Economic Impact Analysis of the Miscellaneous
Metal Parts and Products Surface Coating
NESHAP: Final Report
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EPA-452/R-03-018
August 2003
Economic Impact Analysis of the Miscellaneous Metal Parts and Products Surface Coating
NESHAP
By:
U.S. Environmental Protection Agency
Office of Air Quality Planning and Standards
Innovative Strategies and Economics Group, C339-01
Research Triangle Park, NC 27711
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This report has been reviewed by the Emission Standards Division of the Office of Air
Quality Planning and Standards of the United States Environmental Protection Agency and
approved for publication. Mention of trade names or commercial products is not intended to
constitute endorsement or recommendation for use. Copies of this report are available through
the Library Services, U.S. Environmental Protection Agency, Research Triangle Park, NC 27711,
or from the National Technical Information Services 5285 Port Royal Road, Springfield, VA
22161.
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ECONOMIC IMPACT AND SMALL BUSINESS ANALYSIS:
MISCELLANEOUS METAL PARTS AND PRODUCTS SURFACE COATING
1 INTRODUCTION
Under Section 112(d) of the Clean Air Act (CAA), the U.S. Environmental Protection
Agency (EPA) is developing a National Emissions Standard for Hazardous Air Pollutants
(NESHAP) for the Miscellaneous Metal Parts and Products (Surface Coating) source category
(MMPP). The MMPP encompasses all industries that coat metal parts and products, but are not
subject to other surface coating regulations. This final rule is expected to be promulgated in late
August of 2003. The MMPP produces emissions of hazardous air pollutants (HAP) through the
process of painting or otherwise coating metal surfaces. The Innovative Strategies and
Economics Group (ISEG) has developed this economic impact analysis (EIA) to support the
evaluation of impacts associated with regulatory options considered for this NESHAP. This EIA
is part of compliance with Section 317 of the CAA.
1.1 Scope and Purpose
This report evaluates the economic impacts of pollution control requirements on coating
operations at facilities included in the MMPP source category. These requirements are designed
to reduce emissions of HAP into the atmosphere. The CAA's purpose is to protect and enhance
the quality of the nation's air resources (Section 101(b)). Section 112 of the Clean Air Act
Amendments of 1990 establishes the authority to set national emission standards for hazardous
air pollutants. The emissions of HAP from this source category originates from the coating and
painting of the miscellaneous metal parts and products.
To reduce emissions of HAP, the EPA establishes NESHAP based on maximum
achievable control technology (MACT). For existing sources, the MACT floor is the average
emissions limitation achieved by the best performing 12 percent of sources (if there are 30 or
more sources in the category or subcategory). The MACT can be more stringent than the floor,
considering costs, non-air quality health and environmental impacts, and energy requirements.
The estimated costs for individual plants to comply with the MACT standards are inputs into the
economic impact analysis presented in this report.
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2 ECONOMIC IMPACTS
The MACT standards require facilities involved in the surface coating of miscellaneous
metal parts and products to reduce the emissions of HAP from their surface coating operations to
meet the levels specified by the NESHAP. The costs of meeting the MACT standards will vary
across facilities depending upon their physical characteristics and current usage of coatings and
solvents. These regulatory costs will have financial implications for the affected entities, and
broader implications as these effects are transmitted through market relationships to other
producers and consumers. These potential economic impacts are the subject of this section.
Inputs to the economic analysis include:
• Identification of industry segments with potentially affected facilities.
• Baseline characterization of facilities with miscellaneous metal parts and products
coating operations and the companies that own these potentially affected facilities.
• Compliance cost estimates for facilities (through model plants) to meet the MACT
floor standards.
The EPA has estimated the national total annual compliance costs (including monitoring,
recordkeeping, and reporting) for existing sources to be $47.3 million (1997 dollars).
2.1 Industry Segments
The Miscellaneous Metal Parts and Products (MMPP) source category includes thousands
of small, medium, and large facilities that apply coatings to a metal substrate to produce a wide
range of parts and products. Coatings applied to the metal surfaces provide a protective,
decorative, or functional film including protection from wear and corrosion.. The coatings
possess varying characteristics which make them suitable for different applications. In general,
this source category is broad and includes all those metal parts and products that are not covered
by another coating source category, including original equipment manufacturers (OEM) and
refurbishment shops.
Households, businesses, and institutions purchase and use these miscellaneous metal
parts and products. The MMPP Surface Coating source category covers a wide variety of
industry segments; no single description could cover all of these different industry sectors. For
the purpose of this analysis, the industry segments that have been individually identified are
listed below:
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• Aerospace Ground Support Equipment
• Agricultural and Construction Machinery
• Aluminum Extrusion
• Automobile Parts
• Contract Coating Facilities
• Heavy-Duty Trucks and Buses
• Magnet Wire
• Metal Shipping Containers
• Metal Pipe and Foundry
• Rail Transportation
• Recreational Vehicles
• Rubber-to -Metal Bond ed Part Manu facturing
• Structural Steel
This list should not be considered as exhaustive, and industries that maybe subject to the rule
developed for this source category may not be listed here. Each of the industry segments listed
above is described in greater detail below:
Aerospace Ground Support Equipment. More than 12,000 parts or equipment types can be
considered ground support equipment (GSE) in the aerospace industry. GSE is classified by the
function of the equipment and by the items the equipment is used to support. GSE is used for
auxiliary purposes, testing and checkout, handling of other equipment and cargo, mechanical site
testing, packaging and transport, servicing, and other miscellaneous purposes.
Agricultural and Construction Machinery. The Agricultural and Construction Machinery
Industry is covered by the 1997 North American Industry Classification System (NAICS) code
series 3331 (Agricultural, Construction, and Mining Machinery Manufacturing) and series 33392
(Material Handling Equipment Manufacturing). The Agricultural and Construction Machinery
Industry excludes corrals, stalls, and holding gates which are covered by NAICS code 332323
(Ornamental and Architectural Metal Work Manufacturing) and are categorized within the
Structural Metal Industry. Railway truck maintenance equipment, which is covered by NAICS
code 33651 (Railroad Rolling Stock Manufacturing) and are categorized in the Rail
Transportation Industry. Hand-held clippers for shearing or grooming animals, covered by SIC
3523, are also excluded from the Agricultural and Construction Machinery Industry. A list of the
NAICS codes that describe this industry and corresponding SIC codes is provided below.
333111 Farm Machinery and Equipment Manufacturing
[includes SIC 3523 (Farm Machinery and Equipment), except corrals, stalls, and
holding gates; farm conveyors and farm elevators, stackers and bale throwers; and
hand hair clippers for animal use.]
333112 Lawn and Garden Tractor and Home Lawn and Garden Equipment Manufacturing
[includes SIC 3524 (Lawn and Garden Tractors and Home Lawn and Garden
Equipment), except nonpowered lawnmowers]
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33312 Construction Machinery Manufacturing
[includes SIC 3531 (Construction Machinery and Equipment), except railway
truck maintenance equipment; and winches, aerial work platforms and automotive
wrecker hoists.]
333131 Mining Machinery and Equipment Manufacturing
[includes SIC 3532 (Mining Machinery and Equipment, Except Oil and Gas Field
Machinery and Equipment)]
333132 Oil and Gas Field Machinery and Equipment Manufacturing
[includes SIC 3533 (Oil and Gas Field Machinery Equipment)]
333921 Elevator and Moving Stairway Manufacturing
[includes SIC 3534 (Elevator and Moving Stairways)]
333922 Conveyor and Conveying Equipment Manufacturing
[includes SIC 3535 (Conveyors and Conveying Equipment); and farm conveyors
and farm elevators, stackers and bale throwers from SIC 3523 (Farm Machinery
and Equipment)]
333923 Overhead Traveling Crane, Hoist, and Monorail System Manufacturing
[includes SIC 3536 (Overhead Traveling Cranes, Hoists, and Monorail Systems);
and winches, aerial work platforms, and automotive wrecker hoists from SIC
3531 (Construction Machinery and Equipment)]
333924 Industrial Truck, Tractor, Trailer, and Stacker Machinery Manufacturing
[includes SIC 3537 (Industrial Trucks, Tractors, Trailers, and Stackers), except
metal pallets, and metal air cargo containers]
Aluminum Extrusion. The Aluminum Extrusion Industry is covered by theNAICS code
331316 (Aluminum Extruded Product Manufacturing). The Aluminum Extrusion Industry is
grouped with establishments primarily engaged in extruding aluminum and aluminum-based
alloy basic shapes, such as rod and bar, pipe and tube, and tube blooms, including establishments
producing tube by drawing. Aluminum extrusion manufacturers produce a wide array of
products for several market sectors. The major market categories serviced by aluminum
extruders and included in the MMPP source category are building and construction,
transportation, and consumer durables. The building and construction market category consists
of doors, windows and shutters, mobile homes, curtain walls, bridge rails and decks, street and
highway construction, architectural shapes, patio and pool enclosures, light and flag poles,
louvers and vents, and conduits. Included in the transportation category are aircrafts, trailers and
semitrailers, passenger cars, trucks and buses, travel trailers, and recreational vehicles. The
consumer durables market covers products such as refrigerators and freezers, major appliances,
furniture, boats, outboard motors, sports and athletic equipment, and toys. Other major market
categories serviced by the aluminum extrusion industry include electrical goods, machinery and
equipment, distributors and jobbers, and exports. Most aluminum extruders produce products for
multiple market sectors.
Automobile Parts. The Automobile Parts Industry is covered by the NAICS codes 336211
(Motor Vehicle Body Manufacturing) and theNAICS code series 3363 (Motor Vehicle Parts
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Manufacturing). The Automobile Parts Industry includes establishments primarily engaged in
manufacturing motor vehicle parts and accessories, but not engaged in manufacturing complete
motor vehicles or passenger car bodies. NAICS code 336211 includes dump truck lifting
mechanisms and fifth wheels. A list of the NAICS codes in series 3363 and corresponding SIC
codes (except SIC 3714) that are relevant to the MMPP source category is provided below.
336311 Carburetor, Piston, Piston Rings, and Valve Manufacturing
[includes SIC 3592 (Carburetor, Pistons, Piston Rings, and Valve Manuf.)]
336312 Gasoline Engine and Engine Parts Manufacturing
336321 Vehicular Lighting Equipment
[includes SIC 3647 (Vehicular Lighting Equipment)
336322 Other Motor Vehicle Electrical and Electronic Equipment Manufacturing
[includes SIC 3694 (Electrical Equipment for Internal Combustion Engines)]
33633 Motor Vehicle Steering and Suspension Components (except Spring)
Manufacturing
33634 Motor Vehicle Brake System Manufacturing
33635 Motor Vehicle Transmission and Power Train Parts Manufacturing
33636 Motor Vehicle Seating and Interior Trim Manufacturing
[incl. metal motor vehicle seat frames SIC 3499 (Fabricated Metal Products, nee)]
33637 Motor Vehicle Stamping, Metal
[includes SIC 3465 (Automotive Stampings)]
336391 Motor Vehicle Air-Conditioning Manufacturing
[includes motor vehicle air-conditioning from SIC 3585 (Air-Conditioning and
Warm Air Heating Equipment and Commercial and Industrial Refrigeration
Equipment)]
336399 All Other Motor Vehicle Parts Manufacturing
[includes luggage and utility racks from SIC 3429 (Hardware, Not Elsewhere
Classified); stationary engine radiators from SIC 3519 (Internal Combustion
Engines, Not Elsewhere Classified); gasoline, oil, and intake filters for internal
combustion engines from SIC 3599 (Industrial and Commercial Machinery and
Equipment, Not Elsewhere Classified); and trailer hitches from SIC 3799
(Transportation Equipment, Not Elsewhere Classified)]
Contract Coating Facilities. Contract coating facilities, or "job shops", may be described as
facilities that perform surface coating operations for a variety of industries on a contract basis.
These facilities may specialize in coating products for one specific industry, or may coat several
products for several different industries. Job shops may be covered by several NAICS codes
including NAICS code 332812 (Metal Coating, Engraving (except Jewelry and Silverware) and
Allied Services to Manufacturers). Included are establishments primarily engaged in performing
enameling, lacquering, and varnishing services of metal products for the trade. Also included in
this industry are establishments which perform these types of activities on their own account on
purchased metals or formed products.
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Heavy-Duty Trucks and Buses. The Heavy-Duty Trucks and Buses Industry is covered by the
NAICS code 331316 (Motor Vehicle Body Manufacturing). The Heavy-Duty Truck and Buses
Industry is grouped with establishments primarily engaged in manufacturing large truck and bus
bodies and cabs for sale separately or for assembly on purchased chassis, or in assembling large
truck and bus bodies on purchased chassis. Also included in this industry sector are truck trailers
which are covered by the NAICS code 336212 (Truck Trailer Manufacturing). The truck trailer
industry is grouped with establishments primarily engaged in manufacturing truck trailers, truck
trailer chassis for sale separately, detachable trailer bodies (cargo containers) for sale separately,
and detachable trailer (cargo container) chassis, for sale separately.
Magnet Wire. The Magnet Wire Industry is covered by the NAICS codes 331319 (Other
Aluminum Rolling and Drawing), 331421 (Copper Rolling, Drawing, and Extruding); 331422
(Copper Wire [except mechanical] Drawing), 33149 (Nonferrous Metals [except copper and
aluminum] Rolling, Drawing, and Extruding), and 335929 (Other Communication and Energy
Wire Manufacturing). The Magnet Wire Industry is grouped with establishments primarily
engaged in drawing, drawing and insulating, and insulating wire and cable of nonferrous metals
from purchased wire bars, rods, or wire and includes establishments primarily engaged in
manufacturing insulated fiber optic cable. Magnet wire is produced predominantly in large
facilities which both draw and insulate the wire and sell it for use in electrical and electronic
products.
Metal Shipping Containers. Metal shipping containers are classified by the NAICS code
332439 (Other Metal Container Manufacturing). The Metal Shipping Containers Industry
consists of establishments primarily engaged in manufacturing metal shipping barrels, drums,
kegs, and pails, and includes the following products:
Containers, shipping: barrels, kegs, drums, packages - liquid tight (metal)
• Drums, shipping: metal
• Milk (fluid) shipping containers, metal
• Pails, shipping: metal - except tinned
This industry also includes the reconditioning of shipping containers which is classified by the
NAICS code 81131 (Commercial and Industry Machinery and Equipment {except Automotive
and Electronic} Repair and Maintenance).
Pipe and Foundry. The Pipe and Foundry Industry is covered by the NAICS code 33121 (Iron
and Steel Pipe and Tube Manufacturing from Purchased Steel), and the NAICS code series 3315
(Foundries). This industry segment includes establishments primarily engaged in the production
of welded or seamless steel pipe and tubes and heavy riveted steel pipe from purchased materials.
Also included are establishments primarily engaged in manufacturing iron and steel castings and
those establishments primarily engaged in manufacturing castings and die-castings of aluminum,
brass, bronze, and other nonferrous metals and alloys. A list of the NAICS codes used to
describe this industry and corresponding SIC codes is provided below.
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33121 Iron and Steel Pipe and Tube Manufacturing from Purchased Steel
[includes SIC 3317 (Steel Pipe and Tubes)]
331511 Iron Foundries
[includes SIC 3321 (Gray and Ductile Iron Foundries) and 3322 (Malleable Iron
Foundries)]
331512 Steel Investment Foundries
[includes SIC 3324 (Steel Investment Foundries)]
331513 Steel Foundries (except Investment)
[includes SIC 3325 (Steel Foundries, Not Elsewhere Classified)]
331521 Aluminum Die-Casting Foundries
[includes SIC 3363 (Aluminum Die-Castings)]
331522 Nonferrous (except Aluminum) Die-Casting Foundries
[includes SIC 3364 (Nonferrous Dies-Castings, except Aluminum)]
3 31524 Aluminum Foundries ( except Die -Casting)
[includes SIC 3365 (Aluminum Foundries)]
331525 Copper Foundries (except Die-Casting)
[includes SIC 3366 (Copper Foundries)]
331528 Other Nonferrous Foundries (except Die-Casting)
[includes SIC 3369 (Nonferrous Foundries, Except Aluminum and Copper)]
Rail Transportation. The Rail Transportation Industry is covered by the NAICS code 33651
(Railroad Rolling Stock Manufacturing). The Rail Transportation Industry includes
establishments primarily engaged in building and rebuilding locomotives (including frames and
parts, not elsewhere classified) of any type or gauge; and railroad, street, and rapid transit cars
and car equipment for operation on rails for freight and passenger service. Locomotive fuel
lubricating pumps and cooling medium pumps are covered by NAICS code 333911 (Pump and
Pumping Equipment Manufacturing). In accordance with NAICS code 33651, this industry
sector also includes railway truck maintenance equipment, which is also covered by SIC code
3531 (Construction Machinery and Equipment).
Recreational Vehicles. The Recreational Vehicle Industry is covered by the NAICS codes
336213 (Motor Home Manufacturing) and 336214 (Travel Trailer and Camper Manufacturing).
The industry includes establishments primarily engaged in manufacturing self-contained motor
homes on purchased chassis. NAICS 336213 includes establishments primarily engaged in
manufacturing travel trailers and campers for attachment to passenger cars or other vehicles,
pickup coaches (campers) and caps (covers) for mounting on pickup trucks. NAICS code
336214 also includes automobile, boat, utility, and light truck trailers, which are also covered by
SIC code 3799 (Transportation Equipment, Not Elsewhere Classified).
Rubber-to-Metal Bonded Part Manufacturing. The Rubber-to-Metal Bonded Parts
Manufacturing Industry is covered by the NAICS codes 326291 (Rubber Product Manufacturing
for Mechanical Use) and 326299 (All Other Rubber Products Manufacturing). This industry
includes establishments primarily engaged in manufacturing molded, extruded, and lathe-cut
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mechanical rubber goods, generally for machinery and equipment. It also consists of
establishments primarily engaged in manufacturing industrial rubber goods, rubberized fabrics,
and vulcanized rubber clothing, and miscellaneous rubber specialties and sundries, not elsewhere
classified. Many of the products manufactured in this industry are fabricated for use in the
automotive industry.
Structural Steel. The Structural Steel Industry is covered by the NAICS codes 332114 (Custom
Roll Forming), 332311 (Prefabricated Metal Building and Component Manufacturing), 332312
(Fabricated Structural Metal Manufacturing), 332321 (Metal Window and Door Manufacturing),
and 332323 (Ornamental and Architectural Metal Work Manufacturing). This industry includes
establishments primarily engaged in fabricating iron and steel or other metal for structural
purposes, such as bridges, buildings, and sections for ships, boats, and barges as well as
establishments primarily engaged in manufacturing ferrous and nonferrous metal doors, sash,
window and door frames and screens, molding, and trim. It also includes establishments
primarily engaged in manufacturing architectural and ornamental metal work, such as stairs and
staircases, open steel flooring (grating), fire escapes, grilles, railings, and fences and gates, except
those made from wire; establishments primarily engaged in manufacturing portable and other
prefabricated metal buildings and parts and prefabricated exterior metal panels; establishments
primarily engaged in manufacturing miscellaneous structural metal work, such as metal plaster
bases, fabricated bar joists, and concrete reinforcing bars; and establishments primarily engaged
in custom roll forming of metal. In accordance with NAICS code 332323, the structural metal
industry also consists of metal corrals, stalls, and holding gates, which are covered by SIC code
3523 (Farm Machinery and Equipment).
2.2 Manufacturing Facilities
Based on responses to the Section 114 letters, the EPA identified 321 facilities within this
source category expected to be major sources subject to the MACT standard and its associated
costs. Of this sample, a total of 294 facilities reported employment data with an average
(median) of 824 (400) employees and a range from 2 to 13,287 employees. For the purpose of
this analysis, these facilities represent the universe of potentially affected sources with the
economic impacts estimated based on the regulatory costs applied to each using the "model
plant" costing approach described in the Background Information Document (BID).
2.3 Companies
The EPA identified 221 ultimate parent companies within this industry survey sample and
obtained their sales and employment data from either their survey response or one of the
following secondary sources:
1. Ward's Business Directory
2. Hoover's Company Profiles
3. Company Websites.
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Appendix A provides a listing of these 221 companies identified from the industry survey that
owned and operated the 321 facilities within this source category.
Annual sales and employment data were available for 147 of the companies (67 percent)
and net income data were available for 76 of the companies (34 percent). The average (median)
annual sales of companies reporting data were $7.2 billion ($567 million) with a range of $5
million to $161 billion. These figures include revenues from all operations. The average
(median) employment for these companies was 26,956 employees (2,725 employees) with a
range of 100 to 594,000. In addition, the average (median) annual net income of companies
reporting data were $775 million ($64 million) with a range from -$898 million to $22.1 billion.
The available data indicate 8 of the 76 companies reported negative net income, or profit losses,
for 1997. These observed negative profit levels in the baseline are determined by factors outside
the scope of this analysis. For example, Sunbeam Corporation has continued to experience
negative net income and is reorganizing under Chapter 11 bankruptcy protection. In other
situations, such as that for Union Pacific Corporation and Rockwell International, the company is
no longer experiencing such losses.
Companies owning facilities within the MMPP source category can be grouped into small
and large categories using Small Business Administration (SBA) general size standard
definitions by NAICS codes. For most NAICS codes, the size standard is based on the number
of employees but in some cases, the size standard is based on the annual sales of the company.
There are a multitude of different NAICS codes across the ultimate parent companies owning
these facilities. For these NAICS codes, the small business definition ranges are 500 to 1,500
employees and $5 million in annual sales. Using these guidelines and available data, the EPA
identified 29 small parent businesses, or 20 percent of all companies reporting sales and
employment within this source category.
For 1997, the annual average (median) sales for the small companies was $107 million
($31 million) with a range of $8 to $950 million and the average (median) employment was 317
employees (300 employees) with a range of 100 to 780 employees . Net income data was not
available for the 29 identified small businesses. For large companies, the annual average
(median) sales was $8.7 billion ($871 million) with a range of $50 million to $161 billion and the
average (median) employment was 32,393 employees (3,978 employees) with a range of 500 to
594,000. The annual average (median) net income for the large companies was $492 million
($11 million).
2.4 Economic Impact Results
In conducting an economic impact analysis, the EPA typically models the responses by
producers and markets to the imposition of the proposed regulation. The alternatives available to
producers in response to the regulation and the context of these choices are important in
determining the economic and financial impacts. Economic theory predicts that producers will
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take actions to minimize their share of the regulatory costs. Producers decide whether to
continue production and, if so, determine the optimal level consistent with market signals. These
choices and market feedback allow them to pass costs forward to the consumers of their end-
products or services and/or to pass costs backward to the suppliers of production inputs.
However, given the wide diversity of products that will be affected by the regulation, the EPA
focuses the economic impact analysis on the initial distribution of costs across existing facilities
and companies owning these existing facilities. The small business impact of the regulation is
analyzed in Section 3.
2.4.1 Facility-Level Compliance Cost Burden
Based on the "model plant" costing analysis described in the BID, Table 2-1 summarizes
the compliance cost burden across the 321 facilities in the EPA database. These facilities
account for roughly 20 percent of the total annual compliance costs of the regulation (i.e., $9.3
million of $$47.3 million for all sources). As shown in Table 2-1, the annual average (median)
cost per facility is $32,758 ($28,582) with a range from $25,947 to $140,487 per year. The
estimates here indicate that the distribution of costs across facilities is skewed toward the lower
impact levels, i.e., the median value is lower than the average value.
Table 2-1. Summary of Compliance Cost Burden on Facilities in the Miscellaneous Metal
Parts and Products Source Category: 1997
Item All Facilities
Total Facilities (#)
Total Costs ($/yr)
Per Facility ($/yr)
Average
Median
Minimum
Maximum
321
$9,303,212
$32,758
$28,582
$25,947
$140,487
2.4.2 Company-Level Compliance Cost Burden
Based on the industry survey responses, the EPA was able to identify 221 companies that
owned 321 potentially affected facilites within this source category. Of this total, we were able
to obtain sales data for 147 companies and net income data for 76 companies. For those
companies with sales data, the economic impact analysis indicates that these regulatory costs
average less than 0.1 percent of company sales with a range from zero to 1.25 percent. For those
companies with positive net income data, these regulatory costs average 0.2 percent of company
net income with a range from zero to 3.6 percent. For those companies reporting negative net
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income for 1997, these regulatory costs average 0.001 percent of company sales with a range
from zero to 0.004 percent of company sales. Thus, these costs would not exacerbate the
baseline financial condition of any these companies.
2.4.3 Summary
This analysis indicates that the compliance cost of this standard should not cause
producers to cease or significantly alter their current operations. Hence, no firms or facilities are
expected to be at risk of closures because of the standard.
3 SMALL BUSINESS IMPACTS
This regulatory action will potentially affect the economic welfare of owners of
miscellaneous metal parts coating facilities. The ownership of these facilities ultimately falls on
private individuals who may be owner/operators that directly conduct the business of the firm
(i.e., "mom and pop shops" or partnerships) or, more commonly, investors or stockholders that
employ others to conduct the business of the firm on their behalf (i.e., privately-held or publicly-
traded corporations). The individuals or agents that manage these facilities 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 agents;
however, the owners must bear the financial consequences of the decisions. While
environmental regulations can affect all businesses, 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. The RFA was amended in 1996 by the Small
Business Regulatory Enforcement Fairness Act (SBREFA) to strengthen the RFA's analytical
and procedural requirements. This section examines the MMPP source category and provides a
screening analysis to determine whether this rule is likely to impose a significant impact on a
substantial number of the small entities (SISNOSE) within this industry. The screening analysis
employed here is a "sales test," which computes the annualized compliance costs as a share of
sales for each company.
The Small Business Administration (SBA) defines a small business in terms of the sales
or employment of the owning entity. These thresholds vary by industry and are evaluated based
on the industry classification (NAICS Code) of the affected facility. Responses to the industry
survey indicated multiple industry classification codes with a small business definition ranging
from 500 to 1,500 employees or less than $5 million in annual sales. The EPA determined a
company's size standard based on the reported NAICS codes for these facilities. In cases where
companies own facilities with multiple NAICS's, the primary NAICS code and associated SBA
definition was used. Based on EPA's database, 29 companies were identified as small (20
percent of companies reporting sales and employment data) and the remaining 118 being large
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(80 percent). The identification of companies as small or large is included in the company data
listed in Appendix A.
Table 3-1 reports total annual compliance costs and summary statistics for the
cost-to-sales ratios for small and large companies. Table 3-1 shows that the aggregate
compliance costs incurred by small businesses represents 14 percent, or $856,000, of the industry
sample's total of $5.95 million for those reporting sales and employment data. The annual
compliance costs for small businesses range from zero to 1.17 percent of their sales. The mean
(median) compliance cost-to-sales ratio is 0.17 (0.01) percent for the identified small businesses
and 0.01 (0.01) percent for the large businesses. These results are expected to be
"representative" of the distributional impacts across companies by size. After reviewing the
range of costs (as compared to their sales) expected to be borne by small businesses, the EPA has
determined the costs are typically small and, thus, certifies that this action will not have a
significant impact on a substantial number of small entities.
Table 3-1. SBREFA Screening Analysis on Miscellaneous Metal Part and Products Sample
by Company Size: 1997
Small Large All Companies
Total Number of Companies 29 118 147
Total Annual Compliance Costs ($103/yr) $856 $5,095 $5,951
Average TAG per company ($103/yr) $29.5 $43.2 $40.5
Cost-to-Sales Ratios
Average 0.17% 0.01% 0.04%
Median 0.01% <0.01% <0.01%
Minimum 0.00% 0.00% 0.00%
Maximum 1.17% 0.14% 1.17%
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Appendix A. Baseline Data for EPA Sampled Companies Operating Facilities With
Miscellaneous Metal Parts and Products Coating Operations: 1997
Sales
Company Name ($106)
AB Volvo
AO Smith Corporation
United Industrial Corp.
ABB Ltd.
Accessory Controls and Equipment
Corp.
ACF Industries, Inc.
Advanced Technical Products, Inc.
Airxcel, Inc.
Alcoa Inc.
Alliant Techsystems, Inc.
Allied Hastings Barrel & Drum Service
Allied Signal, Inc.
Allied Tube and Conduit Corporation
Aluminum Shapes L.L.C.
Amana Refrigeration Inc
American Buildings Company
American Meter Company
American Railcar Industries
American Safety Razor, Inc.
AMPCOR II, Inc.
AMSTED Industries, Inc.
AMTROL, Inc.
Anderson Greenwood and Co.
Arkansas Steel Associates
Arvin Industries, Inc.
ASMO Co. Ltd.
AWH Corporation
Behlen Mktg. Inc.
Berenfield Containers, Inc.
Blue Bird Corporation
Bodor Corporation (dba Explorer Van Company)
Briggs & Stratton Corporation
Broan Manufacturing Company, Me.
Brock Enterprises, Inc.
Brunner Engineering & Mfg.
Burlk Woods, Alabama Tank, Inc.
Burnham Corporation
Cal dwell Tanks, Inc.
California Steel Industries
Canam Steel Corporation
Carolina Steel Steel Corp
Carriage, Inc.
Case Corporation
Employment Net Income
(#) ($106)
$26,276
$918
$221
$30,872
$580
$165
$15,340
$1,090
$15,128
$170
$100
$590
$441
$100
$298
$1,252
$202
$2,499
$100
$21
$626
$1,502
$280
$130
$12
$144
$150
$6.149
79,820
9,700
1,900
199,232
2,100
1,568
103,500
6,110
70,400
1,200
900
550
2,850
800
2,257
9,100
1,875
14,963
900
200
2,877
7,615
1,000
1,600
200
800
17.700
$1,066
$45
$1,305
$6
$853
$51
$1,331
$15
$10
-$13
$78
$22
$106
$64
Small
Business
No
No
No
No
No
No
No
No
No
No
No
Yes
No
No
No
No
No
No
No
Yes
No
No
No
No
Yes
Yes
No
No
Page 16
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Appendix A. Baseline Data for EPA Sampled Companies Operating Facilities With
Miscellaneous Metal Parts and Products Coating Operations: 1997 (Continued)
Company Name
Caterpillar, Inc.
CCX Industries, Inc.
Central Can Company
CF&I Steel, L. P.
Chicago Blower Corporation
Chief Industries, Inc.
CHS Acquisition Corp.
Gives Corporation
Coffeyville Re-Con, Inc.
Columbian Steel Tank Company
Commercial Metals Company
Container Recyclers Inc.
Cooper Industries, Inc.
Cooper Tire and Rubber Company
Copperweld Corporation
CP Louisiana, Inc.
Crane Company
Crown Cork & Seal Co. Inc.
CSX Corporation
Cummins Engine Company, Inc.
DaimlerChrysler
Deere & Comp any
Delong's, Me.
Delphi Automotive Systems
DENSO International America
Duchossois Industries, Inc.
EBSCO Industries
Emerson Electric Co.
Equimeter, Inc.
Escalade, Inc.
ESCO Corporation
Essex Group, Inc.
Esterline Technologies
Eugene Welding Company
Evans Industries, Inc.
Farr Company
FKI Industries, Inc.
Ford Motor Company
Franklin Electric Company, Inc.
Galveston-Houston Company
Hargrove Manufacturing
Gehl Company
GATX Corporation
Sales Employment Net Income
($106) (#) ($106)
$20,977
$83
$53
$130
$10
$2,368
$3,651
$1,876
$436
$2,269
$8,300
$9,898
$6,266
$154,615
$13,626
$15
$28,479
$1,000
$13,447
$91
$1,204
$353
$5
$67
$122
$144,416
$273
$262
$1,763
65,824
1,200
300
900
100
7,350
28,100
10,766
2,500
12,500
38,459
46,147
28,300
441,500
37,000
100
197,560
4,000
111,800
725
4,100
3,100
500
1,285
345,175
2,321
710
1,127
6,000
$1,513
$43
$423
$127
$138
$105
$537
-$21
$5,656
$1,021
-$93
$1,229
$6
$7
$22,071
$24
$15
$132
Small
Business
No
No
Yes
No
Yes
No
No
No
No
No
No
No
No
No
No
Yes
No
No
No
No
No
No
Yes
No
No
No
No
No
No
Page 17
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Appendix A. Baseline Data for EPA Sampled Companies Operating Facilities With
Miscellaneous Metal Parts and Products Coating Operations: 1997 (Continued)
Company Name
General Electric Company
General Motors Corporation
Geneva Steel
Glaval Corporation
Gooder-Henrichsen Company, Inc.
Gower Corporation
Great D ane Limited Partnership
Greenbrier Companies
Harley-Davidson, Inc.
Hart and Cooley, Inc.
Hay and Forage Industries
Hexcel Corporation
High Industries, Inc.
Honda Motor Co., Ltd.
Hoover Group
ICO Worldwide, Inc.
Indiana Heat Transfer
Reading Body Works, Inc.
ITT Industries, Me.
J & L Structural, Inc.
J. T. Walker Industries
J.B. Jensen Sr.
Jackson Products, Inc.
Jayco, Inc.
Johnstown America Industries, Me.
Kawada Industries USA
Ken-Koat, Incorporated
Keymark Corporation
Keystone Consolidated Industries, Inc.
Kline Iron & Steel Company, Inc.
Konstant Products, Inc.
Leed Himmel Company
LeTourneau, Inc.
Loxcreen Company, Inc.
LTV Corp.
L & B Protective Coatings Me.
Renault S.A.
MagneTek, Inc.
Newmar Corp
Marion Steel Company
Mark III Industries
Century Tube Corporation
McCook Metals LLC
Sales Employment Net Income
($106) (#) ($106)
$99,820
$161,315
$721
$300
$14
$18
$1,000
$540
$2,064
$130
$110
$1,089
$52,372
$125
$281
$8
$32
$4,493
$250
$560
$68
$370
$65
$4,273
$43,430
$663
$175
$100
$950
293,000
594,000
1,625
600
100
4,700
2,865
6,200
1,700
900
6,875
112,200
500
1,605
100
300
33,000
700
1,200
3,300
500
2,100
700
14,800
138,320
14,900
600
400
780
$9,296
$2,956
-$19
$20
$214
$50
$2,564
$6
$1,533
$4
-$27
$1,561
$39
Small
Business
No
No
No
No
Yes
Yes
No
No
No
No
No
No
No
Yes
No
Yes
Yes
No
No
No
No
Yes
No
No
No
No
No
Yes
Yes
Yes
Page 18
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Appendix A. Baseline Data for EPA Sampled Companies Operating Facilities With
Miscellaneous Metal Parts and Products Coating Operations: 1997 (Continued)
Sales Employment Net Income
Company Name ($106) (#) ($106)
McDermott International, Inc.
McElroy Manufacturing, Inc.
Metal Finishing Company, Inc.
Modine Manufacturing Company
Monaco Coach Corporation
Morgan Chemical Products, Inc.
M-TEK, Inc.
Mueller Co.
Munster Steel Company, Sic.
New Columbia Joist
National RV Holding
Navistar International Transportation
Corp.
NCI Building Systems, L.P.
Nesco Container Corp
New Venture Gear, Inc.
NIBCO Inc.
Nortek Inc.
Northrop Grumman Corporation
Northwestern Steel and Wire Company
Nucor Corporation
Nylint Corporation
Oce' USA Incorporated
Olympic Steel, Inc.
Oregon Steel Mills, Inc.
Owen Industries, Inc.
PACCAR, Inc.
Pee Dee Tank Company, Inc.
Peerless Products Me.
Phelps Dodge Corporation
Pitt-Des Moines Inc.
Plasti-Line, Inc.
Premoor, Inc.
Quoin, Inc.
R. C. Tway Company, Inc.
R. V. Hopkins
Rawson-Koeing, Inc.
Ready Metal Manufacturing Company
Regal Ware, Inc.
Replogle Globes, Inc.
Rexnord Corporation
Roanoke Electric Steel Corp.
Robert Bosch GmbH
General Steel Drum Corporation
$3,150
$14
$1,111
$595
$200
$8
$30
$81
$7,830
$675
$20
$1,033
$500
$1,738
$8,902
$596
$4,151
$20
$560
$893
$7,895
$3,063
$567
$103
$21
$190
$16
$533
$295
$30,200
20,350
200
8,700
3,043
2,300
100
200
400
17,558
3,700
100
4,000
3,500
9,640
49,600
2,000
7,200
200
1,000
2,426
23,000
13,924
2,479
1,200
300
1,800
200
4,800
1,215
188,017
$153
$74
$23
$299
$37
$35
$194
$42
$264
$12
$417
$191
$20
$19
$510
Small
Business
No
Yes
No
No
No
Yes
Yes
Yes
No
No
Yes
No
No
No
No
No
No
Yes
No
No
No
No
No
No
Yes
No
Yes
No
No
No
Page 19
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Appendix A. Baseline Data for EPA Sampled Companies Operating Facilities With
Miscellaneous Metal Parts and Products Coating Operations: 1997 (Continued)
Sales Employment Net Income
Company Name ($106) (#) ($106)
Bigbee Steel and Tank
Rockwell Collins, Inc.
Rockwell International
Rogar Hebert
Schuff Steel Company
Sequa Corporation
Sheffield Steel Corporation
Skyline Corporation
Sonoco Products Company
SST Truck Co.,LLC.
Standard Spray
Subaru-Isuzu Automotive, Inc.
Sunbeam Corporation, Inc.
Supreme Industries
Tenneco Automotive
Texas Finishing Company
Ducane Company
Vendo Company
Therma-Tru Corporation
Three Rivers Aluminum Company, Inc
Tomkins Industries, Inc.
Toro Company
Trailmobile Corporation
Tredegar Industries
Trinity Industries
Truth Hardware Corporation
Tuscaloosa Steel Corporation
Tyco International
U. S. Industries, Inc.
USX Corporation
Union City Body Company L.P.
Union Pacific Corporation
Union Tank Car Company
United Structures of America, Me.
Van Leer Containers, Inc.
VP Buildings, Inc.
W & W Steel Company
Wabash National Corporation
Waterloo Industries, Inc
Wells Aluminum Corporation
West Union Corporation
Windsor Metal Specialties, Inc
Winnebago Industries, Inc.
$6,752
$67
$1,802
$163
$665
$2,558
$420
$1,837
$223
$1,800
$47
$50
$1,400
$931
$400
$700
$2,927
$77
$275
$12,311
$27,877
$10,553
$580
$1,292
$130
$525
41,000
500
11,050
673
3,500
16,500
2,200
14,196
2,000
14,800
500
800
14,000
3,300
1,700
3,400
17,450
800
400
87,000
43,513
65,000
2,600
5,302
1,200
3,010
-$427
$64
$2
$26
$180
-$898
$9
$69
$185
$1,175
$647
-$633
$23
$24
Small
Business
No
No
No
No
No
No
No
No
No
No
Yes
No
No
No
No
No
No
No
Yes
No
No
No
No
No
No
Yes
No
Page 20
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Appendix A. Baseline Data for EPA Sampled Companies Operating Facilities With
Miscellaneous Metal Parts and Products Coating Operations: 1997 (Continued)
Company Name
Worthington Industries, Inc.
Wyman-Gordon Forgings, Inc.
Yale Security Me.
YKK Corporation
Kidde-Fenwal
Chemtrom Fire Systems
Sales Employment Net Income Small
($106) (#) ($106) Business
$1,478
$849
$200
$1,711
$65
10,000
3,955
2,500
9,506
400
No
$37 No
No
$78 No
Yes
Note: Baseline data provided in this table reflect reported financial condition as of 1997 and do not
account for any changes associated with imposition of the MACT standards.
Page 21
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TECHNICAL REPORT DATA
(Please read Instructions on reverse before completing)
1. REPORT NO.
EPA-452/R-03-018
4. TIT LE AND S UBTIT LE
Economic Impact Analysis of the
Surface Coating NESHAP: Fina
o
Miscellaneous Metal Parts and Products
I Report
7. AUTHOR(S)
9. PERFORMING ORGANIZATION NAME AND ADDRESS
U.S. EPA
Office of Air Quality Planning and Standards
Research Triangle Park, NC 2771 1
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 2771 1
3. RECIPIENTS ACCESSION NO.
5. REPORT DATE
August 2003
6. PERFORMINGORGANIZATION CODE
8. PERFORMINGORGANIZATION REPORT NO.
10. PROGRAM ELEMENT NO.
11. CONTRACT/GRANT NO.
13. TYPE OFREPORT AND PERIOD COVERED
14. SPONSORINGAGENCY CODE
EPA/200/04
15. SUPPLEMENTARY NOTES
16. ABSTRACT
This report evaluates the economic impacts of the final Miscellaneous Metal Parts and Products Surface Coating
NESHAP. The economic impacts of the rule are estimated by comparing the expected costs of compliance to
the sales of affected firms. The report also provides the screening analysis for small business impacts.
17.
a. DESCRIPTORS
economic impacts
small business impacts
social costs
18. DISTRIBUTION STATEMENT
Release Unlimited
KEYWORDS AND DOCUMENT ANALYSIS
b. IDENTIFIERS/OPEN ENDED TERMS c. COSATI Field/Group
Air Pollution Control
Economic Impact Analysis
Regulatory Flexibility Analysis
19. SECURITY CLASS (Report) 21. NO. OFPAGES
Unclassified 20
20. SECURITY CLASS (Page) 22. PRICE
Unclassified
EPA Form 2220-1 (Rev. 4-77) PREVIOUS EDITION B OBSOLETE
Page 22
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United States Office of Air Quality Planning and Standards Publication No. EPA-452/R-03-018
Environmental Protection Air Quality Strategies and Standards Division August 2003
Agency Research Triangle Park, NC
Page 24
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