vvEPA
United States
Environmental Protection
Agency
Office of Policy
Fvjrming 3nd Evaluation
Washington DC 20460
EPA 230-09/88-039
September 1988
The Small Business Sector
Study
Impacts of Environmental
Regulations on
Small Business
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THEi SMALL BUSINESS SECTOR STUDY:
IMPACTS OF ENVIRONMENTAL REGULATIONS
ON SMALL BUSINESS
Prepared for
Economic Studies Branch
Office of Policy Analysis
Office of Policy, Planning and Evaluation
U.S. Environmental Protection Agency
By
Lyman H. Clark
Washington, D.C.
and
E. H. Pechan & Associates, Inc.
Springfield, Virginia
SEPTEMBER 1988
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ACKNOWLEDGEMENTS
This study was prepared with the guidance and assistance of EPA's Sector Study
Workgroup.' The workgroup participants were:
Allen Basala (Air)
Allen Jennings (Pesticides)
Karen Klima (Surface Water)
A. W. Marks (Drinking Water)
Elizabeth LaPointe (Solid Waste)
Michael Shapiro (Toxic Substances)
Ralph Luken (Policy) (Chair)
Appendix F on Gasoline Service Stations was prepared by Robert Burt of
Meridian Research, Inc., Silver Spring, Maryland. Appendix I on Water Supply was
prepared by A. W. Marks, Chief of the Economic, Policy Analysis, and Data
Management Branch, Office of Drinking Water, U. S. Environmental Protection
Agency.
A special word of thanks is due Mary Harter, Josephine Petruzzi, and Donna
Turner of E. H. Pechan & Associates, Inc. for creating order out of a mass of
information and thereby making the entire effort possible.
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THE IMPACT OF
ENVIRONMENTAL REGULATIONS
UPON SMALL BUSINESSES
Contents
Page
Chapter 1 INTRODUCTION 1-1
Purpose of the Study. 1-1
Study Methodology 1-2
Limitations 1-3
Chapter 2 ENVIRONMENTAL REGULATIONS AND SMALL BUSINESS. . 2-1
Small Business in the United States 2-1
Environmental Regulations and Small Business 2-4
Summary '. 2-8
Chapter 3 IMPACT UPON SELECTED INDUSTRIES 3-1
Electroplating 3-1
Wood Preserving 3-4
Pesticide Formulating and Packaging. 3-4
Farm Supply Stores 3-5
Interstate Trucking 3-6
Gasoline Service Stations 3-7
Dry Cleaning 3-7
Photofinishing Laboratories 3-9
Water Supply 3-9
Summary 3-10
Chapter 4 CONCLUSIONS AND POLICY CONSIDERATIONS 4-1
Conclusions. : 4-1
Policy Considerations 4-3
APPENDICES
A. Electroplating A-l
B. Wood Preserving B-
C. Pesticide Formulating and Packaging. C-
D. Farm Supply Stores . -D-
E. Interstate Trucking E-
F. Gasoline Service Stations F-
G. Dry Cleaning G-
H. Photofinishing Laboratories H-
I. Water Supply I-
J. Environmental Regulations Included in the Study J-1
Notes N-l
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Chapter 1
INTRODUCTION
The United States is a nation of small businesses as much as it is a nation of
large corporations. Over ninety-five percent of all businesses have fewer than 50
employees. Although these firms employ only about one quarter of the people in the
United States and account for about one quarter of total sales, they are an
important part of the economy and an integral part of the American way of life.
Environmental regulations affect all businesses, large and small, but small
businesses have their own special problems' in dealing with environmental regulations.
Firms with only 5 or 10 employees do not have legal and engineering staffs to assist
them, nor to they have the financial resources available to larger firms. Often their
costs per unit of production to comply with environmental regulations are much
larger than those of their large competitors.
From its inception in 1970, the U.S. Environmental Protection Agency (EPA) has
recognized the special problems of small businesses in dealing with environmental
regulations and has taken these problems into account in its rulemaking process.
Often, EPA has relaxed environmental regulations for small businesses and, for some
regulations, EPA has exempted small businesses. This study is part of EPA's
continuing effort to investigate the impact of its regulations on small businesses.
PURPOSE OF THE STUDY
This study investigates, the potential impact upon small businesses of the
environmental regulations that will become effective during the five year period 1988
through 1992. The investigation first examines how these regulations may affect
small' businesses in general, and then examines in more detail the impacts upon
selected industries. The final chapter summarizes the findings and highlights some
potential problem areas.
This study is not meant to be either detailed or rigorous. Rather, it is
intended to take a first look at a complex subject and to identify potential problem
areas. The study covers 85 recent and forthcoming environmental regulations and
examines the potential impacts of these regulations on small businesses in nine
separate industries. To cover this subject in rigorous detail would require extensive
resources and considerable time. EPA has chosen to undertake this initial study in
order to gain a quick, broad-brush picture of the potential regulatory impacts and to
obtain insights into areas where it might more effectively direct its resources in the
future.
1-1
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STUDY METHODOLOGY
This study first examines small businesses in general to shed some light on
their relative importance in the economy and in the various industries. It then looks
at the list of 85 recent and forthcoming environmental regulations (see Appendix J)
to determine which industries are likely to be affected most. The study then focuses
on nine of these industries. The industries were selected to include those that are
dominated by small businesses as well as those that have a variety of environmental
problems.
The approach used in analyzing each of these industries selected may be
outlined as follows:
1. Describe a typical small business in the industry;
2. Identify the environmental problems associated with small
businesses in the industry;
3. Identify the environmental regulations that will apply to
these small busfnesses and estimate the ' associated
compliance costs;
4. Estimate the paperwork costs associated with the
environmental requirements for each industry.
5. Compare the estimated compliance costs, including the
paperwork burden, with industry financial statistics to
determine whether small businesses might be expected to
have difficulty meeting environmental requirements.
Where the estimated annual cost of compliance was found
to exceed 30% of net profits and/or where the estimated
capital costs were found to exceed 30% of equity, then
small businesses in the industry were identified as having
the potential for financial difficulties.
The threshold value of 30% was selected on more or less an arbitrary basis.
Time and data limitations prevented any extensive financial modeling or detailed
analysis of potential business impacts. This study was designed, instead, to identify
potential problem areas. When estimated environmental costs exceed 30% of the
median small businesses annual net profits and/or estimated capital costs exceed 30%
of the median equity, then there seems to be cause for concern. Small businesses in
some industries may be able to pass such costs on to their customers and others may
be able to reduce the costs through innovative techniques. Some of the costs will
be absorbed by reduced taxes. There are a variety of ways that businesses may
adjust to increased costs. Nevertheless, when it appears that increased costs in any
size category of any industry may exceed 30% of profits, it is safe to say that the
potential for financial difficulties exists. Because the study examined the financial
statistics of both the median firm in each size category and the firm at the lowest
quartile level, the results of the analysis are not particularly sensitive to the 30%
threshold value. When costs were close to 30% for the median firm, they were well
in excess of 30% for the firm at the lowest quartile.
1-2
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This -study did not address the issue of whether small businesses will be able to
pass increased environmental costs on to their customers in the form of higher
prices. While economic theory suggests that prices in an industry should rise to
reflect the average costs of producers, such adjustments may take time and may be
inhibited by competition from substitute or imported products or simply by consumer
resistance. Furthermore, the increased costs experienced by small businesses may be
greater than industry averages. Predicting the price increases that might result from
increased environmental costs is a complex exercise that is beyond the scope of this
study.
Exceptions to the general methodology were made for two industries: gasoline
service stations and private water supply systems. The analysis of gasoline service
stations was based upon a financial model developed for EPA's Office of Underground
Storage Tanks. The analysis of private water supply systems was provided by EPA's
Office of Drinking Water based upon its surveys of water supply systems.
For information on the financial condition of small businesses, this study used
the 1976-1983 Fin/Stat file compiled by the U.S. Small Business Administration. This
is the only data base that provides separate statistics for the smallest size categories
of businesses by four-digit SIC codes. Because the estimates of environmental costs
often were available only for an "average" small business, it was not possible to
conduct detailed financial analyses on businesses of each size category. Using the
Fin/Stat file made it possible, however, to examine the financial capabilities of firms
of different sizes of businesses and to identify potential problem areas.
Although 1976-1983 financial data are slightly outdated, inflation from 1983 to
the end of 1987 was relatively low, about 16%. This is well within the range of
accuracy of the other data used in the study and within the normal year-to-year
fluctuations in the Fin/Stat data. The median dry cleaner in the Fin/Stat file had
lower net profits in 1983 ($12,000) than in 1977 ($14,900), for example, even though
the inflation over that period was almost 65%. The appendices present summaries of
the 1983 financial statistics for the median small businesses in most of the industries.
For a few industries, the average data for 1976-1983 appears to be more
representative, however, and is presented instead.
LIMITATIONS
The approach used in this study has several limitations. For example:
1. Many of the regulations included in the study are not yet
final. One of the environmental regulations affecting
electroplaters -- for example, the hexavalent chromium air
emission standard — is not available yet .in even a
preliminary form, and one of the regulations affecting dry
cleaners — the perchloroethylene air emission standard—
is still under formulation with many options under study.
Thus, the eventual costs and impacts of many regulations
may vary considerably from those indicated herein.
1-3
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2. The performances of individual small businesses differ
considerably from industry averages. Although this study
attempts to take this into account in a qualitative way,
the study cannot go so far as to say how many small
businesses might experience difficulties in any industry.
3. The data used in the study, including both the estimates
of environmental costs and the business financial
statistics, are of limited accuracy. Thus, the conclusions
must be regarded as preliminary.
In spite of these limitations, the study describes how environmental regulations
will affect small businesses, provides estimates of how environmental costs compare
with the financial resources of small businesses, and identifies many potential
problem areas for further study.
1-4
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Chapter 2
ENVIRONMENTAL REGULATIONS AND SMALL BUSINESS
EPA's list of regulations that may affect small businesses during the 1988-1992
period includes 85 different regulations. Although it might seem that so many
regulations would overwhelm any small business, the actual impact could be much
less. Many small businesses will not be affected adversely by any of the 85
environmental regulations. Others will be affected significantly by one or two
regulations, and some will be affected by many regulations. At the same time, many
small firms, particularly those that provide pollution control products or services,
will find that their businesses grow as a result of the forthcoming environmental
regulations. Thus, the overall impact of EPA's recent and forthcoming regulations is
by no means self-evident.
This chapter examines the overall impact of these environmental regulations
upon small businesses during the period 1988-1992. The chapter first describes the
small business community, then examines which of the environmental regulations will
affect small businesses, and finally comments upon the positive and negative impacts
of the regulations .upon the small business community.
SMALL BUSINESS IN THE UNITED STATES
In 1986, there were almost 4 million businesses in the Unites States. These
businesses employed almost 90 million people. Table 2-1 presents statistics on the
number of U.S. businesses in 1986 by employment size category. From this, it is
evident that most, businesses (53 percent) in the Unites States are very small, with
fewer than five employees. Almost 90 percent of the businesses have fewer than 20
employees and 99 percent have fewer than 250 employees. Although over half of the
businesses in the United States employ one to four people, only 5.1 percent of the
people in the Unites States work for such businesses. Only 18 percent of the people
work for firms with fewer than 20 employees.
Definitions of a "small business" vary. The U.S. Small Business Administration
(SBA) uses different definitions for each industrial category. For most manufacturing
industries, SBA defines a small business as a firm with fewer than 500 employees
(99.6% of all firms). The U.S. Occupational Safety and Health Administration
(OSHA), on the other hand, defines a small business as a firm with fewer than 10
employees (75% of all firms). Most of the statistics presented in this segment of the
Sector Study focus on businesses with fewer than 50 employees (95.1% of all firms).
While this definition is somewhat arbitrary, it in no way affects the conclusions of
the study. Whatever the definition used, most businesses are small and the number
of small businesses is about 3.5 million.
2-1
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Table 2-1
BUSINESSES IN THE UNITED STATES BY SIZE - 1984
Number of Percent of Total
Size of Firm Firms Number Employment Sales
(employees)
1-4 ' 1,959,642 52.8% 5.5% 4.8%
5-9 839,268 22.6% 6.1% 5.6%
10-19 453,080 12.2% 6.6% 6.3%
20-49 286,449 7.7% 9.3% 8.4%
50-99 92,979 2.5% 6.8% 5.9%
100-249 50,723 1.4% 8.2% 6.7%
250-499 15,220 0.4%. 5.7% 4.4%
500-999 6,732 0.2% 5.1% 3.7%
1,000-4,999 5,553 0.1% 12.2% 12.2%
5,000-9,999 691 0.02% 5.3% 6.3%
> 10,000 719 0.02% 29.2% 35.8%
Total 3,711,056
Source: U.S. Small Business Administration: Small Business Data Base (SBDB),
United States Establishment and Enterprise Microdata (USEEM).
2-2
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Table 2-2
SMALL BUSINESSES' IN THE UNITED STATES BY SECTOR - 1984
Number of Percent of Sector Total
Sector
Agriculture
Mining
Construction
Manufacturing
Transportation
Wholesale Trade
Retail Trade
Finance
Services
TOTAL 3,538,445
Small Businesses
95,257
32,843
498,610
309,540
123,072
400,932
1,022,150
247,778
808.263
Number
98%
94%
98%
88%
94%
97%
97%
95%
94%
Emolovment
59%
12%
58%
12%
18%
54%
42%
23%
27%
Sales
67%
5%
55%
10%
11%
49%
39%
17%
31%
* Includes businesses with 1-49 employees.
Source: U.S. Small Business Administration: Small Business Data Base (SBDB), United
States Establishment and Enterprise Microdata (USEEM).
2-3
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Although firms with fewer than 50 employees account for about 90%-95% of the
firms in all sectors of the economy, the relative importance of small businesses
varies from sector to sector. Firms with fewer than 50 employees account for over
half the employment and sales in some sectors - agriculture, construction, and
wholesale trade - but less than 20 percent of employment and sales in other sectors
- mining, manufacturing, and transportation. Thus, some sectors of the economy can
be said to be "small business dominated" and others can be said to be "large business
dominated." The differences in relative dominance are even more dramatic at the
level of individual industries, as is discussed further below.
The financial resources available to small businesses for complying with
environmental regulations are, of course, much more limited than those available to
larger companies. As shown in Table 2-3, the average (median) business in the
manufacturing sector with 1-9 employees had net profits in 1983 of $11,000 and
equity of $62,000. The difference between these very small firms and those just
slightly larger is substantial. Businesses with 20 to 49 employees averaged $44,000 in
net profits in 1983 and had equity of $367,000. Thus, even within the range of
businesses that would ordinarily be considered small, there can be dramatic
differences in financial capabilities.
ENVIRONMENTAL REGULATIONS AND SMALL BUSINESS
Most environmental regulations address a single environmental problem, and
often this problem is specific to a single industry or product or a small group of
industries or products. Thus, most environmental regulations apply to only a small
portion of the business community., Most of EPA's regulations are directed at
reducing residuals; that is, at reducing the emissions of contaminants into the air,
water, or soil. These are the air and water standards and solid waste regulations
that are most often associated with environmental regulation. EPA issues another
type of regulation, however, governing the contents or sale and use of certain
products. These product regulations most often concern toxic and hazardous
substances, such as pesticides. For some businesses, EPA's product regulations can
be more important than those governing residuals.
Whether a small business is affected by many environmental regulations, only
one regulation, or none at all depends upon whether the business contributes to
environmental problems or helps to solve them. Most small businesses - for example,
those in the wholesale, retail, financial, and services sectors - are relatively neutral
as regards environmental problems and, hence, are not directly affected by any
environmental regulations.
Small businesses are adversely affected by environmental regulations when they
create environmental problems that the nation has decided to address. Traditionally,
the businesses associated with environmental problems have been those in the
"smokestack" industries, such as mining and manufacturing — industries that
discharge pollutants into the air or waterways. More recently, environmental
regulations have focussed upon the risks associated with toxic chemicals and
hazardous wastes. The businesses adversely affected by these new regulations are
those that use toxic chemicals in their processes and/or generate hazardous wastes.
2-4
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Table 2-3
Net Sales
Expenses & Taxes
Net Profit
Assets
Equity
Return on Equity
FINANCIAL PROFILES - 1983
(median values in $1,000)
MANUFACTURING
(SIC 20-39)
Number of Emolovees
1=9
$257
247
11
134
62
17%
10-19
$726 ,
704
22
351
156
14%
20-49
$1,600
1,556
44
775
367
12%
oer Firm
50-99
$3,709
3,629
81
1,900
823
10%
100+
$11,208
10,958
250
5,975
2,645
9%
All
Firms
$1,076
1,038
28
534
239
12%
Source: U.S. Small Business Administration: Small Business Data Base (SBDB),
Fin/Stat File.
2-5
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Small businesses are positively affected by environmental regulations, if they
engage in activities that help solve environmental problems. Small businesses that
provide engineering or laboratory services, manufacture pollution control or
monitoring equipment, or clean up hazardous waste sites, for example, find that
environmental regulations help their businesses grow. One small business'
expenditure to comply with an environmental regulation is often another small
business* receipt. Thus, when the nation decides to solve environmental problems,
the small businesses that provide the solutions prosper.
The list of 85 environmental regulations, therefore, will present problems for
some small businesses and opportunities for others. Table 2-4 lists the industries
that could be either negatively or positively affected by EPA's regulations. While
this list is not exhaustive, it includes those industries that appear to be most
significantly affected by each regulation.*
The industries that appear most often in the negatively affected column of
Table 2-4 are those with environmental problems that are the focus of EPA's current
regulatory activity. In the decade of the 1970s, environmental regulations focused
upon reducing air ' pollutant emissions and cleaning up wastewater discharges. The
industries most negatively affected by environmental regulations in the 1970s were
the "smokestack" industries, those that emitted conventional air pollutants and
discharged contaminated wastewaters. Now in the 1980s, most of these air and water
pollution regulations are in place and the focus of environmental regulations has
expanded to include toxic substances and hazardous wastes. For this reason, most of
the negatively impacted industries in Table 2-4 are those that handle toxic or
hazardous substances and/or produce hazardous wastes. These include some
industries that usually are considered to be polluting industries - for example,
petroleum refiners, iron foundries, and electric utilities - and other industries that
generally are not regarded as polluters - for example, dry cleaners, photofinishing
laboratories, gasoline service stations, and farm supply stores.
In the positively affected columns of Table 2-4 are most of the industries that
provide environmental services and pollution control equipment including consulting
companies, engineering firms, equipment manufacturers, construction contractors, and
chemical laboratories. In many cases, the small businesses that will benefit from the
environmental regulations are highly specialized; for example, manufacturers of
underground storage tank monitoring equipment. In some cases, however, the
positively affected column includes industries that are more general and are not
usually associated with pollution control services. Home improvement, contractors,
for example, will experience an increase in business as houses are modified to reduce
radon contamination.
Some industries appear in both columns of Table 2-4. These are industries that
provide environmental services and encounter environmental problems as a result of
their activities. The most notable examples are the companies that provide hazardous
waste treatment and disposal services. These companies will experience an increase
*It must be emphasized that this list of industries has been prepared using
information that, in many cases, is still preliminary. As the particulars of each
environmental regulation are developed, it is possible that different industries will be
included and/or that the estimated magnitude of effects will be changed.
2-6
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Table 2-4
INDUSTRIES POTENTIALLY AFFECTED BY ENVIRONMENTAL REGULATIONS
P rogram/Regulati on
AIR
1 Rural Fugitive Dust
2 Stratospheric Ozone
3 Municipal Waste Combustors
4 TSDF Air Standards
5 Diesel Fuel Standards
6 Diesel Particulate Standards
7 Fuel Volatility
B Gas .Marketing
9 lead Phasedown
10 NAAQS: Lead
11 NAAQS: Particulate Matter
Industries that may be
Adversely Affected
Industries that may be
Positively Affected
12 NESHAP: Chromium
13 NESHAP: Perc Dry Cleaning
14 NSPS: Small Boilers
Undetermined
Foam blowing
Refuse systems
Refuse systems; commercial recy-
clers; oils, lubricating and re-
fining
Refineries, petroleum; engines,
diesel, semi-diesel and dual fuel,
except aircraft
Gas/diesel engines; truck and bus
bodies
Refineries, petroleum
Motor vehicle, truck and bus manu-
facturers; gasoline stations
N/A proposal shelved indefinitely
Lead smelters; battery manufacturers
Crushed/broken limestone; other
crushed/broken stone; construction
sand and gravel; hydraulic cement;
cut stone and stone products;
ground/treated minerals; wholesale
grain; utilities; iron/steel;
petroleum; grain mills; paper
mills; paving mixtures; lime; gray
iron foundries; copper; lead;
aluminun; steam supply; municipal
paved roads
Electroplating
Dry cleaners and laundromats
Commercial and institutional
establishments; boiler manu-
facturing; wood preserving
Undetermined
Companies providing replacement
products; engineering services
Engineering; equip, manufacturing
Valves and pipe fittings; pumps
Engineering; equip, manufacturing
Motor vehicle parts, machinery
Motor vehicle parts, hardware
Substitutes for lead'
Engineering services; pollution
control equip.
Engineering services; pollution
control equip.; machine manufacturing
Pollution control equipment,
machine manufacturing
Engineering services; pollution
control equip.; boiler manufacturing
15 NSPS: Industrial Boilers
16 NSPS: Woodstove
Manufacturing industries
Wood heater manufacturers, some
homeowners, hardware and retail
stores selling heaters
Engineering services; pollution
control equip.; boiler manufacturing
Engineering - certification
requirements
2-7a
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Table 2-4
INDUSTRIES POTENTIALLY AFFECTED BY ENVIRONMENTAL REGULATIONS
Program/Regulat i on
RADIATION
17 Radon
18 Radiofrequency Guidance
19 Low Level Radioactive Waste
20 High Level Radioactive Waste
PESTICIDES
21 Inerts
22 Farmworkers
23 Pesticides in Groundwater
24 Large' Volume Pesticides
25 Data Requirements
26 Reregistration of Pesticides
TOXIC SUBSTANCES
27 Asbestos Ban and Phasedoun
28 Asbestos in Schools
29 Chlorinated Solvents
30 PCBs: Electical Equipment
31 PCBs: Electrical Transformers
32 Premanufacture Review Program
Industries that may be
Adversely Affected
Industries that may be
Positively Affected
Real estate
Radio/TV broadcasting
Refuse systems
Commercial electrical power gener-
ators; national defense
Chemicals and pesticides
Pesticides and agricultural chemi-
cals; disinfecting and extermin-
ating; farm supply stores;
nurseries; greenhouses; forestry
Pesticides and agricultural chemi-
cals; pest control; farm supply
stores: commercial applicators
Pest control; pesticides and'
agricultural chemicals:
commercial applicators
No additional impact (requirements
covered by existing regulations)
Disinfecting and exterminating
Manufacturers using asbestos
All local education agencies
Dry cleaners; metal cleaning (gas
stations, repair/maintenance); paint
stripping; aerosols
Electric services
Power, distribution and speciality
transformers; electric services
Chemicals and allied products,
agricultural chemicals
Construction
Engineering; equipment repair
Research institutions (nuclear
accelerators)*, educational
facilities*, refuse systems
Disposal services
Toxicology labs (if used)
Disinfecting and exterminating;
chemical labs; makers of protective
clothing
Disinfecting and exterminating
Pesticides and agricultural
chemicals (for replacement products)
None
Disinfecting and exterminating
(possibly)
Manufacturers using substitutes
Construction
Equipment manufacturing,
Manufacturers of substitutes
Electric services
Electric services
Toxicology labs (if used)
* Cost savings would be realized since wastes whose level of radioactivity is "Below Regulatory Concern" could
be disposed of as a non-radioactive waste
2-7b
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Table 2-4
INDUSTRIES POTENTIALLY AFFECTED BY ENVIRONMENTAL REGULATIONS
Program/Regulation
SARA
33 Title III of SARA
RCRA
34 Subtitle C Location Standards
35 Subtitle D Criteria
36 Li'ner and Leachate Collection
37'Corrective Action at SWMU
38 Hazardous Waste Burning
39 Municipal Ash
40 Land Ban - First Thirds
41 Land Ban • Soil and Debris
42 Land Ban Dioxin
43 Land Ban Cat. List
44 LIST Financial Responsibility
45 UST Technical Standards
46 Hazardous Waste Tank Standards
47 Toxicity Characteristic
48 Small Quantity Generator
49 Waste OiI Management
CERCLA
50 National Contingency Plan
51 CERCLA Settlement Policy
Industries that may be
Adversely Affected
Industries that may be
Positively Affected
Industries that handle toxic
chemicals
Businesses that generate haz. waste
Refuse systems; landfills; businesses
that use waste disposal services
Refuse systems; landfills; businesses
that use waste disposal services
All businesses and industries
generating hazardous waste
Chemical industries; metals
Refuse systems
All businesses and industries that
generate haz. waste; refuse systems
Refuse systems
Gum and wood chemicals;
refuse systems
Chemicals; wood preserving
Petroleum industries; gasoline
service stations; dry cleaners; and
other businesses that store petroleum
in underground storage tanks
Petroleum industries;,gasol.ine
service stations; dry cleaners; and
other businesses that store petroleum
in underground.storage tanks
Businesses generating hazardous
solid waste
Businesses generating haz. wastes
Businesses generating 100-1000kg/mo.
of hazardous waste
Re-refiners of used oil; collectors
of used oil; gasoline service
stations; trucking companies
Consultants; laboratories
Refuse systems
Refuse Systems
Refuse systems
Refuse systems; inspection
services
Equipment manufacturing; monitoring
and inspection services
Refuse systems
Refuse systems
Refuse systems
Refuse systems
Refuse systems
Insurance companies
Equipment manufacturing, repair
Refuse systems; inspection services
Chemical industry
Refuse systems
Responsible parties; Fund; States;
Federal agencies
N/A reduces transaction costs
Construction; monitoring equipment
manufacturers; underground storage
tank manufacturers
Hazardous waste disposal and cleanup
All businesses; small businesses, in
particular, because of "de minimus
component"
2-7c
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Table 2-4
INDUSTRIES POTENTIALLY AFFECTED BY ENVIRONMENTAL REGULATIONS
Program/Regulation
Industries that may be
Adversely Affected
Industries that may be
Positively Affected
DRINKING WATER
52 Total Coliform Rule Water supply systems
53 Surface Water Treatment-Filtration Water supply systems
54 VOCs in Drinking Water
55 SOCs in Drinking Water
56 Inorganics in Drinking Water
57 Fluoride in Drinking Water
58 Lead MCL and Corrosion Control
59 Lead Ban
60 34 MCLs
61 Radionuclides
62 Disinfection
63 Public Notification Rule
GROUND WATER
64 Well-head Protection
65 Class I Underground Injection Wells
Part 122 - Part 146 CFR
Water supply systems
Water Supply systems
Water Supply systems
Water supply systems
Water supply systems
Water supply systems; home
building; plumbing
Water supply systems
Water supply systems
Water supply systems
Water supply systems
All hazardous waste facilities; all
possible sources of contaminants
(dry cleaning, photofinishing;
electroplating; wood preserving;
industries using solvents, such as
computer chip manufacturing;
petroleum bulk transfer; salt
storage yards, junkyards, railyards;;
pesticide transfer to applicator
vehicles')
Chemical, petrochemical and
large manufacturing companies
Equip, repair, monitoring services
Filtration, disinfection equipment
manufacturing; monitoring equipment
Removal equipment; monitoring equip.
Removal equipment; monitoring equip.
Removal equipment; monitoring equip.
Removal equipment; monitoring equip.
Removal equipment; monitoring equip.
Plumbing equipment and services
Monitoring equipment (if required)**
Removal equipment; monitoring equip.
Removal equipment; monitoring equip.
Postal service; newspapers
Hydrogeologic information services;
land use planning; education and
training; moving companies
Hydrogeologic engineering services
66 Class II Underground Injection Wells Chemical, petrochemical and
large manufacturing companies
67
Class V Underground Injection Wells Industrial drainage wells;
Report to Congress: Class V electric power re-injection wells
Injection Wells (submitted 9/30/87)
No exceedence of the 34 MCLs expected.
[Specific amendments for design,
construction, and operation not yet
identified.]
[Regulatory options have not been
proposed.]
2-7d
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Table 2-4
INDUSTRIES POTENTIALLY AFFECTED BY ENVIRONMENTAL REGULATIONS
Program/ReguI at i on
MUNICIPAL
68 Construction Grants Program
69 Secondary Treatment Waivers
70 Municipal Sewage Sludge
71 State Sludge Management
72 Pretreatment
73 Stormwater
74 Non-Point Sources
SURFACE WATER
75 Wetlands
Industries that may be
Adversely Affected
Industries that may be
Positively Affected
Municipalities, states
Industries discharging toxic
pollutants to municipal treatment
plants
Industrial users of municipal
wastewater treatment plants
Industrial users of municipal
wastewater treatment plants
Industrial users of municipal
wastewater treatment plants
Municipalities
Farming (but no impact during
5-year study period)
Construction; real estate
developers
Municipalities, states, construction
Sewage treatment works
Waste management; laboratories
Waste management; laboratories
Waste management; laboratories
Control equipment; engineering
services
N/A
Disposal services; environmental
services (for environmental impact
studies)
76 National Estuary Program
77 Toxic Water Pollutants
78 Ocean Dumping
79 ELG: Foundries
80 ELG: Placer Gold Mining
81 ELG: Machinery Manufacturing
and RebuiIding
82 ELG: Oil and Gas
83 ELG: Organic Chemicals
84 ELG: Pesticides
85 ELG: Pulp and Paper
Marinas; boat yards; industries
discharging pollutants; industries
requiring large quantities of fresh
water
Possibly all discharging industries
Municipal sewerage authorities;
industrial ocean dumpers
Metal manufacturing, primarily iron
Placer gold mining
Machinery, primarily automotive,
aircraft; trucking, railroads
Oil and gas industries
Chemical manufacturing
Pesticides; pesticide formulators
Pulp and paper mills
Disposal services; removal equip.;
monitoring equipment
Removal equip, or engineering service
Removal equipment; land incineration
Equipment repair; engineering
services; equip, manufacturing
Equipment repair; engineering
services; equip, manufacturing
Equipment repair; engineering
services; equip, manufacturing
Equipment repair; engineering
services; equip, manufacturing
Equipment repair; engineering
services; equip, manufacturing
Equipment repair; engineering
services; equip, manufacturing
Equipment repair; engineering
services; equip, manufacturing
2-7e
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in business as the nation devotes more of its resources to dealing with its hazardous
waste problems. The same companies, however, will be faced with increasingly
stringent standards governing the treatment and disposal of hazardous wastes. They
will have to make significant expenditures to comply with the new regulations.
Furthermore, increased costs associated with hazardous waste will induce companies
to reduce the amount of hazardous waste they generate. This will, in turn,
contribute to an eventual decline in business for the hazardous waste treatment and
disposal companies. The net effect of new environmental regulations on these
companies in the long run is impossible to predict.
SUMMARY
This chapter has identified a number of industries that will be affected either
positively or adversely affected by EPA's regulations and, by omission, those
industries that will not be affected directly by the regulations. The industries listed
most frequently in Table 2-4 are summarized in Table 2-5. Most of the industries in
Table 2-5 are in the manufacturing sector, with the exception of a few service
industries, such as dry cleaning or gasoline service stations, that use toxic chemicals
or hazardous substances. Most small businesses are in industries that will not be
affected directly by any of the environmental regulations. These include most of the
small businesses in wholesale trade, retail trade, finance, and services — sectors that
include 70% of all small businesses. Some small businesses, such as engineering and
consulting companies, are in industries that will be positively affected by the
environmental regulations and some are in industries that will be adversely affected.
Table 2-6 examines the small business composition of those industries most often
listed in Table 2-4 .as being adversely affected by the environmental regulations.-
These industries include approximately 120,000 small businesses, or about 3.2% of .the
small businesses in the United States.
Because EPA is particularly concerned about those small businesses that may be
overburdened by environmental regulations, the next chapter focuses upon identifying
the industries in which many small businesses will be adversely affected by the
regulations and describing the impact of the regulations upon typical small businesses
in a number of those industries.
2-8
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Table 2-5
INDUSTRIES POTENTIALLY AFFECTED BY ENVIRONMENTAL REGULATIONS
SUMMARY
Industries That May Be
Adversely Affected
Asbestos
Chemicals
Construction*
Dry Cleaning
Electric Equipment*
Electric Utilities
Electroplating
Farm Supply Stores
Gasoline Service Stations
Motor Vehicles
Motor Vehicle Parts*
Pest Control
Pesticides and Agricultural Chemicals
Petroleum Refining
Photofinishing
Pulp and Paper
Radio/TV Broadcasting
Real Estate
Refuse Systems*
Trucking
Water Supply Systems
Wood Heater Manufacturers
Wood Preserving
All Industries with Hazardous Wastes
Manufacturing and Transportation
Industries that Handle Toxic Chemicals
Industries That May Be
Positively Affected
Chemical Laboratories
Construction*
Consulting
Electric Equipment*
Engineering
Equipment Manufacturing
Insurance
Machinery
Motor Vehicle Parts*
Plumbing and Pipe Fitting
Refuse Systems*
* Industries that may be affected both positively and adversely.
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Table 2-6
SMALL BUSINESSESMN SELECTED INDUSTRIES - 1984
SIC
2491
2861
2879
2911
3292
3321
3341
3471
4213
4911
4941
4953
5191
5541
7216
7395
Industry
Wood Preserving
Gum & Wood Chemicals
Pesticide .Formulators
Petroleum Refining
Asbestos Products
Gray Iron Foundries
Secondary Smelting
Electroplating
Interstate Trucking
Electric Utilities
Water Supply
Refuse Systems
Farm Supply Stores
Service Stations
Dry Cleaners
Photofinishing Labs
Number
of
Firms
344
70
338
315
114
602
506
3,350
24,608
1,376
2,109
2,868
15,810
54,930
15,728
4,739
Number of
Small
Businesses
309
' 61
307
241
91
370
435
3,050
22,656
864
1,977
2,742
15,609
54,077
15,438
4,547
Small Business Portion of
Firms Employment Sales
90%
87%
91%
77%
80%
62%
86%
91%
92%
62%
94%
96%
99%
98%
98%
96%
49%
4%
13%
1%
4%
10%
25%
56%
27%
4%
32%
31%
66%
71%
79%
42%
54%
18%
14%
5%
3%
11%
25%
51%
30%
4%
28%
30%
65%
62%
79%
47%
Includes businesses with 1-49 employees.
Source: U.S. Small Business Administration: Small Business Data Base (SBDB), United
States Establishment and Enterprise Microdata (USEEM).
2-10
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Chapter 3
IMPACT UPON SELECTED INDUSTRIES
Of most interest to EPA in this study are those small businesses that may find
it difficult to meet the requirements of environmental regulations. Accordingly, this
chapter focuses on a few industries that are representative of those in which such
difficulties might be expected.
Table 2-6 has identified those industries most likely to be adversely affected by
environmental regulations during the 1988-1992 period. While this list certainly is
not exhaustive, it probably is representative. It includes many different types of
industries and industries with many different environmental problems. Several of the
industries listed are of interest to this study because they clearly are small business
dominated: dry cleaning, gasoline service stations, farm supply stores, electroplating,
wood preserving, and photofinishing laboratories. Although small businesses do not
account for a high portion of sales in the interstate trucking industry, the industry
also is of interest simply because it includes such a. large number of small businesses.
Other industries, such as pesticide formulators and water supply companies, are of
interest because their environmental problems are different from most of the other
industries on the list. These are the "representative" industries selected for further
study in this chapter.
Table 3-1 identifies the environmental regulations that will adversely affect
each of these industries. The regulations that will have a direct impact are
designated with a "D," those with an indirect impact with an "i," and those with an
impact that is still uncertain with a "?." As can be seen, even those industries
selected as being representative of those most heavily affected by environmental
regulations are subject to relatively few regulations. Small water supply companies
will be affected directly by several drinking water regulations, but small businesses
in the other selected industries will be affected directly by only a few regulations.
t
The following sections are devoted to summarizing the environmental problems
of and the impact of EPA's regulations upon small businesses in the selected
industries. Presented in the Appendix are more lengthy discussions of each of the
selected industries.
ELECTROPLATING
The electroplating process requires the use of many toxic and hazardous
materials, such as metals and solvents. Although electroplaters generally reclaim and
recycle these materials, many of which are valuable, some of the toxic materials
3-1
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Table 3-1
ENVIRONMENTAL REGULATIONS THAT MAY AFFECT SELECTED INDUSTRIES
SIC Code:
Industry:
Program/Regulati on
2491 2879 3471 4213 4941 5191 5541 7216 7395
Wood Pesticide Electro- Trucking Water Farm Gasoline Dry Photo
Preserving Formu- platers Supply Supply Service Cleaning Labs
lators Stores Stations
AIR
1 Rural Fugitive Dust
2 Stratospheric Ozone
3 Municipal Waste Combustors
4 TSDF Air Standards
5 Diesel Fuel Standards
6 Diesel Participate Standards
7 Fuel Volatility
8 Gas Marketing
9 Lead Phasedoun
10 NAAQS: Lead
11 NAAQS: Particulate Matter
12 NESHAP: Chromium
13 NESHAP: Perc Dry Cleaning
14 NSPS: Small Boilers
15 NSPS: Industrial Boilers
16 NSPS: Woodstove
RADIATION
17 Radon
18 Radio-frequency Guidance
19 Low Level Radioactive Waste
20 High Level Radioactive Waste
PESTICIDES
21 Inerts i
22 Farmworkers
23 Pesticides in Groundwater
24 Large Volume Pesticides
25 Data Requirements
26 Reregistrati on of Pesticides
TOXIC SUBSTANCES
27 Asbestos Ban and Phasedown
28 Asbestos in Schools
29 Chlorinated Solvents
30 PCBs: Electical Equipment
31 PCBs: Electrical Transformers
32 Premanufacture Review Program
SARA
33 Title III of SARA
RCRA
34 Subtitle C Location Standards
35 Subtitle D Criteria
36 Liner and Leachate Collection
37 Corrective Action at SWMU
38 Hazardous Waste Burning
39 Municipal Ash
40 Land Ban - First Thirds
41 Land Ban - Soil and Debris
42 Land Ban Dioxin
43 Land Ban Cal. List
44 UST Financial Responsibility
45 UST Technical Standards
46 Hazardous Waste Tank Standards
47 Toxicity Characteristic
48 Small Quantity Generator
49 Waste OiI Management
CERCLA
50 National Contingency Plan
51 CERCLA Settlement Policy
i
i
i
i
i
i
i
i
i
i
i
i
i
i
'
D
D
D
D
0
D
i
7
D
0
i
D
D
NOTE: D -direct impact; i - indirect impact (i.e., a cost incre'ase); ? - uncertain impact
3-2a
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Table 3-1
FORTHCOMING EPA REGULATIONS THAT HAY AFFECT SELECTED INDUSTRIES
SIC Code:
Industry:
Program/Regulation
2491 2879 3471 4213 4941 5191 5541 7216 7395
Wood Pesticide Electro- Trucking Water Farm Gasoline Dry Photo
Preserving Formu- platers Supply Supply Service Cleaning Labs
lators Stores Stations
DRINKING WATER
52 Total Coliform Rule
53 Surface Water Treatment Filtration
54 VOCs in Drinking Water
55 SOCs in Drinking Water
56 Inorganics in Drinking Water
57 Fluoride in Drinking Water
58 Lead MCL and Corrosion Control
59 Lead Ban
60 34 MCLs
61 Radionuclides
62 Disinfection
63 Public Notification Rule
GROUND WATER
64 Well-head Protection ?
65 Class I Underground Injection Wells
66 Class II Underground Injection Wells
67 Class V Underground Injection Wells
MUNICIPAL
68 Construction Grants Program
69 Secondary Treatment Waivers
70 Municipal Sewage Sludge i
71 State Sludge Management i
72 Pretreatment
73 Stormwater ?
74 Non-Point Sources
D
D
0
0
0
D
D
D
D
D
D
D
SURFACE WATER
75 Wetlands
76 National Estuary Program ? ?
77 Toxic Water Pollutants
78 Ocean Dumping i i i i i i
79 ELG: Foundries
80 ELG: Placer Gold Mining
81 ELG: Machinery Manufacturing and Rebuilding ? ?
82 ELG: Oil and Gas i
83 ELG: Organic Chemicals
84 ELG: Pesticides D
85 ELG: Pulp and Paper
NOTE: D = direct impact; i = indirect impact (i.e., a cost increase); ? -uncertain impact
3-2b
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remain in electroplating wastewaters and solid wastes. In addition to these problems
associated with hazardous wastes, electroplaters that use chromium may also have a
problem with hazardous air emissions.
Most of the environmental expenditures for electroplaters over the next few
years will have to do with handling and disposing of the sludge that is generated by
these wastewater treatment systems and with the recordkeeping and reporting that
will become a necessary part of handling toxic substances and hazardous wastes.
One other potential expenditure — emission controls for hexavalent chromium — will
apply only to the chrome plating segment of the industry.
Because electroplaters with fewer than 10 employees will be exempt from
Section 313 of SARA Title III, their additional costs for the 1988-1992 period will be
approximately $4,430 per year, with an additional cost of approximately $3,680 in the
first year for the hazardous waste generator regulations. The estimated annual costs
amount to about 32% of the median small electroplater's net profit and the additional
first year costs amount to about 7% of their equity. Electroplaters at the lowest
quartile of this size category averaged net profits of only $3,400 over the 1976-1983
period and lost $9,100 in 1983. Although the additional first year expenses amount
to only 15% of their equity, the $4,430 in additional environmental expenses amounts
to 130% of their net profits over the 1976-1983 period. These figures suggest that
the electroplaters in this size category may experience difficulty managing the
increased environmental costs. Because the $4,430 in annual expenses represents only
about 2% of their average sales, it seems probable that many of these electroplaters
will be able to adjust to -the increased costs, but for some marginal electroplaters
the additional expenses could present financial difficulties.
The relative impact of environmental regulations during the 1988-1992 period
will be greatest on electroplaters with 10-19 employees. These are the smallest
electroplaters that will be subject to Section 313 of SARA Title III. Section 313 may
add $9,000 to these electroplater's annual costs, with an additional $3,000 in the first
year. This $9,000 plus $4,430 of other expenses amounts to over 70% of the median
electroplater's 1976-1983 net profits. Electroplaters at the lowest quartile in this
size category averaged net profits of only $3,400 over the 1976-1983 period and lost
$4,300 in 1983. The estimated environmental costs would amount to almost 400% of
their average net profits. These figures suggest that many electroplaters with 10-19
employees will have difficulty meeting the costs of the environmental regulations.
Electroplaters in the next size category, 20-49 employees, may also experience
some difficulty meeting the environmental requirements. Their costs will be
approximately the same as those of the smaller electroplaters, and even though they
have a larger annual profits, the annual costs are still relatively high. The median
electroplater in this size category had net profits over 1976-1983 of $34,000 on
equity of $228,000. The estimated annual environmental expenses of $13,430 amounts
to 40% of their average 1976-1983 net profits. Electroplaters at the lowest quartile
level averaged net profits of only $9,000 over 1976-1983 and experienced a $15,200
loss in 1983. The estimated environmental costs amount to almost 150% of their
average net profits. Thus, some electroplaters in this size category also may have
difficulty meeting the environmental requirements.
It is only in the next largest size category of 50-99 employees that the
environmental expenses amount to less than 30% of the median electroplaters' net
3-3
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profits ($70,000). The electroplaters in the lowest quartile averaged net profits of
$40,000, however, so that the estimated environmental costs amount to approximately
34% of these electroplater's annual net profits. Thus, the increased expenses will be
high for some of the firms even in this larger size category.
WOOD PRESERVING
Almost all of the substances and chemicals used at a wood preserving facility
are considered toxic or hazardous. In previous years, as the industry was
developing, and environmental concerns were not an issue, the practices of many
wood preserving facilities eventually contributed to serious contamination of the
surrounding area's soil and water. Many of these facilities have had to implement
extensive cleanup operations to correct these problems. The cleanup costs have
strained the financial resources of many firms severely, and several firms have gone
bankrupt.
Over the period 1988-1992, the cleanup of wood preserving facilities will
continue, and wood preservers will be faced with new regulations governing the
disposal of their hazardous wastes, the reporting of toxic chemicals, and the control
of stormwater flows. The problems associated with these new regulations may
involve not only increased costs, but also the unavailability of disposal sites. Wood
preservers now are finding that there are no disposal alternatives available for their
pentachlorophenol wastes.
Management and reporting of hazardous wastes and toxic chemicals will add
approximately $14,300 in annual costs to wood preservers' environmental expenses.
These costs amount to about 32% of the 1976-1983 median net profits for wood
preservers in both the 10-19 and 20-49 employee size category, and over four times
the reported 1983 net profits. In addition to these costs, some potentially large
costs of forthcoming waste disposal regulations and potentially large capital costs
associated with waste-minimizing technologies have not been included in the
estimates. These figures all suggest that some wood preservers may have great
difficulty meeting environmental expenses.
In addition to these increased annual costs, wood preservers may incur major
construction costs to control stormwater. Although these regulations are still in the
formative stages, the costs of some of the principal regulatory alternatives, such as
constructing roofs or wastewater collection systems for storage yards, have been
estimated to be $200,000 even for small facilities. Capital costs of this magnitude
amount to 150% of the median equity of wood preservers with fewer than 10
employees, and about 80% of the median equity of those with 10-19 employees.
Should costs prove to be as high as the preliminary estimates indicate, small wood
preservers would find it very difficult to meet these requirements.
PESTICIDE FORMULATING AND PACKAGING
Pesticide formulating and packaging (PFP) firms handle many materials that are
considered toxic and may present an environmental danger if spilled. Similarly, many
of the wastes generated from PFP processes are considered hazardous. Process
wastewaters from PFP firms may be contaminated with the toxic substances used
3-4
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and/or with the hazardous wastes generated. Finally, the pesticides produced by
these firms are themselves dangerous and subject to stringent labeling and handling
requirements.
The environmental regulations that will affect PFP firms directly during the
period 1988-1992 include those concerned with the handling of toxic substances and
hazardous wastes as well as those governing the handling and labeling of pesticides.
The PFP plants that currently discharge wastewaters into municipal sewers also will
be subject to categorical pretreatment standards at some time in the future.
The smallest PFP firms, those with 1-9 employees, will be exempt from the most
costly regulation, Section 313 of SARA Title III, and will have annual costs of only
$2,560. These firms should have no difficulty meeting environmental requirements.
Larger PFP firms will face costs of $11,560 per year plus increased waste disposal
costs and an additional $6,680 in the first year of regulation. They also may have to
replace some of their labels at a cost of $1,000-$2,000 each. Although the capital
costs are relatively low, the annual costs are about 37% of median net profits and
about 200% of the net profits of firms at the lowest quartile level. These figures
suggest that some firms may have difficulty meeting the requirements. Unlike firms
in other industries, small PFP firms may have the option of discontinuing some of
their operations rather than closing, if they cannot afford to meet these
environmental requirements.
PFP firms will be subject not only to the. current and forthcoming regulations
that are covered in this study, but also to the continuation of and possible changes
in the many existing regulations that govern the manufacture, distribution, and use
of pesticides. Firms in the pesticide industry are subject to many environmental
product regulations as well as regulations governing the discharge and disposal of
residuals. Regulations governing the registration and labeling of pesticides, for
example, already are a major factor in the PFP industry. EPA is considering
changing many of these existing regulations, which may have a more profound effect
on the PFP industry than the regulations covered in this study.
FARM SUPPLY STORES
Many farm supply stores handle pesticides, with the resultant environmental
dangers in possible spillage. For those firms that offer pesticide application services,
the mixing and use of these pesticides require stringent handling procedures so as
not to contaminate the environment. In addition, those farm supply stores that
provide fuels are concerned with potential spills and leaks from underground storage
tanks containing gasoline or diesel fuel.
Which environmental regulations affect farm supply stores directly depends upon
whether the stores handle pesticides and/or sell gasoline or diesel fuel. Farm supply
stores that handle pesticides will be affected by new pesticide regulations concerning
farmworkers and groundwater. For those farm supply stores that also provide
petroleum products, the underground storage tank technical standards and financial
responsibility requirements will apply. Farm supply stores will also be affected by
reporting requirements for toxic chemicals and by restrictions on the land disposal of
hazardous wastes.
3-5
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A farm supply store with fewer than ten employees, that does not handle
pesticides and does not sell petroleum fuels, would have no costs associated with the
major regulations. . A farm supply store that handles pesticides would face increased
annual costs of approximately $2,100 and would have first-year costs associated with
the farmworkers regulation of approximately $9,000. These annual costs amount to
approximately 5% of annual net profits. The first-year costs amount to about 2% of
the average store's equity. These figures suggest that farm supply stores that do
not sell petroleum should be able to meet environmental requirements without
difficulty.
A farm supply store that sells petroleum fuels would have increased annual
costs of approximately $4,265, plus capital costs and additional first-year costs of
approximately $11,900. These annual costs amount to about 10% of annual net
profits. The capital and first-year costs amount to approximately 3% of equity.
Again, these figures suggest that farm supply stores should be able to meet
environmental requirements without difficulty. Farm supply stores that store
petroleum or chemicals in underground storage tanks, may find that their tanks are
leaking, however. In this event, they would face corrective action costs. If
groundwater contamination or other serious damage must be repaired, these
corrective action costs could exceed $100,000, and thus could exceed the equity of
the smallest farm supply stores that are in less than average financial condition.
INTERSTATE TRUCKING
Environmental concerns associated with the trucking industry include potential
spills and leaks from underground storage tanks (USTs) containing diesel fuel or used
oil. If a trucking operation performs ^ts own maintenance, then it uses solvents for
degreasing parts. Waste disposal problems would involve used oil and spent cleaning
solvents. The used oil might be put into USTs or into drums. The washing of
trucks is done with chemicals and steam cleaning, creating wastewater runoff. For a
tank truck, the "heel," or what is left in the tank after draining the previous haul,
must be steamcleaned out and perhaps handled as a hazardous waste. Small trucking
companies usually have these cleaning functions performed by outside services.
The principal environmental regulations that will affect the interstate trucking
industry during the period 1988-1992 are those are intended to secure the
underground storage of fuel and correct any damage caused by leaks. These
regulations will apply only to those firms that store petroleum fuels on their
premises or store waste oils in USTs. These are generally only the larger trucking
companies. The other environmental regulations that will affect the interstate
trucking industry will do so indirectly, increasing the price of trucks, fuel, or waste
disposal.
Because the most costly regulations will affect only the larger firms, interstate
trucking companies should be able to manage the costs of the environmental
regulations included in this study. The costs of approximately $2,700 per year for
UST and waste-oil regulations represent about 6% of the annual profits of the
smallest companies likely to be affected by the regulations. The required investment
of $3,000 to upgrade each UST represents about 2% of their net worth.
3-6
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Trucking companies that find that their USTs have been leaking will face much
higher costs, however, possibly exceeding $100,000. EPA's experience to date
indicates that 15 percent to 20 percent of the USTs may be leaking. Some of these
firms with leaking USTs may be unable to afford the required corrective actions.
GASOLINE SERVICE STATIONS
Environmental concerns at gasoline service stations include potential spills and
leaks from USTs containing gasoline, diesel fuel, and/or used oil, and vapor emissions
from the handling of gasoline. Waste disposal problems at retail gasoline outlets
involve used oil and spent cleaning solvents.
The principal environmental regulations that will affect gasoline service stations
between 1988 and 1992 are the technical standards for USTs, and the financial
responsibility requirements for the owners and operators of USTs. In addition,
gasoline service stations in certain areas that are not attaining air quality standards
(e.g., St. Louis) will be required to install air emission controls on the nozzles of
their gasoline pump hoses. Other EPA regulations that may affect retail gasoline
outlets include regulations pertaining to generators of small quantities of hazardous
waste.
The major impact of the environmental regulations upon gasoline service
stations will depend mostly upon the status of the stations1 USTs. The cleanup of
even small releases could place the average station in a poor or distressed financial
condition. The cleanup of large plume releases could result in the average station's
failure. Fortunately, not all firms will incur corrective actions, and some states may
use state funds to aid small firms in meeting the costs of corrective action. The
capital investments required by the environmental regulations can be sustained by
most small firms if they are allowed several years to make the expenditures. If,
however, all capital expenditures under all regulations must be met in a two- to
three-year period, only the strongest firms are likely to survive.
DRY CLEANING
Most of the environmental problems in the dry cleaning industry are related to
dry cleaning solvents. Over the years there has been a pronounced trend away from
the use of petroleum-based solvents and toward the use of perchloroethylene (perc).
Over 84% of all dry cleaning facilities use perchloroethylene. Most of the remaining
facilities use a petroleum-based solvent, and a small percentage use either
fluorocarbon or trichloromethane. Environmental problems are created by the
evaporation of these solvents and by the presence of these solvents in wastewaters
and solid wastes. Spent solvents and wastes contaminated by solvents are considered
hazardous. Dry cleaners that use petroleum-based solvents generally store these
solvents in underground storage tanks, with the consequent environmental risks
associated with spills and leaks.
The principal environmental regulations that will affect dry cleaners during the
1988-1992 period will be those that control the evaporation of perchloroethylene from
perc dry cleaning machines, restrict the handling and disposal of hazardous wastes,
and require the reporting of toxic chemicals stored on premises. Dry cleaners that
3-7
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use petroleum solvents will not be subject to the perchloroethylene air emission
standards,* but may be subject to EPA's requirements for underground storage tanks.
Dry cleaners also will be affected indirectly by a series of EPA regulations that will
impose stricter standards on waste disposal in general, and hazardous waste disposal
in particular.
The most expensive regulations will apply to selected dry cleaners — namely,
perc dry cleaners that have no emission controls (about 50%) and petroleum dry
cleaners with regulated underground storage tanks. Unfortunately, the status of
these two important regulations is still uncertain.
Businesses in the dry cleaning industry are among the smallest of the small.
Most dry cleaners have fewer than five employees, and average sales per employee
that are less than half the national average. The median dry cleaner with 1-9
employees in 1983 had profits of less than $10,000 and equity of less than $40,000.
While their rate of return on equity was high, the profit available to absorb
additional costs is low. Dry cleaners at the lowest quartile of profitability in this
size category in 1983 had net profits of only $5,000 and equity of only $8,000.
Should perc emission controls be required of the smallest dry cleaners, current
estimates show they may have to invest $6,000 or more for the perc controls plus an
additional $4,300 for SARA and RCRA and will face additional annual costs of up to
$2,800 to meet all of the regulatory requirements. These costs amount to about 35%
of the median annual net profits and about 33% of the median equity of dry cleaners
with 1-9 employees. Dry cleaners at the lower quartile level of this smallest size
category will have 'to spend about 60% of their annual net profits and over 150% of
their equity. These figures suggest that some of the smallest dry cleaners may have
difficulty installing perc emission controls in addition to meeting the other
environmental requirements. The perc regulation is still under formulation with many
options under study, however, so that actual costs for perc emission controls may be
much different than preliminary estimates.
Dry cleaners with regulated underground storage tanks will have to invest
approximately $5,000 to upgrade their tanks** and meet the additional first-year
costs and will face additional annual costs of approximately $3,200. These costs
amount to about 35% and 55%, respectively, of the median annual net profits and
equity of dry cleaners in the smallest size category. Dry cleaners at the lower
quartile level of this size category will have to spend about 64% of their annual net
profits and about 100% of their equity. These figures suggest that many of the
smallest dry cleaners will have difficulty meeting UST standards. If their
underground storage tanks are found to be leaking, these dry cleaners will face much
larger costs to complete the required corrective actions. These costs could average
over $50,000 and at times could exceed $100,000. Such costs would exceed the equity
of the average dry cleaner even in the 10-19 employee size category. Many small
Air emission standards for petroleum solvents may be established during the
1988-92 period, but for now EPA has deferred making this decision.
These costs assume that USTs containing petroleum solvents are regulated as
petroleum USTs. If they are regulated, instead, as chemical USTs, dry cleaners'
upgrade costs will be greater.
3-8
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dry cleaners will not have the resources to pay for such large corrective action
costs.
PHOTOFINISHING LABORATORIES
There are five major chemical processing steps that are generally used in
processing color film or paper: developing, stopping development, bleaching, fixing,
and stabilizing. The developing solutions contain silver, a hazardous but also a
valuable material. Some of the other solutions used in photofinishing processes, such
as ferrocyanide bleach, are also hazardous. The silver and hazardous solutions are
potential sources of environmental problems, if they are allowed to contaminate
wastewaters or other wastes.
Because silver is a valuable metal, photofinishers recycle and reclaim the silver
so that they generate little or no silver-containing wastes. Small photofinishers also
avoid generating hazardous wastes by using nonhazardous bleaching solutions, such as
iron EDTA. Finally, photofinishers that process 1,600 square feet of film or less
each day are exempt from EPA's effluent limitations for wastewaters. Consequently,
most small photofinishers have no substantial environmental problems and will not be
affected directly by any of the environmental regulations covered in this study.
WATER SUPPLY
The water supply industry consists of both publicly owned and privately owned
water, supplies. Publicly owned water supplies are predominantly owned by local
municipal governments, although a sizable number are owned by the federal
government. Privately owned systems that serve large populations are usually
investor-owned entities. Privately owned systems that serve smaller populations tend
to be owned by real estate developers, homeowners associations, or mobile home
parks.
Unlike most industries that EPA regulates, water supply companies do not
discharge pollutants or produce hazardous substances. Instead, water supply
companies produce a product, drinking water, that is itself considered to be an
element of the environment. Consequently, EPA's regulations for water supply
companies are similar to product specifications. Instead of establishing standards for
the maximum discharge of pollutants, most drinking water regulations establish
standards for the maximum level of contaminants permitted in the water that these
systems supply to their customers.
Public water systems are regulated under the 1974 -Safe Drinking Water Act
(SDWA) and the 1986 Amendments to the Act. Under the 1986 Amendments, EPA is
required to promulgate National Primary Drinking Water Regulations (NPDWRs) for 83
specific contaminants. The SDWA requires that regulations for these 83
contaminants, as well as other regulations discussed below, must be adopted on a
very stringent schedule -- by June 19, 1989. In addition to the tight EPA regulatory
schedule, NPDWRs must officially take effect at the state level within 18 months of
promulgation, assuming the state fulfills primacy requirements.
3-9
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Three other provisions of the SDWA are likely to have significant impacts on
the drinking water industry. EPA is required to specify conditions under which
public water systems served by surface water sources are required to install filtration
as a treatment technique. EPA is also required to promulgate NPDWRs for
disinfection as a treatment technique for all public water systems. Further, the
SDWA mandates EPA to publish regulations that require public water systems to
monitor for a number of "unregulated" contaminants at least once every five years.
To help small systems comply with the disinfection requirement and the "unregulated"
contaminants monitoring requirement, the SDWA authorizes funds for EPA and the
states to provide assistance to small systems. These funds have not been
appropriated.
Although the environmental requirements for water supply systems will be
expensive, compliance costs ultimately will be reflected in increased rates and borne
by customers. Due to often inadequate rate bases, small systems — particularly
those that serve fewer than 2,500 people — and their customers face the greatest
difficulty in financing the necessary compliance activities.
Water supply systems will have to monitor their water for a greater number of
contaminants than is currently required and install appropriate treatment equipment
if contaminants exist at unsafe levels*. Some small systems will most likely have a
significant number of violations until adequate treatment is in place; therefore, public
notification of violations will be an additional expense.
Recognizing that small systems may be limited in their ability to comply with
the new regulations, EPA is attempting to minimize the economic impact on small
systems where possible without reducing the protection of public health. The SDWA
provides an exemption procedure that allows water supply companies additional time
to meet the new standards, provided that the water being delivered in the interim
does not present an unreasonable risk to health. It is expected that exemption
procedures will be used primarily to assist small supplies in achieving compliance.
Water supply systems serving less than 500 service connections, or approximately
1,500 people, are eligible for extendible two-year exemptions. These extendible
exemptions may be granted based upon the need for "financial assistance for the
necessary improvements," unless there is an unreasonable risk to health.
SUMMARY
Table 3-2 presents a summary of the potential impacts of the regulations upon
the selected industries and a list of the regulations that are most important for each
industry. From this table, it is apparent that even among those industries that
seemed upon first examination to be candidates .for serious impacts, there is a wide
variation in potential impacts. The study found that costs may be high for most
small businesses in three of the industries — electroplating, wood preserving, and
pesticide formulating and packaging. If costs prove to be as high as estimated and
cannot be passed on to consumers, some of these small businesses may be forced to
discontinue part of their operations or to close. Costs also may be high for small
businesses in certain segments of five other industries. Some small dry cleaners that
have underground storage tanks or require substantial perchloroethylene emissions
controls may have difficulty meeting environmental requirements. In addition, certain
gas stations, trucking firms, and farm supply stores with leaking underground storage
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Table 3-2
SUMMARY OF IMPACTS UPON SELECTED INDUSTRIES
Industry
Electroplating
Wood Preserving
Pesticide Formulating
and Packaging
Farm Supply Stores
Interstate Trucking
Gasoline Service
Stations
Dry Cleaning
Photofinishing
Laboratories
Water Supply
Most Significant
Regulations
Toxic Chemicals
Hazardous Waste
Chromium Emissions*
Hazardous Waste
Toxic Chemicals
Corrective Action
Stormwater Control*
Toxic Chemicals
Hazardous Waste
Pesticides
UST Standards
UST Corrective Action
UST Standards
UST Corrective Action
UST Standards
UST Corrective Action
Hazardous Waste
UST Standards
UST Corrective Action
Hazardous Waste
Perc Emissions*
None
Drinking Water Standards
Firms That Might
Experience Difficulty
Firms with 1-49
employees
Firms with 1-49
employees
Firms with 10-19
employees
Firms with leaking
underground storage
tanks
Firms with leaking
underground storage
tanks
Firms with leaking
underground storage
tanks
Firms with 1-9
employees that have
USTs or require perc
emissions controls
None
Firms that serve fewer
than 2,500 people
These regulations are still being formulated.
3-11
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tanks may face corrective action costs beyond their financial means. Small private
water supply companies are in a unique position, in that they operate as utilities and
generally obtain rate increases that cover their increased costs. While these firms
would not be expected to go out of business, high treatment costs for water supply
companies that fail to meet new drinking water standards may necessitate large
increases in household usage fees. Environmental costs for one of the industries
studied — photofinishing laboratories — were found to be negligible.
The environmental regulations that appear to be most often responsible for high
costs in the industries studied are those covering the handling and reporting of toxic
chemicals; the handling, treatment, and disposal of hazardous wastes; and the
operation of underground storage tanks. Although costs estimates are available for
only some of these regulations, those that are available indicate that the regulations
will affect a large number of firms in many industries and may entail costs in the
$5,000 to $10,000 range. While these costs may be managed easily by small
businesses of moderate size, they present difficulties for the smallest of the small
businesses. It is these very small businesses that comprise the majority of U.S.
businesses.
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Chapter 4
CONCLUSIONS AND POLICY CONSIDERATIONS
This study has examined the environmental regulations that will have the most
effect upon small businesses during the 1988-1992 period to assess their potential
impacts on these businesses. Although the study has not had the benefit of complete
information on the regulations or the industries studied, it has been possible to
delineate which small businesses may be most affected by the environmental
regulations, describe what many of these small businesses will have to do to comply
with" the regulations, compare • the estimated costs of the environmental regulations
with the financial resources of small businesses in the industries studied, and identify
the characteristics of small businesses in each industry that might experience
difficulty meeting environmental requirements. Although the conclusions must be
regarded as preliminary, the study provides insight into potential problem areas that
might be investigated for future policy initiatives.
CONCLUSIONS
Although the list of EPA's 85 regulations appears to be foreboding, a closer
examination reveals that seventy percent of the 3.5 million small businesses in the
United States are in sectors of the economy that produce little or no pollution--
wholesale and retail trade, finance, and services. Most of these businesses will not
be affected directly by any of the 85 regulations. Small businesses that contribute
to environmental problems will incur additional costs to comply with the regulations,
however, and in some industries the costs may be high.
Analysis of nine of these industries has identified small businesses in eight of
these industries that might have difficulty meeting environmental requirements.
These include:
1. Industries in which many small businesses mav have
difficulty meeting basic environmental requirements.
This study has identifies three industries—
electroplating, wood preserving, and pesticide
formulating and packaging — in which the costs of
environmental regulations that affect all businesses
in the industry amount to a significant portion of
the annual profits and/or equity of the smallest
businesses. In one industry ~ wood preserving—
4-1
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these costs are large, $200,000+ for construction of
stormwater control systems, while in two industries
the costs are relatively moderate, $5,000-$ 10,000 for
hazardous waste and toxic chemical management and
reporting, but present difficulties because the
annual profits of many small business in these
industries are so low.
2. Industries in which small businesses with special
processes or equipment will have difficulty.
This study indicates that most dry cleaners
will be able to afford the cost of environmental
regulations, but small dry cleaners that have to
install emission controls for perchloroethylene or
use underground tanks to store their cleaning
solvents may have difficulty.
3. Industries in which small businesses with
environmental problems will have difficulty.
•
In some industries, only the small businesses
that have environmental problems will have
difficulty meeting regulatory requirements. These
include businesses that have contaminated the
environment — gasoline service stations or trucking
companies with leaking underground storage tanks,
for example — and businesses that must correct
other environmental problems — water supply
companies that must install expensive purification
systems, for example.
The potential for financial difficulties in an industry does not mean that many
small businesses in that industry will be forced to close. In some industries—
pesticide formulating and packaging and farm supply stores, for example — the
owners may be able to discontinue some products or services and still remain in
business. In other industries ~ water supply systems, for example — owners may be
able to pass the increased costs on to their customers. In some industries, however,
the options available to small businesses will be very limited.
The regulations that appear to be most often responsible for high costs in the
industries studied are those covering the handling and reporting of toxic chemicals;
the . handling, treatment, and disposal of hazardous wastes; and the operation of
underground storage tanks. Although costs estimates are available for only some of
these regulations, those that are available indicate that the regulations will affect a
large number of firms in many industries and may entail costs in the $5,000 to
$10,000 range. Although these costs may be managed easily by small businesses of
moderate size, they present difficulties for the smallest of the small businesses. It
is these very small businesses that comprise the majority of U.S. businesses.
For most industries, the study found that the paperwork costs associated with
environmental regulations would be minor, less than $200 per year. Recordkeeping
4-2
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and reporting required for toxic chemicals under SARA Title III, however, could cost
the average small business $10,000 per year. EPA has provided options, such as
range reporting, that should allow small businesses to reduce their costs below these
average estimates, however. The other regulations that were found to entail large
paperwork costs were the corrective action requirements under RCRA. The clean-up
of hazardous waste sites often involves extensive planning. These planning studies
and periodic progress reports were estimated to cost an average of $46,000 for
extensive corrective action programs.
POLICY CONSIDERATIONS
Environmental regulations are created to reduce the risk to human health,
welfare, and the environment from pollution and hazardous substances. All of the
industries studied that will experience significant adverse impacts because of
environmental regulations are industries that produce substantial environmental risk.
Any discussion of the adverse impacts of environmental regulations on these
industries must be balanced by a discussion of the benefits that are generated by
these same regulations. Cleaning up sites contaminated by hazardous waste disposal
or leaking underground storage tanks reduces the exposure of individuals to
carcinogens, reclaims and prevents further contamination of drinking water supplies,
and restores property values. Controlling the emissions of perchloroethylene from
dry cleaning machines reduces both ambient and occupational exposure to a
carcinogen. To the extent permitted by law the regulatory process at EPA includes
balancing the costs and impacts of environmental regulations with the benefits
produced by reducing these environmental risks.
This study has provided a number of insights into the potential impacts of
EPA's regulations on small businesses. While EPA's primary mission is to reduce the
risks posed by environmental damage, the Agency also seeks to minimize the
unnecessary adverse social and economic impacts of its regulations whenever
appropriate. In this context, the results of this study suggest a number of policy
initiatives as well as areas for further study.
Policy Initiatives
Because many of the new environmental programs cut across many industries
and affect thousands of small businesses, new compliance strategies may be needed to
supplement EPA's traditional enforcement efforts. !Many of the policy initiatives
suggested below will help small businesses learn about and comply with the new
environmental regulations. This in turn will assist the Agency in achieving higher
rates of compliance among small businesses.
These policy initiatives are not necessarily new to EPA. The Agency's Small
Business Ombudsman already operates several programs to assist small businesses and
the Office of Research and Development (OR&D) is engaged in developing several
new technologies for pollution control. The problem areas highlighted by this study
provide specific focuses for existing and new programs alike.
Environmental Technology
It may be possible to reduce environmental costs to small businesses by
4-3
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developing lower-cost control technologies or standardizing existing technologies so
that they can be made available at affordable prices.
The results of this study suggest many areas in which new technologies might
help solve the special problems of small businesses. Potential projects might include
new ways to control stormwater drainage from wood preservers' storage yards, for
example, or new processes for dealing with soil that has been contaminated by
leaking underground storage tanks.
Even when appropriate technology exists, the required equipment may be
available only on a customized basis. By working with the regulated community of
small businesses and informing manufacturers of the potential market, EPA might be
able to bring down the costs of existing technologies.
Environmental Services
In some cases, required environmental services are not available to small
businesses or are available only at restrictive prices. Many wood preservers, for
example, have no disposal facilities available for some of their hazardous wastes.
Electroplaters and dry cleaners are also concerned about the availability of disposal
alternatives for their hazardous wastes. Similarly, many small businesses that own
underground storage tanks are finding that no companies will sell them the required
environmental insurance. EPA might work with the regulated community and
potential service providers to expand the options available to small businesses.
Exemplary Programs
For some of the new environmental regulations, thousands of similar small
businesses may have to prepare almost identical responses. Their costs might be
reduced considerably, if exemplary programs or responses could be made available.
Paperwork costs might be reduced, for example, by examples for answers that will be
the same for most businesses in a category. Exemplary emergency response programs
and employee training programs might be developed as well.
Education and Training
Sometimes, simply learning how to comply with environmental requirements can
be an expensive and time-consuming task for small business owners and operators.
Education programs and packages could help to reduce this expense. Such programs
could include seminars, response lines, pamphlets and other written materials, and
video training programs.
Joint Programs
Policy initiatives such as those suggested above can be undertaken by EPA on
its own or can be carried out with the help of other government agencies. New
environmental control technologies, for example, could be developed by and for small
businesses through the SBA's Small Business Innovative Research grants, with
research targeting problem areas identified in this study. Educational programs could
be developed with the U.S. Department of Commerce. State and local governments
could be enlisted in the effort as well.
4-4
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For many programs, it might be desirable to obtain the cooperation of the
industries affected. Programs could be developed with industry trade associations,
for example, to further define potential problems and to jointly prepare solutions.
Alternatively, EPA development efforts could be supported by small business advisory
teams.
Continued Analysis
This study has pointed to several potential problem areas for small businesses.
Additional research might provide more insight into these problems or might show
that the problems will not be as large as this preliminary study has suggested. This
study also has highlighted the value of detailed small business analysis. EPA can
improve the quality of its analyses by maintaining a current data base of financial
statistics on small businesses.
Small Business Analyses
By focusing on industries dominated by small businesses and by paying
particular attention to the smallest businesses in these industries, this study has
shown how detailed analysis can be especially useful in determining whether
environmental regulations will have significant impacts on small businesses. Under
the Regulatory Flexibility Act, EPA has a mandate to conduct such analyses for each
of its regulations.
The detailed analysis of small businesses was made possible through the use of
the Fin/Stat data base provided by the U.S. Small Business Administration (SBA).
Because SBA discontinued this data base in 1983, the data used was slightly out of
date. Nevertheless, it provided useful information on the financial capabilities of
small businesses.
EPA could improve the quality of its small business analyses by obtaining a
current data base of financial statistics. Sharing a common data base would provide
EPA's several offices with a common frame of reference for small business analyses
and would help to develop more standardized analytic methods. Research would be
necessary to determine the best source of such a data base and the best format for
its maintenance. The SBA could be helpful in preparing the data base, and with
other regulatory agencies such as the Occupational Safety and Health Administration,
might be interested in sharing the data base with EPA.
Multi-Regulation Impact Analyses
This study has identified several industries for which the combined effects of
several environmental regulations will result in considerably more impact than the
effects of any one regulation taken alone. Continued analysis of the combined
effects of all of EPA's regulations on those industries identified as being subject to
many regulations will help the Agency maintain a broader perspective of regulatory
impacts and will put the impacts of new regulations in a more accurate perspective.
Regulatory Analyses
This study has pointed to a number of potential problem areas associated with
individual regulations. Continued analysis of these regulations will not only provide
4-5
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better information on the actual economic impacts of this regulations, but will also
provide insights into how the regulations might be improved.
A good example of a regulation that might bear further analysis are those
promulgated under Title III of SARA. The cost for an "average small business" to
comply with Section 313 has been estimated to be approximately $9,000 per year, a
cost that appears to be prohibitive for many of the small businesses included in this
study. Cost estimates for Section 313 have been prepared, however, using
assumptions of an average number of toxic chemicals reported and an average level
of analysis. Furthermore, the estimates do not consider that many small businesses
will be able to take advantage of the range-reporting option that EPA has developed
to reduce their reporting costs. Thus, many small businesses included in this study
may be able to comply with Section 313 at a cost that is considerably lower than
that estimated. Continued analysis of how small businesses actually comply with
these regulations will enable EPA to better assess not only the impacts but also the
efficacy of the regulations.
4-6
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APPENDICES
A. ELECTROPLATING
B. WOOD PRESERVING
C. PESTICIDE FORMULATING AND PACKAGING
D. FARM SUPPLY STORES
E. INTERSTATE TRUCKING
F. GASOLINE SERVICE STATIONS
G. DRY CLEANING
H. PHOTOFINISHING LABORATORIES
I. WATER SUPPLY
J. ENVIRONMENTAL REGULATIONS
INCLUDED IN THE STUDY
NOTES
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Appendix A
ELECTROPLATING
Electroplating is a process by which a second type of metal is deposited onto
the surface of a metal product. The metal parts are passed through a series of
baths in which they are cleansed, rinsed, and plated. The plating bath consists of a
metal and, in many applications, a low concentration cyanide solution.
In 1986, there were 3,222 firms primarily engaged in the plating, polishing,
anodizing and coloring industry (SIC 3471). This industrial classification includes
electroplaters, also known as metal finishers. Although there are only 3,222 firms in
SIC 3471, there are several times that many firms that conduct electroplating
activities. These include manufacturers of automobiles, appliances, and other
products that are made with plated 'parts. The 3,222 firms in SIC 3471 employed
68,409 people and had total sales of approximately $3 billion ($45,000 per employee).
Almost half (44 percent) of these firms had fewer than 10 employees and 91 percent
had fewer than 50 employees. Only 97 firms had more than 100 employees. Firms
with fewer than 50 employees accounted for 51 percent of industry sales and 56
percent of industry employment. (See Table A-l.)
The U.S. Small Business Administration (SBA) classifies as small businesses all
firms in SIC 3471 with fewer than 500 employees. Under this definition all but 4 of
the firms (99.9%) in SIC 3471 in 1986 were considered small businesses.
A typical small electroplater has 10-12 employees and annual sales of
approximately $500,000. Such a firm operates out of a single urban location. There
are also many small electroplaters with 20-50 employees and annual sales of $!-$!.5
million.
ENVIRONMENTAL PROBLEMS
The electroplating process requires the use of many toxic and hazardous
materials, such as metals and solvents. Although electroplaters generally reclaim and
recycle these materials, many of which are valuable, some of the toxic materials
remain in electroplating wastewaters and solid wastes. In addition to these problems
associated with hazardous wastes, electroplaters that use volatile solvents may also
have a problem with hazardous air emissions.
A-l
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Table A-l
SMALL BUSINESSES IN THE ELECTROPLATING INDUSTRY - 1986
(SIC 3471)
Employees Per Firm
1-4 S-9 10-19 20-49 50-99
Number of Firms 650 775 806 690 204
Cumulative Share of:
Firms
Sales
Employment
20%
3%
3%
44%
9%
10%
69%
23%
26%
91%
51%
55%
97%
71%
75%
Source: U.S. Small Business Administration: Small Business Data Base (SBDB), United
States Establishment and Enterprise Microdata (USEEM).
A-2
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The electroplating process generates a variety of wastewaters and finally a
sludge which is stored in a tank or in drums until it is contract-hauled off-site for
disposal in a secure landfill. EPA has promulgated a series of effluent guidelines
setting standards for wastewater discharges from electroplating facilities. Most
electroplaters are now in compliance with these guidelines.
The sludge produced from wastewater treatment contains many hazardous
substances, principally metal hydroxides, and is listed as a hazardous waste. A small
plating operation might generate as much as 700 pounds of sludge (equivalent to 75
gallons) every week.1 This sludge is the primary waste generated from the
electroplating process. Most electroplaters now store their sludge in a tank or in
drums until it is contract-hauled off-site for disposal in a secure landfill.
ENVIRONMENTAL REGULATIONS
The principal environmental regulations that will affect electroplaters during the
period 1988-1992 deal primarily with the handling and disposal of toxic chemicals and
hazardous wastes. Chrome platers will also have to comply with forthcoming
regulations controlling air emissions of hexavalent chromium. These regulations are
summarized in Table A-2.
Paperwork requirements associated with these regulations will include applying
for an EPA identification number and maintaining a manifest system to track
shipments of hazardous wastes and completing all of the emergency planning,
notification, and release reports associated with handling toxic chemicals. The costs
associated with this paperwork burden are presented in Table A-3.
Regulations with a Direct Impact
CAA: Chromium NESHAP
Hexavalent chromium emissions from electroplating operations are to be
regulated under the Clean Air Act. EPA has estimated that there are an estimated
9,750 chrome platers, subject to potential regulation. EPA's regulatory options have
not been prepared yet, nor is there any information available on potential control
costs.
RCRA: Generators of 100 to 1.000 kg/mo
The Hazardous and Solid Waste Amendments of 1984 require EPA to regulate
generators of hazardous wastes that produce between 100 and 1,000 kilograms per
month. The EPA requirements include obtaining an EPA identification number,
maintaining a uniform manifest system, installing management controls, and meeting a
limited set of performance standards. EPA's final rule was promulgated in March
1986 and became effective September 22, 1986.
The costs to a small electroplating operation based on EPA estimates are as
follows:2
A-3
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Table A-2
ENVIRONMENTAL REGULATIONS
for the
THE ELECTROPLATING INDUSTRY
(SIC 3471)
Act/Regulation
Direct Impact
CAA: Chromium
NESHAP
RCRA: Generators of
100-1,000 kg/mo
RCRA: Land
Disposal Bans
SARA: Title III
Requirements
undetermined
manifest,
proper handling
treat sludges
before disposal
recordkeeping
and reporting
of toxic chemicals
Cost to Small Business
undetermined
$3,680 first year,
$1,560 per year
$1,870 per year
$l,000/yr chemical
reports; $9,000/yr:
toxic release forms
Comments
Most firms
complying now.
Estimate for
small firms.
Do some now.
If <10 emp, no
txc rls frms.
Indirect Impact
RCRA: Hazardous
Waste Regulations
higher waste
disposal costs
undetermined
Uncertain Impact
CWA: Machinery ELG
CWA: Pretreatment
and Sludge Mgt.
SDWA: Wellhead
Protection
TSCA: Chlorinated
Solvents
undetermined
undetermined
activity bans
near drinking
water wells
undetermined
undetermined
undetermined
undetermined
undetermined
May apply to
few firms, if
any.
A-4
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Table A-3
PAPERWORK BURDEN
ELECTROPLATING
(SIC 3471)
Regulation/Activity
One-Time Costs
Annual Costs Comments
Small Quantity Generators
Notification
Manifest &
Recordkeeping
$63
$108
Pick-ups twice yearly
SARA Title III
Emergency Planning
Inventory, Evaluation^
Notification
Emergency Planning
Committee
Recordkeeping
Hazardous Chemical
Inventory
Toxic Release Inventory
$150
$472
TOTAL PAPERWORK COSTS $685
$56
$1,000
$400
$12,000
$9,000
$13,164
$9,564
First Year Only
Second Year Only
First year only
Subsequent years
First year only
Subsequent years
First Year
Subsequent Years
A-5
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Initial Annual
Manifesting, Recordkeeping, $2,230 $ 220
Packaging & Labeling
Transportation Costs $ 840
On-site Accumulation Costs $1,450 $ 50
Disposal $ 250
Treatment $ 200
Total Costs $3,680 $1,560
Compliance costs for an individual firm may vary depending on waste
characteristics, proximity of the landfill, and site-specific waste disposal practices
already in effect.
The paperwork burdens associated with this regulation include a one-time
requirement to obtain an EPA identification number and annual recordkeeping
requirements associated with the manifest system. EPA estimates that the costs of
obtaining the identification number will be approximately $603 and the annual cost of
maintaining the manifest will be approximately $1,084. These costs are included in
the table above.
RCRA: Land Disposal Bans
RCRA Section 3004(e) limits the wastes that may be disposed of using land
disposal. For electroplaters, this means that they will no longer be able to send
their untreated sludges to landfills. Instead, the sludges will have to be treated
before disposal in a landfill. EPA estimates that treatment will add approximately
$0.48 per gallon to the costs of disposing of electroplaters' wastewater sludges.5
Assuming that small electroplaters generate 75 gallons of sludge each week (see
Environmental Problems above), their additional annual costs for waste disposal would
amount to approximately $ 1,870.
Title HI of SARA
Sections 302 - 304 of SARA impose requirements for notification, emergency
planning, and emergency notification on any facility using, processing, or storing
extremely hazardous substances in amounts above the established threshold levels for
those substances. EPA has estimated costs per facility for this rule over a three-
year period, FV87 - FV89. First year costs which include inventory, evaluation, and
notification are about $150. Projected costs for the second year, $472.50, are much
higher. This is assuming that the facility will participate in the development and
implementation of the community's Emergency Planning Committee. Third year costs,
primarily recordkeeping, are estimated to be about $56.6 Many electroplaters are
complying with sections 302 - 304.
Sections 311 and 312 of SARA require businesses to submit Material Safety Data
Sheets (MSDS) or alternative lists as well as hazardous chemical inventory forms to
three government agencies: the State Emergency Response Commission, the local
Emergency Planning Committee, and the local Fire Department. The MSDSs are the
same forms already required by the Occupational Health and Safety Administration
(OSHA), which establishes the reporting thresholds. Sections 311 requirements were
A-6
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effective on October 15, 1987; Section 312 on March 1, 1988. EPA estimates that
the costs to comply with sections 311 and 312 will average $1,000 per facility for the
first year with annual costs for the following years averaging about $400.7 These
costs will depend upon how many MSDSs are required and whether the MSDSs are
supplied by vendors. Most electroplaters already are maintaining the MSDS forms
required for OSHA compliance.
Section 313 requires facilities to complete a toxic chemical release form for
each toxic chemical that was manufactured, processed, or otherwise used in quantities
exceeding the established toxic chemical threshold quantity during the preceding
calendar year. Section 313 applies only to businesses within SIC codes 20 - 39
(manufacturing) and exempts from reporting all facilities with fewer than 10
employees. Section 313 went into effect in June 1987. Toxic chemical release forms
are to be submitted annually beginning in 1988. For section 313, the costs will
depend upon the number of toxic chemicals for which each firm must submit a
release form. EPA has estimated that the costs for an average small business
submitting 10 forms will be about $12,000 in the first year and $9,000 per year
thereafter.8 The costs for small electroplaters could be substantially less, however,
because they will not have so many forms and should be able to complete the forms
themselves, rather than having to pay for consulting services. In addition, EPA has
provided for range reporting that will allow small businesses to provide more general
information and thereby reduce analytic costs. The 1,539 small electroplating firms
(46% of SIC 3471) with fewer than 10 employees would be exempt from any costs
associated with section 313.
EPA considers all of the requirements associated with Title III of SARA to be
paperwork requirements. The paperwork costs associated with this regulation,
therefore, are the costs estimated above.
Regulations with an Indirect Impact
RCRA and CERCLA and CWA: Waste Disposal Regulations .
Under CERCLA and RCRA and their subsequent amendments, EPA is issuing
several regulations governing the transportation, storage, treatment, and disposal of
hazardous and nonhazardous wastes as well as standards for corrective action for
hazardous waste and toxic substance spills. Regulations under the CWA and MPRSA
on the ocean dumping of wastes and the incineration of hazardous wastes at sea will
also have an impact on waste disposal practices. The list of regulations that fall
into this category includes:
RCRA Subtitle C Location Standards
Subtitle D Criteria
Liner and Leachate Collection
Corrective Action at SWMUs
Hazardous Waste Burning
Land Ban - Dioxin and Spent Solvents
Land Ban - California List
Land Ban - Soil and Debris
Hazardous Waste Tank Standards
Toxicity Characteristics
A-7
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CERCLA National Contingency Plan
CERCLA Settlement Policy
CWA Ocean Dumping
These regulations will affect electroplating firms directly only if they maintain
a waste storage, disposal, or treatment facility on their property. For the purposes
of this analysis, it is assumed that small electroplating firms will contract out all of
their waste disposal needs. As discussed above, these regulations will affect small
electroplaters indirectly, however, by making it more difficult and more expensive for
them to dispose of their wastes. Thus, the costs of their waste disposal can be
expected to increase. Unfortunately, no estimates are available of the likely
magnitude of such cost increases.
Regulations with an Uncertain Impact
CWA: ELG Machinery Manufacturing and Rebuilding
This regulation could establish effluent limitations guidelines and standards for
the machinery manufacturing, rebuilding, and maintenance (MM&R) industries. The
regulatory approach, if any, will be prepared in FY'88.
The electroplating industry will be studied in Phase II of EPA's development
effort. The effect on small businesses depends on the depth and breadth of the
regulation and the extent to which water is used in the process. Costs cannot be
estimated until the regulatory options are developed.
CWA: Pretreatment and Sludge Management Programs
New standards for municipal pretreatment programs and for the management of
sludge generated by both public and private wastewater treatment works may affect
electroplaters that discharge wastewaters into municipal sewers. Although
electroplaters should be meeting pretreatment standards already, more aggressive
municipal pretreatment programs may lead to additional expenditures for some firms.
At the same time that' pretreatment is becoming more efficient, standards for the
management of the sludge produced by the pretreatment processes are becoming more
stringent. Electroplaters may find disposal of their wastewater treatment sludge
becoming more difficult and more expensive. The combined effects of these
regulations may increase some electroplaters wastewater treatment costs.
SDWA: Wellhead Protection
In June 1986, the Wellhead Protection Act (WHP) was added as an amendment to
the SWDA. The WHP is to be a voluntary program carried out by the individual
states. The location of wellheads would be identified and activities and facilities
within a certain area surrounding the wellhead would be examined for possible
contaminants. Under the WHP, certain electroplating activities may be banned. This
program will affect only those electroplaters that are located near drinking water
wells. The number of such firms and the potential impact upon their activities has
not yet been determined.
A-8
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TSCA: Chlorinated Solvents
An interagency regulatory group, the Chlorinated Solvents Project, is
investigating options for regulating chlorinated solvents. This interagency group
consists of representatives from EPA, FDA, OSHA, and The Consumer Products Safety
Commission (CPSC). This project is currently in the option selection stage for the
dry cleaning industry. Metal finishing is one of the industries targeted for future
regulation, but no options have been proposed at this time.
IMPACT OF THE REGULATIONS
Small businesses in the electroplating industry tend to be larger than small
businesses in many of the other industries examined in this study. As shown in
Table A-4, the average electroplater had revenues of almost $500,000 during the
1976-1983 period and average net profits of $24,000. The equity of the average
electroplater in 1983 was in excess of $100,000. The median electroplater in the
smallest size category, fewer than 10 employees, had sales of about $200,000 with net
profits of $14,000 and equity of $55,000. The median firm among electroplaters with
20-49 employees, on the other hand, had revenues of $875,000 with net profits of
over $30,000 and equity of over $200,000.
Table A-5 presents a summary of the expected costs for electroplaters of
various sizes to comply with the environmental regulations included in this study. It
is- important to note that Table A-5 includes only those environmental costs for
which estimates are available. The costs of controlling emissions of hexavalent
chromium, for example, are not included. The reporting costs for SARA Title III are
those estimated for an average small business. Actual costs for small electroplaters
may be much less. The costs associated with the RCRA land disposal bans are based
upon a single estimate of 75 gallons per week of sludge for a "small" electroplater.
Unfortunately, this estimate does not provide any information that would make it
possible to vary the costs by production volume. Thus, the same cost estimate is
used for electroplaters with sales of $200,000 per year and sales of $500,000 per
year.
Because electroplaters with fewer than 10 employees will be exempt from
Section 313 of SARA Title III, their additional costs for the 1988-1992 period will be
approximately $4,430 per year, with an additional cost of approximately $3,680 in the
first year for the hazardous waste generator regulations. The estimated annual costs
amount to about 32% of the median small electroplater's net profit and the additional
first year costs amount to about 7% of their equity. Electroplaters at the lowest
quartile of this size category averaged net profits of only $3,400 over the 1976-1983
period and lost $9,100 in 1983. Although the additional first year expenses amount
to only 15% of their equity, the $4,430 in additional environmental expenses amounts
to 130% of their net profits over the 1976-1983 period. These figures suggest that
the electroplaters in this size category may experience difficulty managing the
increased environmental costs. Because the $4,430 in annual expenses represents only
about 2% of their average sales, it seems probable that many of these electroplaters
will be able to adjust to the increased costs, but for some marginal electroplaters
the additional expenses could present financial difficulties.
A-9
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Table A-4
FINANCIAL PROFILE: 1976-1983
(median values in $1,000)
ELECTROPLATING
Net Sales
Expenses and Taxes
Net Profit
Assets
Equity
Return on Equity
1-9
$177
163
14
85
55
25%
(SIC 3471)
Number of
10-19
$400
381
19
189
103
18%
Emolovees
20-49
$875
841
34
427
228
15%
oer Firm
50-99
$2,240
2,162
78
1,160
545
14%
100+
$3,999
3,896
103
1,922
987
10%.
All
Firms
$483
459
24
232
128
19%
Source: U.S. Small Business Administration: Small Business Data Base (SBDB),
Fin/Stat File.
A-10
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Table A-5
REGULATORY COSTS FOR TYPICAL SMALL BUSINESSES
in the
THE ELECTROPLATING INDUSTRY
(SIC 3471)
Firm #1: 6 employees, sales = $200,000/yr, net profit = $12,000/yr,
equity = $44,000.
Act/Regulation One-Time Costs Annual Costs
RCRA: Generators of $ 3,680 $ 1,560
100-1,000 kg/mo
RCRA: Land Disposal Bans $ 1,870
SARA: Title III
311 & 312 $ 1,000
TOTAL COSTS $ 3,680 $ 4,430
Firm #2: 12 employees, sales = $500,000/yr, net profit = $18,000/yr,
equity = $120,000.
Act/Regulation One-Time Costs Annual Costs
RCRA: Generators of $3,680 $1,560
100-1,000 kg/mo
RCRA: Land Disposal Bans $ 1,870
SARA: Title III
311 & 312 - $ 1,000
313 $ 3,000 $ 9,000
TOTAL COSTS $ 6,680 $13,430
A-ll
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The relative impact of environmental regulations during the 1988-1992 period
will be greatest on electroplaters with 10-19 employees. These are the smallest
electroplaters that will be subject to Section 313 of SARA Title III. Section 313 may
add $9,000 to these electroplater's annual costs, with an additional $3,000 in the first
year. This $9,000 plus $4,430 of other expenses amounts to over 70% of the median
electroplater's 1976-1983 net profits. Electroplaters at the lowest quartile in this
size category averaged net profits of only $3,400 over the 1976-1983 period and lost
$4,300 in 1983. The estimated environmental costs would amount to almost 400% of
their average net profits. These figures suggest that many electroplaters with 10-19
employees will have difficulty meeting the costs of the environmental regulations.
Electroplaters in the next size category, 20-49 employees, may also experience
some difficulty meeting the environmental requirements. Their costs will be
approximately the same as those of the smaller electroplaters, and even though they
have a larger annual profits, the annual costs are still relatively high. The median
electroplater in this size category had net profits over 1976-1983 of $34,000 on
equity of $228,000. The estimated annual environmental expenses of $13,430 amounts
to 40% of their average 1976-1983 net profits. Electroplaters at the lowest quartile
level averaged net profits of only $9,000 over 1976-1983 and experienced a $15,200
loss in 1983. The estimated environmental costs amount to almost 150% of their
average net profits. Thus, some electroplaters in this size category also may have
difficulty meeting the environmental requirements.
It is only in the next largest size category of 50-99 employees that the
environmental expenses amount to less than 30% of the median electroplaters' net
profits ($70,000). The electroplater in the lowest quartile averaged net profits of
$40,000, however, so that the estimated environmental costs amount to approximately
34% of these electroplater's annual net profits. Thus, the increased expenses will be
high for some of the firms even in this larger size category.
CONCLUSION
Over the past several years, most electroplaters have made substantial
investments in wastewater treatment systems. Most of their added expenditures over
the next few years will have to do with handling' and 'disposing of the sludge that is
generated by these wastewater treatment systems and with the recordkeeping and
reporting that will become a necessary part of handling toxic substances and
hazardous wastes. One other potentially large expenditure, emission controls for
hexavalent chromium, may involve significant expenditures, but will apply only to the
chrome plating segment of the industry.
A comparison of the estimated costs of recent and forthcoming environmental
regulations with the reported financial performance of small electroplaters in various
size categories suggests that many electroplaters with 1-49 employees may have
difficulty meeting the environmental requirements. Some of the less profitable
electroplaters in the next largest size category, 50-99 employees, may also have
difficulty.
A-12
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Appendix B
WOOD PRESERVING
The demand for wood products that can withstand the rapid deterioration
brought on by insects, rotting, and fire has given rise to the wood preserving
industry. Wood preserving facilities usually specialize in treating a limited range of
products. Those using inorganic preservatives treat mostly dimension lumber, posts,
and poles for insect and rot resistance and fire retardancy; plants using organic
preservatives treat primarily poles, railroad ties, and pilings.
In 1986, there were 370 firms primarily engaged in wood preserving (SIC 2491).
These firms employed 10,392 people and had total sales of approximately $850 million
($100,000 per employee). Almost half (43 percent) of these firms had fewer than 10
employees and 86 percent had fewer than 50 employees. Only 21 firms had more
than 100 employees. Firms with fewer than 50 employees accounted for 43 percent
of industry sales and 43 percent of industry employment. (See Table B-l.)
The U.S. Small Business Administration (SBA) classifies as small businesses all
firms in SIC 2491 with fewer than 500 employees. Under this definition all of the
firms in SIC 2491 in 1986 were considered small businesses.
There are two stages in the wood preserving process. First, the wood is
preconditioned to reduce the moisture content, then it is treated with preservatives.
The most common method of preconditioning is pressure steaming in a retort
(cylinder), followed by vacuum drying. This method is widely recognized as
producing a superior product. Other methods include seasoning in large, open yards;
kiln drying; heating in a preservative bath under reduced pressures; and vapor drying.
Wood treating can use either a pressure or non-pressure process. In the non-
pressure processes the wood is immersed in open tanks containing the preservatives.
According to a 1985 survey, only 17 facilities use non-pressure processes today.1 In
the pressure process, the preservative is forced into the wood under pressure in a
retort, or cylinder.
The layout of a typical pressure treatment facility includes three major
processing areas:
1. A raw materials storage yard;
2. A treating cylinder (retort), or pressure vessel, with the
necessary pumps, tanks and control equipment;
3. A boiler plant to heat the solution and to pressurize the
cylinder;
B-l
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Table B-l
SMALL BUSINESSES IN THE WOOD PRESERVING INDUSTRY - 1986
(SIC 2491)
Employees Per Firm
1-4 5-9 10-19 20-49 50-99
Number of Firms 72 82 75 88 27
Cumulative Share of:
•Firms
Sales
Employment
21%
2%
2%
43%
8%
8%
62%
18%
17%
86%
43%
43%
93%
60%
59%
Source: U.S. Small Business Administration: Small Business Data Base (SBDB), United
States Establishment and Enterprise Microdata (USEEM).
B-2
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4. A seasoning and storage yard, including the cylinder
loading track and auxiliary transportation facilities.
The steel treating cylinders (retorts), typically used in pressure treatment, are from
4 to 10 feet in diameter and up to 175 feet in length. These are the most important
component of the plant.2
Wood preserving plants use both organic (oilborne) and inorganic (waterborne)
materials. Some of the organic materials used are pentachlorophenol, and creosote
solutions. Today, many plants in Georgia and Florida are doing away with creosote,
because it has presented numerous problems concerning worker safety and excessive
contamination of the soil and groundwater. The principal inorganic material used is
CCA, a solution of copper, chromium, and arsenic salts. Other inorganic salts--
principally bqrates,. phosphates, and ammonium compounds — are used as fire
retardants. A 1985 survey showed that 63% of the wood treated was treated with
waterborne preservatives, 25% with creosote solutions, 10% with pentachlorophenol
and 2% with fire retardant chemicals.5
To characterize the typical wood preserving plant, it is necessary to
differentiate between those plants treating with waterborne preservatives and those
treating with oilborne preservatives.
The typical plant treating with waterborne preservatives uses CCA, has one
cylinder 50.-60 ft. long, and employs fewer than 12 people. The type of wood treated
(primarily lumbers and timbers used for fences, posts, poles and decks) can be
handled more easily and processed much faster than that requiring the oilborne
treatment. Normal treating time in the cylinder is about two hours, enabling a plant
to complete three to • four charges a day. A 198:5 survey reports an average of
797,040 cu. ft. of wood treated with waterborne preservatives per facility for that
year.4
The typical plant treating with oilborne preservatives uses creosote and
pentachlorophenol, operates two to three cylinders, 100 175 ft. long and employs
20-40 people. The wood treated here is primarily hardwood, used for poles, railroad
ties, pilings and bridge switches. The treatment time is about 18 hours in the
cylinder so that each cylinder charge takes one to two days. Because the pieces of
wood treated here are generally much larger and heavier, more labor is required for
handling and treating the wood. These facilities, needing more machinery and larger
treatment and storage areas are physically larger than waterborne plants. The same
1985 survey reports an average of 1,451,790 cu.ft. of wood treated with oilborne
preservatives per facility that year.6
ENVIRONMENTAL PROBLEMS
Almost all of the substances and chemicals used at a wood preserving facility
are considered toxic or hazardous. In previous years, as the industry was
developing, and environmental concerns were not an issue, the practices of many
wood preserving facilities eventually contributed to serious contamination of the
surrounding area's soil and water. Creosote especially tends to be rapidly absorbed
into the soil and leaches into the groundwater. Many plants were ordered to create
holding ponds to catch the waste runoff, but subsequent inspections found that the
B-3
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substances were still leaching into the ground from the holding ponds and that the
ground around the ponds was contaminated. Many of these facilities have had to
implement extensive clean-up operations to comply with RCRA corrective action
regulations. The cleanup costs have strained the financial resources of- many firms
severely and several have closed.
The principle waste streams generated by the wood preserving process are:
1. Leftover water from pressure treatment which may be sent
to on-site surface impoundments or may be discharged
into municipal sewers. On-site surface impoundments were
standard years ago, but very few are in use today.
2. Wastes leached from the treated wood set outdoors to dry.
Over time this would accumulate in the soil and groundwater.
3. Sludge collected in storage tanks and in treatment systems.
The sludge is comprised of wood preservatives and chemical
impurities.6
Ideally, wood preservers use what is called a "closed system". Most of the
facilities constructed in the last 20 to 30 years use such a system. This method
allows for the steam and condensate to be recycled and reused. Most of the waste
accumulated is residue left over from cleaning out the cylinders and mixtures of oil,
water, and preservatives. These wastes generated from the treatment process need
to be disposed of in hazardous waste landfills.
Those' facilities using pentachlorophenol, which contains low levels of certain
dioxins, have a problem disposing of their wastes, because it is now illegal to dispose
of any dioxin-containing wastes in a landfill. Incineration is the only acceptable
method of disposal and there are no incinerators permitted at the present time to
take this waste.7 It is assumed that most plants are storing these wastes on site
until there are disposal alternatives available. If and when incineration becomes an
option, the supply and demand factor will most likely make it a very costly service.
ENVIRONMENTAL REGULATIONS
Because many wood preserving chemicals are toxic and many wood preserving
wastes are hazardous, EPA has been looking closely at the industry's chemical use
and waste disposal practices. In the early 1980's, the Agency reviewed the use of
wood preservatives under FIFRA and decided to continue their authorization with
certain modifations and use restrictions. Now, the Agency is proposing to regulate
under RCRA some 700 wood preserving plants and about 2,000 sawmills that treat raw
lumber.8 The greatest impact will be on plants treating with creosote and
pentachlorophenol. Under these regulations, costs for waste disposal, permitting, and
corrective-action will be substantial. A summary of the principal environmental
regulations that will affect the wood preserving industry during the period 1988-1992
is presented in Table B-2.
Paperwork requirements associated with these regulations will include applying
for an EPA identification number and maintaining a manifest system to track
B-4
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Table B-2
ENVIRONMENTAL REGULATIONS
for the
THE WOOD PRESERVING INDUSTRY
(SIC 2491)
Act/Regulation
Direct Impact
Requirements
Cost to Small Business
SARA: Title III
Indirect fmlnact
recordkeeping
and reporting
of toxic chemicals
$l,000/yn chemical
reports; $9,000/yr.
toxic release forms
Comments
RCRA: Listing
WP Wastes
RCRA: Land Ban -
First Thirds
RCRA: Land Ban -
Dioxin
RCRA: Land Ban -
California List
RCRA: Liner and
Leachate Standards
RCRA: Corrective
Action
RCRA: Toxicity
Characteristic
RCRA: Generators of
100-1,000 kg/mo
concrete pads
under storage
incineration,
stabilization
testing,
incineration
testing,
proper disposal
double liners,
. leachate collectn
close sites,
repair damage,
testing, disposal
as haz. waste
manifest,
proper handling
$200,000
$5,000 per year
higher disposal
costs
higher disposal
costs
cost estimates
not available
$200,000 to
$2.0 million
higher waste
disposal costs
$3,680 initial
$1,560 annual
Regulation not
final
Assumes 20 bbl
of sludge/year
Alternatives
not selected
Maybe only
penta plants
Will close
disposal sites
Contaminated
sites only
Negotiations
under way
Most firms
now complying
Do some now
If <10 emp, no
txc 'rls frms
RCRA: Hazardous
Waste Regulations
Uncertain' Imoact
CAA: Industrial
Boilers NSPS
SDWA: Wellhead
Protection
TSCA: Chlorinated
higher waste
disposal costs
testing,
install controls
activity bans
near wells
undetermined
undetermined
undetermined
undetermined
undetermined
Most plants
not affected
May apply to
few firms
May not appl
Solvents
selection stage
to industry
B-5
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shipments of hazardous wastes and completing all of the emergency planning,
notification, and release reports associated with handling toxic chemicals. Some
wood preservers will have extensive paperwork requirements associated with
corrective action regulations. The costs incurred by this paperwork burden are
presented in Table B-3.
Regulations with a Direct Impact
RCRA: Generators of 100 to 1000 kg/mo
The Hazardous and Solid Waste Amendments of 1984 require EPA to regulate
generators of hazardous wastes that produce between 100 and 1000 kilograms per
month. The EPA requirements include obtaining an EPA identification number,
maintaining a uniform manifest system, installing management controls, and meeting a
limited set of performance standards. EPA's final rule was promulgated in March
1986 and became effective September 22, 1986.
The costs to a small wood preserving plant based on EPA estimates are as
follows:9
Initial Annual
Manifesting, Recordkeeping, $2,230 $ 220
Packaging & Labeling
Transportation Costs $ 840*
On-site Accumulation Costs $1,450 $ 50
Disposal $ 250
Treatment $ 200
Totals $3,680 $1,560
Compliance costs for an individual firm may vary depending on waste
characteristics, proximity of the landfill, and site-specific waste disposal practices
already in effect.
The paperwork burdens associated with this regulation include a one-time
requirement to obtain an EPA identification number and annual recordkeeping
requirements associated with the manifest system. EPA estimates the cost of
obtaining the identification number to be about $6310 and the annual cost of
maintaining the manifest to be approximately $108.n These costs are included in
the table above.
RCRA: Land Ban - First Thirds
EPA's land disposal regulations for the first third of the scheduled wastes listed
under RCRA Section 3001 require wood preservers that use creosote and/or penta-
chlorophenol to treat wastewaters and wastewater treatment sludges to the
concentration levels achieved by treating wastewaters by chemical precipitation /and
the resulting sludges by incineration and stabilization. EPA estimates that the
* Yearly transportation costs have been estimated at $1,882, when the waste
must be transported more than 200 miles.
B-6
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Table B-3
PAPERWORK BURDEN
WOOD PRESERVING
(SIC 2491)
Regulation/Activity
One-Time Costs
Annual Costs Comments
Small Quantity Generators
Notification
Manifest &
Recordkeeping
$63
$108
Pick-ups twice yearly
SARA Title III
Emergency Planning
Inventory, Evaluation, $150
Notification
Emergency Planning $472
Committee
Recordkeeping
Hazardous Chemical Inventory
Reporting
Toxic Release Inventory
Toxic Chemical
Release Forms
TOTAL COSTS
$685
$56
$1,000
$400
$12,000
$9,000
$13,164
$9,564
First Year Only
Second Year Only
First year only
Subsequent years
First year only
Subsequent years
First year
Subsequent Years
Other Potential Costs
RCRA - Corrective Action
Corrective Action
Studies
$46,000 (site-specific)
If hazardous waste
damage on site.
B-7
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disposal costs for the sludge will increase tenfold, from $0.50 to $5.00 per gallon.12
This would raise the cost of disposing of a 55-gallon barrel of sludge from $28 to
$275. The incremental cost associated with this regulation, therefore, is about $250
per barrel of sludge.
The amount of wastewater sludge generated by a wood preserving facility in a
year can vary greatly. Plants that use steam treating processes can generate 100-200
barrels of wastewater a year. How this wastewater is treated and how much sludge
is produced depends upon the technology employed. As discussed above, wood
preservers are minimizing waste generation as much as possible. Many have switched
from steam treatment to dry kilns or have switched to waterborne preservatives such
as CCA. With these new technologies, wood preservers can reduce their sludge
generation to less than 10 barrels a year. Increased waste disposal costs associated
with this regulation, therefore, could vary from $2,000 to over $50,000 per year.
Given the tenfold increase in disposal costs, it is unlikely that wood preservers
will continue to generate large quantities of wastewater sludge. The ultimate costs
associated with this regulation may be the capital costs of installing alternative
preserving technologies rather than the increased annual costs of sludge disposal.
These capital costs could be large, however, over $100,000 in some cases.
RCRA: Land Ban - Dioxin
On November 8, 1986 the EPA land ban of certain dioxin-containing wastes
went into effect. The restrictions are based on the requirement that extracts from
wastes be tested for concentrations of specified constituents. Wastes whose extracts
contained less than the specified concentrations could be land disposed; wastes
generating extracts with higher contaminant levels would have to be treated prior to
being land disposed. Because there is currently no permitted or certified capacity
for incinerating or otherwise treating the affected dioxin-containing wastes, EPA has
delayed the effective date of the rule for two years, until November, 1988.
Wood preserving plants using pentachlorophenol are most likely to generate
dioxin-containing waste and will be affected heavily by this regulation. In
attempting to estimate costs for incinerating dioxin wastes, EPA surveyed commercial
facilities currently incinerating PCBs (there are no incinerators currently disposing of
dioxin-containing wastes). .Reported disposal prices were about $1,500 per metric
ton.13 The cost of incinerating dioxin-containing wastes, of course, may be
different.
RCRA: Land Ban - California List
On July 8, 1987 the EPA promulgated regulations restricting land disposal of
certain "California list" wastes: liquid hazardous wastes containing polychlorinated
biphenyl (PCBs) above specified concentrations: and hazardous wastes containing
halogenated organic compounds (HOCs) above specified concentrations (1000 mg/kg).
EPA has defined the HOCs that must be included as any compounds having a carbon-
halogen bond. Pentachlorophenol falls into this category and all facilities using this
chemical may have to comply with the regulation. The effect of this regulation will
be to require wood preservers to dispose of these wastes only at permitted hazardous
waste facilities. This will increase waste disposal costs. No estimates are available
of the potential cost.
B-8
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RCRA: Liner and Leachate Collection Standards
All new, replacement and expanded landfills and surface impoundments
continuing to receive waste after Nov. 8, 1984 are subject to Minimum Technology
Requirements. The rule sets minimum design standards for various types of
hazardous waste management facilities. These requirements are primarily for double
liner containment and collection systems. Only plants managing waste on-site are
affected. The compliance deadline for interim status surface impoundments is Nov. 8,
1988.
Most wood preservers with surface impoundments will close them rather than
pay the high costs associated with meeting these standards. Thus, the principal
effect of these standards upon wood preservers will be to accelerate corrective
actions and closures at wood preserving sites that have landfills or surface
impoundments. No estimates of the costs of these activities are available.
RCRA: Listing of Wood Preserving Wastes
EPA is considering listing as hazardous wastes several waste streams generated by
the wood preserving industry. Some of the wastes targeted are dripage, wastewater,
wastewater treatment residuals, and process residuals.
This regulation would require wood preservers either to protect their treated
wood from rain by constructing coverings for the drip pads and storage areas, or to
collect and then treat the rainwater that falls on their drip pads and storage areas.
An EPA Economic Impact Analysis estimates that compliance costs would range from
about $200,000 for a small wood preserving plant to almost $800,000 for a large
plant.14 These estimates assume that the drip pads and storage area at a small wood
preserving plant cover 1/4 to 1/2 acres.
RCRA: Toxicitv Characteristic
According to 40 C.F.R. § 261.20, a solid waste is a hazardous waste if it exhibits
any one of four specific characteristics identified by the RCRA regulations. These
characteristics are ignitibility, corrosivity, reactivity and EP toxicity. A solid waste
exhibits the characteristic of EP toxicity if, using approved testing methods, the
extract from a representative sample of the waste contains any of the contaminants
listed in Table I of 40 C.F.R. § 261.24 at a concentration greater than the threshhold
value given.
On June 13, 1986 EPA proposed amendments to hazardous waste identification
regulations under Subtitle C of RCRA by expanding the Toxicity Characteristic to
include 38 additional chemicals and by introducing a new extraction procedure to be
used. EPA also introduced a second generation leaching procedure, the Toxicity
Characteristic Leaching Procedure, (TCLP), used to address the mobility of organic
and inorganic compounds in the ground.
Two wood preserving wastes already trigger the characteristic of EP Toxicity:
arsenic (>5 mg/1) and chromium (>5 mg/1) and must be managed under RCRA.15 The
proposed amendment will include three creosol compounds and three chlorophenol
compounds typically found in wood preserving wastes. The rule will probably be
finalized in August, 1988. When this goes into effect, these additional compounds
B-9
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will be added to the list of wood preserving wastes that are considered hazardous
and must be disposed of in permitted facilities. Because these substances are already
handled by wood preserving facilities as hazardous wastes, no additional costs should
be incurred.
RCRA: Corrective Action
The final HWSA codification rule requires that any Subtitle C permit issucu 10 a
RCRA facility after the date of enactment must require corrective action for all
releases of hazardous wastes from solid waste management units (SWMUs) as well as
hazardous waste management units at the facility. The final rule grants EPA the
authority to issue corrective action orders to interim status facilities to clean up
releases from both solid and hazardous waste management units on a site-specific
basis. This rule went into effect on July 26, 1985.
Many of the wood preserving facilities in the south, primarily Georgia and
Florida, are presently engaged in extensive clean-up activities. As discussed before,
these plants engaged in practices that caused serious contamination of the soil and
water. The law gives them until November 8, 1988 to clean up and dispose of their
wastes in a specified landfill. One plant in Georgia spent $200,000 in clean-up costs;
others are spending $1 to $2 million.16 The costs of corrective action under this
regulation will depend on the degree of contamination, which in turn depends on
factors such as permeability of the soil, how long the facility has been operating,
what waste disposal practices were used, etc. Thus, the corrective action costs are
highly site-specific and are directly related to the environmental problems at each
site.
The paperwork burdens associated with this regulation include preparing plans,
periodic reports, final reports, and summaries. Substantial additional burdens may be
imposed on a site-specific basis depending on whether contamination of the soil
and/or groundwater is discovered. EPA estimates a one-time cost per facility for
paperwork activities of $46,000.1T
Title III of SARA
Sections 302 - 304 of SARA impose requirements for . notification, emergency
planning, and emergency notification on any facility using, processing, or storing
extremely hazardous substances in amounts above the established threshold levels for
those substances. EPA has estimated costs per facility for this rule over a three-
year period, FY'87 - FY'89. First year costs which include inventory, evaluation, and
notification are about $150. Projected costs for the second year, $472.50, are much
higher. This assumes that the facility will participate in the development and
implementation of the community's Emergency Planning Committee. Third year costs,
primarily recordkeeping, are estimated to be about $56.18 The wood preserving
industry has requested clarification from EPA as to whether certain of their
chemicals or compounds thereof are actually listed as extremely hazardous. They
already report pyrene, a constituent of creosote, as extremely hazardous.
Sections 311 and 312 of SARA require businesses to submit Material Safety Data
Sheets (MSDS) or alternative lists as well as hazardous chemical inventory forms to
three government agencies: the State Emergency Response Commission, the local
Emergency Planning Committee, and the local Fire Department. The MSDSs are the
B-10
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same forms already required by the Occupational Health and Safety Administration
(OSHA), which establishes the reporting thresholds. Section 311 requirements were
effective on October 15, 1987; Section 312 on March 1, 1988. EPA estimates that
the costs to comply with sections 311 and 312 will average $1,000 per facility.19
These costs will depend upon how many MSDSs are required and whether the MSDSs
are supplied by vendors. All wood preservers must comply with Sections 311 and 312
and should be doing it now.
Section 313 requires facilities to complete a toxic chemical release form for
each toxic chemical that was manufactured, processed, or otherwise used in quantities
exceeding the established toxic chemical threshold quantity during the preceding
calendar year. Section 313 applies only to businesses within SIC codes 20 - 39
(manufacturing) and exempts from reporting all facilities with fewer than 10
employees (most of SIC 2491 « See Table B-l). Section 313 went into effect in
June 1987. Toxic chemical release forms are to be submitted annually beginning in
1988. The typical facility submitting 10 forms would expend about 400 labor hours a
year. The forms are, technical and lengthy and ideally should be filled out by a
chemist or an engineering specialist. The industry is recommending that facilities
file a form for each listed chemical (or compound thereof) in a solution to insure
compliance with the law.20 This would indicate that EPA's estimate of first year
costs for this rule of $12,000 to $13,000 per facility is not an overstatement. EPA
estimates second year costs to be lower, about $9,000.21 These costs could also be
higher given that threshold levels for reporting probably will be decreased.
EPA considers all of the requirements associated with Title III of SARA to be
paperwork requirements. The paperwork costs incurred by this regulation are the
costs estimated above.
Regulations with an Indirect Impact
RCRA and CERCLA and CWA: Waste Disposal Regulations
Under CERCLA and RCRA and their subsequent amendments, EPA is issuing
several regulations governing the transportation, storage, treatment, and disposal of
hazardous and nonhazardous wastes as well as standards for corrective action for
hazardous waste and toxic substance spills. Regulations under the CWA on the ocean
dumping of wastes will also have an impact on waste disposal practices. The list of
regulations that fall into this category includes:
i
RCRA Subtitle C Location Standards
Subtitle D Criteria
Hazardous Waste Burning
Land Ban - Soil and Debris
Hazardous Waste Tank Standards
CERCLA National Contingency Plan
CERCLA Settlement Policy
CWA Ocean Dumping
B-ll
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As discussed above, many wood preserving companies formerly disposed of their
wastes on site. These companies are now having to upgrade their disposal practices
to meet these new EPA standards. In most cases, the wood preserving companies
will close their waste disposal facilities and correct any damage to the soil and
groundwater. They will then have to find disposal alternatives off of their plant
sites. EPA's RCRA, CERCLA, and CWA regulations will affect wood preservers
indirectly by making it more difficult and more expensive for them to dispose of
their wastes off-site. Unfortunately, no estimates are available of the likely
magnitude of such cost increases.
Regulations with an Uncertain Impact
CAA: Industrial Boilers NSPS
Standards of performance limiting emissions of sulfur dioxide (SO2) from coal
and oil-fired industrial, commercial, and institutional boilers were promulgated on
December 16, 1987.
Some wood preservers use coal or oil-fired boilers in the Boultonizing process
(preconditioning the wood) or to fire kilns, but the majority of facilities use wood
chips or are switching to the use of wood chips.22 The impact of this regulation on
the industry as a whole is probably minimal, but because no Regulatory Flexibility
Analysis has been prepared, the potential impacts remain uncertain.
CWA: Review
The Water Quality Act of 1987 requires EPA to establish a schedule for the
review/reevaluation of effluent guidelines and standards. This review may have an
impact on the wood preserving industry.
SDWA: Wellhead Protection
In June 1986, the Wellhead Protection Act (WHP) was added as an amendment to
the SDWA. The WHP is to be a voluntary program carried out by the individual
states. The location of wellheads would be identified and activities and facilities
within a certain area surrounding the wellhead would be examined for possible
contaminants. Under the WHP, certain wood preserving activities, at plants that are
located near drinking water wells could be banned. The number of such firms and
the potential impact upon their activities has not yet been determined.
TSCA: Chlorinated Solvents
An interagency regulatory group, the Chlorinated Solvents Project, is
investigating options for regulating chlorinated solvents. This interagency group
consists of representatives from EPA, FDA, OSHA, and The Consumer Products Safety
Commission (CPSC). This project is currently in the option selection stage for the
dry cleaning industry. Wood preserving is not one of the industries targeted for
future regulation, but wood preservers do use chlorinated solvents in their process.
B-12
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IMPACT OF THE REGULATIONS
Table B-4 presents a financial profile of wood preservers over the 1976-1983
period. During this period, the median wood preserving companies in both the 10-19
and 20-49 employee size categories had sales of approximately $1.3 million per year
and net profits of about $50,000 on equity of about $300,000. These figures may be
misrepresentative, however, because the major environmental expenditures for wood
preservers did not occur until the end of the survey period. In 1983, the median
wood preserving company included in SBA's statistics had sales of $1.3 million, but
net profits of only $4,000 on equity of about $550,000, and the median wood
preserving company-with 20-49 employees experienced a loss of $3,400.
The environmental costs facing a typical wood preserver with 20 employees are
summarized in Table B-5. Firms with hazardous waste problems remaining on their
sites will face very large corrective action costs, but even the firms that have
corrected their problems will face very large costs from new environmental
regulations. While the annual costs for firms without hazardous waste problems are
about 32% of median net profits for the 1976-1983 period, they are about four times
median 1983 net profits, and the capital costs are very high -- about 66% of the
equity of the median firm over the 1976-1983 period and about 37% of 1983 equity.
For firms at the lower quartile of the industry, the capital costs amount to about
130% of their average equity over the 1976-1983 period, and almost 200% of their
equity in 1983. These figures and the list of environmental regulations facing the
wood preserving industry suggest that many wood preserving companies could have
great difficulty meeting the environmental requirements.
CONCLUSION
Over the past several years, wood preservers throughout the country have been
making dramatic changes in their facilities and processes in order to correct
environmental problems. These changes have been extremely expensive and many
wood preservers have had to close their facilities because they could not afford the
required environmental actions. Over the period 1988-1992 the cleanup of wood
preserving facilities will continue and wood preservers will be faced with new
regulations governing the .disposal of their hazardous wastes, the reporting of
hazardous and toxic materials handled on site, and the control of stormwater runoff.
More wood preserving wastes will be considered hazardous and more of these wastes
will be banned from land disposal facilities. The problems associated with these new
regulations may involve not only increased costs, but also the unavailability of
disposal sites. Wood preservers now are finding that there are no disposal
alternatives available for their pentachorolphenol wastes.
A comparison of the estimated costs of recent and forthcoming environmental
regulations with typical industry financial statistics suggests that many wood
preservers will have difficulty meeting the regulatory requirements.
B-13
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Table B-4
FINANCIAL PROFILE : 1976-1983
(median values in $1,000)
WOOD PRESERVING
Net Sales
Expenses
Net Profit
Assets
Equity
Return on Equity
JLri.
$303
266
18
249
133
14%
(SIC 2491)
Number of
10-19
$1,000
899
51
493
253
20%
Emolovees
20-49
$1,712
1,616
48
809
391
12%
per Firm
50-99
$4,552
4,159
196
2,891
954
21%
100+
$9,538
8,969
285
5,148
2,115
13%
AH
Firms
$1,292
1,191
51
538
307
16%
Source: U.S. Small Business Administration: Small Business Data Base (SBDB),
Fin/Stat File.
B-14
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Table B-5
REGULATORY COSTS FOR TYPICAL SMALL BUSINESSES
in the
THE WOOD PRESERVING INDUSTRY
(SIC 2491)
Firm #1: 20 employees, sales = $1.3 million/yr, net profit =
equity = $300,000. No hazardous waste problems
Act/Regulation
SARA: Title III
311 & 312
313
RCRA: Generators of
100-1,000 kg/mo
RCRA: Land Ban - First Thirds
RCRA: Land Disposal Bans,
Toxicity Characteristic
RCRA: Listing of Wood
Preserving Wastes
TOTAL COSTS
One-Time Costs
$ 3,000
$ 3,680
$50,000/yr,
on site.
Annual Costs
$ 1,000
$ 9,000
$ 1,560
$ 5,000
increased
disposal costs
$ 200,000
$ 206,680
$16,560 + increased
disposal costs
Firm #2: 20 employees, sales = $1.3 million/yr, net profit =
equity = $300,000. Hazardous waste problems on
Act/Regulation
SARA: Title III
311 &312
313
RCRA: Generators of
100-1,000 kg/mo
RCRA: Land Ban - First Thirds
RCRA: Land Disposal Bans,
Toxicity Characteristic
RCRA: Listing of Wood
Preserving Wastes
RCRA: Corrective Action
TOTAL COSTS
One-Time Costs
$ 3,000
$ 3,680
$50,000/yr,
site.
Annual Costs
$ 1,000
$ 9,000
$ 1,560
$ 5,000
increased
disposal costs
$ 200,000
$200.000 - $2 million
$400,000 - $2.2 million
$16,560 + increased
disposal costs
B-15
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Appendix C
PESTICIDE FORMULATING AND PACKAGING
Pesticide formulating and packaging firms (PFP firms) combine pesticide active
ingredients with substances such as diluents, emulsifiers, and wetting agents to
produce and/or package pesticides for distribution and sale. Pesticide formulators
and packagers are distinguished from pesticide manufacturers, which manufacture the
active ingredients used in pesticides. PFP firms do not manufacture active
ingredients. Instead, they purchase the active ingredients and combine them with
other substances to produce a pesticide that is ready to use. Some of the firms
primarily engaged in pesticide formulating and packaging may have expanded their
activities to include the manufacture of a small quantity of active ingredients, but
this is not their primary activity. Generally, it is only the large PFP firms that also
manufacture active ingredients. PFP firms are also to be distinguished from firms
that merely repackage and/or distribute pesticides. Distributors do not formulate or
package pesticides. Instead, they purchase pesticides already packaged and resell
them.
In 1986, there were 338 firms primarily engaged in SIC 2879, which includes
PFP firms among the general classification of pesticide and agriculture chemical firms
not elsewhere classified. Although there are only 338 firms in SIC 2879, several
times that many firms conduct PFP activities. These include those firms whose
primary activity is the manufacture of chemicals and fertilizers. The 338 firms in
SIC 2879 employed 10,691 people and had total sales of approximately $3.5 billion
($145,000 per employee) in 1986. Most (59%) of these firms had fewer than 10
employees and 90% had fewer than 50 employees. Only 16 firms had more than 100
employees, but these 16 firms accounted for 58% of industry • sales- and employment.
Firms with fewer than 50 employees accounted for 35% of industry sales and 29% of
industry employment. (See Table C-l.)
The U.S. Small Business Administration (SBA) classifies as small businesses all
firms in SIC 2879 with fewer than 500 employees. Under this definition all but 3 of
the firms (99.1%) in SIC 2879 in 1986 were considered small businesses.
Although the statistics on SIC 2879 in Table C-l indicate that 59% of PFP firms
have fewer than 10 employees, most very small firms are discontinuing formulation of
pesticides and are concentrating instead on distribution activities. This general trend
in the industry is the result of increased formulating and packaging activity by the
manufacturers of active ingredients as well as existing EPA, OSHA, and other
regulations, and of the increased complexity of the regulatory environment. It is no
longer feasible for firms with only a few employees to keep up with all of the
regulatory requirements or to bear the liabilities that are associated with pesticide
C-l
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Table C-l
SMALL BUSINESSES IN THE PESTICIDE AND AGRICULTURAL CHEMICAL INDUSTRY
(SIC 2879)
Employees Per Firm
Number of Firms 111 90 54 50 17
Cumulative Share of:
Firms
Sales
Employment
1=4
111
33%
3%
3%
Ł=Ł
90
59%
9%
8%
10-19
54
75%
16
15
20-49 SOj
50
90% 95
35% 42
29% 39
Source: U.S. Small Business Administration: Small Business Data Base (SBDB),
United States Establishment and Enterprise Microdata (USEEM).
C-2
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manufacture. The small businesses that remain pesticide formulators generally have
20-50 employees or more. Firms of this size had average annual sales of $2-$ 10
million and more over the 1976-1983 period and had average profits of $70,000 to
$250,000. Their equity was generally in excess of $500,000. (See Table C-4) While
firms in this category are also small businesses, they are in a better position to deal
with complex environmental regulations than are the smallest businesses in SIC 2879.
ENVIRONMENTAL PROBLEMS
PFP firms handle many materials that 'are considered toxic and therefore
present an environmental danger if spilled. Similarly, many of the wastes generated
from PFP processes are considered hazardous. Process wastewaters from PFP firms
may be contaminated with the toxic substances used and/or with the hazardous
wastes generated. Finally, the pesticides produced by these firms are themselves
dangerous and subject to stringent labeling and handling requirements.
The hazardous wastes generated by PFP firms include contaminated rinsates,
pesticide dustbags, and collected process wastewaters.1 Because pesticides and active
ingredients used in pesticides are valuable products, the PFP industry has a financial
incentive to use as much product as possible. Thus, PFP firms practice extensive
recycling and generate relatively small amounts of waste. Nevertheless, these wastes
are hazardous and must be disposed of properly.
ENVIRONMENTAL REGULATIONS
The environmental regulations that will affect PFP firms directly during the
period 1988-1992 include those concerned with the handling of toxic substances and
hazardous wastes as well as. those governing the. handling and labeling of pesticides.
The PFP plants that currently discharge wastewaters into municipal sewers also will
be subject to categorical pretreatment standards at some time in the future.2 Table
C-2 presents a summary of the current and forthcoming environmental regulations
that will affect PFP firms.
PFP firms will be subject not only to the current and forthcoming regulations
that are the subject of this study, but also to the continuation of and possible
changes in the many existing regulations that govern the manufacture, distribution,
and use of pesticides. As discussed in Chapter 2, firms in the pesticide industry are
subject to many environmental product regulations as well as regulations governing
the discharge and disposal of residuals. Regulations governing the registration and
labeling of pesticides, for example, already are a major factor in the PFP industry.
EPA is considering changes to many of these regulations. These changes in existing
regulations may have a more profound effect on the PFP industry than the
regulations covered in this study.
Paperwork requirements for PFP firms will include applying for an EPA
identification number and maintaining a manifest system to track shipments of
hazardous wastes and completing all of the emergency planning, notification, and
release reports associated with handling toxic chemicals. The costs associated with
this paperwork burden are presented in Table C-3.
C-3
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Table C-2
ENVIRONMENTAL REGULATIONS
for the i
THE PESTICIDE FORMULATING AND PACKAGING INDUSTRY
(SIC 2879)
Act/Regulation
Direct Impact
CWA: Pretreatment
Guidelines
RCRA: Generators of
100-1,000 kg/mo
RCRA: Land
Disposal Bans
SARA: Title III
FIFRA: Farmworkers
Indirect Impact
RCRA: Hazardous
Waste Regulations
Uncertain Impact
CWA: National
Estuary Program
SDWA: Wellhead
Protection
FIFRA: Pesticides
in Groundwater
FIFRA: Registration
of Pesticides
FIFRA: Inerts
TSCA: Premanufacture
Review Program
Requirements
undetermined
manifest,
proper handling
send wastes to
haz. disp. sites
recordkeeping,
reporting of
toxic chemicals
new labels
higher waste
disposal costs
testing, new
labels, restricted
use, recordkeeping
solvent bans
notify EPA of
new chemicals
Cost to Small Business
undetermined
$3,680 first year,
$1,560 following years
increased waste
disposal costs
$l,000/yn chemical
reports; $9,000/yr:
toxic release forms
$l,000-$2,000/label
undetermined
undetermined
undetermined
$5,400 to $12,700
per PMN
Comments
Do some now.
If <10 emp, no
txc rls frms.
May cost less.
permits and
monitoring
activity bans
near wells
monitoring,
restricted use
undetermined
undetermined
undetermined
Only firms
near estuaries
Few firms, if
any.
Only selected
products.
Mfrs. of pest.
intermediates.
C-4
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Table C-3
PAPERWORK BURDEN
PESTICIDE FORMULATING AND PACKAGING
(SIC 2879)
Regulation/Activity
One-Time Costs
Annual Costs Comments
RCRA: Generators of
100-1,000 kg/mo
Notification $63
Manifest &
Recordkeeping
SARA Title III
Emergency Planning
Hazard Evaluation, $150
Planning Committee, $472
Recordkeeping
Notification of accidental releases
Hazardous Chemical Inventory
Reporting (submit MSDSs)
Toxic Release Inventory
Toxic Chemical Release Forms
$108
Trade Secrets
Justification Statements
Provide Information to
Health Professional
$56
$1,000
$391
$12,000
$9,000
$450
$115
FIFRA: Farmworker Protection
Reporting, Recordkeeping,
Data Collection
$65
TOTAL COSTS
$1,250
$13,229
$9,500
Pick-ups twice yearly
1st year costs
2nd year costs
3rd year costs
Case-specific
First year only
Subsequent years
First year only
Subsequent years
Most covered under
mixture rule
Case-specific
May be additional
labeling costs
First year
Subsequent years
C-5
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Regulations with a Direct Impact
CWA: Pretreatment Guidelines
The Clean Water Act requires EPA to act to control wastewater discharges from
the pesticide industry. Effluent limitation guidelines for direct dischargers in the
PFP industry are in effect already. Pretreatment guidelines for indirect dischargers
are scheduled to be repromulgated in 1991. PFP firms will then have three years to
comply.
These regulations will apply to those PFP firms that currently discharge
wastewaters into municipal sewers. Although no analysis is available yet for these
regulations, previous analyses suggest that, for small PFP firms, wastewater flows
will be low enough to make contract hauling and incineration feasible. These firms
will have no capital costs associated with the new regulations and will be able to
minimize annual costs by reusing their process wastewaters, a practice that is now
common throughout the industry.
The paperwork burden associated with this regulation will depend upon the
option that EPA chooses. PFP firms that eliminate all wastewater discharges should
no longer have any paperwork associated with this regulation, however.
RCRA: Generators of 100 to 1000 kg/mo
The Hazardous and Solid Waste Amendments of 1984 require that EPA regulate
generators of hazardous wastes that produce between 100 and 1000 kilogram per
month. Regulations require obtaining an EPA identification number, maintaining a
uniform manifest system, installing management controls, and meeting a limited set of
performance standards. EPA's final rule was promulgated in March 1986 and became
effective September 22, 1986.
The costs to a small PFP firm based on EPA estimates are as follows:3
Annual
Manifesting, Recordkeeping, $2,230 $ 220
Packaging & Labeling
Transportation Costs $ 838*
On-site Accumulation Costs $1,450 $ 53
Disposal $ 250
Treatment $ 200
Total Costs $3,680 $1,560
Compliance costs -for an individual firm may vary depending on waste
characteristics, proximity of the landfill, and site-specific waste disposal practices
already in effect.
* Yearly transportation costs have been estimated to be $1,880, when the
waste has to be transported more than 200 miles.
C-6
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The paperwork burdens associated with this regulation include a one-time
requirement to obtain an EPA identification number and annual recordkeeping
requirements associated with the manifest system. EPA estimates that the costs of
obtaining the. identification number will be approximately $604 and the annual cost
of maintaining the manifest will be approximately $108.5
RCRA: Land Disposal Bans
RCRA Section 3004(e) limits the wastes that may be disposed of using land
disposal. For pesticide formulators, this will mean an increased use of dustbags,
enabling pesticide dust to be reused, rather than regulated as a hazardous waste. It
is expected that formulators also will move to incineration of wastes, such as mixed
pesticide dustbags, and rinsates. At this time there are no studies available as to
how these changes in waste disposal practices will affect PFP firms.
Title III of SARA
Sections 302 - 304 of SARA impose requirements for notification, emergency
planning, and emergency notification on any facility using, processing, or storing
extremely hazardous substances in amounts above the established threshold levels for
those substances. EPA has estimated costs per facility for this rule over a three-
year period, FY'87 - FY'89. First year costs which include inventory, evaluation, and
notification are about $150. Projected costs for the second year, $472.50, are much
higher. This assumes that the facility will participate in the development and
implementation of the community's Emergency Planning Committee. Third year costs,
primarily recordkeeping, are estimated to be about $56.6 Many PFP firms are
complying now with Sections 302 - 304.
Sections 311 and 312 of SARA require businesses to submit Material Safety Data
Sheets (MSDS) or alternative lists as well as hazardous chemical inventory forms to
three government agencies: the State Emergency Response Commission, the local
Emergency Planning Committee, and the local Fire Department. The MSDSs are the
same forms already required by the Occupational Health and Safety Administration
(OSHA), which establishes the reporting thresholds. Sections 311 requirements were
effective on October 15, 1987; Section 312 on March 1, 1988. EPA estimates that
the costs to C9mply with sections 311 and 312 will average $1,000 per; facility.7
These costs will depend upon how many MSDSs are required and whether the MSDSs
are supplied by vendors. Most of these costs will not be new, however, because
most PFP firms already submit MSDSs for OSHA.
Section 313 requires facilities to complete a toxic chemical release form for
each toxic chemical that was manufactured, processed, or otherwise used in quantities
exceeding the established toxic chemical threshold quantity during the preceding
calendar year. Section 313 applies only to businesses within SIC codes 20 - 39
(manufacturing) and exempts from reporting all facilities with fewer than 10
employees. Section 313 went into effect in June 1987. Toxic chemical release forms
are to be submitted annually beginning in 1988. EPA estimates that a small business
will have to complete 10 release forms, at a cost of approximately $12,000 in the
first year and $9,000 each year thereafter.^ No information is available to indicate
whether these cost estimates are accurate for PFP firms. The 198 small firms in SIC
2879 (59% of the industry) that have fewer than 10 employees would be exempt, of
course, from any costs associated with section 313.
C-7
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Section 322 states that any owner or operator required to submit information
pursuant to sections 311, 312, 303(d)(2), 303 (d)(3) or" 313 to any other person or
agency may withhold the specific chemical identity of a certain hazardous chemical,
extremely hazardous substance, or a toxic chemical, if additional requirements are
met as defined by the law. The rule requires that owners or operators submit a
statement of justification for claiming trade secrecy to the Administrator along with
a separate statement revealing the specific identity of the designated chemical or
substance. The owner must keep these records on file. EPA estimates that very few
PFP firms will be affected by this rule. EPA estimates that this will require 13.3
labor hours per facility at a one-time cost of $450.9
Section 323 requires an owner or operator to provide the specific chemical
identity of a substance upon the request of a health professional for purposes of
diagnosis and treatment of an individual who has been exposed to the substance.
This would occur on a case by case basis and EPA has estimated 3.3 hours/year at a
cost of $115.50 per facility.10
Title III costs are generated primarily by the labor hours associated with
paperwork requirements. Therefore paperwork costs are synonymous with the costs
stated above.
FIFRA: Farmworkers
EPA is proposing to revise its regulations under FIFRA for protection of
agricultural workers from exposure to pesticides. The primary impact of this
regulation on PFP firms would be the requirement to make changes on labels of
pesticide products. Labels will have to include instructions on the use of the
pesticides consistent with the regulations. This might cost $1,000 to $2,000 per
label.11 The regulations may be phased in, however, so that actual costs would be
reduced. For instance, the regulations might allow the label changes to be made
when the labels are being changed for other reasons.
Paperwork requirements associated with this regulation include reporting,
recordkeeping, and data collection. Recordkeeping is expected to require 0.25 hours
per week of clerical time to maintain the records, or 6.5 hours per year. Assuming
.an upper-bound labor cost of $10/hour, the annual cost per firm would be $65.12
FIFRA: Pesticides in Ground Water
EPA is considering restricting or canceling, on a case-by-case basis, the use of
pesticides that threaten the groundwater, except where management plans for
reducing the potential for contamination have been approved. The Agency is meeting
with states and others to discuss the issues involved. The potential prevention
strategy involves issuing regulations on groundwater monitoring as well as requiring
data on and restricting the use, on a regional basis, of pesticides that could leach
into the groundwater.
Although the cost of these regulations may be substantial, they apply only to
those PFP firms that register their own products, an activity not common to small
PFP firms, and then only to those PFP firms that register those pesticides that are
designated as posing a hazard to groundwater. PFP firms that sell restricted or
cancelled pesticides and not their substitutes may loose market share.
C-8
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Regulations with an Indirect Impact
RCRA and CERCLA and CWA: Waste Disposal Regulations
Under CERCLA and RCRA and their subsequent amendments, EPA is issuing
several regulations governing the transportation, storage, treatment, and disposal of
hazardous and nonhazardous wastes as well as standards for corrective action for
hazardous waste and toxic substance spills. Regulations under the CWA and MPRSA
on the ocean dumping of wastes and the incineration of hazardous wastes at sea will
also have an impact on waste disposal practices. The list of regulations that fall
into this category includes:
RCRA Subtitle C Location Standards
Subtitle D Criteria
Liner and Leachate Collection
Corrective Action at SWMUs
Hazardous Waste Burning
Land Ban - Dioxin and Spent Solvents
Land Ban - California List
Land Ban - First Thirds
Land Ban - Soil and Debris
Hazardous Waste Tank Standards
Toxicity Characteristic
CERCLA National Contingency Plan
CERCLA Settlement Policy
CWA Ocean Dumping
These regulations will affect PFP firms directly only if they maintain a waste
storage, disposal, or treatment facility on their property. For the purposes of this
analysis, it is assumed that small PFP firms will find it prohibitive to maintain such
facilities and will contract out all of their waste disposal needs. These regulations
will affect small PFP firms indirectly, however, by making it more difficult and more
expensive for them to dispose of their wastes. As discussed above in reference to
the land ban regulations, the costs of waste disposal for PFP firms can be expected
to increase. No estimates are available of the likely magnitude of such cost
.increases.
Regulations with an Uncertain Impact
CWA: National Estuarv ProRram
The National Estuary Program was established in 1987 by sections 317 and 320
of the Water Quality Act. No national program guidance and/or regulations have
been developed to define the Comprehensive Conservation and Management Plans
(CCMP) which are to be developed by management conferences convened in estuaries
of national significance. The impact on PFP firms would depend on the estuaries
covered and the pollutant problems of concern. Although it is possible that some
small PFP firms might be affected by this program, it is too early to comment on
the potential impacts.
C-9
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SDWA: Wellhead Protection
In June 1986, the Wellhead Protection Act (WHP) was added as an amendment to
the SDWA. The WHP is to be a voluntary program carried out by the individual
states. The location of wellheads would be identified and activities and facilities
within a certain area surrounding the wellhead would be examined for possible
contaminants. Under the WHP, certain activities, such as the loading of pesticides
from storage to applicator vehicles, may be banned. This program will affect only
those PFP firms that are located near drinking water wells. The number of such
firms and the potential impact upon their activities has not yet been determined.
TSCA: Premanufacture Review Program
TSCA requires that chemical manufacturers file a form with EPA giving specific
information 90 days before the manufacture or import of a new chemical. The cost
is estimated to be between $5,400 to $12,700 per premanufacture notice (PMN).13
Only those PFP firms that also manufacture pesticide intermediates would be
affected by this regulation. Because the development of new pesticides or new
chemicals requires a large investment in research and development, this regulation is
most likely to apply to large petroleum, chemical, or pharmaceutical manufacturers
and not the smaller PFP operations. Although it is possible that a small PFP firm
might decide to enter the market, it is highly improbable. For the purposes of this
study, it is assumed that the premanufacture review program will not apply to small
businesses.
FIFRA: Rereaistration of Pesticides
Pesticides are subject to reexamination as standards change, new data becomes
available, etc. Manufacturers may be required to conduct further tests to support
the registration. This would have an impact on those PFP firms that also
manufacture active ingredients or formulate pesticides.
Individual pesticides may be banned or their use may be restricted. There may
be other requirements for the use of specific pesticides, such as special clothing
required for application. PFP firms may have to affix new labels to their current
inventory. All of these possibilities have some impact on PFP firms. For instance,
restricted use pesticides require more recordkeeping.
The costs of reregistration requirements to PFP firms will depend on what
actions are taken for which pesticides. These are as yet undetermined.
FIFRA: Inerts
The Inerts Data Call-in requirements of FIFRA require that manufacturers of
inerts submit data on the toxicology and related aspects of inert ingredients of
pesticide products. The data will be used to assess the acceptability of using
specific chemicals as inert ingredients in pesticide products. Users of these
products, such as pesticide formulators and packagers, would have to reformulate and
relabel pesticides containing banned ingredients. No analyses of the potential
impacts of these activities have been prepared.
C-10
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IMPACT OF THE REGULATIONS
Table C-4 presents a financial profile of small firms in SIC 2879. Over the
1976-1983 period, the median firm in the industry had 12 employees and earned
annual net profits of approximately $31,000 on sales of about $700,000 and equity of
$265,000. The median firm in the smallest size category (1-9 employees) earned
annual net profits of approximately $12,000 on sales of about $270,000 and equity of
$47,000.
Table C-5 summarizes the costs of recent and forthcoming environmental
regulations for two "typical" PFP firms without wastewater discharges. The smallest
PFP firms, those with 1-9 employees, will be exempt from the most costly regulation,
Section 313 of SARA Title III, and will have annual costs of only $2,560. These
firms should have no difficulty meeting environmental requirements. Larger PFP
firms will face costs of $11,560 per year plus increased waste disposal costs and an
additional $6,680 in the first year of regulation. They also may have to replace
some of their labels at a cost of $1,000-$2,000 each. Although the capital costs are
relatively low, the annual costs are about 37% of net profits of the median firm with
10-19 employees and about 200% of the net profits for firms at the lowest quartile
level of this size category. These figures suggest that some firms may have
difficulty meeting the requirements. Unlike' firms in other industries, small PFP
firms may have the option of discontinuing some of their operations rather than
closing, if they cannot afford to meet these environmental requirements.
CONCLUSION
There is a long list of environmental regulations that will affect PFP firms.
Unfortunately, the costs of most are as yet unavailable. The most significant
uncertainties have to do with which pesticides will be banned or restricted and how
many pesticides will have to be reformulated and/or relabeled. Also undetermined
are the pretreatment regulations for PFP firms that discharge waste- waters into
municipal sewers. Costs of waste disposal will increase and there will be increased
recordkeeping and reporting costs, especially those associated with toxic chemicals.
A comparison of the estimated costs of the environmental regulations with
industry financial statistics for 1976-1983 suggests that PFP firms with 10-19
employees could experience some difficulty meeting the increased regulatory costs.
Rather than closing their operations entirely, PFP firms that experience such
difficulty may discontinue those operations that are covered by the most costly
regulations.
C-ll
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Table C-4
FINANCIAL PROFILE: 1976 - 1983
(median values in $1,000)
PESTICIDE AND AGRICULTURAL CHEMICALS
(SIC 2879)
Number of Employees per Firm
Net Sales
Expenses and Taxes
Net Profit
Assets
Equity
Return on Equity
_UL
$269
257
12
110
47
26%
10-19
$608
567
31
415
197
15%
20-49
$5,100
4,978
122
2,345
1,019
12%
50-99
$10,986
10,719
267
4,911
2,579
10%
100+
$55,109
54,188
911
20,160
7,926
1.1%
All
Firms
$717
686
31
449
265
12%
Source: U.S. Small Business Administration: Small Business Data Base (SBDB),
Fin/Stat File.
C-12
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Table C-S
REGULATORY COSTS FOR TYPICAL SMALL BUSINESSES
in the
THE PESTICIDE FORMULATING AND PACKAGING INDUSTRY
(SIC 2879)
Firm #1: 4 employees, sales = $270,000/yr, net profit = $12,000/yr,
equity = $47,000.
Act/Regulation
RCRA: Generators of
100-1,000 kg/mo
SARA: Title III
311 & 312
RCRA: Land Disposal Bans
FIFRA: Farmworkers
TOTAL COSTS
One-Time Costs
$ 3,680
$l,000-$2,000/label
$3,680 + cost of labels
Annual Costs
$ 1,560
$ 1,000
increased
disposal costs
$2,560 + increased
disposal costs
Firm #2; 12 employees, sales = $700,000/yr, net profit = $30,000/yr,
equity - $265,000.
Act/Regulation
RCRA: Generators of
100-1,000 kg/mo
SARA: Title III
311 & 312
313
RCRA: Land Disposal Bans,
FIFRA: Farmworkers
TOTAL COSTS
One-Time Costs
$ 2,120
$ 3,000
$l,000-$2,000/label
$6,680 + cost of labels
Annual Costs
$ 1,560
$ 1,000
$ 9,000
increased
disposal costs
$11,560 + increased
disposal costs
C-13
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Appendix D
FARM SUPPLY STORES
Farm supply stores provide needed agricultural products and services to farmers.
These businesses are primarily engaged in the wholesale distribution of animal feeds,
fertilizers, agricultural chemicals, pesticides, seeds and other farm supplies, except
grains. Many farm supply stores also provide fertilizer and/or pesticide application
services.
In 1986, there were 15,109 firms primarily engaged in the farm supply industry
(SIC 5191). These firms employed 150,486 people and had total sales of
approximately $31 billion ($200,000 per employee). Most (58%) of these firms had
fewer than 5 employees and 94% and fewer than 20 employees. Only 80 firms had
more than 100 employees. Firms with fewer than 20 employees accounted for 46% of
industry sales and 44% of industry employment. (See Table D-l.) Employment in
farm supply stores actually varies seasonally, with the number of employees often
doubling in the spring.
The U.S. Small Business Administration (SBA) classifies as small businesses all
firms in SIC 5191 with fewer than 100 employees. Under this definition, all but 80
of the firms (99.5%) in SIC 5191 in 1986 were considered small businesses.
A typical small farm supply , store has 3 employees and annual sales of
approximately $500,000. Discussions with agricultural county agents and owners of
farm supply stores suggest that many of these smaller operations have been ceasing
operations in recent years, in part because of the problems and liabilities associated
with handling pesticides.1 Many of the smaller stores still in business, may have
ceased pesticide handling and/or application operations.2
A survey conducted in 1986 by the publication Farm Store Merchandising
showed that only 69% of farm store retailers and distributors sold crop chemicals
(herbicides, insecticides, fungicides).3 Thirty percent of these firms had gross sales
of less than $500,000; 20% had sales between $500,000 and $999,999; 22% had sales of
$1 million to $1,999,999 and 28% had sales of $2 million or more. This study showed
that the percentage of respondents selling crop chemicals varied from 40% for those
firms with sales of less than $500,000 to 86% for those firms with sales of $2 million
or more. This study also showed that a larger percentage (65%) of the firms with
sales of over $2 million offered application services than firms with lower gross sales
(47% to 50%). -
D-l
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Table D-l
SMALL BUSINESSES IN THE FARM SUPPLY INDUSTRY - 1986
(SIC 5191)
Employees Per Firm
1-4 5-9 10-19 20-49 50-99
Number of Firms 8,755 3,964 1,492 683 135
Cumulative Share of:
Firms
Sales
Employment
58%
13%
15%
84%
30%
32%
94%
46%
44%
99%
64%
57%
99%
74%
63%
Source: U.S. Small Business Administration: Small Business Data Base (SBDB), United
States Establishment and Enterprise Microdata (USEEM).
D-2
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Thus, very small farm supply stores, those with 3 or fewer employees, generally
do not formulate or apply pesticides. Today, it would appear that firms with 8 to 10
employees and annual sales of approximately $3 million are probably more typical of
small farm supply stores that handle and/or apply pesticides. Many farm supply
stores are operated by farmers' cooperatives. These operations have a central
location with many individual subordinate outlets. Such cooperatives are generally
larger than the typical firms described above.
Practices of farm supply operations vary regionally. Thus in Iowa, most farm
supply stores apply pesticides, while those in Georgia and California do not. In
California, pesticides are applied by separate application companies. In Georgia,
farmers apply their own pesticides unless aerial applications are needed.4 The Farm
Supply Store Merchandising Study showed that, whereas about 66% of the respondents
from the New England, Mid-Atlantic, and East and West North Central regions
offered application services, only 39% of the respondents from the South Atlantic and
East and West South Central regions and 27% from the Mountain and Pacific regions
offered these services.
ENVIRONMENTAL PROBLEMS
For farm supply stores that handle pesticides, there are environmental dangers
in possible spillage in their use and transportation. For those firms which offer
pesticide application services, the mixing and use of these pesticides required
stringent handling procedures so as not to contaminate the environment. In
addition, those farm supply stores that provide fuels are concerned with potential
spills and leaks from underground storage tanks containing gasoline or diesel fuel.
The number of farm supply stores that provide fuels is not known, but it appears to
be small.
Farm supply stores do not usually formulate pesticides. However, as part of
their application operation, they will mix pesticides according to manufacturers1
directions for application. Mixing is usually accomplished in open tanks for ease in
handling and monitoring. Both wettable powders and liquid formulations from five-
to fifty-gallon containers are used. Most applicators, use formulations in such a way
that they do not generate 100 kilogram per month of hazardous waste.5 Shaken-out
bags and triple rinsed and hole-punched or crushed containers are classified as
industrial wastes and can be disposed of in sanitary landfills. However, waste bags
or rinsed containers of pesticides classified as acutely hazardous are considered
hazardous wastes. There is some difficulty for owners of farm supply operations in
determining which of their wastes are classified as acutely hazardous.6
ENVIRONMENTAL REGULATIONS
Which environmental regulations affect farm supply stores depends upon whether
the stores handle pesticides and/or sell gasoline or diesel fuel. Farm supply stores
that handle pesticides will be affected by FIFRA regulations concerning farmworkers
and groundwater. For those farm supply stores that also provide petroleum products,
the underground storage tank technical standards and financial responsibility
requirements will apply. Farm supply stores will also be affected by reporting
D-3
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requirements under Title III of SARA and by restrictions on the land disposal of
hazardous wastes. Table D-2 presents a summary of the principal environmental
regulations that will affect farm supply stores during the period 1988-1992.
Paperwork requirements for farm supply stores will include initial notification,
monitoring, evidence of financial responsibility, and recordkeeping associated with
USTs. In addition, they will be required to complete all of the emergency planning,
notification, and release reports associated with handling toxic chemicals. The costs
incurred by this paperwork burden are presented in Table D-3.
Regulations with a Direct Impact
FIFRA: Farmworkers
EPA is circulating a proposal to substantially revise the federal regulations
designed to protect the health and safety of pesticide handlers, including
farmworkers performing land labor activities in fields during and after application of
pesticides. These regulations provide new requirements for reentry intervals,
personal protective clothing, training of workers who handle pesticides,, posting of
notices in pesticide-treated areas, providing soap, water, and towels for workers, and
cholesterase monitoring for commercial applicators of organophosphate pesticides
(blood test measurements of pesticide handlers that relate to nerve functioning). The
estimated first year costs per establishment for commercial handlers are $8,910.
Most of these costs will recur each year.7 Some part of these costs are already
being incurred by commercial applicator firms as a result of regulations promulgated
at state and federal levels.
Paperwork requirements associated with this regulation include reporting,
recordkeeping, and data collection. Recordkeeping is expected to require 0.25 hours
per week of clerical time to maintain the records, or 6.5 hours per year. Assuming
an upper-bound labor cost of $10/hour, the annual cost per firm would be $65.8
Title III of SARA
Title HI regulations set various recordkeeping and reporting requirements for
industries depending on the kinds of substances they have on hand and the activites
of the facility.
Sections 302 - 304 of SARA impose requirements for notification, emergency
planning, and emergency notification on any facility using, processing, or storing
extremely hazardous substances in amounts above the established threshold levels for
those substances. EPA has estimated costs per facility for this rule over a three-
year period, FY'87 - FV89. First year costs which include inventory, evaluation, and
notification are about $150. Projected costs for the second year, $472.50, are much
higher. This assumes that the facility will participate in the development and
implementation of the community's Emergency Planning Committee. Third year costs,
primarily recordkeeping, are estimated to be about $56.9 Many PFP firms are
complying now with Sections 302 - 304.
Sections 311 and 312 of SARA require businesses to submit Material Safety Data
Sheets (MSDS) or alternative lists as well as hazardous chemical inventory forms to
three government agencies: the State Emergency Response Commission, the local
D-4
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Table D-2
ENVIRONMENTAL REGULATIONS
for
FARM SUPPLY STORES
(SIC 5191)
Act/Regulation
Direct Impact
FIFRA: Farmworkers
SARA: Title III
RCRA: UST Standards
RCRA: UST Corrective
Action
RCRA: Land
Disposal Bans
Indirect Impact
RCRA: Hazardous
Waste Regulations
Uncertain Impact
CWA: National
Estuary Program
SDWA: Wellhead
Protection
FIFRA: Pesticides
in Groundwater
FIFRA: Registration
of Pesticides
FIFRA: Inerts
TSCA: Premanufacture
Review Program
RCRA: Generators of
100-1,000 kg/mo
Requirements
protective clothing
health monitoring
reporting
release detection,
insurance, and
tank upgrade
repair or replace
leaking UST,
clean-up release
send wastes to
haz. disp. sites
higher, waste
disposal costs
permits and
monitoring
activity bans
near wells
recordkeeping,
restricted use
use restrictions
solvent bans
notify EPA of
new chemicals
manifest,
proper handling
Cost to Small Business
$8,910 first year,
$73.51/employee
$400/yr
$500/3-yrs testing,
$2,500/yr insurance,
$3,000/tank upgrade
may be $100,000+,
increased waste
disposal costs
undetermined
Comments
undetermined
undetermined
undetermined
undetermined
undetermined
$5,400 to $12,700
per PMN
$3,680 initial,
$1,560 annual
Most do now
Only stores
that sell
fuels
15+% of tanks
may be leaking
Only stores
near estuaries
Few stores, if
any
Only selected
pesticides
Only selected
pesticides
Only if import
new chemicals
Most stores
exempt
D-5
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Table D-3
PAPERWORK BURDEN
FARM SUPPLY STORES
(SIC 5191)
Regulation/Activity One-Time Costs
FIFRA: Farmworkers
Reporting, Recordkeeping
Annual Costs Comments
$65
SARA Title III
Emergency Planning
Hazard Evaluation, $150
Planning Committee, $472
Recordkeeping
Notification of Accidental Releases
Hazardous Chemical Inventory
Reporting
RCRA: UST Standards
Notification $15
Tank Tightness
Test Records
Financial Assurance $31
Records
Corrective Action
TOTAL COSTS $668
$56
$1,000
$400
$1,236
$636
1st yr costs
2nd yr costs
3rd yr costs
Case-specific
First year only
Subsequent years
Not significant
Site-specific
First year costs
Subsequent years
D-6
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Emergency Planning Committee, and the local Fire Department. The MSDSs are the
same forms already required by the Occupational Health and Safety Adminis-tration
(OSHA), which establishes the reporting thresholds. Farm supply stores are required
to begin submitting report under Sections 311 and 312 in» September, 1988. EPA
estimates that the costs to comply with sections 311 and 312 will average $1,000 per
facility.10 These costs will depend upon how many MSDSs are required and whether
the MSDSs are supplied by vendors.
EPA considers all of the requirements associated with Title III of SARA to be
paperwork requirements. The paperwork costs, associated with this regulation,
therefore, are the costs estimated above.
RCRA: UST Technical Standards and UST Financial Responsibility
Under EPA's RCRA regulations for underground storage tanks (USTs) that
contain petroleum, owners have been required to notify appropriate state authorities
as to age, size, construction, location, and contents of their tanks. The proposed
technical .standards for USTs contain provisions covering general performance
standards, release detection, corrosion protection including the upgrading of existing
tanks within 10 years, corrective action, closure standards, and reporting and
recordkeeping requirements. These regulations will also require meeting financial
responsibility requirements. Generally, this will mean obtaining a specified amount of
insurance coverage. The final rule is scheduled to be promulgated in July 1988. The
requirements will become effective in October 1988, although the effective date of
the financial responsibility requirements may be extended to allow certain UST
owners and operators time to obtain the required incentive.
These requirements for USTs only apply to those farm supply stores that store
chemicals or petroleum products in underground storage tanks. The number of farm
supply stores that sell petroleum products varies regionally and there are no
estimates on the percentage of stores this might be.
The major costs to a small farm supply store with an underground storage tank
for. complying with the UST regulations are estimated to be as follows:12
Annual Insurance Costs $ 2,500
Tightness Testing (lx/ 3 yrs) $ 500
Upgrade Costs (within 10 yrs) $ 3,000
In addition to these routine costs, farm supply stores with regulated USTs face the
possibility that their tanks may be found to be leaking. In this case, they will be
required to repair or replace the tank, remove the released solvents from the soil or
the groundwater, and repair any other damage to the environment. The cost of such
corrective action may be only a few hundred dollars or may be several thousand
dollars. EPA estimates that the average clean-up costs for a leaking UST have been
approximately $53,000. EPA's experience shows that approximately 15% of all USTs
are leaking currently and that an additional 2% can be expected to begin leaking
each year.
The paperwork requirements for USPs include notifying EPA, maintaining
monitoring records, and submitting reports showing evidence of financial assurance.
Existing facilities have submitted the notification form already, a one-time cost of
D-7
-------
about $15.1S Because most owners/operators now keep inventory or other tank
monitoring records, these requirements will not result in incremental costs. Filing a
record of the required tank tightness test every three years will require
approximately 5 minutes and cost about $1.25. The annual cost of showing evidence
of financial assurance and maintaining records of financial assurance is estimated to
be S31.2514
Records must also be kept for tanks that have been upgraded, repaired, or
closed. Recordkeeping costs for farm supply stores will vary depending on the
number, age, and materials of their existing tanks and whether any leaks have been
discovered. In most cases also, filing records will be the only paperwork
requirement. If extensive corrective action is required, the owner/operator will have
to submit a number of reports, including corrective action plans, progress reports,
and a completion notification.
RCRA: Land Disposal Bans
RCRA Section 3004(e) limits the wastes that may be disposed of using land
disposal. For farm supply stores that handle pesticides, these restrictions may result
in increased costs for disposing of acutely hazardous pesticide wastes. Farm supply
stores that sell petroleum products also may experience cost increases associated with
waste disposal. The costs or extent of these problems is unknown.
Regulations with an Indirect Impact
RCRA and CERCLA and CWA: Waste Disposal 'Regulations
Under CERCLA and RCRA and their subsequent amendments, EPA is issuing
several regulations governing the transportation, storage, treatment, and disposal of
hazardous and nonhazardous wastes as well as standards for corrective action for
hazardous waste and toxic substance spills. Regulations under the CWA and MPRSA
on the ocean dumping of wastes and the incineration of hazardous wastes at sea will
also have an impact on waste disposal practices. The list of regulations that fall
into this category includes:
RCRA Subtitle C Location Standards
Subtitle D Criteria
Liner and Leachate Collection
Corrective Action at SWMUs
Hazardous Waste Burning
Land Ban - Dioxin and Spent Solvents
Land Ban - California List
Land Ban - First Thirds
Land Ban - Soil and Debris
Hazardous Waste Tank Standards
Toxicity Characteristics
CERCLA National Contingency Plan
CERCLA Settlement Policy
CWA Ocean Dumping
D-8
-------
These regulations do not affect farm supply stores directly unless they maintain
a waste disposal facility on their property. For the purposes of this analysis, it is
assumed that small farm supply stores find it prohibitive to maintain such facilities
and contract out all of their waste disposal needs. As described under the
discussion of land disposal bans above, these regulations may affect small farm supply
stores indirectly, however, by making it more difficult and more expensive for them
to dispose of their wastes. Thus, the costs of their waste disposal can be expected
to increase. Unfortunately, no estimates are available of the likely magnitude of
such cost increases.
Regulations with an Uncertain Impact
CWA: National Estuary Program
The National Estuary Program was established in 1987 by sections 317 and 320
of the Water Quality Act. No national program guidance and/or regulations have
been developed to define the Comprehensive Conservation and Management Plans
(CCMP) which are to be developed by management conferences convened in estuaries
of national significance. The impact on 'farm supply operations would depend on the
estuaries covered and the pollutant problems of concern. The elimination of the use
of some pesticides in designated estuaries might have some limited impact on
pesticide distributors or applicators in the area. It is too early to comment on the
potential impacts.
SDWA: Wellhead Protection
In June 1986, the Wellhead Protection Act (WHP) was added as an amendment to
the SWDA. The WHP is to be a voluntary program carried out by the individual
states. The location of wellheads would be identified and activities and facilities
within a certain area surrounding the wellhead would be examined for possible
contaminants. Under the WHP, certain activities, such as the loading of pesticides
from storage to applicator vehicles, may be banned. This program will affect only
those farm supply firms that operate near drinking water wells. The number of such
firms and the potential impact upon their activities has not yet been determined.
FIFRA: Pesticides in Groundwater
EPA is considering restricting or canceling, on a case-by-case basis, the use of
pesticides that threaten the groundwater, except where management plans for
reducing the potential for contamination have been approved. The Agency is meeting
with states and others .to discuss the issues involved. The potential prevention
strategy involves issuing regulations on groundwater monitoring as well as requiring
data on and restricting the use, on a regional basis, of pesticides that could leach
into the groundwater.
It would appear that, for farm supply stores, this regulation mainly will involve
recordkeeping. It does have the potential, however, to ban or restrict the use of
certain pesticides. Farm supply stores could sell substitutes, however. No estimates
of the potential costs or impacts of these regulations are available.
D-9
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FIFRA: Rereeistration of Pesticides
Pesticides are subject to reexamination as standards change, new data becomes
available, etc. As a result of these activities individual pesticides may be banned or
their use may be restricted. There may be other requirements; such a special
clothing required for application. The costs to farm supply stores that sell or apply
pesticides has not been determined.
FIFRA: Inerts
The Inerts Data Call-in requirements of FIFRA require that manufacturers of
inerts submit data on the toxicology and related aspects of inert ingredients of
pesticide products. The data will be used to assess the acceptability of using
specific chemicals as inert ingredients in pesticide products. Users of these
products, such as pesticide applicators, would be affected if certain solvents were
banned. Presumedly substitutes would be available, but no analyses of the potential
costs or impacts of these activities have been prepared.
TSCA: Premanufacture Review Program
TSCA requires that chemical manufacturers file a form with EPA giving specific
information 90 days before the manufacture or import of a new chemical. The cost
is estimated to be between $5,400 to $12,700 per premanufacture notice (PMN).10
Because TSCA does not apply to pesticides, this regulation would only come into
play for those farm supply firms that might import a new chemical to be used in
fertilizers or some other non-pesticide use, not a very likely scenario, especially
given the potential costs and complications.
RCRA: Generators of 100 to 1.000 kg/mo
The Hazardous and Solid Waste Amendments of 1984 require EPA to regulate
generators of hazardous wastes that produce between 100 and 1,000 kilogram per
month. The EPA requirements include obtaining an EPA identification number,
maintaining a uniform manifest system, installing management controls, and meeting a
limited set of performance standards. EPA's final rule was promulgated in March
1986 and became effective September 22, 1986.
EPA estimates that it will cost a small business approximately $3,68015 to
comply with the initial requirements of these regulations and approximately $1,560
per year thereafter.18 Most farm supply stores do not generate sufficient wastes to
come under these regulations. Farm supply stores that apply larger than average
quantities of acutely hazardous pesticides might come under this regulation, however.
IMPACT OF THE REGULATIONS
Table D-4 presents a financial profile of farm supply stores over the period
1976-1983. The smallest farm supply stores averaged profits of $20,000 per year over
that period on equity of approximately $125,000. The next largest group of farm
supply stores, those with 10-19 employees, averaged profits of $44,000 per year on
equity of approximately $400,000.
D-10
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Table D-4
FINANCIAL PROFILE: 1976 - 1983
(median values in $1,000)
FARM SUPPLY STORES
Net Sales
Expenses and Taxes
Net Profit
Assets
Equity
Return on Equity
(SIC 5191)
Number of Employees oer Firm
JA
$660
640
20
250
125
16%
10-19
$2,359
2,315
44
850
395
11%
20-49
$5,453
5,326
107
2,263
1,019
11%
50-99
$12,397
12,156
241
5,146
2,467
10%
100+
$25,489
24,830
659
11,973
6,430
10%
All
Firms
$1,274
1,245
29
395
197
15%
Source: U.S. Small Business Administration: Small Business Data Base (SBDB),
Fin/Stat File.
D-ll
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Table D-5 presents the estimated capital and annual costs of current and
forthcoming environmental regulations for three typical farm supply stores. A 5-
employee farm supply store that does not handle pesticides and does not sell
petroleum fuels would have no costs associated with the major regulations. A 15-
employee farm supply store that handles pesticides would face increased annual costs
of approximately $2,100 and would have first year costs associated with the
farmworkers regulation of approximately $9,000. These annual costs amount to
approximately 5% of annual net profits. The first year costs amount to about 2% of
the average stores' equity. These figures suggest that farm supply stores that do
not sell petroleum should be able to meet environmental requirements without
difficulty.
A 15-employee farm supply store that sells petroleum fuels would have increased
annual costs of approximately $4,765 plus first year and capital costs of
approximately $11,900. These annual costs amount to about 11% of annual net
profits. The capital and first year costs amount to approximately 3% of equity.
Again, these figures suggest that farm supply stores should be able to meet
environmental requirements without difficulty.
As discussed above, farm supply stores that store petroleum or chemicals in
underground storage tanks, may find that their tanks are leaking. In this event,
they would face corrective action costs. If groundwater contamination or other
serious damage must be repaired, these corrective action costs could exceed $100,000.
These costs could exceed the equity of the smallest farm supply stores that are in
less than average financial condition, and could cause them'to go out of business.
CONCLUSION
Farm supply stores sell a wide variety of products and perform many different
services. Consequently, the environmental regulations that a farm supply store must
meet are determined by which products and services the store offers, most notably
on whether the store sells or applies pesticides and/or stores petroleum or chemicals
in underground storage tanks. Farm supply stores have the option of discontinuing
those products or services that entail high environmental costs.
A comparison of the expected costs of environmental regulations with 1976-
1983 industry financial statistics, suggests that most farm supply stores will have
little difficulty meeting environmental requirements. The major exception to this
conclusion is that farm supply stores that face extensive corrective action costs
associated with leaking underground storage tanks, may find that the costs are so
large they will exhaust their equity and be forced out of business. The percentage
of farm supply stores that will face such large costs should be extremely low.
D-12
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Table D-5
REGULATORY COSTS FOR TYPICAL SMALL BUSINESSES
in the
THE FARM SUPPLY INDUSTRY
(SIC 5191)
Firm #1; 5 employees, sales = $660,000/yr, net profit = $20,000/yr,
equity = $125,000. Does not handle pesticides. Does not sell fuels.
Act/Regulation Capital Costs Annual Costs
None
Firm #2: 15 employees, sales = $2.4 million/yr, net profit = $45,000/yr,
equity = $400,000. Applies pesticides. Does not sell fuels.
Act/Regulation Capital Costs Annual Costs
. FIFRA: Farmworkers $8,910 $1,100
SARA: Title III $1,000
TOTAL COSTS $8,910 $2,100
Firm #3: 15 employees, sales = $2.4 million/yr, net profit = $45,000/yr,
equity = $400,000. Applies pesticides. Sells fuels.
Act/Regulation Capital Costs Annual Costs
FIFRA: Farmworkers $8,910 $1,100
SARA: Title III $1,000
RCRA: UST Standards $3,000/tank $2,665
TOTAL COSTS $11,910 $4,765
D-13
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Appendix Ł
INTERSTATE TRUCKING
The trucking industry is divided into two segments: local trucking and trucking,
except local. Trucking, except local, includes companies that offer "over the road"
trucking services outside a single municipal area. For convenience, these companies
are termed "interstate" in this study, even though some may not cross state
boundaries. Although the environmental problems of all trucking companies are
similar, this study focuses on interstate trucking.
In 1986, there were 24,335 firms primarily engaged in interstate trucking (SIC
4213). These firms employed 779,930 people and had total sales of approximately $55
billion ($72,000 per employee). Almost half (44 percent) of these firms had fewer
than 5 employees and 92 percent had fewer than 50 employees. Only 962 firms had
more than 100 employees. Firms with fewer than 50 employees accounted for 30
percent of industry sales and 25 percent of industry employment. (See Table E-l.)
I
The U.S. Small Business Administration (SBA) classifies as small businesses all
firms in SIC 4213 with annual sales less than $12.5 million. In 1986 firms in SIC
4213 with 100-249 employees had average annual sales of $10.4 million and firms with
250-499 employees had average annual sales of $22.4 million. Thus, most interstate
trucking companies with less than 250 employees (approximately 98.6% of the
industry) would have been considered small businesses.
The trucking industry is divided into three size classes by annual sales:
Class I - greater than $5 million
Class II - from $1 million to $5 million
Class III - less than $1 million
A "high side" Class III firm, with sales approaching $1 million, would have 10 to 12
trucks, 20-25 employees, and no terminals.1 Most Class III firms would be much
smaller than that. A typical small business in the interstate trucking industry in
1986, had six employees and annual sales of approximately $500,000. Such a firm
would have operated out of a single suburban location using five trucks. The upper
range of Class II firms would own 50 trucks and employ approximately 100 people.2
All would have a home base and many would perform their own maintenance, but few
would have terminals. A considerable number would have an underground storage
tank (UST) storing diesel fuel or gasoline. A Class I firm would buy fuel in bulk,
necessitating self-storage, and would have at least one UST for diesel fuel and might
have more than one; it might also have a gasoline UST for smaller trucks that use
gasoline.
E-l
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Table Ł-1
SMALL BUSINESSES IN THE INTERSTATE TRUCKING INDUSTRY
(SIC 4213)
Number of Firms
Cumulative Share of:
Firms
Sales
Employment
Employees Per Firm
1=1
',757
44%
4%
3%
5d>
4,711
64%
9%
7%
10-19
3,736
79%
17%
13%
20-49
3,070
92%
30%
25%
50-9!
1,099
96%
40%
34%
Source: U.S. Small Business Administration: Small Business Data Base (SBDB),
United States Establishment and Enterprise Microdata (USEEM).
E-2
-------
ENVIRONMENTAL PROBLEMS
Environmental concerns associated with the trucking industry include potential
spills and leaks from underground storage tanks containing diesel fuel or used oil. If
a trucking operation performs its own maintenance, then it uses solvents for
degreasing parts. Waste disposal problems would involve used oil and spent cleaning
solvents. The used oil might be put into underground storage tanks or into drums.
The washing of trucks is done with chemicals and steam cleaning, creating
wastewater runoff. For a tank truck, the "heel," or what is left in the tank after
draining the previous haul, must be steamcleaned out and perhaps handled as a
hazardous waste. Both Class I and Class II firms would likely have these cleaning
functions performed by outside services.
Gasoline and diesel fuel handling operations, emissions, and controls are divided
into two steps: the filling of the underground storage tank (Stage I) and vehicle
refueling (Stage II). Stage I emissions can be reduced by about 95 percent by the
use of a vapor balance system, in which the vapors are transferred in the tank truck
unloading at the service stations and then to the terminal vapor processor for
recovery or destruction. Instead of being vented to the atmosphere, the vapors are
transferred into the tank truck unloading at the gasoline tank and, ultimately, to the
terminal vapor processor for recovery or destruction. Such controls have been
incorporated into many state regulations.
Vehicle refueling emissions from spillage and from vapor displaced from the
vehicle by dispensed fuel are another major source of emissions. Stage II controls
on fuel pumps are currently being used in 26 counties in California and the District
of Columbia and are being considered for other ozone nonattainment areas.
Tank trucks with vapor collection equipment can become a separate source of
emissions when leakage occurs (estimated to average about 30 percent of potentially
captured emissions). Many states require gasoline tank trucks equipped for vapor
collection to pass an annual test of tank vapor tightness and pressure limits for the
tanks and vapor collection equipment (reducing average leakage to about 10 percent).
Contaminants are introduced in used oil through use, mixing, or mismanagement.
Engine use of lubricating oils produces contaminated used oils through the internal
chemical breakdown of additives during service and through such external factors as
engine blowby, dust, and dirt. In addition, used oil may be mixed either knowingly
or unknowingly with hazardous wastes and thus become contaminated. For example;
chlorinated solvents, such as degreasing solvents, are frequently introduced into used
oil storage tanks. The preferred, and more common, practice is to store the spent
solvents in separate storage drums.
ENVIRONMENTAL REGULATIONS
The principal environmental regulations that will affect the interstate trucking
industry during the period 1988-1992 are those are intended to secure the
underground storage of fuel and correct any damage caused by leaks, reduce air
emissions during pumping, and control the disposal of hazardous wastes. These are
summarized in Table E-2.
E-3
-------
Table E-2
ENVIRONMENTAL REGULATIONS
for the
THE INTERSTATE TRUCKING INDUSTRY
(SIC 4213)
Act/Regulation
Direct Impact
SARA: Title III
RCRA: UST Standards
Requirements
recordkeeping
and reporting
insurance,
tightness testing,
upgrade tank
RCRA: UST Corrective repair/replace
Action
RCRA: Waste Oil
Management
Indirect Impact
CAA: Heavy-Duty
Diesel Particulates
CAA: Diesel Fuel
Standards
leaking tanks,
clean-up releases
recordkeeping,
repair leaks
none
none
CAA: Fuel Volatility none
CWA: Oil and Gas ELG none
RCRA: Hazardous
Waste Regulations
Uncertain Impact
CAA: Gas Marketing
new nozzles
CWA: Machinery ELG undetermined
SDWA: Wellhead
Protection
TSCA: Chlorinated
Solvents
activity bans
near wells
undetermined
Cost to Small Business
$400/yr; $1,000
first year
$2,500/yr
$500/3-yr/tank
$3,000/tank
may be $100,000+,
depends upon damage
from leak
$100/yr plus
costs of repairs
higher engine prices
higher fuel prices,
reduced maintenance
higher fuel prices
higher fuel prices
higher waste
disposal costs
$2,000-$4,000 capital
$300 annual
undetermined
undetermined
undetermined
Comments
No Class III,
some Class II,
all Class I
15+% of tanks
may be leaking
Options still
to be decided
Only DC, CA,
St. Louis
May apply to
few firms
E-4
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Paperwork requirements for trucking firms will include initial notification,
monitoring, evidence of financial responsibility, and recordkeeping associated with
USTs. In addition, they will be -required to complete all the notification and
reporting forms associated with handling hazardous substances and used oil.
The costs associated with meeting these paperwork requirements are presented in
Table E-3.
Regulations with a Direct Impact
Title III of SARA
Sections 311 and 312 of SARA require businesses to submit Material Safety Data
Sheets (MSDS) or alternative lists as well as hazardous ^chemical inventory forms to
three government agencies: the State Emergency Response Commission, the local
Emergency Planning Committee, and the local Fire Department. The MSDSs are the
same forms already required by the Occupational Health and Safety Adminis-tration
(OSHA), which establishes the reporting thresholds. Sections 311 requirements were
effective on October 15, 1987; Section 312 on March 1, 1988. EPA estimates that
the costs to comply with sections 311 and 312 will average $1,000 per facility for the
first year and about 5400 in succeeding years.3 These costs will depend upon how
many MSDSs are required and whether the MSDSs are supplied by vendors. Trucking
firms that use solvents or other hazardous chemicals will be required to comply with
this rule.
EPA considers all of the requirements associated with Title III of SARA to be
paperwork requirements. The paperwork costs associated with this regulation,
therefore, are the costs estimated above.
RCRA: UST Technical Standards and UST Financial Responsibility
* •
Under EPA's RCRA regulations for underground storage tanks (USTs) that
contain petroleum, owners have been required to notify appropriate state authorities
as to age, size, construction, location, and contents of their tanks. The proposed
standards for USTs contain general performance standards as well as requirements
for release detection, installation and maintenance of corrosion protection, closure,
and reporting and recordkeeping. Existing tanks are to be upgraded to new tank
standards within 10 years. These regulations will also require meeting financial
responsibility requirements. Generally, this will mean obtaining a specified amount of
insurance coverage. The final rule is scheduled to be promulgated in July 1988. The
requirements will become effective in October 1988, although the effective date of
the financial responsibility requirements may be extended to allow certain UST
owners and operators time to obtain the required insurance.
Few trucking firms in the smallest classification, Class HI, would have USTs,
but a considerable number in the Classes I and II category would. The major costs
for complying with the UST regulations are estimated to be as follows:4
Annual Insurance Costs $ 2,500
Tank Testing (lx/3 yrs) $ 500/tank
Tank Upgrade (within 10 yrs) $ 3,000/tank
E-5
-------
Table E-3
PAPERWORK BURDEN
INTERSTATE TRUCKING
(SIC 4213)
Regulation/Activity
One-Time Costs
Annual Costs Comments
SARA Title III
Hazardous Chemical Inventory
Inventory
$1,000
$400
First year only
Subsequent years
UST Standards
Notification
Tank Tightness
Test Records
Financial Assurance
Records
Corrective Action
$15
$31
Not significant
Site-specific
Waste Oil Mgmt
Notification
Recordkeeping
$15
$22
Firms generating
used oil
TOTAL COSTS
$61
$1,022
$422
First year
Subsequent years
E-6
-------
In addition to these routine costs, firms with regulated USTs face the possibility that
their tanks may be found to be leaking. In this case, they will be required to repair
or replace the tank, remove the released solvents from the soil or the groundwater,
and repair any other damage to the environment. The cost of such corrective action
may be only a few hundred dollars or may be several thousand dollars. EPA
estimates that the average clean-up costs for a leaking UST have been approximately
$53,000. EPA's experience shows that approximately 15 percent of all USTs are
leaking currently and that an additional 2 percent can be expected to begin leaking
each year.5
The paperwork requirements for USTs include notifying EPA, maintaining
monitoring records, and submitting reports showing evidence of financial assurance.
Existing facilities have submitted the notification form ^already, a one-time cost of
about $15.6 Because most owners/operators now keep inventory or other tank
monitoring records, these requirements will not result in incremental costs. Filing a
record of the required tank tightness test- every three years will require
approximately 5 minutes and cost about $1.25. The annual cost of showing evidence
of financial assurance and maintaining records of financial assurance is estimated to
be $31.257
Records must also be kept for tanks that have been upgraded, repaired, or
closed. Recordkeeping costs for gasoline service stations will vary depending on the
number, age, and materials of their existing tanks and whether any leaks have been
discovered. In most cases also, filing records will be the .only paperwork
requirement. If extensive corrective action is required, the owner/operator will have
to submit a number of reports, including corrective action plans, 'progress reports,
and a completion notification.
RCRA: Waste Oil Management
Trucking firms may accumulate and sell used oil to be re re fined or burned as
fuel. EPA decided in November 1986 not to regulate used oil destined for recycling
as a hazardous waste due to the deleterious effect on recycling. EPA is examining a
range of RCRA, TSCA, and other options regarding used oil disposal. The legislative
mandate for waste oil management regulations is section 3012 of RCRA, added to the
statute by the Used Oil Recycling Act of 1980 and amended (and re-designated as
section 3014) by the 1984 RCRA amendments. The statute provides a special niche
for recycled oil in Subtitle C that differs from all other wastes. Recycled oil is to
be regulated under a special set of rules, effects on recycling must be taken into
account in listing and regulating recycled oil, and EPA retains authority to regulate
recycled oil under Subtitle C whether or not it is identified or listed as hazardous.
EPA announced (SI FR 41900) that it intends to issue recycled oil management
standards under Section 3014 of RCRA and that it will determine whether used oil
being disposed of (not recycled) should be listed as a RCRA hazardous waste.
In the past, most trucking firms would sell the used oil that they accumulated
to collectors, who in turn would sell the used oil to refining facilities for re-refining
or to other parties for burning in industrial boilers. Collectors would pick up used
oil in trucks and generally pay between 10 and 30 cents per gallon. As the price of
oil has declined, this practice has been declining as well, so that used oil is no
longer such a marketable commodity.
E-7
-------
The costs that trucking firms would incur under EPA's used oil regulations will
depend upon the regulatory strategy that EPA chooses. One of the options that EPA
has been considering would require firm operators to obtain an EPA identification
number, maintain an internal log of waste oil pickups, and meet UST technical
standards and financial responsibility requirements for any USTs containing used oil.
EPA estimated the cost of these used oil requirements to be approximately $100 per
year plus the cost of meeting UST requirements described above. Should trucking
companies be required to meet the more stringent standards associated with
hazardous waste tanks and hazardous waste management, the costs of the used oil
regulations would be considerably greater.
Presently, paperwork activities associated with used ,oil management for trucking
firms requires notification, recordkeeping, and tracking of shipments using a manifest
system. However, because of the controversy over EPA's decision not to list used
oil as a hazardous waste, the current standards may change. All trucking firms that
generate used oil are now required to notify EPA one time to receive an EPA
identification number. This is estimated to take 1 hour and cost the facility $15.9
Trucking firms that recycle used oil will not have to obtain individual permits.
Collection logs and recordkeeping impose annual paperwork burdens. Trucking firms
are required to track used oil shipments using invoices (i.e., collection logs), so that
used oil goes only to legitimate outlets and allowing EPA to trace problems to their
sources. The burden of collection logs largely falls on recycling companies, many of
whom currently use invoices that meet the regulatory requirements. Maintaining a
collection log is estimated to take 5 minutes per event and to cost about $22 per
year for a typical generator.
Regulations with an Indirect Impact
CAA: Heavv-Dutv Diesel Particulates
The Heavy-Duty Diesel Paniculate regulation established emission standards for
oxides of nitrogen emissions and particulate emissions from heavy-duty diesel engines.
New NOX standards were finalized for the 1988 model year for light-duty trucks and
heavy-duty engines and again in the 1991 model year for heavy-duty engines. New
particulate standards for heavy-duty engines were finalized for the 1988, 1991, and
1994 model years. The 1988 NOX standards have been delayed until 1990 for all but
the lighter end of the light-duty truck class. Direct costs apply to manufacturers
but small businesses that use these products will likely have increased costs of
purchase of new trucks and engines.
CAA: Diesel Fuel Standards
The Diesel Fuel Standard regulation is aimed at refiners. EPA is evaluating the
need to propose a diesel fuel sulfur standard of about 0.05 percent by weight and an
aromatics standard of about 20 percent by volume. The schedule of implementation
is under study. Indirect impacts on users of diesel fuels are expected assuming some
increased costs in refiners meeting standards will increase the cost of fuel. Only
No. 2 diesel fuel will be affected. The ATA estimates truckers' fuel costs will
increase 1 to 3 cents per gallon. Increased costs of fuel may be somewhat offset by
decreased maintenance costs and increased engine life. A positive impact of this
E-8
-------
regulation is that it will reduce the costs for engine manufacturers to meet the 1991
and 1994 heavy-duty engine particulate standards, thus ameliorating the paniculate
standard's impact on the trucking industry.
C'AA: Fuel Volatility
Refiners must reduce the Reid Vapor Pressure of gasoline in ASTM Class C
areas to 10.5 psi in 1989 and to 9.0 psi in 1992, thus reducing butane content.
Proportional reductions apply to other areas. Nationwide refinery costs of about
$447 million per year would be offset by savings to the consumer of about $294
million per year due to increased fuel energy density and the recovery of evaporative
emissions. Including a small vehicle cost increase, the net cost to the consumer
would be about $157 million per year, or under $20 per vehicle over its lifetime.
CWA: Oil and Gas Effluent Guidelines
The oil and gas extraction industry onshore segment stripper subcategory will
be subject to regulations establishing effluent limitations and guidelines. Trucking
companies could be affected indirectly by this regulation with an increase in the cost
of oil and gasoline. The proposal is planned for 1991 with promulgation in 1993.
RCRA and CERCLA and CWA: Waste Disposal Regulations
Under CERCLA and RCRA and their subsequent amendments, EPA is issuing
several regulations governing the transportation, storage, treatment, and disposal of
hazardous and nonhazardous wastes as well as standards for corrective action for
hazardous waste and toxic substance spills. Regulations under the CWA and MPRSA
on the ocean dumping of wastes and the incineration of hazardous wastes at sea will
also have an impact on waste disposal practices. The list of regulations that fall
into this category includes:
RCRA Subtitle C Location Standards
Subtitle D Criteria
Liner and Leachate Collection
Corrective Action at SWMUs
Hazardous Waste Burning
Land Ban - Dioxin and Spent Solvents
Land Ban - California List
Land Ban - First Thirds
Land Ban - Soil and Debris
Hazardous Waste Tank Standards
Toxicity Characteristics
CERCLA National Contingency Plan
CERCLA Settlement Policy
CWA Ocean Dumping
These regulations would affect interstate trucking firms directly only if they
maintain a waste storage, disposal, or treatment facility on their property. This is
highly unlikely. The regulations will affect trucking firms indirectly, however, by
making it more difficult and more expensive for them to dispose of their wastes.
E-9
-------
Thus, the costs of their waste disposal can be expected to increase. Unfortunately,
no estimates are available of the likely magnitude of such cost increases.
Regulations with an Uncertain Impact
CAA: Gas Marketing
The Gas Marketing regulation is intended to reduce emissions from gasoline
marketing operations of benzene, ethylene dibromide (EDB), ethylene dichloride
(EDC), and gasoline vapors. The focus is on gasoline vapors, or volatile organic
compounds, as precursors to ozone formation, since these emissions contribute to
failure to attain the national ambient air quality standard for ozone in some areas.
The regulation was prompted by the need to revise state, implementation plans for 11
air control regions, pursuant to Section 110(a)(l) of the Clean Air Act.
The two regulatory strategies are (1) control systems on gasoline pumping
equipment (Stage II controls) and (2) control systems on vehicles and trucks (onboard
controls). Onboard controls are the subject of Section 202(a)(b) of the Clean Air
Act, and proposed rules for these controls were announced in the August 19, 1987
Federal Register.
Stage II controls consist of either vapor balance systems or assisted systems.9
Assisted systems use a variety of means to generate a negative or zero pressure
differential at the nozzle-vehicle interface so that a tight seal is not necessary
between the vehicle and the nozzle boot, a flexible covering over the nozzle which
captures the vapor for return to the underground tank via a vapor hose. Onboard
vapor controls consist of a fillpipe seal and a carbon canister that adsorbs the
vapors displaced from the vehicle fuel tank by the incoming gasoline. The
technology is an extension of a system already installed on light-duty cars and
trucks. Since 1-971, new cars have been equipped with similar carbon canister
systems for collecting evaporative emissions (breathing losses caused by temperature
changes in the vehicle tank and carburetor).
EPA has estimated that the costs to install the necessary Stage II control
systems would be $5,000 to $10,000 for a gasoline service station with 6-9 pumps.
Annual maintenance costs would be approximately $600 per year.*0 The costs to a
trucking company with fewer pumps would be proportionately less. Few or no Class
III trucking companies would have their own fuel storage, but a considerable number
of Class II firms would.
Currently, EPA proposes to limit Stage II controls to the areas in California
and the District of Columbia, where they are already in place, and to the St. Louis
metropolitan area. Thus, as currently proposed, this regulation will not affect the
vast majority of interstate trucking companies.
CWA: Machinery Manufacturing and Rebuilding
Possible effluent limitation guidelines for the machinery manufacturing,
rebuilding, and maintenance industry are the subject of a new EPA industry study.
The effect on small businesses depends on the depth and breadth of the regulation
and the extent to which water is used in the process. A decision document to
determine the regulatory approach, if any, will be prepared in fiscal year 1988.
E-10
-------
Thus, a description of requirements cannot be given. Some requirements for trucking
firms might be limitations on truck washing, maintenance and fueling, grease traps,
and shop drains.
SDWA: Wellhead Protection
In June 1986, the Wellhead Protection Act (WHP) was added as an amendment to
the Safe Drinking Water Act (SDWA). The WHP is to be a voluntary program carried
out by the individual states. The location of wellheads would be identified, and
activities and facilities within a certain area surrounding the wellhead would be
examined for possible contaminants. Under the WHP, certain activities, such as the
transfer of petroleum products from tank farms to public or private gas stations, may
be banned. This program will affect only those trucking firms are located near
drinking water wells. The number of such firms and the potential impact upon their
activities has not yet been determined.
TSCA: Chlorinated Solvents
The regulatory options for metal cleaning with chlorinated solvents have not yet
been finalized, but it is expected that they will include ambient controls and
occupational controls. Gas stations and presumably trucking firms, too, use outside
services to dispose of their solvents. Many trucking firms use methylene chloride
and petroleum solvents in repair and maintenance.
IMPACT OF THE REGULATIONS
Table E-4 presents a financial profile of the interstate trucking industry for
1983.* The median firm in 1983 had sales of $770,000, net profits of $24,000, and
equity of $140,000. The median firm with $1,000,000 in sales would have had profits
of approximately $30,000. A median trucking firm in the smallest category (1-9
employees) had sales of about $325,000, net profits of $13,000, and equity of about
$90,000.
Table E-5 summarizes the costs of environmental regulations for trucking
companies of various sizes. The smallest companies do not perform their own
maintenance and have no underground storage tanks. These companies would not
have any direct costs associated with the environmental regulations included in this
study. Companies that perform maintenance would have annual costs of
approximately $500 and additional first year costs of approximately $600 associated
with the waste oil regulations and the reporting requirements under SARA Title III.
These annual costs would amount to less than 3% of annual net profits. The
additional first year costs would amount to less than 1% of the median firm's equity.
Larger companies that also have an underground storage tank would have to upgrade
their tank, obtain insurance, and test their tank every three years. Their total
annual environmental costs would be approximately $3,200 and their capital costs
* Statistics are presented for 1983 rather than for the 1976-1983 period,
because the industry showed a steady trend of rising sales and equity over the
period, so that figures for 1983 are substantially higher than the average for the
period.
E-ll
-------
Table E-4
FINANCIAL PROFILE; J983
(median values in $1,000)
INTERSTATE TRUCKING
(SIC 4213)
Number of Employees per Firm
Net Sales
Expenses and Taxes
Net Profit
Assets
Equity
Return on Equity
1-9
$326
313
13
178
89
14%
10-19
$697
679
18
327
1-21
15%
20-49
$1,606
1,561
45
664
226
20%
50-99
$3,733
3,584
149
1,345
430
35%
100+
$11,446
11,322
124
5,439
1,262
10%
All
Firms
$819
795
24
332
140
17%
Source: U.S. Small Business Administration: Small Business Data Base (SBDB),
Fin/Stat File.
E-12
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Table E-5
REGULATORY COSTS FOR TYPICAL SMALL BUSINESSES
in the
THE INTERSTATE TRUCKING INDUSTRY
(SIC 4213)
Firm »1; 5 employees, sales = $325,000/yr, net profit = $13,000/yr,
equity = $90,000. No maintenance. No underground storage tank.
Act/Regulation Capital Costs Annual Costs
None
Firm »2; 13 employees, sales = $700,000/yr, net profit = $18,000/yr,
equity = $120,000. Performs maintenance. No underground storage tank.
Act/Regulation Capital Costs Annual Costs
SARA: Title III $ 600 $ 400
RCRA: Waste Oil - $ 100
TOTAL COSTS $ 600 $ 500
Firm #3; 27 employees, sales - $1.6 million/yr, net profit = $45,000/yr,
equity = $225,000. Performs maintenance. One underground storage tank.
Act/Regulation Capital Costs Annual Costs
SARA: Title III $ 600 $ 400
RCRA: UST Standards $3,000 $2,665
RCRA: Waste Oil - $ 100
TOTAL COSTS $3,600 $3,165
E-13
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about $3,600. These costs would amount to about 7% and 1,5% of their annual net
profits and equity, respectively. These figures all suggest that interstate trucking
firms should have no difficulty meeting the environmental requirements included in
this study.
Firms that find that their underground tanks have been leaking could- f-ace much
higher costs, however, possibly exceeding $100,000. EPA's experience to date
indicates that 15 percent to 20 percent of the underground tanks may be leaking. It
is possible that some of these firms with leaking USTs may be unable to afford the
required corrective actions. This is likely to be a very small portion of the industry,
however.
CONCLUSION
The principal environmental regulations that will affect the interstate trucking
industry directly during the 1988-1992 period will apply only to those firms that
store petroleum fuels on their premises or store waste oils in underground storage
tanks. These are generally only the larger trucking companies. The other
environmental regulations that will affect the interstate trucking industry will do so
indirectly, increasing the price of trucks, fuel, or waste disposal.
A comparison of the expected costs of environmental regulations with 1983
industry financial statistics, suggests that most interstate trucking companies will
have little difficulty meeting environmental requirements. The major exception is
that trucking companies that face extensive corrective action costs associated with
leaking underground storage tanks may find that the costs are so large they will
exhaust their equity and be forced out of business. The percentage of interstate
trucking companies that will face such large costs should be extremely low.
E-14
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Appendix F
GASOLINE SERVICE STATIONS
The retail marketing of gasoline is performed at various types of business
outlets, including gasoline service stations, convenience stores, marinas, car washes,
and agricultural cooperatives. In 1984, approximately 90,000 firms owned
approximately 193,000 retail motor fuel outlets. The owners of these outlets ranged
from some of the largest corporations in the United States (Exxon, Mobil Oil, etc.)
to very small businesses with no reported payroll. Approximately 59,000 of the retail
outlets were leased to different business entities by their owners.
The types of businesses that own and operate retail gasoline marketing outlets
are defined below.
Refiners are large, vertically integrated oil companies with refineries that
produce petroleum products that are distributed through the companies1
wholesale and retail "branded" outlets;
Jobbers are primarily wholesalers of petroleum products that also may own
retail service stations or convenience store outlets;
Convenience stores are chains of retail stores that sell gasoline in addition
to grocery and other products;
Independent chain marketers are owners of chains of retail gasoline
marketing outlets that often sell "unbranded" or private brand petroleum
products;
Open dealers are individuals who both own and operate their gasoline
marketing operations, usually at single-site locations; and
Lessee dealers are individuals who operate outlets under lease
arrangements, generally with refiners, jobbers, or independent chains.
Table F-l presents statistics on the number of retail gasoline marketing outlets
owned, operated, and leased by these different types of businesses.
F-l
-------
Table F-l
OWNERSHIP AND OPERATION OF GASOLINE MARKETING OUTLETS
Segment
Number Number of Retail Number of Retail Total Number
of Outlets Owned Outlets Owned of Retail
Firms and Operated and Leased Outlets Owned
Refiners
Jobbers
Convenience Stores1
Independent Chains3
Open Dealers
TOTAL
27
8,766
516
125
80.304
89,738
9,964
25,333
14,732
4,010
80.304
134,343
36,817
20,713
0
1,127
o
58,657
46,781
46,046
14,732
5,137
80.304
193,000
Source: Meridian Research, Inc., Financial Responsibility for Underground Storage
Tanks: Financial Profile of the Retail Motor Fuel Marketing Industry
Sector. Draft Final Report, April 1987.
1. Convenience store owners are defined to exclude jobbers.
2. Independent chains are defined to exclude jobbers and convenience
store owners.
F-2
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The basis for classifying firms in standard industrial classification (SIC) 5541 is
that they receive more than 50 percent of their revenues from the sale of gasoline
and related products (e.g., lubricating oil). Thus, firms in this SIC classification
include both firms that own and firms that only operate gasoline outlets. Using
SIC 5541 data, there are approximately 49,453 firms in the gasoline service station
industry. Table F-2 presents a distribution of these firms by employment-size
category. It shows that 52 percent of these firms had fewer than five employees
in 1986 and 94 percent had fewer than 20 employees. In the same year, firms with
fewer than 20 employees accounted for 49 percent of industry sales and 56 percent
of industry employment. Table F-3 presents a financial profile of firms in SIC
5541. It shows that the typical small firm in 1983 (a firm with 19 or fewer
employees) had sales of $600,000 to $2 million and profits of $10,000 to $30,000 in
1983.
Small businesses in SIC 5541 include firms that own and operate their own
retail gasoline outlets, firms that lease the outlets they operate, and a limited
number of firms that only lease outlets to others. Firms that both own and
operate their own outlets will bear the full impact of all environmental regulations
affecting retail gasoline outlets.
Small businesses in the retail gasoline marketing sector are defined by the
Small Business Administration as firms with less than $4.5 million in annual sales.
All firms in the open dealer segment and some firms in the convenience store and
independent chain segments are small businesses. Small firms own approximately
88,780, or 46 percent, of all retail gasoline outlets. In addition, all firms leasing
retail gasoline outlets are small businesses.
Analyzing potential impacts on lessee dealers is especially difficult because
although these dealers are themselves small businesses operating only a single
outlet, the firms from which they lease their outlets—refiners (62.8 percent),
jobbers (35.3 percent) and independent chains (1.9 percent)--are all large
businesses. It is thus often not clear whether the owner or the lessee will bear
the burden of regulatory costs. In normal practice, the owner is contractually
responsible for capital investments and property-related expenditures such as
corrective action; the lessee, however, is usually responsible for routine operating
expenditures. Because of the uncertainties concerning impacts on lessee dealers,
this chapter will focus on firms that both own and operate retail motor fuel
outlets.
Table F-4 presents a distribution of total assets for all firms owning retail
gasoline outlets, i.e., all of the firms that will have to bear the full costs of
forthcoming EPA regulations. It shows that 93.6 percent of these firms have less
than $600,001 in total assets. The median firm has assets between $200,000 and
$400,000, while the median outlet is-owned by a firm with assets in the $600,000 to
$1 million range.
F-3
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Table F-2
SMALL BUSINESSES IN THE GASOLINE SERVICE STATION INDUSTRY - 1986
(SIC 5541)
Employees Per Firm
1-4 5-9 10-19 20-49 50-99
Number of Firms 25,589 15,586 5,467 1,873 543
Cumulative Share of:
Firms
Sales
Employment
52%
14%
17%
83%
34%
40%
94%
49%
56%
98%
63%
68%
99%
72%
77%
Source: U.S. Small Business Administration: Small Business Data Base (SBDB),
United States Establishment and Enterprise Microdata (USEEM).
F-4
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Table F-3
FINANCIAL PROFILE - 1983
(median values in $1,000)
GASOLINE SERVICE STATIONS
Net Sales
Expenses and Taxes
Net Profit
Assets
Equity
Return on Equity
J^
$640
631
9
137
85
10%
(SIC 5541)
Number of
10-19
$2,000
1,976
24
235
89
26%
Emolovees
20-49
$4,796
4,781
15
717
303
5%
oer Firm
50-99
$10,875
10,762
113
1,220
332
34%
100+
$29,000
28,928
72
5,858
1,829
4%
All
Firms
$1,203
1,188
15
212
121
12%
Source: U.S. Small Business Administration: Small Business Data Base (SBDB),
Fin/Stat File.
F-5
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Table F-4
DISTRIBUTION OF TOTAL ASSETS AMONG FIRMS
OWNING RETAIL GASOLINE MARKETING OUTLETS
Total Assets
0-5200,000
$200,001-5400,000
$400,001-5600,000
$600,001 -$1,000,000
$1,000,001 -$10,000,000
$ 1 0,000,00 1 -$ 1 00,000,000
$ 1 00,000,00 1 -$ 1 ,000,000,000
1, 000,000,000 +
Number of Firms Number of Outlets Owned
in This Group by Firms in This Group
30,114
33,410
20,478
3,567
2,063
76
4
27
(33.56)1
(37.23)
(22.82)
(3.97)
(2.30)
(0.08)
(0.00004)
(0,03).
30,114
36,705
21,684
14,268
28,722
9.572
2,562
49,371
(15.60)
(19.02)
(11.24)
(7.39)
(14.88)
(4.96)
(1.33)
(25.58)
TOTAL
89,7382
193,000
Source: Meridian Research, Inc., Financial Responsibility for Underground Storage
Tanks: Financial Profile of the Retail Motor Fuel Marketing Industry
Sector. Draft Final Report, April 1987.
l. Numbers in parentheses are percentages of all firms or all outlets in this
sector represented by the firms in this asset group.
l -
2. Columns may not total because of rounding; percentages are calculated for
the rounded total.
F-6
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Table F-5 illustrates the distribution of net income to total asset ratios (i.e., rate
of return on assets) for all of the firms that own retail gasoline outlets. This ratio
can be used to characterize a firm's financial health or profitability. The lower a
firm's return on assets, the greater the likelihood that the firm will fail or decide to
close its outlets. The median rate of return on assets for these firms is between 6
percent and 8 percent, which is a fairly typical return on assets for U.S. firms
(except for U.S. firms engaged in banking or financial services).
This rate of return indicates that firms in the retail gasoline marketing sector
are, on average, neither more nor less profitable than firms engaged in most other
lines of business. Most of the return on assets categories shown in Table F-5
include both large and small firms, although a large convenience store chain is the
only firm represented in the negative return on assets category. The second lowest
category (0-0.02) includes both single-outlet open dealers and the Texaco
Corporation, while the highest rate of return category (0.08+) includes both the
Exxon Corporation and many single-outlet open dealers. These data show that small
firms owning retail gasoline marketing outlets are no less profitable on a percentage
rate of return basis than large firms. Environmental regulations may affect large
and small firms quite differently, however, because small firms have much less
revenue to cover environmental costs that are often almost as high for them as for
the large firms.
ENVIRONMENTAL PROBLEMS
Environmental concerns at retail gasoline outlets include potential spills and leaks
from underground storage tanks containing gasoline, diesel fuel, and/or used oil, and
vapor emissions from the handling of gasoline. Waste disposal problems at retail
gasoline outlets involve used oil and spent cleaning solvents.
Gasoline handling operations are divided into two steps: the filling of an
underground storage tank (Stage I) and vehicle refueling (Stage II). Stage I
emissions can be reduced by about 95 percent through the use of a vapor balance
system, which transfers fuel vapors into the tank truck unloading at the outlet and
then to the terminal vapor processor for recovery or destruction, instead of venting
them to the atmosphere. Requirements for such controls have been incorporated into
many state regulations.
Tank trucks with vapor collection equipment can become a separate source of
emissions when leakage (estimated to average about 30 percent of potentially
captured emissions) occurs. Many states require gasoline tank trucks equipped for
vapor collection to pass an annual test of tank vapor tightness and pressure limits
for the tanks and vapor collection equipment. Meeting these requirements reduces
average leakage to about 10 percent.
Vehicle refueling emissions from spillage and from vapor displaced from vehicles
by dispensed gasoline are another major source of emissions.
F-7
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Table F-S
DISTRIBUTION OF NET INCOME TO TOTAL ASSETS RATIOS AMONG
FIRMS OWNING RETAIL GASOLINE MARKETING OUTLETS
Ratio of Net Income
to Total Assets
Less than 0
0-0.02
0.02-0.04
0.04-0.06
0.06-0.08
0.08+
TOTAL
Number of Firms
in This Group
1 (O)1
30,573 (34.07)
1,540 (1.72)
6,941 (7.73)
30,590 (34.09)
20,094 (22.39)
89,7382
Number of Outlets Owned
by Firms in This Group
185 (0.10)
48,801 (25.29)
25,891 (13.42)
45,840 (23.75)
42,054 (21.79)
30,225 (15.66)
193,000
Source: Meridian Research, Inc., Financial Responsibility for Underground Storage
Tanks: Financial Profile of the Retail Motor Fuel Marketing Industry
Sector. Draft Final Report, April 1987.
1. Numbers in parentheses are percentages of the total population of outlets or
firms in this net income to total assets category.
2. Columns may not total because of rounding; percentages are calculated for
the rounded total.
F-8
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Stage II controls are currently being used in 26 counties in California and the
District of Columbia and are being considered for other ozone nonattainment areas.
Contaminants are introduced into used oil through use, mixing, or mismanagement.
Automotive use of lubricating oils produces contaminated used oils through the
internal chemical breakdown of additives during service and through such external
factors as engine blowby, dust, and dirt. This oil contains large quantities of lead
and lower levels of barium, arsenic, and cadmium. In addition, used oil may be
mixed either knowingly or unknowingly with hazardous wastes and thus become
contaminated. For example, chlorinated solvents such as degreasing solvents are
frequently introduced into automotive used oil storage tanks. The preferred, and
more common, practice is to store the spent solvents in separate storage drums.
ENVIRONMENTAL REGULATIONS
The principal environmental regulations that will affect gasoline service stations
between 1988 and 1992 are the technical standards and financial responsibility
requirements for owners and operators of underground storage tanks (USTs) and the
regulations governing the handling and disposal of used oil. In. addition gasoline
service stations in certain air quality nonattainment areas (e.g. St. Louis) will be
required to install air emission controls on the nozzles of their gasoline pump hoses.
Other EPA regulations that may affect retail gasoline outlets include regulations
pertaining to used oil, hazardous wastes, and toxic chemicals.
Paperwork requirements for gasoline service stations will include initial
notification, monitoring, evidence of financial responsibility, and recordkeeping
associated with USTs. In addition, they will be required to complete all the
notification, manifest and reporting forms associated with handling hazardous
substances and used oil. The costs associated with meeting these paperwork
requirements are presented in Table F-6.
Regulations with a Direct Impact
CAA: Gasoline Marketing
EPA's gasoline marketing regulations are intended to reduce emissions of benzene,
ethylene dibromide (EDB), ethylene dichloride (EDC), and gasoline vapors. The focus
is on gasoline vapors, or volatile organic compounds, because these emissions
contribute to the failure of some geographical areas to attain the national ambient
air quality standard for ozone. The regulation was prompted by the need to revise
state implementation plans for 11 air control regions, pursuant to Section 110(a)(l) of
the Clean Air Act.
Two regulatory strategies are being considered: (1) control systems on vehicles
and trucks (onboard controls), and (2) control systems on service station equipment
(stage II controls). Onboard controls are the subject of Section 2020(a)(b) of the
Clean Air Act, and proposed rules for these controls were announced in the August
19, 1987 Federal Register.
Stage II controls consist of either vapor balance systems or assisted systems.
F-9
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Table F-6
PAPERWORK BURDEN
GASOLINE SERVICE STATIONS
(SIC 5541)
Regulation/Activity
One-Time Costs
Annual Costs Comments
RCRA: UST Standards
Notification
Tank Tightness
Test Records
Financial Assurance
Records
Corrective Action
RCRA: Waste Oil Mgrot
Notification
Recordkeeping
RCRA: Generators of
100 to 1,000 kg/mo
Notification
Manifest
Recordkeeping
SARA Title III
Hazardous Chemical
Inventory
$15
S31
$15
$25
Not significant
Site^-specific
Stations generating
$22 used oil
$20
$1,000
$400
Done by contractor
First year only
Subsequent years
TOTAL COSTS
$86
$1,042 First year
$442 Subsequent years
F-10
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Assisted systems use a variety of means to generate a negative or zero pressure
differential at the nozzle-vehicle interface so that a tight seal is not necessary
between the vehicle and the nozzle boot, which is a flexible covering over the
nozzle that captures the vapor for return to the underground tank via a vapor hose.
Onboard vapor controls consist of a fillpipe seal and a carbon canister that adsorbs
the vapors displaced from the vehicle fuel tank by the incoming gasoline. The
technology is an extension of a system already installed on light-duty cars and
trucks. Since 1971, new cars have been equipped with similar carbon canister
systems for collecting evaporative emissions (breathing losses caused by temperature
changes in the vehicle tank and carburetor). EPA's August 1987 proposal limited the
application of stage II controls to selected nonattainment areas (e.g. St. Louis).
Thus, these regulations will not affect most gasoline service stations.
RCRA: UST Technical Standards-
EPA's technical standards for underground storage tanks will include regulations
for new and existing tanks containing petroleum and hazardous substances. These
standards may be applied to tanks containing used oil as well. EPA's proposed
technical standards for new and existing tanks contains provisions covering release
detection, general technical requirements (e.g., performance standards for new USTs,
operation and maintenance of corrosion protection for new and existing USTs),
mandatory upgrading of existing USTs, closure, corrective action, reporting and
recordkeeping. These regulations should become final in July 1988.
RCRA: UST Financial Responsibility Requirements
EPA's financial responsibility, requirements for owners and operators of
underground storage tanks require UST owners or operators to demonstrate financial
responsibility for taking corrective action and for compensating third parties for
bodily injury and property damage caused by accidental releases from their USTs.
Owners and operators- are permitted to use one, or a combination, of the following
mechanisms to demonstrate financial responsibility: financial tests of self-insurance,
guarantees, insurance (including risk retention group coverage), surety bonds, letters
of credit, State-required mechanisms, and State funds (or other State assurance).
Financial responsibility must be demonstrated in the amount of at least $1 million
per occurrence and in an aggregate amount that depends on the number of USTs
assured. One to 16 USTs must be assured at the $1 million aggregate level; 17 or
more USTs must be assured at the $2 million aggregate level. UST owners and
operators who are unable to provide financial assurance by the effective date of the
regulations may apply for a suspension of enforcement while they attempt to form
risk retention groups or obtain assurance from a State corrective action and
compensation program. These regulations may be changed prior to promulgation in
July 1988 and the effective date may be extended to allow certain UST owner and
operators time to obtain the required insurance.
The paperwork requirements for USTs include notifying EPA, maintaining
monitoring records, and submitting reports showing evidence of financial assurance.
Existing facilities have submitted the notification form already, a one-time cost of
about S15.1 Because most owners/operators now keep inventory or other tank
monitoring records, these requirements will not result in incremental costs. Filing a
record of the required tank tightness test every three years will require
approximately 5 minutes and cost about $1.25. The annual cost of showing evidence
F-ll
-------
of financial assurance and maintaining records of financial assurance is estimated to
be S31.252
Records must also be kept for tanks that have been upgraded, repaired, or closed.
Recordkeeping costs for gasoline service stations will vary depending on the number,
age, and materials of their existing tanks and whether any leaks have been
discovered. In most cases also, filing records will be the only paperwork
requirement. If extensive corrective action is required, the owner/operator will have
to submit a number of reports, including corrective action plans, progress reports,
and a completion notification.
RCRA: Waste Qil Management
Gasoline service stations may accumulate and sell used oil to be rerefined or
burned as fuel. EPA decided in November 1986 not to regulate used oil destined for
recycling as a hazardous waste due to the deleterious effect on recycling. EPA is
examining a range of RCRA, TSCA, and other options regarding used oil disposal.
The legislative mandate for waste oil management regulations is section 3012 of
RCRA, added to the statute by the Used Oil Recycling Act of 1980 and amended (and
re-designated as section 3014) by the 1984 RCRA amendments. The statute provides
a special niche for recycled oil in Subtitle C that differs from all other wastes.
Recycled oil is to be regulated under a special set of rules, effects on recycling must
be taken into account in listing and regulating recycled oil, and EPA retains
authority to regulate recycled oil under Subtitle C whether or not it is identified or
listed as hazardous.
EPA announced (51 FR 41900) that it intends to issue recycled oil management
standards under Section 3014 of RCRA and that it will determine whether used oil
being disposed of (not recycled) should be listed as a RCRA hazardous waste.
Furthermore, EPA may require that underground tanks used to store used oil meet
the UST standards discussed above. In the preamble to the proposed UST technical
standards, EPA explained:
The Agency is assessing whether the regulations that are
proposed today would be appropriate for used oil UST
systems.... EPA may determine that the technical standards
being proposed today are appropriate for used oil tanks, in
which case, EPA may apply today's technical standards to used
oil in the final rule (52 FR 12689, April 17, 1987).
In the past, most service stations would sell the used oil that they
accumulated to collectors, who in turn would sell it to refining facilities for re-
refining or to other parties for burning in industrial boilers. Collectors would pick
up used oil in trucks and generally pay between 10 and 30 cents per gallon. As
the price of oil has declined, this practice has been declining as well, so that used
oil is no longer such a marketable commodity.
The costs that gasoline stations would incur under EPA's waste oil regulations
will depend upon the regulatory strategy that EPA chooses. One of the options
that EPA has been considering would require service station operators to obtain an
EPA identification number, maintain an internal log of waste oil pickups, and meet
F-12
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UST technical standards and financial responsibility requirements for any USTs
containing waste oil. EPA estimates the cost of these requirements to be
approximately $100 per year plus the cost of meeting UST requirements described
above. Should gasoline stations be required to meet the more stringent standards
associated with hazardous waste tanks and hazardous waste management, the costs
of the waste oil regulations would be considerably greater.
Presently, paperwork activities associated with waste oil management for
gasoline service stations require notification, recordkeeping, and tracking of
shipments using a manifest system. However, because of the controversy over
EPA's decision not to list used oil as a hazardous waste, the current standards may
change.
All gasoline service stations that generate used oil are now required to notify
EPA one time to receive an EPA identification number. This is estimated to take
1 hour and cost the facility $15.3 Gasoline stations that recycle used oil will not
have to obtain individual permits. Collection logs and record- keeping impose
annual paperwork burdens. Gasoline stations are required to track used oil
shipments using invoices (i.e., collection logs), so that used oil goes only to
legitimate outlets, allowing EPA to trace problems to their sources. The burden of
collection logs largely falls on recycling companies, many of whom currently use
invoices that meet the regulatory requirements. Maintaining a collection log is
estimated to take 5 minutes per event and to cost about $22 per year for a typical
generator.
RCRA: Generators of 1QQ to I.OOP ke/mo
The Hazardous and Solid Waste Amendments of 1984 require EPA to regulate
generators of hazardous wastes that produce between 100 and 1000 kilogram per
month. The EPA requirements include obtaining an EPA identification number,
maintaining a uniform manifest system, installing management controls, and meeting
a limited set of performance standards. EPA's final rule was promulgated in March
1986 and became effective September 22, 1986.
Gasoline service stations will be required to comply with these regulations, if
they generate between 100 and 1,000 kilograms of spent solvents per month. EPA
estimates that it will cost a small business approximately $3,680* to comply with
the initial requirements of these regulations. The annual cost of compliance for
service stations depends on the frequency of the Safety Kleen pick-up service
which amounts to about $50 each time. The range is once every month to once
every 9 weeks or about $300 to $600 per year.6
The paperwork burdens associated with this regulation include a one-time
requirement to obtain an EPA identification number and annual recordkeeping
requirements associated with the manifest system. EPA estimates that the cost of
obtaining the identification number is approximately $25° and the annual cost of
maintaining the records for the manifest is approximately $20.7
Title III of SARA
Sections 311 and 312 of SARA require businesses to submit Material Safety
Data Sheets (MSDS) or alternative lists as well as hazardous chemical inventory
F-13
-------
forms to three government agencies: the State Emergency Response Commission,
the local Emergency Planning Committee, and the local Fire Department. The
MSDSs are the same forms already required by the Occupational Health and Safety
Administration (OSHA), which establishes the reporting thresholds. Section 311
requirements are effective September 1988; Section 312 becomes effective March
1989. EPA estimates that the costs to comply with sections 311 and 312 will
average $1,000 per facility for the first year and about $400 in succeeding years.8
These costs will depend upon how many MSDSs are required and whether the
MSDSs are supplied by vendors. Most service stations use solvents or other
hazardous chemicals and will be required to comply with this rule.
EPA considers all of the requirements associated with Title III of SARA to be
paperwork requirements. The paperwork costs associated with this regulation,
therefore, are the costs estimated above.
Regulations with an Indirect Impact
CAA: Fuel Volatility
Refiners must reduce the Reid Vapor Pressure of gasoline in ASTM Class C
areas to 10.5 psi in 1989 and to 9.0 psi in 1992, thus reducing butane content.
Proportional reductions apply to other areas. A small vehicle cost of $20/car over
its lifetime is expected, and it is presumed that higher costs for gasoline will
impact slightly on all businesses that use gasoline.
CWA: Oil and Gas Effluent Guidelines
The oil and gas extraction industry onshore segment stripper subcategory will
be subject to regulations establishing effluent limitations and guidelines. Gasoline
service stations Could be impacted indirectly by this regulation with an increase in
the cost of oil and gasoline. The proposal is planned for 1991 with promulgation
in 1993.
RCRA and CERCLA and CWA: Waste Disposal Regulations
Under CERCLA and RCRA and their subsequent amendments, EPA is issuing
several regulations governing the transportation, storage, treatment, and disposal of
hazardous and nonhazardous wastes as well as standards for corrective action for
hazardous waste and toxic substance spills. Forthcoming regulations under the
CWA and MPRSA on the ocean dumping of wastes and the incineration of
hazardous wastes at sea will also have an impact on waste disposal practices. The
list of forthcoming regulations that fall into this category includes:
RCRA Subtitle C Location Standards
Subtitle D Criteria
Liner and Leachate Collection
Corrective Action at SWMUs
Hazardous Waste Burning
Land Ban - Dioxin and Spent Solvents
Land Ban - California List
Land Ban - First Thirds
F-14
-------
Land Ban - Soil and Debris
Hazardous Waste Tank Standards
Toxicity Characteristics
CERCLA National Contingency Plan
CERCLA Settlement Policy
CWA Ocean Dumping
These regulations would affect gasoline service stations firms directly only if
they maintain a waste storage, disposal, or treatment facility on their property.
This is highly unlikely. The regulations will affect service stations indirectly,
however, by making it more difficult and more expensive for them to dispose of
their wastes. Thus, the costs of their waste disposal can be expected to increase.
Unfortunately, no estimates are available of the likely magnitude of such cost
increases.
Regulations with an Uncertain Impact
CWA: Machinery Manufacturing Effluent Guidelines
Possible effluent limitation guidelines for the machinery manufacturing,
rebuilding, and maintenance industry are the subject of a new EPA industry study.
The effect on small businesses depends on the depth and breadth of the regulation
and the extent to which water is used in the process. A decision document to
determine the regulatory approach, if any, will be prepared in fiscal year 1988.
Thus, a description of requirements cannot be given.
SDWA: Wellhead Protection
In June 1986, the Wellhead Protection Act (WHP) was added as an amendment
to the SWDA. The WHP is to be a voluntary program carried out by the individual
states. The location of wellheads would be identified and activities and facilities
within a certain area surrounding the wellhead would be examined for possible
contaminants. Under the WHP, certain activities, such as the transfer of
petroleum products from tank farms to gas stations may be banned. This program
will affect only those service stations that are located near drinking water wells.
The number of such firms and the. potential impact upon their activities has not
yet been determined.
IMPACT OF THE REGULATIONS
This section describes the impacts of the regulations described above on a
typical small business in the retail gasoline marketing sector, a median open dealer.
For the median open dealer, assets are $210,000, net annual income is $14,000, and
net worth is $90,000.
UST Technical Requirements
The underground storage tank technical standards differ from many regulations
in that they cannot be summarized as a one-time capital cost followed by constant
F-15
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annual operating costs. There is no cost of these requirements that must be
incurred in every year. Under the proposed standards, which may change prior to
promulgation, tank testing must be conducted every three years. Other
requirements depend upon the condition of the UST or have timing that is at the
discretion of the owner or operator. Whether tanks must be replaced or corrective
action expenditures incurred depends upon the condition of the UST. The owner
or operator is allowed ten years to upgrade tanks and, in most cases, can meet
upgrading requirements by retrofitting existing tanks rather than by replacing
them. Because of the nature of these requirements, the potential impacts are best
analyzed as a series of possible activities that may occur at a gasoline service
station. The costs of different compliance activities related to UST technical
requirements are summarized in Table F-7.
Routine monitoring. Testing three tanks has an after-tax cost of $1,275. This
reduces the rate of return on assets for the typical open dealer to approximately 6
percent, which is still a good rate of return. The impact of testing will be
somewhat reduced by the fact that these costs are incurred only once every three
years.
Tank upgrading. Upgrading one tank has an after-tax cost of $2,593. This
reduces the rate of return of the median open dealer to about 5.5 percent. Thus,
even in the year in which a tank is upgraded, it is possible for such a firm to
finance this activity out of profits and still retain at least a fair rate of return.
Under the proposed rule, a dealer with three tanks need not upgrade a tank more
frequently than once every three years to meet the 10-year regulatory deadline.
A non-plume release. As Table F-7 shows, the expected value of the after-tax
cost of leak verification and corrective action for a non-plume release is $19,635.
This alone would absorb more than the annual net income of the median open
dealer. Such a corrective action would therefore leave the median open dealer in
poor financial condition (-2.7 percent rate of return).
A small plume release. As Table F-7 shows, the expected value of the
after-tax cost of leak verification and corrective action for an average small plume
release (i.e., one less than 25 square meters in area) is $31,620 if only a floating
plume must be cleaned up and $53,720 if a dispersed plume must also be cleaned
up. Paying these costs would leave the median open dealer in severe financial
distress (-8.4 percent rate of return). The additional costs of cleaning up a
dispersed plume are nearly four times the annual net income of the median open
dealer. These costs would leave the median open dealer in severe financial distress
(-18.9 percent rate of return).
A large plume release. As Table F-7 shows, an average large plume release
(i.e., one greater than 25 square meters in area) has an expected value in after-tax
leak verification and corrective action costs of $108,545 (although the pre-tax
costs of $127,700 may again be a more appropriate measure because of the size of
the loss). These after-tax costs alone are equal to nearly eight years' of net
income for the median open dealer. This is clearly enough to cause the median
open dealer to fail.
F-16
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Table F-7
IMPACTS ON MEDIAN DEALER'S PROFITABILITY OF
SELECTED COMPLIANCE ACTIVITIES AND EVENTS
Activity/Event
Cost of Action
Before Tax
Adjusted
\J
Test Three Tanks
Upgrade One Tank
Non-Plume Release with
Leak Verification, and
Corrective Action
Small Plume Release with
Clean-up of Floating Plume,
Leak Verification, and
Corrective Action
Large Plume Release,
Leak Verification, and
Corrective Action
$ 1,500
$ 3,050
$ 23,100
$ 37,200
5127,700
$ 1,275
$ 2,593
$ 19,635
$ 31,620
II
$108,545
Source: Meridian Research, Inc., using the Affordability model.
^ Adjustment is based on Cost X (1-TR), where marginal corporate tax rate,
TR, is estimated to be 15 percent. Where losses are made, it is assumed that the
deduction will be carried over, since costs do not recur annually.
^ Cost of new tank ($6,000) is reduced by 10 percent income tax credit prior
to adjustments for tax described in note.
F-17
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UST Financial Responsibility Requirements
Open dealers will not be able to use the majority of the financial assurance
mechanisms proposed by EPA to satisfy their financial responsibility requirements.
These dealers will not be able to meet the financial test of self-insurance or to
qualify for letters of credit or surety bonds, and other private assurance
mechanisms will generally be unavailable to firms of this size. At this time, public
mechanisms such as State funds are not available. Firms that are not able to
obtain a financial assurance mechanism may apply for a suspension of enforcement.
The only private mechanism potentially available to open dealers is pollution
liability insurance. In the past, such insurance has not been sold to single-site
operations in the retail gasoline marketing industry. ,If such insurance were
available, however, EPA estimates that it would cost approximately $2,500 per
outlet annually. (See EPA's Regulatory Impact Analysis of Proposed Financial
Responsibility Requirements for Underground Storage Tanks Containing Petroleum).
EPA estimates that the cost of UST insurance would cause 0.7 percent of small
business-owned retail gasoline outlets to close annually as a result of paying the
costs of insurance premiums. However, over the long run (10 years), fewer firms
would exit the industry if they had UST insurance than if they did not. The costs
of insurance premiums may force some low-profit, marginal open dealer firms to
close. However, among larger, more profitable open dealer firms and small
business chains, fewer outlets would close because of paying insurance premiums
than would close as a result of meeting the costs of their UST-related corrective
action and third-party liability awards from their own funds.
The financial responsibility regulations may also accelerate the costs associated
with the technical requirements. The technical requirements allow 3 years for
initial monitoring and 10 years for upgrading tanks. However, some insurers may
require monitoring data and upgrading of USTs in order to obtain insurance. -As a
result, costs that would have been incurred over the next ten years for the
technical standards may have to be incurred within a single year in order to obtain
insurance. On the other hand, once insurance is obtained, it will cover the costs
of any corrective actions that may occur, and will thus minimize the potential for
economic disruption associated with these events. Currently, there are no state
compensation and liability funds that fully meet Subtitle Fs requirements for use as
a financial responsibility mechanism. The extent to which such programs mitigate
economic impacts depends on how they are set up. At one extreme, a fund that
paid for all corrective actions and provided low-interest loans to small businesses
for tank replacement and that was based on a gasoline tax would virtually
eliminate the economic impacts on small businesses of the technical standards. At
the other extreme, a fund based on tank fees and that paid only corrective action
costs for financially insolvent UST owners or operators would do nothing to
mitigate the economic impacts of these standards on small businesses.
In summary, unless the availability of insurance and types of firms able to
obtain it alter greatly, insurance will not significantly mitigate small business
economic impacts. State compensation and liability funds may mitigate the
economic impacts of the technical standards, but it is uncertain whether such
funds will come into being and whether they will be designed in a way that
permits them to mitigate economic impacts.
F-18
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Gasoline Marketing Regulations
EPA has estimated that the costs of stage II vapor recovery system for a
gasoline service station with 6 to 8 nozzles. Such a system would have capital
costs of $12,600 and annual operating costs of $890 per year. The capital costs
would reduce the median open dealers' income from $14,000 to $500 if the costs
could not be recovered through increased revenues. These costs would temporarily
force the firm into a marginal financial condition. Firms with lower profits than
the median open dealer would be tempted to close as the result of such
expenditures. The annual costs of this regulation would have a relatively minor
impact on the net income of the median open dealer even if he is unable to
recover these costs through increased revenues.
As discussed above, these costs will apply only to stations in selected air
quality nonattainment areas (i.e. California, Washington, D.C., and St. Louis).
Because California and Washington, D.C. already have stage II controls installed,
the incremental costs of these regulations will be felt only in St. Louis.
Other Regulations
The combined annual costs of the regulations covering waste oil, generators
of 100 to 1,000 kg/mo of hazardous wastes, and SARA Title III will be
approximately $1,000 per year. These costs would have a minor impact on the net
income of the median open dealer.
CONCLUSION
Table F-8 summarizes the impacts of selected compliance activities upon the
average gasoline service station. As can be seen, the impact of the regulations
will depend mostly upon the status of the stations' USTs. The cleanup of even
small releases could place the average station in a poor or distressed financial
condition. The cleanup of large plume releases could result in the average
station's failure.
The costs associated with a corrective action, particularly if there is a plume
or if the tank must be replaced, will lead to severe economic impacts. In many.
cases, these events will cause the bankruptcy of small businesses in the retail
gasoline marketing sector. Fortunately, not all firms will incur corrective actions,
and some states may use state funds to aid small firms in meeting the costs of
corrective action. The capital investments required by all standards considered
here can be sustained by most small firms if they are allowed several years to
make the expenditures. If, however, all capital expenditures under all regulations
must be met in a two- to three-year period, only the strongest firms are likely to
survive.
F-19
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Table F-8
IMPACTS OF SELECTED COMPLIANCE ACTIVITIES
UPON THE AVERAGE GASOLINE SERVICE STATION
Activity/Event
Test Three Tanks
Upgrade One Tank
Nonplume Release
with leak verification
and corrective action
Financial
Net Income (S) Net Income/Assets (%) Condition
512,725
$11,407
$ -5,635
6.06%
5.43%
-2.68%
Good
Good
Poor
Small Plume Release
with cleanup of floating
plume, leak verification,
and corrective action
$-17,620
-8.39%
Severe
Distress
Large Plume Release
with cleanup of floating
plume, leak verification,
and corrective action
$-94,545
-45.02%
Failure
F-20
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Appendix G
DRY CLEANING
The dry cleaning industry is engaged in the cleaning, pressing, and finishing of
garments and apparel. It is divided into three sectors: commercial (SIC 7216), coin-
operated (SIC 7215), and industrial (SIC 7218). Commercial facilities are the stores
popularly referred to as "dry cleaners". Plants in the coin-operated sector are
usually part of a laundromat. They provide inexpensive dry cleaning that does not
include pressing or other finishes. The industrial sector supplies laundered uniforms,
wiping towels, work gloves, etc. to industrial or commercial users. For industrial dry
cleaners, dry cleaning is a supplemental process applied to only about 10 percent of
their laundry items. The remainder of this chapter focuses on commercial dry
cleaners.
In 1986, there were 15,251 firms primarily engaged in the commercial dry
cleaning industry (SIC 7216). These firms employed 140,793 people and had total
sales of approximately S3 billion ($24,000 per employee). Almost half (46%) of these
firms had fewer than 5 employees and 91% had fewer than 20 employees. Only 91
firms had more than 100 employees. Firms with fewer than 20 employees accounted
for 56% of industry sales and 59%-of industry employment, (see Table G-l).
The U.S. Small Business Administration (SBA) classifies as small businesses all
firms in SIC 7216 with annual sales less than $2.5 million. In 1986, dry cleaners
with 50-99 employees had average sales of $1.5 million and dry cleaners with 100-249
employees had average sales of $3.4 million. Thus, most dry cleaners with fewer
than 100 employees (99.4% of the industry) would be considered small businesses.
A typical small dry cleaner has 3-5 employees and annual sales of approximately
$100,000. Such a firm cleans 50,000 pounds of clothing each year, operating out of a
single urban location with one 30 pound dry cleaning machine.
ENVIRONMENTAL PROBLEMS
Most of the environmental problems in the dry cleaning industry are related to
dry cleaning solvents. Over the years there has been a pronounced trend away from
the use of petroleum-based solvents and toward the use of perchloroethylene. Over
84% of all dry cleaning facilities use perchloroethylene.1 Most of the remaining
facilities use a petroleum-based solvent and a small percentage use either
fluorocarbon or trichloromethane. Environmental problems are created by the
evaporation of these solvents and by the presence of these solvents in wastewaters
and solid wastes. Spent solvents and wastes contaminated by solvents are considered
hazardous.
G-l
-------
Table G-l
SMALL BUSINESSES IN THE DRY CLEANING INDUSTRY - 1986
(SIC 7216)
Employees Per Firm
1-4 S-9 10-19 20-49 50-99
Number of Firms 6,983 4,503 2,390 1,059 225
Cumulative Share of:
Firms
Sales
Employment
46%
15%
14%
75%
36%
35%
91%
56%
57%
98%
78%
78%
99%
89%
"88%
Source: U.S. Small Business Administration: Small Business Data Base (SBDB), United
States Establishment and Enterprise Microdata (USEEM).
G-2
-------
Many firms in the dry cleaning industry already have taken steps to reduce
solvent emissions and solvent contaminated wastes. The use of perchloroethylene by
the dry cleaning industry has been declining and is expected to continue to-decrease
slowly due to greater recycling and lower solvent emissions from equipment. The
economic incentive for self-imposed emission reductions and solvent recycling have
persuaded plants to install control devices and/or switch to more efficient machines
voluntarily.
Another trend in the commercial dry cleaning industry is the increased use of
dry-to-dry machines as opposed to transfer machines. Transfer machines are those
which consist of separate units for cleaning and drying that require manual transfer
from the cleaning to the drying unit. Dry-to-dry machines accomplish both cleaning
and drying in one machine, thereby eliminating solvent^ emissions from the transfer
process.
With few exceptions, most commercial dry cleaners use distillation and/or
filtration techniques to regenerate their solvents. The wastes produced by these
processes consist of spent filter cartridges, thick liquid still bottoms, and/or muck-
containing dry filter powder. Typically, a dry cleaner will generate 50-60 pounds of
such wastes per 1,000 pounds of clothing cleaned.2 Thus, a small business that
processes 50,000 pounds of clothing each year will generate approximately 3,000
pounds of solvent-containing wastes, or about 110 kilograms of such wastes each
month.
Most dry cleaners have contracts with a single national service company.
Safety-Kleen, to provide disposal drums for their solvent-related wastes, pick-up and
dispose of these wastes, and carry out all manifesting requirements except generator
signature. Approximately five percent of commercial dry cleaners do not use
Safety-Kleen's services, either because they are in remote areas or for other reasons
dispose of their own wastes.
ENVIRONMENTAL REGULATIONS
The principal environmental regulations that will affect dry cleaners during the
1988-1992 period will be those that control the evaporation of perchloro- ethylene
from perc dry cleaning machines, restrict the handling and disposal of hazardous
wastes, and require the reporting of toxic chemicals stored on premises. Dry
cleaners that use petroleum solvents will not be subject to the perchloroethylene air
emission standards, but may be subject to EPA's requirements for underground
storage tanks. Dry cleaners also will be affected indirectly by a series of EPA
regulations that will impose stricter standards on waste disposal in general, and
hazardous waste disposal in particular.3 The forthcoming EPA regulations that will
affect dry cleaners are described in more detail below and are summarized in Table
G-2.
Paperwork requirements for dry cleaners will include initial notification,
monitoring, evidence of financial responsibility, and recordkeeping associated with
USTs. In addition, they will be required to complete all the notification, manifest
and reporting forms associated with handling hazardous substances and spent
solvents. The costs associated with meeting these paperwork requirements are
presented in Table G-3.
G-3
-------
Table G-2
ENVIRONMENTAL REGULATIONS
for the
THE DRY CLEANING INDUSTRY
(SIC 7216)
Act/Reeulalion
Direct Impact
CAA: Perc Dry
Cleaner NESHAP
SARA: Title III
Requirements
ambient controls
or machinery
replacement
recordkeeping,
reporting
Cost to Small Business
$6,500 for controls
$28,000 to replace
$1,000 first year,
$400/yr thereafter
Comments
50% installed.
Options still
to be decided.
Vendor may
supply forms
RCRA: Generators of
100-1,000 kg/mo
RCRA: UST Standards
RCRA: UST Corrective
Action
Indirect Impact
RCRA: Hazardous
Waste Regulations
Uncertain Impact
SDWA: Wellhead
Protection
manifest,
proper handling
insurance,
tightness testing,
upgrade tank
repair/replace
leaking tanks,
clean-up releases
higher waste
disposal costs
$50 per month, plus
$3,680 first year
$2,500/yr
$500/3-yr/tank
$3,000/tank
may be $100,000+,
depends upon damage
from leak
undetermined
activity bans
near drinking,
water wells
undetermined
Contract
services
Portion of
industry.
15+% of tanks
may be
leaking.
Only one
company
providing
service.
May apply to
few firms, if
any.
G-4
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Table G-3
PAPERWORK BURDEN
DRY CLEANERS
(SIC 5541)
Regulation/Activity
One-Time Costs
Annual Costs Comments
UST Standards
Notification
Tank Tightness
Test Records
Financial Assurance
Records
Corrective Action
Small Quantity Generators
Notification
Manifest
Recordkeeping
SARA Title III
Hazardous Chemical
Inventory
$30
$31
.$63
$20
$1,000
5400
Not significant
Site-specific
Done by contractor
First year only
Subsequent years
TOTAL COSTS
$124
$1,020 First year
$420 Subsequent years
G-5
-------
Regulations with a Direct Impact
CAA: Perc Dry Cleaners NESHAP
TSCA: Chlorinated Solvents
An interagency regulatory group, the Chlorinated Solvents Project, is
investigating regulatory options for the dry cleaning industry. This interagency
group consists of representatives from EPA, FDA, OSHA, and The Consumer Products
Safety Commission (CPSC). Options for health risk management in the commercial
sector of the dry cleaning industry consist of methods for reducing emissions from
chlorinated solvents from dry cleaning machines.4 Various alternatives are based on
three different emission control techniques: requiring dry cleaners to switch from
transfer to dry-to-dry machines; requiring ambient controls (refrigerated condensers
and carbon adsorbers) on all machines, and requiring that worker controls (leak
detection and repair methods and local exhaust systems) be placed on all machines.
The alternatives may include one or a combination of the three control techniques.
Viable alternatives depend on the permissable exposure limit (PEL) that might be
established by OSHA regulations. Also under study is the consumers exposure to
solvents.
The addition of ambient controls (refrigerated condensers and carbon
adsorbers) on both transfer and dry-to-dry machines is one possibility for controlling
emissions. Another option under consideration is the banning of transfer machines.
According to one study, approximately 50 percent of commercial dry cleaners have
installed ambient controls already. Some of these plants have installed emission
reducing equipment voluntarily, but the majority are regulated through state and/or
local restrictions.
The capital costs of installing controls on most commercial dry-to-dry perc dry
cleaning machines (IS Ib. to 45 Ib.) would be about $6,800 for a carbon adsorber and
$6,300 for a refrigerated condenser. The capital costs of installing a refrigerated
condenser on a transfer machine would be higher, about $8,400. Annual costs would
increase more with the installation of a carbon absorber, approximately $l,800/yr. for
a 30 Ib. machine, than with the installation of a refrigerated condenser,
approximately $475/yr.s
If transfer machines are banned, the costs of the regulations to those dry
cleaners currently operating such machines will be much higher than the cost of
installing ambient controls. Replacing a 35-lb transfer machine with a 35-lb dry-to-
dry unit with a built-in refrigerated condenser would cost approximately $28,000.6
The Chlorinated Solvents Project is still considering the issues involved in this
regulation and comparing the available options. No regulatory decisions have been
made.
RCRA: Generators of 100 to 1000 kg/mo
The Hazardous and Solid Waste Amendments of 1984 require EPA to regulate
generators of hazardous wastes that produce between 100 and 1000 kilogram per
month. The EPA requirements include obtaining an EPA identification number,
maintaining a uniform manifest system, installing management controls, and meeting a
limited set of performance standards. Dry cleaners are subject to container
G-6
-------
regulations that require covers over buckets where spent cartridges, filter sludge,
and still bottoms are temporarily stored. EPA's final rule was promulgated in March
1986 and became effective September 22, 1986.
EPA estimates that it will cost a small business approximately $3,680r to comply
with the initial requirements of these regulations. The cost of compliance for dry
cleaners is included in Safety Kleen's $50 monthly service charge.
The paperwork burdens associated with this regulation include a one-time
requirement to obtain an EPA identification number and annual recordkeeping
requirements associated with the manifest system. EPA estimates that the cost of
obtaining the identification number for these facilities is approximately $25.8 The
annual cost of maintaining the records for the manifest is approximately $20.9
Title III of SARA
Sections 311 and 312 of SARA require businesses to submit Material Safety Data
Sheets (MSDS) or alternative lists as well as hazardous chemical inventory forms to
three government agencies: the State Emergency Response Commission, the local
Emergency Planning Committee, and the local Fire Department. The MSDSs are the
same forms already required by the Occupational Health and Safety Adminis-tration
(OSHA), which establishes the reporting thresholds. Under EPA's regulations,
businesses with more than 10,000 pounds of designated materials on hand will be
required to submit MSDS's by September 1988. Most dry cleaners have tanks
containing more than 1,250 gallons of solvent and would fall under these
requirements. EPA estimates that the costs to comply with sections 311 and 312 will
average $1,000 per facility for the first year and $400 per year thereafter.10 If
solvent suppliers provide completed MSDS forms, however, the costs could be
substantially less.
EPA considers all of the requirements associated with Title III of SARA to be
paperwork requirements. The paperwork costs associated with this regulation,
therefore, are the costs estimated above.
RCRA: UST Technical Standards and UST Financial Responsibility
Under EPA's RCRA regulations for underground storage tanks (USTs) that
contain petroleum or chemicals*, owners have been required to notify appropriate
state authorities as to age, size, construction, location, and contents of their tanks.
The proposed technical standards cover general performance, release detection,
operation and maintenance of corrosion protection, closure, and recordkeeping and
reporting. Existing tanks must be upgraded to new tank standards within 10 years.
The proposed regulations also require meeting financial responsibility requirements.
Generally, this will mean obtaining a specified amount of insurance coverage. The
final rule is scheduled to be promulgated in July 1988. The requirements will become
effective in October 1988, although the effective date of the financial responsibility
requirements may be extended to allow certain UST owners and operators time to
obtain the required insurance.
'Should dry cleaning solvents be designated hazardous, then dry cleaners will
have to meet much stricter and more expensive standards for USTs.
G-7
-------
These requirements for USTs only apply to those dry cleaners that store their
solvents in underground storage tanks. Generally, this is the practice only of dry
cleaners that use petroleum solvents. Because dry cleaners using petroleum solvents
are usually smaller than average, it is possible that they account for a much greater
percentage of firms than they do of production volume (14%). One source has
suggested that up to 50% of dry cleaning facilities may be using petroleum solvents.
•
The major costs to a small dry cleaner for complying with the UST regulations
are estimated to be as follows:11
Insurance S 2,500/year
Tightness Testing (lx/3 yrs) $ 500/tank
Tank Upgrade (within 10 yrs) $ 3,000/tank
In addition to these routine costs, dry cleaners with regulated USTs face the
possibility that their tanks may be found to be leaking. In this case, they will be
required to repair or replace the tank, remove the released solvents from the soil or
the groundwater, and repair any other damage to the environment. The cost of such
corrective action may be only a few hundred dollars or may be several thousand
dollars. EPA estimates that the average clean-up costs for a leaking gasoline service
station UST have been approximately $53,000. EPA's experience shows that
approximately 15% of all USTs are leaking currently and that an additional 2% can be
expected to begin leaking each year.
The paperwork requirements for USTs include notifying EPA, maintaining
monitoring records, and submitting reports showing evidence of financial assurance.
Existing facilities have submitted the notification form already, a one-time cost of
about $15.12 Because most owners/operators now keep inventory or other tank
monitoring records, these requirements will not result in incremental costs. Filing a
record of the required tank tightness test every three years will require
approximately 5 minutes and cost about $1.25. The annual cost of showing evidence
of financial assurance and maintaining records of financial assurance is estimated to
be $31.25"
Records must also be kept for tanks that have been upgraded, repaired, or
closed. Recordkeeping costs for dry cleaners will vary depending on the number,
age, and materials of their existing tanks and whether any leaks have been
discovered. In most cases also, filing records will be the only paperwork
requirement. If extensive corrective action is required, the owner/operator will have
to submit a number of reports, including corrective action plans, progress reports,
and a completion notification.
Regulations with an Indirect Impact
RCRA and CERCLA and CWA: Waste Disposal Regulations
Under CERCLA and RCRA and their subsequent amendments, EPA is issuing
several regulations governing the transportation, storage, treatment, and disposal of
hazardous and nonhazardous wastes as well as standards for corrective action for
hazardous waste and toxic substance spills. Regulations under the CWA and MPRSA
on the ocean dumping of wastes and the incineration of hazardous wastes at sea will
also have an impact on waste disposal practices. The list of regulations that fall
into this category includes:
G-8
-------
RCRA Subtitle C Location Standards
Subtitle D Criteria
Liner and Leachate Collection
Corrective Action at SWMUs
Hazardous Waste Burning
Land Ban - Dioxin and Spent Solvents
Land Ban - California List
Land Ban - First Thirds
Land Ban - Soil and Debris
Hazardous Waste Tank Standards
Toxicity Characteristics
CERCLA National Contingency Plan
CERCLA Settlement Policy
CWA Ocean Dumping
These regulations will affect dry cleaners directly only if they maintain a waste
storage, disposal, or treatment facility on their property. The vast majority of dry
cleaners have no need to maintain such facilities and contract out all of their waste
disposal needs.
These regulations will affect dry cleaners indirectly, however, by making it
more difficult and more expensive for them to dispose of their wastes. In July 1987,
the EPA Office of Small Business Ombudsman reported on a survey of dry cleaners
that indicates that hazardous waste regulations already are creating problems for the
industry.10 Major complaints centered on understanding the hazardous waste
regulations and the high costs associated with disposal. ' The latter situation was
attributed by the dry cleaners to a monopoly by Safety-Kleen which, the dry cleaners
charged, has no competition and is free to raise rates and set terms for collection of
wastes.
For the smallest dry cleaners with hazardous wastes, the minimum costs of
removing these wastes were reported to be $40 per month. This is the cost charged
by Safety-Kleen, who insists on monthly pick-up, needed or not. Costs were
reported to have greatly escalated recently. Dry cleaners are protesting their lack
of choice in transporters and the resulting pressures, especially financial, put upon
them by Safety-Kleen. The judgement of the dry cleaners that Safety-Kleen's prices
are unreasonably high was expressed by 79% of the respondents to the survey.
Regulations with an Uncertain Impact
SOW A: Wellhead Protection
In June 1986, the Wellhead Protection Act (WHP) was added as an amendment to
the SDWA. The WHP is to be a voluntary program carried out by the individual
states. The location of wellheads would be identified and activities and facilities
within a certain area surrounding the wellhead would be examined for possible
contaminants. Under the WHP, certain activities, possibly including dry cleaning may
be banned. This program will affect only those dry cleaners that are located near
drinking water wells. The number of such firms and the potential impact upon their
activities has not yet been determined.
G-9
-------
IMPACT OF THE REGULATIONS
Businesses in the dry cleaning industry are among the smallest of the small.
Most dry cleaners have fewer than five employees with average sales per employee
that are less than half the national average. As shown in Table G-4, the median dry
cleaner with fewer than 10 employees in 1983 had net profits of less than $10,000
and equity of less than $40,000. While their rate of. return on equity was high, the
profit available to absorb additional costs was low. Dry cleaners at the lower
quartile level of this size category in 1983 had net profits of only $5,000 and equity
of only $8,000.
Table G-5 presents a summary of the environmental costs for "typical" dry
cleaners in each of the major regulated categories. Dry, cleaners that do not require
perc emission controls and have no underground storage tanks will face about $1,000
in additional annual costs plus about $4,280 in additional first-year expenses. These
costs amount to about 11% of both the annual net profits and equity of the median
dry cleaner with fewer than 10 employees. Dry cleaners at the lower quartile level
of this size category will have to spent a larger portion of their resources in order
to meet the regulations; approximately 20% and 54%, respectively, of net profits and
equity. These figures suggest that most dry cleaners that do not have to install
perc emission controls or meet UST standards will be able to afford the regulatory
costs. A few of the most marginal firms in the smallest size category may have
difficulty, however.
Should perc emission controls be required of the smallest dry cleaners, current
estimates show they may have to invest $6,000 or more for the perc controls plus an
additional $4,300 for SARA and RCRA and will face additional annual costs of up to
$2,800 to meet all of the regulatory requirements. These costs amount to about 35%
of the median annual net profits and about 33% of the median equity of dry cleaners
with 1 -9 employees. Dry cleaners at the lower quartile level of this smallest size
category will have to spend about 60% of their annual net profits and over 150% of
their equity. These figures suggest that some of the smallest dry cleaners may have
difficulty installing perc emission controls in addition to meeting the other
environmental requirements. The perc regulation is still under formulation with many
options under study, however, so that actual costs for perc emission controls may be
much different than preliminary estimates.
Dry cleaners with regulated underground storage tanks will have to invest
approximately $7,300 to upgrade their tank and meet the additional first year costs
and will face additional annual costs of approximately $3,700. These costs amount to
about 40% and 19%, respectively, of the median annual net profits and equity of dry
cleaners in the smallest size category. Dry cleaners at the lower quartile level of
this size category will have to spend about 80% of their annual net profits and about
100% of their equity. These figures suggest that many of the smallest dry cleaners
will have difficulty meeting UST standards and that some may close.
Dry cleaners with leaking underground storage tanks could face even higher
costs as they complete the required corrective actions and repair or replace damaged
tanks. These costs could exceed $100,000. Such costs would exceed the equity of
the average dry cleaner even in the 10-19 employee size category. Many small dry
cleaners do not have the resources to pay for such large corrective action costs.
G-10
-------
Table G-4
FINANCIAL PROFILE - 1983
(median values in $1,000)
DRY CLEANING
(SIC 7216)
Number of Employees per Firm
Net Sales
Expenses and Taxes
Net Profit
Assets
Equity
Return on Equity
1-9
$112
103
9
68
38
25%
10-19
$301
286
15
123
46
33%
20-49
$549
541
8
169
124
6%
50-99
$1,273
1,250
23
324
292
8%
100+
$2,124
2,080
44
625
365
12%
All
Firms
$220
208
12
124
51
24%
Source: U.S. Small Business Administration: Small Business Data Base (SBDB),
Fin/Stat File.
G-ll
-------
Table G-5
REGULATORY COSTS FOR TYPICAL SMALL BUSINESSES
in the
THE DRY CLEANING INDUSTRY
(SIC 7216)
Firm #1: 5 employees, sales = $110,000/yr, net profit = $IO,000/yr, equity = $40,000.
One 30 Ib. dry-to-dry Perc machine with controls.
Act/Regulation One-Time Costs Annual Costs
SARA: Title III $ 600 $ 400
RCRA: Generators of $3,680 $ 600
100-1,000 kg.
TOTAL COSTS $4,280 $1,000
Firm *2; 5 employees, sales = $110,000/yr, net profit = $IO,000/yr, equity = $40,000.
One 35 Ib. transfer Perc machine, no controls.
Act/Regulation One-Time Costs Annual Costs
CAA: Perc Dry Cleaners $6,760-$8,420 $680-51,830
NESHAP
SARA: Title III $ 600 $ 400
RCRA: Generators of $3,680 $ 600
100-1,000 kg.
TOTAL COSTS $ 11,040-$ 12,700 $ 1,680-$2,830
Firm #3; 5 employees, sales = $110,000/yr, net profit = $10,000/yr, equity = $40,000.
One 30 Ib. petroleum machine with underground storage tank.
Act/Regulation One-Time Costs Annual Costs
SARA: Title III $ 600 $ 400
RCRA: Generators of $3,680 $ 600
100-1,000 kg.
RCRA: UST Standards $3,000 $2,665
TOTAL COSTS $7,280 $3,665
G-12
-------
CONCLUSION
The list of environmental regulations facing the dry cleaning industry suggests
that the most expensive regulations will apply to selected dry cleaners; namely, perc
dry cleaners that have no emission controls and petroleum dry cleaners with
regulated underground storage tanks. Unfortunately, there are no industry surveys
available to suggest how many dry cleaners fall into these two categories nor is the
status of these two important regulations yet certain.
A comparison of the expected costs of environmental regulations with industry
financial statistics, suggests that most dry cleaners who do not have to install perc
emission controls or meet UST standards will be able to meet environmental
requirements without difficulty. Installing perc emission controls or meeting UST
standards may be difficult for many of the smallest dry cleaners, however, and some
of them may be unable to remain in business. Many small dry cleaners that face
extensive corrective action costs associated with leaking underground storage tanks
are very likely to have insufficient resources to carry out the required cleanup.
G-13
-------
Appendix H
PHOTOFINISHING LABORATORIES
Photofinishing laboratories develop film into finished prints by treating a silver
halide sensitized material (film) with a series of chemical solutions and washes which
produce a visible image in black-and-white or color. Typically, the processing
laboratory is made up of several rooms, each for a different process step while the
minilabs are essentially self-contained units which take up approximately 60 square
feet of space. Most facilities process only color film and send black-and-white and
slide film out to larger regional labs.
In 1986, there were 5,763 firms primarily engaged in the photofinishing industry
(SIC 7384).1 These firms employed 78,038 people and had total sales, of
approximately $5 billion ($67,000 per employee). Almost half (52 percent) of these
firms had fewer than 5 employees and 90 percent had fewer than 20 employees.
Only 79 firms had more than 100 employees. Firms with fewer than 20 employees
accounted for 55 percent of industry sales and 33 percent of. industry employment.
(See Table H-l.)
The U.S. Small Business Administration (SBA) classifies as small businesses all
firms in SIC 7384 with annual sales less than $3.5 million. In 1986, photofinishing
laboratories with 50-99 employees had average sales of $3.4 million and laboratories
with 100-249 employees had average sales of $7.4 million. Thus, most firms in SIC
7384 with fewer than 100 employees (98.6% of the industry) in 1984 were considered
small businesses.
A typical small photofinishing laboratory has 5 employees and annual sales of
approximately $300,000. Such a firm operates out of single urban location with one
color processing machine.
ENVIRONMENTAL PROBLEMS
There are five major chemical processing steps that are generally used in
processing color film or paper developing, stopping development, bleaching, fixing
and stabilizing. The developing solutions contain silver, a hazardous but also a
valuable material. Some of the other solutions used in photofinishing processes, such
as ferrocyanide bleach, are also hazardous. The silver and hazardous solutions are
potential sources of environmental problems, if they are allowed to contaminate
wastewaters or other wastes.
H-l
-------
Table H-l
SMALL BUSINESSES IN THE PHOTOFINISHING INDUSTRY - 1986
(SIC 7384)
Employees Per Firm
1-4 S-9 10-19 20-49 50-99
Number of Firms 3,004 1,538 660 359 124
Cumulative Share of:
Firms
Sales
Employment
52%
15%
10%
79%
28%
23%
90%
55%
33%
96%
70%
47%
98%
78%
57%
Source: U.S. Small Business Administration: Small Business Data Base (SBDB), United
States Establishment and Enterprise Microdata (USEEM).
H-2
-------
Because silver is a valuable metal, photofinishers recycle and reclaim the silver
so that they generate little or no silver containing wastes. Small photofinishers also
avoid generating hazardous wastes by using nonhazardous bleaching solutions.
Consequently, most small photofinishers have no substantial environmental problems.
Only the large laboratories (15%-18% percent of the industry) use ferrocyanide
bleach. The wastewaters resulting from the bleaching process are treated prior to
discharge, but the treatment process generates a cyanide sludge. This cyanide sludge
is accumulated and shipped out for incineration.
ENVIRONMENTAL REGULATIONS
Although the photofinishers use materials that might create serious
environmental problems, they generally treat their wastewaters and practice extensive
recycling. The quantities of toxic chemicals and hazardous materials that they
handle each month are not sufficient to bring them under Title III of SARA.*
Consequently, most of the small businesses in this industry will not be directly
affected by any of the environmental regulations covered in this study. Large
photofinishers may be subject to RCRA . regulations, if they generate sufficient
hazardous wastes each month. Table H-2 summarizes the principal environmental
regulations that will affect the photofinishing industry during the 1988-1992 period.
Paperwork requirements for small photofinishing laboratories appear will be
negligable. Only the largest laboratories will be affected by the environmental
regulations included in this study.
Regulations with a Direct Impact
RCRA: Generators of 100 to 1000 ke/mo
The Hazardous and Solid Waste Amendments of 1984 require EPA to regulate
generators of hazardous wastes that produce between 100 and 1000 kilogram per
month. The EPA requirements include obtaining an EPA identification number,
maintaining a uniform manifest system, installing management controls, and meeting a
limited set of performance standards. EPA's final rule was promulgated in March
1986 and became effective September 22, 1986.
Photofinishers typically generate four types of wastes that could bring them
under these regulations as generators of 100-1000 kg/mo: silver-bearing fix solutions
and wastewater, chemical recovery cartridges (CRCs) used to recover silver, film
chips containing silver, and ferrocyanide sludge. As discussed most photofinishers
reclaim their silver and generate little or no silver-bearing waste. Only the largest
photofinishers produce ferrocyanide sludge.
*Should the threshhold quantity of 10,000 Ib. for Sections 311-312 be
reduced, small photofinishers may be required to meet Title III requirements.
H-3
-------
Table H-2
ENVIRONMENTAL REGULATIONS
for the
THE PHOTOFINISHING INDUSTRY
(SIC 7384)
Act/Regulation
Direct Impact
RCRA: Generators of
100-1,000 kg/mo
Indirect Impact
RCRA: Hazardous
Waste Regulations
Requirements
manifest,
proper handling
higher waste
disposal costs
Cost to Small Business
$3,680 first year,
$1,560 per year
thereafter
undetermined
Comments
Will not
affect small
firms.
Small firms
have no
haz. waste.
Uncertain Impact
SDWA: Wellhead
Protection
activity bans
near drinking
water wells
undetermined
May apply to
few firms, if
any.
H-4
-------
Those photofinishers that use CRCs to recover silver, send their CRCs to metal
reclamation centers and receive about $132.00 for each one.2 Currently, these CRCs
are not classified as a hazardous waste. If they should be reclassified, only the
largest photofinishers will produce 100 kg/mo. Such a facility would have to produce
at least 60 CRCs a year. These would have a resale value of approximately $7,920.
EPA estimates that it will cost a small business approximately $3,680 to comply
with the initial requirements of these regulations and approximately $1,560 per year
thereafter.*
Regulations with an Indirect Impact
RCRA and CERCLA and CWA: Waste Disposal Regulations
Under CERCLA and RCRA and their subsequent amendments, EPA is issuing
several regulations governing the transportation, storage, treatment, and disposal of
hazardous and nonhazardous wastes as well as standards for corrective action for
hazardous waste and toxic substance spills. Regulations under the CWA and MPRSA
on the ocean dumping of wastes and the incineration of hazardous wastes at sea will
also have an impact on waste disposal practices. The list of regulations that fall
into this category includes:
CERCLA
CWA
Subtitle C Location Standards
Subtitle D Criteria
Liner and Leachate Collection
Corrective Action at SWMUs
Hazardous Waste Burning
Land Ban - Dioxin and Spent Solvents
Land Ban - California List
Land Ban - First Thirds
Land Ban - Soil and Debris
Hazardous Waste Tank Standards
Toxicity Characteristics
National Contingency Plan
CERCLA Settlement Policy
Ocean Dumping
These regulations will affect. small photofinishing firms indirectly, however, by
making it more difficult and more expensive for them to dispose of their wastes.
Thus, the costs of their waste disposal can be expected to increase. As discussed
above, small photofinishers generate very little hazardous wastes, if any, and should
not be significantly affected by rising waste disposal costs. Large photofinishers
that use ferrocyanide bleach may find the costs of incineration services increasing.
Unfortunately, no estimates are available of the likely magnitude of such cost
increases.
H-5
-------
Regulations with an Uncertain Impact
*
SOW A: Wellhead Protection
In June 1986, the Wellhead Protection Act (WHP) was added as an amendment to
the SWDA. The WHP is to be a voluntary program carried out by the individual
states. The location of wellheads would be identified and activities and facilities
within a certain area surrounding the wellhead would be examined for possible
contaminants. Under the WHP, it is possible that certain photofinishing activities
could be banned. This program will affect only those photofinishing firms that are
located near drinking water wells. The number of such firms and the potential
impact upon their activities has not yet been determined.
IMPACT OF THE REGULATIONS
The financial profile of the photofinishing industry in 1983 is presented in
Table H-3. The smallest firms in the industry had sales in 1983 of about $200,000
with net profits of $5,000 and equity of about $35,000. The largest firms in the
photofinishing industry, those with 50 or more employees, had annual sales of
approximately $2 million and more and annual profits of $25,000 to several hundred
thousand dollars. Their average equity was $500,000 or more.
Most photofinishers do not create sufficient environmental problems to be
directly affected by any of the regulations covered in this study. Consequently, no
adverse impacts are likely for the small business segment of the photofinishing
industry. The large photofinishers may find that they are covered by EPA's
hazardous waste regulations and, in rare cases, by Title III of SARA, but the added
costs of these regulations should not exceed $1,000 per year. These figures suggest
that photofinishing firms will have no difficulty meeting environmental requirements.
CONCLUSION
SmaU photofinishing laboratories will not ,be affected by any of the
environmental regulations included in this study. Some of the larger photofinishers
will have minor costs associated with handling hazardous wastes and toxic chemicals,
but no adverse impacts are indicated. Of more concern to large photofinishers might
be changes in the availability and/or costs of incineration services for their
wastewater treatment sludges. There is no indication at this time, however, that the
costs of such services might become unmanageable.
H-6
-------
Table H-3
FINANCIAL PROFILE - 1983
(median values in $1,000)
PHOTOFINISHING
Net Sales
Expenses and Taxes
Net Profit
Assets
Equity
Return on Equity
(SIC 7384)
Number of Employees oer Firm
1-9
$211
206
5
115
35
13%
10-19
$527
511
16
201
92
17%
20-49
$951
936
15
461
194
8%
50-99
$1,921
1,897
24
936
480
5%
100+
$7,015
6,655
360
2,954
1,761
20%
AH
Firms
$379
371
8
188
79
11%
Source: U.S. Small Business Administration: Small Business Data Base (SBDB),
Fin/Stat File.
H-7
-------
Appendix I
WATER SUPPLY
A public water system is defined under the Safe Drinking Water Act (SDWA) as
a system for providing water for human consumption serving 25 or more persons and
having at least 15 service connections. The SDWA definition of a public water
supply includes the collection, treatment, storage, and distribution facilities necessary
•for the provision of potable water.
Public water systems are grouped in three main categories: community water
systems, non-community water systems, and non-transient non-community water
supplies. Community water systems serve fixed or residential populations more than
60 days per year. Non-community systems generally serve transient populations at
facilities such as campgrounds, marinas, restaurants, motels, hotels and highway rest
areas with their own water supplies. Non-transient non-community water supplies
typically serve fixed populations, such as factories, schools, day-care centers, and
places of employment. Many of the regulations controlling contaminant levels in
drinking water apply to community and non-transient non-community water systems
because of the potential for chronic exposure. Of the approximately 200,000 public
water systems in the United States, 52,350* (29%) currently are considered to be
community water systems.
The public water supply industry consists of both publicly-owned and
privately-owned water supplies. Publicly-owned water supplies are predominantly
owned by local municipal governments, although a sizeable number are owned by the
federal government. Privately-owned systems that serve large populations are usually
investor-owned entities. Privately-owned systems that serve smaller populations tend
to be owned by homeowners associations, mobile-home parks, or developers. Many
small privately-owned systems that serve mobile home parks or other small
developments are not set up as distinct entities in the conventional sense of a
regulated utility. These systems (referred to as ancillary systems) usually do not
have a separate rate to cover the costs of delivering water to the communities they
serve. They are, nevertheless, within the purview of the SDWA definition of a
public water supply.
Of the 59,000 community water systems in the United States, about 28,500 (54%)
are privately-owned systems. The size differentiation of public water supplies is
usually made on the basis of the size of the population served. Table 1-1 shows the
size distribution of both publicly-owned and privately-owned community water
systems.
* The Federal Reporting Data System counts 59,000 community water systems.
These figures, collected from the states, show more small systems than do the survey
data presented in Table 1-1.
1-1
-------
Table 1-1
SMALL BUSINESSES IN THE WATER SUPPLY INDUSTRY - 1986
(SIC 4941)
System Size
(Poo. Served)
Very Small
(25-500)
Small
(501-3300)
Medium
(3301-10000)
Large
(10K-100K)
Very Large
(>LOOK)
Total
Publicly
Owned
6,900
9,600
3,900
3,100
M
23,810
Privately Owned
Home
Investor Assoc. Ancill.
4,600 5,100 13,000
2,100 1,500 900
600 300 5
300 50 5
_« _u _^
7,665 6,965 13,910
Total
22,700
4,500
905
355
SQ
28,540
Small Businesses
(<50K; $3.5 M)
NA
7,600 6,900 13,900 28,400
Source: U.S. Environmental Protection Agency, Office of Drinking Water;
1986 Survey of Community Water Systems.
1-2
-------
Also shown in Table 1-1 is the number of systems that meet the U.S. Small
Business Administration standards of a small business. According to that standard, a
privately-owned water supply would qualify as a small business if its average annual
revenues for the previous three years do not exceed $3.5 million. Based on the
revenue data provided in the 1986 Survey of Community Water Systems, privately-
owned systems serving up to 50,000 people have annual revenues below $3.5 million.
Using this standard, 28,400 (more than 99.5 percent) privately-owned public water
systems can be considered small businesses. These include both those that charge
for water and those (i.e., the ancillary systems) that do not.
The equipment and processes of public waters systems have four basic
components: 1) source and transmission facilities such, as well sites and surface
impoundments; 2) treatment facilities such as filtration and disinfection equipment; 3)
storage facilities such as elevated storage tanks; and 4) distribution systems such as
valves, hydrants and piping materials. The amount and type of equipment,
particularly for treatment facilities, varies according to the system size, water source
and water characteristics requiring treatment.
According to the 1986 Survey of Community Water Systems, these systems
generally have between one and seven operators working between 2 and 34 hours per
week. Typically, the very small systems have only part-time operators, usually
non-professionals. As would be expected, the larger systems have operators (most of
whom are professionally trained) who typically are full-time employees.
Revenue data for the water supplies that are small businesses (limited to those
who charge for water) indicate that annual revenues range from $32 thousand for the
smallest systems up to approximately $3.5 million for the larger ones. Total net
assets range from approximately $430 thousand to $34.4 million.
ENVIRONMENTAL PROBLEMS
Unlike the other industries included in this study, the water supply industry
does not contribute to environmental problems. Instead, the industry works to
correct existing problems by removing contaminants from the water supplied to its
users. The principal environmental regulations that affect the industry are those
that establish maximum contaminant levels for the water that these systems supply to
consumers. In this sense, the regulations are similar to product standards rather
than pollution control standards.
ENVIRONMENTAL REGULATIONS
Public water systems are regulated under the 1974 Safe Drinking Water Act
(SDWA) and the 1986 Amendments to the Act. Under the 1986 Amendments, EPA is
required to promulgate National Primary Drinking Water Regulations (NPDWRs) for 83
specific contaminants. Regulations for these 83 contaminants, as well as other
regulations discussed below, must be adopted on a very stringent schedule — by June
19, 1989. In addition to the tight EPA regulatory schedule, NPDWRs must officially
take effect at the state level within 18 months of promulgation.
1-3
-------
The NPDWRs establish non-enforceable Maximum Contaminant Levels (MCLGs) at
which no known or anticipated adverse health effects occur, allowing for an adequate
margin of safety. Enforceable Maximum Contaminant Levels (MCLs) are set as close
to the MCLGs as is feasible taking costs into account. In those cases where it is
not economically or technically feasible to establish or enforce an MCL, the
regulator may specify treatment techniques to be implmented by the water supplies.
Three other provisions of the SDWA are likely to have significant impacts on
the drinking water industry. EPA is required to specify conditions under which
public water systems served by surface water sources are required to install filtration
as a treatment technique. EPA is also required to promulgate NPDWRs for
disinfection as a treatment technique for all public water systems. Further, the
SDWA mandates EPA to publish regulations which require public water systems to
monitor for a number of "unregulated" contaminants at least once every five years.
To help small systems comply with the disinfection requirement and the "unregulated"
contaminants monitoring requirement, the SDWA authorizes funds for the EPA and
states to provide assistance to small systems. No funds have been appropriated to
fulfill this purpose.
Generally, the regulations promulgated under the SDWA apply only to community
and non-transient non-community water supplies, although some (notably the
microbiological and nitrate standards) apply to all water supplies.
Table 1-2 summarizes the requirements of the principal environmental
regulations that will apply to water supply systems. Ten of these establish the MCLs
as well as monitoring and reporting requirements for the 83 contaminants specified in
the 1986 SDWA Amendments. In addition, the surface water treatment rule includes
critera under which the filtration of 'surface water will be required. The lead
materials ban will prohibit the use of lead solder, flux, and pipes in new drinking
water plumbing installations and repairs of public water systems and drinking water
plumbing connected to such systems. The public notification rule includes changes to
the regulations that require that the public be notified of contaminants in their
drinking water or when a system violates the secondary standards for flouride.
As indicated in Table 1-2, most of the regulations that establish MCLs will
affect only a small percentage of the water supply systems. This is because the
water from most systems already meets the standards that will be established. Most
frequently, it will be the small water supply systems that will not meet the required
MCLs. Thus, although the drinking water regulations will apply to all public water
supply systems, it is the smaller systems that most often will incur additional costs
in order to meet the required MCLs, Table 1-3 presents EPA's estimates of the
regulatory costs of the ten MCL regulations to water supply companies by size
category.
All water systems regulated under the SDWA must perform a number of
information collection activities to ensure compliance with primary regulations and
proper operation and maintenance of water systems. Paperwork requirements include
reporting and recordkeeping of compliance monitoring results and notifying the public
if a standard is violated. The estimated average cost per facility of monitoring,
recordkeeping, and reporting for the regulations varies from $6 for the fluoride
regulation to approximately $5,000 for the surface water treatment rule for unfiltered
plants.
1-4
-------
Table 1-2
ENVIRONMENTAL REGULATIONS
for the
THE PRIVATE WATER SUPPLY INDUSTRY
(SIC 4941)
Regulation
Public Notification
Rule
Lead Ban
Total Coliform Rule
Corrosion Control
Lead and Copper
Radionuclides
Disinfection
Surface Water
Treatment Rule
Synthetic Organic
Compounds (SOCs)
Volatile Organic
Compounds (VOCs)
Lead and Copper MCL
Fluoride
Inorganic Chemicals
(lOCs)
34 MCLs
Requirements
Notification
Ban lead in plumbing, „
notification
MCL, monitoring,
reporting
Monitoring, corrosion
control, public education
MCLs, monitoring,
reporting
MCLs, monitoring,
reporting
MCLs, filtration,
disinfection,
monitoring, reporting
•k.
MCLs, monitoring,
reporting
MCLs, monitoring,
reporting
MCLs, monitoring,
reporting
MCL, monitoring,
reporting
MCLs, monitoring,
reporting
MCLs, monitoring,
reporting
Percent of Systems
100%
100%
90%
58%
29%
24%
7%
3%
2%
1%
.6%
.4%
* Estimated percent of systems that will have to install additional
treatment or incur other expenses to comply with the regulation.
1-5
-------
Table 1-3
PRIVATE WATER SUPPLY INDUSTRY
(SIC 4941)
REVENUES, ASSETS, AND REGULATORY COSTS
(51,000)
— Population Served —
Reculation/Activitv
Number of Community Systems1
Net Assets (Median)2
Annual Revenues (Median)2
CO LI FORM
Percent of Systems3
Capital Cost4 .
Annualized Cost5
CORROSION CONTROL
Percent of Systems
Capital Cost
Annualized Cost
DISINFECTION
Percent of Systems
Capital Cost
Annualized Cost
RADIONUCLIDES
Percent ot" Systems
Capital Cost
Annualized Cost
SWTR - FILTERED
Percent ot Systems
Capital Cost
Annualized Cost
SNVTR - UN FILTER ED
Percent of Systems
Capital Cost
Annualized Cost
SOCs
Percent of Systems
Capital Cost
Annualized Cost
VOCs
Percent of Systems
Capital Cost
Annualized Cost
LEAD & COPPER MCL
Percent of Systems
Capital Cost
Annualized Cost
IQCs
Percent of Systems
Capital Cost
Annualized Cost
FLUORIDE
Percent of Systems
Capital Cost
Annualized Cost
25-
100
.6.77,3
4
95%
<1
54%
3
2
28%
9
3
30%
66
5
3%
10
5
2%
90
14
3%
51
12
2%
24
3
1%
149
18
<1%
203
26
<1%
7
4
Source: U.S. Environmental
100-
500
10,763
58
16
98%
<1
53%
4
2
21%
17
4
29%
76
6
3%
15
5
2%
164
22
3%
68
16
2%
36
5
1%
231
34
<1%
280
33
<1%
6
4
Protection
500-
1.000
2,159
236
48
100%
1
55%
6
4
16%
27
9
20%
92
8
9%
19
11
3%
291
44
3%
98
24
2%
59
9
J%
276
45
<1%
308
55
<1%
85
19
Agency,
1,000-
3.300
2,063
824
169
97%
1
47%
9
6
9%
42
15
16%
155
14
10%
23
15
3%
498
74
3%
171
44
2%
90
16
1%
495
83
<1%
553
135
<1%
80
53
Office
3,300-
10.000
783
3,835
504
23% .
<1
49%
55
19
6%
76
20
14%
186
25
24%
59
is
4%
1,401
127
3%
999
217
2%
178
24
1%
1,674
219
1%
978
158
<1%
1,210
195
of Drinking
10,000-
25.000
203
2,426
1,101
2%
1
47%
71
37
4%
136
39
11%
375
56
. 29%
79
. 22
3%
2,371
357
2%
1,580
354
2%
386
58
1%
1,715
230
<1%
1,830
350
0%
.
-
Water.
25,000-
50.000
114
33,480
2,257
5%
<1
47%
315
49
3%
200
49
10%
657
100
39%
100
28
4%
3,558
538
1%
3,500
730
3%
670
100
1%
2,550
470
1%
1,200
80
0%
.
-
1 Source: Federal Reporting Data System (FY86 & FY87)
2 Source: U.S. Environmental Protection Agency, Office of Drinking Water; Final
Descriptive Summary' 1986 Survey of Community Water Systems: Washington,
D.C.; October 23, 1987. :
3 Percent of systems in the size category that will have to make additional
expenditures to comply with the regulation.
4 Average estimated capital cost for systems that must make additional expenditures.
5 Average estimated annualized costs (operating and maintenance costs plus a capital
recovery factor) for systems that must make additional expenditures.
1-6
-------
IMPACT OF THE REGULATIONS
The new requirements under the SDWA will significantly affect the private
water supply industry because of the accelerated implementation schedule for
NPDWRs and the costs for systems to comply with the requirements. Although the
new requirements will be expensive, compliance costs will be ultimately borne by
customers. Due to often inadequate rate bases, small systems and their customers
face the greatest difficulty in financing the necessary compliance activities.
Systems will have to monitor their water for a greater number of contaminants
than is currently required and install appropriate treatment equipment if
contaminants exist at unsafe levels. Some small systems ..will likely have a significant
number of violations until adequate treatment is in place; therefore, public
notification of violations will be an additional expense. Due to often inadequate rate
bases, small systems and their customers will face the greatest difficulty in financing
the necessary compliance activities.
The greatest impact will be felt by the very small systems with water that fails
to meet one or more of the MCLs. As shown in Table 1-3, the annual costs of the
most expensive treatment processes, e.g. for lOCs, can be several times the current
average revenues of the smallest water supply systems. Very small water supply
systems with contaminated water will have to increase their rates substantially or
find alternative solutions to their problems. Fortunately, only a small percentage of
water supply systems, in most cases fewer than 1%, will face these difficulties.
Recognizing that small systems may be limited in their ability to comply with
the new regulations, EPA is attempting to minimize the economic impact on small
systems where possible without reducing the protection of public health. The SDWA
provides an exemption procedure* that allows water supplies additional time to meet
the new standards, provided that the water being delivered in the interim does not
present an unreasonable risk to health. It is expected that the exemptions will be
used primarily to assist small supplies in achieving compliance.
* Water supplies serving fewer than 500 service connections, or approximately
1,500 people, are eligible for extendible two-year exemptions. These exemptions are
to be based upon the need for "financial assistance for the necessary improvements,"
but cannot be granted if there is an unreasonable risk to health.
1-7
-------
Appendix J
ENVIRONMENTAL REGULATIONS INCLUDED IN THE STUDY
Program/Short Title
Ak
1. Rural Fugitive Dust
2. Stratospheric Ozone
3. Municipal Waste
Combustors
4. TSDF Air Standards
5. Diesel Fuel Standards
6. Diesel Paniculate
Standards
7. Fuel Volatility
8. Gas Marketing
9. Lead Phasedown
10. NAAQS: Lead
11. NAAQ& Particulate
Matter
12. NESHAP: Chromium
13. NESHAP: Perc Dry
Cleaning
14. NSPS: Small Boilers
15. NSPS: Industrial
Boilers
16. NSPS: Woodstove
Legislative Title
CAA Section 110, 165, 169 / Agricultural
Burning
Stratospheric Ozone Protection Strategy
NSPS: Municipal Waste Combustors
(Assessment of Municipal Waste Combustor
Emissions Under the Clean Air Act)
Treatment, Storage, and Disposal Facility
Area Source Air Emissions - RCRA Standards
Diesel Fuel Modification
Nonconformance Penalties for 1991 through
1994 Model Year Emission Standards for
Heavy-Duty Vehicles and Engines
Control of Excess Evaporative Emissions/
Fuel Volatility
Decision on Air Pollution Regulatory
Strategies for the Gasoline Marketing Industry
Removal of Lead from EPA Certification and
Test Fuels (Revision)
NAAQS: Lead
NAAQS for Particulate Matter (Revision)
NESHAP: Chromium—Electroplating
NESHAP: Perchloroethylene Dry Cleaning
NSPS: Small Boilers
NSPS: Industrial Boilers
NSPS: Residential Wood Combustion
J-l
Promulgation
undetermined
8/88
12/90
9/90
7/89
3/89
1/89
1/89
1/88
3/90
undetermined
3/91
undetermined
9/90
12/87
2/88
-------
Appendix J (cont.)
ENVIRONMENTAL REGULATIONS INCLUDED IN THE STUDY
Program/Short Title
Radiation
17. Radon
18. Radiofrequency
Guidance
19. Low Level
Radioactive Waste
20. High Level
Radioactive Wastes
Legislative Title
Federal Radiation Protection Guidance:
Proposed Alternatives for Controlling
Public Exposure to Radiofrequency Radiation
Environmental Protection Standards for
Low-Level Radioactive Waste
Environmental Standards for the Management
and Disposal of Spent Nuclear Fuel, High-
Level and Transuranic Radioactive Wastes
Promulgation
undetermined
7/89
5/89
undetermined
Pesticides
21. Inerts
22. Farmworkers
23. Pesticides in
Ground water
24. Large Volume
Pesticides
25. Data Requirements
26. Reregistration of
Pesticides
Worker Protection Standards for
Agricultural Pesticides (Revision)
Comprehensive Revision of Pesticide
Registration and Classification
Procedures (Revision)
undetermined
3/89
2/89
undetermined
5/88
undetermined
J-2
-------
Appendix J (cont.)
ENVIRONMENTAL REGULATIONS INCLUDED IN THE STUDY
Program/Short Title
Toxic Substances
27. Asbestos Ban and
Phasedown
28. Asbestos in Schools
29. Chlorinated Solvents
30. PCBs: Electrical
Equipment
31. PCBs: Electrical
Transformers
32. Premanufacture
Review Program
SARA
33. Title III of SARA
Legislative Title
RCRA
34. Subtitle C Location
Standards
35. Subtitle D Criteria
36. Liner and Leachate
Collection
37. Corrective Action
at SWMUs
38. Hazardous Waste
Burning
Action Concerning Commercial and
Industrial Use of Asbestos
Asbestos Reinspection Rule
Regulatory Investigation of Chlorinated
Solvents
Polychlorinated Biphenyls/Manufacturing,
Processing, Distribution in Commerce and
Use Prohibitions: Use in Electrical Equipment
Polychlorinated Biphenyls in Electrical
Transformers: Final Rule
Promulgation
1/89
10/87
6/89
9/88
7/88
undetermined
Emergency and Hazardous Chemical Inventory 9/89
Forms and Community Right-To-Know Reporting
Requirements, and
SARA Section 313 Toxic Chemical Release 6/89
Reporting Rule
Location Standards for Hazardous Waste 12/88
Facilities
Solid Waste Disposal Facility Criteria 12/88
Double Liner and Leachate Collection 9/88
Systems for Hazardous Waste Land
Disposal Units
Corrective Action for Solid Waste 11/88
Management Units (SWMUs) at Hazardous
Waste Management Facilities
Burning of Hazardous Waste in Boilers 10/88
and Industrial Furnaces
J-3
-------
Appendix J (cont.)
ENVIRONMENTAL REGULATIONS INCLUDED IN THE STUDY
Program/Short Title
RCRA (cont.)
39. Municipal Ash
40. Land Ban - First
Thirds
41. Land Ban - Soil
and Debris
42. Land Ban - Dioxin
43. Land Ban - Cat. List
44. UST Financial
Responsibility
45. UST .Technical
Standards
Legislative Title
46. Hazardous Waste Tank
Standards
47. Toxicity
Characteristics
48. Small Quantity
Generator
49. Waste Oil Management
CERCLA
50. National Contingency
Plan
51. CERCLA Settlement
Policy
Municipal Waste Combustor Ash Management
Land Disposal Restrictions for First
Third of Scheduled Wastes
Land Disposal Restrictions for Soil and
Debris Containing Hazardous Wastes
Restrictions on Land Disposal of
Specified Solvent Dioxin Wastes
Land Disposal Restrictions for Certain
Hazardous Wastes - California List
Underground Storage Tanks Containing
Petroleum - Financial Responsibility
Requirements
Underground Storage Tanks - Technical
Requirements / Technical Standards and
Corrective Action Requirements for Design
& Operation of USTs Containing Petroleum
and Hazardous Substances
Hazardous Waste Tank Standards
Identification of Hazardous Wastes by
Toxicity Characteristics and Listing of
Additional Organic Toxicants
RCRA Small Quantity Generator Rule
Management of Used Oil
National Oil and Hazardous Substances
Pollution Contingency Plan (NCP)
Promulgation
12/89
8/88
10/91
undetermined
7/87
5/88
5/88
undetermined
8/88
3/86
undetermined
11/89
undetermined
J-4
-------
Appendix J (cont.)
ENVIRONMENTAL REGULATIONS INCLUDED IN THE STUDY
Program/Short Title
Legislative Title
Promulgation
Drinking Water
52. Total Coliform Rule
53. Surface Water Treatment
Filtration
54. VOCs in Drinking Water
55. SOCs in Drinking Water
56. Inorganics in Drinking
Water
57. Fluoride in Drinking
Water
58. Lead MCL and
Corrosion Control
59. Lead Ban
60. 34 MCLs
61. Radionuclides
62. Disinfection
63. Public Notification
Rule
National Primary Drinking Water Regulations
(NPDWR): Microbials and Filtration of
Surface Drinking Water Supplies
NPDWR: MCLs for Volatile Organic
Chemicals Found in Drinking Water
NPDWR: Inorganic and Organic Compounds
Public Water System Supervision Program:
Ban on Lead in Plumbing
NPDWR: Radionuclides
NPDWR: Disinfection, Disinfectants and
Disinfection By-Products (Revision)
undetermined
undetermined
6/87
undetermined
undetermined
undetermined
undetermined
6/86
undetermined
undetermined
undetermined
10/87
J-5
-------
Appendix J (cont.)
ENVIRONMENTAL REGULATIONS INCLUDED IN THE STUDY
Program/Short Title
Groundwater
64. Well-head Protection
65. Class I Underground
Injection Wells
66. Class II Underground
Injection Wells
67. Class V Underground
Injection Wells
Surface Water
68. Construction Grants
Program
69. Secondary Treatment
Waivers
70. Municipal Sewage
Sludge
71. State Sludge
Management
72. Pretreatment
73. Stormwater
74. Nonpoint Sources
75. Wetlands
76. National Estuary
Program
Legislative Title
Underground Injection Control Program /
Hazardous Waste Disposal Injection
Restriction for Class I Hazardous Waste
Injection Wells
Comprehensive Construction Grant
Regulation Revision
CWA Section 301(h) Revisions
Sewage Sludge Use and Disposal
Regulations
National Pollutant Discharge Elimination
System Sewage Sludge Permit Regulations;
State Sludge Management Program Requirements
Final Revisions to General Pretreatment
Regulations for Existing and New Sources
NPDES Regulations: Stormwater Application
Requirements (Revision)
Section 319 of the Clean Water Act /
Nonpoint Source Guidance
404(c) Regulations / Actions
Promulgation
12/87
undetermined
undetermined
undetermined
5/89
undetermined
12/89
2/89
undetermined
11/89
undetermined
undetermined
undetermined
J-6
-------
Appendix J (cont.)
ENVIRONMENTAL REGULATIONS INCLUDED IN THE STUDY
Program/Short Title
Surface Water (cont.)
77. Toxic Water
Pollutants
78. Ocean Dumping
79. ELG: Foundries
Legislative Title
Promulgation
80. ELG: Placer Gold
Mining
81. ELG: Machinery
Manufacturing and
Rebuilding
82. ELG: Oil and Gas
83. ELG: Organic Chemicals
84. ELG: Pesticides
85. ELG: Pulp and Paper
Section 304(1) of the Clean Water Act
Regulations
Comprehensive Revisions to Ocean Dumping
Regulations
Metal Molding and Casting Industry Point
Source Category Effluent Limitations
Guidelines, Pretreatment Standards and
Nonpoint Source Performance Standards
Effluent Limitations Guidelines for the
Placer Gold Mining Industry
Effluent Limitations Guidelines for the
Equipment Manufacturing and Rebuilding
Industry
Effluent Guidelines for Offshore Oil
and Gas Extraction Industry (Revision)
Effluent Guidelines for Organic Chemicals
and Plastics and Synthetic Fibers
Effluent Guidelines for Pesticides
Chemicals
Effluent Guidelines for Pulp, Paper
and Paperboard
8/89
10/85
undetermined
undetermined
3/90
12/87
9/91
5/88
J-7
-------
NOTES
Appendix A
I. ICF, Incorporated, " Analysis of the Combined Impact of Various EPA
Regulatory Initiatives on Generators of 100 - 1000 kg/mo.", prepared for the
U.S. Environmental Protection Agency, January 1986- DRAFT.
2. ICF Incorporated, "Report to Congress on Small Quantity Generators of
Hazardous Waste," Volume I, July 1986.
3. U.S. Environmental Protection Agency, Office of Policy, Planning and
Evaluation, Information Policy Branch. This estimate assumes that the average
time per facility to read the instructions, find out the identification number of
the hazardous waste, and complete the notification form is 1.5 hours.
4. U.S. Environmental Protection Agency, Office of Policy, Planning and
Evaluation, Information Policy Branch. This estimate assumes that the average
electroplater will send out two shipments of hazardous waste each year. Each
shipment will require about 1.5 hours of a supervisor's time and one half hour
of clerical time. Recordkeeping will require about five minutes of clerical time.
5. ICF Incorporated, "Regulatory Impact Analysis of the Land Disposal Restrictions
of First Third Wastes," prepared for Office of Solid Waste, U.S. Environmental
Protection Agency, Washington, D.C., August 1988, Exhibit 3-9, first page.
Estimate is derived by dividing the incremental cost of managing F006 wastes
($64,409,000) by the quantity requiring treatment (134,580,800 gallons per year).
6. U.S. Environmental Protection Agency, Office of Policy, Planning and
Evaluation, Information Policy Branch. These cost estimates are based on an
hourly rate of $35 for manager/supervisor time.
7. Regulatory Impact Analysis in Support of Final Rulemaking Under Sections 311
and 312 of the Superfund Amendments and Reauthorization Act of 1986.
September 1987.
8. Regulatory Impact Analysis in Support of Proposed Rulemaking Under Section
313 of the Superfund Amendments and Reauthorization Act of 1986, May 1987.
N-l
-------
Appendix B
I. Micklewright, James T., "Wood Preservation Statistics, 1985: A Report to the
Wood Preserving Industry in the United States.", January 1987.
2. U.S. Environmental Protection Agency, Office of Water Planning and Standards,
"Economic Impact Analysis of Alternative Pollution Control Technologies".
3. Micklewright, James T., Op. cit.
4. Micklewright, James T., Op. cit.
5. Micklewright, James T., Op. cit.
6. Ebner, Volz and Selman, "Wood Preservers Guide to RCRA", February 1986.
7. Industrial Economics, Inc., "Regulatory Analysis of Restrictions on Land Disposal
of Certain Dioxin-Containing Wastes", prepared for the U.S. Environmental
Agency, November 1986, pp. 1-4.
8. Hazardous Waste Report, Aspen Publishers, Inc. Vol. 8 #14, March 16, 1987.
9. ICF Incorporated, "Report to Congress on Small Quantity Generators of
Hazardous Waste," Volume I, July 1986.
10. U.S. Environmental Protection Agency, Office of Policy, Planning and
Evaluation, Information Policy Branch. This estimate assumes that the average
time per facility to read the instructions, find out the identification number of
the hazardous waste, and complete the notification form is 1.5 hours.
II. U.S. Environmental Protection Agency, Office of Policy, Planning and
Evaluation, Information Policy Branch. This estimate assumes that the average
wood preserver will send out two shipments of hazardous waste each year.
Each shipment will require about 1.5 hours of a supervisor's time ($35.50/hr.)
and one half hour of clerical time ($6.25/nr.). Recordkeeping will require about
five minutes of clerical time.
12. ICF Incorporated, "Regulatory Impact Analysis of the Land Disposal Restrictions
of First Third Wastes", prepared for Office of Solid Waste, U.S. Environmental
Protection Agency, Washington, D.C., August 1988, Exhibit 3-9, second page.
Estimate of the post-regulatory cots is derived by dividing the post-reg cost of
managing K.001 wastes ($9,749,000) by the quantity requiring treatment (1,946,100
gallons per year). Estimate of the pre-regulatory cost is derived by subtracting
from this figure the incremental cost ($8,755,000) divided by the quantity
requiring treatment.
13. Industrial Economics, Inc., "Regulatory Analysis of Restrictions on Land Disposal
of Certain Dioxin-Containing Wastes", prepared for the U.S. Environmental
Agency, November 1986, p 6-3.
N-2
-------
14. DPRA, Inc. "Preliminary Cost and Economic Impact Analysis of Listing
Hazardous Wastes Under RCRA for the Wood Preserving and Sawmilling
Industries," prepared for the U.S. Environmental Protection Agency, April 1987.
15. Ebner, Volz and Selman, Op. cit.
16. Gilbert, Walter, Telephone conversation, January 1988.
17. U.S. Environmental Protection Agency, Office of Policy, Planning and
Evaluation, Information Policy Branch.
18. U.S. Environmental Protection Agency, Office of Policy, Planning and
Evaluation, Information Policy Branch. These cost estimates are based on an
hourly rate of $35 for manager/supervisor time.
19. "Regulatory Impact Analysis in Support of Final Rulemaking Under Sections 311
and 312 of the Superfund Amendments and Reauthorization Act of 1986",
September 1987.
20. John Hall, AWPI, Interview, January 1988.
21. "Regulatory Impact Analysis in Support of Proposed Rulemaking Under Section
313 of the Superfund Amendments and Reauthorization Act of 1986", May 1986.
22. John Hall, Op. cit.
Appendix C
1. ICF, "Analysis of the Combined Impact of Various Regulatory Initiatives on
Generators of 100-1000 kg/mo," Jan. 6, 1986.
2. Meta Systems, Inc., "Economic Impact Analysis of Effluent Limitation
Guidelines and Standards for the Pesticide Chemicals Industry," Sept. 1985.
3. ICF Incorporated, "Report to Congress on Small Quantity Generators of
Hazardous Waste," Volume I, July 1986.
4. U.S. Environmental Protection Agency, Office of Policy, Planning and
Evaluation, Information Policy Branch. This estimate assumes that the average
time per facility to read the instructions, find out the identification number of
the hazardous waste, and complete the notification form is 1.5 hours.
5. U.S. Environmental Protection Agency, Office of Policy, Planning and
Evaluation, Information Policy Branch. This estimate assumes that the average
wood preserver will send out two shipments of hazardous waste each year.
Each shipment will require about 1.5 hours of a supervisor's ($35.50/hr.)
time and one half hour of clerical time ($6.25/hr.). Recordkeeping will
require about five minutes of clerical time.
6. U.S. Environmental Protection Agency, Office of Policy, Planning and
Evaluation, Information Policy Branch.
N-3
-------
7. "Regulatory Impact Analysis in Support of Final Rulemaking Under Sections 311
and 312 of the Superfund Amendments and Reauthorization Act of 1986",
September 1987.
8. "Regulatory Impact Analysis in Support of Proposed Rulemaking Under Section
313 of the Superfund Amendments and Reauthorization Act of 1986", May 1986.
9. U.S. Environmental Protection Agency, Office of Policy, Planning and
Evaluation, Information Policy Branch.
10. Ibid.
11. U.S. Environmental Protection Aency, Draft "Regulatory Impact Analysis: Worker
Protection Standards for Agricultural Pesticides," Dec. 8, 1987.
12. U.S. Environmental Protection Agency, Office of Policy, Planning and
Evaluation, Information Policy Branch.
13. ICF Inc., "Regulatory Impact Analysis for New Chemical Reporting Alternatives
Under Section 5 of TSCA." Prepared for the Economics and Technology
Division, U.S. Environmental Protection Agency, May 1983.
Appendix D
1. Telephone interviews with Agricultural County Agents in rural counties in
Georgia, Iowa, and California, Jan. 1988.
2. Telephone interviews with farm store owners in Georgia and Iowa, Jan. 1988.
3. Miller Publishing Co., "Farmstore Merchandising 1986 Market Profile Study,"
Minnetonka, Minnesota.
4. Telephone interviews with Agricultural County Agents and farm store owners in
rural counties in Georgia, Iowa, and California, Jan. 1988.
5. ICF, "Analysis of the Combined Impact of Various EPA Regulatory Initiatives on
generators of 100-1000 kg/mo," Jan. 6, 1986.
6. Telephone interviews with Agricultural County Agents in rural counties in
Georgia, Iowa, and California, Jan. 1988.
7. U.S. Environmental Protection Agency, "Draft Regulatory Impact Analysis:
Worker Protection Standards for Agricultural Pesticides", Dec. 8, 1987.
8. U.S. Environmental Protection Agency, Office of Policy, Planning and
Evaluation, Information Policy Branch.
9. Ibid.
N-4
-------
10. "Regulatory Impact Analysis in Support of Final Rulemaking Under Sections 311
and 312 of the Superfund Amendments and Reauthorization Act of 1986",
September 1987.
11. See note 8.
12. Meridian Research, Inc.
13. U.S. Environmental Protection Agency, Office of Policy, Planning and
Evaluation, Information Policy Branch. This is assuming an hourly rate of
$15/hr. for supervisor/manager time.
14. U.S. Environmental Protection Agency, Office , of Policy, Planning and
Evaluation, Information Policy Branch. Owners/operators will need to spend 2
hours per response to submit reports showing evidence of financial assurance
and an additional 5 minutes/year to maintain records of financial assurance or
records to support an application for suspension of enforcement. Owners/
operators who apply for suspension will group together by state, thus forming
SO associations that will submit twice-yearly applications for suspension of
enforcement. According to EPA, the total number of owners/operators applying
for suspension will be 272,089. At a total estimated cost of $180,000, the
average cost per farm supply store is S0.66.
15. ICF Incorporated, "Report to Congress on Small Quantity Generators of
Hazardous Waste," Volume I, July 1986.
Appendix E
1. Bob Lundy, Analyst, Office of Transportation Analysis, Interstate Commerce
Commission, personal communication, Frbruary 8, 1988.
2. Tom Mcclellan, Analyst, Office of Transportation Analysis, Interstate Commerce
Commission, personal communication, February 8, 1988.
3. "Regulatory Impact Analysis in Support of Final Rulemaking Under Sections 311
and 312 of the Superfund Amendments and Reauthorization Act of 1986",
September 1987.
4. Meridian Research, Inc., "Regulatory Impact Analysis of Proposed Financial
Responsibility Requirements for Underground Storage Tanks Containing
Petroleum," prepared for Office of Underground Storage Tanks, Environmental
Protection Agency, March 30, 1987.
5. Ibid.
6. U.S. Environmental Protection Agency, Office of Policy, Planning and
Evaluation, Information Policy Branch. This is assuming an hourly rate of
$15/hr. for supervisor/manager time for this industry.
N-5
-------
7. U.S. Environmental Protection Agency, Office of Policy, Planning and
Evaluation, Information Policy Branch. Owners/operators will need to spend 2
hours per response to submit reports showing evidence of financial assurance
and an additional 5 minutes/year to maintain records of financial assurance or
records to support an application for suspension of enforcement. Owners/
operators who apply for suspension will group together by state, thus forming
SO associations that will submit twice-yearly applications for suspension of
enforcement. According to EPA, the total number of owners/operators
applying for suspension will be 272,089. At a total estimated cost of $180,000,
the average cost per gasoline service station is S0.66.
8. See Note 6.
9. U.S. Environmental Protection Agency, "Evaluation of Air pollution Regulatory
Strategies for Gasoline Marketing Industry,*1 office of Air and Radiation, 84-
Ol2a, July 1984.
10. U.S. Environmental Protection Agency, "Draft Regulatory Impact Analysis:
Refueling Emission Regulations for Gasoline-Fueled Motor Vehicles - Volume
Analysis of Gasoline Marketing Regulatory Strategies," Office of Air and
Radiation, EPA-450/3-87-001a, July 1987.
Appendix F
1. U.S. Environmental Protection Agency, Office of Policy, Planning and
Evaluation, Information Policy Branch. This is assuming an hourly rate of
SlS/hr. for supervisor/manager time for this industry.
2.' U.S. Environmental Protection Agency, Office of Policy, Planning and
Evaluation, Information Policy Branch. Owners/operators will need to spend 2
hours per response to submit reports showing evidence of financial assurance
and an additional 5 minutes/year to maintain records of financial assurance or
records to support an application for suspension of enforcement. Owners/
operators who apply for suspension will group together by state, thus forming
SO associations that will submit twice-yearly applications for suspension of
enforcement. According to EPA, the total number of owners/operators
applying for suspension will be 272,089. At a total estimated cost of $180,000,
the average cost per gasoline service station is $0.66.
3. See Note 1.
4. ICF Incorporated, "Report to Congress on Small Quantity Generators of
Hazardous Waste," Volume I, July 1986.
5. Conversation with Safety Kleen representative, April, 1988.
6. U.S. Environmental Protection Agency, Office of Policy, Planning and
Evaluation, Information Policy Branch. This estimate assumes that the average
time per facility to read the instructions, find out the identification number of
the hazardous waste, and complete the notification form is l.S hours.
N-6
-------
7. Ibid. Includes only recordkeeping costs associated with signing and filing the
manifest.
8. "Regulatory Impact Analysis in Support of Final Rulemaking Under Sections 311
and 312 of the Superfund Amendments and Reauthorization Act of 1986",
September 1987.
Appendix G
1. French, Michael T.; McNeilly, Lisa D.; "Economic Impact Analysis for the Dry
Cleaning NESHAP," July 30, 1987.
2. Meijer, John, International Fabricare Institute, January 1988.
3. ICF, "Analysis of the Combined Impact of Various EPA Regulatory Initiatives on
Generators of 100-1000 kg/mo.," January 6, 1986.
4. ICF, "Options for Regulating Perchloroethylene Emissions in the Dry Cleaning
Industry: A Cost-Benefit Analysis," Nov. 11, 1987.
5. Radian Corp., letter from Ed Moretti to E.H. Pechan and Associates, Jan. 25,
1988.
6. Ibid.
7. ICF Incorporated, "Report to Congress on Small Quantity Generators of
Hazardous Waste," Volume I, July 1986.
8. U.S. Environmental Protection Agency, Office of Policy, Planning and
Evaluation, Information Policy Branch. This is assuming an hourly rate of
$15/hr. for supervisor/manager time.
9. Ibid. Includes only recordkeeping costs associated with signing and filing the
manifest.
10. "Regulatory Impact Analysis in Support of Final Rulemaking Under Sections 311
and 312 of the Superfund Amendments and Reauthorization Act of 1986",
September 1987.
11. Meridian Research, Inc.
12. See Note 8.
13. U.S. Environmental Protection Agency, Office of Policy, Planning and
Evaluation, Information Policy Branch. Owners/operators will need to spend 2
hours per response to submit reports showing evidence of financial assurance
and an additional 5 minutes/year to maintain records of financial assurance or
records to support an application for suspension of enforcement. Owners/
operators who apply for suspension will group together by state, thus forming
SO associations that will submit twice-yearly applications for suspension of
enforcement. According to EPA, the total number of owners/operators
N-7
-------
applying for suspension will be 272,089. At a total estimated cost of $180,000,
the average cost per gasoline service station is $0.66.
14. Lord II, G. F. "Hazardous Waste Pickup Problems among Automotive Maintenance
and Dry Cleaning Firms," July 1987.
Appendix H
I. In 1984 Photofinishing Laboratories were classified as SIC 7395. This has since
been changed to SIC 7384.
2. ICF, Incorporated, "Analysis of the Combined Impact of Various EPA Regulatory
Initiatives on Generators of 100 -• 1000 kg/mo.", prepared for the EPA, January
6, 1986.
3. ICF Incorporated, "Report to Congress on Small Quantity Generators of
Hazardous Waste," Volume I, July 1986.
N-8
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