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

-------
                                                      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

-------
                                                       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

-------
                                                       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

-------
                                                       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

-------
                                                       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

-------
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

-------
                                     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.

                                        2-9

-------
                                  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

-------
                                       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

-------
                                               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

-------
                                               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

-------
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

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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

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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.
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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.
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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

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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.
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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.
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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

                                         3-10

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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.
                                          3-12

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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

-------
                                    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

-------
                                    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

-------
                                        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

-------
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

-------
                     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

-------
     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

-------
                                    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

-------
                                   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

-------
     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

-------
                                   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

-------
     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

-------
     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

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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

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     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

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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

-------
     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

-------
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

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                                    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

-------
   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

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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

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                                 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

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                                   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

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     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

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                                     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

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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

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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

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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

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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

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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

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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

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     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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