United States Office of Air Quality
Environmental Protection Planning and Standards
Agency Research Triangle Park, NC 27711
EPA-452/R-99O04
November 1999
Air
& EPA
Economic Impact Analysis of Proposed
Commercial and Industrial Solid Waste
Incineration Regulation
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Previous Page Blank
CONTENTS
Section Page
1 Introduction 1-1
1.1 Scope and Purpose 1-1
1.2 Organization of the Report 1-2
2 Waste Management Practices and Waste Incinerators 2-1
2.1 Background on Waste Management Practices 2-1
2.2 Incinerator Technology 2-3
2.2.1 Excess Air 2-4
2.2.2 Starved Air 2-5
2.2.3 Air Curtain 2-5
2.2.4 Fluidized Bed 2-5
2.2.5 Rotary Kiln 2-5
2.3 Incinerator Emissions 2-6
2.3.1 Particulate Matter 2-6
2.3.2 Metals 2-6
2.3.3 Acid Gases 2-6
2.3.4 Carbon Monoxide 2-6
2.3.5 Nitrogen Oxides 2-6
2.3.6 Organic Compounds 2-7
3 Profiles of Affected Units and Facilities 3-1
3.1 Affected Units , 3-1
3.2 Affected Facilities 3-2
3.3 Waste Incinerated and Alternative Management Practices 3-3
in
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CONTENTS (continued)
Section Page
4 Profiles of Affected Industries 4-1
4.1 Lumber and Wood Products (SIC 24) 4-1
4.1.1 Supply Side of the Industry 4-3
4.1.2 Demand Side of the Industry 4-7
4.1.3 Organization of the Industry 4-7
4.1.4 Markets and Trends : 4-9
4.2 Paper and Allied Products (SIC 26) 4-9
4.2.1 Supply Side of the Industry 4-11
4.2.2 Demand Side of the Industry 4-13
4.2.3 Organization of the Industry 4-16
4.2.4 Markets and Trends 4-16
4.3 Noncellulosic Man-Made Fibers Industry (SIC 2824) 4-17
4.3.1 Supply Side of the Industry 4-18
4.3.2 Demand Side of the Industry 4-22
4.3.3 Organization of the Industry 4-23
4.3.4 Markets and Trends 4-23
4.4 Pharmaceutical Preparations and Medicinal Chemicals and Botanical
Products (SIC 2833, 2834) 4-25
4.4.1 Supply Side of the Industry 4-25
4.4.2 Demand Side of the Industry 4-30
4.4.3 Organization of the Industry 4-31
4.4.4 Markets and Trends 4-33
4.5 Industrial Organic Chemicals Industry (SIC 2869) 4-34
4.5.1 Supply Side of the Industry 4-34
4.5.2 Demand Side of the Industry 4-39
4.5.3 Organization of the Industry 4-39
4.5.4 Markets and Trends 4-40
IV
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CONTENTS (continued)
Section Page
4.6 Fabricated Metals (SIC 34) 4-40
4.6.1 Supply Side of the Industry 4-41
4.6.2 Demand Side of the Industry 4-46
4.6.3 Organization of the Industry 4-46
4.6.4 Markets and Trends 4-47
5 Economic Impacts 5-1
5.1 Control Cost Estimates 5-1
5.1.1 Model Units 5-1
5.1.2 New Sources 5-2
5.2 Unit-Level Control Costs 5-4
5.3 Total Annual Control Costs 5-6
5.4 Alternative Disposal Methods Analysis 5-6
5.5 Market Impacts 5-10
5.6 Summary of Economic Impact Analysis 5-14
6 Regulatory Flexibility Analysis 6-1
6.1 Analysis of Facility-Level and Parent-Level Data 6-2
6.2 Small Business Impacts 6-4
References R-l
Appendix A Examples of Waste Being Incinerated at Affected Facilities A-l
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LIST OF FIGURES
Number Page
3-1 Distribution of Incinerator Unit Capacity in the Inventory Database 3-2
3-2 Characteristics of Incinerator Units in the Inventory Database 3-3
5-1 Market Equilibrium Without and With Regulation 5-13
6-1 Parent Size by Employment Range 6-4
6-2 Number of Parents by Sales Range 6-5
VI
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LIST OF TABLES
Number Page
2-1 Solid Waste Generation Recycling and Disposal Methods by State 2-2
2-2 National Waste Generation, Recycling, Incineration and Landfilling
Rates (1988-1998) 2-3
2-3 Facilities Engaged in Waste Management Practices 2-4
3-1 Incineration Technologies in Inventory Database 3-4
3-2 Affected Facilities by Industry Grouping and Government Sector 3-5
3-3 Breakdown of Affected Facilities in the Chemical Industry 3-6
3-4 Type of Waste Being Incinerated 3-7
3-5 Quantity of Waste Being Incinerated by Business Category 3-8
4-1 Lumber and Wood Products Markets Likely to be Affected by Regulation ... 4-2
4-2 Value of Shipments for the Lumber and Wood Products Industry (SIC 24),
1987-1996 4-2
4-3 Wastes and By-Products Incinerated at Lumber and Wood
Product Facilities 4-5
4-4 Inputs for the Lumber and Wood Products Industry (SIC 24),
1987-1996 4-6
4-5 Capacity Utilization Ratios for Lumber and Wood Products Industry,
1991-1996 4-6
4-6 Size of Establishments and Value of Shipments for the Lumber and Wood
Products Industry (SIC 24) 4-8
4-7 Measures of Market Concentration for Lumber and Wood
Products Markets 4-10
4-8 Paper and Allied Products Industry Markets Likely to be
Affected by Regulation 4-10
4-9 Value of Shipments for the Paper and Allied Products Industry (SIC 26),
1987-1996 4-11
4-10 Waste and By-Products Incinerated at Paper and Allied Products
Facilities 4-14
4-11 Inputs for the Paper and Allied Products Industry (SIC 26),
1987 to 1996 4-15
vn
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LIST OF TABLES (continued)
Number Page
4-12 Capacity Utilization Ratios for Paper and Allied Products Industry,
1991-1996 4-15
4-13 Size of Establishments and Value of Shipments for the Paper and
Allied Products Industry (SIC 26) 4-17
4-14 Measurements of Market Concentration for Paper and Allied
Products Markets 4-18
4-15 Value of Shipments for the Noncellulosic Man-Made Fibers Industry
(SIC 2824), 1987-1996 4-19
4-16 Wastes and By-Products Incinerated at Noncellulosic Man-Made
Fibers Facilities 4-20
4-17 Inputs for the Noncellulosic Man-Made Fibers Industry (SIC 2824),
1987-1996 4-21
4-18 Capacity Utilization Ratios for the Noncellulosic Man-Made Fibers
Industry, 1989-1996 4-22
4-19 Size of Establishments and Value of Shipments for the Noncellulosic
Man-Made Fibers Industry (SIC 2824) 4-24
4-20 Measures of Market Concentration for the Noncellulosic Man-Made Fibers
Industry (SIC 2824) 4-25
4-21 Value of Shipments for the Botanicals, Medicinals, and Pharmaceutical
Preparations Industries, 1987-1996 4-26
4-22 Wastes and Materials Incinerated at Botanicals, Medicinals,
and Pharmaceutical Preparations Facilities 4-28
4-23 Inputs for Botanical Products and Medicinal Chemicals Industry
(SIC 2833), 1987-1996 4-29
4-24 Inputs for Pharmaceutical Preparations Industry (SIC 2834), 1987-1996 4-30
4-25 Capacity Utilization Ratios for the Botanical Products and Medicinal
Chemicals (SIC 2833) and Pharmaceutical Preparations (SIC 2834)
Industries, 1991-1996 4-31
4-26 Size of Establishments and Value of Shipments for the Botanical Products
and Medicinal Chemicals (SIC 2833) and Pharmaceutical Preparations
(SIC 2834) Industries 4-32
4-27 Measures of Market Concentration for the Botanical Products and
Medicinal Chemicals (SIC 2833) and Pharmaceutical Preparations
(SIC 2834) Industries 4-33
vin
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LIST OF TABLES (continued)
Number Page
4-28 Value of Shipments for the Industrial Organic Chemicals, N.E.C. Industry
(SIC 2869), 1987-1996 4-35
4-29 Wastes and Materials Incinerated at Industrial Organic Chemicals
Facilities 4-37
4-30 Inputs for the Industrial Organic Chemicals Industry (SIC 2869),
1987 to 1996 4-38
4-31 Capacity Utilization Ratios for the Industrial Organic Chemicals
Industry (SIC 2869), 1991-1996 4-39
4-32 Size of Establishments and Value of Shipments for the Industrial
Organic Chemicals Industry (SIC 2869) 4-40
4-33 Measurements of Market Concentration for Industrial Organic
Chemicals Industry 4-41
4-34 Value of Shipments for the Fabricated Metals Industry (SIC 34),
1987 to 1996 4-42
4-35 Wastes and Materials Incinerated at Fabricated Metals Industry 4-44
4-36 Inputs for Fabricated Metals Industry (SIC 36), 1987 to 1996 4-45
4-37 Capacity Utilization Ratios for Fabricated Metals Industry, 1991-1996 4-46
4-38 Size of Establishments and Value of Shipments for the Fabricated
Metals Industry (SIC 36) 4-47
4-39 Measures of Market Concentration for Fabricated Metals Markets 4-48
5-1 Description of Model Incinerator Units 5-2
5-2 Distribution of Model Incinerator Units 5-3
5-3 Summary of Model Incinerator Costs (third-quarter 1998 dollars) 5-4
5-4a Total Annualized Unit-Level Control Costs for Floor Alternative 5-5
5-4b Total Annualized Unit-Level Control Costs for Above the Floor
Alternative 5-5
5-5 Total Annual Control Costs 5-7
5-6 Alternative Disposal Methods 5-9
5-7 Economic Feasibility of Alternative Waste Management (landfills) 5-11
6-1 Facility-Level and Parent-Level Data 6-3
6-2 Small Parent Companies 6-6
6-3 Floor Cost-to-Sales Ratio 6-7
IX
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SECTION 1
INTRODUCTION
The U.S. Environmental Protection Agency (EPA) is developing regulations under
Sections 111 and 129 of the Clean Air Act for commercial and industrial incineration units
that burn nonhazardous solid waste materials. Section 129 requires EPA to develop and
adopt "standards of performance" and "emission guidelines" for solid waste incineration
units pursuant to Section 111 of the Act. Section 11 l(b) requires EPA to establish standards
of performance for new sources, and Section 11 l(d) requires EPA to establish procedures for
submitting state plans to implement emission guidelines for existing sources. Under Section
129, the standards and guidelines adopted for solid waste incineration units pursuant to
Section 111 must reflect maximum achievable control technology (MACT). MACT is the
maximum degree of reduction in emissions of specified air pollutants, taking into
consideration the cost of achieving the reductions and any nonair quality health and
environmental impacts and energy requirements.
Section 129 specifies the following ten pollutants for which emission limits are
required: particulate matter, dioxins/furans, HC1, mercury, cadmium, lead, NOX, SO2, CO,
and opacity. Additionally, Section 129 requires an operator training and certification
program and siting criteria for new units. Because there is no major or area source distinction
under Section 129, units of all sizes are covered. EPA has developed a definition of
nonhazardous solid waste to clarify when a unit is subject to the Section 111 and 129
regulations.
1.1 Scope and Purpose
EPA identified 122 commercial and industrial incinerators located at 112 facilities.
Based on these 122 sources and MACT guidelines, the Agency has identified control
measures for the facilities to reduce HAP emissions. Control measures implemented to
comply with the proposed regulation will impose regulatory costs on affected facilities in the
commercial, industrial, and government sectors. The purpose of this report is to evaluate the
impact (both negative and positive) of these costs on facilities, the parent companies who
own the facilities, and the U.S. economy. Additionally, impacts on small entities are
1-1
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evaluated in compliance with the Regulatory Flexibility Act (RFA) and the Small Business
Regulatory Enforcement Fairness Act (SBREFA).
The standards and guidelines will apply to new and existing commercial and
industrial solid waste incineration units (CISWI) that bum nonhazardous solid waste. The
combustion of hazardous waste under the Resource Conservation and Recovery Act (RCRA)
is not covered. Additionally, to avoid any potential for overlapping regulations, incineration
units are not covered under the standards and guidelines if they are addressed by regulations
in 40 CFR Part 60 for municipal waste combustors (Subparts Cb, Ea, and Eb) or
hospital/medical/infectious waste incinerators (Subparts Ce and EC). Additionally, the
standards and guidelines do not apply to incineration units that burn greater than 90 percent
by weight pathological waste, which includes human and animal tissue and any associated
containers or bedding materials.
The population of affected incinerators used in this analysis was developed from the
EPA Inventory Database V.4—Incinerators/Flairs (referred to as the Inventory Database).
The incinerators contained in the inventory database are based on information from the
Aerometric Information Retrieval System (AIRS) and Ozone Transport Assessment Group
(OTAG) databases, state and local permit records, and the combustion source Information
Collection Request (ICR) conducted by the agency in 1997. The list of incinerator units
contained in the Inventory Database was reviewed and updated by industry and
environmental stakeholders as part of the Industrial Combustion Coordinated Rulemaking
(ICCR), chartered under the Federal Advisory Committee Act (FACA). Information to
support the small business impacts analysis was obtained from the American Business
Information database and the Small Business Administration.
1.2 Organization of the Report
The remainder of this report is divided into five sections that support and provide
details on the methodology and results of this analysis.
• Section 2 provides background on waste production and disposal methods.
Included is a discussion of incinerator technology and typical emissions and
control costs associated with commercial and industrial incinerators.
• Section 3 profiles the units and facilities affected by the regulation. Included in
the profile is a description of the type and quantity of waste being incinerated and
alternative waste management methods.
1-2
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Section 4 profiles the industries with the largest number of affected facilities.
Included are profiles of the lumber and wood products, paper and allied products,
noncellulosic manmade fibers, pharmaceutical, organic chemicals, and fabricated
metals industries.
Section 5 presents the economic analysis of the proposed regulation. The
regulatory control options and associated costs of compliance are described and
costs are linked to individual units in the incinerator population. Total cost of
compliance is estimated for each regulatory control option, and market impacts
are discussed. Alternative waste management options are also discussed in
Section 5.
Section 6 assesses the firm-level impacts of the proposed regulation, including an
initial regulatory flexibility analysis to evaluate the small business effects of the
regulation.
1-3
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SECTION 2
WASTE MANAGEMENT PRACTICES AND WASTE INCINERATORS
This section provides background information on waste management practices and
waste incinerators. Included is a discussion of waste incinerator technologies and typical
emissions generated by commercial and industrial waste incinerators.
2.1 Background on Waste Management Practices
The U.S. generates more than 360 million tons of solid waste per year. As shown in
Table 2-1, California, New York, and Florida are the top three waste generating states in the
U.S., as measured in terms of tons per year. Table 2-2 shows recent trends in total waste
generated and in recycling and waste disposal methods. In 1998, 61 percent of solid waste
was managed using landfills, 9 percent was incinerated, and the remaining 30 percent was
recycled (Glenn, 1998).
As shown in Table 2-1, the share of total waste (by tons) incinerated in the U.S. has
remained fairly constant since 1991. Currently, the Mid-Atlantic region and the South have
the highest incinerator capacity in the country, 27,650 ton/day (tpd) and 27,070 tpd,
respectively. These regions are followed by New England with 19,390 tpd and the Great
Lakes with 12,505 tpd. Incineration capacity west of the Mississippi is lower than 10,000
tpd. The majority of incinerated wastes in all parts of the country are handled by municipal
and commercial waste management organizations and are controlled regulated under separate
regulations for municipal waste combustors.
Approximately 80 percent of incinerated waste (by weight) is defined as
nonhazardous waste, also known as Subtitle D waste. Subtitle D waste includes any solid,
liquid, semi-solid, or contained gaseous material resulting from industrial, commercial, or
institutional operations that is not regulated as hazardous under Subtitle C of RCRA. The
large majority of Subtitle D waste is handed by municipal or private waste management
organizations. A survey of industrial Subtitle D establishments found that approximately
three-fourths of the waste management practices of Subtitle D establishments include off-site
2-1
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Table 2-1. Solid Waste Generation Recycling and Disposal Methods by State
State
Alabama*3
Alaska
Arizona*3
Arkansas'3
California*1'"
Colorado*1
Connecticut
Delaware*3
Dist. of Columbia
Floridad'f
Georgia*3
Hawaii*3'0
Idaho*3
Illinoisb'f
Indianadlf
Iowa*3
Kansas8
Kentucky0
Louisiana0
Maine '8
Maryland*3'*1
Massachusetts
Michigan*3'0
Minnesota
Mississippi*3'*1
Missouri*3'*1
Solid
Waste
(tons/yr)
5,549,000
560,000
5,700,000
4,287,000
45,000,000
3,084,000
2,950,000
1,189,000
246,000
23,617,000
14,645,000
2,125,000
886,000
13,386,000
7,171,000
3,462,000
4,250,000
4,418,000
3,894,000
1,339,000
5,329,000
7,160,000
13,500,000
4,780,000
2,360,000
7,896,000
Recycled3
23
7
18
36
30
18e
23
31
8
40
33
25
n/a
28
23
32
11
28
14
41
29
33
25
42
13
33
Incinerated
5
15
0
1
0
0
60
20
92
17
1
27
n/a
0
10
1
0
0
0
40
23
45
10
30
4
0
Landtllled
72
78
82
63
70
82
17
49
0
43
66
48
n/a
72
67
67
89
72
86
19
48
22
65
28
83
67
State
Montana*3'*1
Nebraska1"'8
Nevada*3
New Hampshireb|f
New Jersey*1
New Mexicob'd
New Yorkb'g
North Carolina*3'0
North Dakotaf
Ohiod
Oklahoma
Oregond'f
Pennsylvania
Rhode Island
South Carolina*3'0
South Dakota*3
Tennessee '
Texas '
Utahw
Vermont*3'*1
Virginia
Washington*1
West Virginia0
Wisconsin8
Wyoming
Total
Solid
Waste
(tons/yr)
1,039,000
2,000,000
3,955,000
1,200,000
8,200,000
1,400,000
28,800,000
9,843,000
510,000
12,339,000
2,500,000
3,836,000
9,440,000
477,000
8,361,000
510,000
9,496,000
21,738,000
3,760,000
600,000
9,000,000
6,527,000
2,000,000
3,622,000
530,000
340,466,000
Recycled3
5
27
15
25
45
12
39
26
21
19
12
28
26
23
34
42
40
n/a
19
30
35
48
20
36
5
30
Incinerated
2
0
0
14
18
0
12
1
0
1
10
7
21
0
3
0
4
n/a
8
15
18
4
0
3
0
9
Landfilled
93
73
85
61
37
88
49
73
79
80
78
65
53
77
63
58
56
n/a
73
55
47
48
80
61
95
61
"Includes yard trimmings composting; includes industrial and/or construction and demolition debris waste
on FY1996-97 data; dbased on 1996 data; eno official estimate—based on Recycle Colorado and BioCycle
1990 data
disposed of at MSW facilities; cbased
data; fbased on 1995 data; 8based on
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Table 2-2. National Waste Generation, Recycling, Incineration, and Landfilling
Rates (1988-1998)
Waste Survey
Year
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
Total Tons
Generated
250,000,000
269,000,000
293,613,000
280,675,000
291,742,000
306,866,000
322,879,000
326,709,000
327,460,000
340,466,000
Recycled3 (%)
n/a
8
11.5
14
17
19
23
27
28
30
Incinerated (%)
n/a
8
11.5
10
11
10
10
10
10
9
Landfilled(%)
n/a
84
77
76
72
71
67
63
62
61
Includes yard trimmings composting.
n/a = not available
Source: Glenn, Jim. 1998. "The State of Garbage: A BioCycle Nationwide Survey, Part I." BioCycle
39(4):32-43.
waste management. Table 2-3 indicates the percentage of U.S. facilities engaging in different
waste management practices. Land- based waste management practices account for the large
majority of on-site waste management activities.
As shown in Table 2-3, less than one percent of the industrial facilities surveyed in
1981 used incineration as a waste management practice. In addition, based on information
from the 1997 combustion source ICR, a significant number of incineration units have been
shut down between 1985 and 1995, with most of this waste being switched to land-based
management practices, such as on-site and off-site landfills.
2.2 Incinerator Technology
Industrial and commercial incinerators vary greatly in size, capacity, technology, and
materials combusted (EPA, 1998). However, the majority have capacities between 150 and
2,000 pounds per hour and are of single or multiple chamber design. Typically, these
incinerators are manually charged and intermittently fed. A few industrial incinerators are on
par with municipal waste combustors in both size and capacity (EPA, 1993). The most
2-3
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Table 2-3. Facilities Engaged in Waste Management Practices
Waste Management
Practice
Number of Faculties
Engaging in
Management Practice
Percentage of
Facilities Engaging in
Management Practice
Metric tons of
Subtitle D Waste
(millions)
On-site Landfills
On-site Surface
Impoundments
On-site Land
Application Units
On-site Waste Piles
On-site Recycling/
Reclaim/Reuses
On-site Incineration
On-site Tank Treatment
Off-site Practices3
Others'3
2,321
6,680
2,136
4,204
4,608
463
1,683
54,409
8,023
3.2%
9.2%
3.9%
5.8%
6.4%
0.6%
2.3%
75.1%
11.1%
78.4
6,700.0
90.1
69.9
n/a
n/a
n/a
n/a
n/a
"Sold or sent off-site for management.
"Includes unspecified practices, on-site underground injection, and underground boilers.
n/a = Not available
Source: Schroeder, Kirsten, Robert Clickner, and Esther Miller. 1987. Screening Survey of Industrial
Subtitle D Establishments: Draft Final Report. Submitted to EPA, Office of Solid Waste under
contract number 68-01-7359.
common types of commercial and industrial nonhazardous waste incinerators are described
below.
2.2.1 Excess Air
In excess air incinerators, waste is batch fed into a primary chamber and moved
through the unit by hydraulic transfer rams, oscillating grates, or a revolving hearth. As
materials combust, bottom ash may be discharged to a wet quench pit, and recirculated
combustion air and flue gas may help maintain desired temperatures. In some incinerators, a
secondary chamber provides additional flue gas residence time for improved fuel/carbon
burnout. Some facilities recover energy by sending waste heat to a boiler.
2-4
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2.2.2 Starved Air
Waste is batch fed into a starved air incinerator's primary chamber and moved
through by either hydraulic transfer rams or reciprocating grates. Bottom ash may be
discharged into a wet quench pit. Gases flow into a secondary chamber where they may be
recharged and circulated back into the primary chamber. As with excess air incinerators,
starved air incinerators may also send waste heat to a boiler for energy recovery. The two
types differ in that starved air units operate using less air in the primary chamber (EPA,
1993).
2.2.3 Air Curtain
Also known as trench combustors, air curtain incinerators forcefully project a curtain
of air across a pit in. which open burning occurs (EPA, 1993). The air curtain is meant to
increase combustion efficiency while reducing smoke and emissions of particulate matter.
The waste may also be underfired with air to decrease the amount of time needed for
complete combustion. These units are commonly used to combust wood wastes, yard wastes,
and clean lumber.
2.2.4 Fluidized Bed
In a fluidized bed incinerator, waste is either continuously or batch fed into a
combuster vessel equipped with a gas distribution plate. An undergird air windbox at the
bottom fluidizes the combustion bed. Undergird air is maintained at a high flow rate to
optimize combustion. Overfire air may be used to decrease the amount of time needed for
combustion.
2.2.5 Rotary Kiln
A rotary kiln incinerator is a steel shell slightly tilted on its horizontal axis into which
waste materials are typically batch fed. As the shell rotates, hot air is introduced into the
chamber and the waste material is "tumbled" by its own gravity. Rotation and length and
slope of the kiln determine the time needed for materials to combust (Santoleri, 1992).
Rotary kiln incinerators evolved from kilns used in the lime, cement, and aggregate
industries. They are generally considered to be the most flexible incineration systems
(Santoleri, 1992).
Other less common incineration technologies include open burn, liquid injection,
rotary hearth, and fixed hearth.
2-5
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2.3 Incinerator Emissions
Emissions from incinerators vary by incinerator type and materials combusted.
Consistent with Section 129, the ICCR Coordinating Committee (EPA, 1998) recommended
six general emissions categories for municipal, industrial, and commercial incinerators:
2.3.1 Paniculate Matter
The amount of particulate matter (PM) generated depends on the waste
characteristics, physical nature of the incinerator design, and the incinerator's operation.
During operation, solid flyash from incombustible matter in the unit may be released with the
flue gas.
2.3.2 Metals
Metals enter the incinerator through the waste stream. During combustion, metals
may be emitted in gaseous form or condense onto PM.
2.3.3 Acid Gases
The chief acid gases of concern are hydrogen chloride (HC1) and sulfur dioxide (SO2).
The presence of HC1 and SO2 in the flue gas is related to the amount of chlorine and sulfur in
the combusting materials and combustion air. HC1 derives from the chlorine in wastes such
as paper products and plastics. SO2 develops when items such as asphalt shingles, gypsum
products, some paper products, rubber, and other materials containing sulfur are combusted.
2.3.4 Carbon Monoxide
Carbon monoxide (CO) develops from carbon not fully oxidized into carbon dioxide
(CO2). CO can be a good indicator of combustion efficiency. For example, high levels of
CO might indicate that sufficiently high temperatures inside the unit were not maintained
long enough to completely convert CO to C02. Oxygen and air distribution vary by
incinerator type, causing levels of CO to vary as well.
2.3.5 Nitrogen Oxides
Nitrogen oxides (NOX) are formed during most combustion processes. For
incinerators, NOX is generated from oxidation of nitrogen in the wastes and from fixation of
atmospheric nitrogen.
2-6
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2.3.6 Organic Compounds
A host of toxic organic compounds exists in the waste or is generated during
combustion. They may condense, be absorbed onto PM, or be emitted as gases.
2-7
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SECTIONS
PROFILES OF AFFECTED UNITS AND FACILITIES
EPA identified 122 commercial, industrial, and government incinerators located at
112 facilities that combust nonhazardous solid wastes. The population of affected
incinerators included in the economic impact analysis was developed from the EPA Inventory
Database V.4—Incinerators/Flairs (referred to as the Inventory Database). The list of
incinerators contained in this database was developed from information in the AIRS and
OTAG databases, state and local permit records, and the combustion source ICR conducted
by the agency. The incinerator units contained in the EPA Inventory Database were reviewed
by industry and environmental stakeholders as part of the ICCR FACA process. In addition,
stakeholders contributed to the Inventory Database by identifying and including omitted
units.
3.1 Affected Units
Incinerators listed in the Inventory Database range in capacity from 6 to 40,000
pounds per hour. Figure 3-1 presents the distribution of units by capacity. Over half of the
units have capacities between 150 and 2,000 pounds per hour. Only two units have capacities
greater than 10,000 pounds per hour.
Figure 3-2 presents a summary of key characteristics for the incinerator units in the
Inventory Database. The majority of the units in the database have more than one chamber
and approximately two thirds of incinerator units in the database are described as being either
intermittently or single-batch fed. One third of the units are continuously fed; two of these
units incorporate automatic feeding technology. As shown in Figure 3-2c, over half of the
units burn solid materials.
3-1
-------
0.0%
Less than 50 50 to 149 150 to 349 350 to 999 1000 to 1999 2000 to 9999 more than
10000
Capacity (Ib/hr)
Figure 3-1. Distribution of Incinerator Unit Capacity in the Inventory Database
Of the many types of incinerators in the Inventory Database, most are classified as
excess air technology incinerators. Other incinerator technologies represented in the database
include fixed hearth, starved air, rotary kiln, and fluidized bed technologies. Table 3-1 shows
the number of each type of incinerator in the database.
3.2 Affected Facilities
The 122 incinerator units identified in the Inventory Database are located at 112
facilities. Table 3-2 presents the distribution of units and facilities by industry grouping. The
chemical industry accounts for approximately 30 percent of affected units and 28 percent of
affected facilities. Table 3-3 presents a breakdown of the affected facilities for SIC code 28
(chemical industry). Pharmaceuticals, inorganic chemicals, man-made fibers, and
3-2
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Intermittently
Fed
29 I
Continuously
Fed
30
Multiple
Chamber
47
Single Chamber
28
Single Batch Fed
24
a) Feed Type (N=83)
b) Chamber Type (N=75)
c) Materials Burned (N=113)
Figure 3-2. Characteristics of Incinerator Units in the Inventory Database
Note: Due to nonresponses, totals do not sum to 122.
plastics account for the majority of the units for SIC 28. The chemical industry also has the
highest number of incinerators per facility, averaging 1.2 units per facility. Most other
industries tend to have one incinerator per facility.
Other two-digit SIC code industries with more that three affected units include pulp
and paper, wood products, and fabricated metal. These industries, along with the
pharmaceutical, inorganic chemicals, and man-made fibers industries are profiled in
Section 4.
3.3 Waste Incinerated and Alternative Management Practices
There is substantial variation in the quantity and type of waste being incinerated by
units contained in the Inventory Database, reflecting the substantial diversity across the
affected industries. Table 3-4 lists the type of principal waste being incinerated. Facilities
burning waste petroleum products account for approximately 10 percent of facilities for
3-3
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Table 3-1. Incineration Technologies in Inventory Database
Technology Number in Database3
Excess Air 39
Fixed Hearth 16
Starved Air 12
Rotary Kiln 7
Fluidized Bed 4
Air Curtain (Forced Air; Trench Combuster) 3
Rotary Hearth 2
Liquid Injection 1
Open Burn 1
aTotal number of units does not total to 122 because of nonresponses.
Source: Industrial Combustion Coordinated Rulemaking (ICCR). 1998. Data/Information Submitted to
the Coordinating Committee at the Final Meeting of the Industrial Combustion Coordinated
Rulemaking Federal Advisory Committee. EPA Docket Numbers A-94-63, H-K-4b2
through-4b5. Research Triangle Park, North Carolina. September 16-17.
which information was available. Appendix A contains a more detailed description the
wastes included in each category in Table 3-4.
As shown in Table 3-5, wood products and pharmaceuticals account for the majority
of industrial waste being incinerated as measured by annual tons. Based on information in
the Inventory Database, waste wood products account for over 2,300 tons per year and waste
chemical products account for over 1,000 tons per year. Pharmaceutical products (medicines
and packaging) that have been returned or have expired also account for a large share of
waste chemical products being incinerated.
3-4
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Table 3-2. Affected Facilities by Industry Grouping and Government Sector
State
City
Military
University
Total
SIC
07
13
20
22
23
24
25
26
27
28
30
32
33
34
35
36
37
40
42
49
50
51
55
76
87
Agricultural Services
Oil & Gas Extraction
Food & Kindred Products
Textile Mill Products
Apparel
Lumber & Wood Products
Furniture & Fixtures
Paper & Allied Products
Printing & Publishing
Chemicals & Allied Products
Rubber & Misc. Plastics
Stone, Clay, Glass, & Concrete Products
Primary Metals Industries
Fabricated Metal Products
Industrial & Commercial Machinery
Electronic Equipment
Transportation Equipment
Railroad Transportation
Motor Freight Transport & Warehousing
Electric, Gas, & Sanitary Services
Durable Goods Wholesale Trade
Nondurable Goods Wholesale Trade
Automotive Dealers & Gas Stations
Misc. Repair Services
Engineering
State Governments
City Governments
Armed Services
Universities
# Facilities
3
2
1
2
1
8
1
6
1
32
2
1
1
9
3
2
4
2
1
3
3
1
1
• 1
1
2
5
8
5
112
Source: Industrial Combustion Coordinated Rulemaking (ICCR). 1998. Data/Information Submitted to the
Coordinating Committee at the Final Meeting of the Industrial Combustion Coordinated
Rulemaking Federal Advisory Committee. EPA Docket Numbers A-94-63, H-K-4b2 through -4b5.
Research Triangle Park, North Carolina. September 16-17.
3-5
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Table 3-3. Breakdown of Affected Facilities in the Chemical Industry
SIC
2800
2821
2822
2824
2833
2834
2869
2875
2879
2895
Total
Description
C&AP— Unclassified
Plastics Materials, Synthetic Resins, & Nonvulcanizable
Elastomers
Synthetic Rubber, Vulcanizable Elastomers
Man-Made Organic Fibers, Except Cellulosic
Medicinal Chemicals & Botanical Products
Pharmaceutical Preparations
Industrial Organic Chemicals, N.E.C.
Fertilizers, Mixing Only
Pesticides & Agricultural Chemicals, N.E.C.
Carbon Black
# Units
3
5
1
5
4
8
6
1
2
2
37
# Facilities
2
4
1
3
3
8
6
1
2
2
32
Source: Industrial Combustion Coordinated Rulemaking (ICCR). 1998. Data/Information Submitted to the
Coordinating Committee at the Final Meeting of the Industrial Combustion Coordinated
Rulemaking Federal Advisory Committee. EPA Docket Numbers A-94-63, II-K-4b2 through -4b5.
Research Triangle Park, North Carolina. September 16-17.
3-6
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Table 3-4. Type of Waste Being Incinerated
Type of Waste Number of Facilities'
Organic Sludge 3
Fumes and Gases 6
Waste Petroleum Products 8
Pharmaceutical Products 8
Paint Products 8
Paper and Wood Products 11
Other Biomass Products 6
Other 29
aDue to nonresponses, the total number of facilities does not equal 112.
Source: Industrial Combustion Coordinated Rulemaking (ICCR). 1998. Data/Information Submitted to
the Coordinating Committee at the Final Meeting of the Industrial Combustion Coordinated
Rulemaking Federal Advisory Committee. EPA Docket Numbers A-94-63, II-K-4b2 through-4b5.
Research Triangle Park, North Carolina. September 16-17.
3-7
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Table 3-5. Quantity of Waste Being Incinerated by Business Category8
Industry (SIC)
Oil & Gas Extraction (13)
Food (20)
Textile & Apparel (22 & 23)
Wood & Paper (24, 25, 26, & 27)
Chemicals (28)
Rubber (30)
Metals (33 & 34)
Equipment (35, 36, & 37)
Trans., Comm., Elec., Gas & San.
Svcs. (40s)
Government Facilities
Universities
# Units
2
1
1
9
24
1
5
6
3
9
5
Average Unit
Tons/year
41.9
26.0
1,617.8
4,698.5
1,590.7
1,275.3
152.3
42.0
2,835.5
248.4
73.7
Total
Industry
Tons/year
83.8
26.0
1,612.8
42,286.1
38,175.8
1,275.3
761.6
251.8
8,506.6
2,235.7
368.7
Maximum
Unit
Tons/year
75.0
26.0
1,612.8
30,300.8
3,647
1,275.3
540.0
112.5
8,400.0
1,248.0
256.23
Minimum
Unit
Tons/year
8.8
26.0
1,612.8
138.0
3.0
1,275.3
5.0
3.6
1.6
0.3
14.04
"Due to nonresponses, the total number of facilities does not equal 112.
Source: Industrial Combustion Coordinated Rulemaking (ICCR). 1998. Data/Information Submitted to the
Coordinating Committee at the Final Meeting of the Industrial Combustion Coordinated
Rulemaking Federal Advisory Committee. EPA Docket Numbers A-94-63, H-K-4b2 through -4b5.
Research Triangle Park, North Carolina. September 16-17.
3-8
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SECTION 4
PROFILES OF AFFECTED INDUSTRIES
This section contains profiles of the major industries affected by the proposed
commercial and industrial waste incinerator regulation. Included are profiles of the following
industries:
• Lumber and Wood Products (SIC 24),
• Paper and Allied Products (SIC 26),
• Noncellulosic Man-Made Fibers (SIC 2824),
• Pharmaceutical Preparations, Medicinal Chemicals, and Botanical Products
(SIC 2833, 2834),
• Industrial Organic Chemicals (SIC 2869), and
• Fabricated Metals (SIC 34).
4.1 Lumber and Wood Products (SIC 24)
The lumber and wood products industry is comprised of a large number of
establishments engaged in logging, operating sawmills and planing mills, and manufacturing
structural wood panels, wooden containers, and other wood products. Table 4-1 lists the
lumber and wood products markets that are likely to be affected by the commercial and
industrial waste incinerator proposed regulation. Most products are produced for the
domestic market, but exports increasingly account for a larger proportion of sales (DRI et al.,
1998). The largest consumers of lumber and wood products are the remodeling and
construction industries.
In 1996, the lumber and wood products industry's total value of shipments was
$85,724.0 million. As seen in Table 4-2, shipment values increased steadily through the late
1980s before declining slightly through the early 1990s as new construction starts and
furniture purchases declined (DRI et al., 1998). Shipment values recovered, however, as the
economy expanded in the mid-1990s.
4-1
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Table 4-1. Lumber and Wood Products Markets Likely to Be Affected by the
Regulation
SIC Description
2421 Sawmills and Planing Mills, General
2434 Wood Kitchen Cabinets
2449 Wood Containers, N.E.C.
2491 Wood Preserving
2493 Reconstituted Wood Products
2499 Wood Products, N.E.C.
Source: Industrial Combustion Coordinated Rulemaking (ICCR). 1998. Data/Information Submitted to the
Coordinating Committee at the Final Meeting of the Industrial Combustion Coordinated Rulemaking
Federal Advisory Committee. EPA Docket Numbers A-94-63, II-K-4b2 through -4b5. Research
Triangle Park. North Carolina. September 16-17.
Table 4-2. Value of Shipments for the Lumber and Wood Products Industry (SIC 24),
1987-1996
Year
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
Value of Shipments (1992 Smillion)
85,383.4
85,381.2
85,656.8
86,203.0
81,666.0
81,564.8
74,379.6
79,602.0
87,574.6
85.724.0
Sources: U.S. Department of Commerce. Bureau of the Census. 1996b. 7992 Census of Manufactures,
Subject Series: General Summary. Washington. DC: General Printing Office.
U.S. Department of Commerce. Bureau of the Census. 1990-1998. Annual Survey of Manufactures
[Multiple Years]. Washington, DC: Government Printing Office.
4-2
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4.1.1 Supply Side of the Industry
4.1.1.1 Production Processes
Sawn lumber. Sawn lumber is softwood or hardwood trimmed at a sawmill for future
uses in construction, flooring, furniture, or other markets. Softwoods, such as douglas fir and
spruce, are used for framing in residential or light-commercial construction. Hardwoods, such
as maple and oak, are used in flooring, furniture, crating, and other applications.
Lumber is prepared at mills using a four-step process. First, logs are debarked and
trimmed into cants, or partially finished lumber. The cants are then cut to specific lengths.
Logs are generally kept wet during storage to prevent cracking and to keep them supple.
However, after being cut, the boards undergo a drying process, either in open air or in a kiln,
to reduce the moisture content. The drying process may take several months and varies
according to the plant's climate and the process used. Finally, the lumber may be treated with
a surface protectant to prevent sap stains and prepare it for export (EPA, 1995a).
Reconstituted wood products. Reconstituted wood products, such as particleboard,
medium density fiberboard, hardboard, and oriented strandboard, are made from raw wood
that is combined with resins and other additives and processed into boards. The size of the
wood particles used varies from sawdust to strands of wood. Once combined, the ingredients
are formed into a mat and then, at high temperatures, pressed into a board. A final finishing
process prepares the boards for delivery.
Wood preserving. Wood is treated with preservative to protect it from mechanical,
physical, and chemical influences (EPA, 1995a). Treatment agents are either water-based
inorganics, such as copper arsenate (78 percent), or oil-borne organics, such as creosote
(21 percent) (EPA, 1995a). Wood preservatives are usually applied using a pressure
treatment process or a dipping tank. Producers achieve the best results when the lumber's
moisture content is reduced to a point where the preservative can be easily soaked into the
wood. Treated wood is then placed in a kiln or stacked in a low-humidity climate to dry.
4.1.1.2 Types of Output
The lumber and wood products industry produces essential inputs into the
construction, remodeling, and furniture sectors. Lumber and reconstituted wood products are
produced in an array of sizes and can be treated to enhance their value and shelf-life. These
products are intermediate goods; they are purchased by other industries and incorporated into
-------
higher value-added products. In addition to sawmills, the lumber and wood products industry
includes kitchen cabinets, wood containers, and other wooden products used for fabricating
finished goods for immediate consumption.
4.1.1.3 Major By-Products and Co-Products
Shavings, sawdust, and wood chips are the principal co-products of sawn lumber.
Paper mills and reconstituted wood products frequently purchase this material as an input.
By-products are limited to emissions from the drying process and from use of preservatives.
Very little solid waste is generated by reconstituted wood products manufacturing.
Because the production process incorporates all parts of the sawn log, little is left over as
waste. However, air emissions from dryers are a source of emissions.
Wood preserving results in two types of by-products: air emissions and process debris.
As preservatives dry, either in a kiln or outside, they emit various chemicals into the air. At
plants with dipping processes, wood chips, stones, and other debris build up in the dipping
tank. The debris is routinely collected and disposed of.
Based on the Inventory Database, eight units at lumber and wood products plants
incinerate some portion of their industrial waste (Table 4-3). Generally, units are incinerating
unreclaimed sawdust, chips, filters, dust, and natural gas. For the three units for which
capacity information is available, approximately 2,340.5 tons of material are incinerated
annually.
4.1.1.4 Costs of Production
The costs of production for the wood products industry fluctuate with the demand for
the industry's products. Most notably, the costs of production steadily declined during the
early 1990s as recession stifled furniture purchases and new housing starts (see Table 4-4).
Overall, employment in the lumber and wood products industry increased approximately 6
percent from 1987 to 1996. During this same period payroll costs decreased 12 percent,
indicating a decrease in average annual income per employee. New capital investment and
costs of materials generally moved in tandem over the 10-year-period, increasing from 1987
to 1990 and 1994 to 1996 and decreasing 1991 to 1993.
4-4
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Table 4-3. Wastes and By-Products Incinerated at Lumber and Wood Products
Facilities
Facility Name
SIC
Materials Combusted
Pcrecntagc
Annual
Input"
Waste Dcseription
Atlantic Wood
Industries. Inc.
Burroughs-Ross
Colvillc Company
Haas Cabinets
2491 Wood: Timber: Mostly Bark
2499 Wood: Timber: Little Bark
2434 Industrial Solid Waste, N.H.
Natural Gas
100
100
95
5
Fiberglass overspray-
filters loaded with
overspray from
finish system
Home-Crest
Corporation
L.D. McFarland
La. Skid & Pallet
Company of BR
Service Products. Inc.
Zoscl Lumber
Company
2434
2499
2449
2493
2421
Industrial Solid Waste, N.H.
Natural Gas
Wood: Timber: Mostly Bark
No. 4 Fuel Oil
Wood: Dried Milled Lumber
Natural Gas
Wood Adulterated Coproduct
Wood: Timber: Mostly Bark
70 Paint filters and
varnish dust
.}()
100
1
99
10
90 Hardboard
100
"Calculated on a volume basis.
Source: Industrial Combustion Coordinated Rulcmaking (ICCR). 1998. Data/Information Submitted to the
Coordinating Committee at the Final Meeting of the Industrial Combustion Coordinated Rulemaking
Federal Advisor}1 Committee. EPA Docket Numbers A-94-63. II-K-4b2 through -4b5. Research
Triangle Park, North Carolina. September 16-17.
4.1.1.5
Capacity Utilization
Full production capacity is broadly defined as the maximum level of production an
establishment can obtain under normal operating conditions. The capacity utilization ratio is
the ratio of the actual production level to the full production level. Table 4-5 presents the
historical trends in capacity utilization for the lumber and wood products industry. The
varying capacity utilization ratios reflect adjusting production levels and new production
4-5
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Table 4-4. Inputs for the Lumber and Wood Products Industry (SIC 24), 1987-1996
Year
1987
1988
1989
'1990
1991
1992
1993
1994
1995
1996
Quantity
(thousands)
698.4
702.4
684.2
677.7
623.6
655.8
685.4
718.5
740.2
738.7
Labor
Payroll
(1992 Smillion)
SIC 24, Lumber and
15,555.5
15,800.0
15,381.3
15,612.9
14,675.8
13,881.8
11,798.9
12,212.5
13,915.4
13.933.7
Materials
(1992 Smillion)
Wood Products
50,509.2
51,341.0
51,742.2
53,369.0
50,416.3
48,570.0
45,300.3
48,535.6
53,732.9
52.450.1
New Capital
Investment
(1992 Smillion)
2,234.3
2,099,4
2,329.9
2,315.3
2,006.5
1,760.1
1,538.1
1,956.8
2,553.1
2.659.9
Sources: U.S. Department of Commerce, Bureau of the Census. 1996b. 1992 Census of Manufactures,
Subject Series: General Summary. Washington, DC: Government Printing Office.
U.S. Department of Commerce, Bureau of the Census. 1990-1998. Annual Survey of Manufactures
[Multiple Years]. Washington, DC: Government Printing Office.
Table 4-5. Capacity Utilization Ratios for Lumber and Wood Products Industry, 1991
to 1996
1991 1992 1993 1994 1995 1996
78 80 81 80 77 78
Source: U.S. Department of Commerce, Bureau of the Census. 1998. Survey of Plant Capacity: 1996.
Washington. DC: Government Printing Office.
4-6
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facilities going on- or off-line. The capacity utilization ratio for the industry in 1996 was 78;
the 6-year average was 79.
4.1.2 Demand Side of the Industry
4.1.2.1 Product Characteristics
Lumber and wood products are valued both for their physical attributes and their
relative low-cost. Woods are available in varying degrees of durability, shades, and sizes and
can be easily shaped. Lumber and wood products have long been the principal raw materials
for the residential and light commercial construction industries, the remodeling industry, and
the furniture industry. Wood is readily available because over one-third of the United States is
forested. The ready supply of wood reduces its costs.
4.1.2.2 Uses and Consumers of Products
Lumber and wood products are used in a wide range of applications, including:
residential and noresidential construction; repair/remodeling and home improvement projects;
manufactured housing; millwork and wood products; pulp, paper, and paperboard mills; toys
and sporting goods; kitchen cabinets; crates and other wooden containers; office and
household furniture; and motor homes and recreational vehicles (DRI et al., 1998).
4.1.3 Organization of the Industry
4.1.3.1 Firm Characteristics
In 1992, 33,878 companies produced lumber and wood products and operated 35,807
facilities, as shown in Table 4-6. By way of comparison, in 1987, 32,014 companies
controlled 33,987 facilities. About two-thirds of all establishments have nine or fewer
employees. Between 1987 and 1992, the number of facilities with nine or fewer employees
increased more than 10 percent to 23,590. These facilities' share of the value of shipments
increased about 18.3 percent. Although the number of establishments employing 100 to 249
people decreased during that time, that category's shipment value jumped nearly 40 percent.
The remaining facility categories lost both facilities and value of shipment.
4-7
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Table 4-6. Size of Establishments and Value of Shipments for the Lumber and Wood
Products Industry (SIC 24)
Average Number of Employees
in Establishment
1 to 4 employees
5 to 9 employees
10 to 19 employees
20 to 49 employees
50 to 99 employees
100 to 249 employees
250 to 499 employees
500 to 999 employees
1,000 to 2,499 employees
2.500 or more employees
Total
19!
Number of
Facilities
14,562
6,702
5 353
4,160
1.702
1,190
260
47
4
2
33.987
*7
Value of
Shipments
(1992
Smillion)
2,769.7
4,264.4
6 982 3
28,551.3
(D)
24,583.3
12,093.4
3,907.9
2,231.3
(D)
85,383.4
19<
Number of
Facilities
15,921
7,669
5 331
3,924
1,615
1,082
219
39
4
3
35.807
n
Value of
Shipments
(1992
Smillion)
3,288.9
5,030.4
6 902 8
26,964.9
(D)
34,051.4
(D)
3,331.4
598.6
1,396.4
81.564.8
(D) = undisclosed
Sources: U.S. Department of Commerce, Bureau of the Census. 1991. 1987 Census of Manufactures,
Subject Series: General Summary. Washington, DC: Government Printing Office.
U.S. Department of Commerce. Bureau of the Census. 1996b. 1992 Census of Manufactures,
Subject Series: General Summary. Washington, DC: Government Printing Office.
Market structure can affect the size and distribution of regulatory impacts.
Concentration ratios are often used to evaluate the degree of competition in a market, with
low concentration indicating the presence of a competitive market, and higher concentration
suggesting less competitive markets. Firms in less-concentrated industries are more likely to
be price takers, while firms in more-concentrated industries are more likely to influence
market prices. Typical measures include four- and eight-firm concentration ratios (CR4 and
CR8) and Herfindahl-Hirschman indices (HHI). The four-firm concentration ratios for lumber
and wood products subsectors represented in the incinerator inventory database range
between 13 and 50, meaning that, in each subsector, the top firms' combined sales ranged
4-8
-------
from 13 to 50 percent of that respective subsector's total sales. The eight-firm concentration
ratios ranged from 47 to 66 (U.S. Dept. of Commerce, 1995b). The CR4 and CR8 indicate
that a few firms control 50 percent or less of the market.
Although there is no objective criterion for determining market structure based on the
values of concentration ratios, the 1992 Department of Justice's (DOJ's) Horizontal Merger
Guidelines provide criteria for doing so based on HHIs. According to these criteria, industries
with HHIs below 1,000 are considered unconcentrated (i.e., more competitive), those with
HHIs between 1,000 and 1,800 are considered moderately concentrated (i.e., moderately
competitive), and those with HHIs above 1,800 are considered highly concentrated (i.e., less
competitive) (DOT, 1992). Firms in less-concentrated industries are more likely to be price
takers, while firms in more-concentrated industries are more likely to be able to influence
market prices. The unconcentrated nature of the markets is also indicated by HHIs of 1,000
or less (DOJ, 1992). Table 4-7 presents various measures of market concentration for sectors
within the lumber and wood products industry. All lumber and wood products industries are
considered unconcentrated and competitive.
4.1.4 Markets and Trends
The U.S. market for lumber and wood products is maturing, and manufacturers are
looking to enter other markets. Although 91 percent of the industry's products are consumed
by the U.S. domestic market, the share of exports increases each year. Exports more than
doubled in value from $3 billion in 1986 to $7.3 billion in 1996 (DRI et al., 1998). The U.S.
market grew only 2 percent during that time frame. American manufacturers are focusing on
growing construction markets in Canada, Mexico, and the Pacific Rim, with products such as
durable hardwood veneer products and reconstituted wood boards (EPA, 1995a).
4.2 Paper and Allied Products (SIC 26)
The paper and allied products industry is one of the largest manufacturing industries in
the United States. In 1996, the industry shipped nearly $150 billion in paper commodities.
The industry produces a wide range of wood pulp, primary paper products, and paperboard
products such as: printing and writing papers, industrial papers, tissues, container board, and
boxboard. The industry also includes manufacturers that "convert"primary paper and
paperboard into finished products like envelopes, packaging, and shipping containers (EPA,
4-9
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Table 4-7. Measures of Market Concentration for Lumber and Wood Products
Markets
Number of Number of
SIC Dcseription CR4 CR8 HHI Companies Facilities
2421 Saw Mills and Planing 14 20 78 5,302 6004
Mills
2434 Wood Kitchen 19 25 156 4,303 4323
Cabinets
2449 Wood Containers, 34 47 414 217 225
N.E.C.
2491
2493
2499
Wood Preserving
Reconstituted Wood
Products
Wood Products,
N.E.C.
17
50
13
28
66
19
152
765
70
408
193
2,656
486
288
2754
Sources: U.S. Department of Commerce, Bureau of (he Census. 1995b. 1992 Concentration Ratios in
Manufacturing. Washington. DC: Government Printing Office.
U.S. Department of Commerce, Bureau of the Census. 1996b. 1992 Census of Manufactures,
Subject Scries: General Summary. Washington, DC: Government Printing Office.
1995b). Paper and allied products industry subsectors that are likely to be affected by the
commercial and industrial waste incinerator proposed regulation are listed in Table 4-8.
Table 4-8. Paper and Allied Products Industry Markets Likely to Be Affected by
Regulation
SIC Industry Description
2611 Pulp Mills
2621 Paper Mills
2676 Sanitary Paper Products
Source: Industrial Combustion Coordinated Rulcmaking (ICCR). 1998. Data/Information Submitted to the
Coordinating Committee at (he Final Meeting of the Industrial Combustion Coordinated Rulcmaking
Federal Advisory Committee. EPA Docket Numbers A-94-63. II-K-4b2 through -4b5. Research
Triangle Park, North Carolina. September 16-17.
4-10
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Table 4-9 lists the paper and allied products industry's value of shipments from 1987
to 1996. The industry's performance is tied to raw material prices, labor conditions, and
worldwide inventories and demand (EPA, 1995b). Performance over the 10-year period was
typical of most manufacturing industries. The industry expanded in the late 1980s, then
contracted as demand tapered off as the industry suffered recessionary effects. In the two
years after 1994, the industry's value of shipments increased 9.3 percent to $149.5 billion.
Table 4-9. Value of Shipments for the Paper and Allied Products Industry (SIC 26),
1987-1996
Year Value of Shipments (1992 Smillion)
1987 129,927.8
1988 136,829,4
1989 138,978.3
1990 136,175.7
1991 132,225.0
1992 133,200.7
1993 131.362.2
1994 136,879.9
1995 135,470.3
1996 149,517.1
Sources: U.S. Department of Commerce, Bureau of the Census. 1996b. 7992 Census of Manufactures,
Subject Series: General Sitmmarv. Washington. DC: Government Priming Office.
U.S. Department of Commerce, Bureau of the Census. 1990-1998. Annual Survey of Manufactures,
[Multiple Years]. Washington, DC: Government Printing Office.
4.2.1 Supply Side of the Industry
4.2.1.1 Production Process
The manufacturing paper and allied products industry is capital- and resource-
intensive, consuming large amounts of pulp wood and water in the manufacturing process.
Approximately half of all paper and allied products establishments are integrated facilities,
4-11
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meaning that they produce both pulp and paper on-site. The remaining half produce only
paper products; few facilities produce only pulp (EPA, 1995b).
The paper and paperboard manufacturing process can be divided into three general
steps: pulp making, pulp processing, and paper/paperboard production. Paper and paperboard
are manufactured using what is essentially the same process. The principal difference between
the two products is that paperboard is thicker than paper's 0.3 mm.
Producers manufacture pulp mixtures by using chemicals, machines, or both to reduce
raw material into small fibers. In the case of wood, the most common pulping material,
chemical pulping actions release cellulose fibers by selectively destroying the chemical bonds
that bind the fibers together (EPA, 1995b). Impurities are removed from the pulp which then
may be bleached to improve brightness. Only about 20 percent of pulp and paper mills
practice bleaching (EPA, 1995b). The pulp may also be further processed to aid in the paper-
making process.
During the paper-making stage, the pulp is strengthened and then converted into
paper. Pulp can be combined with dyes, resins, filler materials, or other additives to better
fulfill specifications for the final product. Next, the water is removed from the pulp, leaving
the pulp on a wire or wire mesh conveyor. The fibers bond together as they are carried
through heated presses and rollers. The paper is stored on large rolls before being shipped for
conversion into another product, such as envelopes and boxes, or cut into paper sheets for
immediate consumption.
4.2.1.2 Types of Output
The paper and allied products industry's output ranges from writing papers to
containers and packaging. Paper products include: printing and writing papers; paperboard
boxes; corrugated and solid fiber boxes; fiber cans, drums, and similar products; sanitary food
containers; building paper; packaging; bags; sanitary paper napkins; envelopes; stationary
products; and other converted paper products.
4.2.1.3 Major By-Products and Co-Products
The paper and allied products industry is the largest user of industrial process water in
the U.S. In 1988, a typical mill used between 16,000 and 17,000 gallons of water per ton of
paper produced. The equivalent amount of waste water discharged each day is about 16
million cubic meters (EPA, 1995b). Most facilities operate waste water treatment facilities on
4-12
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site to remove biological oxygen demand (BOD), total suspended solids (TSS), and other
pollutants before discharging the water into a nearby waterway.
Based on the Inventory Database, six units at pulp and paper facilities incinerate some
portion of their industrial waste (Table 4-10). Generally, units are incinerating fuels, industrial
wastewater sludge, process gases, and process liquids. For the three units for which capacity
information is available, approximately 36,060 tons of material are incinerated annually.
4.2.1.4 Costs of Production
Historical statistics for the costs of production for the paper and allied products
industry are listed in Table 4-11. From 1987 to 1996, industry payroll generally ranged from
approximately $19 to 20 billion. Employment peaked at 633,200 persons in 1989 and
declined slightly to 630,600 persons by 1996. Materials costs averaged $74.4 billion a year
and new capital investment averaged $8.3 billion a year.
4.2.1.5 Capacity Utilization
Table 4-12 presents the trend in capacity utilization for the paper and allied products
industry. The varying capacities reflect adjusting production levels and new production
facilities going on- or off-line. The average capacity utilization ratio for the paper and allied
products industry between 1991 and 1996 was approximately 80, with capacity declining
slightly in recent years.
4.2.2 Demand Side of the Industry
4.2.2.1 Product Characteristics
Paper is valued for its diversity in product types, applications, and low cost due to
ready access to raw materials. Manufacturers produce papers of varying durabilities, textures,
and colors. Consumers purchasing large quantity of papers may have papers tailored to their
specification. Papers may be simple writing papers or newsprint for personal consumption
and for the printing and publishing industry or durable for conversion into shipping cartons,
drums, or sanitary boxes. Inputs in the paper production process are readily available in the
U.S. because one-third of the country is forested, and facilities generally have ready access to
waterways.
4-13
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Table 4-10. Waste and By-Products Incinerated at Paper and Allied Products Facilities
Facility Name SIC
Materials Combusted
Percentage
Annual
Inputa
Waste Description
Frascr Paper
Company
Kimberly Clark
Corporation
Pope & Talbot,
Inc.
Tenneeo
Packaging
Company-
Union Camp-
Eastover
Weycrhaueser
2621 No. 2 Distillate Fuel Oil 1
Natural Gas 47
Industrial Wastewater 52
Sludge
2676 Industrial Solid Waste, N.H. 95
Liquid Petroleum Gas 0
Natural Gas 5
2621 Natural Gas 100
Industrial Wastewater 0
Sludge
2621 No. 2 Distillate Fuel Oil 100
Industrial Wastewater 0
Sludge
2621 No. 2 Distillate Fuel Oil 9
Decorative Laminate Scrap 41
Liquid Petroleum Gas <1
Process Co-product Gas 49
2611 Natural Gas 68
Process Co-product Gas 24
Process Co-product Liquid 8
Collected from mill process:
fiber, filler, and biomass
Off spec, diaper raw
materials, trim waste, paper,
corrugated cartons, and
plastic
Paper mill sludge from waste
treatment plant
Sludge from activated sludge
wastewater treatment plant
Rectified methanol from
pulpmill condcnsates; pulp
mill noncondcnsible gases
NCGS from pulping process
Turpentine and methanol
from fuel condcsate stripper
"Calculated on a volume basis.
Source: Industrial Combustion Coordinated Rulemaking (ICCR). 1998. Data/Information Submitted to the
Coordinating Committee at the Final Meeting of the Industrial Combustion Coordinated Rulemaking
Federal Advisor}' Committee. EPA Docket Numbers A-94-63, II-K-4b2 through -4b5. Research
4-14
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Table 4-11. Inputs for the Paper and Allied Products Industry (SIC 26), 1987 to 1996
Labor
Year
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
Quantity
(thousands)
611.1
619.8
633.2
631.2
624.7
626.3
626.3
621.4
629.2
630.6
Payroll
(1992 Smillion)
20,098.6
19;659.0
19,493.1
19,605.2
19,856.3
20,491.9
20,602.6
20,429.7
18,784.3
19,750.0
Materials
(1992 Smillion)
70,040.6
73,447.4
75,132.5
74,568.8
72,602.5
73,188.0
73,062.6
76,461.6
79,968.6
75,805.9
New Capital
Investment
(1992 Smillion)
6,857.5
8,083.8
10,092.9
11,267.2
9,353.9
7,962.4
7,265.2
6,961.7
7,056.8
8.005.9
Sources: U.S. Department of Commerce, Bureau of the Census. 1996b. 1992 Census of Manufactures,
Subject Series: General Summery. Washington. DC: Government Printing Office.
U.S. Department of Commerce, Bureau of the Census. 1990-1998. Annual Survey of Manufactures
[Multiple Years]. Washington, DC: Government Printing Office.
Table 4-12. Capacity Utilization Ratios for the Paper and Allied Products Industry,
1991-1996
1991
1992
1993
1994
1995
1996
78
80
81
80
77
78
Source: U.S. Department of Commerce, Bureau of the Census. 1998. Survey of Plant Capacity: 1996.
Washington, DC: Government Printing Office.
4.2.2.2
Uses and Consumers of Products
The paper and allied products industry is an integral part of the U.S. economy; nearly
every industry and service sector relies on paper products for its personal, education, and
business needs. Among a myriad of uses, papers are used for correspondence, printing and
4-15
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publishing, packing and storage, and sanitary purposes. Common applications are all
manners of reading material, correspondence, sanitary containers, shipping cartons and drums,
and miscellaneous packing materials.
4.2.3 Organization of the Industry
4.2.3.1 Firm Characteristics
In 1992, 4,264 companies produced paper and allied products and operated 6,416
facilities. By way of comparison, 4,215 controlled 6,292 facilities in 1987. Although the
number of small firms and facilities increased during those 5 years, the industry is dominated
by high-volume, low-cost producers (DRI et al., 1998). Even though they account for only
45 percent of all facilities, those with 50 or more employees contribute more than 93 percent
of the industry's total value of shipments (see Table 4-13). (According to the Small Business
Administration, those companies employing fewer than 500 employees are "small.")
For paper and allied products markets likely to be affected by the proposed
commercial and industrial solid waste incinerator regulation, the four firm concentration ratios
ranged between 29 and 68 in 1992 (see Table 4-14). This means that, in each subsector, the
top firms' combined sales ranged from 29 and 68 percent of their respective industrys total
sales. For example, in the sanitary paper products industry, the CR4 ratios indicate that a few
firms control 68 percent of the market. This sector's moderately concentrated nature is also
indicated by its HHI of 1451 (DOJ, 1992). The remaining two sectors' ITHIs indicate that
their respective markets are unconcentrated (i.e., competitive).
4.2.4 Markets and Trends
The Department of Commerce projects that shipments of paper and allied products
will increase through 2002 by an annual average of 2.5 percent (DRI et al., 1998). Because
nearly all of the industry's products are consumer related, shipments will be most affected by
the health of the U.S. and global economy. The U.S. is a key competitor in the international
market for paper products and, after Canada, is the largest exporter of paper products.
According to DRI et al., the largest paper and allied products exporters in the world are
Canada (with 23 percent of the market), the United States (10 to 15 percent), Finland (8
percent), and Sweden (7 percent) (1998).
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Table 4-13. Size of Establishments and Value of Shipments for the Paper and Allied
Products Industry (SIC 26)
1987
Number of Employees in
Establishment
1 to 4 employees
4 to 9 employees
10 to 19 employees
20 to 49 employees
50 to 99 employees
100 to 249 employees
250 to 499 employees
500 to 999 employees
1,000 to 2, 499 employees
2;500 or more employees
Total
Number of
Facilities
729
531
888
1,433
1,018
1,176
308
145
63
1
1,732
Value of
Shipments
(Smillion)
640.6
(D)
1.563.4
18,328.6
(D)
32,141.7
24,221.1
28,129.1
24,903.1
(D)
129,927.8
1992
Number of
Faeilities
786
565
816
1,389
1,088
1,253
298
159
62
6,416
Value of
Shipments
(Smillion)
216
483
1,456.5
6,366.6
12,811.5
35,114.0
22,281.2
31356.5
23,115.4
133,200.7
(D) = undisclosed
Sources: U.S. Department of Commerce, Bureau of the Census. 1990d. 1987 Census of Manufactures,
Industry Series: Pulp, Paper, and Board Mills. Washington. DC: Government Printing Office.
U.S. Department of Commerce, Bureau of the Census. 1995c. 7992 Census of Manufactures,
Industry Series: Pulp, Paper, and Board Mills. Washington, DC: Government Printing Office.
1995c.
4.3 Noncellulosic Man-Made Fibers Industry (SIC 2824)
The man-made fibers industry accounts for nearly 6.25 percent of the $300 billion a
year chemical industry. Noncellulosic man-made fibers production comprises approximately
90 percent of the total amount of man-made fibers produced in the U.S. annually. Man-made
fibers are used in products as varied as clothing and tires (Mote, 1994). These fibers are
largely intermediate goods and are shipped to other manufacturers in the form of yarn, tow,
staple, or monofilament. Thereafter, they are transformed into consumer and industrial
products. In addition to being less expensive than natural fibers, synthetic fibers are also more
durable, hold their shape better, and are more uniform (Mote, 1994).
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Table 4-14. Measurements of Market Concentration for Paper and Allied Products
Markets
SIC
2611
2621
2676
Description
Pulp Mills
Paper Mills
Sanitary Paper Products
CR4
48
29
68
CR8
75
49
82
HHI
858
392
1,451
Number of
Companies
29
127
80
Number of
Facilities
45
280
150
Sources: U.S. Department of Commerce, Bureau of the Census. 1995b. 1992 Concentration Ratios in
Manufacturing. Washington, DC: Government Printing Office.
U.S. Department of Commerce, Bureau of the Census. 1995e. 1992 Census of Manufactures,
Industry Series: Pulp, Paper, and Board Mills. Washington, DC: Government Printing Office.
Table 4-15 presents shipment values for the industry from 1987 to 1996. In 1996, the
industry shipped $11,883.5 million in man-made fibers, a performance on par with that of the
late 1980s. With the exception of 1991 and 1994-95, the industry's value of shipments has
been fairly stable for the past decade.
4.3.1 Supply Side of the Industry
4.3.1.1 Production Processes
Man-made fibers are derived from both natural and petroleum-based ingredients that
are melted together to form liquids containing free-moving molecules. The liquid passes
through small holes in vats called spinnerets. As the liquid exits the vats, it hardens to form
long filaments.
Manufacturers produce man-made fibers using four variations of the process described
above: dry, wet, melt, and core spinning (Mote, 1994). In dry spinning, the raw materials are
dissolved in solvents. After passing through the spinnerets, the fibers-to-be are exposed to
hot air. The solvents evaporate, leaving behind a solid filament. Wet spinning is quite similar
to dry spinning. The main difference between the two is that, after the stream exits the vat
through the spinneret, it falls into a coagulating chemical bath. As the stream enters the bath,
it hardens, leaving a solid filament as the product.
4-18
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Table 4-15. Value of Shipments for the Noncellulosic Man-Made Fibers Industry (SIC
2824), 1987-1996
Year Value of Shipments (1992 Smillion)
1987 11,622.8
1988 11,894.4
1989 1L893.8
1990 11,232.7
1991 10,817.8
1992 1 LI 13.0
1993 11,643.8
1994 12,146.2
1995 12,004.3
1996 11,883.5
Sources: U.S. Department of Commerce. Bureau of the Census. 1995a. 1992 Census of Manufactures,
Industry Series: Plastics Materials, Synthetic Rubber, and Man-made Fibers. Washington. DC:
Government Printing Office.
U.S. Department of Commerce, Bureau of the Census. 1990-1998. Annual Survey of Manufactures
/Multiple Years]. Washington, DC: Government Printing Office.
Melt and core spinning are simple processes. In melt spinning, the raw materials are
blended together and extruded. They dry upon contact with air to form the filaments. Core
spinning involves spinning together a continuous filament yarn with a short-length hard fiber
to form a composite. This is the newest method of production.
4.3.1.2 Types of Output
The man-made fiber industry produces fibers derived from molecules containing
combinations of carbon, hydrogen, nitrogen, and oxygen. The output includes polyester,
nylon, olefins, and acrylics.
These fibers are sold to manufacturers in four forms: yarn, monofilament, staple, and
tow, Monofilaments are single, long strands used in toothbrushes and nylon stockings. Staple
comprises fibers that are cut short. Staple is usually blended with other materials to form
yarns. Tow is much like staple, but it is kept in long, rope-like form before being cut at a later
time.
4-19
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4.3.1.3 Major By-Products and Co-Products
SIC 2824 has no co-products. Few by-products are associated with man-made fibers.
Emissions from man-made fiber production are largely recovered by using activated carbon.
However some carbon disulfide and hydrogen sulfide escape during production (Mote, 1994).
Based on the Inventory Database, five units at man-made fibers plants incinerate some
portion of their industrial waste. Generally units are incinerating natural gas, plastics, and fuel
oils. As shown in Table 4-16, approximately 6 percent of Monsanto's incinerator input is
plastics. The DuPont May Plant incinerator burns waste oil by-products. Based on data in
the CIWI database, DuPont incinerates an estimated 220.1 tons of material per year.
Monsanto incinerates approximately 39.6 tons.
Table 4-16. Wastes and By-Products Incinerated at Noncellulosic Man-Made Fibers
Facilities
Facility Name
DuPont — Seaford
Monsanto Company
DuPont — May Plant
Materials
#2 Distillate Fuel Oil
Other Solid
Natural Gas
Plastics
Natural Gas
Plastics
Natural Gas
Plastics
#2 Distillate Fuel Oil
Liquid Waste
Percentage
Annual Input'1
100
0
94
6
94
6
94
6
30
70
Solid Waste Description
Nylon 6,6 Polvmcr
Vegetable, Coconut, Rice, and
Siliconc Oils
"Calculated on a volume basis.
Source: Industrial Combustion Coordinated Rulcmaking (ICCR). 1998. Data/Information Submitted to the
Coordinating Committee at the Final Meeting of the Industrial Combustion Coordinated Rulemaking
Federal Advisory Committee. EPA Docket Numbers A-94-63. II-K-4b2 through -4b5. Research
Triangle Park, North Carolina. September 16-17.
4-20
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4.3.1.4
Costs of Production
New capital investments, increased productivity, and technology improvements have
allowed the industry to cut its labor costs (Mote, 1994). The number of people employed by
the man-made fiber industry has declined over the past 15 years. Between 1987 and 1996
employment in the industry decreased nearly 18 percent (Table 4-17). By comparison, the
costs of materials fell by 4.3 percent during the same period, most likely because of the decline
in the level of production. New capital investments averaged $706.6 million per year from
1987 to 1996. Investments contributed to the creation of new production strategies to help
minimize increasing costs and make the production process more efficient (Mote, 1994).
Table 4-17. Inputs for the Noncellulosic Man-Made Fibers Industry (SIC 2824),
1987-1996
Year
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
Quantity
(thousands)
45.4
45.8
48.0
48.1
46.9
44.4
42.3
40.7
38.6
38.5
Labor
Payroll
(1992 Smillion)
1,547.4
1,522.6
1,513.1
1,513.1
1,531.1
1,545.2
1,487.1
1,409.5
1,347.4
1,363.0
Materials
(1992 Smillion)
5,933.3
6,000.8
5,929.8
5,078.2
4,797.9
5,337.1
5,593.9
5,747.5
5,965.6
5,679.5
New Capital
Investment
(1992 Smillion)
533.4
688.4
696.3
800.8
790.7
721.3
929.0
560.8
638.3
(D)
(D) = undisclosed.
Sources: U.S. Department of Commerce, Bureau of the Census. 1995a. 7992 Census of Manufactures,
Industry Series: Plastics Materials, Synthetic Rubber, and Man-made Fibers. Washington, DC:
Government Printing Office.
U.S. Department of Commerce, Bureau of the Census. 1990-1998. Annual Survey of Manufactures,
[Multiple Years]. Washington, DC: Government Printing Office.
4-21
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4.3.1.5 Capacity Utilization
Table 4-18 presents the historical trends in the capacity utilization for the man-made
fibers industry. The full production capacity utilization ratio for the noncellulosic man-made
fibers industry was 92 in 1996.
Table 4-18. Capacity Utilization Ratios for the Noncellulosic Man-Made Fibers
Industry, 1989-1996
19891990199119921993199419951996
SIC 2824 88 89 89 86 88 91 89 92
Note: The capacity utilization ratio is the ratio of the actual production level to the full production capacity
level.
Source: U.S. Department of Commerce, Bureau of the Census. 1996a& 1998. Sun'ey of Plant Capacity:
1994 & 1996. Washington. DC: Government Printing Office.
4.3.2 Demand Side of the Industry
4.3.2.1 Product Characteristics
Man-made fibers are valued for their versatility and variety. They are less expensive
than most natural fibers and are more durable and uniform (DRI et al., 1998). Used
predominantly by the apparel and textile industry, synthetic fibers are flexible and resist aging
and do not react to exposure to the elements. The fibers can be manipulated during the
manufacturing process to become softer, rougher, stronger, or more resilient. They can be
dyed and are easily woven to form other materials. Polyester and nylon are two key fibers
produced by this industry. Polyester does not retain moisture, provides excellent electrical
insulation, and is highly resistant to solvents. Nylon has a high strength-to-weight ratio, is not
easily permanently deformed, and is resistant to abrasion.
4.3.2.2 Uses and Consumers of Products
The largest consumer of synthetic fibers is the floor-coverings industry. This sector
consumes roughly 32 percent of all fibers produced to make floor coverings for residential,
institutional, and industrial purposes. The apparel and various household textile industries
consume about 25 percent and 10 percent, respectively (Mote, 1994). The remainder is used
4-22
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in such varied industries as tires (for reinforcement), rope, surgical and sanitary supplies,
fiberfill, electrical insulation, and plastics reinforcements.
Polyester fibers are used predominantly by the home furnishings and apparel industries,
as well as general textile facilities. Nylon is mostly used in carpeting, but also in apparel,
noncarpet home furnishings, ropes, and miscellaneous industrial products. Acrylics and
olefins are used in apparel and highly durable carpeting, respectively. In response to
increasing pressure from both the government and environmental groups, the industry is
seeking methods for recycling fibers such as polyester into new fabrics and carpet materials.
4.3.3 Organization of the Industry
4.3.3.1 Firm Characteristics
In 1992, 42 companies produced noncellulosic organic fibers and operated 71
facilities. By way of comparison, 47 companies controlled 72 facilities in 1987. The top five
firms' sales were nearly four times that of the next five largest firms during the time period
presented in Table 4-19. Facilities with 250 to nearly 2,500 employees increased their share
of the total value of shipments from 89.7 percent in 1987 to 95.4 percent in 1995.
The four-firm concentration ratio for this industry in 1992 was 74, meaning that the
top four firms accounted for 74 percent of the industry's total sales. The eight-firm
concentration ratio for the same years was 90 (HOC, 1995b). These ratios indicate that a few
firms control a large share of the market. The highly concentrated nature of the man-made
noncellulosic fibers industry is also indicated by its HHI of 2,158 (DOJ, 1992). According to
the Department of Justice's Horizontal Merger Guidelines, industries with HHIs above 1,800
are considered highly concentrated (i.e., less competitive). Table 4-20 presents several
measures of market concentration in the man-made fiber (noncellulosic) industry.
4.3.4 Markets and Trends
The U.S. Department of Commerce expects the man-made fiber market to grow by 19
percent between 1995 and 2000. Consumption of polyester, the most popular fiber, is
expected to increase 16 percent over the same period (DRI et al., 1998). Although American
companies control 90 percent of the U.S. market for man-made fibers, their global market
share has dropped in the last half of the 20th century. According to DRI et al., U.S.
corporations controlled approximately 18 percent of the global market for man-made fibers in
1992; in 1950 that figure was 50 percent (1998). In the 1990s, 50 percent of the worldwide
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Table 4-19. Size of Establishments and Value of Shipments for the Noncellulosic
Man-Made Fibers Industry (SIC 2824)
1987
Number of Employees in
Establishment
1 to 4 employees
5 to 9 employees
10 to 19 employees
20 to 49 employees
50 to 99 employees
100 to 249 employees
250 to 499 employees
500 to 999 employees
LOGO to 2,499 employees
2,500 or more employees
Total
Number of
Facilities
3
5
1
4
7
17
8
9
17
1
72
Value of
Shipments
(1992
Smillion)
2.2
9.5
(D)
25.0
69.0
470.9
750.5
1532.8
8888.7
(D)
11622.8
1992
Number of
Facilities
1
0
2
7
8
14
13
6
19
1
71
Value of
Shipments
(1992
Smillion)
47.8
0
(D)
(D)
105.5
355.7
1,224.2
909.9
8,470.7
(D)
11,113.8
(D) = undisclosed
Sources: U.S. Department of Commerce. Bureau of the Census. 1990a. 1987 Census of Manufactures,
Industry Series: Plastics Materials, Synthetic Rubber, and Man-made fibers. Washington, DC:
Government Printing Office.
U.S. Department of Commerce. Bureau of the Census. 1995a. 1992 Census of Manufactures,
Industry Series: Plastics Materials, Synthetic Rubber, and Man-made Fibers. Washington. DC:
Government Printing Office.
capacity for polyester production is in Asia, compared to 13 percent in the U.S. (DRI et al.,
1998). The U.S. is the world's largest exporter of synthetic fibers, followed by Taiwan and
Japan. Other significant exporters are Austria, Canada, and the Southeast Asian nations.
4-24
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Table 4-20. Measures of Market Concentration for the Noncellulosic Man-Made Fibers
Industry (SIC 2824)
SIC
SIC 2824
Description
Man-Made Organic
Fibers. Noncellulosic
CR4
74
CR8
90
HHI
2;158
Number of
Companies
42
Number of
Facilities
71
Sources: U.S. Department of Commerce. Bureau of the Census. 1995b. 1992 Concentration Ratios in
Manufacturing. Washington. DC: Government Printing Office.
U.S. Department of Commerce. Bureau of the Census. 1995a. 1992 Census of Manufactures,
Industry Series: Plastics Materials, Synthetic Rubber, and Man-made Fibers. Washington. DC:
Government Printing Office.
4.4 Pharmaceutical Preparations and Medicinal Chemicals and Botanical Products
(SIC 2833, 2834)
The pharmaceutical preparations industry (SIC 2834) and the medicinal chemicals and
botanical products industry (SIC 2833) are both primarily engaged in the research,
development, manufacture, and/or processing of medicinal chemicals and pharmaceutical
products. Apart from manufacturing drugs for human and veterinary consumption, the
industries grind, grade, and mill botanical products that are inputs for other industries.
Typically, most facilities cross over into both industries (EPA, 1997a). Products include
drugs, vitamins, herbal remedies, and production inputs, such as alkaloids and other active
medicinal principals.
Table 4-21 presents both industries' value of shipments from 1987 to 1996.
Medicinals and botanicals' performance during the late 1980s and early 1990s was mixed.
However, shipments increased steadily from 1994 to 1996, increasing 37.7 percent as natural
products such as herbs and vitamins became more popular (EPA, 1997a). Pharmaceutical
preparations' shipments increased steadily over the 10-year period. From 1987 to 1996, the
industry's shipments increased 24.3 percent to $55.1 billion in 1996.
4.4.1 Supply Side of the Industry
4.4.1.1 Production Processes
The medicinals and botanical products industry and the pharmaceutical preparations
industry share similar production processes. Many products of the former are inputs in the
4-25
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Table 4-21. Value of Shipments, for the Botanicals, Medicinals, and Pharmaceutical
Preparations Industries, 1987-1996
Year
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
SIC 2833 Medicinals &
Botanicals (Smillion)
4,629.1
5,375.4
5,708.9
5,535.8
6,637.7
6,438.5
5,669.2
5,774.7
6,404.1
7,952.8
SIC 2834 Pharmaceutical
Preparations (Smillion)
44,345.7
46,399.1
48,083.6
49,718.0
49,866.3
50,417.9
50,973.5
53,144.7
53,225.9
55,103.6
Sources: U.S. Department of Commerce, Bureau of the Census. 1995c. 1992 Census of Manufactures,
Industry Series: Drug Industry. Washington, DC: Government Printing Office.
U.S. Department of Commerce, Bureau of the Census. 1990-1998. Annual Survey of Manufactures
[Multiple Years]. Washington, DC: Government Printing Office.
latter's production process. There are three manufacturing stages: research and development,
preparation of bulk ingredients, and formulation of the final product.
The research and development stage is a long process both to ensure the validity and
benefit of the end product and to satisfy the requirements of stringent federal regulatory
committees (The pharmaceutical industry operates under strict oversight of the Food and
Drug Administration [FDA].). Therefore, every stage in the development of new drugs is
thoroughly documented and studied. After a new compound is discovered, it is subjected to
numerous laboratory and animal tests. Results are presented to the FDA via applications that
present and fully disclose all findings to date. As research and development proceeds, studies
are gradually expanded to involve human trials of the new compound. Should the compound
be approved by the FDA, the new product is readied for mass production.
To ensure a uniform product, all ingredients are prepared in bulk using batch
processes. Companies produce enough of each ingredient to satisfy projected sales demand
4-26
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(EPA, 1997a). Prior to production, all equipment is thoroughly cleaned, prepared, and
validated to prevent any contaminants from entering the production cycle. Most ingredients
are prepared by chemical synthesis, a method whereby primary ingredients undergo a complex
series of processes, including many intermediate stages and chemical reactions in a
step-by-step fashion (EPA, 1997a).
After the bulk materials are prepared, they are converted into a final usable form.
Common forms include tablets, pills, liquids, creams, and ointments. Equipment used in this
final stage is prepared in the same manner as that involved in the bulk preparation process.
Clean and validated machinery is used to process and package the pharmaceuticals for
shipment and consumption.
4.4.1.2 Types of Output
Both industries produce pharmaceutical and botanical products for end consumption
and intermediate products for the industries' own applications. Products include vitamins,
herbal remedies, and alkaloids. Prescription and over-the-counter drugs are produced in
liquid, tablet, cream, and other forms.
4.4.1.3 Major By-Products and Co-Products
Both industries produce many by-products because of the large number of primary
inputs and the extensive chemical processes involved. Wastes and emissions vary by the
process employed, raw materials consumed, and equipment used. In general, emissions
originate during drying and heating stages and during process water discharge. Emissions
controls are in place pursuant to environmental regulations. Other wastes include used filters,
spent raw materials, rejected product, and reaction residues (EPA, 1997a).
Based on the Inventory Database, four units in the medicinal chemicals and botanicals
industry incinerate some portion of their industrial wastes. The pharmaceuticals industry
operates seven units. Generally, these units are incinerating fuels, industrial waste water
sludge, animal remains, industrial solid wastes, medical wastes, returned and rejected product,
and garbage (see Table 4-22). For the ten units for which capacity information is available,
approximately 11,662 tons of material is incinerated annually.
4-27
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4.4,1.4 Costs of Production
Table 4-23 presents SIC 2833 industry's costs of production and employment
statistics from 1987 to 1996. Employment was stable during the late 1980s before steadily
growing in the 1990s. In 1987, medicinals and botanicals employed 11,600 people. By 1996,
the industry employed 16,800, an increase of nearly 45 percent. Materials costs matched the
increase in shipments over this same period. Industry growth also fed new capital investments
which averaged $191.2 million a year in the late 1980s and $515.6 million a year in the early
to mid 1990s.
SIC 2834's costs of production and employment for 1987 to 1996 are presented in
Table 4-24. The number of persons employed by the industry ranged between 120,000 and
144,000; employment peaked in 1990 before declining by 21,000 jobs by the end of 1992.
During this 10-year period, the cost of materials rose 42.1 percent. The increase is associated
with increased product shipments and the development of new, more expensive relatively
more expensive medications (DRI et al., 1998). New capital investment averaged $2.3 billion
a year.
4-28
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Table 4-22. Wastes and Materials Incinerated at Botanicals, Medicinals, and
Pharmaceutical Preparations Facilities
Facility Name
Glaxo Wellcome
Hoffman LaRochc
SIC
2833
2833
Materials Combusted
Natural Gas
Unknown Codes
Pathological: Animal Remains
Percentage
Annual
Input"
NA
<1
Additional
NA
Waste Description
Pfizer. Inc.
Bristol Myers
King
Pharmaceuticals
Merck, Sharpe, &
Dohme
Marion Merrcll
Dav Inc.
Merck & Company
Ortho-McNeil
Roche Products.
Inc.
Squibb
Manufacturing
No. 2 Distillate Fuel Oil <1
Industrial Solid Waste, N.I I. 11
Medical Waste 4
Natural Gas 85
Other Solid 54
Returned pharmaceutical products
and packaging
Confidential papers
Biological secondary sludge from
industrial wastcwater treatment
Returned and rejected products
and packaging
Gauzes, oily rags, paper,
cardboard, sweepings, and plastics
Waste ethical drugs, sweeping,
waste narcotic controlled drugs
Returned pharmaceutical products
Activated sludge from wastewatcr
treatment system
Ethyl acetate isopropanol
Returned and rejected
pharmaceutical products
Waste activated charcoals and
earth used as filter media; trash,
sweepings, cafeteria wastes,
garbage
Sludge from wastcwater treatment
plant.
a Calculated on a volume basis.
Source: Industrial Combustion Coordinated Rulemaking (ICCR). 1998. Data/Information Submitted to the Coordinating
Committee at the Final Meeting of the Industrial Combustion Coordinated Rulemaking Federal Advison-
Committee. EPA Docket Numbers A-94-63, FI-K-4b2 through -4b5. Research Triangle Park, North Carolina.
4-29
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Table 4-23. Inputs for Botanical Products and Medicinal Chemicals Industry
(SIC 2833), 1987-1996
Labor
Year
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
Quantity
(thousand)
11.6
11.3
11.4
10.9
12.5
13.0
13.0
13.9
14.1
16.8
Payroll
(Smillion)
520.2
494.4
504.9
476.4
568.6
587.1
584.3
572.6
625.0
752.1
Materials
(Smillion)
2,229.3
2,658.8
3,118.4
2,902.4
3,368.2
3,245.9
2,638.4
2,755.2
3,006.0
3,793.9
New Capital
Investment
(Smillion)
158.2
194.9
263.4
218.9
512.9
550.5
470.0
480.3
356.2
752.1
Sources: U.S. Department of Commerce, Bureau of the Census. 1995c. 1992 Census of Manufactures,
Industry Series: Drug Industry. Washington, DC: Government Printing Office.
U.S. Department of Commerce, Bureau of the Census. 1990-1998. Annual Sun>ey of Manufactures,
[Multiple Years]. Washington, DC: Government Printing Office.
4-30
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Table 4-24. Inputs for the Pharmaceutical Preparations Industry (SIC 2834), 1987-1996
Labor
Year
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
Quantity
(thousands)
131.6
133.4
141.8
143.8
129.1
122.8
128.2
134.2
143.0
136.9
Payroll
(Smillion)
5,759.2
5,447.2
6,177.5
6,223.9
5,275.8
4,949.4
5,184.2
5,368.4
5,712.4
5,547.3
Materials
(Smillion)
11,693.7
12,634.8
12,874.2
13,237.6
13,546.6
13,542.5
13,508.7
13,526.1
15,333.6
16,611.1
New Capital
Investment
(Smillion)
2,032.7
2,234.0
2,321.4
2,035.3
1,864.7
2,450.0
2,385.2
2,531.9
2,856.1
2,317.0
Sources: U.S. Department of Commerce. Bureau of the Census. 1995c. 1992 Census of Manufactures,
Industry Series: Drug Industry. Washington, DC: Government Printing Office.
U.S. Department of Commerce. Bureau of the Census. 1990-1998. Annual Survey of Manufactures,
[Multiple Years]. Washington, DC: Government Printing Office.
4.4.1.5
Capacity Utilization
Table 4-25 presents the trend in these ratios from 1991 to 1996 for both industries.
The varying capacity ratios reflect adjusting production volumes and new production facilities
and capacity going both on and off-line. In 1996, the capacity utilization ratio for SIC 2833
and 2834 were 84 and 67, respectively.
4.4.2 Demand Side of the Industry
New product introductions and improvements on older medications by the drug
industry have greatly improved the health and well-being of the U.S. population (DRI et al.,
1998). Products help alleviate or reduce physical, mental, and emotional ailments or reduce
the severity of symptoms associated with disease, age, and degenerative conditions. Dietary
supplements, such as vitamins and herbal remedies, ensure that consumers receive nutrients
4-31
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Table 4-25. Capacity Utilization Ratios for the Botanical Products and Medicinal
Chemicals (SIC 2833) and Pharmaceutical Preparations (SIC 2834) Industries,
1991-1996
SIC 2833
SIC 2834
1991
84
76
1992
86
74
1993
89
70
1994
80
67
1995
90
63
1996
84
67
Note: Capacity utilization ratio is the ratio of the actual production level to the full production level.
Source: U.S. Department of Commerce, Bureau of the Census. 1998. Survey of Plant Capacity: 1996.
Washington. DC: Government Printing Office.
of which they may not ordinarily consume enough. Products are available in a range of
dosage types, such as tablets and liquids.
Although prescription medications are increasingly distributed through third parties,
such as hospitals and health maintenance organizations, the general population remains the
end-user of pharmaceutical products. As the average age of the U.S. population adjusts to
reflect large numbers of older people, the variety and number of drugs consumed increases.
An older population will generally consume more medications to maintain and improve quality
oflife (DRI et al., 1998).
4.4.3 Organization of the Industry
4.4.3.1 Firm Characteristics
In 1992, 208 companies produced medicinal chemicals and botanical products and
operated 225 facilities (see Table 4-26). The number of companies and facilities in 1992 was
the same as that of 1987, although shipment values increased almost 40 percent. The average
facility employed more people in 1992 than in 1987. In fact, the number of facilities
employing 50 or more people grew from 37 to 45. These facilities accounted for the lion's
share of the industry's shipments. According to the Small Business Administration,
companies are considered small if they employ fewer than 750 employees. It is unclear what
percentage of the facilities listed in Table 4-26 are small companies.
In 1992, 585 companies manufactured pharmaceutical preparations and operated 691
facilities. By way of comparison, 640 companies operated 732 facilities in 1987. Although
4-32
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the number of facilities declined by 41, no particular category lost or gained an exceptional
number of facilities. The biggest movement was in the five to nine employees category, which
lost 35 facilities. In both years, facilities with more than 50 employees accounted for at least
95 percent of the industry's shipments.
4-33
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Table 4-26. Size of Establishments and Value of Shipments for the Botanical Products
and Medicinal Chemicals (SIC 2833) and Pharmaceutical Preparations (SIC 2834)
Industries
1987
Number of Employees in
Establishment
SIC 2833
1 to 4 employees
5 to 9 employees
10 to 19 employees
20 to 49 employees
50 to 99 employees
100 to 249 employees
250 to 499 employees
500 to 999 employees
1,000 to 2,499 employees
Total
SIC 2834
1 to 4 employees
5 to 9 employees
10 to 19 employees
20 to 49 employees
50 to 99 employees
100 to 249 employees
250 to 499 employees
500 to 999 employees
1,000 to 2,499 employees
2.500 employees or more
Total
Number of
Facilities
61
34
46
47
15
12
5
4
1
225
158
108
102
117
66
76
50
23
24
8
732
Value of
Shipments
(Smillion)
20.7
38.6
237.0
287.3
273.6
520.6
753.0
2478.2
(D)
4629.1
58.7
178.8
320.3
932.5
1231.0
3596.0
9239.7
4946.9
15,100.9
8740.9
44.345.7
1992
Number of
Facilities
62
42
47
29
25
10
4
3
3
225
152
73
101
110
65
77
56
30
21
6
691
Value of
Shipments
(Smillion)
23.8
58.3
357.1
182.0
653.9
5,163.4
(D)
(D)
(D)
6,438.5
115.6
105.4
284.6
815.7
1,966.8
2,912.4
11,394.6
10,077.7
14,525.7
8,219.4
50,417.9
(D) = undisclosed
Sources: U.S. Department of Commerce. Bureau of the Census. 1990b. 1987 Census of Manufactures,
Industry Series: Drug Industry. Washington. DC: Government Printing Office.
U.S. Department of Commerce, Bureau of the Census. 1995c. 1992 Census of Manufactures,
Industry Series: Drug Industry. Washington, DC: Government Printing Office.
4-34
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Table 4-27 presents the measures of market concentration for both industries. For the
medicinals and botanicals industry, the four-firm concentration ratio was 76. The eight-firm
concentration ratio was 84 (U.S. Dept. of Commerce, 1995b). The highly concentrated
nature of the market is further indicated by an HHI of 2,999 (DOJ, 1992). According to the
Department of Justice's Horizontal Merger Guidelines, industries with HHIs above 1,800 are
less competitive.
Table 4-27. Measures of Market Concentration for the Botanical Products and
Medicinal Chemicals (SIC 2833) and Pharmaceutical Preparations (SIC 2834)
Industries
SIC
2833
2834
Industry
Medicinal
Chemicals &
Botanical Products
Pharmaceutical
Preparations
CR4
76
26
CR8 HHI
84 2,999
42 341
Number of
Companies
208
585
Number of
Facilities
225
691
Sources: U.S. Department of Commerce, Bureau of the Census. 1995b. 1992 Concentration Ratios in
Manufacturing. Washington. DC: Government Printing Office.
U.S. Department of Commerce. Bureau of the Census. 1995c. 1992 Census of Manufactures,
Industry Series: Drug Industry. Washington. DC: Government Printing Office.
The pharmaceuticals preparations industry is less concentrated that the medicinal
chemicals and botanical products industry. For SIC 2834, the CR4 and CR8 were 26 and 42,
respectively, in 1992. The industry's HHI was 341, indicating a competitive market.
4.4.4 Markets and Trends
According to the Department of Commerce, global growth in the consumption of
pharmaceuticals is projected to accelerate over the coming decade as populations in developed
countries age and those in developing nations gain wider access to health care. Currently, the
U.S. remains the largest market for drugs, medicinals, and botanicals and produces more new
products than any other country (DRI et al., 1998). But, nearly two-fifths of American
producers' sales are generated abroad. Top markets for American exports are China,
4-35
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NAFTA, Australia, and Japan. Most imports originate in Canada, Russia, Mexico, Trinidad
and Tobago, and Norway.
4.5 Industrial Organic Chemicals Industry (SIC 2869)
The industrial organic chemicals (not elsewhere classified) industry (SIC 2869)
produces organic chemicals for end-use applications and for inputs into numerous other
chemical manufacturing industries. In nominal terms, it was the single largest segment of the
$367 billion dollar chemical and allied products industry (SIC 28) in 1996, accounting for
approximately 17 percent of the industry's shipments.
All organic chemicals are, by definition, carbon-based and are divided into two general
categories: commodity and specialty. Commodity chemical manufacturers compete on price
and produce large volumes of staple chemicals using continuous manufacturing processes.
Specialty chemicals cater to custom markets, using batch processes to produce a diverse range
of chemicals. Specialty chemicals generally require more technical expertise and research and
development than the more standardized commodity chemicals industry (EPA, 1995c).
Consequently, specialty chemical manufacturers have a greater value added to their products.
End products for all industrial organic chemical producers are as varied as synthetic perfumes,
flavoring chemicals, glycerin, and plasticizers.
Table 4-28 presents the shipments of industrial organic chemicals from 1987 to 1996.
In real terms, the industry's shipments rose in the late 1980s to a high of $54.9 billion before
declining in the early 1990s as the U.S. economy went into recession. By the mid 1990s, the
industry recovered, as product values reached record highs (DRI et al., 1998). Between 1993
and 1996, the industry's shipments grew 7.3 percent to $57.7 billion,
4.5.1 Supply Side of the Industry
4.5.1.1 Production Processes
Processes used to manufacture industrial organic chemicals are as varied as the
end-products themselves. There are thousands of possible ingredients and hundreds of
processes. Therefore, what follows is a general description of the ingredients and stages
involved in a typical manufacturing process.
Essentially a set of ingredients (feedstocks) is combined in a series of reactions to
produce end-products and intermediates (EPA, 1995c). The typical chemical synthesis
processes incorporate multiple feedstocks in a series of chemical reactions. Commodity
4-36
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Table 4-28. Value of Shipments for the Industrial Organic Chemicals, N.E.C. Industry
(SIC 2869), 1987-1996
Year Value of Shipments (1992 Smillion)
1987 48,581.7
1988 53,434.7
1989 54,962.9
1990 53,238.8
1991 51,795.6
1992 54,254.2
1993 53,805.2
1994 57,357.1
1995 59,484.3
1996 57,743.3
Sources: U.S. Department of Commerce, Bureau of the Census. 1995d. 7992 Census of Manufactures,
Industry Series: Industrial Organic Chemicals. Washington, DC: Government Printing Office.
U.S. Department of Commerce, Bureau of the Census. 1990-1998. Annual Survey of Manufactures,
Multiple Years. Washington. DC: Government Printing Office.
chemicals are produced in a continuous reactor and specialty chemicals are produced in
batches. Specialty chemicals may undergo a series of reaction steps, as opposed to
commodity chemicals' one continuous reaction because a finite amount of ingredients are
prepared and used in the production process. Reactions usually take place at high
temperatures, with one or two additional components being intermittently added. As the
production advances, by-products are removed using separation, distillation, or refrigeration
techniques. The final product may undergo a drying or pelletizing stage to form a more
manageable substance.
4.5.1.2 Types of Output
Miscellaneous industrial organic chemicals comprise nine general categories of
products:
• aliphitic and other acyclic organic chemicals (ethylene); acetic, chloroaceptic,
adipic, formic, oxalic, and tartaric acids and their metallic salts, chloral,
formaldehyde, and methylamine;
4-37
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• solvents (ethyl alcohol etc.); methanol; amyl, butyl, and ethyl acetates; ethers;
acetone, carbon disulfide and chlorinated solvents;
• polyhydric alcohols (synthetic glycerin, etc.);
• synthetic perfume and flavoring materials (citral, methyl, oinone, etc.);
• rubber processing chemicals, both accelerators and antioxidants (cyclic and
acyclic);
• cyclic and acyclic plasticizers (phosphoric acid, etc.);
• synthetic tanning agents;
• chemical warfare gases; and
• esters, amines, etc., of polyhydric alcohols and fatty and other acids.
4.5.1.3 Major By-Products and Co-Products
Co-products, by-products, and emissions vary according to the ingredients, processes,
maintenance practices, and equipment used (EPA, 1997). Frequently, residuals from the
reaction process that are separated from the end product are resold or possibly reused in the
manufacturing process. A by-product from one process may be another's input. The industry
is strictly regulated because it emits chemicals through many types of media, including
discharges to air, land, and water, and because of the volume and composition of these
emissions.
Based on the Inventory Database, six units at industrial organic chemical facilities
incinerate some portion of their industrial waste. Generally, units are incinerating fuels,
industrial sold wastes, liquid wastes, sludge, process gasses, waste oils, and wastewaters (see
Table 4-29). For the three units for which capacity information is available, approximately
7,438.4 tons of material are incinerated annually.
4.5.1.4 Costs of Production
Of all the factors of production, employment in industrial organic chemicals fluctuated
most often between 1987 and 1996 (see Table 4-30). During that time, employment fell
4-38
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Table 4-29. Wastes and Materials Incinerated at Industrial Organic Chemicals
Facilities
Facility Name
ArcoChcmical
Company
Ashland Chemical
Corporation
BASF Corporation
BASF Corporation
Chevron Chemical
Corporation
Exxon Chemical
Waste
Liquid Waste
Natural Gas
Aqueous Waste
Natural Gas
Other Gas
Industrial Solid Waste, N.H.
Natural Gas
Liquid Waste
Natural Gas
Other Gas
Industrial Solid Waste, N.H.
Natural Gas
Process Co-Product Gas
Waste Oil
Natural Gas
Petrochemical Process Gas
Process Coproduct Solid
Industrial Wastcwatcr
Sludge
Percentage
Annual
Input"
70
30
10
66
24
95
5
NA
30
40
0
30
36
35
2
27
Additional Waste Description
Liquid hydrocarbons waste
containing salts and catalyst
Distillate and fumes from reactors.
N-Methylpyrolidine Reside and 1.4
Butonediol Heavy Ends
Liquid waste from air oxidation
process
Off-gas from air oxidation process,
storage tanks, vents, and distillation
vents
Solids from manufacturing process
and product storage
Vent gas
Co-product of partial accidations
process
Wastcwater treatment plant sludge
(dry and \vet)
aCalculatcd on a volume basis.
Source: Industrial Combustion Coordinated Rulcmaking (ICCR). 1998. Data/Information Submitted to the
Coordinating Committee at the Final Meeting of the Industrial Combustion Coordinated Rulemaking
Federal Advisory Committee. EPA Docket Numbers A-94-63, II-K-452 through -4b5. Research
4-39
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Table 4-30. Inputs for the Industrial Organic Chemicals Industry (SIC 2869), 1987 to
1996
Year
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
Quantity
(thousands)
100.3
97.1
97.9
100.3
101.0
100.1
97.8
89.8
92.1
100.3
Labor
Payroll
(1992 Smillion)
4,295.8
4,045.1
3,977.4
4,144.6
4,297.3
4,504.2
4,540.2
4,476.5
4,510.4
5,144.8
Materials
(1992 Smillion)
28,147.7
29,492.8
29,676.4
29,579.2
29,335.2
31,860.6
30,920.1
33,267.4
33,163.9
36,068.9
New Capital
Investment
(1992 Smillion)
2,307.4
2,996.5
3,513.0
4,085.5
4,428.7
4,216.6
3,386.1
2,942.8
3,791.0
4,794.7
Sources: U.S. Department of Commerce, Bureau of the Census.
Washington, DC: Government Printing Office.
U.S. Department of Commerce, Bureau of the Census.
Washington, DC: Government Printing Office.
1995d. 1992 Census of Manufactures.
1990-1998. Annual Survey of Manufactures.
8.18 percent to 92,100, after a high of 101,000 in 1991. Most jobs lost were at the
production level (DRI et al., 1998). Facilities became far more computerized, incorporating
advanced technologies into the production process. Even with the drop in employment,
payroll was $200 million more in 1995 than in 1987. The cost of materials fluctuated between
$29 and $36 billion for these years, and new capital investment averaged $3,646 million a
year.
4.5.1.5 Capacity Utilization
Table 4-31 presents the trend in capacity utilization ratios from 1991 to 1996 for the
industrial organic chemicals industry. The varying capacity utilization ratios reflect changes in
production volumes and new production facilities and capacities going on- and off-line. The
capacity utilization ratio for the industry averaged 85.3 over the 6-year period presented.
4-40
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Table 4-33. Measurements of Market Concentration for the Industrial Organic
Chemicals Industry
CR4
29
CR8
43
HHI
336
Number of
Companies
489
Number of
Facilities
705
Sources: U.S. Department of Commerce, Bureau of the Census. 1995b. 7992 Concentration Ratios in
Manufacturing. Washington, DC: Government Printing Office.
U.S. Department of Commerce, Bureau of the Census. 1995a. 7992 Census of Manufactures,
Industry Series: Industrial Organic Chemicals Industry. Washington, DC: Government Printing
Office.
metal products are produced from both ferrous and nonferrous metals that may be finished
using a variety of techniques including: electroplating, coloring, anodizing, and coating. The
industry's output are either end-products or intermediates used in other manufacturing
industries or the construction industry.
The fabricated metals industry's value of shipments decreased during the 1990s
recession, but later recovered and grew to record levels (DRI et al., 1998). From 1989 to
1991, the industry's value of shipments decreased nearly 7 percent (see Table 4-34) to $161
billion. As the U.S. economy emerged from recession, however, the total value of shipments
grew approximately 23 percent to $197.4 billion in 1996.
4.6.1 Supply Side of the Industry
4.6.1.1 Production Processes
The industry's various production processes involve one or more of the following
stages: metal fabrication, metal preparation, and metal finishing.
During the metal fabrication stage, molten metals are cast into sheets that can be some
way shaped into a more manageable form. Oils, solvents, acids, and other agents are
employed throughout the process to help clean, form, and cut the materials. After a shape is
formed, it is cut, formed, bent, rolled, or otherwise configurated, according to specifications.
The surface of the metal may require preparation prior to any final finishing stages
(EPA, 1995d). Most finishing processes require a clean, smooth surface to achieve best
4-41
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Table 4-34. Value of Shipments for the Fabricated Metals Industry (SIC 34), 1987 to
1996
Year (1992 $ millions)
1987 16,8706.1
1988 17,6160.1
1989 17,2599.7
1990 16,7345.2
1991 16,0993.1
1992 16,6532.0
1993 17,2763.6
1994 18,4972.8
1995 19,1192.6
1996 19,7363.2
Sources: U.S. Department of Commerce, Bureau of the Census. 1996b. 7992 Census of Manufactures,
Subject Series: General Summary. Washington, DC: General Printing Office.
U.S. Department of Commerce, Bureau of the Census. 1990-1998. Annual Survey of Manufactures
[Multiple Years]. Washington, DC: Government Printing Office.
results. Organic solvents, acids, or alkaloids may be applied to degrease the metal or remove
any of the substances applied during the metals fabrication process.
Surface finishing operations include: electroplating, anodizing, and chemical
conversion coating; a brief description of each follows (EPA, 1995d).
• Anodizing is an electrolytic process that converts the metal surface to an insoluble
oxide coating. The process guards against corrosion, creates decorative surfaces,
and provides a base for painting and other coating processes. Sulfuric acid is the
most common agent used in an anodizing process.
• Chemical conversion coating processes are produced on various metals by
chemical or electrochemical treatment. Chromating, phosphating, metal coloring,
and passivating are all examples of a chemical conversion coating process. The
surface metal is converted to an oxide or similar metallic compound to produce a
decorative finish.
4-42
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• Electroplating applies a metal coating on the surface of another metal by
electrodeposition. Manufacturers employ this process to provide corrosion
resistence, hardness, wear resistence, electrical or thermal conductivity, or
decoration.
4.6.1.2 Types of Output
Fabricated metals products include:
SIC 341—Metal Cans and Shipping Containers
SIC 342—Cutlery, Handtools, & General Hardware
SIC 343—Heating Equipment and Plumbing Fixtures
SIC 344—Fabricated Structural Metal Products
SIC 345—Bolts, Nuts, Screws, Washers, and Rivets
SIC 346—Metal Forgings and Stampings
SIC 347—Coating, Engraving, and Allied Services
SIC 348—Ordnance and Accessories
SIC 349—Miscellaneous Fabricated Metal Products
4.6.1.3 Major By-Products and Co-Products
The industry produces a large number of by-products. Air emissions include
metal-ion-bearing mists, acid mists, and evaporated solvents. Water and solid waste
emissions are generally wastewaters, industrial sludges, metal chips, ignitable wastes, filters,
and other pollutants (EPA, 1995d). There are generally few or no co-products.
Based on the Inventory Database, ten units at fabricated metals facilities incinerate
some portion of their industrial waste. Units are typically burning fuels, rubbish, industrial
wastewater sludge, other sludges, solid waste, paints, and filters (see Table 4-35). For the
five units for which capacity information was available, approximately 761.1 tons of material
is incinerated annually.
4-43
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Table 4-35. Wastes and Materials Incinerated at Fabricated Metals Facilities
Facility Name
Armtec Defense
Products
Company
Gonzalez Steel
Drum Company
Owens-Brockway
Bretford
Manufactuing
Knaak
Manufacturing
Hitachi Magnetic
Materials
Imperial
Fabricating
Company
Rollex
Corporation
Streasau
Laboratory
SIC
3489
3412
3499
3469
3449
3499
3499
3444
3483
Waste Description
Industrial Sludge
Industrial Solid Waste, N.H.
Natural Gas
Industrial Wastewater Sludge
Natural Gas
Other Solids
Other Liquid
Natural Gas
Natural Gas
Municipal/Commercial Solid
Waste: Type 0 - Trash
Industrial Solid Waste, N.H.
Municipal/Commercial Solid
Waste: Type 1 - Rubbish
Natural Gas
Natural Gas
Natural Gas
No. 2 Distillate Fuel Oil
Process Co-product Solid
Percentage
Annual
Input" Waste Description
11
1 1 Paper containing nitrocellulose;
molded paper containing
nitrocellulose
8
NA
Paint
10 Laquer and paint
90
85
15
NA Paint filters
100
100
100
65
35 Paper; waste explosives
Calculated on a volume basis.
Source: Industrial Combustion Coordinated Rulemaking (ICCR). 1998. Data/Information Submitted to the Coordinating
Committee at the Final Meeting of the Industrial Combustion Coordinated Rulemaking Federal Advisory
Committee. EPA Docket Numbers A-94-63, II-K-4b2 through -4b5. Research Triangle Park, North Carolina.
September 16-17.
4-44
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Table 4-36. Inputs for Fabricated Metals Industry (SIC 36), 1987 to 1996
Labor
Year
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
Quantity
(thousands)
1459.9
1494.6
1486.6
1460.3
1387.2
1362.3
1370.8
1407.1
1463.6
1483.0
PayroU
(1992 $million)
40079.2
41301.2
39842.4
39090.9
38143.4
38961.8
39526.2
40870.9
41653.4
42542.3
Materials
(1992 $million)
83172.8
88755.7
87965.8
85251.1
82073.5
82264.5
85336.2
91776.0
96598.8
98467.2
New Capital
Investment
(1992 $million)
5514.7
4633.7
4876.8
4891.2
4210.0
4437.5
5696.1
5634.0
6632.1
6339.0
Source: U.S. Department of Commerce, Bureau of the Census. 1996b. 7992 Census of Manufactures, Subject
Series: General Summary. Washington, DC: Government Printing Office.
4.6.1.4 Costs of Production
The costs of production for the industry fluctuate with the demand for the industry's
products. Most notably, the costs of production and number of persons employed by the
. industry declined in the early 1990s because orders from other manufacturing sectors and the
construction industry slowed. Although employment in the industry fluctuated during the ten
year period presented in Table 4-36, overall employment between 1987 and 1996 remained
essentially unchanged. Raw materials and payroll costs moved in tandem with the industry's
value of shipments. New capital investment average $5,286.5 million a year during the
10-year period.
4.6.1.5 Capacity Utilization
Table 4-37 presents the historical trends in capacity utilization for the fabricated
metals industry. The varying capacity utilization ratios reflect fluctuations in demand and
new production facilities and capacity coming on and old production facilities being closed.
The average ratio for 1991 to 1996 was 56.7.
4-45
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Table 4-37. Capacity Utilization Ratios for Fabricated Metals Industry, 1991-1996
1991 1992 1993 1994 1995 1996"
57 58 59 61 53 52
Note: The capacity utilization ratio of the actual production level to the full production level
Source: U.S. Department of Commerce, Bureau of the Census. 1998. Survey of Plant Capacity: 1996.
Washington, DC: Government Printing Office.
4.6.2 Demand Side of the Industry
Intermediate and end-use fabricated metal products are consumed by many industries
and individual consumers. Metals are more durable and stronger than other materials and can
be easily shaped into usable forms. Cutlery, handtools, bolts, drums, stampings, framing, and
heating equipment are all products produced by the fabricated metals industry. Consumers
include individuals, automobile manufacturers, appliance manufacturers, the construction
industry, and a multitude of other manufacturers.
4.6.3 Organization of the Industry
4.6.3.1 Firm Characteristics
In 1992, 32,959 companies manufactured fabricated metals products and operated
36,429 facilities. By way of comparison, 32,470 companies operated 36,098 facilities in
1987. In 1992, the average firm owned 1.1 establishments. In both years, over 80 percent of
all facilities employed fewer than 50 people but only accounted for 39 percent of the
industry's value of shipments. According to the small business administration, nearly all
fabricated metals companies are considered small if their total employment does not exceed
500 employees. However, it is unclear what percentage of the facilities listed in Table 4-38
are owned by small companies.
The four firm concentration ratios for fabricated metal products markets represented
in the incinerator inventory database range between 8 and 83, meaning that, in each
subsector, the top four firms' combined sales was between 8 and 83 percent of that respective
subsector's combined sales (see Table 4-39). The eight firm concentration ratios ranged from
13 to 89 (U.S. Dept. of Commerce, 1995b). The ratios indicate that a few firms control over
80 percent of the market or less. The varying concentration of the market is also indicated by
4-46
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Table 4-38. Size of Establishments and Value of Shipments for the Fabricated Metals
Industry (SIC 36)
1987
Number of Employees in
Establishment
1 to 4 employees
5 to 9 employees
10 to 19 employees
20 to 49 employees
50 to 99 employees
100 to 249 employees
250 to 499 employees
500 to 999 employees .
1 ,000 to 2,499 employees
2,500 or more employees
Total
Number of
Facilities
8,882
6,328
6,998
7,498
3,353
2,145
629
175
62
22
36,092
Value of
Shipments
(1992
$million)
1,594.5
12,260.9
(D)
22,774.7
26,028.7
41,800.4
26,596.6
14,175.5
12,545.6
10,846.9
168,706.1
1992
Number of
Facilities
9,941
6,273
6,698
7,223
3,307
2,192
570
165
47
13
36,429
Value of
Shipments
(1992
$million)
1,886.7
12,377.7
(D)
50,650.7
(D)
45,844.0
25,536.9
13,723.2
10,756.6
5,756.1
166,532.0
(D) = undisclosed
Sources: U.S. Department of Commerce, Bureau of the Census. 1996b. 1992 Census of Manufactures,
Subject Series: General Summary. Washington, DC: General Printing Office.
U.S. Department of Commerce, Bureau of the Census. 1991. 1987 Census of Manufactures, Subject
Series: General Summary. Washington, DC: General Printing Office.
the differences in the HHIs. The ordinance industry's HHI was 1,929 in 1992. According the
Department of Justice's Horizontal Merger Guidelines, industries with HHIs of 1,800 or
more are considered highly concentrated (i.e., less competitive). Most industries classified
under SIC 34 have HHIs less than 1,000, indicating that those markets are generally
competitive.
4.6.4 Markets and Trends
Most industries in SIC 34 are largely dependent upon the demands of other industries
(EPA, 1995d). Structural products are largely dependent on the commercial and industrial
construction industry; as more buildings are built, the quantity of structural metals (such as
beams) increases. The general component (washers, nuts, bolts), and metal finishing sectors
4-47
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Table 4-39. Measures of Market Concentration for Fabricated Metals Markets
Number of Number of
SIC Description CR4 CR8 HHI Companies Facilities
3412 Metal Shipping Barrels, 36 52 490 116 155
Drums, Kegs, and Pails
3444 Sheet Metal Work 9 13 34 4,465 4,702
3449 Misc. Structural Metal 26 34 258 563 658
Work
3469 Metal Stampings, N.E.C. 8 13 31 2,632 2,748
3483 Ammunition, Except for 57 70 1,529 55 70
Small Arms
3489 Ordnance and Accessories, 83 89 1,929 71 72
N.E.C.
3499 Fabricated Metal Products, 10 14 40 3,383 3,444
N.E.C.
Source: U.S. Department of Commerce, Bureau of the Census. 1996b. 19.92 Census of Manufactures, Subject
Series: General Summary. Washington, DC: Government Printing Office.
face similar demand. Captive (or on-site) metal finishing facilities are more numerous than
independent finishers. However, independent finishers are usually less specialized and
accommodate many customers. Sales in the fabricated metals industry are primarily driven by
orders for consumer durables, such as automobiles, washing machines, and electronics
(EPA,1995e).
4-48
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SECTION 5
ECONOMIC IMPACTS
Control measures implemented to comply with the proposed regulation will impose
regulatory costs on affected facilities in the commercial, industrial, and government sectors.
This section estimates the cost associated with the control measures and investigates
alternative waste disposal methods available to facilities.
5.1 Control Cost Estimates
Model incinerator units were developed to evaluate impacts on existing sources.
These model are representative of the population contained in the Inventory Database.
Model unit control costs are linked to individual units in the Inventory Database to estimate
the total control costs associated with the proposed regulation.
5.1.1 Model Units
Three separate model units were developed, representing typical incinerator units in
the Inventory Database. A brief description of the model units is presented in Table 5-1. A
detailed discussion of the model units and the assumptions used in their development is
presented in the docket for the commercial and industrial solid waste incinerator rulemaking
(ICCR, 1998).
The model units were mapped to the 122 individual incinerator units in the Inventory
Database. Approximately 52 percent of the units in the Inventory Database are classified as
Model B, 36 percent are Model C, and the remaining 12 percent are Model A. Table 5-2
shows the distribution of model units by industry. Most of the units in the chemical industry,
the industry segment with the largest number of units, are classified as Model B and
Model C.
Model unit capital and operating costs (independent of control costs) are presented in
Table 5-3. Model A, the large continuous feed unit, has the highest capital and operating
costs. The total annualized cost (annualized capital cost and operating and maintenance
5-1
-------
Table 5-1. Description of Model Incinerator Units
Model Parameters Model A Model B Model C
Waste Type Sludge/liquid Solids Solids
Technology Excess Air Excess Air Excess Air
Chamber Design Single Chamber Single Chamber Multiple Chamber
Waste Charging Continuous Batch Intermittent
Capacity 1,500 Ibs/hr lOOlbs/hr 1,500 Ibs/hr
500 Ibs/batch
Operating Time 4,719hrs/yr 2,838 hrs/yr 2,838 hrs/yr
Source: Industrial Combustion Coordinated Rulemaking (ICCR). 1998. Data/Information Submitted to the
Coordinating Committee at the Final Meeting of the Industrial Combustion Coordinated Rulemaking
Federal Advisory Committee. EPA Docket Numbers A-94-63, n-K-4b2 through -4b5. Research
Triangle Park, North Carolina. September 16-17.
costs) for Model A is $252,759 per year. In comparison, Model B, the smaller batch feed
unit, has annualized costs of $30,988 per year.
5.1.2 New Sources
Frequently a proposed rule will include new source performance standards, and these
.associated control costs will be included in the economic analysis. It is customary to project
the baseline to some point in the future (e.g., 5 years) based on forecasted growth trends and
to account for the new sources arising over that time period in the control cost estimates of
the proposed regulation.
However, no net growth in the number of commercial or industrial incinerator units is
projected in the foreseeable future. Thus, no economic inpacts are expected due to the
regulation of new sources. This assumption of zero growth in the number of incinerator units
is based on information collected during the ICCR process.1
'it is possible that some existing units will be shut down and replaced by new units. Any new units would be
required to meet the same emissions limits as existing units included in the proposed CISWI regulation.
5-2
-------
Table 5-2. Distribution of Model Incinerator Units
SIC
07
13
20
22
23
24
25
26
27
28
30
32
33
34
35
36
37
40
42
49
. 50
51
55
76
87
State
City
Federal
University
Total
Industry Description
Agricultural Services
Oil & Gas Extraction
Food & Kindred Products
Textile Mill Products
Apparel
Lumber & Wood Products
Furniture & Fixtures
Paper & Allied Products
Printing & Publishing
Chemicals & Allied Products
Rubber & Misc. Plastics
Stone, Clay, Glass, & Concrete Products
Primary Metals Industries
Fabricated Metal Products
Industrial & Commercial Machinery
Electronic Equipment
Transportation Equipment
Railroad Transportation
Motor Freight Transport & Warehousing
Electric, Gas, & Sanitary Services
Durable Goods Wholesale Trade
Nondurable Goods Wholesale Trade
Automotive Dealers & Gas Stations
Misc. Repair Services
Engineering, Accounting, Research,
Management and Related Services
State Governments
City Governments
Federal Government
Universities
Model Model
1 2
3
1
1
1 5
3
1 2
1
5 17
1
1
1
6
2 1
1
1
1
2
2
1
1
1
1
1 1
1 2
1 5
5
15 64
Model
3
1
1
1
1
2
'3
15
1
4
1
2
3
2
1
1
2
2
43
Total
Number
of Units
3
2
1
2
1
8
3
6
1
37
2
1
1
10
4
3
4
2
1
3
3
1
1
1
1
2
5
8
5
122
Source: Industrial Combustion Coordinated Rulemaking (ICCR). 1998. Data/In formation Submitted to the
Coordinating Committee at the Final Meeting of the Industrial Combustion Coordinated Rulemaking
Federal Advisory Committee. EPA Docket Numbers A-94-63, II-K-4b2 through -4b5. Research
Triangle Park, North Carolina. September 16-17.
5-3
-------
Table 5-3. Summary of Model Incinerator Costs (third-quarter 1998 dollars)
Total Capital Investment ($)
Total O&M ($/yr)
Annualized Capital ($/yr)
Total Annual Costs ($/yr)
Model A
Sludge/Liquid
$708,850
$109,529
$143,231
$252,759
Model B
Solids
$78,184
$14,772
$16,216
$30,988
Model C
Solids
$259,264
$47,074
$52,523
$99,597
Source: Industrial Combustion Coordinated Rulemaking (ICCR). 1998. Data/Information Submitted to the
Coordinating Committee at the Final Meeting of the Industrial Combustion Coordinated Rulemaking
Federal Advisory Committee. EPA Docket Numbers A-94-63, H-K-4b2 through -4b5. Research
Triangle Park, North Carolina. September 16-17.
5.2 Unit-Level Control Costs
Control costs are estimated for two regulatory alternatives. These two alternatives are
refereed to as the Floor Alternative and the Above the Floor Alternative. The Floor
Alternative is based on the emission levels associated with an incinerator unit with a wet
scrubber. The Above the Floor Alternative is based on emission levels associated with an
incinerator unit with both a wet scrubber and a Carbon Injection/Fabric Filter System. A
technical description of these two regulatory alternatives and the procedures used to identify
the Floor and Above the Floor Alternatives is presented in the docket for the CISWI
rulemaking (ICCR, 1998).
For each of the two regulatory alternatives, a series of control costs were estimated for
each model unit. The series of control cost estimates correspond to the varying level of
existing controls currently in place on the incinerators identified in the Inventory Database.
For example, under the Floor Alternative, it is assumed that units with no existing controls
would install a wet scrubber, and a unit with dry sorbent injection (DSI) would install a
Packed Bed (PB) scrubber. Thus, units with existing controls generally have lower assigned
control costs.
Table 5-4a presents the Floor Alternative unit control costs for Models 1, 2, and 3 for
the levels of existing controls on units in the database. Similarly, Table 5-4b presents
unit-level control costs for the Above the Floor Alternative. A detailed technical description
5-4
-------
Table 5-4a. Total Annualized Unit-Level Control Costs for Floor Alternative
Existing Controls
Units With Wet Scrubbers
Units With Fabric Filters or
Dry Sorbent Injection and
Fabric Filters
Units That are Uncontrolled
Additional Controls
Required2
No Additional Control
Requirements
Packed Bed
Wet Scrubbers
Model 1
Control
Costs
$20,700
$159,782
$186,307
Model 2
Control
Costs
$20,315
$57,318
$69,319
Model 3
Control
Costs
$20,315
$117,222 .
$141,366
a All units must comply with testing and monitoring, and operator training and certification requirements
regardless of existing controls
Source: Industrial Combustion Coordinated Rulemaking (ICCR). 1998. Data/Information Submitted to the
Coordinating Committee at the Final Meeting of the Industrial Combustion Coordinated Rulemaking
Federal Advisory Committee. EPA Docket Numbers A-94-63, II-K-4b2 through -4b5. Research
Triangle Park, North Carolina. September 16-17.
Table 5-4b. Total Annualized Unit-Level Control Costs for Above the Floor Alternative
Existing Controls
Additional Controls
Required3
Model 1
Control
Costs
Model 2
Control
Costs
Model 3
Control
Costs
Units With Wet Scrubbers
Units With Fabric Filters
Units With Dry Sorbent
Injection and Fabric
Filters
Units That are
Uncontrolled
Carbon Injection/Fabric
Filters
Packed Bed and Carbon
Injection
Carbon Injection
Carbon Injection/Fabric
Filters and Packed Bed
$211,203 $115,169 $184,609
$205,293 $62,686 $142,060
$66,211 $25,683 $45,153
$350,285 $152,172 $281,516
a All units must comply with testing and monitoring, and operator training and certification requirements
regardless of existing controls.
Source: Industrial Combustion Coordinated Rulemaking (ICCR). 1998. Data/Information Submitted to the
Coordinating Committee at the Final Meeting of the Industrial Combustion Coordinated Rulemaking
Federal Advisory Committee. EPA Docket Numbers A-94-63, II-K-4b2 through -4b5. Research
Triangle Park, North Carolina. September 16-17.
5-5
-------
of the existing and add-on control options is presented in the docket for the CISWI
rulemaking (ICCR, 1998).
The control costs listed in Tables 5-4a and 5-4b are the total annualized costs (TACs)
associated with the regulatory scenarios. The TAG comprises annualized capital costs and
total operating and maintenance costs. Capital costs are discounted using a 7 percent social
discount rate to obtain annualized capital costs. Total operating and maintenance costs
include operation and maintenance of the control equipment, testing and monitoring, and
operator training and certification.
5.3 Total Annual Control Costs
Total control costs are estimated by linking the unit-level control costs in Table 5-4a
and Table 5-4b to the individual incinerator units identified in the Inventory Database. Total
annual control costs for the Floor Alternative are estimated to be $11,590,228, and total
annual control costs for the Above the Floor Alternative are estimated to be $24,519,126.
Table 5-5 presents total annual control costs broken out by industry. For the Floor
Alternative, the chemical industry accounts for 27.5 percent of the control costs. Fabricated
metals and lumber and wood products account for 8.5 percent and 7.0 percent of total control
costs, respectively.
For the Above the Floor Alternative, the percentage distribution of control costs is
basically the same as for the Floor Alternative. The chemical industry accounts for 28.9
percent of control costs. Fabricated metals and lumber and wood products account for 8.3
percent and 6.8 percent of total control costs, respectively.
5.4 Alternative Disposal Methods Analysis
The total annual control costs shown in Table 5-5 represent an upper bound of the
costs of the regulation because these total costs are based on the assumption that firm
behavior does not change and that all facilities simply install the control technologies
required to meet the emissions standards. Affected facilities, however, have several options
available to them to meet the emission limits of the regulation, ranging from alternative waste
management practices to closing down the facility generating the waste. It is possible that for
some firms these alternatives will be "less costly" compared to installing the control
technology and this will lower the total economic impact of the regulation.
5-6
-------
Table 5-5. Total Annual Control Costs
SIC
07
13
20
22
23
24
25
26
27
28
30
32
33
34
35
36
37
40
42
49
50
51
55
76
87
State
City
Federal
University
Industry Description
Agricultural Services
Oil & Gas Extraction
Food & Kindred Products
Textile Mill Products
Apparel
Lumber & Wood Prod.
Furniture & Fixtures
Paper & Allied Products
Printing & Publishing
Chemicals & Allied Products
Rubber & Misc. Plastics
Stone, Clay, Glass, &
Concrete Products
Primary Metals Industries
Fabricated Metal Products
Ind. & Commrcl. Mach.
Electronic Equipment
Transportation Equipment
Railroad Transportation
Motor Freight Transport &
Warehousing
Electric, Gas, & Sanitary
Services
Durable Goods Wholesale
Trade
Nondurable Goods
Wholesale Trade
Automotive Dealers & Gas
Stations
Misc. Repair Services
Eng., Acct., Res. Mgmt. &
Rel. Svcs.
State Governments
City Governments
Federal Government
Universities
Total
Floor
Alternative
Control
Costs
207,957
210,685
141,366
210,685
141,366
815,634
207,957
219,182
69,319
3,182,869
323,673
186,307
69,319
981,378
583,299
352,051
469,273
282,732
20,315
250,004
280,004
69,319
186,307
69,319
69,319
210,685
607,677
791,632
346,595
$11,590,228
Percentage
Floor
Alternative
Control Costs by
Industry
1.8%
1.8%
1.2%
1.8%
1.2%
7.0%
1.8%
1.9%
0.6%
27.5%
2.8%
1.6%
0.6%
8.5%
5.0%
3.0%
4.0%
2.4%
0.2%
2.4%
2.4%
0.6%
1.6%
0.6%
0.6%
1.8%
5.2%
6.8%
3.0%
100.0%
Above the
Floor
Alternative
Control Costs
456,516
433,688
281,516
433,688
281,516
1,674,177
456,516
863,333
152,172
7,078,791
631,801
350,285
152,172
2,039,096
1,134,258
715,204
857,264
563,032
25,683
585,860
585,860
152,172
350,285
152,172
152,172
433,688
1,217,661
1,547,688
760,860
$24,519,126
Percentage
Above the
Floor
Alternative
Control Costs
by Industry
1.9%
1.8%
1.2%
1.8%
1.2%
6.8%
1.9%
3.5%
0.6%
28.9%
2.6%
1.4%
0.6%
8.3%
4.6%
2.9%
3.5%
2.3%
0.1%
2.4%
2.4%
0.6%
1.4%
0.6%
0.6%
1.8%
5.0%
6.3%
3.1%
100.0%
5-7
-------
Based on information provided by the ICCR process, alternative disposal methods are
the most likely "noncontrol-technology" option facilities have to comply with the proposed
regulations. Under this scenario, a facility would close its incinerator unit (with other
business operations unchanged) and dispose of its waste through the use of landfills, for
example. Although alternative disposal methods may involve some additional costs, such as
waste transportation and tipping fees, facilities would realize some cost saving from
eliminating operating, maintenance and fuel costs associated with operating the incinerator
units. If the net change is that costs associated with alternative disposal methods are less than
the costs of the control technologies (presented in Table 5-4a or Table 5-4b), then it may be
in the best interest of the facility to shut down the incineration unit.
As part of the combustion source ICR, facilities were asked to identify what their
alternative disposal methods would be if they were not able to incinerate their wastes.
Facility responses are listed in Table 5-6. The most common alternative disposal methods
cited were special disposal contracts and off-site landfills. In addition, several facilities
indicated that their "waste" could be sold as either a product or a fuel. Eight facilities
indicated that they had no other disposal alternative besides incineration.
To investigate the economic feasibility of alternative disposal methods, we analyzed
the benefits and costs associated with facilities closing their incineration unit and using
off-site landfills to dispose of the waste previously being incinerated. The alternative net
costs (i.e., negative net benefits) from switching from on-site incineration to off-site disposal
(landfill) can be expressed as
Alternative Net Costs = (costs of off-site disposal) - (O&M costs of on-site
incineration) = ([Transportation + tipping fees] * tons/yr) -
(total O&M costs)
where
Transportation costs = cost per ton of transporting the waste to off-site landfill plus
any incremental costs associated with storage
Tipping fees = cost per ton charged by landfill
Tons/yr = tons of waste incinerated per year
Total O&M costs = total cost of operating and maintaining incinerator unit per
year.
For our analysis we assume that the average transportation cost is $8.43/ton. This is
based on a typical hauling distance of 30 miles (Boss and Maxfield, 1997), and an average
hauling fee of $0.28/ton, per mile (Kosmicki, 1997). In reality, transportation costs may vary
5-8
-------
Table 5-6. Alternative Disposal Methods
Alternative Disposal Method Number of Facilities"
Dispose of on Site 11
Local Trash 12
Special Disposal Contract 43
Off-site Landfill 29
Sell as Product 5
Sell as Fuel 10
Vent to Atmosphere 5
Waste Water Treatment Plant 4
No Other Alternative 8
Don't Know 5
Other Disposal Method 18
a Sum of responses is greater than the number of facilities (112) because some facilities listed multiple
alternative disposal methods.
Source: Industrial Combustion Coordinated Rulemaking (ICCR). 1998. Data/Information Submitted to the
Coordinating Committee at the Final Meeting of the Industrial Combustion Coordinated Rulemaking
Federal Advisory Committee. EPA Docket Numbers A-94-63, H-K-4b2 through -4b5. Research
Triangle Park, North Carolina. September 16-17.
greatly by facility, depending of the distance to the closest landfill. Correspondingly,
respondents in the combustion source ICR who responded that they had no alternative
disposal methods may have implicitly been stating that they were too far from any landfills to
make this option economically feasible.
Tipping fees in the U.S. generally range $30 to $60 dollars/ton, depending on regional
factors such as state regulations and the opportunity cost of land (Glenn, 1998). The
maximum tipping fee in the U.S. is approximately $100/ton. For our analysis we use the
average national tipping fee of $49.75/ton (Glenn, 1998), yielding a total alternative disposal
cost (transportation plus tipping fee) of $58.18/ton.
The number of tons per year incinerated for each facility was estimated based on
information collected from the ICR. Annual tons per year incinerated was calculated as
5-9
-------
Tons/yr = (Annual operating hours) * (unit Capacity Ib/hr)
* (average unit operating rate)
Based on this information, it is estimated that it may be economically feasible for over
50 percent of incinerators for which we have capacity information to use landfills as an
alternative disposal method, replacing incineration.2 Economically feasible implies that the
annualized cost of installing the control technology (wet scrubber, for example) and operating
the incinerator is greater than the net alternative disposal cost for a given unit. Table 5-7
shows the average TAG control costs and the range of estimated alternative costs by industry
type.3
However, the above cost analysis does not account for the possible intangible benefits
associated with on-site incineration. These intangible benefits may include convenience of
continuous/on-demand waste disposal
• storage costs associated with accumulation of waste between disposal pick-ups
• administrative costs associated with contracting for transportation
• uncertainties regarding transportation and tipping fees and availability of future
access to landfills.
Thus, the share of actual facilities selecting alternative disposal methods may be less than the
percent estimate presented in the above analysis. However, based in the combustion source
ICR, it is likely that some facilities will change to alternative options. As a result, the use of
alterative waste disposal methods may reduce the economic impact of the regulation.
5.5 Market Impacts
The purpose of the market analysis is to describe and quantify how control cost
requirements impact the markets where the affected facilities buy inputs and sell outputs. To
achieve this purpose, a market model analysis is typically conducted to transform the control
2This is based on 28 units, the majority of which are from the chemical and allied products industry. Thus, the
50 percent estimate may not be representative of the population as a whole. The intent of the analysis is to
illustrate that economically feasible alternatives may exist.
3The alternative disposal methods analysis was not conducted for the Above the Floor Alternative because the
results are intended to demonstrate the feasibility of alternative methods and are not used to estimate
economic impacts. The higher control costs of the Above the Floor Alternative would likely increase the
percentage of incinerators for which landfills would be economically feasible.
5-10
-------
Table 5-7. Economic Feasibility of Alternative Waste Management (landfills)
SIC
07
13
20
22
23
24
25
26
27
28
30
32
33
34
35
36
37
40
42
49
50
51
55
76
87
State
City
Federal
University
SIC Code
Agricultural
Oil & Gas Extraction
Food & Kindred Products
Textile Mill Products
Apparel
Lumber & Wood Products
Furniture & Fixtures
Paper & Allied Products
Printing & Publishing
Chemicals & Allied Products
Rubber & Misc. Plastics
Stone, Clay, Glass, & Concrete Products
Primary Metals Industries
Fabricated Metal Products
Indstrl & Commrcl Machinery
Electronic Equipment
Transportation Equipment
Railroad Transportation
Motor Freight Transport & Warehousing
Electric, Gas, & Sanitary Services
Durable Goods Wholesale Trade
Nondurable Goods Wholesale Trade
Automotive Dealers & Gas Stations
Misc. Repair Services
Eng., Acct., Res. Mgmt. & Rel. Svcs.
State Governments
City Governments
Federal Government
Universities
Avg. Net AIL
Avg. Total Cost (Trans. + No. Units No. Units
Annual Cost Tipping Maximum Minimum with Where Off-site
(Floor Fees — Total Alternative Alternative Avail. Disposal is
Alternative) O&M costs) Cost Cost Data" Econ. Feasible"
-
136,266
188,440
-
188,440
144,154
-
83,246
84,019
122,960
260,037
-
-
143,719
188,440
153,657
188,440
-
-
84,091
-
-
.
-
-
-
-
133,646
-
-
2,436
1,510
-
93,833
47,136
-
699,332
130,322
167,085
74,197
-
-
31,417
304
6,126
1,257
-
-
488,712
-
-
-
-
-
-
-
10,607
-
-
4,364
1,510
-
93,833
122,527
-
1,762,898
130,322
637,769
74,197
-
-
31,417
304
6,126
1,257
-
-
488,712
-
-
-
-
-
-
-
31,417
-
-
509
1,510
-
93,833
8,029
-
78,741
130,322
22,055
74,197
-
-
31,417
304
6,126
1,257
-
-
488,712
-
-
-
-
-
-
-
65
-
-
2
1
-
1
3
-
3
1
8
1
-
-
1
1
1
1
-
-
1
-
-
-
-
-
-
-
3
-
_
2
1
.
1
3
-
1
0
3
1
-
-
1
1
1
1
-
-
0
-
-
-
-
-
-
-
3
-
Total
28
19
-------
cost estimates associated with affected facilities to changes in production decisions, thus
altering the affected markets that lead to changes in price, quantity, and social welfare.
Figure 5-1 presents a conceptual overview of the market analysis. As shown in
Figure 5-1 a, the total market supply is the horizontal sum of affected and unaffected
facilities' supply. The supply curve for affected and unaffected facilities is assumed to be
upward sloping reflecting varying technology and efficiency factors that differentiate existing
supply conditions. Demand is represented by a downward sloping function, indicating that as
price decreases, the quantity demanded increases. The slope of the demand function reflects
how responsive demand is to changes in price (e.g., the price elasticity of demand). The
baseline market equilibrium (without regulation) is defined by the market price (P) and
quantity (Q) that equate the supply and demand (i.e., the point where the supply and demand
curves intersect).
Figure 5-lb shows the regulation market equilibrium. Compliance costs have shifted
up the affected facilities' supply curve and this contributes to an upward shift in the total
market supply curve. The unaffected facilities' supply curve does not change. In addition,
the demand curve does not shift as a result of the regulation because the control costs do not
affect consumers' tastes or preferences. As shown in Figure 5-lb, the upward shift in the
total market supply function leads to an increase in price and a decrease in quantity.
Changes in the market price and quantity are used to adjust engineering estimates of
control costs to estimate economic impacts. In addition, changes in market price and quantity
.are used to assess the share of the regulatory costs that are borne by consumers and
producers. For example, do producers bear the production cost increase associated with the
regulation or are these costs passed on to consumers in the form of higher prices?
The size of the shift in the total market supply curve depends on two factors:
1. The relative size of the shift in the supply curve for affected facilities, and
2. The proportion of facilities that are affected relative to the total market size.
Thus, in general, high control costs relative to production costs and a large share of the
market being affected leads to a large upward shift in the total market supply function.
For the proposed CISWI regulation, our analysis indicates that control costs will be
small relative to total production costs. In addition, the number of affected facilities in each
individual market will also be small. Based on the Inventory Database, relatively few
5-12
-------
+ p -
Affected Facilities
= p
DM
Unaffected Facilities
Market
a) Baseline Equilibrium
P
P
S'
J 1
P'
= P
M,
Affected Facilities
Unaffected Facilities
Q' Q
Market
b) With Regulation Equilibrium
Figure 5-1. Market Equilibrium Without and With Regulation
facilities within each market will be affected by the regulation. In addition, as shown in
Section 4, the major markets affected are competitive, implying that the individual affected
facilities will not be able to influence market conditions.
5-13
-------
As a result, our analysis indicates that there will be a very small shift in the total
market supply functions for the industries affected by the regulation. And, because this will
lead to little or no change in market price, control costs will be primarily borne by the
affected producers in the industries with incineration units. In effect, competition from
unaffected facilities will prevent affected facilities from passing the increased cost of the
regulation onto consumers in the form of higher prices. This conclusion also implies that the
regulation's impact on imports and exports will be negligible.
The economic analysis also indicates that the proposed regulation's impact on total
employment in the industries affected will be negligible. As discussed in Section 6, the ratio
of control costs to company sales is low. Thus, it is anticipated that no plants will close as a
result of the regulation and that any decreases in production at affected facilities will be offset
by increases in production by unaffected facilities.
5.6 Summary of Economic Impact Analysis
Control costs associated with the Floor Alternative for the proposed CISWI regulation
are estimated to be approximately $11.6 million. This estimate is based on the
122 incinerator units identified in the Inventory Database and accounts for their existing
control technologies. Control costs of the Above the Floor Alternatives are estimated to be
approximately $24.5 million.
The rule affects a very small number of facilities in many different industries and
government entities. Of the 112 affected facilities, 92 are spread among 25 different
industries; 15 are spread among state, federal and city governments; and 5 are at universities.
Because of the competitive nature of the markets and the relatively small number of
affected facilities in each market, producers will be unable to pass along the cost of the
regulation to consumers in the short run. Hence, these costs will be borne by the affected
domestic producers. This conclusion also implies that the regulation's impact on imports and
exports will be negligible. The economic analysis also indicates that the proposed
regulation's impact on total employment in the industries affected will be negligible. The
ratio of control costs to company sales is low; only 9 of the 79 companies owning affected
facilities in the 25 different industries had cost-to-sales ratios of 3 percent or more (see
Section 6). It is anticipated that no plants will close as a result of the regulation. However,
the use of alternative waste management decisions, such as the use of landfills or selling
materials as fuels and intermediate products, should lower the total social cost of the
5-14
-------
regulation below the annual cost estimates of $11.6 million for the Floor Alternative, which
assume add-on control technology is used for all affected units.
The general findings from the economic impact analysis are similar for the Floor and
Above the Floor Alternatives. Whereas the control costs for individual affected units double
under the Above the Floor Alternative, compared to the Floor Alternative, the economic
analysis indicates that the Above the Floor Alternative's impact on employment and foreign
trade would be negligible.
5-15
-------
SECTION 6
REGULATORY FLEXIBILITY ANALYSIS
The regulatory costs imposed on domestic producers to reduce air emissions from
commercial and industrial waste incineration will have a direct impact on owners of
the affected facilities. Firms or individuals that own the facilities with incinerators are legal
business entities that have the capacity to conduct business transactions and make business
decisions that affect the facility. The legal and financial responsibility for compliance with a
regulatory action ultimately rests with these owners, who must bear the financial
consequences of their decisions. Thus, an analysis of the firm-level impacts of the proposed
regulation involves identifying and characterizing affected entities, assessing their response
options by modeling or characterizing the decision-making process, projecting how different
parties will respond to a regulation, and analyzing the consequences of those decisions.
Environmental regulations, such as the proposed commercial and industrial waste
incineration standard, affect both large and small businesses, but small businesses may have
special problems in complying with such regulations. The Regulatory Flexibility Act (RFA)
of 1980 requires that special consideration be given to small entities affected by federal
regulation. Specifically, the RFA requires determining whether a regulation will significantly
affect a substantial number of small entities or cause a disproportionate burden on small
entities in comparison to large companies. In 1996, the Small Business Regulatory
Enforcement Fairness Act (SBREFA) was passed, which further amended the RFA by
expanding judicial review of agencies' compliance with the RFA and by expanding small
business review of EPA rulemaking.
This analysis assesses the potential impacts of the standard on small businesses. To
do that, the costs of the regulation are, to the extent possible, mapped to firm-level data and
proportional cost effects are estimated for each identified firm. Then, the focus is placed on
small firms and the question of whether there are a substantial number whose regulatory
6-1
-------
cost-to-sales impact is large. The control costs for the Floor Alternative are used to estimate
cost-to-sales ratios,1
6.1 Analysis of Facility-Level and Parent-Level Data
Based on the Inventory Database, it is estimated that the proposed regulation will
affect 112 existing facilities. As shown in Table 6-1, these 112 facilities are owned by 90
parent companies. The average number of facilities per company is 1.24; however, as
illustrated in Table 6-1, a few large parent companies in the chemical industry and a military
installation own several facilities with incinerators.
Employment and sales are typically used as measures of business size. Employment,
sales, and tax revenue data (when applicable) were collected for the 90 parent companies.2
Figure 6-1 shows the distribution of employees by parent company. Employment for parent
companies ranges from 3 to 276,000 employees. Twenty-three of the firms have fewer than
500 employees, and 9 companies have more than 50,000 employees.
Sales provide another measure of business size. Figure 6-2 presents the sales
distribution for affected parent companies. The median sales figure for affected companies is
$916 million, and the average sales figure is $7.4 billion (excluding the federal government).
As shown in Figure 6-2, the distribution of firm sales is skewed toward the higher end of the
sales range. Approximately two-thirds of all parents have sales greater than $100 million.
These figures include all sales associated with the parent company, not just facilities that are
affected by the regulation (i.e., facilities with incinerators).
Based on Small Business Administration guidelines, 26 of the companies were
identified as small businesses.3 Small businesses by business type are presented in Table 6-2.
The lumber and wood products industry contains the largest number (7) of the small
'Using control costs for the Above the Floor Alternative would approximately double cost-to-sales results
presented in this section. However, the overall findings from the analysis would remain unchanged.
^Total annualized cost is compared to tax revenue to assess the relative impact on local governments.
3Small business guidelines typically define small businesses based on employment and the threshold varies
from industry to industry. For example, in the paints and allied products industry, a business with fewer
than 500 employees is considered a small business; whereas in the industrial gases industry, a business
with fewer than 1,000 employees is considered small. However, for a few industries, usually services,
sales are used as the criterion. For example in the veterinary hospital industry, companies with less than $5
million in annual sales are defined as small businesses.
6-2
-------
Table 6-1. Facility-Level and Parent-Level Data
SIC
07
13
20
22
23
24
25
26
27
28
30
32
33
34
35
36
37
40
42
49
50
51
55
76
87
State
City
Federal
University
Total
Industry Description
Agricultural Services
Oil & Gas Extraction
Food & Kindred Products
Textile Mill Products
Apparel
Lumber & Wood Products
Furniture & Fixtures
Paper & Allied Products
Printing & Publishing
Chemicals & Allied Products
Rubber & Misc. Plastics
Stone, Clay, Glass, & Concrete Products
Primary Metals Industries
Fabricated Metal Products
Indstrl & Commrcl Machinery
Electronic Equipment
Transportation Equipment
Railroad Transportation
Motor Freight Transport & Warehousing
Electric, Gas, & Sanitary Services
Durable Goods Wholesale Trade
Nondurable Goods Wholesale Trade
Automotive Dealers & Gas Stations
Misc. Repair Services
Engineering, Acct, Res Mgmt & Rel. Svc.
State Governments
City Governments
Federal Government
Universities
Number of
Facilities
3
2
1
2
1
8
1
6
1
32
2
1
1
9
3
2
4
2
1
3
3
1
1
1
1
2
5
8
5
112
Number of
Parent
Companies
3
1
1
2
1
8
1
6
1
22
2
1
1
9
3
2
4
2
1
3
3
0
1
0
1
1
5
1
4
90
Avg. Number of
Facilities Per
Parent Entity
1
1
1
1
1
1
1
1
1
1.5
1
1
1
1
1
1
1
1
1
1
1
0
1
0
1
2
1
8
1.3
1.33
Source: Industrial Combustion Coordinated Rulemaking (ICCR). 1998. Data/Information Submitted to the
Coordinating Committee at the Final Meeting of the Industrial Combustion Coordinated
Rulemaking Federal Advisory Committee. EPA Docket Numbers A-94-63, II-K-4b2 through -4b5.
Research Triangle Park, North Carolina. September 16-17.
6-3
-------
I
25
20
15
o
I 10
<500
500 to
1,000
1,000 to
5,000
5,000 to
25,000
25,000 to
50,000
50,000 to
100,000
> 100,000
Parent Employment
Figure 6-1. Parent Size by Employment Range
Includes 83 parent companies for which data are available.
businesses, followed by fabricated metals, veterinary hospitals, and wholesale trade sectors.
Also, four cities are classified as small governments because they have fewer than 50,000
residents. The remaining six small businesses are distributed across six different two-digit
SIC code groupings.
6.2 Small Business Impacts
Table 6-3 presents a summary of the ratio of floor control costs to sales for affected
large and small entities. The average floor cost-to-sales ratio is 0.03 percent for large
companies (excluding the federal government) and 4.72 percent for small companies. Only
nine small businesses had floor cost-to-sales ratios greater than 3 percent, assuming add-on
control is employed to meet the standard (rather than alternative disposal methods).
For the nine entities that had floor cost to sales ratios greater than 3 percent, the
median volume of material incinerated was about 50 tons per year. Because of the relatively
6-4
-------
1,000 to
7,500
7,500 to
25,000
>25,000
Parent Sales ($m)
Figure 6-2. Number of Parents by Sales Range
Includes 86 parent companies for which data are available.
small number of tons per year being incinerated, the alternative net cost for landfilling (see
Section 5.4) is likely to be less than the control costs for many of these facilities. Thus, it
may be economically feasible for some of these small entities to switch to an alternative
disposal methods, such as off-site landfills, and lower their net compliance costs.
Based on the low number of affected small firms and the relatively low control cost,
this analysis suggests that the proposed regulation should not generate significant small
business impact on a substantial number of small firms in the commercial, industrial, and
government sectors.
6-5
-------
Table 6-2. Small Parent Companies
SIC
07
13
20
22
23
24
25
26
27
28
30
32
33
34
35
36
37
40
42
49
50
51
55
76
87
State
City
Federal
University
Total
Industry Description
Agricultural Services
Oil & Gas Extraction
Food & Kindred Products
Textile Mill Products
Apparel
Lumber & Wood Products
Furniture & Fixtures
Paper & Allied Products
Printing & Publishing
Chemicals & Allied Products
Rubber & Misc. Plastics
Stone, Clay, Glass, & Concrete Products
Primary Metals Industries
Fabricated Metal Products
Indstrl & Commrcl Machinery
Electronic Equipment
Transportation Equipment
Railroad Transportation
Motor Freight Transport & Warehousing
Electric, Gas, & Sanitary Services
Durable Goods Wholesale Trade
Nondurable Goods Wholesale Trade
Automotive Dealers & Gas Stations
Misc. Repair Services
Engineering, Acct, Res Mgmt & Rel. Svc.
State Governments
City Governments
Federal Government
Universities
Number of
Facilities
3
2
1
2
1
8
1
6
1
32
2
1
1
9
3
2
4
2
1
3
3
1
1
1
1
2
5
8
5
112
Number of
Parent
Companies
3
1
1
2
1
8
1
6
1
22
2
1
1
9
3
2
4
2
1
3
3
0
1
0
1
1
5
1
4
90
Number of
Small Parent
Companies
3
1
0
0
0
7
0
0
0
1
0
0
0
3
0
1
0
1
0
1
3
0
1
0
0
0
4
0
0
26
Source: Industrial Combustion Coordinated Rulemaking (ICCR). 1998. Data/Information Submitted to the
Coordinating Committee at the Final Meeting of the Industrial Combustion Coordinated
Rulemaking Federal Advisory Committee. EPA Docket Numbers A-94-63, H-K-4b2 through -4b5.
Research Triangle Park, North Carolina. September 16-17.
6-6
-------
Table 6-3. Floor Cost-to-Sales Ratio
Number of Parent Entities
Average Floor Control Costs
Average Sales
Average Cost-to-Sales Ratio
Number of Companies with Cost-to-
Sales Ratios Above 3%
Number of Companies with Cost-to-
Sales Ratios Above 1%
Large
65
$135,524.77
$10,341. 77 million3
0.029%
0
0
Small
26
$114,131.73
$14.85 million
4.72%b
9
15
a Excludes federal government tax revenues.
The median cost-to-sales ratio for small companies is 1.85 percent.
6-7
-------
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Project. 1995d. Profile of the Fabricated Metal Products Industry. Washington,
DC: U.S. Environmental Protection Agency.
U.S. Environmental Protection Agency (EPA), Office of Compliance Sector Notebook
Project. 1997a. Profile of the Pharmaceutical Industry. Washington, DC: U.S.
Environmental Protection Agency.
U.S. Environmental Protection Agency, Incinerator Work Group (IWG). 1997b.
Combustion Unit Survey Form. Research Triangle Park, NC: U.S. Environmental
Protection Agency, ICCR Coordinating Committee.
R-3
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APPENDIX A
EXAMPLES OF WASTE BEING INCINERATED AT AFFECTED FACILITIES
(Source: ICCR, 1998)
Organic sludge
• wastewater treatment plant sludge (dry & wet)
• wet sludge consisting of 85% water and 15% dry solids
• sludge from activated sludge wastewater treatment plant
Fumes and gasses
• off-gas from air oxidation process, storage tank vents, distillation vents
• fumes from reactors
• natural gas
• organic fumes from condensation reaction of unsaturated polyester resin
• mineral spirits fumes are burned off without condensation
• pulp mill noncondensable gases
Petroleum products
• refined petroleum contaminated debris
• waste lubrication oils
• fuel oil, 65%, paper, 32%, waste explosives, 3%
• oil filters, oil field trash, process filters
• oil filters & process filters oil & gas
• petroleum sorbents, oil filters, fuel filters
• oil soaked pads—oil absorbent bags from floor drains
• waste oil from automotive vehicles and construction equipment
A-l
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Pharmaceutical products
• off spec pharmaceutical products & packaging components
• nonhazardous industrial solid waste, including off-spec pharmaceutical and other
commercial products, nonhazardous industrial wipers, etc.
• waste ethical drugs, sweeping, etc., waste narcotic controlled drugs
• returned pharmaceutical products with packaging (nonhazardous)
• returned pharmaceutical goods
• activated sludge from a pharmaceutical manufacturing plant wastewater treatment
system
• tablets, capsules, noncorrugated carton
• illegal drugs and combustible contraband
Paint products
• paint from painted outside of david
• paint filters and varnish dust
• paint filters
• paint from production tooling
• laquer/paint from painting booths
• fiber paint booth filters & paper waste
• paint both filters containing cured 2-part urethane paint, floor sweepings
• used air filters from paint booths, dirty rags, drip paper from paint booths
Paper and wood
• broken wooden pallets
• molded paper articles containing nitrocellulose
• land-clearing debris from construction activity
• collected from papermill process; made up of fiber, filler, and biomass
• utility poles, salt-treated timbers
A-2
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• 75% paper 25% plastic
paper mill sludge from waste treatment plant-deink tissue mill
ncgs from pulping operations
hardboard—analysis attached
classified paper waste & magnetic media
off-specification diaper raw materials and trim waste, paper, corrugated cartons,
plastic
Other biomass products
• vegetable oil, coconut oil, rice oil, silicone oil
biomass waste from site wastewater treatment facility, -90% water
biological secondary sludge from aerobic treatment of industrial wastewater with 5
percent inert solids
water with varying amounts of organics
the combustion device destroys volatile organic compounds from pioneer's
manufacturing processes (paper coating operations, and resin production) and
distillate treatment system
waste activated charcoal and waste diatomaceous earth used as filter media, non
hazardous
Other
• fiberglass overspray filters loaded with overspray from finish system
phosphate cleaner waste
residue from herbicide intermediate production
ethyl acetate isopropanol
waste coolant, mop water, washer rinse water and wash water
stoddard calibration fluid
contaminated trash from ammunition production lines
nylon 6,6 polymer
pallets
A-3
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98% water, 2% anti-static liquid mixed with water
waste carbon black
carbon black
solids from manufacturing and product storage
food materials, paint, varnishes and non-hazardous wastes no hazardous wastes
are accepted
polypropylene carpet backing
n-methyl pyrrolidine residue
multiple effect evaporator concentrate; concentrated blowdown from cooling
tower
empty drums
A-4
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TECHNICAL REPORT DATA
(Please read Instmctions on reverse before completing)
1. REPORT NO.
EPA-452/R-99-004
3. RECIPIENT'S ACCESSION NO.
4. TITLE AND SUBTITLE
5. REPORT DATE
November 1999
Economic Impact Analysis of Proposed-Commercial and Industrial
Solid Waste Incinerator Regulation
6. PERFORMING ORGANIZATION CODE
7. AUTHOR(S)
8. PERFORMING ORGANIZATION REPORT NO.
9. PERFORMING ORGANIZATION NAME AND ADDRESS
U.S. Environmental Protection Agency
Office of Air Quality Planning and Standards
Research Triangle Park, NC 27711
10. PROGRAM ELEMENT NO.
11. CONTRACT/GRANT NO.
68-W7-0018
12. SPONSORING AGENCY NAME AND ADDRESS
Director
Office of Air Quality Planning and Standards
Office of Air and Radiation
U.S. Environmental Protection Agency
Research Triangle Park. NC 27711
13. TYPE OF REPORT AND PERIOD COVERED
Proposed regulation
14. SPONSORING AGENCY CODE
EPA/200/04
15. SUPPLEMENTARY NOTES
16. ABSTRACT
The U.S. Environmental Protection Agency (EPA) is developing regulations under Sections 111 and 129 of the Clean Air
Act for commercial and industrial incineration units that burn nonhazardous solid waste materials. EPA identified 122
commercial and industrial incinerators located at 112 facilities that may be affected by this regulation. Control measures
implemented to comply with the proposed regulation will impose regulatory costs on affected facilities in the commercial,
industrial, and government sectors. This study evaluaties the impact (both negative and positive) of these costs on facilities, on
the parent companies that own the facilities, and on the U.S. economy.
Of the 112 affected facilities, 92 are spread among 25 different industries; 15 are spread among state, federal, and city
governments; and 5 are at universities. Control costs associated with the Floor Alternative for the proposed CISWI regulation
are estimated to be approximately SI 1.6 million. However, the use of alternative waste management decisions, such as using
landfills or selling materials as fuels and intermediate products, should lower the total social cost of the regulation below the
annual cost estimate of SI 1.6 million for the Floor Alternative, assuming add-on control technology is used for all affected
units. The analysis also suggests that the proposed regulation should not generate significant small business impacts on a
substantial number of small firms in the commercial, industrial, and government sectors.
17.
KEY WORDS AND DOCUMENT ANALYSIS
DESCRIPTORS
b. IDENTIFIERS/OPEN ENDED TERMS
c. COSATI Field/Group
air pollution control, environmental
regulation, economic impact analysis,
incinerators, small business impacts
18. DISTRIBUTION STATEMENT
Release Unlimited
19. SECURITY CLASS (Report)
Unclassified
21. NO. OF PAGES
63
20. SECURITY CLASS (Page)
Unclassified
22. PRICE
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