in jection/CGC/EIMS
Anticipated Levels of PCB's:  1-100 ug/g.  All horaologs present
Anticipated Levels of Interferents:  Negligible

SAMPLE PRODUCT-2
Description:  Opaque,  viscous oily liquid
Extraction:   Dilute  1/100,  filter off solid (F2)
Cleanup:  Liquid  (Fl)  -  Florisil  column cleanup
          Solid  (F2)  - Digest with acid, refilter and extract
                       PCBs into  hexane
Analysis:  CGC/EIMS
Anticipated Levels of  PCBs:  100-1, 000 • ug/g, C^^Cl - C12H5C15
          presents
Anticipated Levels of  luterferents:   Twenty-five chlorinated
          species from chloroform through C^Cl^ are known to be
          present.   C^Clg  is present at about 40%; all
          chlorobenzenes are present, including CgClg at 10%.
          Sample  assays  at 50% chlorine

SAMPLE PRODUCT-3
Description:   Colored  Powder
Extraction:  Dissolve  in  heated I^SO^,  extract three times with
             hexane, dry  on  Na2S04 column, concentrate the
             appropriate  volume
Analysis:  CGC/EIMS
Anticipated Levels of  PCBs:   100 ug/g total; niixture of C^HjCl
          iso:ners
Anticipated Levels of  Interferences:  Minimal Chlorinated; may
          semivolatile hydrocarbons,  aromatics, and nitrogen
          bases

SAMPLE WATER-1
Description:  Industrial wastewater
Extraction:  Method 603
Cleanup:  Method 608
Analysis:  CGC/EIMS
Anticipated Levels of  PCBs:   50 ug/Liter total,  50 isomers over
          all homologs                       -
Anticipated Levels of  Interferences:   100-1,000 ug/Liter each of
          10 PNAs, 6 chlorinated pesticides, and 4 chlorophenols
                              -54-

-------
SAMPLE AIR-1
Description:
Extract ion:
              Florisil, aqueous  condensate,  and  hexarie  rinse  (3
              containers)  from modified  ^ethoci  5 train  (assume
              sample  is in-house)
              Florisil -- soxhlet,  4  hours.'  with  hexane
              Aqueous sample -  liquid-liquid  partition  with
              hexane-
              Hexane Rinse - back extract with water
              Combine all extracts
Cleanup:  ShaKe hexane extract  with concentrated sulfuric  acid
Analysis:  CGC/EIMS
Anticipated Levels of PCRs:  10 uq/m^  (10m  of air  sampled)
          total; 10 isomers C12HgCl throuqh C12H7C13; mostly  a
          mixture of the three  C^2HgCl  isomers
Anticipated Levels of Interferences:   similar levels of PCNs  and
          chlorobenzeries; some  chloraliphatics
                                  -55-

-------
                            Appendix F

           Calculation of Wage Rates for EPA Personnel

I.    Managerial hourly wage rates:

     0   Assumed GS-15 (step 5) annual salary based on."Proposed
         Pay Schedule for Federal White Collar Employees"
         (August, 1982):  $55,025

     0   Allow 50% overhead costs:
         $55,025 x 1.5 = 582,537

     0   2,080 manhours/year
         $82,537-r2,080 hrs. = $40/hour

II.  Technical hourly wage rates:

     0   Assumed GS 12/13 (step 5) annual salary based on
         "Proposed Pay Schedule for Federal White Collar
         Employees" (August, 1982): $33,290 + 39,586)
         2 = $36,438

     0   Allow 50%  overhead costs:
         $36,438 x 1.5 = $54,657

     0   2,080 manhours/year

     0   $54,657-^2,080  S26/hour

III.  Clerical hourly wage rates

     0   Assumed GS 4/5 (step 5) annual salarly based on
         "Proposed Pay Schedule for Federal white Collar
         Employees"  (August,  1982): ($13,541 + 15,153)
         2 = $14,347

     0   Allow 50% overhead costs:
         S14,347 x 1.5 = $21,520

     0   2,080 manhours/year

     0   21,520T 2,080 =$10/hour

-------
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