&EPA
           United States
           Environmental Protection
           Agency
           Office of Air Quality
           Planning and Standards
           Research Triangle Park NC 27711
EPA-450 3-80-035a
October 1 980
           Air
Metal  Coil             Draft
Surface Coating
Industry —
Background Information
for Proposed Standards


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                           EPA-450/3-80-035a
    Metal Coil Surface
   Coating Industry —
Background Information
for Proposed Standards
    Emission Standards and Engineering Division
    U.S. ENVIRONMENTAL PROTECTION AGENCY
       Office of Air, Noise, and Radiation
    Office of Air Quality Planning and Standards
    Research Triangle Park, North Carolina 27711

            October 1980

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This report has been reviewed by the Emission Standards and
Engineering Division of the Office of Air Quality Planning and
Standards, EPA, and approved for publication.  Mention of
trade names or commercial products is not intended to constitute
endorsement or recommendation for use.  Copies of this report
are available through the Library Services Office  (MD-35),
U.S. Environmental Protection Agency, Research Triangle Park,
N.C.  27711, or from National Technical Information Services,
5285 Port Royal Road, Springfield, Virginia 22161.
               Publication No. EPA-450/3-80-035a
                               ii

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                       ENVIRONMENTAL  PROTECTION AGENCY

                     Background  Information  and Draft
                       Environmental  Impact Statement
                       for Metal  Coil Surface Coating
                               Prepared by:
                             _
Don R. Goodwin/                                              '   (We)
Director, Emission Standards and Engineering Division
U.S.  Environmental Protection Agency
Research Triangle Park, NC   27711

1.    The proposed standards  of performance would limit emissions of vola-
      tile organic compounds  from new, modified, and reconstructed metal
      coil surface coating operations.  Section 111 of the Clean Air Act (42
      U.S.C. 7411), as amended, directs the Administrator to establish
      standards of performance for any category of new stationary sources of
      air pollution that "... causes or contributes significantly to air
      pollution which may reasonably be anticipated to endanger public
      health or welfare."  The industrial centers of the Northeast and
      Midwest will be particularly affected by the proposed standards.

2.    Copies of this document have been sent to the following Federal Depart-
      ments:  Labor, Health and Human Services, Defense, Transportation,
      Agriculture, Commerce,  Interior, and Energy; the National Science
      Foundation; the Council on Environmental Quality; members of the State
      and Territorial Air Pollution Program Administrators; the Association
      of Local Air Pollution  Control Officials; EPA Regional Administrators;
      and other interested parties.

3.    The comment period for  review of this document is 60 days.  Mr. Gene
      Smith may be contacted  regarding the date of the comment period.

4.    For additional information contact:

     Mr.  Gene W. Smith
      Standards Development Branch (MD-13)
     U.S.  Environmental Protection Agency
      Research Triangle Park, NC  27711
      telephone:   (919) 541-5421

5.   Copies of this document may be obtained from:

     U.S.  EPA Library (MD-35)
     Research Triangle Park, NC  27711

     National Technical Information Service
     5285 Port Royal  Road
     Springfield, VA  22161
                                    11 i

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                             TABLE OF CONTENTS

                                                                       Page
1.  SUMMARY	1-1
    1.1  Regulatory Alternatives 	  1-1
    1.2  Environmental Impact	1-1
    1.3  Economic Impact	1-2
    1.4  Energy Impact	1-2

2.  INTRODUCTION	2-1
    2.1  Background and Authority for Standards	2-1
    2.2  Selection of Categories of Stationary Sources 	  2-4
    2.3  Procedure for Development of Standards of
           Performance	2-6
    2.4  Consideration of Costs	2-8
    2.5  Consideration of Environmental Impacts	2-9
    2.6  Impact on Existing Sources	2-10
    2.7  Revision of Standards of Performance	2-11

3.  THE COIL COATING INDUSTRY	3-1
    3.1  General	3-1
    3.2  Coil Coating Processes and Emissions	3-1
    3.3  Baseline Emissions	3-8
    3.4  References	3-10

4.  EMISSION CONTROL TECHNIQUES	4-1
    4.1  Introduction	4-1
    4.2  Description of Industry Control Techniques	4-1
         4.2.1  Thermal Incineration 	  4-2
                4.2.1.1  Zone Incineration 	  4-4
                4.2.1.2  Regenerative Heat Recovery	4-5
                4.2.1.3  Recuperative Heat Recovery.  .  	  4-5
                4.2.1.4  Direct Recycle Heat Recovery	4-6
         4.2.2  Catalytic Incineration	  4-7
         4.2.3  Coating Rooms	4-8
         4.2.4  Waterborne Coatings.	4-9
         4.2.5  Other Control Methods	4-10
    4.3  References	4-11

 5.  MODIFICATIONS AND RECONSTRUCTION 	  5-1
    5.1  Descriptions of Typical  Modifications and
           Reconstruction	5-1
    5.2  Retrofit Considerations  	  5-2
    5.3  References	5-3

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                           CONTENTS  (continued)

                                                                       Page
 6.  MODEL PLANTS  AND  REGULATORY  ALTERNATIVES  	   6-1
    6.1  Model  Plants	6-1
    6,2  Regulatory Alternatives 	  	   6-7

 7.  ENVIRONMENTAL IMPACT 	   7-1
    7.1  Air Pollution Impact	7-1
    7.2  Water Pollution Impact	7-8
    7.3  Solid Waste  Disposal Impact	   7-9
    7.4  Energy Impact	7-9
    7.5  Other Environmental  Concerns	7-14
         7.5.1  Irreversible  and Irretrievable Commit-
                  ment of Resources	7-14
         7.5.2  Environmental Impact of Delayed Standards	  .  7-14
    7.6  References	7-14

8.   ECONOMIC IMPACT	8-1
    8.1  Industry Chacterization 	   8-1
         8.1.1  General Profile	8-1
         8.1.2  Trends	8-17
                8.1.2.1  Historical  Trends 	  8-17
                8.1.2.2  Future  Trends 	  8-19
    8.2  Cost Analysis of Control Options	8-22
         8.2.1  Introduction	    ....    ^  ^^
         8.2.2  New Facilities 	  !'**'!.  8-30
                8.2.2.1  Capital Costs	  8-30
                8.2.2.2  Annualized Costs	                  8-32
                8.2.2.3  Cost Effectiveness	    '          8-35
                8.2.2.4  Base Cost of Facility	      .    8-40
         8.2.3  Modified/Reconstructed Facilities	    ...  8-47
    8.3  Other Cost Considerations	    	8-50
         8.3.1  The Clean Water Act	..........  8-52
         8.3.2  Occupational Exposure	  .  .            8-52
         8.3.3  Toxic  Substances Control ............  8-55
    8.4  Economic  Impact Analysis. ..................  8-55
         8.4.1  Summary	. .  .  .	8-56
         8.4.2  Economic Conditions  in the Industry. .........  8-57
                8.4.2.1  Industry Structure.  .............  8-58
                8.4.2.2  Industry Performance	    *         8-60
         8.4.3  Methodology	'	Q-B2
                8.4.3.1  Discounted  Cash Flow Approach '.'.'.'.'.'.''  8-62
                8.4.3.2  Project Ranking Criterion  ..........  8-66
                8.4.3.3  Determining the  Impacts of the
                           Regulatory  Alternatives  	       8-67
         8.4.4   Economic Impacts on  New Facilities	'.'.'.'.'.  8-68
                8.4.4.1  Price  Impacts	'.'.'.['.'.  8-71
                8.4.4.2  Return on  Investment Impacts. .......   8-71
                8.4.4.3  Incremental Capital  Requirements.  ......  8-71
                8.4.4.4  Summary	'  3.75
                                     VI

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                           CONTENTS (continued)
         8.4.5  Economic Impacts on Modified Facilities ........  8-76
                8.4.5.1  Price Impacts ................  8-79
                8.4.5.2  ROI Impacts .................  8-79
                8.4.5.3  Incremental Capital Requirements .......  8-79
                8.4.5.4  Summary ...................  8-83
    8.5  Potential Socioeconomic and Inflationary Impacts .......  8-83
         8.5.1  Annual ized Cost Criterion ...............  8-84
         8.5.2  Product Price Criterion ................  8-84
    8.6  Financial Data for Coil Coating Firms ............  8-88
    8.7  References ..........................  8-91

Appendix A:  Evolution of the Background Information Document .....   A-l
Appendix B:  Index to Environmental Impact Considerations .......   B-l
Appendix C:  Emission Source Test Data ................   C-l
Appendix D:  Emission Measurement and Continuous Monitoring ......   D-l
Appendix E:  Revised Regulatory Alternatives .....  ........   E-l
                                    vn

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                              LIST OF FIGURES
Number
 3-1   Schematic diagram of a coil coating line	3-3
 6-1   Schematic diagram of model  coil  coating line	6-2
 6-2   List of model  plant parameters for small plant with
         1 coating line	5-4
 6-3   List of model  plant parameters for medium plant with
         1 coating line	5-5
 6-4   List of model  plant parameters for large plant with
         1 coating line	   6-6
 7-1   List of States and major metropolitan areas currently
         regulating organic solvent emissions through
         specific numerical standards	7-3
 7-2   List of States not regulating organic solvent emissions
         through specific numerical standards	7-4
 8-1   Total projected shipments of precoated metal:   1981-1985.  .  .  .  8-20
 8-2   List of parameters for model coil coating lines	8-24
 8-3   Schematic diagram of a model coil coating line with
         thermal incineration and primary and secondary heat
         recovery (Control Option 2) 	  8-29
                                   V111

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                              LIST OF TABLES

Number

 1-1   Assessment of Environmental and Economic Impacts
         for Each Regulatory Alternative Considered 	    1-3

 3-1   Coatings Used in Coil Coating.	    3-4

 4-1   Emission Test Results for Thermal Incinerators on
         Coil  Coating Lines .	    4-3

 7-1   Estimated Environmental Impacts.  .  .  ..	    7-7

 7-2   Rate of Fuel  Energy Usage of Model  Coil  Coating Lines	   7-10

 7-3   Rate of Electrical Energy Usage of Model Coating Lines ....   7-11

 7-4   Estimated Annual  Increase in National  Fuel  Consumption
         Due to Industry Growth	.  .  .  .   7-13

 8-1   Domestic Coil  Coating Establishments  Currently
         in Operation:   1979	    8-3

 8-2   Current and Suggested End Uses  of Precoated Metal  Strip.  ...    8-8

 8-3   Coatings,  Prices,  and Metals Coated	8-14

 8-4   Shipments  of  Precoated Aluminum and Steel:
         1976  and 1977.  .	8-15

 8-5   Major Markets  for Precoated Metal:  1976 and 1977,  	   8-16

 8-6   Estimate of Total  Shipments of  Prepainted or Pre-
         coated Metal Coil  by Coaters  Located in the
         United States,  Canada,  and Mexico.  .	   8-18

 8-7   Regulatory Alternatives and Control Options Considered
         in the Economic Analysis	   8-23

 8-8   Key  Parameters for Control  Option 1:  Multiple  Zone
         Incinerators and Coating  Rooms  	   8-25

 8-9   Key  Parameters for Control  Option 2:  Thermal
         Incineration with  Heat Recovery	8-26

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                        LIST OF TABLES (continued)
Number                                                                 Page
 8-10  Key Parameters for Control Option 3:   Thermal
         Incineration with Heat Recovery and Coating Rooms	8-27
 8-11  Capital Costs of Control Options .  .  .	8-31
 8-12  Component Capital Cost Factors Used in Calculating
         Total Installed Costs	8-33
 8-13  Calculation of Annual 1 zed Costs of Air Pollution
         Control Systems	8-34
 8-14  Annual Operating Costs of Control Options	8-36
 8-15  Annual!zed Cost of VOC Control Options for Small
         Model Line	8-37
 8-16  Annualized Costs of VOC Control Options for Medium
         Model Line	              8_38
 8-17  Annualized Costs of VOC Control Options for Large
         Model Line	8-39
 8-18  Marginal Cost Effectiveness of NSPS Above SIP
         Regulations for Small Model Line 	  8-41
 8-19  Marginal Cost Effectiveness of NSPS Above SIP
         Regulations for Medium Model Line	8-42
 8-20  Marginal Cost Effectiveness of NSPS Above SIP
         Regulations for Large Model Line 	  8-43
 8-21  Capital Costs of New Coil Coating Facilities	8-44
 8-22  Annual Operating Costs of Model Coil Coating
         Lines Without Emission Control Equipment 	  8-46
 8-23  Increase in Annual Operating Costs of Existing
         Lines Having CTG Control Systems Due to
         Increased Production and Additional Emission
         Control	              8_4g
 8-24  Increase in Annual Operating Costs of Existing
         Lines Having 85 Percent Control Due to Increased
         Production and Additional (95 Percent Overall)
         Emission Control to Meet NSPS	   8-51
 8-25  Threshold Limit Values (TLV)'and Lower Explosive Limits
         (LEL) of Typical Solvents	   8-54

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                        LIST OF TABLES (continued)

Number                                                                 Page
 8-26  Concentration Ratios in the Metal  Coating
         and Allied Services Industry	8-59

 8-27  Selected Financial  Statistics for the Coil
         Coating Industry, 1976-1978 	  8-61

 8-28  Definitions	8-64

 8-29  Summary Cost Data for New Facilities	8-69

 8-30  Unit Prices and Rankings for New Facilities	8-70

 8-31  Price Impacts of Regulatory Alternatives
         on New Facilities	8-72

 8-32  Return on Investment Impacts of Regulatory
         Alternatives on New Facilities	8-73

 8-33  Incremental Capital Requirements of Regulatory
         Alternatives for New Facilities  	  8-74

 8-34  Summary Cost Data for Modified Facilities 	  8-77

 8-35  Unit Prices and Rankings for Modified Facilities	8-78

 8-36  Price Impacts of Regulatory Alternatives on
         Modified Facilities 	  8-80

 8-37  Return on Investment Impacts of Regulatory  Alternatives
         on Modified Facilities	8-81

 8-38  Incremental Capital Requirements of Regulatory
         Alternatives for Modified Facilities	8-82

 8-39  Incremental Annualized Cost of Compliance With
         Regulatory Alternative III, 1985	8-85

 8-40  Overall  Price Impact of Regulatory Alternative III	  8-87

 8-41  Financial  Statistics for Coil Coating Firms 	  8-89

 8-42  Yields by Rating Class for Cost of Debt  Funds, 1979	8-92
                                   XI

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                                1.   SUMMARY

     Section 111 of the Clean Air Act (42 U.S.C.  7411) as amended directs
the Administrator to establish standards of performance for any category of
new stationary sources of air pollution that "causes or contributes signifi-
cantly to air pollution which may reasonably be anticipated to endanger
public health and welfare."  The metal coil surface coating industry falls
into this classification, and standards of performance have been developed
for volatile organic compound (VOC) emissions from this industry.
1.1  REGULATORY ALTERNATIVES
     Five regulatory alternatives are considered.  The first involves
no additional regulation.  Emissions from new, modified, or recon-
structed metal coil coating plants would continue to be governed by
State regulations.
     The second regulatory alternative would limit emissions to those
resulting from the use of the best available emission control  device in
conjunction with current industry practice for capturing VOC emissions.
     The third regulatory alternative is the same as the second, except
that a separate, higher emission limit would be included for plants that
use low-VOC content coatings.
     The fourth regulatory alternative would limit emissions to those
resulting from the use of the best available emission control  device and
would require that coating application stations be enclosed in rooms.
     The fifth regulatory alternative is the same as the fourth, except
that a separate, higher emission limit would be included for plants that
use low-VOC content coatings.
1.2  ENVIRONMENTAL IMPACT
     Under Regulatory Alternative I, there would be no environmental impact,
either beneficial or adverse.  Under Regulatory Alternative II, VOC emissions
                                 1-1

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would be reduced by 1,915 megagrams (Mg) per year in 1985; under Regulatory
Alternative III, they would be reduced by 1,815 Mg; under Regulatory Alterna-
tive IV, they would be reduced by 3,605 Mg; and, under Regulatory Alterna-
tive V, they would be reduced by 3,200 Mg.  No adverse impacts on water,
solid waste, or noise would be expected from any of the regulatory alterna-
tives.  A matrix summarizing the environmental, energy, and economic impacts
is presented in Table 1-1.
1.3  ECONOMIC  IMPACT
     Under  Regulatory Alternative  I,  no economic impact would result for
the  coil coating industry.  Under  Regulatory Alternatives II, III, IV,  or V,
the  price of coil  coated  metal could  be expected to increase by  2.0 to
3.1  percent nationally after 5 years.   Price increases at individual plants
could  be either higher or lower  than  this national  figure.
1.4   ENERGY IMPACT
      Under  Regulatory Alternative  I,  no energy impact would  occur, but  for
 Regulatory  Alternatives  II through V, energy consumption  by  the  coil coating
 industry would be  expected to  increase by about 1  percent per year above
 the  current level.  In the fifth year, the increase in energy consumption
 would be  equivalent to about  200,000  barrels of oil.
                                  1-2

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          TABLE 1-1.   ASSESSMENT OF ENVIRONMENTAL AND ECONOMIC IMPACTS FOR EACH REGULATORY ALTERNATIVE CONSIDERED
u>
Administrative
action
Regulatory
Alternative I
Regulatory
Alternative II
Regulatory
Alternative III
Regulatory
Alternative IV
Regul atory
Alternative V
Delayed
standards
Air
impact
0
+2a
+2a
+3
+3
-1
Water
impact
0
0
0
0
0
0
Solid waste
impact
0
0
0
0
0
0
Energy
impact
0
-la
-la
-1
-1
0
Noise
impact
0
0
0
0
0
0
Economic
impact
0
-2a
-2a
-3
-3
0
       aLong-term impact.

       KEY:  + Beneficial impact
             - Adverse impact
             0 No impact
             1 Negligible impact
             2 Small impact
             3 Moderate impact

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                             2.   INTRODUCTION

2.1  BACKGROUND AND AUTHORITY FOR STANDARDS
     Before standards of performance are proposed as a Federal regulation,
air pollution control methods available to the affected industry and the
associated costs of installing and maintaining the control equipment are
examined in detail.  Various levels of control, based on different technolo-
gies and degrees of efficiency,  are expressed as regulatory alternatives.
Each of these alternatives is studied by the U.S. Environmental Protection
Agency (EPA) as a prospective basis for a standard.   The alternatives art
investigated in terms of their impacts on the economics and well-being of
the industry, their impacts on the national economy, and their impacts on
the environment.  This document summarizes the information obtained through
these studies so that interested persons will be able to see the information
considered by EPA in the development of the proposed standard.
     Standards of performance for new stationary sources are established
under Section 111 of the Clean Air Act (42 U.S.C. 7411), as amended, herein
referred to as the. Act.   Section 111 directs the Administrator to establish
standards of performance for any category of new stationary source of air
pollution that "causes,  or contributes significantly to air pollution which
may reasonably be anticipated to endanger public health or welfare."
     The Act requires that standards of performance for stationary sources
reflect "the degree of emission reduction achievable which (taking into
consideration the cost of achieving such emission reduction, and any nonair
quality health and environmental impact and energy requirements) the Adminis-
trator determines has been adequately demonstrated for that category of
sources."  The standards apply only to stationary sources, the construction
or modification of which commences after regulations are proposed by publi-
cation in the Federal Register.
                                  2-1

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     The 1977 amendments to the Act altered or added numerous provisions
that apply to the process of establishing standards  of performance:
          EPA is required to list the categories  of  major stationary sources
          that have not already been listed and regulated uncier standards
          of performance.  Regulations must be promulgated for these new
          categories on the following schedule:
               25 percent of the listed categories by August 7, 1980
               75 percent of the listed categories by August 7, 1981
               100 percent of the listed categories  by August 7, 1982.
          A governor of a State may apply to the Administrator to add a
          category not on the list or to have a standard of performance
          revised.
          EPA is required to review the standards of performance every 4
          years and, if appropriate, revise them.
          EPA is authorized to promulgate a standard based on design,
          equipment, work practice, or operational procedures when a stand-
          ard based on emission levels is not feasible.
          IjLuen? standards of performance is redefined, and a new term
           technological system of continuous emission reduction" is defined.
             tJnr def ' "I*1 Ol«. clarify that the control system must be
             nnS-     may include a low-polluting or nonpolluting process
             operation.
      "    n£Lr1Sr5*tWe??1thS pr°P°sal and Promulgation of a standard
          under Section 111 of the Act may be extended to 6 months.
      Standards of performance, by themselves, do not guarantee protection
of health or welfare because they are not designed to achieve any specific
air quality levels.  Rather, they are designed to reflect the degree of
emission limitation achievable through application of the best adequately
demonstrated technological system of continuous emission reduction, with
the cost of achieving such emission reduction, any nonair quality health and
environmental impacts, and energy requirements being considered.
      Congress had several reasons for including these requirements.  First,
standards with a degree of uniformity are needed to prevent situations
where some States may attract industries by relaxing standards relative to
other States.  Second, stringent standards enhance the potential for
long-term growth.  Third, stringent standards may help achieve long-term
cost  savings by avoiding the need for more expensive retrofitting if pollu-
tion  ceilings are reduced in the future.  Fourth, certain types of stand-
ards  for coal-burning sources can adversely affect the coal market by
                                   2-2

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driving up the price of  low-sulfur coal or effectively excluding certain
coals from the reserve base because their untreated pollution potentials
are high.  Congress does not intend that New Source Performance Standards
(NSPS) contribute to these problems.  Fifth, the standard-setting process
should create incentives for improved technology.
     Promulgation of standards of performance does not prevent State or
local agencies from adopting more stringent emission limitations for the
same sources.  States are free under Section 116 of the Act to establish
even more stringent emission limits than those established under Section 111
or those necessary to attain or maintain the National Ambient Air Quality
Standards (NAAQS) under Section 110.  Thus, new sources may in some cases
be subject to limitations more stringent than standards of performance
under Section 111, and prospective owners and operators of new sources
should be aware of this possibility in planning for such facilities.
     A similar situation may arise when a major emitting facility is to be
constructed in a geographic area that falls under the prevention of signifi-
cant deterioration of air quality provisions of Part C of the Act.   These
provisions require, among other things, that major emitting facilities to
be constructed in such areas are to be subject to best available control
technology.   The term best available control technology (BACT), as defined
in the Act,  means
     ...  an emission limitation based on the maximum degree of
     reduction of each pollutant subject to regulation under this
     Act emitted from, or which results from, any major emitting
     facility, which the permitting authority, on a case-by-case
     basis,  taking into account energy, environmental, and economic
     impacts and other costs, determines is achievable for such
     facility through application of production processes and avail-
     able methods, systems, and techniques, including fuel cleaning
     or treatment or innovative fuel combustion techniques for
     control  of each such pollutant.   In no event shall application
     of "best available control technology" result in emissions of
     any pollutants which will  exceed the emissions allowed by any
     applicable standard established pursuant to Sections 111 or 112
     of this Act.  (Section 169(3))
     Although standards of performance are normally structured in terms of
numerical  emission limits,  where feasible, alternative approaches are some-
times necessary.   In some cases physical  measurement of emissions from a
                                  2-3

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new source may be impractical  or exorbitantly expensive.   Section lll(h)
provides that the Administrator may promulgate a design or equipment stand-
ard in cases where it is not feasible to prescribe or enforce a standard of
performance.  For example,  emissions of hydrocarbons from storage vessels
for petroleum liquids are greatest during tank filling.   The nature of the
emissions—high concentrations for short periods during filling and low
concentrations for longer periods during storage—and the configuration of
storage tanks make direct emission measurement impractical.   Therefore,
equipment specification has been a more practical approach to standards of
performance for storage vessels.
     In addition, Section lll(j) authorizes the Administrator to grant
waivers of compliance to permit a source to use innovative continuous
emission control technology.  In order to grant the waiver, the Administra-
tor must find (1) a substantial likelihood that the technology will produce
greater emission reductions than the standards require or an equivalent
reduction at lower economic, energy, or environmental costs; (2) the proposed
system has  not been adequately  demonstrated; (3) the technology will not
cause or contribute to  an unreasonable risk to the public health, welfare,
or safety;  (4) the governor of  the State where the source is located consents;
and (5) the waiver will  not prevent  the attainment or maintenance of any
ambient standard.  A waiver may have conditions attached to assure that the
source will  not  prevent attainment of any NAAQS.  Any such condition will
have the  force of a performance standard.  Finally, waivers have definite
end dates and may be terminated earlier if the conditions are not met  or if
the system  fails  to perform as  expected.  In such a case, the source may be
given up  to 3 years to  meet the standards with a mandatory progress schedule.
2.2  SELECTION OF CATEGORIES OF STATIONARY SOURCES
     Section  111 of the Act directs  the Adminstrator to  list categories of
stationary  sources.  The Administrator  "shall  include a  category of sources
in  such  list  if  in his  judgment it  causes, or  contributes significantly to,
air pollution which may reasonably  be anticipated to endanger public health
or welfare."  Proposal  and  promulgation of standards of  performance are to
follow.
     Since  passage of  the Clean Air  Amendments  of 1970,  considerable atten-
tion has  been given to  the  development  of a  system  for assigning priorities

                                   2-4

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to various source categories.   The approach specifies areas of interest by
considering the broad strategy of the Agency for implementing the Clean Air
Act.   Often, these "areas" are actually pollutants emitted by stationary
sources.   Source categories that emit these pollutants are evaluated and
ranked by a process involving such factors as (1) level  of emission control
(if any) already required by State regulations,  (2) estimated levels of
control that might be required from standards of performance for the source
category, (3) projections of growth and replacement of existing facilities
for the source category, and (4) the estimated incremental amount of air
pollution that could be prevented in a preselected future year by standards
of performance for the source category.   Sources for which an NSPS was
promulgated or under development during 1977 or earlier were selected based
on these criteria.
     The Clean Air Act amendments of August 1977 establish specific criteria
to be used in determining priorities for all major source categories not
yet listed by EPA.  These are (1) the quantity of air pollutant emissions
that each such category will emit, or will be designed to emit; (2) the
extent to which each such pollutant may reasonably be anticipated to endan-
ger public health or welfare; and (3) the mobility and competitive nature
of each such category of sources and the consequent need for nationally
applicable new source standards of performance.
     The Administrator is to promulgate standards for these categories
according to the schedule referred to earlier.
     In some cases it may not be feasible immediately to develop a standard
for a source category with a high priority.  This might happen when a
program of research is needed to develop control techniques or because
techniques for sampling and measuring emissions may require refinement.  In
the development of standards, differences in the time required to complete
the necessary investigation for different source categories must also be
considered.   For example, substantially more time may be necessary if
numerous pollutants must be investigated from a single source category.
Further, even late in the development process the schedule for completion
of a standard may change.  For example, inablility to obtain emission data
from well-controlled sources in time to pursue the development process in a
systematic fashion may force a change in scheduling.  Nevertheless, priority
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ranking is,  and will  continue to be,  used to establish the order in which
projects are initiated and resources  assigned.
     After the source category has been chosen,  the types of facilities
within the source category to which the standard will  apply m::st be deter-
mined.  A source category may have several facilities  that cause air pollu-
tion, and emissions from some of these facilities may  vary from insignifi-
cant to very expensive to control.  Economic studies of the source category
and of applicable control technology may show that air pollution control is
better served by applying standards to the more severe pollution sources.
For this reason, and because there is no adequately demonstrated system for
controlling emissions from certain facilities, standards often do not apply
to all facilities at a source.  For the same reasons,  the standards may not
apply to all air pollutants emitted.   Thus, although a source category may
be selected to be covered by a standard of performance, not all pollutants
or facilities within that source  category may be covered by the standards.
2.3   PROCEDURE FOR DEVELOPMENT OF STANDARDS OF PERFORMANCE
      Standards of performance must (1) realistically reflect best demon-
strated control practice; (2) adequately consider the cost, the nonair
quality health and environmental  impacts, and the energy requirements of
such  control;  (3) be applicable to existing sources that are modified or
reconstructed, as well as new installations; and (4) meet these conditions
for  all variations of operating conditions being considered anywhere in the
country.
      The  objective of a  program for developing standards  is to  identify the
best technological system of  continuous  emission reduction that has been
adequately  demonstrated.  The standard setting process  involves three
principal phases of  activity:   (1) information gathering,  (2) analysis  of
the  information, and (3) development  of  the  standard  of performance.
      During the  information  gathering phase,  industries  are queried through
a telephone survey,  letters  of  inquiry,  and  plant  visits  by EPA representa-
tives.   Information  is  also  gathered  from many other  sources, and  a litera-
ture search is conducted.   From the  knowledge acquired  about  the  industry,
EPA  selects certain  plants  at which  emission tests  are  conducted  to provide
reliable  data that characterize the  pollutant emissions from  well-controlled
existing  facilities.

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      In  the  second  phase  of  a  project,  the  information  about  the  industry
 and  the  pollutants  emitted is  used  in analytical  studies.   Hypothetical
 "model plants"  are  defined to  provide a common  basis  for  analysis.  The
 model plant  definitions,  national pollutant emission  data,  and existing
 State regulations governing  emissions from  the  source category are  then
 used in  establishing  "regulatory alternatives."   These  regulatory alterna-
 tives are  essentially different levels  of emission control.
      EPA conducts studies to determine  the  impact of  each  regulatory alter-
 native on  the economics of the industry and on  the national economy, on the
 environment, and on energy consumption.  From several possibly applicable
 alternatives, EPA selects the  single most plausible regulatory alternative
 as the basis for a  standard  of performance  for  the source  category  under
 study.
      In  the  third phase of a project, the selected regulatory alternative
 is translated into a  standard  of performance, which,  in turn, is written in
 the  form of  a Federal  regulation.   The  Federal  regulation, when applied to
 newly constructed plants, will limit emissions  to the levels indicated in
 the  selected regulatory alternative.
     As  early as is practical  in each standard  setting project, EPA repre-
 sentatives discuss the possibilities of a standard and the  form it might
 take with members of  the National  Air Pollution Control Techniques Advisory
 Committee (NAPCTAC).   Industry representatives  and other interested parties
 also participate in these meetings.
     The information  acquired  in the project is summarized  in the Background
 Information Document  (BID).   The BID, the standard, and a preamble explain-
 ing the  standard are widely  circulated  to the industry being considered for
 control, environmental groups, other government agencies, and offices
within EPA.  Through  this extensive review process, the points of view of
expert reviewers are considered as changes are made to the documentation.
     A "proposal package" is assembled  and sent through the offices of EPA
Assistant Administrators for concurrence before the proposed standard is
officially endorsed by the EPA Administrator.  After being approved by the
EPA Administrator,  the preamble and the proposed regulation are published
 in the Federal  Register.
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     As a part of the Federal  Register announcement of the proposed regula-
tion, the public is invited to participate in  the standard-setting process.
EPA invites written comments on the proposal and also holds a public hear-
ing to discuss the proposed standards with interested parties.   All public
comments are summarized and incorporated into  a second volume of the BID.
All information reviewed and generated in studies in support of the standard
of performance is available to the public in a "docket" on file in Washington,
D.C.
     Comments from the public are evaluated, and the standard of performance
may be altered in response to the comments.
     The significant comments and EPA's position on the issues raised are
included in the "preamble" of a "promulgation  package," which also contains
the draft of the final regulation.  The regulation is then subjected to
another round of review and refinement until  it is approved by the EPA
Administrator.  After the Administrator signs  the regulation, it is pub-
lished as a "final rule" in the Federal Register.
2.4  CONSIDERATION OF COSTS
     Section  317 of  the Act requires an economic impact assessment with
respect  to any  standard of performance established under Section 111 of the
Act.   The  assessment is required  to contain an analysis of  (1) the costs  of
compliance with  the  regulation, including  the extent to which the  cost of
compliance varies  depending on the effective date of the  regulation and the
development of  less  expensive or  more  efficient methods of  compliance; (2)
the potential  inflationary or recessionary effects of  the  regulation; (3)
the effects the regulation might  have  on  small  business with respect to
competition;  (4) the effects  of the  regulation  on  consumer costs;  and
 (5) the effects of the  regulation on energy use.   Section 317  also requires
that the economic  impact  assessment  be as extensive  as practicable.
      The economic  impact  of a proposed standard upon an industry  is  usually
addressed both  in  absolute terms  and in terms  of the control costs that
would be incurred  as a result of  compliance with typical,  existing State
control.regulations.  An  incremental  approach  is necessary because both  new
 and existing  plants would be required to comply with State regulations  in
 the absence of a Federal  standard of performance.   This approach  requires a
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 detailed analysis  of  the  economic  impact  from  the  cost  differential  that
 would  exist between a proposed  standard of  performance  and  the  typical
 State  standard.
     Air pollutant emissions may cause water pollution  problems, and cap-
 tured  potential  air pollutants  may pose a solid waste disposal  problem.
 The  total  environmental impact  of an emission  source must,  therefore, be
 analyzed and the costs determined whenever  possible.
     A thorough  study of  the profitability  and price setting mechanisms of
 the  industry is  essential to the analysis so that  an accurate estimate of
 potential  adverse  economic  impacts can be made for proposed standards.  It
 is also  essential  to  know the capital requirements for  pollution control
 systems  already  placed in plants so additional capital  requirements  necessi-
 tated  by these Federal standards can be placed in  proper perspective.
 Finally,  it  is necessary  to assess the availability of  capital  to provide
 the  additional control equipment needed to  meet the standards of performance.
 2.5  CONSIDERATION OF ENVIRONMENTAL IMPACTS
     Section 102(2)(C) of the National Environmental Policy Act (NEPA) of
 1969 requires Federal agencies  to prepare detailed environmental impact
 statements on proposals for legislation and other major Federal actions
 significantly affecting the quality of the  human environment.   The objective
 of NEPA  is to build into  the decisionmaking process of  Federal agencies a
 careful  consideration of  all environmental aspects of proposed actions.
     In  a number of legal  challenges to standards of performance for various
 industries, the  U.S.  Court of Appeals for the District of Columbia Circuit
 has held that environmental impact statements need not be prepared by the
Agency for proposed actions under Section 111 of the Clean Air Act.   Essen-
tially, the Court of Appeals has determined that the best system of emission
 reduction requires the Administrator to take into account counter-productive
environmental effects of a proposed standard, as well  as economic costs  to
the industry.  On this basis,  therefore,  the Court established a narrow
exemption from NEPA for EPA determination under Section 111.
     In addition to these  judicial  determinations,  the Energy  Supply and
Environmental Coordination Act (ESECA)  of 1974 (PL-93-319) specifically
exempted proposed actions  under the Clean Air Act from NEPA requirements.
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According to Section 7(c)(l), "No action taken under the Clean Air Act
shall be deemed a major Federal action significantly affecting the quality
of the human environment within the meaning of the National Environmental
Policy Act of 1969." (15 U.S.C. 793c(l))
     Nevertheless, the Agency has concluded that the preparation of environ-
mental impact statements could have beneficial effects on certain regulatory
actions.  Consequently, although not legally required to do so by Section 102
(2)(C) of NEPA, EPA has adopted a policy requiring that environmental
impact statements be prepared for various regulatory actions, including
standards of performance developed under Section 111 of the Act.  This
voluntary preparation of environmental  impact statements,  however, in no
way  legally subjects the Agency to NEPA requirements.
      To  implement this policy, a separate section in this  document is
devoted  solely  to an analysis  of the potential environmental  impacts associ-
ated with the proposed standards.  Both adverse and beneficial  impacts  in
such areas  as air and water  pollution,  increased  solid waste  disposal,  and
increased energy  consumption are discussed.
2.6   IMPACT ON  EXISTING  SOURCES
      Section  111  of the  Act  defines  a  new  source  as "any  stationary  source,
the  construction  or modification of  which  is  commenced" after the proposed
 standards  are published.   An existing  source  is redefined as  a new source
 if "modified"  or  "reconstructed" as  defined in  amendments to  the general
 provisions  of Subpart A of 40 CFR  Part 60,  which  were  promulgated in the
 Federal  Register on December 16, 1975.   (40 FR  58416)
      Promulgation of a standard of performance  requires States to establish
 standards  of performance for existing sources in  the  same industry under
 Section 111 (d) of the Act if the  standard for  new sources limits emissions
 of a designated pollutant (i.e.,  a pollutant for  which air quality criteria
 have not been issued under Section 108 or which has not been listed  as a
 hazardous pollutant under Section  112).  If a State does not act, EPA must
 establish such standards.   General provisions outlining procedures for
 control of existing sources under Section lll(d)  were promulgated on Novem-
 ber 17, 1975, as Subpart B of 40 CFR Part 60.  (40 FR 53340)
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2.7  REVISION OF STANDARDS OF PERFORMANCE
     Congress was aware that the level of air pollution control achievable
by any industry may improve with technological advances.  Accordingly,
Section 111 of the Act provides that the Administrator "shall, at least
every 4 years, review and, if appropriate, revise" the standards.  Revisions
are made to ensure that the standards continue to reflect the best systems
that become available in the future.  Such revisions will not be retroactive,
but will apply to stationary sources constructed or modified after proposal
of the revised standards.
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                         3.  THE COIL COATING INDUSTRY

3.1  GENERAL
     The coil coating industry is comprised of approximately 109 plants
containing 147 coating lines that engage in the application of organic
coatings to flat metal sheet or strip that is packaged in rolls or coils.
Estimated North American shipments of coated metal coil reached nearly
3.63 million Mg (4 million tons) in 1977, representing a total product
value of $3.5 billion.1  Major markets for coil coated metal include the
transportation industry, the building products industry, and the packaging
industry.  New end uses for the product are constantly emerging, and the
industry is expected to maintain a 12 percent rate of growth through 1985.
     Types of metal processed by the industry are mainly cold-rolled steel,
galvanized steel, and aluminum but also include small amounts of zinc,
brass, and copper.  The metal is fabricated into end products after it is
coated, thus eliminating the need for postassembly painting.
     Toll and captive coaters represent the two basic industry divisions.
Toll coaters produce metal that is coated in accordance with the specifica-
tions of their multiple customers.   Captive coaters both coat the metal and
fabricate it into end products within the same company.  Some plants per-
form both toll and captive operations.
3.2  COIL COATING PROCESSES AND EMISSIONS
     The coil coating process begins with a coil (or roll) of bare sheet
metal and terminates with a coil of metal with a dried and cured organic
coating on one or both sides.  Although the physical configuration of the
equipment used in coil coating varies from one installation to another, the
individual operations generally follow a set pattern.  The metal strip is
unrolled from the coil at the entry to the coil coating line and first
passes through a wet section, where the metal is thoroughly cleaned and
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given a chemical treatment (conversion coating) to promote adhesion of the
coating to the metal surface.   In some installations, the wet section may
also contain an electrogalvanizing operation in which a protective zinc
coating is applied to steel by an electrocoating process.  After the metal
strip leaves the wet section,  it is squeegeed and air dried and then passes
to a coating applicator station.  At this point, a coating is applied with
rollers to one or both sides of the metal strip.  The strip then passes
through an oven where the temperature is increased to the desired curing
temperature of the coating.  The strip is then quenched or cooled (usually
by a water spray) and dried.  If the line is a "tandem" line, the first
coating application  is a prime coat, and the metal strip next enters another
coating applicator  station where a top o^ finish coating is applied by
rollers to one  or both sides of the metal.  The strip then enters a second
oven for  drying and  curing of the top or finish coat.  This is followed by
a second  cooling (or quench) station.  The  finished  metal is then rewound
into a coil and packaged for shipment or further processing.  Most coil
coating lines  have  accumulators at the entry and exit that permit the  strip
to move continuously through the coating process while a new coil is mounted
at the entry  or a full coil removed at the  exit.   Figure 3-1 is  a schematic
diagram of  a  coil coating  line.
      For  existing coil coating  lines, the widths of  the  metal strip vary
 from a few  to 183 cm (72  in.),  and thicknesses vary  from approximately 0.018
 to 0.229  cm (0.007  to  0.090 in.).  The speed at which the metal  strip  is
 processed is  as high as  3.556 m/s  (700 ft/min) on  some of the newer  lines.
      The  types of coating  applied  in  coil coating  operations  include  a wide
 variety  of  formulations.   Among the more prevalent types are polyesters,
 acrylics, fluorocarbons,  alkyds,  vinyls,  and plastisols.  Table  3-1  lists
 the  coatings  commonly used by the  industry  and gives the range  of organic
 solvent  content normally present in  each coating.  As  can be  seen from
 Table 3-1,  most of  the coatings contain  organic solvents, which  are  the
 major source  of volatile organic compound (VOC) air  emissions  in the indus-
 try.   The majority  of the coatings (estimated  to  be  85  percent)  are  organic
 solvent  based and  have solvent  contents  of  from 0 to 80  percent by volume,
 with 40  to  60 percent being the more  prevalent range.   A smaller fraction
 of coatings (estimated to be  15 percent) is of the waterborne  type,  but
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                         ACCUMULATOR
CO

CO
                    SPLICER
                                              WET SECTION
            UNCOILING
              METAL
                                                                                                           ACCUMULATOR
                                                                           PRIME
                                                                           COATER
               PRIME
               OVEN
TOPCOAT
 COATER
TOPCOAT
  OVEN
TOPCOAT
QUENCH
RECOILING
  METAL
                                           Figure 3-1.  Schematic diagram of a coil coating line.

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  TABLE 3-1.   COATINGS USED IN COIL COATING2
Coatings
Volatile content,
 weight percent
Acrylics
A^hesives
Al kyds
Epoxies
Fluorocarbons
Organosols
Phenolics
Plastisols
Polyesters
Silicones
Vinyls
Zincromet (TM)
Dacromet (TM)
    40-45
    70-80
    50-70
    45-70
    55-60
    15-45
    50-75
     5-30
    45-50
    35-50
    60-75
    35-40
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 these  coatings  also  contain  some  organic  solvent,  usually  in  the  range of 2
 to  15  percent by  volume.  The waterborne  coatings  generally produce a lower
 mass of VOC  emissions per unit of coating solids applied,  but waterborne
 coatings  have not as yet been developed for all end-product uses.  The
 choice of a  solvent-borne versus  a waterborne coating  is generally depen-
 dent upon the end use of the coated metal and the  type of  metal used.  The
 most prevalent  use of waterbornes is on aluminum used  for  siding  in the
 construction industry.
     High-solids  coatings in the  form of  plastisols and organosols are also
 used to some extent by the coil coating industry.  Because these  coatings
 have a low organic solvent content, VOC emissions  from them are lower than
 those  from the  more commonly used coatings.   Organosols and plastisols are
 used to coat residential siding,  drapery  hardware, and other  products.
     The  major  sources of VOC emissions in a coil  coating  plant are the
 curing ovens.   When the metal strip, wet with the  freshly  applied coating,
 enters the oven,  it passes through several zones that normally operate at
 successively higher temperatures.   During this passage through the oven,
 the solvent  contained in the coating is evaporated, and the metal is heated
 to a design  peak  temperature to achieve proper curing of the  coating.   Most
 curing ovens are  direct fired and use natural gas  as fuel.   Many ovens are
 designed  to  use propane as a backup fuel  in case of natural gas curtail-
ments.   Ovens heated by fuel oil   or electricity are used in some plants,
but to a much lesser extent than those heated by natural  gas.   The heat
 input to  the ovens must be sufficient to evaporate the solvent in the
coatings,  to bring the metal and coatings up to the design temperature
 (usually  in  the range of 191 to 260° C [375  to 500° F]),  to replace the
heat lost from the ovens by radiation and conduction,  and to heat the air
used for dilution to the operating temperature of the oven.  This latter
heat load (i.e., the heating of the oven ventilating air) is normally the
 largest single factor in the total oven heat load.   When  solvent is evapo-
rated in an oven,  it is necessary to keep the concentration of solvent in
the oven atmosphere below the levels at which combustion  can occur.   The
level  at which sustained combustion can occur is referred to as the lower
explosive limit (LEL).
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     To ensure that an oven atmosphere is reasonably safe from fires and
explosions, dilution air is normally passed through the oven in sufficient
quantities to maintain the solvent concentration at or below 25 percent of
the LEL.  Although the LEL concentration is different for different types
of solvents, a value of 283.2 m3 (10,000 ft3) of dilution air per gallon of
solvent evaporated is usually considered for design purposes to be suffi-
cient to maintain a safe oven atmosphere.  In normal operations of an
uncontrolled coil coating line, this amount of hot, solvent-laden air is
exhausted to the atmosphere, and an equivalent amount of fresh air at
ambient temperature is drawn into the oven from the surrounding plant
environment.  The heating of this volume of dilution air to oven operating
temperatures, which may range from 316 to 427° C (600 to 800° F), requires
a  large quantity of heat.  For example, 139 million joules  (Jj, or 131
thousand Btu, are required to heat the dilution air for one gallon of
solvent from  21 to 427° C  (70 to 800° F).  Many coil coaters  are now reducing
their  overall energy  consumption by employing techniques to recover and  use
a  portion  of  the heat that would otherwise be exhausted to  the atmosphere.
     When  waterborne  coatings are used, a portion  of the coating that must
be evaporated in the  ovens  is water.  Because water has a higher heat of
vaporization  than organic  solvents, the  heat needed to evaporate the water
 is greater than would be  needed to  evaporate an equivalent  quantity of
 solvent.   However,  because waterborne coatings  normally contain only a
 small  volume  fraction of  solvent, the amount of dilution air  required to
 maintain  a safe  level of  solvent  in the  ovens when waterborne coatings  are
 used is usually  lower than the  dilution  air  required when solvent-borne
 coatings  are used.   Consequently, the total  heat  load  of an oven when
 waterborne coatings are used may  be less than the total  heat load  when
 solvent-borne coatings  are used.  However,  it has been demonstrated that,
 with heat recovery systems, solvent-borne coatings require  less  energy
 input than waterborne systems.   Historically, waterborne coatings  have  been
 more expensive than equivalent solvent-borne types; however,  this  price
 differential has decreased in recent years,  because of increases in solvent
 costs, and waterbornes are currently priced competitively with the solvent-
 borne coatings.3
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     It has been estimated that approximately 90 percent of the total
solvent content of the coatings used by the industry is evaporated in the
curing ovens.2  Of the remaining 10 percent, it is estimated that 8 percent
evaporates at the applicator station and 2 percent at the quench station.
In a study of the coil coating industry conducted by Scott Research Labora-
tories,4 measurements were made on two coil coating lines of the nonmethane
hydrocarbon emissions from the coater room, the ovens, and the quench area.
For one line, the percentages of total emissions that were measured from
each area were 11 percent, 86 percent, and 3 percent, respectively.  For the
other line, the corresponding measured percentages were 0.7 percent, 99 per-
cent, and 0.3 percent, respectively.  In a test conducted by Clayton Environ-
mental Consultants for Kaiser Aluminum and Chemical Corporation, the emis-
sions from the coating area accounted for 17 percent of total emissions.5
Based on these data, emissions from the coating area appear to vary substan-
tially from one installation to another.   These variations are probably
related to the volatility of the coating solvents and other process parame-
ters.
     In most new plants, the applicator stations are enclosed in rooms.6
Because air is drawn into the ovens from these rooms, it is generally
postulated that most (and possibly all) of the solvent that evaporates in
this area is drawn into the ovens.   On lines that do not have coating
rooms, an exhaust hood is normally installed directly over the roll coaters
to exhaust the solvent that evaporates in that area.   The quench stations
are also usually contained inside an enclosure adjacent to the exit end of
the ovens.  Most of the solvent that evaporates in the quench area is also
generally believed to be drawn into the oven along with the dilution air.
     The actual rate of VOC emissions from a coil  coating line is deter-
mined by the operating parameters of the line.   These parameters include
(1) the width of the metal strip, (23 the solvent content of the coating,
(3) the speed at which the strip is processed,  and (4) the thickness at
which the coating is applied.   For example, a line processing a strip that
is 30.48 cm (12 in.) wide at a speed of 1.778 m/s (350 ft/min) using coat-
ings that are 50 percent solvent by volume and applied at a dry thickness
of 0.0254 mm (0.001 in.) on the front side and 0.0203 mm (0.0008 in.)  on the
back side would emit 89 Si (24 gaT)  of solvent per hour.   A line processing
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a strip that is 167.6 cm (66 in.)  wide at a rate of 3.048 m/s (600 ft/min)
and using the same coating and coating thickness as above would emit 841 L
(222 gal) of solvent per hour.  This illustrates the magnitude of the
variations that commonly exist in  the VOC emissions from individual coil
coating lines.
3.3  BASELINE EMISSIONS
     The costs directly attributable to a New Source Performance Standard
(NSPS) are computed as the difference in the costs of complying with exist-
ing regulations and the costs of complying with the NSPS.  For these costs
to be  computed, it is necessary to establish a baseline level of control
required by existing regulations.   The recommended procedure for establish-
ing this baseline level of control is to compute the average level  of control
required by existing State regulations.  The following discussion  is aimed
at establishing these average or baseline  levels of control  that are required
 in the coil coating  industry.
     Coil  coating plants  are  dispersed throughout  27 States.   Of 109 spec-
 ifically  identified  plants, a total  of 77  are  located  in  States or major
 metropolitan  air  quality  control  regions  (AQCRs) that  apply  specific numer-
 ical  limitations  to  organic solvent  emissions.   These  regulations  typically
 require  that organic solvent  emissions from paint-baking ovens not exceed
 3 Ib/h,  or a total  of 15  Ib/day,  unless  uncontrolled emissions are reduced
 by 85 percent prior to discharge.   For the purpose of  computing baseline
 emissions, it is  assumed that all  plants in these  States are currently
 subject to a requirement to reduce their emissions by  85 percent prior to
 discharge.  The remaining 32 plants are  located in States that use a permit
 system for controlling emissions.   Most of the State Implementation Plans
 (SIPs) for these  States indicate  that the degree of control  required will
 be determined on  a case-by-case basis.   It has not been possible during
 this study to determine the degree of control  that is  required in these
 States.   It was,  therefore,  necessary to make an assumption regarding the
 degree of control that would be required for new plants locating in these
 States.   EPA has prepared a  series of documents, called Control Technique
 Guidelines (CTGs), to provide guidance to the States in the development of
 their SIPs.  The CTG for coil coating2 suggests an emission limitation of
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0.31 kg VOC/£ (2.6 Ib VOC/gal) of coating, less water, stated in terms of
the solvent content of the coating at the point of application.   For the
purpose of estimating baseline emissions for plants in those States that
now use the permit system, it was assumed that control to at least this
recommended level would be required.
     Two separate baselines were selected for use in this study because the
two different requirements in existing SIPs are reasonably well  defined and
are significantly different from one another.  The SIPs for States that
operate under a permit system usually contain provisions that prohibit the
violation of ambient air quality standards for hydrocarbons and oxidants.
Estimating the degree of control that would be imposed on a coil coating
plant by such a provision would be a monumental task.   Because the States
are in the process of revising their SIPs and have the CTG documents as
guidance, it was assumed that the States would incorporate provisions that
are at least as stringent as the CTG recommendation.  Those States that
already have numerical limits on VOC emissions are unlikely to relax these
limits in order to conform to the CTG recommendations but would continue to
require the more stringent level of control already contained in their
SIPs.   On the basis of this reasoning, this study uses two baselines from
which costs and environmental and economic impacts are computed.
     Other information used in estimating baseline emissions includes the
following items:
          The annual  (1977) production of coil coated metal is 1.2(109) m2
          [13(109) ft2].1
          The annual  (1977) usage of coatings by the industry is 72(106) Si
          [19(106) gal].1
          Approximately 15 percent of the annual production of the coil
          coating industry is done using waterbornre coatings.7
          The average VOC content of waterborne coatings used by the indus-
          try is 10 percent by volume.
          The average solids content of all coatings used by the industry
          is 40 percent by volume.
          The average density of coating solvents is 0.88 kg/A (7.36 Ib/gal).
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     On the basis of the estimated average solvent content of the solvent-
borne coatings used by the coil  coating industry (i.e.,  60 percent by
volume) and the estimated annual production and coating usage, the uncon-
trolled or potential emissions when solvent-borne coatings are used are
0.032 kg/m2 (0.0065 lb/ft2) of metal processed.  When waterborne coatings
are used, average uncontrolled emissions are 0.0054 kg/m2 (0.0011 lb/ft2).
In areas where emissions are subject to a numerical limit, the actual, or
baseline, emissions when solvent-borne coatings are used are 0.0048 kg/m2
(0.0010 lb/ft2).  This level of emissions reflects an 85 percent reduction
from the uncontrolled level.  Baseline emissions from waterborne coatings
are assumed to be equal to their uncontrolled  levels because most SIPs
exempt users of waterborne coatings from the reduction requirements.
     In areas not subject to a  numerical limit,  it is assumed that emis-
sions will be controlled to the level of the CTG recommendation  of 0.31  kg
VOC/A  (2.6 Ib VOC/gal) of coating as applied (less water), or equivalent.
This is equivalent  to an emission rate of 0.465  kg/2  (4.0  Ib/gal) of  coat-
ing  solids applied.  Again, if  it is assumed that  the average coating
formulation used by the  industry has a VOC  content of 60 percent by volume,
the  uncontrolled,  or potential, emissions are  1.279  kg/A  (11 Ib/gal)  of
solids applied.  To reduce  these emissions  to  the  recommended level of
0.465  kg/a  (4.0 Ib/gal)  of  solids,  a control efficiency  of 64 percent would
be required.   Baseline  emissions  for plants subject  to  this  limitation
would, therefore,  be 0.012  kg/m2  (0.0023  lb/ft2) of  metal  processed.   For a
 plant  that uses waterborne  coatings, baseline  emissions  would be 0.22 kg/A
 (1.84  Ib/gal) of coating solids for the coating formulation  defined above.
      Each of the above  baseline levels of control  will  be given considera-
 tion in later chapters  of this  document that describe the environmental  and
 cost impacts of the NSPS.
 3.4  REFERENCES
 1.   Coil Coating:  The Better Way.  National  Coil Coaters Association.
      Philadelphia, Pennsylvania.   December 1978.
 2.   Control of Volatile Organic Emissions from Existing Stationary Sources.
      Volume II.  Surface Coating of Cans, Coils, Paper, Fabrics, Automobiles,
      and Light-Duty Trucks.  U.S.  Environmental Protection Agency   Research
      Triangle Park, North Carolina.  EPA-450/2-77-008.  May 1977   p  v.
                                   3-10

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3.    Craig, Russell W.  Waterborne Coatings . . . Fact or Fantasy?   Indus-
     trial Finishing,  p. 26-28.  November 1977.

4.    A Study of Emissions from the Coil Coating Process.  Volume I.  Emis-
     sion Tests.  Scott Research Laboratories, Inc.  Plumsteadville,
     Pennsylvania.  December 1970.  p. 5-4.

5.    Wright, Milton.  Trip Report:  Kaiser Aluminum—Toledo, Ohio.   Research
     Triangle Institute.  Research Triangle Park, North Carolina.  October 31,
     1979.  Attachment B.

6.    Letter from Whike, Alan S.  B & K Machinery International Limited, to
     McCarthy, J.  M., Research Triangle Institute.  October 10, 1979.
     Equipment costs for coil coating lines.

7.    Coil Coaters Consider RACT for VOC.  PF Report.  Products Finishing.
     January 1978.  p. 56-61.
                                  3-11

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                      4.   EMISSION  CONTROL TECHNIQUES

4.1   INTRODUCTION
      There  are  two  strategies  by which volatile organic compound  (VOC)
emissions from  coil  coating operations may be reduced.  One  is to reduce
the amount  of solvent in  the coatings used by the  industry,  and the other
is to remove the VOCs from the exhaust gas streams through the use of
add-on control  equipment.
      The coatings that this industry applies to metal coil surfaces can be
divided into two general  classes:  waterborne coatings and solvent-borne
coatings.   Approximately  85 percent of coil coating is done with solvent-
borne coatings1 2 that average 40  percent solids and 60 percent organic
solvents by volume.   Waterborne coatings also contain organic solvents to
aid in wetting  the pigments, to produce solubility (in the case of partially
water-soluble,  film-forming components), and to promote good flow and vis-
cosity characteristics in the coating mixtures.   The solvent content of
waterborne  compositions varies between 2 and 15 percent of the total volume
of the coating  formulation.
      Estimates  by the  National Coil Coaters Association (NCCA)3 indicate
that  approximately 72  million $, (19 million gal) of coatings are used each
year  in this industry.  This volume includes approximately 37.7 million &
(9.97 million gal) of  solvent, all  of which represents potential  atmospheric
emissions totalling 33.3 Gg (36,690 tons) per year.  Since there are report-
edly  146 coating lines in operation, this is an average emission potential
of 227 Mg (251 tons) per year per  line.
4.2   DESCRIPTION OF INDUSTRY CONTROL TECHNIQUES
      Commonly used add-on control equipment for the removal of volatile
organic emissions from industrial operations include adsorbers,  incinerators,
condensers,  and absorbers.  During the drying,  or curing,  process used in
coil   coating, a mixture of organic vapors and air is exhausted from the
                                  4-1

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ovens at temperatures of 260 to 426° C (500 to 800° F),  which present major
problems to the use of adsorption,  condensation,  and absorption as methods
of controlling VOC emissions.   For  removing organics from the exit streams,
therefore, the coil coating industry has almost exclusively chosen incinera-
tion.  Two methods of incineration  are available:   thermal and catalytic.
The majority of incineration units  used for control in this industry are
thermal units.
     It should be noted that equipment for controlling organic emissions
through the use of afterburners (incinerators) that exhaust directly to the
atmosphere is expensive to install  and results in significant increases in
fuel consumption.  As fuel costs have increased rapidly in recent years,
equipment vendors have developed energy recovery systems that are combined
with incinerators to recover a major portion of the heat from the exhaust
gases and to use the flammable solvent vapors from the coatings as fuel.
4-2-l  Thermal Incineration
     Thermal incinerators consist of an oxidation chamber and a burner.
The waste gas stream is introduced into the incinerator where proper con-
ditions of time, temperature, and turbulence are achieved to oxidize the
solvent in the gas stream.  Most solvents will oxidize with about 90 percent
conversion efficiency if a temperature of 650° C (1,200° F) and a residence
time of 0.3 to 0.5 s is achieved.  To achieve conversion efficiencies of
greater than 90 percent, incinerators are normally operated at temperatures
of 760 to 815° C (1,400 to 1,500° F).*  Available emission test data for
thermal incinerators indicate conversion efficiencies ranging from 87.6 to
99.6 percent.  A summary of these data is given in Table 4-1.
     The  heating of the exhaust stream to the high incineration temperatures
requires  large amounts of energy unless some means of heat recovery is
incorporated  into  the system.  Many recent installations of thermal incine-
rators  in the coil coating  industry have included a means of heat recovery
to  reduce the energy consumption of the systems.  Several concepts of  heat
recovery  are  in  successful  operation  in the industry.  These include direct
recycle of  a  portion of the oven atmosphere through internal oven burners
or  incinerators, the use  of regenerative heat exchangers, and the use  of
recuperative  heat  exchangers.  Waste  heat  boilers are also employed in
conjunction with some of  the  systems.   Steam  from these boilers can be  used
in  the  wet  section of the coil coating  line or in other processes in the
                                  4-2

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        TABLE 4-1.   EMISSION  TEST  RESULTS  FOR THERMAL  INCINERATORS
                           ON COIL COATING LINES
Total VOC concentration
Uncontrolled,
Unit sampled inlet
Precoat Metals
Finish
Prime
Scott Research
Laboratory tests
Unit 031
Unit 033
Kaiser Aluminum
SupraCote Corp.
zone incinerators
Finish (average of 5
incinerators
Prime (average of 4
incinerators
INRYCO
Average
Metal Koting
Average
Roll Coater
Prime
Finish
16,588
5,759
6,857
6,975
7,320 ppmv
7,155 ppmv
4,530 ppmv

3,718 ppmv
733 ppmv
552 ppmvc

8,100 ppmv

210 Ib/h
492 Ib/h
492 Ib/h
492 Ib/h
Percent Temperature
Controlled conversion ° C (°Fj
1,228
271
270
298
33 ppmv
800 ppmv
560 ppmv

32 ppmv
55 ppmv
29 ppmvc

109 ppmv

.005 Ib/h
1.07 Ib/h
1.28 Ib/h
.002 Ib/h
92.6
95.3
96.1
95.7
99.5
88.8
87.6

99.1
92.5
94.8

98.7

99.9
99.8
99.9
99.9
760
760
760
760
760
649
704

768
717
704

871

649
482
543
649
1,400
1,400
1,400
1,400
1,400*
l,200a
1,300

1,414
1,323
1,300

1,600

1,200
900
1,100
1,200
Estimated.
cMeasured as propane.
                                  4-3

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plant.  The use of heat recovery has no detrimental  effect on the efficiency
with which the incinerator removes VOCs from the exhaust gas stream.  The
following paragraphs describe several of the thermal incineration and heat
recovery systems that are currently in use in the coil coating industry.
     4.2.1.1  Zone Incineration.  The ovens on coil  coating lines are
generally divided into zones.  Each zone is equipped with a burner, and
each  succeeding zone is normally maintained at a higher temperature than
the previous one.  For example, a four-zone oven for a finish coat might
have  a temperature gradient of 315, 343, 371, and 399° C (600, 650, 700,
and 750° F) in the four zones.  In the zone incineration system, the normal
burner in each oven zone  is replaced by an incinerator through which a
mixture of solvent vapor  and  air drawn from the oven  is passed.  These
gases are  incinerated along with enough natural gas to bring the zone
temperature to a  preset level.  The  exhaust gases from the  incinerator  are
 injected directly into the oven.  Approximately 60  percent  of the  solvent
vapor that evaporates  in  the  oven passes through the  zone incinerators  and
 is destroyed.  The  remainder  is exhausted  directly  to the atmosphere or to
 an afterburner.
      Some  coil coaters have  stated  that they  can meet existing  State air
 quality  regulations  using only the  zone incinerators  without an afterburner.
 However,  it  is unlikely that zone incinerators  alone  would  be  capable  of
 meeting  the  standard in States that require  an  85 percent reduction in
 emissions.
      Recycling the  oven  atmosphere through the  zone incinerators reduces
 the amount of air that must be heated from ambient  temperature to the
 temperature of the oven  and thus reduces  the fuel  required for air heating-
 Substituting solvent vapor for part of the fuel further reduces fuel  con-
 sumption.   Zone incineration coupled with recirculation of the oven atmos-
 phere results in a significant reduction in the volatile organic emissions
 from the metal coil coating  line and results in a considerable reduction in
 the  energy (fuel) necessary  to dry (cure) the coating film.
      Adding an afterburner to the above system to oxidize the remaining
 40 percent of the organic vapors results  in a system that will destroy a
 minimum of 90 percent of the volatile organics that enter the drying (cur-
 ing) oven.6  The addition of the afterburner causes an increase in energy
                                   4-4
5

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 consumption  and  an  increase  in  the  cost  of control  unless  the  heat  generated
 by  the  incinerator  is  recovered.  One  means of  recovering  this  heat is  to
 install waste  heat  boilers that use the  heat to generate process  steam.
 When  the  demand  for process  steam is not great  enough  to use the  amount
 generated, other forms of heat  recovery  may be  employed (for example,
 preheated oven exhaust,  space heating, etc.).
      4.2.1.2   Regenerative Heat Recovery.   A second  system of  incineration
 and heat  recovery that is suitable  for coil  coating  installations uses  a
 heat  sink.  This heat  sink is alternately used  (1) to  add  heat  to the oven
 exhaust gas to raise the temperature to  or near the  point  necessary  for
 thermal oxidation in a gas-fired incinerator and (2) to extract heat from
 the incinerator  exhaust  to reduce the  temperature of the gas before  it  is
 returned  to the  ovens,  exhausted to  the  atmosphere, or used for additional
 heat  recovery.
      Solvent vapors, air, and products of combustion are exhausted  from the
 ovens, mixed,  and transported (by means  of  an exhaust  fan) to a heat sink,
 where the gas  temperature is raised  through  the  absorption of heat from the
 heat  sink.  The  gases  then pass to  an  incinerator operating at  a temper-
 ature of  about 815° C  (1,500° F).  The products  of combustion exit from the
 incinerator through the  heat sink, where  heat is imparted to the heat sink.
 Part of these  cooled gases is returned to the ovens to serve as the heat
 source.    The remainder of the gases  may  be exhausted to the atmosphere or
 may be passed  through  a  heat exchanger or a waste heat boiler for additional
 heat recovery.   A minimum of two heat sinks  is  required in these systems,
 and as many as seven have been reported  in a single installation.   The  heat
 sinks are generally packed with ceramic material that alternately absorbs
 and releases heat energy.
     A disadvantage of this system is the large  space requirements for
 installation of  the heat sinks and combustion chamber units and their
 associated ducting.   This disadvantage applies primarily to retrofit in-
 stallations since new plants can be  designed to accommodate the system.
     4.2.1.3   Recuperative Heat Recovery.  A third system of heat recovery
 is the use of  recuperative heat exchangers.  This system is very similar to
the regenerative heat exchanger but  uses an air-to-air heat exchanger
 instead of the packed beds.   In this system, the oven exhaust gas  stream
passes through the heat exchanger before entering the incinerator.  The

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oven exhaust gas stream is heated by the hot exhaust gas leaving the incin-
erator.   After incineration, the hot exhaust gases pass through the heat
exchanger and give up heat to the gas stream entering the incinerator.
After they are cooled, the incinerator exhaust gases may be exhausted to
the atmosphere, passed through additional heat exchangers, or returned to
the oven to supply heat.  The amount of heat that can be recovered in the
recuperative heat exchanger is limited by the autoignition temperature of
the oven exhaust gases.
     4.2.1.4  Direct Recycle Heat Recovery.  A fourth heat recovery option
is the direct recycle of incinerator exhaust to the ovens.  This technique
is sometimes employed in conjunction with regenerative of recuperative heat
exchangers, as described in preceding paragraphs, or it may b° used alone.
One unique direct recycle system is the  low-oxygen system.  In this system,
the solvent-rich gases  from the oven are exhausted to a single afterburner,
where the solvent vapors are incinerated along with enough natural gas to
maintain a preset temperature.  Only the stoichiometric requirement for  air
is  introduced  into the  incinerator  so that the exhaust from the  incinerator
has an oxygen  content  in the range  of 2  to 3 percent.  Most of these ex-
haust gases are returned to the oven to  supply the heat necessary  to cure
the coatings.  A small  volume of the incinerator  exhaust  is ducted to the
atmosphere.  This volume  is equal to the volume of stoichiometric  air and
natural  gas introduced  into the  incinerator.  The entire  system  is main-
tained as a closed loop by  the  use  of air  seals at the  oven openings.  The
oxygen content of the  oven  atmosphere is maintained  below the  level  required
 for combustion of the  solvent vapors, thus  eliminating  the need  for  large
 quantities  of  dilution  air.   Fuel savings  result  from  burning  solvent
 vapors  in  combination  with  natural  gas,  supplying oven  heat with the  recy-
 cled products  of  combustion,  and  reducing  the volume of dilution air  that
 must be  heated to oven temperature.  A  report on  one such system that  is
 currently  in  operation states that  the  gases  exhausted to the  atmosphere
 have a VOC content  of less  than 50  ppm  and that  fuel savings  that result
 from the system are  in the  range of 55  to  82  percent.7
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 4.2.2  Catalytic Incineration
      Catalytic incinerators operate on the same basic principles as thermal
 incinerators but contain a catalyst.   The catalyst causes the oxidation
 reaction between the solvent and air to occur at a lower temperature for
 the same solvent concentration and composition.   Therefore,  catalytic units
 require less fuel  to heat the oven exhaust gases to combustion temperatures,
 and they have a lower exhaust temperature than equivalent thermal  incinerators.
      Installation  costs for catalytic incinerators are comparable  to those
 of thermal  oxidation units, but catalytic incinerators are generally smaller
 than equivalent thermal systems,  resulting in a space savings  over a thermal
 system.   These savings  are offset by  the  cost of the  catalysts,  which are
 noble metals or metal  oxides.   The most commonly used catalyst is  platinum
 and its  salts.
      In  some situations,  problems may be  encountered  with  the  use  of cata-
 lytic incineration  systems.   The  major problem is  catalyst deactivation.
 Catalysts are deactivated (poisoned)  when they are contacted by  elements
 such as  lead,  antimony,  cadmium,  zinc,  phosphorus,  arsenic, and  copper.
 Some of  these elements  are present in the pigment  component of coil  coat-
 ings.   In addition,  the catalyst  may  be masked by  high molecular weight
 organics, alumina,  and  silica  dusts and may be suppressed  by halogens  and
 sulfur,  each of which is  present  in some  coating formulations.
      When a  catalyst becomes  deactivated  (poisoned) or masked, it must be
 regenerated  or  cleaned.   The  time necessary for the cleaning-regeneration
 can  vary from a few hours  to a  day.
      The members of the  industry  that  have found catalytic incineration
 suitable for their  situations are the  captive  coaters that coat only a few
 different products  with a  limited number of coatings.   These coaters can
 control  the  coating materials used to  insure that  no chemical poisons are
 present  to deactivate the  catalysts.  However, for toll coaters, who must
 often use a wide variety of coatings specified by  their customers, the
 chance of catalyst  poisons being  introduced into the catalytic incineration
 system is proportionately  greater.
     One coil coater stated that  he plans to install a catalytic incinera-
tor and will  include a filter in  the gas stream ahead of the catalyst to
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remove impurities that might poison  or  mask the  catalyst.9   He further
stated that his company has  installed a similar  system on a can coating
operation.   That system is reportedly operating  satisfactorily.
     For the forseeable future,  catalytic incineration will probably be
limited to captive coaters,  who  have greater control  over the coatings
used.  Thermal incineration  with heat recovery may continue to be the more
appropriate system for coaters who use  many different coating formulations.
     Emission tests on catalytic incinerators were identified for only one
installation.  In two separate tests, the average conversion efficiency was
found to be 92.2 percent and 99.5 percent.8  The incinerator operating
temperature was not reported for the first series of tests.  In the second
series, measurements were made at incinerator temperatures  of 238 and
393° C (460 and 740° F).  Although catalytic incinerators are inherently
more energy efficient than thermal incinerators, their use is even more
efficient if a heat recovery system  is  added.  Any of the heat recovery
techniques described above for thermal  incinerators can be applied in
conjunction with catalytic incinerators.
4.2.3  Coating Rooms
     When an emission control device is  used to control VOC  emissions, the
efficiency with which the total emissions  are captured and sent to the
control device is  an  important factor  in the overall  emission  reduction
that can be  achieved.   Emission studies  indicate  that as much  as 8 percent
of the total  VOC  input  to a  coil  coating operation may be  given off  at the
coating application  station  before  the metal  strip enters  the  oven.   The
capture of  these  coating  station  emissions,  therefore, plays an  important
part in the  overall  emission reduction that can  be achieved  with an  emission
control device.   Many of  the coil coating  lines  that  were  observed  during
this background  study have  the  coating application stations  enclosed *n
 rooms.  The  normal design of these  rooms has the ventilation supplied from
the side  of the  room opposite the oven.   Because a portion of the  normal
oven ventilation enters the oven  through the opening  where the metal strip
enters, the oven ventilating air  flows across the room,  over the coating
application equipment,  and  over the wet  metal  strip  before entering the
 oven.   In addition,  some of the lines  also employ a  hood or snout that
 extends  from the oven opening,  over the  wet metal strip  to a point near  the

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 coating  rolls.   Such  an  arrangement  greatly  increases  the  capture  of VOC
 emissions  relative  to a  system  that  has  open  coating stations.  One coil
 coating  line  was identified  that  passes  all  of  the  coating room ventilation
 through  the oven, which  should  result  in very nearly complete capture of
 the  emissions from  the coating  application station.  However, many coaters
 and  vendors of coil coating  equipment  have stated that the amount of air
 that enters the oven  through the  coating room does  not adequately ventilate
 the  coating room.   Consequently,  most  coating rooms have a part of their
 ventilating air exhausted to the  atmosphere or  to the  plant.  Even under
 these conditions, most of the VOC emissions that occur at  the coating
 application station can  be captured  by the air  entering the oven from the
 coating  room  if a hood or snout is employed.  Statements submitted by
 industry representatives imply that  an overall  capture efficiency of 95 per-
 cent is  achievable  under these conditions, and  one vendor  estimated that a
 capture  efficiency  of 98 percent  could be achieved.10  ll   These statements
 as well  as industrial  ventilation standards,  imply that the overall control
 efficiency of an emission control system can  be greatly improved by the
 proper use of coating  rooms  and hooding  to improve the overall capture
 efficiency of the VOC  emissions.
 4.2.4  Waterborne Coatings
     One method of eliminating volatile organic emissions  from the metal
 coil coating  process  is to reformulate the coatings to exclude VOCs.   With
 this objective  in mind, coating manufacturers have been formulating and
 marketing waterborne coatings for some time.
     All waterborne coatings contain some VOCs.   These VOCs are necessary
 in order to produce a coating film with properties comparable to those pro-
 duced by solvent-borne coatings.  The VOCs must be present to ensure wetting
 of the pigment.  Poor wetting results  in poor distribution of the pigment
 in the liquid vehicle and reduces the  hiding power and gloss of the coating.
VOCs are used to adjust the rate of evaporation of the vehicle,  to adjust
the viscosity of the coating, and to increase the solubility of the water-
soluble,  film-forming components of the coating.
     As mentioned earlier,  it is estimated that approximately 15 percent of
all coil  coating is currently done with waterborne coatings.  Most of the
current usage is on aluminum substrates,  but a significant quantity is  also
used on steel  substrates.12   The variety of coatings needed to produce  the
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performance and aesthetic properties for the many products made from coil
coated metal are not yet available as waterborne coatings.  This is one of
the more important reasons why more of the industry has not converted.  A
representative of one of the major coating manufacturers estimates that the
usage of waterborne coatings will continue to increase over the next several
years but also estimates that their most important use will continue to be
on aluminum building products.2
     The use of waterborne coatings results in an energy  savings in the
ovens relative to an uncontrolled line that uses solvent-borne coatings,
even though the heat of vaporization for water is much higher than that  for
organic solvents.  The energy savings result from the fact that the amount
of dilution air that must be passed through the oven (and heated)  is  re-
duced when waterborne coatings are  used.12
     Contacts were made with a number of coating manufacturers to  solicit
information on the VOC content of waterborne coatings that are used by the
coil coating  industry.  The data submitted  by the manufacturers show  the
VOC  content ranging  from  a low of 0.07  kg/£ (0.58 Ib/gal) of  coating  solids
to  a high  of  0.54  kg/a (4.51  Ib/gal)  of coating  solids.   This  range repre-
sents  24 different coating formulations.13  14 1S  16  17   Of these  24 formula-
tions,  20  have  a VOC content  of  0.28  kg/2  (2.34  Ib/gal)  of coating solids
or  less.
      4.2.5 Other  Control Methods
      Other emission  control techniques  that are  sometimes used in metal
 surface coating industries  include  high-solids  coatings, powder coatings,
 radiation  curing,  and  carbon  adsorption.   In the coil  coating industry,
 none of these techniques has  found widespread use.   Some high-solids  coat-
 ings are used by the industry in specialized,  limited-use applications.
 For example,  organosols, with a solids content in the range  of 50 to 80 per-
 cent by volume, and plastisols,  with a solids content of 80  to 95 percent
 by volume, are occasionally used by the coil coating industry.  These
 coatings are normally used by toll coating plants that also use many other
 coating formulations with higher solvent content.  Additionally, because of
 the hydrostatic properties of available high-solid coatings, existing
 equipment often cannot be used  to apply the thinner film thicknesses needed
 for many end products.  Consequently, the  use of high-solids coatings as the
 basis for a standard does not appear to be a feasible alternative.

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      The use of carbon adsorption as a means of controlling VOC emissions
 from coil coating is dismissed by most knowledgeable individuals as being
 unacceptafaly expensive because of the high temperatures of the exhaust gas
 streams and the questionable value of the recovered solvent.18  Therefore,
 this technique has not been widely considered as an option available to the
 industry, and there are no known installations on coil  coating lines.
      Powder coatings have not been used commercially in the coil coating
 industry because of technical problems in application and because of the
 limited selection available.19
      Radiation cured coatings are used for a few applications  in coil
 coating.   Three small  lines are reported  to be in operation in the industry,
 but the variety of coatings available for the process is  quite limited,
 and,  to date,  radiation cured coatings have been used only for one-coat
 systems.20   Estimated  VOC emissions  from  the process  are  near  zero;  however,
 it is not considered to be a feasible control  alternative for  widespread
 use because  of the limitations  cited above.
      Electrodeposition (EDP) as a method  of applying  the  prime coat  on
 metal  coil  is  known  to be used  on one line in  the  United  States.9  The
 plant uses a wide  variety of top coats  with the  system  and reports that
 formability  and other  characteristics of  the finished metal are  equivalent
 to most other  two-coat systems.   In  the EDP system, the metal  strip  is
 passed  through  a  liquid bath containing coating  solids, water, and cosolvents.
 The solids are  electrodeposited on the  strip, and  the liquid remains in  the
 bath, except for a minute  amount  that is  entrained with the coating  solids
 and the amount  that  adheres  to  the surface  of the  strip when it emerges
 from  the  bath.  The  surface  liquid is removed from the  strip by a squeegee
 and returned to the  bath,  and the coated  strip is dry to the touch at that
 point.  The  strip  then  passes to a coating  station where a top coat  is
 applied by roll coating.   The strip then  passes through an oven where both
 coats are cured in a single pass.  Emissions from the EDP coating operation
 are estimated to be  near zero.  The organic solvent content of the EDP bath
 is  generally less than  5 percent.21
4.3  REFERENCES
1.    Coil Coaters Consider RACT for VOC.  PF Report.   Products Finishing.
     January 1978.   p.  56-61.
                                  4-11

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2.    Telecon.   Wright,  Milton,  Research Triangle  Institute, with  Morman,
     Robert,  Glidden Paint Company.   June 27,  1979.  Amount of waterborne
 13
     coatings used by industry.
3*   Bu1'] gating:   Tne Better Way.   National  Coil  Coaters  Association.
     Philadelphia,  Pennsylvania.   December  1978.

4.   The Coating Industry-Guide  to  Energy  Conservation  Technologies When
     bmploying Hydrocarbon Emission  Control.   Centec  Corporation.   Fort
     Lauderdale, Florida.   March  1979.   p.  2-22.

5.   Telecon.  Kearney, James, Research Triangle  Institute, with Phillips,
     John, Bay Area Air Quality Management  District.   July  26,  1979.
     ueterimning which plants are operating with  control systems.
6'   I?1!00!!' oifU1Sht:.M11ton' ^search Triangle Institute,  with Dusil,
     Richard, B&K Machinery Co.,  Ltd.,  Toronto,  Canada.   March 6, 1979.
     Emission control systems.

7.   Low-Oxygen Oven Slashes Fuel  Use,   Industrial  Finishing.   February
     -.           -
            p. ,32-35.
8'   «ll?r!SMl'lt0?' TTn>l? Report:   Kaiser Aluminum-Toledo, Ohio.   Re-
                     T                                     ,
     nr«h           Institute.   Research Triangle Park, North Carolina.
     October 31, 1979.  Attachment A.

 9.   Reference 8, p. 4.

 10.  Graziano, Frank^D.  Statement by National Coil Coaters Association.
     in:  National Air Pollution Control Techniques Advisory Committee.
     Minutes of Meeting June 4 and 5, 1980.  Research Triangle Park, U.S.
     Environmental Protection Agency.  June 25, 1980.  p. 111-14.
 U'   A?inC°S'«. UCSar^y' J' M" Research Triangle Institute, with Whike,
      Coatin           ^ C°" Ltd' ' Toronto> Ca™da.  June 9, 1980.
      Telecon   Wright   Milton   Research Triangle  Institute, with Miller,
      M.  W.,  DuPont.  June  26,  1980.  Waterborne coatings for coil.

 "'   JohnC°Entp!fn!.?htVhn-0ni'  Jesearch Triangle  Institute, with Uphoff,
      coatings  ?or coil          Coat1n9*.  Inc.  June 26, 1980.  Waterborne


 16.   Telecon   Wright,  Milton,  Research Triangle  Institute, with Chernich,
      JIB,  Valspar Corporation.   June 26,  1980.  Waterborne  coatings  for
                                  4-12

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17.  Telecon.  Wright, Milton,  Research  Triangle  Institute,  with  Kinzly,
     H. B. , Cook  Paint and Varnish  Company.   June 27,  1980.   Waterborne
     coatings  for coil.

18.  Control of Volatile Organic  Emissions  From Existing  Stationary  Sources.
     Volume II.  Surface Coating  of Cans, Coils,  Paper, Fabrics,  Automobiles,
     and Light Duty Trucks.  U.S. Environmental Protection Agency.   Research
     Triangle  Park, North Carolina.  EPA-450/2-77-008.  May  1977.  p. 3-12.

19.  Moran, Edward E.  New Developments  in  Coil Coating.  Light Metal Age.
     p. 12.  April 1973.

20.  Habersen, G.  Practical Application of Electric Infra-Red Heating in
     Coil Coating.  Research Incorporated.  Minneapolis, Minnesota.  (Pre-
     sented at Fall Technical Meeting of the National Coil Coaters Associ-
     ation.  Chicago.  October 1-2, 1979).

21.  Telecon.   Wright, Milton, Research Triangle  Institute, with Jasenoff,
     Ken, Desoto Chemicals.  December 12, 1979.   EDP coating technology.
                                  4-13

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                    5.  MODIFICATIONS AND RECONSTRUCTION

      New Source Performance Standards (NSPS) apply to newly constructed
 facilities and to existing facilities that undergo modification or recon-
 struction.   Definitions of modification and reconstruction are given in
 Title 40, Section 60, of the Code of Federal Regulations.1  Briefly, a
 modification is defined as any physical or operational change in an exist-
 ing facility that results in an increase in the emission rate from that
 facility, and a reconstruction is defined as an expenditure on new compo-
 nents for an existing plant that exceeds 50 percent of the capital  cost
 that would  be required to construct a comparable,  entirely new facility.
 This chapter presents a discussion of modifications and reconstruction as
 they relate to the NSPS for the coil  coating industry.
 5.1  DESCRIPTIONS  OF  TYPICAL MODIFICATIONS  AND  RECONSTRUCTION
      The subject of modifications  to  and reconstruction  of coil  coating
 lines was discussed with  a  number  of  industry representatives  during plant
 visits  and  through telephone  calls.   On  the basis  of  these discussions, a
 conclusion  was  reached that most modifications  to  coil coating lines are
 made either to  increase the processing rate or  to  reduce the energy  consump-
 tion of  the line.   Those modifications that are made  to increase processing
 rate (or line speed)  result in an  increase  in emissions and therefore would
 make the line subject to the requirements of an NSPS.  Modifications to
 increase line speed are often accomplished  by replacing the drive motors,
by changing the electrical controls on the  line, or by both.2 3  In many
cases, significant increases can be made in line speed without modifica-
tions to the ovens, either because the original  ovens were constructed with
excess capacity or because improvements in coating technology have resulted
in improved  coating curing performance.   In other cases,  oven modifications
                                 5-1

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may be required in order to increase line speed.   At least one plant is
planning to incorporate a curing booster on the ovens of one coil  coating
line so as to increase line speed.4
     Modifications to coil coating lines for the purpose of improving the
energy efficiency of the line do not cause the line to become subject to
the requirements of an NSPS because such modifications do not cause an
increase in emissions.  In most cases, modifications of this type decrease
emissions by recycling a portion of the oven exhausts through the oven
burners2 or by adding an incinerator with heat recovery.5  For both types
of modifications, the capital investment required is $100,000 or less.
Therefore, they cannot be classified as reconstructions, and the facility
becomes subject to the NSPS only when an increase in emission rate results.
     Only a few reconstructions of coil coating lines were identified
during this study.  In some cases a line reconstruction is implemented to
convert a single-coat line to a tandem line,6 and, in one instance, a line
was reconstructed to change from vertical to horizontal ovens and from a
horizontal to a vertical wet section.6  These types of activities require a
capital investment approaching 50 percent of the cost of a new line and
could make a facility subject to the NSPS from that standpoint.
5.2  RETROFIT CONSIDERATIONS
     When coil coating lines are modified to increase the line speed, VOC
emissions increase in direct proportion to the increase in speed if other
operating parameters  remain unchanged.  These types of modifications will
probably continue to  be  implemented on the older, slower lines as the
demand  for additional capacity expands over the next few years.  These
modifications could  lead  to an increase in VOC emissions in proportion to
the  increase in plant capacity that is developed by the modifications
unless  emission controls  are installed on the modified  lines.
     All of the control  techniques discussed in Chapter 4 are adaptable to
existing lines that  undergo a modification or reconstruction.  The use of
each of the control  techniques as  a retrofit on existing lines is well
documented in the literature.  As  a result, no major problems are antici-
pated  in applying retrofit controls on coil coating lines that undergo
modifications or  reconstructions.  The installation cost of an emission
                                 5-2

-------
 control  system as a retrofit is normally somewhat higher than the cost of a

 new installation; however,  this cost increment does not appear to be a

 major consideration,  as  discussed in Chapter 8.

 5.3  REFERENCES

 1.    U.S.  Environmental  Protection Agency.   Code of Federal  Regulations.
      Title 40,  Chapter I, Subchapter C,  Part 60.   Washington,  D.C.   Office
      of  the  Federal Register.   July 1, 1978.   p.  19-22.

 2.    Telecon.   Wright, Milton,  Research  Triangle Institute,  with  Ream,  H. S.,
      Elwin G.  Smith Division.   September 18,  1979.   Discussion of coil
      coating  line modifications.

 3.    Telecon.   Wright, Milton,  Research  Triangle  Institute,  with  Raschke,
      G.  B., California Finished Metals.   September  20,  1979.   Discussion of
      coil coating line modifications.

4.   Wright, Milton.  Trip  Report:   Precoat Metals--St.  Louis, Missouri.
      Research Triangle Institute.   Research Triangle Park, North  Carolina.
     March 6, 1979.  p.  4.

5.   Telecon.  Wright, Milton,  Research  Triangle  Institute, with  Dwyer,
      Larry, Supracote.  September 20, 1979.  Discussion  of coil coating
      line modifications.

6.   Telecon.  Wright, Milton,  Research Triangle Institute, with McComb,
     R. S., Litho Strip.   September 19, 1979.  Discussion of coil  coating
     line modifications.
                                 5-3

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                  6.  MODEL PLANTS AND REGULATORY ALTERNATIVES

      This chapter provides information describing model plants and regula-
 tory alternatives in the metal coil surface coating industry.   These model
 plants are representative of new plants that are expected to be built by
 the industry in the near future.   The model plant parameters given are
 based on information obtained during visits to eight coil coating plants,
 on information obtained from literature and industry sources,  and from
 State and Federal governmental regulatory agencies involved in pollution
 control.   The model  plants and regulatory alternatives  presented here were
 developed for the purpose of estimating the environmental,  economic,  and
 energy impacts of a New Source Performance Standard (NSPS)  for the coil
 coating industry.
 6.1  MODEL PLANTS
      Plants  that  would  be affected  by  an  NSPS  include all new  plants  and
 all  existing plants  that undergo modification  or reconstruction.   Specific
 operations in a coil coating  plant  that would  be covered  by a  standard
 include the  application and curing  of  the  coating on the  metal  strip.  A
 typical coil  coating operation consists of  an  uncoiler  station, a  splicer,
 an  inlet  accumulator, a wet section  (cleaning, treating, and rinsing), a
 prime  coat applicator,  a prime  coat  curing  oven,  a quench station, a finish
 or top  coat  applicator,  a finish coat curing oven, a quench station, an
 exit accumulator, a shear, and  a recoil station.  Some  lines also have
 printing  and  laminating capabilities.  A schematic diagram of a typical
 coil coating  line is given in Figure 6-1.
     Information pertaining to  the operating conditions of existing coil
 coating plants was used  to define the size ranges to be considered for the
model plants.  This information was obtained from several  sources, includ-
 ing the National Coil Coaters Association (NCCA), industry personnel, and a
 literature review.  However, the most comprehensive data for this purpose
                                  6-1

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ro
                                    SOLVENT LOSS j
                                     FROM PRIME I
                                   COATING AREA I
                      ACCUMULATOR
                 SPLICER
                  fl
        UNCOILING
         METAL
                 SOLVENT LOSS
                 FROM TOPCOAT
                 COATING AREA

                                                                        \
                                                                          \
                                                                           \
                                             TO CONTROL
                                             EQUIPMENT

                                                                AIR
                                                \
                                                 \
                                                   \
3
3
y
\
N

L)



I
\      PRIME
  \    COATING



       \
         \
\
\
ATURA
AS
i 	 »
\
\
\
L \
\ ^

PNATURAL
1 GAS
\ " N
\ TOPCOAT
«• 	 > \ COATING . 	 ». .* 	 .
                                                                                                                             ACCUMULATOR
                                         WFT SECTION
           PRIME     PRIME         PRIME    TOPCOAT   TOPCOAT      TOPCOAT
          COATING    OVEN        QUENCH   COATING    OVEN        QUENCH
           AREA                           AREA
RECOILING
 METAL
                                               Figure 6-1.  Schematic diagram of model coil coating line.

-------
were obtained from the Effluent Guidelines Division (EGD) of EPA.  EGD had
recently completed a survey of the coil coating industry as a part of its
activities in developing regulations governing liquid effluent from coil
coating operations.  Information gathered during this survey included line
speeds and widths, annual production, number of employees, and other items
of interest to the current study.  Data from this survey were used to
establish the size ranges for small, medium, and large coil coating plants.
These general size ranges are discussed below; a description of the specific
model plants then follows.  All of the model plants consist of a single
coil coating line.  In reality, plants often operate more than one coil
coating line.
     A small plant is estimated to have an annual production of approxi-
mately 4.6 million m2 (50 million ft2) of metal.   Such a plant may operate
coil coating lines capable of processing metal in widths of 0.46 m (18 in.)
or less at line speeds up to 1.78 m/s (350 ft/min).   The maximum solvent
capacity of the ovens in such a plant would be about 0.032 t/s (30 gal/h).
Annual operating hours may range from 3,000 to 6,000.
     A medium size plant is estimated to have an annual  production of
14 million m2 (150 million ft2) of metal.   Such a plant may operate coil
coating lines with the capability of coating metal  strip up to 1.22 m
(48 in.) wide at line speeds up to 2.03 m/s (400 ft/min).   Maximum oven
solvent capacity for these lines would be about 0.095 £/s (90 gal/h).
Annual operating hours may range from 3,000 to 6,000.
     A large coil coating plant is estimated to have an annual production
of 28 million m2 (300 million ft2) of metal.   A plant of this size may
operate coating lines capable of processing metal in widths up to 1.83 m
(72 in.) at speeds as high as 3.56 m/s (700 ft/min).  Maximum solvent capa-
city of the ovens on these lines would be about 0.210 A/s (200 gal/h).
Annual operating hours may range from 3,000 to 6,000.
     Information obtained during several plant visits indicates that coating
is actually being applied during approximately 70 percent of the plant
operating hours.  The remaining time is spent performing maintenance and
making color changes.   These figures, along with the plant size ranges
given above, were used to develop the three model plants.   Parameters for
these plants are listed in Figures 6-2, 6-3,  and 6-4.
                                  6-3

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Annual operating time: 4,000 h

Annual coating time:  2,780 h

Total metal processed: 4.6 X  106 m2/yr (50 X 106 ft2/yr)

Metal: Aluminum, 0.46 m (18 in.) wide
                  0.30 mm (0.012 in.) thick

Line speed:  1.02 m/s (200ft/min)

Coating:  Solvent based, with 60 percent by volume solvent (toluene)
          Total dry film thickness, prime coat, 0.0114 mm (0.00045 in.) each side
          Total dry film thickness, top coat, 0.0114 mm (0.00045 in.) each side

Ovens:
    Number                               2
    Maximum solvent input8                0.32 £/s (30 gal/h) each oven
    Average solvent input                  0.16 £/s (15.1 gal/h) each oven
    Air flowb                             2.4 m3/s(5,000 SCFM) each oven
    Exhaust temperature                   316° C (600° F)

 Uncontrolled emissions:  275 Mg/yr (303 ton/yr}

 Baseline emissions:
    States using numerical limits: 41.2 Mg/yr (45.4 ton/yr)
    States using CTG limits:  99.0 Mg/yr (109 ton/yr)
 "Solvent rate* are given per unit of actual coating time.
  Air flow rate is given at standard conditions of 15.6° C (60° F) and 101 kPa (14.7 psia).
  Figure 6-2. List of model plant parameters for small plant with 1 coating line.
                                   6-4

-------
 Annual operating time: 4,000 h

 Annual coating time:  2,780 h

 Total metal processed: 14 X 106 m2/yr (150 X 106 ft2/yr)

 Metal:  Steel, 0.91 m (36 in.) wide
             0.43mm (0.017 in.) thick

 Line speed:  1.5 m/s (300 ft/m)

 Coating:  Solvent based, with 60 percent by volume solvent (toluene)
          Total dry film thickness, prime coat, 0.01 T4 mm (0.00045 in.) each side
          Total dry film thickness, top coat, 0.0114 mm (0.00045 in.) each side

 Ovens:
    Number                               2
    Maximum solvent Input3               0.095 ft/s (90 gal/h) each oven
    Average solvent input                   0.048 J2/s (45.4 gal/h) each oven
    Air flowb                             7.1 m3/s (15,000 SCFM) each oven
    Exhaust temperature                   316° C (600° F)

 Uncontrolled emissions: 828 Mg/yr (912 ton/yr)

 Baseline emissions:
    States using numerical limits:  124 Mg/yr (137 ton/yr)
    States using CTG limits: 298 Mg/yr (328 ton/yr)
aSolvent rates are given per unit of actual coating time.
bAir flow rate is given at standard conditions of 15.6° C (60° F) and 101 kPa (14.7 psia).
Figure 6-3. List of model plant parameters for medium plant with 1 coating line.
                                 6-5

-------
Annual operating time: 4,000 h

Annual coating time:  2,500 h

Totai metal processed: 28 X  1C8 m2/yr (300 X 106 ft2/yr)

Metal: Steel, j.22 m (48 in.) wide
             0.48mm (0.019 in.) thick

Line speed: 2.5 m/s {500 ft/min)

Coating:  Solvent based,  with 60 percent by volume solvent (toluene)
          Total  dry film  thickness, prime coat, 0.0114 mm (0.00045 in.) each side
          Total  dry film  thickness, top coat, 0.0144 mm (0.00045 in.) each side

Ovens:
    Number                               2
    Maximum solvent input3                0.21  K/s (200 gal/h) each  oven
    Average solvent input                  0.11  8/s (101 gal/h) each  oven
    A'r f'owb                             15.6 m3/s (33,000 SCFM) each oven
    Exhaust temperature                  316° C (600° F)

 Uncontrolled emissions:  1,650 Mg/yr (1,820 ton/yr)

 Baseline emissions:
    States using numerical limits: 248 Mg/yr (273 ton/yr)
    States using CTG limits:  594 Mg/yr (655 ton/yr)
 •Solvent rates are given per unit of actual coating time.
  Air flow rate is given at standard conditions of 15.6° C (60° F) and 101 kPa (14.7 psia).
  Figure 6-4.  List of model plant parameters for large plant with 1 coating lina
                                  6-6

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      In the small  model  plant,  total  annual  production is  4,110  Mg/yr
 (4,080 ton/yr),  and uncontrolled or potential  emissions  are  275  Mg/yr  (303
 ton/yr).   Baseline emissions  for States  having numerical limits  are  41.2 Mg/
 yr  (45.4 ton/yr);  for States  using Control Technique Guideline (CTG) limits,
 baseline emissions are 99.0 Mg/yr (109 ton/yr).
      In the medium size  plant,  annual production  is 54,800 Mg/yr (60,300
 ton/yr),  and uncontrolled  emissions are  828  Mg/yr (912 ton/yr).   Baseline
 emissions for States  having numerical limits are  124.2 Mg/yr (136.8  ton/yr);
 for States using CTG  limits,  baseline emissions are 298 Mg/yr (328 ton/yr).
      In the large  plant, annual  production is  104,000  Mg/yr  (116,000 ton/yr),
 and uncontrolled emissions are  1,650 Mg/yr (1,820 ton/yr).   Baseline emis-
 sions  for States having  numerical  limits are 247.5 Mg/yr (273 ton/yr); for
 States  using CTG limits, baseline  emissions  are 594 Mg/yr  (655 ton/yr).
     The  annual  operating  time  of  4,000  hours  for each plant is  the equiva-
 lent of 2 shifts per  day,  5 days per week, 50  weeks per year.  Actual
 coating times  were calculated from industry  averages and are 2,780 hours
 per year  for the small and medium  size plants  and 2,500 hours per year for
 the large plant.
     Water usage of the model lines is estimated  using an  overall factor of
 4.0 £/m2  obtained  from EGD.  The water requirements are as follows:   small
 plant,  4,600 A/h (1,200 gal/h); medium plant,  14,000 £/h (3,700 gal/h); and
 large plant, 28,000 £/h (7,400 gal/h).
     The  enclosed  area of structures housing the  model coil coating lines
will be approximately 6,690 m2 (72,000 ft2)  for the small plant,  9,290 m2
 (100,000  ft2)  for  the medium plant, and 12,800 m2  (138,000 ft2) for the
 large plant.
6.2  REGULATORY  ALTERNATIVES
     This  section  presents a discussion of the regulatory alternatives to
be considered  for  the coil  coating industry.   The discussion is based on
 information  obtained from industry and literature sources.   The impacts on
emissions  for each  regulatory alternative are discussed in Chapter 7 of
this document.  A  set of revised regulatory alternatives is discussed in
Appendix  E.
                                  6-7

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     The first regulatory alternative to be considered is no additional
regulation.   Under this alternative,  emissions from coil  coating plants
would continue to be governed by State regulations.   There are no compli-
ance costs associated with this alternative.   However, as discussed in
Chapter 7, the no-regulation alternative also has no positive impact on
emissions and may lead to a degradation of the ambient air quality.
     A second regulatory alternative  is to require that overall emissions
be reduced by 85 percent or to limit  emissions to the equivalent (on the
basis of the coating solids applied)  of that obtained by an overall reduc-
tion of 85 percent in the emissions from the average industry coating
formulation of 40 percent solids and  60 percent organic solvent by volume.
A standard based on this alternative  would be approximately equal to exist-
ing State regulations that have numerical limits on volatile organic compound
(VOC) emissions.  Compliance with the 85 percent alternative could be
achieved by using an incinerator with a 95 percent destruction efficiency
in conjunction with 90 percent capture of the total emissions.  This capture
efficiency is normally achieved without a coating room.  Compliance could
also be achieved by using a less efficient incinerator and a more efficient
capture system.  Compliance with a limit based on an 85 percent reduction
in the emissions from the average industry coating formulation could be
achieved by incineration or by using low-solvent coatings.
     A third regulatory alternative is to require that overall emissions be
reduced by 95 percent or to limit emissions to the equivalent  (on the basis
of the coating  solids applied) of that obtained by an overall  reduction of
95 percent in the emissions from the average coating  formulation used by
the  industry  (40 percent solids and 60 percent solvent by volume).  Compli-
ance with the 95 percent alternative could be achieved by using an  inciner-
ator with a 95  percent destruction efficiency in conjunction with  a coating
room to  insure  that  100 percent of the VOC emissions  are captured  by the
ovens.   Compliance with a  limit based on  a 95 percent reduction  in  the
ennssions from  the  industry average coating  formulation  could  be achieved
by  incineration or  by  using  low-solvent  coatings.
     Appropriate  parameters  for incinerators  that meet the  requirements  of
the  above control alternatives are given in  Chapter 8 along with their
estimated costs.  Costs  are  presented  for both the  installation  and the
operation of  the  incineration systems.

                                   6-8

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                           7.  ENVIRONMENTAL IMPACT

      This chapter presents a discussion of the environmental  impact of each
 of the regulatory alternatives presented in Chapter 6.   The discussion
 includes the impact of each regulatory alternative on air emissions,  water
 quality, solid waste,  and energy.   All calculations and conclusions regard-
 ing environmental  impact are based on the model  plants  described  in Chapter
 6 and on the industry  growth projections given in Chapter 8.
      The regulatory alternatives  for which impacts are  discussed  are  as
 follows:
           No NSPS.
           Reducing  overall  emissions by 85 percent or limiting emissions to
           the equivalent of that  obtained by an  overall  reduction of  85 per-
           cent in the  emissions from the average industry coating formulation
           of 40 percent  solids and 60  percent  organic solvent by volume.
           Reducing  overall  emissions by 95 percent or limiting emissions to
           the equivalent of that obtained by an  overall  reduction of  95 per-
           cent in the  emissions from the  average industry  coating formula-
           tion of 40 percent solids  and 60 percent organic solvent  by
           volume.
The  impacts  of a set of  revised regulatory alternatives  are presented in
Appendix  E.
7.1  AIR  POLLUTION  IMPACT
     As discussed in Chapter 8, it is estimated  that the coil coating
industry  is currently operating at approximately 65 percent capacity and
that the  industry will  maintain a growth rate of approximately 12 percent
per year over the next several years.  Although a portion of this projected
growth can be absorbed by existing plant capacity, new plant capacity will
be needed to maintain this growth  rate over an extended period.   This
additional capacity can be achieved by increasing the production  of  exist-
ing coil coating lines  or by building new lines.
                                  7-1

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     The impact of a promulgated  New  Source  Performance  Standard (NSPS)  on
air emissions of volatile  organic compounds  (VOCs)  is  calculated as  the
difference between the emissions  that are  permitted by existing regulations
and the emissions allowed  under the NSPS.  Currently there  are 21 States or
parts of States that have  existing regulations  that include a specific
numerical limit o.. VOC emissions.1 These  States  are listed in Figure 7-1.
Although the limits for these  States  vary  somewhat, most of them specify
that uncontrolled emissions be reduced by  85 percent prior  to discharge.
This limit was used to estimate the baseline emissions for  coil coating
plants located in States that  have numerical limits.
     There are 36 States or parts of  States  that  currently  control VOC
emissions through the use  of a permit system.   These States are listed in
Figure 7-2.   Most of the regulations  for these  States  indicate that the
degree of control required for VOC emissions is determined  on a case-by-case
basis at the time an application  for  a permit is  made.   For the purpose  of
computing baseline emissions,  it  was  assumed that these  States would require
that VOC emissions be controlled  to at least the  level recommended by EPA
in its Control Technique Guideline (CTG) document.2
     The CTG-recommended limit is 0.31 kg/2  (2.6  Ib/gal) of coating, minus
water.  The limit is expressed as a coating  formulation  and is equivalent
to a coating that is 65 percent solids and 35 percent  organic solvent.  The
limit was derived on the basis of the incineration of  the emissions from an
organic solvent-borne coating  that contains  25 percent solids by volume.
The emission limit can be  achieved in this situation by  capturing 90 percent
of the emissions and directing them to a control  device, which must operate
with at least a 90 percent destruction efficiency.   To achieve the CTG
liait when the industry's  average coating  formulation  (i.e., 60 percent
organic solvent and 40 percent solids) is  being used,  an overall emission
reduction of 64 percent would  be  required.
     As discussed in Chapter 8, it is estimated that,  over the next 5
years, the coil coating industry  will expand at an annual rate of approxi-
mately 12 percent per year.  With the current (1977) annual production of
1.2 billion m* (13 billion ft*) per year being used as a base, this would
amount to an annual increase in capacity of  0.11  billion m^ (1.5 billion
ft*).  It is further estimated that this new plant capacity will be achieved

                                  7-2

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I
CO
                           1.
                           2.
                           3.
                           4.
                           5.
                           6.
                           7.
                           8.
                           9.
                           10.
Alabama3
Arizona (Maricopa County)3
California (S. Coast AQCR)3
Colorado
Connecticut3
District of Columbia
Illinois3
Indiana3
Kentucky3
 Louisiana
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
Massachusetts (Boston AQCR)3
New York (NYC)3
North Carolina3
Ohio3
Oklahoma
Pennsylvania (Philadelphia)3
Puerto Rico
Rhode Island
Virginia3
Wisconsin3
                           11.  Maryland (National Capital AQCR)3
                           aDenotes States in which coil coating plants are currently in operation.
                                  Figure 7-1.  List of States and major metropolitan areas currently regulating organic
                                             solvent emissions through specific numerical standards.

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    1.  Alaska
    2.  Arkansas3
    3.  Arizona3
   4.  Delaware3
   5.  Florida3
   6.  Georgia3
   7.  Hawaii
   a  Idaho
   9.  Iowa3
  10.  Kansas
  11.  Maine
  12.  Maryland3
  13.  Massachusetts3
  14.  Michigan3
 15.  Minnesota3
 16.  Mississippi
 17,  Missouri3
 18. Montana
  19.  Nebraska
  20.  Nevada
  21.  New Hampshire
 22.  New Jersey3
 23.  New Mexico
 24.  New York3
 25.  North Dakota
 26,  Oregon
 27.  Pennsylvania3
 28.  South Carolina3
 29.  South Dakota
 30.   Tennessee3
 31.  Texas3
 32.  Utah
33.  Vermont
34.  Washington3
35.  West Virginia3
36.  Wyoming
3 Denotes States in which coll coating plants are currently in operation.
           Figure 7-2. List of States not regulating organic solvent emissions through
                      specific numerical standards.

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 by modifying nine existing coil coating lines each year and by constructing
 seven new lines each year.
      All emission calculations are based on the following values:
      Annual (1977) production of coil   1.2 (109)m2    (13 (109) ft2)
        coated metal
      Annual (1977) coating usage
      Average organic solvent content
        of coatings (by volume)
          Solvent-borne
          Waterborne
      Average solids content of all
        coatings (by volume)
      Average solvent density
      Fraction of plants  subject to
        85 percent control
      Fraction of plants  subject to
        CTG limits
      Fraction of coatings  that are
        waterborne (by total  volume)
 72 (106)£     (19 (106) gal)
               60 percent
               10 percent
0.88 kg/2
40 percent

(7.36 Ib/gal)
0.70

0.30

0.15
With these values,  average  uncontrolled  (or potential) emissions from coil
coating activities  can be computed as 0.032 kg/m2  (0.0065 lb/ft2) when
solvent-borne coatings are  used and as 0.0054 kg/m2 (0.0011 lb/ft2) when
waterborne coatings are used.  If plant  capacity increases by 0.11 billion
m2 (1.5 billion ft2) per year, the annual increase in uncontrolled emis-
sions would be 3,872 Mg (4,268 tons).  If it is assumed that the relative
usage of waterborne and solvent-borne coatings remains the same, that the
geographic distribution of  new plant capacity will be the same as that of
existing plants, and that no add-on controls are required when waterborne
coatings are used,  baseline emissions from new plant capacity amount to 914
Mg (1,007 tons) per year.    If no NSPS were promulgated, emissions from coil
coating operations  would be expected to  increase by this amount annually.
At the end of 5 years, the total  annual   increase in emissions would amount
to 4,570 Mg (5,035  tons).
                                  7-5

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     If an NSPS were promulgated based on  the  second regulatory alternative
(i.e.,  the equivalent of an 85 percent reduction in  emissions  for the aver-
age industry coating formulation),  emissions  from new plant capacity would
be 676 Mg (745 tons) per year.   This  is a  reduction  of 238 Mg  (262 tons)
per year from the baseline case.  At  the end  of the  fifth year, total
annual  emissions from new plant capacity under this  regulatory alternative
would amount to 3,380 Mg (3,726 tons), which  is a reduction of 1,187 Mg
(1,309 tons) from the baseline case.   These emissions are the  result of new
plant capacity that becomes available each year.   A  portion of this new
capacity is the result of modifications to existing  lines.  When an affected
facility is modified, the existing  capacity of that  facility also becomes
subject to the NSPS limits.  The existing  line capacity that annually
becomes subject to these limits because of modifications is estimated to be
74 million m2 (795 million ft2).  Baseline emissions from this volume of
production are estimated to be 483  Mg (533 tons). Reductions  in emissions
that result from control of the existing capacity of modified  lines would
amount to 125 Mg (138 tons) per year  under this regulatory alternative.
When combined with the results of new plant capacity, the overall effect is
a net increase of 551 Mg (607 tons) per year  for the entire industry.  This
is a reduction of 363 Mg (400 tons) per year  from the baseline emissions.
At the end of the fifth year, the net annual  increase in emissions would
amount to 2,755 Mg (3,035 tons),  which is  a decrease of 1,815  Mg (2,000 tons)
per year from the baseline emissions.  The environmental impact for each
regulatory alternative is summarized  in Table 7-1.
     If an NSPS were promulgated based on  the third  regulatory alternative
(i.e., the equivalent of a 95 percent reduction in emissions for the average
industry coating formulation), emissions from new plant capacity would be
300 Mg (331 tons) per year.  This is  a reduction of  613 Mg (676 tons) per
year from the baseline case.  At the  end of the fifth year, annual emis-
sions from new plant capacity under this regulatory  alternative would total
1,500 Mg (1,655 tons), which is a reduction of 3,066 Mg (3,380 tons) from
the baseline case.  After control of the existing capacity of modified
lines, the estimated emissions under the third regulatory alternative are
160 Mg (176 tons) per year.  This is a reduction of 325 Mg (358 tons) per
                                  7-6

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TABLE 7-1.  ESTIMATED ENVIRONMENTAL IMPACTS
Regulatory alternative
I. No NSPS
II. 85 percent control
III. 95 percent control
Emissions
plant capacity
1st year
914 (1,007)
676 (745)
300 (331)
from new
, Hg/yr (ton/yr)
5th year
4,570 (5,035)
3,380 (3,726)
1,500 (1,655)
Reduction in emissions from
modified plants^Mg/yr (ton/yr)
1st year
-125 (-138)
-325 (-358)
5th year
-625 (-690)
-1,625 (-1,790)
Overal 1
on emissions,
1st year
+914 (+1,007)
+551 (+607)
-25 (-27)
impact
Hg/yr (ton/yr)
5th year
+4,570 (+5,035)
+2,755 (+3,035)
-125 (-135)

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year in overall emissions.   When this reduction is combined with the emis-
sions from new plant capacity, the result is a net decrease in emissions of
25 Mg (27 tons) per year.   At the end of the fifth year, the net annual
decrease in emissions would amount to 125 Mg (135 tons).
     There are a number of potential inaccuracies in the above discussion
that are due mainly to a lack of detail in the available data.  First of
all, the separate calculations of emissions from solvent-borne and water-
borne coatings carry an underlying implication that each type of coating is
used in plants that exclusively use one or the other type of coating.  It
is known that this is not, in fact, the true situation.  Some plants that
mostly use solvent-borne coatings also use small quantities of waterborne
coatings,3 and some plants that mostly use waterborne coatings also use
small quantities of solvent-borne coatings.4  Information relating to the
distribution of coating usage is not available in sufficient detail to
permit more precise calculations of emissions from each type of coating.
     There are also potential inaccuracies in the estimates of baseline
emissions from coil coating plants.  These estimates were made by assuming
that existing and new plants exactly meet the standards that are in effect
in the States in which they are located.  It is very likely that those
plants that use incineration as a method of controlling emissions are
achieving a greater degree of control than state regulations require.
However, it is also known that some coil coating plants now operate with no
controls, either because they have been granted a variance or because the
State has not required any controls.  These two sources of potential inac-
curacies would tend to offset one another, and it has not been possible to
determine which would have the greater  impact.  The potential inaccuracies
in the estimates of baseline emissions  lead to corresponding potential
inaccuracies in the estimates of the impact of an NSPS  on air emissions of
VOCs.  However, the potential inaccuracies tend, again, to offset one
another, and it is felt that the estimated impact is reasonable.
7.2  WATER POLLUTION  IMPACT
     Liquid effluent  from coil coating  operations is generated in the wet
sections of coil coating lines.  In the wet section, the metal is thoroughly
cleaned and chemically treated to  enhance the bonding of the  coatings to
                                   7-8

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 the metal.  The application of control devices on oven exhaust streams does
 not affect the operation of the wet section.  Consequently, it is estimated
 that none of the regulatory alternatives would have any effect on water
 pollution or the liquid effluents from coil coating operations.
 7.3  SOLID WASTE DISPOSAL IMPACT
      The techniques available to the coil coating industry to achieve
 compliance with the regulatory alternatives proposed in this study include
 the use of incinerators and the use of low-solvent coatings.  Neither of
 these control  techniques generates additional  solid wastes.   It is there-
 fore estimated that none of the regulatory alternatives would have an
 impact on solid waste disposal.
 7.4  ENERGY IMPACT
      Data on the energy consumption of existing  facilities are sparse.   To
 make estimates  of the effect  of  regulatory alternatives on national  fuel
 consumption,  the fuel  inputs  to  the model  plants  in  Chapter 6 were calcu-
 lated.   These  fuel  usage rates were then  converted to  a basis of  energy
 used per unit area coated and  applied  to  the expected  new  production rates
 and modified/reconstructed production  rates  discussed  in Section  7.1.
      The fuel energy  requirements  of each  model plant  at different levels
 of  emission  control are summarized in  Table  7-2.   The  predominant fuel for
 ovens and afterburners  in the  industry is  natural  gas,  followed by fuel
 oil.  Many plants  burn  propane when  natural  gas is unavailable.   Electrical
 energy  requirements of  each model  plant are  given  in Table 7-3, based on an
 average  energy  requirement of  0.26  kWn/m2  (0.024 ktfn/ft2) coated.5 6
     Many coating  lines located in States with CTG limits could achieve the
 required levels  of control using only  an internal, oven-mounted incineration
 control  scheme.  Because  64 percent  reduction is at the upper  limit of
 solvent  destruction for these  systems, each new or modified/reconstructed
 Tine must be evaluated  individually.  For purposes of these estimates, it
 is assumed that all new facilities in States with CTG limits can meet those
 limits with such a control system.
     Plants located in  States with numerical limits would have fuel and
electrical needs according to the type(s) of emission control system used.
With thermal incineration systems,  the requirements would range from the
                                  7-9

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                    TABLE  7-2.   RATE  OF  FUEL  ENERGY  USAGE  OF  MODEL COIL COATING LINES4
 I
M
O
Level of Control
Model line
Small
Medium
Large
No emission
control
size kW (106Btu/h)
2,100 (7.3)
6,700 (23)
14,000 (49)
64 percent reduction
by incineration at
ovens
kW (106Btu/h)
1,000 (3.4)
3,200 (11)
7,000 (24)
85 percent overall
reduction by incin-
eration at after-
burner
kW (106Btu/h)
1,600 (5.3)
4,700 (16)
10,000 (34)
95 percent overall
reduction by incin-
eration at after-
burner with coating
rooms
kW (106Btu/h)
1,500 (5.0)
4,400 (15)
9,400 (32)
Energy rates during plant operating time.

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                 TABLE 7-3.  RATE OF ELECTRICAL ENERGY USAGE OF MODEL COATING LINES4
Level of Control
Model line size
Small
Medium
Large
No emission
control
kW
190
680
1,300
64 percent reduction
by incineration at
ovens
kW
190
680
1,300
85 percent overall
reduction by incin-
eration at after-
burner
kW
300
900
1,800
95 percent overall
reduction by incin-
eration at after-
burner with coating
rooms
kW
300
900
1,800
Energy rates during plant operating time.

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higher fuel  needs and lower electrical  needs of a system with an afterburner
only to the  lower fuel  needs and higher electrical  needs of a system with
an afterburner and primary and secondary heat exchangers.   In this chapter,
the estimates of energy usage for control  systems meeting numerical limits
and NSPS limits are based on the use of thermal incineration with primary
and secondary heat recovery.  This basis reflects the trend in the industry
toward energy savings by heat recovery.  Although the economics of the
systems generally favor the use of heat recovery, the actual type of system
installed on a line will depend on corporate policy, the availability of
fuel, and other factors.
     The effects of the regulatory options on national fuel consumption are
estimated in Table 7-4, based on the projected construction of seven new
lines per year and the projected modification or reconstruction of nine
existing lines per year, as discussed  in Section 7.1.  The assumption is
made that the distribution  of new and modified or reconstructed lines by
location will be the same as that of existing lines.  The increase in
national fuel demands is highly dependent on the types of control  systems
installed.  The values given in these  tables are order-of-magnitude esti-
mates and are subject to inaccuracy for the same reasons discussed in
Section 7.1.
     The national increase  in electrical energy demand due to growth in the
industry is extremely difficult to predict.  There are  little data on
existing lines because many coil coating lines are located in facilities
that  use electricity for other operations and because the focus  in the
literature  has been on  fuel conservation.   However,  an  order-of-magnitude
estimate can  be  made using  figures of  0.26  kWh/m2  (0.024 kWh/ft2)  of produc-
tion  (lines meeting NSPS or numerical  limits)  and  0.18  kWh/m2  (0.017 kWh/ft2)
of production (lines meeting  CTG  limits).   The annual increase  in national
electrical  energy usage under  Regulatory Alternative I,  No  NSPS,  is  esti-
mated at 40 million  kWh.   The  annual  increase  under  either  NSPS alternative
 is estimated  at  44 million kWh.
      Several  methods are  available  to  reclaim  heat energy  and thus reduce
overall  energy consumption, including  the  use  of recuperative heat exchang-
 ers as in  the model  plants.  Various  systems are described in detail  in
 Chapter 4.  These include recuperative  and  regenerative  heat recovery,  in
                                   7-12

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             TABLE 7-4.   ESTIMATED ANNUAL INCREASE IN NATIONAL FUEL
                       CONSUMPTION DUE TO INDUSTRY GROWTH3

                                    	Increase in fuel  consumption
                                       First year              Fifth year
 Regulatory alternative             TJD (billion Btu)        TJ  (billion  Btu)

 I.     No NSPS                        700 (660)                 3,500 (3,300)

 II.    Limiting emissions  to the      770 (730)                 3,850 (3,650)
       equivalent of that  obtained
       by an overall  reduction  of
       85 percent in the emissions
       from the average industry
       coating formulation of
       40 percent solids and
       60 percent solvent  by volume

 III.   Limiting emissions              740 (700)                 3,700 (3,500)
       to the  equivalent of
       that obtained  by an
       overall  reduction of
       95 percent in  the emissions
       from the  average industry
       coating  formulation of
       40 percent solids and
       60 percent solvent  by volume


 Assumptions:
 1.  Wherever 85 or  95 percent  reduction  is required, new and jodified/
     reconstructed  lines  using  solvent-borne coatings install thermal
     incineration systems.   These systems include primary and secondary
     heat  recovery or  equivalent heat recovery.
 2.  Systems with 95 percent control  include coating rooms.
 3.  CTG  levels  of control  are  achieved by coating rooms and ovens
     using  solvent combustion.
 4.  Incineration temperature for 85 and 95 percent control  is 760° C
     (1,400° F).
 5   Lines  usina waterborne coatings meet NSPS limits by choice of coating
     formulation rather than by installation of emission control equipment.

bTJ = terajoule, 1012  joules.
                                  7-13

-------
which incinerator exhaust gases are used to preheat oven make-up air and/or
incinerator inlet air.   Process steam is also produced in some plants from
the heat of exhaust gases.   Other systems use direct recycle to return
afterburner exhaust gases directly to the ovens;  since the exhaust streams
have been cleaned of solvent,  safe solvent levels are maintained in the
ovens with a mini .urn ambient make-up air requirement.
7.5  OTHER ENVIRONMENTAL CONCERNS
7'5>1  ^reversible and irretrievable Commitment of Resources
     Each of the control alternatives considered requires the commitment of
a quantity of steel and various other materials to construct emission
control systems.  This  commitment is estimated to be quite small relative
to the total annual usage of these materials.   Some of the emission control
systems require a small commitment of land area for installation.   Although
there may be individual coaters with limited available space for whom this
land requirement is a problem, it is estimated to be a minor consideration
on a national basis.  The energy impact of the control alternatives is
described in the preceding section and shows that there is a net increase
in energy consumption for each of the NSPS regulatory alternatives but that
the impact is minimized when incineration with heat recovery is used.
7'5'2  Environmental Impact of Delayed Standards
     If promulgation of an NSPS is delayed for some period of time, VOC
emissions from coil coating operations would increase at an annual rate
equal to the No NSPS alternative discussed above in Section 7.1.  Relative
to the second regulatory alternative (i.e., requiring plants to reduce
ennssions by 85 percent), the  net annual increase in emissions during the
delay would be 603 Mg (664 tons).  Relative to the third regulatory alter-
native (i.e. requiring all plants to decrease emissions by 95 percent) the
net annual increase in emissions during the delay would amount to 1,059 Mg
(1,167 tons).
7.6  REFERENCES
     p  41-61         riangle Park,  North Carolina.   February 12, 1979.
                                  7-14

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 2.    Control of Volatile Organic Emissions form Existing Stationary Sources.
      Volume II.   Surface Coating of Cans, Coils, Paper, Fabrics, Automobiles,
      and Light-Duty Trucks.   U.S.  Environmental Protection Agency.   Research
      Triangle Park, North Carolina.   Publication No.  EPA-450/2-77-008.   May
      1977.   p.  v.

 3.    Trip  Report:   Precoat Metals—St.  Louis,  Missouri.   Research Triangle
      Institute.   Research Triangle  Park,  North Carolina.   March 6,  1979.
      p.  5.

4.    Trip  Report:   Bendix Modern Materials—Detroit,  Michigan.   Research
      Triangle  Institute.   Research Triangle  Park,  North Carolina.   March
      12, 1979.  p.  3.

5.   Telecon.  McCarthy,  J. M.,  Research  Triangle  Institute, with Dombeck,
     Jerry,  Precoat Metals.  October 26,  1979.   Operating  costs  of  coating
     lines.

6-   Telecon.  McCarthy, J. M.,  Research  Triangle  Institute, with Dwyer,
     Larry, Supracote.  January  8, 1980.  Operating costs  of coating lines.
                                 7-15

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                              8.   ECONOMIC  IMPACT

 8.1  INDUSTRY CHARACTERIZATION
      Coil coating  is a process by which metal is coated prior to its forma-
 tion into end products.  The process originated in the 1930s as a method of
 coating metal to be used in making Venetian blinds, but, because of the
 efficiency and cost-effectiveness of the process, its use has expanded to
 many other products.  The process begins with a roll (or coil) of bare
 sheet metal and ends with a roll of metal that has one or two coats of
 finish on one or both sides.   Coatings are applied with rollers, which are
 virtually 100 percent efficient in transferring the coating to the metal
 surface.   The process is also more energy efficient than most postassembly
 coating operations  because of the continuous nature of the process.   It has
 been estimated that coil  coating uses only about one-fifth of the  energy
 that would be required by a postassembly coating operation.1   This  section
 presents  a description of the coil  coating industry and identifies  the
 companies and plants that are engaged in the process.
 8.1.1  General  Profile
      A  total  of  83  companies  have been  identified that  engage  in the produc-
 tion  of coil  coated metal.  These companies  own  approximately 109 plants
 containing an estimated 147 coil  coating  lines that produce precoated steel
 and aluminum  for domestic consumption.   Coil coating facilities  are typically
 located in or near  industrial areas to minimize the shipping costs of both
 raw materials  and the  final product.  Although plants are dispersed through-
 out 27  States, over one-half of the existing facilities are located in
 Illinois,  Ohio, Pennsylvania,  and California.  However, facilities are not
 heavily concentrated in any one locality within these States.   On an EPA
 Regional basis, Region V  represents about 34 percent of existing coil
coating plants, and Region IV, about 12 percent.   A listing of all  identified
                                  8-1

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companies and plants is contained in Table 8-1,  along with the number of
lines per plant, plant location,  and company ownership, where applicable.
     The majority of coil  coating establishments are privately owned or
operated.  Analysis of available data indicates  that, of the 83 companies
identified, a total of 42 are subsidiaries of conglomerates or of major
iron, steel, or :luminum manufacturing concerns.  Existing plants are, on
the average, about 23 years old and have had a renovation or upgrading of a
coil coating line within the last 6 years.2
     "Toll" and "captive11 coaters represent the  two basic structural divi-
sions of this highly competitive industry.  The  toll coater is a service
coater that accepts an order to coat steel or aluminum according to a
customer's needs and specifications.  The coated metal is then delivered to
the customer, who forms the end product.  Some large toll coaters use up to
1,000 different formulations of coatings.  In contrast, the captive coater
both coats the metal and fabricates the final product, often within the
same plant, and normally uses a smaller number of coating formulations.
Some coil coaters perform both toll and captive  coating services.
     Coated metal coil is not generally considered an end product because
it is usually cut and formed into other metal products by the purchaser.
Coated metal coil has historically been associated with building products
such as  Venetian blinds, curtain and drapery hardware, and exterior wall
and roof panels but has recently been formed into many new end products.
During 1977, the transportation industry was the largest single user of
coil coated metal, and the large appliance industry  is expected to be an
expanding market in coming years.  A list of current and suggested end uses
of coil  coated metal, supplied by the National Coil Coaters Association
(NCCA),  is contained in Table 8-2.
     Estimated North American shipments of coated metal coil reached over
3.4 million Mg  (3.7 million tons) in 1977, a 19 percent increase over 1976
shipments.  Coated steel coil accounted for over three-fourths of 1977
production, with estimated shipments of 2.6 million Mg (2.9 million tons).
Much of  the 22 percent increase over 1976 shipments  is accredited to the
larger shipments of coated steel purchased by the transportation industry.
Precoated aluminum shipments reached an estimated 709,415 Mg (782,000 tons)
in 1977, an increase of 8.6 percent over the previous year.  The nearly 3.6
                                  8-2

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                   TABLE 8-1.  DOMESTIC COIL COATING ESTABLISHMENTS
                             CURRENTLY IN OPERATION:  19792 3
Company/Subsidiary3
Alan Wood
Alcan Aluminum Ltd. (Canada)
A! can Aluminum Corp.
Almax Aluminum Mills
Alsar Manufacturing
Aluminum Company of America

Stolle Corp.
AMAX Inc. (50%)
Mitsui and Co. (45%)
Nippon Steel Co. (5%)
Alumax Mill Products

American Nickel oid

Amsted Industries Incorporated
Litho Strip Co.



Anta Corporation
^Nichols-Homeshield Inc.

Apollo Metals, Inc.
Armco Steel
Arvin Industries, Inc.
Roll Coater, Inc.
Plant location(s)
Pennsylvania
Ohio
Pennsylvania
California
California
Michigan
Pennsylvania
Iowa
Indiana
Tennessee
Ohio



California
Illinois
Illinois
Pennsylvania

Illinois
Illinois
Texas
Pennsylvania

Iowa
Illinois
New Jersey
Pennsylvania
Ohio

Indiana
Indiana
Estimated
number of line
per plant
1
1
1
1
1
1
I
I
1
1
1



2
1
1
1

1

1
1

1
i
J.
1
1
1

2
1
a
 Subsidiaries are indented.
(continued)
                                  8-3

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                           TABLE 8-1.   (continued)
Company/Subsidiary
                  a
 Plant  location(s)
   Estimated
number of lines
   per plant
Atlantic Richfield
  Anaconda

Banyon Corporation
  Hydrographies Corporation
Belmont Industries, Inc.
  Supra Cote, Inc.
Bendix Corporation
  Modern Materials Corporation
Chamberlain Manufacturing Corp.
Chicago Metallic Corp.
  California Finished Metals, Inc.
  Chesapeake Finished Metals, Inc.
Chicago Finishing
Chroma!loy American
  Precoat Metals
  Arrow Group
Clark Brothers
Consolidated Foods
  Graber Co.
Consolidated Systems
  Southeastern Coated Products
Cortland Container Corporation
Custom Metals
Cyclops Corp.
  E.G. Smith

Oonn Corporation
  American Metals
Edco Products,  Inc.
a
Ohio
Ohio
Texas

California

Michigan
Pennsylvania

California
Maryland
Illinois

Missouri
New Jersey
Michigan

Wisconsin

South Carolina
Texas
Illinois

Pennsylvania
Ohio

Ohio
Minnesota
       I
       2
       1

       1

       3
       1
       I
       1
       2
       I
       I
       1
       1
       1

       1
       1

       1
       1
 Subsidiaries are indented.
                                                             (continued)
                                  8-4

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                              TABLE 8-1.  (continued)
Company/Subsidiary3
Enameled Steel and Sign Company
Epic Metals Corp.
Finished Metals Inc.
Fruehauf
Globe Products Corp.
Groff Industries, Inc.
Hexcel Corporation

Hillman Coal and Coke Co., Inc.
Prior Coated Metals, Inc.


Hoechst A. G. (Germany)
Azoplate
Hunter-Douglas N. V.
Hunter-Douglas
Imperial Metals
Inland Steel
INRYCO
Kaiser Aluminum

Kirsch Company
Landsdale Finishing
Lawler Steel Components, Inc.
Levolor-Lorentzen, Inc.

Lifeguard Industries, Inc.
LTV Corp.
Jones and Laughlin Steel Corp.
Marathon Manufacturing
Marathon-Carey-McFal 1
Plant location(s)
Illinois
Ohio
Pennsylvania
Illinois
Alabama
Maryland
Texas
Arizona
Texas

Pennsylvania
Pennsylvania
Georgia

New Jersey

North Carolina
California

Wisconsin
Washington
Ohio
Michigan
Pennsylvania
Texas
West Virginia
California
New Jersey
Ohio

Texas

Pennsylvania
Estimated
number of line
per plant
1
1
1
1
1
1
1
1


2
1
1

3

1
1

1
3

1
1
1
2
1
5
1

1

1
Subsidiaries  are  indented.
8-5
(continued)

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                              TABLE 8-1.   (continued)
Company/Subs1di ary*
Plant location(s)
   Estimated
number of lines
   per plant
Martin Marietta
Marwais Steel

Minnesota Mining & Manufacturing
Mirro Aluminum

Material Sciences Corporation
  Prefinish Metals Inc.


National Steel Corporation

  Enamel Products & Plating

  National Aluminum
  Hastings Aluminum
National Roll ex

N. E. Co. Limited Int.

  Aluminum Mills, Inc.

Noranda Mines Ltd. (Canada)
  Norandex

Omega Industries

Phelps Dodge Corp.

  Consolidated Aluminum


Pechiney Ugine Kuhlmann (France)
  Howmet Corp.


Republic Steel Corp.

Revere Copper and Brass,  Inc.

  Revere Aluminum Building Products

Reynolds Metals Company

  Alloys Sheet & Plate
  McCook Sheet & Plate
  Asheville Arch
Kentucky

California

West Virginia

Washington
Illinois
Illinois
Pennsylvania
Indiana
Kentucky
Michigan

Wisconsin


California


Ohio

Texas
Tennessee
Missouri
 Pennsylvania
 Texas
 Ohio
 Illinois
 Alabama

 Alabama

 Alabama
 Illinois
 Ohio
       I

       1
       1

       1
       I
       2
       2
       I
       I
       2
       I

       I
        1
        1
        2
        1
        1
        1
        2
        1
        1
 Subsidiaries are  indented.
                                                              (continued)
                                   8-6

-------
                              TABLE 8-1.   (continued)
Company/Subsidiary*
Plant location(s)
   Estimated
number of lines
   per plant
Rosewall Industries,  Inc.
  PI astee! Products Corporation
Sears Roebuck
  Roper Eastern
Stanley Works
Teledyne, Inc.
  Teledyne-Rodney
Thomas Steel Strip Corporation
U.S. Steel Corporation
  Alside, Inc.
Wheeling-Pittsburgh Steel Corporation
  Pittsburgh-Canfield
  Wheeling Corrigated
Wolverine Aluminum Corporation
Zeeger,  Inc.
  Pennsylvania

  Maryland
  Connecticut

  Massachusetts
  Ohio
  Alabama
  Ohio

  Ohio
  West  Virginia
  Michigan
  Illinois
       5
       6

       2
       1
       1
       2

       1
       1
       3
       1
 Subsidiaries are indented.
                                  8-7

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         TABLE 8-2.   CURRENT  AND SUGGESTED  END USES OF

____ PRECOATED METAL STRIP1*

Appliances— Large

 1.  Air conditioners
 2.  Clothes dryers
 3.  Otsh washers
 4.  Furnaces
 5.  Gas or electric ranges
 6.  Radio and phonograph cabinets
 7.  Refrigerator and freezer  liners
 8.  Refrigerator and freezer—doors and shells'
 9.  Space Heaters
10.  Vending machines
11.  Washing machines
12.  Water coolers
13.  Water heater jackets

Appliances—Small

 1.  Beauty shop equipment co1n-op equipment
 2.  Business machine housings
 3.  Can openers
 4.  Clock faces and housings
 5.  Coin-op equipment
 6.  Dehunidifiers
 7.  Electric fan blades
 8.  Floor waxers
 9.  Hair dryers
10.  Honogenizers
11.  Household cooking appliances
12.  Humidifiers
13.  Knife sharpeners

is4:  SmS'lT         for appl1ances (braces-  bMckets- •*•>
16.  Sewing machines
17.  Sound recording equipment
18.  Vacuum cleaners
19.  Watches and clocks

Construction

 1:  SSSTIS 2LSS*  ""•• «•• — ..... *.
 3.  Baseboard heating covers
 4.  Bathroom cabinets
 |.  Building soffit systems
 6.  Bus stop shelters
 7.  Carports, boat shelters
 8.  Car wash booths
 9.  Ceiling tile
10.  Commercial building marquees
11.  Construction machinery
                .    e)"3  S6et  Su"e™^.  aircraft hangers,  fac-
13.  Decorative chinmies
14.  Decorative shutters
15.  Doors
16.  Door and window frames
17.  Ductwork
18.  Electrical switch and outlet plates
I3-  Elevator and escalator paneling

            ted SeCt1°nS f°r bHd9eS a"d
2
22.  Fireplaces
                                                              (continued)
                                   8-8

-------
                           TABLE 8-2.    (continued)
  23.  Garage doors
  24.  Gutters and downspouts
  25.  Interior partitions and trim
  26.  Kitchen cabinets
  27.  Lighting reflectors and housings
  28.  Louvered vents
  29.  Partitions and fixtures
  30.  Patio covers and supports
  31.  Radiator fin stock
  32.  Refreshment booths (to house vending machines)
  33.  Residential siding
  34.  Roof decking
  35.  Roof flashing
  36.  Roof shingles and sheet
  37.  Sanitary ware (metal)
  38.  Screen  frames
  39.  Shower  stalls
  40.   Signs and  advertising  displays
  41.   Si To roofs
  42.   Stadium seats
  43.   Staircases,  railings,  scaffolds
  44.   Storage sheds, tool sheds
  45.   "T"  Bar hangers for tile
  46.   Telephone  booth—paneling
  47.   Walkway covers and supports
  48.   Wall tile

  Machinery, Farm and Garden Equipment

  1.   Animal  shelters
  2.   Farm storage bins
  3.   Feed troughs
  4.  Garden Equipment
  5.  Grain dryers
  6.  Large farm machinery
  7.  Blowers  and fans
  8.  Food products machinery
  9.  Industrial  controls
 10.  Machine  tool accessories
 11.  Paper industry machinery
 12.  Printing industry machinery
 13.  Stampers, roll  formers
 14.  Switchgear
 IS.  Textile  machinery
 16.  Mowers
 17.   Snowblowers
 18.   Spreaders
 19.   Tools

 Furniture
     (Residential  and Commercial)
  1.   Cabinets (storage, beverage,  functional)
  2.   Card  tables
  3.   Chairs
  4.'  Clothes  hampers
  5.   Coat  racks
  6.   Desks
  7.   Display  cases
  8.   Filing cabinets
  9.   Fireplace accessories
10.   Institutional furniture
11.   Ironing boards
12.  Juvenile  furniture
13.   Ladders and ironing boards	
                     "~(continued)
                                  8-9

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                         TABLE  8-2.    (continued)
14.   lamps and shades
15.   Lawn furniture
16.   Library shelving
17.   Lockers
18.   Metal drawers dividers
19.   Radiator covers
20.   Shelving
21.   Store *
-------
                          TABLE  8-2.    (continued)
 Miscellaneous

  1.   Athletic and sporting goods
  2.   Blackboards  (metal}
  3.   Bread boxes
  4.   Camera shells and parts
  5.   Casket handles
  6.   Communications equipment
  7.   Dental  equipment
  8.   Dispensing machines, towels, etc.
  9.   Drapery fixtures and curtain rods
10.   Electrical measuring equipment
11.   Games,  toys
12.   House  numbers
13.   Instrument gauge faces,  clocks, thermometers,  etc.
14.   Instrument panels
15.   Luggage
16.  Mail boxes
17.  Metal  signs (interior and exterior)
18.  Morticians goods
19.  Musical instruments
20.  Ordnance and accessories
21.  Photographic equipment
22.  Picture frames
23.  Pins and mechanical  pencils
24.  Tool and tackle  boxes
25.  Utensils
26.  Window blinds, Venetian  blinds,  pivot shades,  and accessories^
                                  8-11

-------
million Mg (4 million tons) of coil  coated metal  currently produced per
year represents an estimated product value of over $3.5 billion.1
     Industry sources indicate that the industry  currently operates at
about 65 percent of its maximum practical  capacity,1 compared to 67 percent
for the metal coating industry as a whole.5  Practical capacity is defined
as the greatest level of output the plant can achieve within a realistic
work pattern.5  If all lines run at full capacity, implied production is
estimated at more than 1.86 billion m2 (20 billion ft2) of coated metal
annually.  Total actual production in 1977 reached 1.21 billion m2 (13 bil-
lion ft2) and had an average product value of $2.47/m2 (23
-------
 comprehensive printed price list.   However, a list of average prices of
 coating per square foot of coated metal was constructed during an industry
 analysis conducted by the EPA Effluent Guidelines Division.6  This list is
 given in Table 8-3 and shows that the average price ranges between IB.Kt/m2
 and $2.15/m2 (1.5
-------
TABLE 8-3. COATINGS,
Coating
Weldable primer
Zincrometal
Epoxy
Epoxy-ester
Acrylic
Sili com' zed acrylic
Al kyd
Fluorocarbon (pvf and pvf2)
Fluorocarbon (ptfe)
Phenolic
Polyester (oil free)
Sili cone polyester
Solution vinyl
Urethane
Organosol
Plastisol
Acrylic film
Polyvinyl chloride film
Poly vinyl fluoride
Polyester film
Polyolefin film
Prints of two or more colors
Plastisols and organosols
Polyphenylene sulfide
Water and alkali soluble
=================^^
PRICES, AND METALS
Price/m2 (ft2)
$0.16 (1.5
-------
                        TABLE 8-4.   SHIPMENTS OF PRECOATED ALUMINUM AND STEEL:   1976 and 1977
      Industry users
                                            Aluminum
                                                             Steel
                                   1976
                            1977
                            1976
                            1977
Megagrams (tons)
Megagrams (tons)
Megagrams (tons)
Megagrams (tons)
CO
M
Cjn
      Building products
      Transportation
      Appliances
      Containers &
        packaging
      Furniture, fix-
        tures, &
          equipment
      Other users
316,419 (348,794)
 29,707  (32,747)
  5,054   (5,571)
308,753 (340,344)
 60,747  (66,962)
 17,040  (18,783)
144,059  (158,799)     163,271 (179,976)
   1,057  (1,165)
  24,931  (26,931)
   3,126  (3,446)
 107,159  (118,123)
715,320 (788,509)
646,680 (712,846)
 65,595  (72,306)

 66,313  (73,098)

 78,764  (86,823)
 103,598  (114,198)
795,054 (876,402)
837,712 (923,424)
 84,246  (92,866)

 58,403  (64,379)

 69,395  (76,495)
 97,054  (106,985)

-------
      TABLE 8-5.   MAJOR MARKETS FOR PRECOATED METAL:   1976 AND 19778
      Markets
                                     Megagrams (tons) of metal  shipped
     1976
     1977
Aluminum markets
  Residential siding
  Cans, ends & tabs
  Service centers &
    distributors
  Mobile homes
  Travel trailers & campers
  Trucks, trailers & shipping
    containers
  Awnings & canopies
  Rain  carrying equipment
 Steel markets
  Passenger  automobiles
  Industrial, rural buildings
  Lighting fixtures
  Trucks, trailers & shipping
    containers
  Shelving & fixtures
  Heating, water  heating &
    water softening equipment
  Container  strapping  & seals
  Portable  buildings & parts
144,127 (158,874)
132,608 (146,176)

 14,118  (15,563)
 61,999  (68,343)
 19,196  (21,160)

  7,315   (8,063)
 17,352  (19,127)
 21,787  (24,016)

494,804 (545,431)
422,193 (465,390)
 37,006  (40,792)

 18,333  (20,209)
 40,764  (44,935)

 17,157  (18,912)
 32,939  (36,309)
 32,231  (35,529)
157,776 (173,919)
151,568 (167,076)

 61,718  (68,033)
 53,380  (61,046)
 26,086  (28,755)

 24,171  (26,644)
 21,303  (23,483)
 21,033  (23,185)

780,570  (860,436)
546,216  (602,103)
 55,210  (60,859)

 52,424  (57,788)
 39,609  (43,662)

 36,773  (40,536)
 35,894  (39,567)
 34,400  (37,920)
                                   8-16

-------
 import or export of coil coated metal  was identified from government or
 industry sources because data on precoated metal  are included in overall
 figures for production,  imports, and exports of steel  and aluminum.
      The standard government publications that contain industry  statistics
 on shipments,  employment, and production did not yield any information  that
 is specifically related  to the coil  coating industry.   The reason for this
 lack of data is that coil coating is identified by a seven-digit Standard
 Industrial  Classification (SIC) code,  and none of the  statistics is  reported
 to that level  of detail.   Most of the  data are reported at the four-digit
 level.   Coil  coating as  an independent process is included in SIC code
 3479,  Metal  Coating and  Allied Services,  which also includes  numerous other
 metal  coating  processes.   The captive  coil  coaters may be  included in the
 SIC code for their parent companies, which may be producers of aluminum or
 steel,  or may  be classified by their major product.  Because  of  this  lack
 of published data,  most  of the information contained in the above  discus-
 sion was provided by sources within  the coil  coating industry.
 8.1.2   Trends
     8.1.2.1   Historical  Trends.   Since its  inception  in the  1930s, the
 coil coating industry has demonstrated a  steady rate of growth.  During the
 10-year period from 1968  through 1977,  the  industry grew,  on  the average,
 about  14 percent each year.8  This may be  compared to  an annual  growth rate
 of 8.8  percent for  the metal  coating industry  as  a whole during  the same
 period."  Although shipments  of both  precoated steel  and  aluminum declined
 sharply  during the  1974-1975 recession, production  quickly recovered by
 1976.  Total shipments of precoated metal from  1968  through 1977 are indi-
 cated  in  Table 8-6  along  with  the percent change per year in the production
 of  steel  and aluminum.
     Shipments  of precoated  aluminum coil increased an average of 9.6
percent each year from 1968  through 1977, and shipments of precoated steel
grew by nearly  16 percent  each year during the  same period.  The  rapid
growth of precoated  steel  has corresponded to an increase in demand in both
new and existing markets,  such as the transportation and large appliance
industries,  respectively.  Because both aluminum and steel production have
shown significant growth  in  recent years, it does not appear that one
segment is growing at the  expense of the other.  Imports and substitute
                                  8-17

-------
                        TABLE 8-6.   ESTIMATE OF TOTAL SHIPMENTS OF PREPAINTED OR PRECOATED METAL COIL
                                 BY COATERS LOCATED IN THE UNITED STATES, CANADA, AND MEXICO8
                                               [thousands of megagrams (tons)]
00
i-»
00
Year
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
Average
growth per
year
Aluminum
411 (453)
526 (580)
499 (550)
600 (661)
662 (730)
752 (829)
641 (707)
526 (580)
653 (720)
709 (782)

+ 9.6%

Percent
change
+ 24.6%
+ 27.9%
- 0.4%
+ 20.1%
+ 10.3%
+ 13.6%
- 14.7%
- 18.0%
+ 24.1%
+ 8.6%



Steel
919 (1,013)
1,072 (1,182)
1,031 (1,137)
1,146 (1,263)
1,305 (1,439)
1,690 (1,863)
1,893 (2,087)
1,301 (1,434)
2,184 (2,407)
2,671 (2,944)

+ 15.9%

Percent
change
+ 17.7%
+ 16.8%
+ 0.4%
+ 11.1%
+ 13.8%
+ 29.4%
+ 12.0%
- 31.3%
+ 67.9%
+ 22.3%



Total
1,330 (1,466)
1,598 (1,762)
1,530 (I,o87)
1,746 (1,924)
1,967 (2,169)
2,442 (2,692)
2,534 (2,794)
1,827 (2,014)
2,837 (3,127)
3,380 (3,376)

+ 14.0%

Percent
change
+ 19.7%
+ 20.2%
- 0.4%
+ 14.0%
+ 12.7%
+ 24.1%
+ 3.8%
- 27.9%
+ 54.9%
+ 19.2%




-------
 products have had  little or no effect on growth trends during the past 10
 years.9
      During the past 10 years, expansion of industry capacity has been
 achieved through the construction of new coil coating lines and through
 modifications of existing facilities.  Based on data obtained from the EPA
 Effluent Guidelines Division,2 it is estimated that a total of 18 new lines
 have been constructed since 1970 and that 55 lines have undergone modifica-
 tion since that time.  The ratio of modifications to new lines has been
 about 3 to 1 during the past decade.  Although some of the newer lines have
 dramatically higher production rates than most existing lines, smaller
 lines also continue to be built.   New plant construction has not substan-
 tially modified the geographic distribution of the industry in recent
 years.
      8.1.2.2  Future Trends.   The coil  coating industry is highly capital
 intensive and fast growing.   Led by the increased use of precoated metal in
 the transportation and appliances industry,  the  demand for coil  coated
 steel  and aluminum is expected to grow significantly in the future.   Con-
 trary to the lower annual  growth  rate of 4  to  5  percent forecast for  most
 industries  that purchase precoated metal,  it is  estimated that the coil
 coating industry will  grow at  an  average annual  rate of 12 percent through
 1985.12 13   projections  of total  shipments  of  precoated metal  for  the
 5-year  period  from 1981  through 1985 are indicated in Figure 8-1.   By 1985,
 total  shipments  of coil  coated metal are expected  to reach approximately
 6.9  million  Mg  (7.6 million tons),  as compared to  approximately  3.4 million
 Mg  (3.7 million  tons)  during 1977.   Projections  are  based  on an  annual
 growth  rate  of 12  percent  of the  base year  (1977)  production through  1985.
 This amounts to  an  annual  increase  of approximately  0.45 million Mg (0.50
 million tons) per year during  this period.
     Although existing facilities will absorb a portion of  this anticipated
 growth  during the next few years, new and modified lines will be necessary
 to maintain  the  growth rate.   At  least three major manufacturers are  known
 to be planning the  construction of new lines to be in operation by the
early 1980s.  As discussed in  Chapter 5, the most prevalent modification to
coil coating lines will be for the purpose of increasing line speed.
                                  8-19

-------
12,000

11,000

10,000

 9,000

 8,000

 7,000

 6,000

 5,000

 4,000

 3,000

 2,000

 1,000
5,600
             1981
                             7,100
          6,100
          1982
1983
                                           1984
                                        7,600
                                        1985
  Figure 8-1. Total projected shipments of precoated metal: 1981-1985.
                       (in thousands of tons)
                                   8-20

-------
       The projected growth in the production of coil  coated metal  is equiva-
  lent to an annual increase in production of 139 million m2 (1.5 billion
  ft2).   This projected growth is equivalent to three  large, two medium,  and
  two  small  new model  plants per year and the modification of nine  existing
  plants  per year.   As mentioned previously, some of the newer lines  have  a
  much higher production capacity than previous ones.   For example, Roll
  Coater,  Inc.,  and Prefinish Metals  each have lines operating or under
  construction  that are capable  of processing metal  up  to 1.83 m (72  in.)
  wide at  speeds  in the range of 3.5  to 4.0  m/s (700 to  800  ft/rain).  One
  line of  this  capacity is  equal  to several  lines  in the  size  ranges  of the
  model plants.   The estimate  of the  number  of new lines  is  made  only to
  represent  the expected increase  in  production capacity.  The actual number
  of lines built  may be  more or  less  than the  estimates depending on the
  capacity of each  new  line.  Major replacement of equipment for existing
  lines is not typical of the coil coating industry.   Routine replacement of
  line components, such as the wet section, which may occur every 2 to 5
 years, does not constitute a modification because it  does not impact produc-
 tion or emissions.
      Areas of growth will  include the deeper penetration of existing markets
 In addition to the entrance into new markets not yet  explored by the indus-
 try.   Increased sales to the transportation industry  for such products  as
 trucks,  trailers,  and recreational vehicles are expected.   Industry  spokes-
 persons  also believe  the large  appliance industry to  be on  the verge of a
 major switch to  precoated  stock.5 Advances in coating formulations, energy
 conservation measures,  and the  desire to avoid postassembly painting and
 its resultant  pollution control  problems  are expected  to be additional
 factors that will  lead to  increased  sales of precoated metal  coil.  Competi-
 tion  with  imports  or  substitute products  is  not expected to dampen industry
 growth.
      The actual  coating process,  the size of  lines, and  the geographical
 concentration of new  lines are  not expected to  change to any significant
 degree over  the  next 5 years.   However, improved  operating characteristics
on new and existing lines, such as increased  line speed  and the addition of
dual coating heads, which allow color changes  to be made without interrupt-
ing the coating  process, will contribute to industry growth.  New lines
                                  8-21

-------
will incorporate an even higher degree of automation,  resulting in lower
labor cost and greater economy of scale in production.   Examples of recent
innovations include automatic film (coating) thickness monitoring and strip
temperature measurement using infrared techniques.   In addition, advances
in coating formulations will  enable new industries to use precoated steel
or aluminum in t.,eir manufacturing processes.   For coil coated metal to be
used in a product, the coatings not only must be capable of withstanding
the normal conditions of the products' use, but must also withstand manufac-
turing operations such as cutting, bending, and joining.  Two recent innova-
tions that have led to new markets for coil coated steel are (1) a polyester
coating that is induction heated during roll forming operations to radii as
small as twice the metal thickness and (2) a weldable primer.14  The first
of these developments is used by General Electric to manufacture refrigerator
doors and wrappers, and the latter is used by the automobile industry.
8.2  COST ANALYSIS OF CONTROL OPTIONS
8.2.1  Introduction
     In this section the costs of various control options are presented and
analyzed.  The control options, discussed in Chapter 4, are summarized in
Table 8-7, along with the regulatory alternatives to which each applies.
(See Appendix E for a description of a set of revised control options and
regulatory alternatives.)  The model coil coating lines presented in Chapter 6
form the basis for all cost analyses in this section.   Figure 8-2 lists key
parameters for each model line size.  The metal sizes and production rates
of  the model lines are based on responses to an industry survey of all
known facilities.
     The  first  regulatory alternative, No New Source Performance  Standard
 (NSPS), corresponds  to  the level  of control expected under the  State  Imple-
mentation Plans  (SIPs).  The S!P  limits  applicable to  particular  coating
 lines vary geographically, depending  on whether Control Technique Guideline
(CTG) limits or numerical limits  apply.  AS described  in Chapter  7, the
average level of volatile organic compound  (VOC) control required  in  those
areas that use  CTG limits is 64 percent  overal!, while  the average  level  of
control required in  States that use numerical limits is 85 percent  overall
(approximately  equivalent to 90 percent  capture and 95  percent  destruction
                                  8-22

-------
          TABLE 8-7.  REGULATORY ALTERNATIVES AND CONTROL OPTIONS
                    CONSIDERED IN THE ECONOMIC ANALYSIS
       Regulatory alternative
       Control option
I.    No NSPS
      (SIP regulations apply)
      SIP = CTG limits
      SIP = Numerical limits
II.    Limiting emissions to the
      equivalent of an 85 percent
      reduction in the emissions
      from the average industry
      coating formulation of
      40 percent solids and 60
      percent VOC

III.   Limiting emissions to the
      equivalent of a 95 percent
      reduction in the emissions
      from the average industry
      coating formulation
1.


2.


2.
Multiple zone incinerators
and coating rooms

Thermal incineration with
heat recovery

Thermal incineration with
heat recovery
3.
Thermal incineration with
heat recovery and coating
rooms.
                                  8-23

-------
Small Line
      Annual operating time
      Annual coating time
      Total metal processed
      Metal
      Dry film thickness

      Line speed
      Ovens
      Oven exhaust temperature
4,000 h
2,780 h
4.6 X 106 m2/yr (50 X  106 ft2/yr)
Aluminum, 0.46 m (18  in.) wide, 0.30 mm (0.012 in.) thick
prime coat, 0.0114 mm (0.00045 in.) each side
top coat, 0.0114 mm (0.00045 in.) each side
1.02m/s{200ft/min)
1 each for prime coat and top coat
316° C (600° F)
Medium Line
      Annual operating time
      Annual coating time
      Total metal processed
      Metal
      Dry film thickness

      Line speed
      Ovens
      Oven exhaust temperature
4,000 h
2,780 h
14 X 106m2/yr(150X 10^ ft2/yr)
Steel, 0.91 m (36 in.) wide, 0.43 mm {0.017 in.) thick
prime coat, 0.0114 mm (0.00045 in.) each side
top coat, 0.0114 mm (0.00045 in.) each side
1.5m/s(300ft/min)
1 each for prime coat and top coat
316° C (600° F)
 Large Line
      Annual operating time
      Annual coating time
      Total metal processed
      Metal
      Dry film thickness

       Line speed
      Ovens
      Oven exhaust temperature
 4,000 h
 2,500 h
 28 X  1Q6 m2/yr (300 X  106 ft2/yr)
 Steel, 1.22 m (48 in.) wide, 0.48 mm (0.019 in.) thick
 prime coat, 0.0114 mm (0.00045 in.) each side
 top coat, 0.0114 mm (0.00045 in.) each side
 2.5 m/s (500 ft/min)
 1 each for prime coat and top coat
 316° C (600° F)
               Figure 8-2. List of parameters for model coil coating lines.
                                           8-24

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                TABLE 8-8.  KEY PARAMETERS FOR CONTROL OPTION 1:  MULTIPLE ZONE INCINERATORS
                                              AND COATING ROOMS
                                                                Line size
    Parameter
    Small
     Medium
      Large
    Oven exhaust temperature     316° C (600° F)

    Exhaust volume, each oven    2.4 m3/s (5,000 scfm)
    Effectiveness of solvent
      capture

    Effectiveness of solvent
      destruction

     Average solvent input
       reaching oven
 100  percent


  64  percent
316° C (600° F)

4.7 mVs (10,000 scfm)

    100 percent


     64 percent
0.016 £/s (15.1 gal/h)     0.048 S./s  (45.4 gal/h)
316° C (600° F)

9.4 mVs (20,000 scfm)

    100 percent


     64 percent


0.11 £/s (101 gal/h)
ro
01
     Average heat released by     720 kW (2.5 MM Btu/h)      2,200  kW  (7.4 MM  Btu/h)     4,700 kW  (16 MM Btu/h)
       solvent combustion
     Electric power required
       above that of standard
       ovens
 Approx. 0
     Approx.  0
      Approx.  0
      MM Btu = million Btu/h.

-------
                     TABLE 8-9.   KEY PARAMETERS FOR CONTROL OPTION  2:  THERMAL  INCINERATION WITH HEAT RECOVERY
                                                                       Line size
        Parameter
                                            Small
                                    Medium
                                   Large
00
r
ro
en
  Oven exhaust temperature
  Incineration temperature
  Exhaust volume,  each  oven
  Primary heat exchanger duty
  Secondary heat exchanger
   duty
  Effectiveness of solvent
   capture
 Effectiveness of solvent
   destruction in incinerator
 Average  solvent  input  reaching
   oven
 Average  heat  released by
   solvent combustion
 Electric power required
  above that of standard
  ovens
Volume of preheated air to
  ovens
Temperature of preheated air
  to ovens
  316° C (600° F)
  760° C (1,400° F)
  2.4 mVs  (5,000  scfm)
  1,000 kW  (3.5  MM Btu/h)
  1,800 kW  (6.3  MM Btu/h)

       90 percent

       95 percent

 .014 £/s (13.6  gal/h)

 970  kW (3.3 MM  Btu/h)

       106 kW

4.1 mVs (8,600 scfm)

382° C (720° F)
 316° C (600° F)
 760° C (1,400° F)
 7.1 m3/s  (15,000 scfm)
 2,900 kW  (10 MM Btu/h)
 5,600 kW  (19 MM Btu/h)
      90 percent

      95 percent

.043 £/s (40.9 gal/h)
 316°  C  (600°  F)
 760°  C  (1,400° F)
 15. F  mVs  (33,000 scfm)
 6,700  kW  (23.MM Btu/h)
 12,000  kW  (42 MM Btu/h)

      90 percent

      95 percent

.096 A/s (90.0 gal/h)
                                                                     2,900 kW (9.9 MM Btu/h)    6,400 kW (22 MM Btu/h)
                                                                          225 kW
                                                                     12  mVs  (26,000  scfm)
                                                                     382°  C (720°  F)
                               510 kW
                          27 mVs (58,000 scfm)
                          382° C (720° F)
      MM Btu/h = million Btu/h.

-------
       TABLE 8-10.   KEY PARAMETERS  FOR CONTROL OPTION 3:  THERMAL INCINERATION WITH HEAT RECOVERY
                                           AND COATING ROOMS
                                                             Line size
Parameter
Small
Medium
                                                                                                    Large
      Oven exhaust temperature

      Incineration temperature

      Exhaust volume, each oven

      Primary heat exchanger duty

      Secondary heat exchanger
        duty

      Effectiveness  of  solvent
        capture

oo      Effectiveness of solvent
[^        destruction in incinerator

       Average solvent input reaching
         oven

       Average heat  released by
          solvent  combustion

        Electric power required
          above that of standard
          ovens

        Volume of preheated air
          to ovens

        Temperature of preheated
          air to ovens
                                316° C (600° F)

                                760° C (1,400° F)

                                2.4 m3/s (5,000 scfm)

                                1,000 kW (3.5 MM Btu/h)

                                1,800 kW (6.3 MM Btu/h)


                                    100 percent


                                      95 percent


                                 0.16 SL/s  (15.1 gal/h)
                   316° C (600° F)

                   760° C (1,400° F)

                   7.1 m3/s (15,000 scfm)

                   2,900 kW (10 MM Btu/h)

                   5,600 kW (19 MM Btu/h)


                       100 percent


                         95 percent


                    .048 £/s  (45.4 gal/h)
                                 1,100 kW (3.7 MM Btu/h)    3,200 (11 MM Btu/h)
                                        106 kW
                                  4.1 m3/s  (8,600  scfm)
                                  382° C (720° F)
                          225 kW
                     12 m3/s  (26,000 scfm)
                     382°  C  (720°  F)
                   316° C (600° F)

                   760° C (1,400° F)

                   15.6 mVs (33,000 scfm)

                   6,700 kw (23 MM Btu/h)

                  12,000 kW (42 MM Btu/h)


                        100 percent


                         95 percent


                    0.11 £/s  (101 gal/h)


                    7,000 kW (24 MM Btu/h)


                            510 kW



                    27 m3/s (58,000 scfm)


                      382° C (720° F)
  MM Btu/h = million Btu/h.

-------
in the control  device).   Tables 8-8,  8-9,  and 8-10 list important parameters
for the three control  options.
     By virtue of its  having the lowest capital  and operating costs, Control
Option 1 is the control  option applied to  CTG limits in this analysis.
Option 1 involves the  use of multiple incinerators as integral parts of the
curing ovens.  Fumes from the various oven zones are recycled through these
incinerators in such a manner that solvent destruction is achieved before
the exhaust leaves the ovens.   These  systems, in effect, incinerate a
portion of the total gas flow in the  ovens.   With this control technique, a
solvent destruction level of 64 percent is near the maximum that can consis-
tently be obtained.   Therefore, coating rooms are required in order to
achieve maximum percent capture of solvents.   The costs of coating rooms
are included in the capital costs of this  control option.
     Control Option 2 is thermal incineration with primary and secondary
heat recovery, resulting in 90 percent solvent capture and 95 percent
solvent destruction.  Figure 8-3 is a schematic diagram of a model coil
coating line with such a control system.   The effectiveness of the primary
heat exchanger is limited to an average of 36 percent in order that the
temperature of the gas stream entering the incinerator be no greater than
482° C (900° F) for safety reasons.  The secondary exchanger is 60 percent
effective, which is a relatively high level  of effectiveness for an air-to-
air exchanger, and is  offered by a number  of vendors as standard equipment.
The use of these heat exchangers reflects  the rapidly growing trend in the
industry toward heat recovery systems.
     Control Option 3 is thermal incineration with heat recovery, as in
Option 2, with the addition of coating rooms.  Solvent destruction is 95
percent complete, and solvent capture is assumed to be 100 percent effec-
tive.  With reference to the model coil coating line diagrammed in Figure
8-3, the addition of enclosures around the two coating areas would make the
"solvent loss" streams equal to zero and would increase the solvent avail-
able for combustion in the incinerator over that of Option 2.
     Several variations on the above incineration schemes with heat recov-
ery are available to the industry.  These  include the use of multiple zone
incinerators followed by an afterburner and the use of thermal incineration
with regenerative heat recovery.
                                  8-28

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                                                                                                     TO STACK
CD
 I
ro
SOLVENT LOSS
  FROM PRIME
COATING AREA
                       ACCUMULATOR
                   SPLICER
            ^
          UNCOILING
            METAL
                                                                   SOLVENT LOSS
                                                                   FROM TOPCOAT
                                                                   COATING AREA
                                                                                                                       AIR
                                                                                                                  NATURAL GAS
                                                                                              PRIMARY
                                                                                              HEAT
                                                                                              EXCHANGER
                                                                                                                        INCINERATOR
                                                              TO CONTROL
                                                              EQUIPMENT
                                                                    -*••
                                                                                                               AIR

u



1
                                          WET SECTION
                               PRIME     PRIME       PRIME   TOPCOAT   TOPCOAT      TOPCOAT
                              COATING    OVEN       QUENCH  COATING    OVEN       QUENCH
                               AREA                           AREA
RECOILING
 METAL
                          Figure 8-3.  Schematic diagram of a model coil coating line with thermal incineration and primary
                                                   and secondary heat recovery (Control Option 2).

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     Another category of control  technology  for  this  industry is  catalytic
incineration.   Recuperative  heat  exchangers  may  be  used in conjunction with
these incinerators to achieve maximum fuel economy.   However, catalytic
incineration is not widely used in the industry  due to a history  of problems
with catalyst fouling and poisoning.   These  problems  can be overcome through
control of the t>pes of coatings  used, regular maintenance of the units,
and the use of special filters.   Catalytic  incineration is best suited to
captive coaters, who use only a few coatings and know the composition of
each.  In such cases, this system is more economical  than thermal incinera-
tors due to fuel savings.  Catalytic incineration is  not considered as a
control option in this section, however,  because it is not universally
applicable to the industry.
     The cost estimates presented in this section are study estimates,
accurate to ±30 percent.  Equipment costs of lines  and control systems were
obtained from vendors of the equipment.15 16 *7  is  is 20 21  Descriptions
of the model lines were sent to a number  of  vendors with the request that
they provide cost data on the control systems they would recommend.  Operat-
ing costs of lines and control equipment  were estimated based on vendor
data and on calculations made with the parameters shown in Figure 8-2 and
Tables 8-8, 8-9, and 8-10.  The costs of  coating lines and control equip-
ment presented here have been found to be consistent with the experience of
various coil coating firms.
8.2.2  New Facilities
     In this section, costs that are applicable to new coating lines are
summarized.  All costs are based on the model plant parameters.  In this
industry, new coating lines are likely to fall within the size range of
existing facilities.  Model plant sizes are discussed in Chapter 6.
     8.2.2.1  Capital Costs.  Table 8-11 shows the total installed costs of
air  pollution control equipment for the various control options.   The
control system  in Option  1 consists of multiple zone  incinerators  in combi-
nation with the  use of coating rooms.  The  installed  cost given  for Option
2  is for thermal  incineration with recuperative (air-to-air)  heat exchangers,
a  common form of heat recovery used in the  industry.  This control system
is described in  detail  in Section 8.2.1,  above.
     Different  vendors  offer  equivalent heat  recovery using  their  own
designs and types of  equipment.  Based on vendor responses,  the  ranges  of
                                  8-30

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TABLE 8-11.   CAPITAL COSTS OF CONTROL OPTIONS


Control option
1. Multiple zone
incinerators and
coating rooms
2. Thermal incineration
with heat recovery
3. Thermal incineration
with heat recovery
and mat inn rooms
Percent overall
solvent
destruction
64

85
95
Size
model
line
Small
Medium
Large
Small
Medi um
Large
Small
Medium
Large

Installed cost,
$l,OOOs
214
289
A f\ r*
405
278
548
1,178
388
680
1,322
                   8-31

-------
installed capital  costs for systems using thermal  incineration with
primary heat recovery (36 percent effectiveness) and secondary heat recov-
ery (60 percent effectiveness), or at least equivalent heat recovery, are
approximately as follows:  small model  line, $260,000 to $420,000; medium
model line, $490,000 to $740,000; and large model  line, $680,000 to
$1,400,000.  Because of the high air flow rates in the large model line,
most vendors recommend the use of two incinerators, one for each oven.  The
costs of control for the large line thus include two incinerators plus heat
recovery systems.   The total installed costs shown in Table 8-11 were
determined from equipment prices with component capital cost factors.22
Table 8-12 shows the component capital  cost factors used in this analysis.
     Most vendors provide cost information  for a 90 percent control  level.
Capital costs for the  systems designed to deliver 95 percent solvent
destruction are estimated to be 10 percent  greater than the costs for
systems designed to deliver 90 percent solvent destruction.  Equipment
vendors indicate that, for some lines, no modification to their standard
control systems would  be required to achieve 95 percent control.  However,
in  order to guarantee  95 percent in every situation, a larger  incineration
chamber and/or  special seals on the heat exchangers may be required.
Based  on discussions with vendors and on the use of standard cost/capacity
correlations, the equipment cost of the incinerator alone would increase  20
to  30  percent for the  required  increase in  residence time from approxi-
mately 0.3  second to 0.4 or 0.5 second." ™  This WQuld result  -n an
increase  in the cost of  the entire  system of approximately 10  percent.
This factor was applied  to the  capital costs of systems for 90 percent
destruction to  arrive  at the cost  of systems for 95 percent destruction.
     8.2.2.2  Annual 1 zed Costs.   In this section,  the  annualized  costs  of
the control options  are  discussed.  These costs include annualized capital
costs  and  operating  costs  for  electricity,  fuel, labor, and maintenance.
     Table 8-13 shows  some  basic  assumptions made  in the cost  calculations.
Additional  assumptions are  that the control devices operate at preset
temperatures  and  air flow  rates throughout  the  4,000 hours annual  operating
time and that the devices  use  no  fuel during nonoperating  hours.   The
 latter assumption  is made  for  ease in calculation, with the realization
that a firm operating  two  shifts  per day might  choose  to use  a low-fire
mode at night to  protect the  incinerator and heat  exchangers  and  prevent

                                   8-32

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        TABLE 8-12.
COMPONENT CAPITAL COST FACTORS  USED  IN  CALCULATING
        TOTAL INSTALLED COSTS
        Type of cost
                         Component  capital cost factor
Basic equipment cost

Installation direct costs

  Foundations and supports
  Erection and handling
  Electrical
  Piping
  Insulation
  Painting
  Freight

Installation indirect costs

  Engineering and supervision
  Construction and field expense
  Construction fee
  Startup
  Performance test
  Contingencies
                                      1.00
                                     0.08
                                     0.14
                                     0.04
                                     0.02
                                     0.01
                                     0.01
                                     0.05
                                             Total
                                    8-33

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          TABLE  8-13.   CALCULATION  OF ANNUALIZED  COSTS  OF  AIR
                       POLLUTION  CONTROL  SYSTEMS
   Cost component
                                              Basis  of  calculation
Operating factor



Operation and maintenance

Utilities

     Electricity
     Natural gas
    Capital  recovery factor3
                                           16  n/d
                                          250  d/yr
                                        4,000  h/yr
                                            5  percent Of installed cost
                                        $.04/kWh
                                       $2.84/GJ ($3.00/MM Btu)
                                    0.174
          and overhead and 0.02  for taxes  and i

MM Btu/h = million Btu/h.
                                 8-34

-------
  lengthy warm-up times.  The operating temperature to achieve 95 percent
  solvent destruction is taken as 760° C (1,400° F) in the thermal  incinera-
  tors.23 25
       Table 8-14 summarizes annual  operating costs for the control  options.
  The  estimates of operating costs for Options 2 and 3 in this analysis
  tend to be somewhat higher than the costs that the most energy-conscious
  firm could achieve with the same equipment.   This is primarily  due to  fuel
  costs.   The control  equipment at many existing plants is  operated  at preset
  temperatures  and gas flows as assumed in  this  analysis.   However,  as energy
  conservation  becomes more  of a necessity,  the  use of low-fire modes during
  extended noncoating  periods  and during oven  turndown modes,  when possible,
  may  increase.   Such  practices  would  tend  to  keep  operating costs below
  those shown here.
      Tables 8-15  through 8-17  present annualized  capital  and operating
  costs for air pollution control  systems.   Three levels of overall solvent
  destruction are evaluated  for  facilities that use solvent-borne coatings:
 64 percent, 85 percent, and 95 percent.
      The operating costs of the control systems in Tables 8-15 through 8-17
 demonstrate the economic value of heat recovery equipment.  The fuel require-
 ment  of each control system is less than  the requirement of a line  without
 controls.   In the medium and large plants, the fuel savings cause  the
 direct cost (operating cost) of each system to be  negative,  i.e., a savings.
 For any  given new coating line, a particular design of the heat  recovery
 scheme may  offer the most cost-effective emission  control.   Firms building
 new lines generally consider several  designs  before deciding  on  the best
 one for  their  applications.   Several  plants  are  using regenerative  heat
 recovery systems  that are  reported  by the  vendor to yield  a net  cost savings
 for almost  any size line.   Other firms are  using direct  recycle  of  incine-
 rator exhaust  or  recycle of oven  exhaust through oven  burners.   There are
many variations on  thermal  incineration with  heat  recovery in the industry.
     8.2.2.3  Cost  Effectiveness.  The overall cost effectiveness of con-
trol  options is presented in Tables 8-15 through 8-17.  These figures give
the annual cost or  savings  associated with a control system per unit VOCs
removed.
                                  8-35

-------
          TABLE 8-14.   ANNUAL OPERATING COSTS OF CONTROL OPTIONS
                                  Annual  operating costs. $l,OOOs
Control
option
Model line
   size
Electricity
Fuel
  Labor,
maintenance,
 materials
Total
  1.
  2.
  3.
 Small
 Medium
 Large

 Small
 Medium
 Large

 Smal 1
 Medi um
 Large
     0
     0
     0

    17
    36
    82

    17
    36
    82
 (25)
(143)
(304)

 (25)
 (83)
(178)

 (28)
 (93)
(198)
    10
    14
    20

    14
    28
    60

    20
    35
    C7
 (15)
(129)
(284)

   6
 (19)
 (36)

   9
 (22)
 (49)
                                   8-36

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TABLE 8-15.   ANNUALIZED COST OF VOC CONTROL OPTIONS  FOR SMALL MODEL  LINE





CO
CO
Percent Overall
Control option for overall effectiveness of Annual i zed Direct
facilities that use solvent VOC reduction capital costs, cost (savings),
solvent-borne coatings destruction Mg/yf ton/yr $l,OOOs Jl.OOOs
1. Multiple zone 64 176 194 37 (15)
incinerators and
coating rooms
2. Thermal incineration 85 235 259 48 6
with heat recovery
3. Thermal incineration 95 261 288 68 9
with heat recovery
and coating rooms
facilities that use waterborne coatings were not considered for add-on controls.
Overall cost
Total annualized (savings)/unit
cost (savings), VOC removal
$l,OOOs $/Mg $Aon
22 120 110

54 230 208

77 295 267



-------
CO
I
u>
00
                        TABLE 8-16.   ANNUALIZED COSTS  OF VOC  CONTROL OPTIONS FOR MEDIUM MODEL  LINE
Percent Overall
Control option for overall effectiveness of Annual i zed Direct
facilities that use solvent VOC reduction capital costs, cost (savings),
solvent-borne coatings destruction Mg/yr ton/yr $l,OOOs 51,000s
1.


2.

3.


Multiple zone 64 530 584 50 (129)
incinerators and
coating rooms
Thermal incineration 85 708 780 95 (19)
with heat recovery
Thermal incineration 95 787 866 118 (22)
with heat recovery
and coating rooms
Overall cost
Total annual i zed (savings)/unit
cost (savings), VOC removal
$l,OOOs $/Mg $/ton
(79) (149) (135)


76 107 97

96 122 111


       ^Facilities  that use waterborne coatings were not considered for add-on controls.

-------
00
                      TABLE 8-17.   ANNUALIZED  COSTS OF VOC  CONTROL  OPTIONS  FOR LARGE MODEL LINE
Percent Overall Overall cost
Central option for overall effectiveness of Annualized Direct Total annualized {savings)/unit
facilities that use solvent VOC reduction capital costs, cost (savings), cost (savings), VOC removal
solvent-borne coatings destruction Mg/yr ton/yr $l,OOOs $l,OOOs $l,OOOs $/Mg t/ton
1.

2.
3.
Multiple zone 64 1,060 1,168 70 (284) (214) (202) (183)
incinerators and
coating rooms
Thermal incineration 85 1,411 1,556 205 (36) 169 120 109
with heat recovery
Thermal incineration 95 1,568 1,729 230 (49) 181 115 105
with heat recovery
and coating rooms
       'facilities using waterborne coatings were not considered for add-on controls.

-------
     Control  Option 1,  applicable  only  to  lines  needing  64  percent  control,
offers a net  savings over the  cost of standard coating lines  for  the  medium
and large model  lines.   This  is  because the  use  of multiple zone  incine-
rators and coating rooms has  a relatively  low capital cost  above  that of
the basic lines  (without emission  controls)  for  larger plants yet allows
recovery of substantial  heat  from  the solvent.
     Tables 8-18 through 8-20  show the  marginal  cost per unit VOCs  removed
for various control alternatives in achieving NSPS levels of  control.   The
marginal cost in achieving NSPS  limits  over  CTG  limits is the difference  in
total annualized cost between  the  CTG control option and the  NSPS option
being considered.   For the medium  and large  size plants,  the  annualized
cost of the CTG  option is negative; that is,  it  is a savings  over the
standard line without controls,  as seen in Tables 8-15 through  8-17.   Thus
the marginal  cost per unit VOCs  removed is higher for the medium  and  large
model lines than for the small line.
     The marginal  costs per unit VOCs removed given in Tables 8-18  through
8-20 (e.g., the  case of going from Control Option 2 to Control  Option 3 for
small and medium plants) are  generally  higher than the corresponding  overall
cost effectiveness values given  in Tables  8-15 through 8-17  This  is
primarily due to the increase  in capital requirements to achieve  a  modest
reduction in  emissions.   The  large plant shows a relatively low marginal
cost in this  case because of  proportionally  lower capital costs per unit
VOCs removed.  In going from  the CTG control  system       ^    ^ ^ ^
control system (Options 2 or  3), the high  marginal costs are  due  to a
com ination of major increases in  capital  costs  and substantially higher
fuel requirements.
     8.2.2.4  Base Cost of faculty.  This section presents the base  cost
and operaung costs of new col,  coating faculties.  These  costs  can  be
compared to t e cost of control allocable to MSPS to determine the economic
f...ibimy of new regulations.  The analys1s contains costs  for  each size
model plant.
     The najor capita, expenses  for a new col, coating p,ant  are  for  me-
chan,cal equlpraent and ovens  for the ,1ne  Itself, Installation  of equip-
ment, and natenals and construction of a  Urge  factory  building.   These
costs are summarized In Table 8-21. All Information In  Table 8-21  was
                                  8-40

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                TABLE 8-18.   MARGINAL COST  EFFECTIVENESS OF  NSPS  ABOVE  SIP REGULATIONS  FOR SMALL MODEL  LINE
Control option for
facilities that use
solvent-borne coatings3
2.
3.
Thermal incineration
with heat recovery
Thermal incineration
with heat recovery
and coating rooms
Percent
overall
solvent
destruction
85
95
Incremental effectiveness
of VOC removal compared
with SIP regulations
Mg/yr(ton/yr)°
States using
CTG limit
59 (65)
85 (94)
States using
numerical limits
~0 (~0)
26 (29)
Incremental annual i zed cost
attributable to NSPS,
Sl.OOOs
States using States using
CTG limits numerical limits
32 0
55 23
Marginal cost per unit
of VOC removal
$/Mg ($/ton)
States using
CTG limits
540 (490)
650 (590)
States using
numerical limits
880 (790)
CO
Facilities that use waterborne coatings were not considered for add-on controls.
The difference between SIP emissions and NSPS emissions expressed on an annual basis.

-------
oo
i
-P»
ro
                    TABLE 8-19.   MARGINAL COST EFFECTIVENESS  OF NSPS ABOVE SIP REGULATIONS FOR MEDIUM MODEL LINE
Control option for
facilities that use
solvent-borne coatings
2. Thermal incineration
with heat recovery
3. Thermal incineration
with heat recovery
and coating rooms
Percent
overall
solvent
destruction
85
95
Incremental effectiveness
of VOC removal compared
with SIP regulations
Mfl/yr(ton/yr)ft
States using States using
CTG limit numerical limits
178 (196) ~0 (~0)
257 (282) 79 (86)
Incremental annual i zed cost
attributable to NSPS,
$1.000s
States using States using
CTG limits numerical limits
155 ~0
175 20
Marginal cost per unit
of VOC removal
$/.> ($/ton)
States using States using
CTG limits numerical limits
870 (790)
680 (620) 250 (230)
 Facilities that use waterborne coatings were not considered for add-on controls.


nThe difference between SIP emissions and NSPS emissions expressed on an annual basis.

-------
03
i
-p»
OJ
             TABLE 8-20.   MARGINAL COST EFFECTIVENESS OF NSPS ABOVE  SIP  REGULATIONS  FOR  LARGE MODEL  LINE
Control option for
facilities that use
solvent-borne coatings
Percent
overall
solvent
destruction
Incremental effectiveness
of VOC removal compared
with SIP regulations
Mq/yr(ton/yr)D
States using States using
CTG limit numerical limits
Incremental annual i zed cost
attributable to NSPS,
$ 1,000s
States using States using
CTG limits numerical limits
Marginal cost per unit
of VOC removal
$/Mg ($/ton}
States using States using
CTG limits numerical limits
        2.  Thermal  incineration        85
            with heat recovery

        3.  Thermal  incineration       95
            with heat recovery
            and coating rooms
                                         351  (388)      ~0   (~0)
                                          508  (561)    157  (173)
383
395
                                                                                                  ~0
12
             1,110 (1,000)
780  (710)    80   (70)
facilities that use waterborne coatings were not considered for add-on controls.

bThe difference between SIP emissions and NSPS emissions expressed on an annual basis.

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      TABLE 8-21.  CAPITAL COSTS OF NEW COIL COATING FACILTIES
Cost item
Mechanical equipment-- line
Ovens
Installation of mechanical
equipment and ovens
Total basic line cost
Building cost
Total facility cost less
control equipment
Total facility cost,
including control
equipment, to meet
Control Options 1, 2,
and 3
Control Option 1—64
percent overall
destruction
Control Option 2--85
percent overall
destruction
Control Option 3—95
percent overall
destruction
Costs
Small
2,700
630
1,110
4,440
2.870
7,310





7,520

7,590

7,700

for each size
$1 ,000s
Medium
4,000
800
1,600
6,400
3,870
10,270





10,560

10,820

10,950

model line,
Large
53150
1,090
2,080
8,320
5,200
13,520





13,920

14,700

14,840

pplicable only to lines that use solvent-borne
coatings.
                                8-44

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 obtained from vendors  and  other persons  responsible for estimating costs of
 new Tines.15 1S 2l 26  27   In Table 8-21, four significant figures are used
 only to demonstrate differences between  costs with and without emission
 controls.
      Installation costs are the most variable of the costs shown.  These
 are affected by geographic location of the new facility and the local cost
 of labor.  A factor of 33 percent of equipment cost is assumed for the
 installation cost of mechanical equipment.15 26
      Since few lines have been built exclusively for the use of waterborne
 coatings, there are few cost data available on these lines at the present
 time.   However,  most of the mechanical  equipment and the structure for a
 Plant  that uses  such lines would be similar to those of a plant with  lines
 built  exclusively for the use of solvent-borne coatings.   As  previously
 discussed,  the  average oven size and air flow on lines that  use waterborne
 coatings are assumed to be the  same as  those on  lines  that use solvent-
 borne  coatings.   Therefore, the costs  of model  lines  that  use waterborne
 coatings may also be taken from Table  8-21.
     New model coating facilities  would require  approximately the following
 shop areas:   small  line,  6,690  m2  (72,000 ft2);  medium line,  9,290 m2
 (100,000 ft2); and  large  line,  12,800 m2  (138,000  ft2).  The  building  costs
 in  Table 8-21 reflect  a cost  of $377/m2 ($35/ft2)  plus  an  allowance for  a
 ceiling-mounted  crane.15  26 27   Building costs  are high  in this  industry
 because  of  the amount  of  structural  steel required.
     In  estimations of annual operating costs of model  coating facilities,
 it  was assumed that each  facility  provides coating services for customers
 and does  not  actually  purchase  the metal.  Table 8-22 gives .annual operat-
 ing costs for the model plants.  Costs  of coatings are by far  the  greatest
 operating expenses for coil coaters.  Annual coating costs for the model
 facilities are estimated with a figure  of $2.37/m2 ($.022/ft*) coated.
 This figure reflects the use of a  relatively inexpensive, commonly used
 coating  (a polyester,  for example) at the film thickness used  in the model
 Plants.  Most coating  facilities use a  variety of coatings and adjust their
 charge to the customer  to reflect  the cost of the coatings.
     Electrical costs  in Table 8-22 were calculated with a figure of
0.26 kWh/m2 (0.024 kWh/ft2) of metal coated.   The electrical  costs of
                                  8-45

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     TABLE  8-22.  ANNUAL OPERATING COSTS OF MODEL COIL COATING
              LINES WITHOUT  EMISSION CONTROL  EQUIPMENT

             	Annual operating  costsT  $l,OODs

Model line                                Maintenance

  size       Electricity     Fuel    Labor      repairs    Materials    Total
                                  8-46

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  operating coil coating lines vary from less than 0.19 kWh/m2 (0.018 kWh/ft2)
  coated to greater than 0.31 kWh/m2 (0.029 kWh/ft2) coated,  depending on
  line  size,  line speed, and type of equipment.26 28  Fuel  costs  are  based on
  the use of  ovens with no solvent destruction or heat recovery.  The costs
  of electrical  energy and fuel  energy are  given  in Table 8-14.   Labor costs
  in Table 8-22  reflect the following:   small  plant,  19 employees; medium
  plant,  28 employees;  and large plant,  36  employees.   These  numbers  exclude
  maintenance personnel,  whose salaries  are included  in the maintenance and
  repair  costs.   These  costs  are estimated  at  5 percent of the total  installed
  costs of  the facilities  without  air pollution control  equipment.  All labor
  is assumed to  cost $9 per hour.  The number  of employees in each plant
  reflects  a shop worker to administrative worker ratio of approximately 3 to 1.
 8-2.3  Modified/Reconstructed  Facilities
      As discussed in Chapter 5, most modifications to coil coating lines
 are made either to increase the production rate or to conserve fuel  energy.
 In the past, a number of plants have achieved an increase  in line  speed  of
 approximately 20 percent by replacing drive motors and gears and by  chang-
 ing the electrical controls on  the line.29  Frequently, no modification to
 the  ovens was  required in such  cases.   Today, the cost of  modifying  a line
 in this manner  would be on the  order of $100,000 to $200,000.
     Since an  increase in line  speed would result in increased emissions,
 such a modification  would bring a facility under NSPS regulations.   For
 purposes of  estimating the economic impact of the  regulations on a facility
 undergoing modifications,  the installed capital  costs  of emission control
 equipment given in this  chapter,  multiplied by a  factor of 1.3, may  be
 used.  The 30 percent  increase  in capital  costs  is intended to allow  for
 additional direct  costs  of ducting, structural work,  and electrical work
 and for  additional indirect  costs of engineering and construction.   These
 costs are  very  much site  specific.  The capital costs of retrofitting
emission control systems vary from  less than 20 percent greater to several
hundred percent greater than the costs of such equipment on new lines.  A
figure  of 30 percent represents  the typical case where no major design or
installation problems are encountered in the retrofitting process.
                                 8-47

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     Capital  and operating expenses  were  analyzed  for  coil  coating lines
(in the size  range of the  model  lines)  that  undergo  modifications  to
increase their production  rate  by  20 percent.   While this  is  by no means the
only kind of  modification  expected in the industry,  it is  believed to be a
reasonable example of modifications  that  may occur.  An existing line
meeting CTG limits by Control  Option 1  would be required to install addi-
tional emission control  equipment  in order to meet NSPS requirements.
Thermal incinerators are generally used in combination with Control Option
1 systems to  achieve better emission control.   The operating temperatures
of the afterburner can be  significantly less than  760° C (1,400° F) for
most solvents.15
     For the purpose of estimating the  costs of additional emission control
needed to meet NSPS, the following system is used.  On each model  line, an
afterburner with a primary heat exchanger is added to  treat the exhaust
flow from both ovens.  The primary heat exchanger, with an effectiveness of
50 percent, is used to preheat oven exhaust gas with heat from the incine-
rator exhaust gas.  Primary heat exchangers are used here because package
units containing both incinerator  and heat exchanger are available, and
because their use here is  in keeping with the level  of heat recovery used
in the analysis of new lines meeting NSPS requirements in Section 8.2.2.
Secondary heat exchangers  or air preheaters are not considered here (1)
because significant heat recovery has already been achieved by the use of
zone incinerators and a primary heat exchanger and (2) because afterburner
temperatures are somewhat lower than those considered  in Section 8.2.2.
  " Tn'1^^6^"65 °f the add'°n-incinerators  assumed here are
538  C  (1,000  F) for 85 percent overall  control and 649° C (1,200° F) for
95 percent overall control.
     The capital costs of the incinerator systems  with primary heat recovery
 or the model lines already having Control Option 1 are as follows:  small
line  $258,000; medium line, $426,000;  large line, $671,000.   The units are
sized for actual flow rates at 649° C (1|200. F).   The costs are corrected
to current prices using Marshal! and Swift equipment cost indices and a
factor  of 1.30 to account for the extra costs of  retrofit equipment.
     Operating costs of modified lines originally having CTG levels of
      1°nrntHH* are deSCn'bed " Tabl6 8'23'  The tabl* -eludes informa-
      on the addUional operating costs of the model lines modified for a 20
                                  8-48

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      TABLE 8-23.   INCREASE IN ANNUAL OPERATING COSTS  OF EXISTING  LINES
            HAVING CTG CONTROL SYSTEMS DUE TO INCREASED  PRODUCTION
                    AND ADDITIONAL EMISSION CONTROL
                                   ($l,OOOs)

Size model
line Fuel


Electricity
Maintenance
and
repairs


Materials Labor Total
 A-  Production
 Cost increase (savings) in existing portion of line due to 20 percent

 increase in productionb
 Small
 Medium
 Large
 (4)
(12)
(23)
 7
20
41
0
0
0
  220
  660
1,320
0
0
0
  223
  668
1,338
 B.   Control
 Cost increase due to additonal  control  equipment needed to  provide
«5 percent overall
Small
Medium
Large
23
37
72
control
5
10
20
13
21
33
0
0
0
0
0
0
                                                                         41
                                                                         68
                                                                        125
C.  Control
gost increase due to additonal control equipment needed to provide
'•"'.percent overall control
Small
Medium
Large
35
58
114
5
10
20
13
21
33
0
0
0
0
0
0
53
89
167
Includes the materials and labor associated with maintenance and repairs.
bTo obtain total additional operating costs of a line due to increase in
 production and NSPS requirements, add the total production cost increase
 (A) to the total control cost increase for the appropriate NSPS level  of
 control  (B or C).
                                 8-49

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percent increase in line speed,  without the additional  afterburners.   Costs
are also presented that can be directly attributed to the additional  control
systems.
     The above discussion of capital  and operating costs refers to the
situation in which an existing line with CTG levels of emission control is
retrofitted with -quipment to meet NSPS requirements for the regulatory
alternatives requiring 85 and 95 percent overall  control.  In the case of a
line currently having a system to provide 85 percent overall control  (in
States using numerical limits),  the only regulatory alternative to consider
is the alternative requiring 95 percent overall  control.  Since the system
in Control Option 2 provides 85 percent overall  control, it is assumed here
that an existing facility in a State using numerical limits would need to
add coating rooms to achieve 95 percent control.   The installed costs of
coating rooms, with a factor of 1.3 built in to  allow for the difficulty of
retrofitting the equipment, are as follows:  small line, $143,000; medium
line, $172,000; large line, $187,000.  Additional operating costs due to
the increased production and the additional emission control are summarized
in Table 8-24.  The fuel savings shown are due to the heat of combustion
provided by the additional solvent oxidized to 95 percent destruction.
     In actual practice, some existing facilities may be achieving 85
percent overall removal by other means, such as  less efficient incinerators
in combination with coating rooms.  In such cases, the capital and operat-
ing expenses would be different (perhaps higher) than those presented here.
For example, facilities may have to modify existing incinerators to increase
the residence time of combustion chambers or to reduce leakage in heat
exchangers.  However, the costs presented in Table 8-24  represent those
expected in typical cases.
8.3  OTHER COST CONSIDERATIONS
     The purpose of this section is to summarize, to the extent possible,
the cost impact of requirements imposed on the coil coating industry by
other environmental regulations.  Areas of other major regulations perti-
nent to the coil coating process include water pollution, occupational
exposure to toxic substances by employees, and toxic substances control.
                                  8-50

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     TABLE 8-24.  INCREASE IN ANNUAL OPERATING COSTS OF EXISTING LINES
            HAVING 85 PERCENT CONTROL DUE TO INCREASED PRODUCTION
            AND ADDITIONAL (95 PERCENT OVERALL) EMISSION CONTROL
                                TO MEET NSPS
                                  ($l,OOOs)

Size model
line Fuel


Electricity
Maintenance
and
repairs


Materials Labor Total
 A.   Production
 Cost increase  (savings)  in  exfstfng portion  of  Une due to 20 percent

 increase  in  production

     Small    (5)      7               0           220            0       222
     Medium   (15)      20               0           660            0       665
     Large    (31)      41               0          1,320            0     1,330

 8.   Control
 Additional cost increase  (savings) due to additional control  equipment
 needed to provide 95  percent overall  control

     Small    (4)      0               7             °   •         S        A
     Medium   (11)      0               9             0            0        (2
	  Large    (21)      0               9             00       (12)

Includes the materials and labor associated with maintenance and repairs.
bTo obtain total additional  operating costs of a line  due  to  increase  in
 production and NSPS requirements, add the total production cost increase
 (A) to the total  control cost increase (B).
                                 8-51

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8.3.1  The Clean Water Act
     Coil coating facilities are generally subject to effluent discharge
regulations imposed by the Federal  Water Pollution Control  Act Amendments
of 1972,30 as amended by the Clean  Water Act of 1977, Public Law 95-217
(the Act).  Basically, the Act requires that EPA develop effluent limita-
tions for both new and existing facilities that discharge liquid effluent
directly into navigable waters.   New and existing facilities that discharge
to publicly owned treatment works (POTWs) would be subject to new pretreat-
ment standards.   In addition, Section 307 (a) of the Act requires that the
Administrator promulgate specific effluent guideline limitations for the
toxic pollutants listed under Section 307 (a) (1) of the Act.   Included in
this listing are several of the solvents commonly used in the surface
coating process.
     Effluent discharges from coil  coating facilities generally originate
from the pretreatment ("wet") section of the plant.   In the actual coating
process, common industry practice entails the capture and reclamation of
cleanup solvent in lieu of effluent discharge.   When a color change is
made in a plant that uses solvent-borne coatings, the coating tray and
coating rolls are cleaned with solvent.   Excess solvent is  drained from the
coating pan, stored in drums, and shipped to a commercial recovery plant.
Reclaimed solvent from the recovery plant is sold back to the coater for
use in cleanup operations.
     Estimates of compliance costs  for Water Act regulations are not avail-
able for inclusion in this study.   However,  preliminary estimates indicate
no expectation of plant closures due to the  regulations, which are scheduled
for proposal in September 1980.«  New or existing sources  that meet, or
™lo ^ 6XiSt1n9 Nati°nal P°11Utant D1scha^ Elimination System
(NPDES) standards would incur only minimal economic impact.   However,
sources that do not practice solvent recovery in the coating process may be
subject to a more severe impact for water treatment systems.«
8.3.2  Occupational Exposure
     The responsibility of regulating levels of enrissions within the plant
working area is that of the National Institute for Occupational Safety and
Health (HIOSH) and the Occupational Safety and Health Administration (OSHA).
OSHA „ a part of the U.S. Department of Labor, and its responsibilities
                                  8-52

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  include final  adoption of occupational  exposure standards  and  enforcement
  of the  standards through inspection of  work places.   NIOSH is  an  agency of
  the U.S.  Department of Health,  Education,  and  Welfare,  and part of  its
  charter is  to  provide regulation support information  to OSHA.
      OSHA has  worker area standards for nearly 500  chemicals.  These stand-
  ards are  very  similar to the  Threshold  Limit Values (TLVs)  designated by
  the American Conference  of Governmental  Industrial  Hygienists  (ACGIH).   The
  ACGIH defines  TLV as  "concentrations of  air-borne substances which  repre-
  sent conditions  under which it  is believed  that  nearly  all workers may be
  repeatedly exposed  day after  day without adverse effect  ....  TLVs refer
  to time-weighted concentrations for a seven or eight hour workday and a
  forty hour work week."  This  same definition may be used for OSHA exposure
 standards.  The TLVs  for typical solvents used in the coil  coating process
 are shown in Table 8-25.
      Control of worker-area solvent concentrations is  accomplished through
 containment, isolation, substitution, general ventilation,  7oca7 exhaust
 ventilation,  change of operating procedures, and administrative control.
 Many hooding techniques can be used and  are discussed  in the ACGIH Indus-
 trial Ventilation Manual.32  Around a coating area,  a  hooding system com-
 bined with a containment system can be very effective  in limiting  employee
 solvent  exposure levels.   The  cost of hood,  ducting, and fan 'is expected to
 be  a small percent  of the total  capital  cost of a new  coating line.
     Another  emission level constraint affecting  the coil coater is  the
 lower explosive limit (LED of solvents.  Solvent explosions  are not only a
 health and safety concern to the worker,  they also are a  great  concern to
 insurers of coating  equipment.   Insurance companies require strict monitor-
 ing of solvent  7eve7s  in  equipment areas  where  such levels might approach
 the  LEL.
     The highest  solvent  levels  are  found in the drying ovens.  Most coat-
 ing systems are designed to maintain a concentration below 25 percent of
the LEL in the ovens.   Table 8-25 lists LEL values for typical solvents
used in the coil coating  industry.  However, meeting the required  levels of
solvent concentration  in this  instance is a design concern rather  than an
added cost due to Federal regulation.
                                  8-53

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           TABLE 8-25.  THRESHOLD LIMIT VALUES (TLV) AND LOWER
               EXPLOSIVE  LIMITS (LEL) OF TYPICAL SOLVENTS
TLV
Solvent
Toluene
Xylene
n-Hexane
n-Heptane
Cyclohexane
Naphtha
Methyl acetate
Ethyl acetate
N-Butyl acetate
Acetone
Methyl ethyl ketone (MEK)
Methyl isopropyl ketone
Carbon tetrachloride
Methanol
Ethanol
•— .,_,... . _ _ _ _
Mg/m3
375
435
(l,800)b
(2,000)b
1,100
NA
610
1,400
710
2,400
590
700
65C
260C
1,900
ppm
100
100
(500)b
(500)b
300
NA
200
410
150
1,000
200
200
10C
200C
1,000
Vol %
1.27
1.0
1.3
1.0
1.31
0.81
4.1
2.2
1.7
2.15
1.81
1.4
NA
6.0
3.3
LEL
lb/103ftsa
2.37
2.32
2.75
2.40.
2.8
2.16
7.45
4.74
4.83
3.04
3.20
3.54
NA
4,70
3.72
Calculated at 100° F.
b.
 In the process of being changed.
                                         through skin>
mucous
NA--not available.
                                  8-54

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 8-3.3  Toxic  Substances  Control
      The  EPA  Office  of Toxic  Substances  has  authority to  regulate the manu-
 facture,  importation, processing,  use, and disposal of chemical substances
 that pose unreasonable risk to health or the environment.  This includes
 industries such as the paint  and coating industries, which for the most part
 are processors of chemicals;  i.e., they  mix chemicals such as solvents to
 form paint.33
      Several of the  solvents  currently in wide use throughout the industry
 are contained on the EPA Priority  List of Toxic Substances.   These sub-
 stances, including toluene, are under active study by the Agency.   Accord-
 ingly,  future regulations may ban  their  use in manufacturing processes or
 may limit them to specific nonessential   uses.  However,  the  impact of such
 a regulation appears minimal.34
 8.4  ECONOMIC IMPACT ANALYSIS
      This section analyzes the economic  impacts of the regulatory  alterna-
 tives for new and modified facilities in the  coil  coating industry.   Model
 plants  of three capacities are used to represent typical  new  sources  and
 typical  existing sources  that might undergo modification  in the  industry.
 The analysis  in this  section  is  based on  the  parameters and costs  presented
 In  Sections 8.2 and 8.3.   Two  baselines  are used  in  estimating the economic
 impacts;  these correspond to  facilities  in States  that require a reduction
 in  VOC emissions  of 64 percent (designated as CTG  areas)  and  to those  in
 States that specify an 85 percent reduction in  VOC emissions  (designated as
 numerical  limit  areas).
      The  impacts  of two regulatory  alternatives are estimated in this
 section,  only  one of  which  applies  to new and modified sources in numerical
 limit areas.   Regulatory  Alternative  I is the no regulation, or No NSPS,
 case  and would  therefore  have  no impact on the  industry.   Regulatory Alter-
 native II would  require an  85  percent reduction in emissions and applies
 only  to sources  in CTG areas.  Regulatory Alternative III would require a
 95 percent reduction  in emissions and applies to sources in CTG and numerical
 limit areas.
     Three types of impacts are estimated.  Price  impacts are calculated
with the assumption that all additional costs of the alternatives are
passed forward to consumers of the  coil coaters1 services.  Return on
                                  8-55

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 investment (ROI)  impacts  assume  that these additional costs are  absorbed  by
 the  coil  coater-that  is, that the product price does not change in  the
 face of  a cost  increase.  Finally, incremental capital requirements  attribut-
 able to  the regulatory alternatives are estimated.  Section 8.4.1 contains
 a summary of these  impacts for new and modified facilities.  Section 8.4.2
 discusses the structure and performance of the industry and provides a
 backdrop  against  which the estimated impacts can be interpreted.  Section
 8.4.3 describes the methodology  used to estimate the impacts.  Sections 8.4.4
 and  8.4.5 present the estimated  impacts for new and modified facilities,
 respectively.
 8.4.1 Summary
      The  regulatory alternatives would have a smaller Impact on  new  sources
 than on  existing  facilities that undergo modification.  These impacts are
 more severe for new and modified sources in CTG areas than for those in
 numencal  limit areas.  In addition, the regulatory alternatives are likely
 to affect the toll coater more than the captive, or subsidiary,  coater, who
 is a part of an integrated company.
      Estimated price impacts for new facilities range from 0.2 to 4.1 percent.
 The  larger price  impacts fall on firms in the CTG areas and range from 1.0
 to 41 percent compared with those for sources in numerical limit areas.
 wh,ch range from  0.2 to 0.8 percent.   The decline in the baseline ROJ of
 12 percent is estimated to range from 0.4 to 2.4 percentage points for
 f.c,l,ti..  constructed in CTG areas as opposed to a decline ranging  from
 0.1  to 0.3  percentage points for new sources in numerical  limit areas.   The
 largest .ncremental capital  outlay for firms in CTG areas represents 6.6 per-
 cent of the baseline (Alternative I)  outlay compared with a maximum  increase
 of l^percent for firms in numerical  limit areas.   Even though the  regula-
 ory alternates affect facilities in CTG areas more than those in  numerical
 l«it areas, no competitive advantage  is gained or lost because coil coat-
 ing  f,rms  serve local markets rather  than a national  one.   In effect, this
means that  firms  in CTG areas are not  in competition with firms in numerical
 limit areas.
     The impacts  for existing sources  that undergo modification are more
severe than those reported above for  new sources;  again,  lines in CTG areas
are affected more than those in numerical  limit areas.   The price impacts
                                  8-56

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 for the former range from 20.2 to 45.5 percent; those for the latter range
 from 2.0 to 15.0 percent.  An ROI does not exist that would allow a modi-
 fied facility in a CTG area to maintain the baseline (No NSPS) price of its
 coating services.  The baseline ROI of a facility in a numerical limit area
 would decline by 6.1 to 11.9 percentage points.  The incremental capital
 required if a modification is undertaken explains the size of these impacts.
 It ranges from 258 to 336 percent of the baseline investment for facilities
 in CTG areas,  or 94 to 143 percent for modified sources in numerical limit
 areas.
      A distinction must be drawn in the interpretation of these  results as
 they are applied to toll  versus  captive coaters.   For the toll coater,
 whose product  is a service (namely,  the coating of a steel  or aluminum coil
 for a price),  the results stand.   A captive coater,  however,  is  usually part
 of a vertically  integrated firm—a steel  or aluminum producer, for  example.
 In this  case,  the regulatory  alternatives would increase  the  cost of an
 input (the  coated coil)  used  in  the  manufacture of some final product—for
 example,  aluminum siding  or rain-carrying equipment.  Because the cost of
 this input  represents only a  fraction  of the cost  of all  inputs  used to
 manufacture  the  final product, the actual increase  in the product price
 would be  less  than  the "price" increases reported  above.  Thus,  the  toll
 coater might suffer greater impacts  than the captive coater, whose parent
 company might  be  more interested in  an  assured  supply of coated  coils than
 in  the price per  se of the coater1s  services.
 8.4.2  Economic Conditions in the Industry
     The purpose  of this  section is  to  provide  a perspective from which to
 interpret the  economic impacts presented in Sections 8.4.4 and 8.4.5.
These impacts  are based on representative model plants, which are engineer-
 ing constructs, rather than on actual plants and firms in the industry.
The  information in  this section, then,  supplements the model plant analysis
by relating  it to actual conditions  facing the  industry.  Section 8.4.2.1
describes the  structure of the coil coating industry.  Section 8.4.2.2
analyzes the financial performance of the industry and presents an estimate
of the weighted average cost of capital, which  is used in the calculation
of the economic impacts.
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     8-4-2'1  Industry Structure.   Production  in  the  coil  coating industry,
as noted in Section 8.1.1,  is  not  heavily  concentrated.   Historical  data on
concentration ratios for the metal  coating and allied services industry (of
which coil coating is a part)  are  presented in Table  8-26.   In each  case
the concentration ratio has been derived by calculating  the  ratio of the
value of shipment of the 4, 8, 20,  and  50 largest firms to  the value of
shipments for all firms in the industry.   It should be emphasized that coil
coating is only a part of this industry, and the  concentration ratios may
not reflect the degree of concentration  existing  among coil  coaters.  The
total value of shipments by coil coating firms accounted for 17,2 percent
of the total value of shipments for the  metal  coating and allied services
industry in 1972 and for 18.9  percent in 1977.35   Data for a more complete
analysis of concentration ratios for the coil  coating industry are not
currently available.
     The evidence suggests that firms exhibit  economies  of scale in  produc-
tion.  As stated in Section 8.1.1, as well as  in  other industry studies,
production is capital intensive and continuous; high-volume  production is a
significant operating characteristic. **  There is no  evidence, however,
that these economies of scale  restrict the entry  of new  firms into the
industry.  Expansion within the industry,  as discussed in Section 8.1.2.1,
consists primarily of the modification of  existing lines (to increase the
line speed) and the construction of new lines  by  existing firms.
     Vertical and horizontal  integration may be more  important as barriers
to entry into the industry.  As Table 8-1  indicates,  the majority of coil
coating firms are subsidiaries of  larger organizations.   As  a result, the
cost of capital may be lower  than  that for independent (nonsubsidiary)
coaters.  (A large, publicly  traded firm has access to more  sources  of
capital than does a privately owned, or independent,  coater.   Such sources
include issuing more shares of common stock, financing out of retained
earnings, issuing notes or bonds,  and borrowing from  a bank.   The privately
owned coater can tap only two  of these sources:  earnings and bank borrow-
ing   The publicly traded firm, then, has  more flexibility in determining
the fmancing mix, and thus the cost of financing, than  does the independent
coater.)  Many nonsubsidiary  firms are large meta! processing and manufac-
turing enterprises, who may therefore be !ess  concerned  with the market
                                  8-58

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     TABLE 8-26.   CONCENTRATION  RATIOS  IN  THE METAL  COATING
                 AND ALLIED  SERVICES  INDUSTRY37	

                     Value of shipments  (%) accounted for
                 	by largest firms	

Year             4 firms      8  firms      20 firms      50 firms


1963                17           26           39            54

1967                18           26           37            50

1972                15           23           36            49
                            8-59

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demand for coil  coating services.   Both characteristics imply,  at least
qualitatively, that a new market entrant would potentially face higher
capital costs as well as less certain demand and would thus be  less likely
to enter the market in response to otherwise favorable profit conditions.
     As indicated in Table 8-6, the coil coating industry has experienced
historically high growth rates.  This trend is expected to continue through
1985 and will take place through increased sales to the transportation
industry as wel? as expansion of newer markets sjch as the large appliance
industry.  However, growth is expected to be achieved by using existing
capacity more fully, by modifying existing lines, and by the construction
of new lines by existing manufacturers.
     In light of the industry's economic structure, there are several
qualitative  implications regarding the impacts of the regulatory alternatives.
If compliance requires  significant increases in capital costs, the higher
interest  rates paid by  the nonsubsidiary firms will increase their costs of
production,  making them less competitive than the subsidiary firms.
     8'4-2'2 Industry  Performance.  Data on a variety of financial statis-
tics for  the coil coating  industry for  the period 1976-1978 are presented
in Table  8-27.  These statistics were compiled from data on 29 firms  (see
Section 8.6).  The  industry's  financial position appears to have been  rela-
tively satisfactory  over the 3-year  period.
     The  ratio of current  assets to  current liabilities fell slightly
between  1976 and 1978 but  remained above 2.0, indicating an ability to meet
all  short-term  obligations.  Long term  debt to total  capitalization  in the
industry  declined  from  34  percent  in 1976 to  31 percent in 1978; the  indus-
try  is  not burdened  with excessive debt, and  the average coil coating firm
should be able  to  finance  at least a part of  new investment through  the
bond market, usually a  less  costly option than financing  out of  equity.
The  ratios of sales  to  inventory  and sales  to receivables  fluctuated  sharply
between  1977 and 1978.   The  sales-to-inventory  ratio  more  than doubled,
suggesting that the industry reduced the value  of  its assets held  in the
 form of inventories relative to sales,  a,  indicator that  tne industry is
not  carrying *x«ss^ inventory.  The ratio  of sales to  receivables fell,
 however,  indicating that the industry's customers *er* not as  prompt in
paying off their accounts.
                                   8-60

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 TABLE 8-27.  SELECTED  FINANCIAL STATISTICS FOR THE COIL COATING INDUSTRY,
                                1976-1978*
Ratio
Sales to inventories
Sales to receivables
Current assets to current liabilities
Debt to total capitalization (%)

1976
NA
NA
2.3
33.5
Year
1977
5.9
11.6
3.2
32.4

1978
12.0
7.4
2.1
30.7
— — — —• -
—  .^^^^     "       _    —'	 I I	... -^Ml^              	

Calculated from financial data on 29 firms (see Section 8.6).

 NA = not available.
                                 8-61

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     An important financial parameter for the industry is the weighted
average cost of capital (WACC), which was estimated to be 12 percent.  The
WACC is the return on investment needed to guarantee a supply of investment
funds for the industry.  The cost of capital is a weighted average of the
after-tax costs of the three major sources of capital:  common stock,
long-term debt, a<,d preferred stock.  The methods used to determine the
WACC are described in detail in Section B.6.
8.4.3  Methodology
     The methodology used to estimate the impacts of the regulatory alter-
natives is described in this section.  A discounted cash flow (DCF) approach
is used to evaluate the profitability of investing in new production facil-
ities and, more specifically, to determine which one of several alternative
facilities is the most profitable for the firm.  For each size of produc-
tion facility, the firm can choose one of several possible configurations.
These configurations correspond to the "base case" and the control options
for which cost data were provided in Section 8.2.  Using the OCF approach,
the most profitable configuration for each type of production facility can
be selected.  The resulting choices show which facilities would be con-
structed by the industry in the absence of the regulatory alternatives and
thus constitute a baseline from which the impacts of those alternatives can
be measured.
     A general description of the DCF approach is provided in Section 8.4.3.1.
This background is needed  to understand the particular application of the
DCF approach, which, as presented in Section 8.4.3.2, is used to estimate
the economic  impacts.  Finally, how the impacts are calculated with  this
method is discussed in Section 8.4.3.3.
     8.4.3.1  Discounted Cash Flow Approach.  An investment project  gene-
rates cash outflows and inflows.  Cash outflows include the initial  invest-
ment and operating expenses.  Cash  inflows  are the revenues from the sales
of the output produced by  the project, depreciation of the capital equip-
ment, and recovery of  the  working capital at the end  of the project's life.
Cash outflows and inflows  can occur  at any  time during the project's life-
time.  For this analysis,  all  flows  are assumed to take place  instantaneously
at the end of each year.   Furthermore, all  investments are assumed to be
                                  8-62

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  conventional  investments;  that is,  they are represented  by  one  cash  outflow
  followed by one or more cash inflows.38  This  assumption insures  the exist-
  ence  of a unique internal  rate of return for each  project.39  For a  project
  with  a  lifetime of N years,  there are  N + 1 points  in  time  at which  cash
  flows occur:   at the end of  year  0,  the end of year  1, and  so on  through
  the end of the Nth year.
       The  initial  (and only)  investment is assumed  to be  made at the  end of
 year  zero.  This  cash outflow  comprises the sum of the fixed capital cost
 and the working capital.   It is offset by an investment  tax credit, which
 is calculated  as  a  percentage  of  the fixed  capital cost  and represents a
 direct tax  saving.  The  cash flow in year zero can be given by the follow-
 ing equation:

                      Y  = (FCC + WC) +  (TCRED x FCC).                 (8-1)

 The variables for this  and subsequent equations are defined in Table 8-28.
      The project generates its first revenues (and incurs further  costs)  at
 the end  of year 1.  The  net cash flows  in this  and succeeding  years  can be
 represented by the following equation:

              Yt = (Rt -  Et) (1  - T)  + QtT      t = 1,  .  .  ., N.       (8-2)

 The first term of Equation  8-2  represents the after-tax inflows  of the
 project  generated by sales  of the  output after  netting  out all deductible
 expenses.   Revenues are  given by

                              R. = P  •  Q • U.                         (8-3)
                                U

 Deductible  operating expenses,  Et, are  the sum  of the fixed and variable
 operating  costs  and can  be  represented  by

                                E  = V *  U  +  F.                        (8-4)
                                 U-

Variable costs  include expenditures on  raw materials, labor (operating,
supervisory, and maintenance), and utilities.  Fixed costs include expendi-
tures for facility use,  insurance, administrative overhead, etc.   For

                                 8-63

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                          TABLE 8-28.   DEFINITIONS
                                        Explanation
Dt             Depreciation in year t
DFt            Discount factor = (1 + r)-t
DF             Sum of the discount factors over the life of the project
                                     N         -t
                                     I  (1 + r) t
                                   t = 0
DSL            Present value of the tax savings due to straight line
                 depreciation =      N
                                     2  D.T(1 + r)"1
                                   t = 0 l
Et             Operating expenses in year t
F              Annual fixed costs
FCC            Fixed capital costs
N              Project lifetime in years
NPV            Net present value
P              Price per unit of output
Q              Annual plant capacity
Rt             Revenues in year t
r              Discount rate, or weighted average cost of capital
T              Corporate tax rate
TCC            Total capital cost
TCRED          Investment tax credit
U              Capacity utilization rate
V              Annual variable operating costs
WC             Working capital
X              Minimum [$2,000, 0.2 x FCC]
Yt             Net cash flow in year t
                                  8-64

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  income  tax purposes,  E.  is deductible from gross  revenues,  Rt.  Hence, the
  after-tax cash  inflow to the firm can be  determined  by  netting out these
  expenses  and  multiplying the result  by (1 -  T).
       Federal  income tax  laws also allow a deduction  for depreciation of the
  capital equipment  (not including  working  capital).   Although depreciation
  'is not  an  actual cash  flow,  it does  reduce income tax payments (which are
  cash  outflows)  since taxes are based on net  income after the depreciation
  allowance  is  deducted.40   In Equation  8-2, the expression DtT represents a
  firm's annual tax  savings  resulting  from  depreciation; it is treated as a
  cash  inflow.  In the analysis in this  section, the straight-line method of
 depreciation  is used.   The salvage value of the facility is assumed to be
 zero, so the annual depreciation expense  is simply given by (FCC - X)/N,
 where N is the lifetime of the project and X is $2,000 or 20 percent of the
 fixed capital  costs,  whichever is smaller.
      The net cash flows represented by Equation 8-2 occur at the end of the
 first through  the Nth  years.   Additional cash inflows occur at  the end  of
 the first  and  Nth year.  The additional cash inflow at the  end  of  the first
 year  is  the tax  savings attributable  to the additional  first year  deprecia-
 tion  deduction of 20 percent  of the fixed  capital  cost or $2,000,  whichever
 is  smaller. By  law, the  basis for calculating  normal  depreciation allow-
 ances  must be  reduced  by  the  amount of the additional  first  year deprecia-
 tion.4!  The additional cash  inflow at the end  of  the Nth year occurs when
 the working capital, initially treated as  a cash outflow, is recovered.
     Because these  cash flows occur over a future  period of  time,  they must
 be  discounted  by an appropriate interest rate to reflect the fact  that a
 sum of money received at  some future  date  is worth less than if that sum
were received  at the present  time.  This discount  factor, DFt, can be given
by

                    DF  = (1  + r)-t     t = o, 1,  . .  ., N.            (8-5)
                      U

The sum of  the discounted cash flows  from a project is called the net
present value of that project.  That  is,
                                  3-65

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                                    N
                            NPV  =   I    Y.  -  OF.  ,  or
                                 t =  0   l      t
                                                                    (8-6)
                                    N              _t
                            NPV  =1    Y.  (1 + r)  r .
                                 t =  0   *

The decision criterion is to invest in the  project if  it has a positive NPV
at a discount rate equal  to the  weighted average cost  of capital.
     8.4.3.2  Project Ranking Criterion. The specific application of DCF
used in the economic analysis is discussed  in this section.   What is needed
is a criterion for ranking alternative investment projects in terms of
profitability.  It is assumed that, in the  absence of  the regulatory alter-
natives, any firm building a new production facility would invest in the
most profitable configuration of that facility.  This  configuration can be
compared with the one to be built to comply with the regulatory alternative;
this comparison forms the basis  for calculating price  and rate of return
impacts.
     Equation 8-6 can be rearranged and used as the ranking criterion.  The
procedure begins by substituting the expressions for R and E (given by
Equations 8-3 and 8-4, respectively) in Equation 8-2.   Next, the expres-
sions for YQ  in Equation 8-1 and Yt in  Equation 8-2 are substituted for Yfc
in Equation 8-6.  NPV in equation 8-6 is then  set equal to zero, and the
unit price, P,  is solved for by rearranging the terms in Y. so that the
price is on the left-hand side of the equal sign, and all other terms are
on the  right  hand side:
                  p =
                      DP  •  (l-T)  • Q  -U        Q  . u     '            •

 where  Z =  -YQ  - DSL - WC(1  + r)"N - X(l + r)"1 -  T  and  all other variables
 are  as defined in Table 8-28.  The resulting expression  for P  has two  terms.
 The  first, or  "capital cost," term is that part of the unit price accounted
 for  by the initial capital  outlay (adjusted for the tax  savings  attribut-
 able to depreciation, recovery of working capital, etc.) and includes  the
 return on  the  invested capital.   The  second, or "operating cost," term is  a
                                   8-66

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  function of the fixed and variable operating costs.  Hence, for any con-
  figuration, the price given by Equation 8-7 can be interpreted as the one
  that just covers the unit operating costs and yields a rate of return,  r,
  over the project's lifetime on the unrecovered balances of the initial
  investment.
       For each type of facility, Equation 8-7 is used to calculate the unit
  cost of the coating from each configuration.   The results are  then ranked
  in order of cost,  from lowest to highest.   The most profitable configura-
  tion is the one that can coat a square meter of metal  coil  for the lowest
  cost.
       8.4.3.3   Determining the Impacts  of the  Regulatory Alternatives.  This
  section describes  how the impacts  of the regulatory alternatives  are esti-
  mated with the  price  ranking  method discussed  in Section  8.4.3.2.  The
  estimated impacts  are presented  in Sections 8.4.4 and 8.4.5.  Three cate-
  gories  of impacts  are estimated:  price, ROI, and incremental capital
  requirements.
      Price impacts are calculated directly from Equation 8-7.  Given the
  imputed cost of the coating for each control option, cost increases from
 the base unit cost of the most profitable line can be calculated.
      Whereas price impacts are calculated by assuming that all  of the
 incremental  costs associated with a given control  option are passed forward
 to  the consumer, ROI impacts are estimated by assuming that the producer
 absorbs  all  of the incremental costs, thus lowering  the ROI.  In this case,
 the price facing the consumer  would not change.   For any control  option,
 there may exist a discount rate that would enable  the  producer  to  maintain
 the imputed  price of the  coating at  its baseline level.  The  baseline  price
 is  the price  associated with the  most profitable line  configuration and  is
 determined from  the procedure  described in  Section 8.4.2.2
      The baseline price was calculated  from Equation 8-7 using a specific
 value of the discount  rate, r  (equal to the weighted average  cost  of capital).
 The calculation  of  the  rate of  return impact would begin by setting P = P
 In  Equation 8-7, where P  is the baseline  (lowest) price, and by then itera-
 tively solving for the value of r that  equates the right-hand side of
Equation 8-7 with P.  This value, say r*, will always be less than r, the
baseline rate of return.  The difference between r* for each control option
and r constitutes the rate of return impact.
                                  8-67

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     The incremental capital  requirements are calculated from the cost data
presented in Section 8.2.   The additional capital required to meet the
standards is used as a partial measure of the financial difficulty firms
might face in attempting to conform to the standard.   Incremental capital
requirements also constitute a barrier for firms entering the coil coating
industry.  The magnitude of the additional capital relative to the baseline
capital requirements is a measure of the size of this barrier.
8.4.4  Economic Impacts on New Facilities
     This section presents the estimated impacts of the regulatory alter-
natives on new production facilities.  The firm is confronted with a set of
coating line configurations from which it selects the most profitable by
applying the ranking method described in Section 8.4.3.2.  Each  line configu"
ration corresponds to a level of emission control (64 percent reduction,
85 percent reduction, or 95 percent reduction).  The profit-maximizing
choice is compared with the configuration needed to comply with  the regula-
tory alternatives; the resulting impacts are then estimated with  the
methods described in Section 8.4.3.3.
     Table 8-29 presents the capital and operating costs for the  different
configurations of the small> medium, and large coating lines.  The costs
are based on those given in Section 8.2 and are reproduced here  to illus-
trate the form in which they were used in the analysis.  The "annual operat-
ing costs" reported in Section 8.2 are here classified as "fixed" and
"variable."  Note that these are not annualized costs; that is,  they do  not
include  a capital recovery component.  This aspect of cost accounting is
implicitly handled  in the DCF approach.
     The costs for  each configuration were inserted into Equation 8-7 to
determine the cost  of coating one square meter of metal.  All calculations
assumed  straight-line depreciation of the capital equipment over 10 years;
a  100 percent capacity utilization rate;  an  investment tax credit of 10  per-
cent; a  corporate tax rate of 46 percent; and a discount rate of 12 percent
(equal to the weighted average cost  of capital reported  in Section 8.4.2.2).
Working  capital was estimated at 10  percent  of the fixed capital  cost.
     Table 8-30 presents the  unit price  for  each  line  configuration.  These
are ranked from lowest (rank = 1) to  highest.  These prices and  rankings
                                  8-68

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                        TABLE 8-29.  SUMMARY COST DATA FOR NEW FACILITIES ($1,000)
                                                             Line size
                       	Small9	Medium	  	Largec	
                       Capital    Operating cost    Capital     Operating cost    Capital    Operating cost
Line configuration      costd   Fixed6  Variablef   costd    Fixed6  Variable1"   costd    Fixed6  Variablef

Zone incineration
  (64% reduction)      8,272.0   300.8   1,885.0   11,616.0   422.4    4,571.0  15,312.0   556.8   8,516.0

Thermal incineration
  (85% reduction)      8,349.0   303.6   1,906.0   11,902.0   432.8    4,681.0  16,170.0   588.0   8,764.0

Thermal incineration
  (95% reduction)      8.470.0   308.0   1,909.0   12.045.0   438.0    4,678.0  16,324.0   593.6   8,751.0

aOne coating line  with annual capacity  = 4,600 x  103 m2.
  One line with annual  capacity  = 14,000 x  103 m2.
 C0ne line with annual  capacity  = 28,000 x  103  m2.
  Installed equipment costs from Tables  8-11 and 8-21 plus  working capital  at 10 percent of installed cost.
 e
  4 percent of installed equipment cost.
 fFrom Tables 8-14 and 8-22.

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                         TABLE 8-30.   UNIT PRICES AND RANKINGS FOR NEW FACILITIES'
Line size
Small b

Line configuration
Zone incineration
(64% reduction)
Thermal incineration
(85% reduction)
Thermal incineration
(95% reduction)
^ aAll calculations assumed
^ 10 percent, a corporate
o weighted average cost of
Price,
$/m2

0.854

0.863

0.870
straight- li
tax rate of
capital) of


Rank

CTG Numerical

I

2

3
ne
46
12

NA

1

2
depreciation of
Price,
$/m2

0.532

0.545

0.547
capital
percent, a project life
percent.

Medium0
Rank

CTG

1

2

3

Numerical

NA

1

2
Price,
$/m2

0.439

0.456

0.457
equipment, an investment of
of 10

years, and

a discount

Large


CTG

1

2

3
tax
rate

Rank



Numerical

NA

1

2
credit
(the







of


 One coating line with annual capacity = 4,600 x io3 m2.
C0ne line with annual capacity = 14,000 x io3 m2.
 One line with annual capacity = 28,000 x IO3 m2.
 NA = not applicable.

-------
  are used to estimate the price impacts (Section 8.4.4.1), the ROI impacts
  (Section 8.4.4.2), and the incremental capital requirements (Section 8.4.4.3)
  of the regulatory alternatives.
       8.4.4.1  Price Impacts.   Table 8-31 shows the price impacts of the
  regulatory alternatives on new facilities in CTG and numerical  limit areas.
  Note that two alternatives apply to facilities in CTG areas,  and one alter-
  native to facilities  in numerical  limit areas.   This reflects the difference
  in  the baseline level  of control  required by States  using the CTG (64 per-
  cent reduction in emissions)  and  that required by States  specifying  a
  numerical  limit on emissions  (85  percent  reduction).   The less stringent
  standard  for  the CTG areas  also explains  why the  impacts  are  greater for
  new  facilities located  in  those areas  than  for  those  in the numerical limit
  areas.  Facilities  in CTG  areas would  have  to  increase prices by  1.1 to
  3.9  percent to maintain the baseline  ROI  under  Alternative II; under Alter-
  native  III, the  price impact would range  between  1.9 and 4.1 percent.  The
  impacts on facilities in numerical limit  areas  are insignificant; the
 estimated price  increases would range  from 0.2  to 0.8 percent.
      8.4.4.2   Return on Investment Impacts.  Table 8-32 shows  the ROI
 impacts of the regulatory alternatives for new facilities in CTG and numeri-
 cal  limit areas.  Again, the impacts are more severe for facilities in CTG
 areas.   The decline in  ROI would range from 0.4 to 2.3 percentage points
 under Alternative II and from 0.7 to 2.4 percentage points under  Alterna-
 tive in.   Alternative  III  would have insignificant ROI impacts  for facili-
 ties  in numerical limit  areas,  with  the ROI  declining from 0.1 to 0.3 per-
 centage points from its  baseline level  of  12 percent.
      8.4.4.3   Incremental  Capital  Requirements.  The  additional capital
 outlays required under the  regulatory alternatives  for  facilities  in  CTG
 and numerical  limit areas are  shown  in  Table  8-33.  The incremental capital
 requirements,  as a percentage  of the  baseline amount, are  larger  for  new
 facilities  in  CTG areas  than for facilities  in numerical limit areas.
 Under Alternative III, from 2.4  to 6.6  percent more capital is required for
 new lines  in CTG  areas, compared with a 1.0 to 1.4 percent increase for new
 lines in numerical  limit areas.  In absolute  amounts, the incremental
capital  requirements are also greater for  new facilities in CTG areas,
ranging  from $180,000 to $920,000 under Alternative III.  The comparable
range for lines  in numerical limit areas is $110,000 to $140,000.

                                  8-71

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TABLE 8-31.   PRICE IMPACTS OF REGULATORY ALTERNATIVES ON NEW FACILITIES  (%)
Regulatory alternative
CTG areas
II. 85%
III. 95%
reduction
reduction

Small3
1.05
1.87
Line size
Medi urn
2,44
2.82

Large
3.87
4.10
 Numerical  limit areas
   III.   95% reduction            0.81               0.37                0.22
 aOne  coating line with  annual  capacity =  4,600  x  103  m2.
  One  line  with annual capacity = 14,000 x io3 m2.
 C0ne line with annual  capacity = 26,000  x
                                    8-72

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    TABLE 8-32.  RETURN ON INVESTMENT IMPACTS OF REGULATORY ALTERNATIVES
                           ON NEW FACILITIES (%)a
Regulatory alternative
CTG areas
II. 85% reduction
III. 95% reduction
Numerical limit areas
III. 95% reduction

Small5
-0,38
-0.69
-0.31
Line size
Medium0
-1.21
-1.41
-0.21

Large
-2.28
-2.39
-0.1-2
aTable entries are decreases  from the baseline ROI of 12 percent.
 One coating line with annual capacity = 4,600 x 103 m2.
C0ne line with annual capacity = 14,000 x 103 m2.
dOne line with annual capacity = 28,000 x 10s m2.
                                 8-73

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        TABLE 8-33.   INCREMENTAL CAPITAL  REQUIREMENTS OF REGULATORY

                 ALTERNATIVES FOR NEW FACILITIES ($l,OOOs)3
Regulatory alternative
CTG areas
II. 85% reduction
III. 95% reduction
Numerical limit areas
III. 95% reduction

Small b
77.0
(0.9)
198.0
(2.4)
121.0
(1.4)
Line size
Medium0
286.0
(2.5)
429.0
(3.7)
143.0
(1.2)

a
Large
858.0
(5.6)
1,012.0
(6.6)
154.0
(1.0)
*s                       '  ' "    ''"•' *   ~~  ' ' """ '   - •  ^  '   •'_  _-.___  -  - ~-- - -L '_- j—^asas^ssiSS^^^^^™

 Calculated from data in Table 8-29.   Numbers in parentheses  are the incre-
 mental capital requirement as a percentage of the baseline capital  invest-
 ment.                                                          r


 One coating line with annual  capacity =  4,600 x 103 m2.

 One line with annual capacity = 14,000 x io3 m2.

 One line with annual capacity = 28,000 x io3 m2.
                                   6-74

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        8.4,4.4   Summary.   Regulatory  Alternative  III, which calls  for a
  95 percent  reduction  in  emissions,  will  have  the  largest overall impact on
  the  industry.   Price  increases  ranging from 0.2 to 4.1 percent would result
  if all additional costs  were passed through;  ROI  decreases of 0.1 to 2.4
  percentage points would  occur if the additional costs were absorbed by the
  producer.  Alternative II, on the other  hand, would have the least impact
  on the industry, primarily because facilities in numerical  limit areas
  would not be affected.  New lines in CTG areas would have to raise  prices
  from 1.1 to 3.9 percent if all  additional costs were passed  forward;  the
  ROI  would decline from 0.4 to 2.3 percentage points if producers  absorbed
  the  incremental costs.
       These impacts  are subject  to two  important  qualifications.   First,  the
  costs for the  model  plants  implicitly  assume  that  only one type of coating
  would be  applied.  While  this may be true for  captive  coaters, it is not
  true  for  toll  coaters, who  use many  types of coatings.  Calculating the
  unit  price for each  configuration  based on these costs, then, creates a
  false  impression that  each  coater  sets and maintains one price for all of
  his output.  In  actuality,  as discussed in Section 8.1 and illustrated in
  Table 8-3, prices for  coil  coating services vary widely, primarily depend-
  ing on the type of coating  applied.  Using a point estimate  (the unit
 prices reported  in Table 8-30) to represent an array of prices carries  with
 H the risk that estimates of price and ROI impacts may be greatly over-  or
 underestimated.  Second, the unit prices reported in Table 8-30  can  be
 viewed as  prices only for toll  coaters; a vertically integrated  company
 that  owns  a coating  firm would  view the reported  "prices"  as  costs, and the
 estimated  "price" increases  as cost increases.  The actual price impact
 would  appear  in the price  of the  final  product  in which the coated coil was
 an  input;  the magnitude of this impact  would depend, among other things,  on
 the share  of  the cost of the coated coil relative to the total cost of
 production of the final  product.
     The size of  the  impacts for  facilities in  CTG areas relative to those
 for facilities  in  numerical  limit areas also deserves comment.  No competi-
 tive advantage  currently exists for facilities  in CTG areas,  nor would a
facility in a numerical  limit area acquire a competitive advantage under
Alternative II or III merely because the impacts are smaller.   A coil
                                  8-75

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coater does not serve a national  market,  so there is little if any competi-
tion between facilities in CTG and numerical limit areas.   That facilities
in CTG areas have no competitive  advantage is demonstrated by observing
that only 30 percent of the coil  coating facilities are located in these
areas where production costs are  presumably lower.  It seems clear that
another factor, the location of the coil  coater close to the customers he
serves, is much more important than the air pollution standards of the area
in determining the location of new facilities.  The implementation of
Alternative II or III, then, will tend to equalize the costs of production
between CTG and numerical limit facilities, although site-specific factors
will still result in considerable price variation.
8.4.5  Economic Impacts on Modified Facilities
     This  section presents the estimated  impacts  of Regulatory Alterna-
tives  II and  III on  existing  coil coating  lines  that undergo modification.
The  modification is  an equipment  change that  increases the  line speed  (and
output) by 20 percent.  Table 8-34 gives  the  capital and operating costs
for  small, medium, and large  lines that undergo  modification  in CTG and
numerical  limit  areas.  These costs are based on those given  in Section 8.2.
The  operating costs  represent the variable cost  of  production  for the
additional  output  of the  line and include the emissions control costs.
      The  costs for each  line  configuration were  inserted  into  Equation 8-7
to determine  the unit price of coating a  square  meter  of  metal.  All  calcu-
 lations  assumed straight-line depreciation of the additional  capital  equip-
ment over 10  years;  a 100 percent capacity utilization rate;  an  investment
 tax credit of 10 percent; a corporate tax rate  of 45  percent;  and a  discount
 rate of 12 percent (equal to  the weighted average cost of capital from
 Section 8.4.2.2).   Working capital  was estimated at 10 percent of the fixed
 capital  cost.
      Table 8-35 presents the  unit price in dollars per square meter  for
 each configuration and line size in both CTG and numerical limit areas.
 These are ranked from lowest  to  highest,  i.e.,  from most to least profit-
 able.  These prices and rankings were used to estimate price impacts (Sec-
 tion 8.4.5.1), ROI impacts (Section 8.4.5.2), and incremental capital
 requirements (Section 8.4.5.3) that would occur under Alternatives II and III.
                                   8-76

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                                 TABLE 8-34.   SUMMARY  COST DATA  FOR  MODIFIED  FACILITIES  ($1,0005)'
oo
Line configuration
Zone incineration
(64% reduction)
Thermal incineration
(85% reduction)
Thermal incineration
(95% reduction)

Snail
Capital
cost6
110.0
393.8
393.8

line"
Operat-
ing f
costr
223.0
264.0
276.0
CTG
Medium
• Capital
cost6
165.0
633.6
633.6
areas
linec
Operat-
ing f
cost1
668.0
736.0
757.0
Numerical limit areas
Large
Capital
cost6
220.0
958.1
958.1
lined
Operat-
ing f
! costT
1,338.0
1,463.0
1,505.0
Small
Capital
cost6
NA
110.0
267.3
lineb
Operat-
1n9,g
costa
NA
222.0
225.0
Medium
Capital
cost6
NA
165.0
354.2
linec
Operat-
1na>g
costy
NA
665.0
663.0
Large
Capital
cost
NA
220.0
425.7
lined
Operat-
il19*q
cost"
NA
1,330.0
1,318.0
          The modification is  a  20 percent increase in line  speed accomplished by replacing the drive motor,  gears, and electrical controls.   The
          resulting increase in  annual capacity is 920 x  io3 m2  for the small line,  2,800 x 103 m2 for the medium line, and 5,600 x io3 m2  for the
          large line.
          One coating line with annual capacity = 4,600 x io3  m2.
          C0ne line with annual capacity  = 14,000 x io3 m2.
          One line with annual capacity  = 28,000 x io3 m2.
          eCapital costs taken from Section 8.2.3,  including working capital  at 10 percent of the  installed capital cost.
           Operating costs taken from Table 8-23,  including the variable costs of production and emission control attributable  to  the additional out-
           put only.
           Operating costs taken from Table 8-24,  including  the variable costs  of production and emission control attributable  to  the additional out-
           put only.
           NA = not applicable.

-------
                             TABLE 8-35.   UNIT PRICES  AND  RANKINGS  FOR MODIFIED  FACILITIES*
                              	CTG  areas	   	Numerical limit areas	

                              Small  line    Medium line0  Large line    Small line13   Medium  1inec   Large lined

                              Price,        Price,        Price,        Price,        Price,        Price,
       Line configuration     $/m2   Rank   $/m2   Rank   $/m2   Rank   $/m2   Rank   $/m2   Rank   $/m2   Rank

       Zone incineration
         (64% reduction)      0.268    1    0.251    1    0.247    1      NA     NA      NA    NA     NA     NA

       Thermal incineration
         (85% reduction)     0.377    2    0.311    2    0.297    2    0.266    1    0.250    1    0.246    1

       Thermal incineration
         (95% reduction)     0.390   3     0.318     3    0.305   3     0.306   2    0.263     2    0.251    2

^      All calculations assume  straight-line depreciation of  capital equipment,  an  investment  tax  credit of
oo      10 percent,  a  corporate  tax  rate of 46 percent, a project life  of 10 years,  and  a discount  rate  (the
       weighted average cost  of capital) of 12 percent.

       One coating  line with  annual capacity = 4,600 x io3 m2.
      C0ne line with annual capacity = 14,000 x io3 m2.
       One line with annual capacity = 28,000 x IO3 m2.
       NA = not applicable.

-------
       8.4.5.1  Price Impacts.  Table 8-36 presents the price impacts for
  modified facilities in CTG and numerical limit areas.  Alternative II is
  not applicable to facilities in numerical limit areas.  Alternative II is
  not applicable to facilities in numerical limit areas, since the SIPs
  require an 85 percent reduction in emissions.   However,  firms that modify
  facilities in CTG areas would have to raise the price of the additional
  output by 20.2 to 40.7 percent to maintain  the baseline  ROI.   Alterna-
  tive  III  would affect all  modified facilities,  although  the  price  increases
  for modified lines in numerical  limit areas, which  range from 2.0  to  15.0 per-
  cent,  are significantly smaller  than  those  for  lines  in  CTG  areas, which
  range  from  23.5  to 45.5 percent.
      8.4.5.2  ROI  Impacts.   Table  8-37  shows the ROI  impacts of the regula-
  tory alternatives  on modified  facilities.  In calculating these impacts, it
  is  assumed  that producers  attempt  to maintain the baseline price when faced
 with cost increases.   For  firms in CTG  areas, this is the price for the
 zone incineration  configuration reported  in Table 8-35;  for firms in the
 numerical limit areas,  it  is the unit price for the thermal  incineration
 (85 percent  reduction) configuration.
      As the  table  shows, the impacts are  large.   For modified lines in CTG
 areas,  an ROI does not exist under either Regulatory Alternative II or III
 that would allow the firm to maintain  the baseline  price. Another way of
 stating this is that a firm would never have a  net  cash inflow (see Equa-
 tion 8-2)  over the life of the project by charging  the baseline price;  it
 would  thus be impossible for the  firm  to recover its  initial  capital  invest-
 ment.   The impacts for facilities  that undergo  modification in  numerical
 limit areas  are almost as great.   The  ROI would  decrease  by 11.9, 9.1,  and
 6.1  percentage points  for the small, medium, and large lines,  respectively,
 from the baseline  ROI  of 12 percent.
     8.4.5.3  Incremental  Capital  Requirements,  Table 8-38 gives the
 additional capital  outlays  that would be required under Alternatives II and
 HI  if  an  existing  line  were  modified.    The results help  explain the severity
 of the  ROI impacts.  Modifications  of facilities in CTG areas would require
 increased outlays ranging from 258 to 336 percent under Alternatives II or
III over the  baseline capital requirement.  These increases range from 94
to 143 percent for  modifications in numerical limit areas.
                                  8-79

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        TABLE 8-36.   PRICE IMPACTS OF REGULATORY ALTERNATIVES ON
                        MODIFIED FACILITIES (%)


II.
III.

Regulatory
alternative
85% reduction
95% reduction

Small
linea
40.67
45.52
CTG areas
Medium
lineb
23.90
26.69
Numerical limit
Large
line
20.24
23.48
Small
linea
NA
15.04
Medium
lineb
NA
5.20
areas
Largec
line
NA
2.03
One coating line with annual capacity = 4,600 x io3
One line with annual capacity = 14,000 x io3 m2.
One line with annual capacity = 28,000 x io3 m2.
NA = not applicable.
                                  8-80

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   TABLE 8-37.
RETURN ON INVESTMENT IMPACTS OF REGULATORY ALTERNATIVES
        ON MODIFIED FACILITIES (%)


Regulatory alternative
II.
III.
85% reduction
95% reduction

Small
line
	 b
	 b
CTG areas
Medium
lined
— -b
— -b
Numerical limit
Large
line
... _b
— -b
Small
linec
NA
-11.90
Medium
lined
NA
-9.14
areas
Large
1* C
me
NA
-6.09
3Table entries are decreases from the baseline ROI of 12 percent.
bThe ROI is undefined.  That is, an ROI does not exist that would allow the
 facility to maintain the baseline price.
C0ne coating line with annual capacity = 4,600 x 103 m2.
dOne line with annual capacity = 14,000 x 10s m2.
30ne line with annual capacity = 28,000 x 103 m2.
 NA = not applicable.
                                 8-81

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  TABLE 8-38.   INCREMENTAL CAPITAL REQUIREMENTS OF REGULATORY ALTERNATIVES
                     FOR MnniFipn PAPTI TTTPC rti  nnn^>a
FOR MODIFIED FACILITIES ($l,OOOs)
                                _CJG areas           Numerical  limit areas
                         Smal]     Medium   Large    Small    Medium   Large
Regulatory alternative   lineu     linec    line0    line     lineC    line0


 II.   85% reduction       283.8    468.6    738.1     NA       NA       NA
                         (258.0)  (284.0)  (335.5)


III.   95% reduction       283.8    468.6    738.1    157.3    189.2   205.7
	(258.0)  (284.0)  (335.5)  (143.0)  (114.7)  (93.5)


 Calculated from data in Table  8-34.   Numbers in parentheses are the incre-
 mental capital requirement as  a percentage of the baseline capital invest-
 ment.

 One coating line with annual capacity = 4,600 x io3 m2.

C0ne line with annual capacity  = 14,000 x io3 m2.

 One line with annual capacity  - 28,000 x io3 m2.

 NA = not applicable.
                                   8-82

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       8.4.5.4  Summary.  The estimated impacts of the regulatory alternatives
  on modified facilities were much larger than the estimated impacts for new
  facilities.  The main reason for this is the relatively small investment
  outlay (between $100,000 and $200,000) required to make the original  modifi-
  cation when compared with the additional capital outlays needed to meet  the
  regulatory alternatives (see Table 8-38).   However, it cannot be concluded
  that the modification of an existing plant would not be undertaken.   The
  unit prices reported in Table 8-35 represent point estimates;  in actuality,
  the  price charged by a coil  coater could be expected to vary  widely,  depend-
  ing  mainly on  the type of  coating  being  applied.   A coil  coater  receiving
  an average price  for the additional  output  that  is  greater  than  the highest
  price  reported in Table 8-35 would  make  the  modification  because  it would
  be profitable  for him to do so.  Hence,  the  prices  in Table 8-35 must be
  interpreted as  the minimum needed to cover  the variable production costs
  and  to return  12  percent on the unrecovered  balances of the initial invest-
 ment over  the  life of the project.  Since the estimated prices are tied so
 closely to the one type of coating  implicit  in the cost data,  and since
 there are many types  of coatings used in the industry, it cannot be con-
 cluded that all modifications of existing lines would cease.
 8-5  POTENTIAL SOCIOECONOMIC AND INFLATIONARY IMPACTS
      Executive Order 12044 requires that the inflationary impacts of major
 legislative proposals, regulations,  and rules be  evaluated.  The  regulatory
 options would  be considered a major action (thus  requiring the preparation
 of  an Inflationary Impact  Statement) if either  of the following criteria
 apply:
    •     Additional annualized costs  of  compliance,  including capital
         charges (interest and depreciation),  will  total  $100 million within
        any Slender  year by the attainment  date,  if  applicable, or within
        5 years  of implementation.
        Total additional cost of production  is more than 5 percent of the
        selling price of the product.
Section 8.5.1 estimates the maximum additional annualized costs of com-
pliance. Section 8.5.2  addresses the expected increase in the product
price.
                                  8-83

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8.5.1  Annualized Cost Criterion
     To calculate the additional compliance costs,  the number of new sources
that would be constructed and the number of existing sources that would be
modified each year were taken from Section 8.1.2.2.   For new sources, it
was estimated that three large lines, two medium lines, and two small lines
would be built each year; it was assumed that three lines of each size
would be modified each year.  To calculate the worst impacts, two assump-
tions were made:  (1) all new and modified sources  would come onstream in
1985 and (2) all new and modified facilities would  be located in CTG areas.
     The incremental annualized costs were determined from the cost data
for Alternative III (95 percent reduction) in Tables 8-29 and 8-34.  The
incremental capital investment for each Mne size was multiplied by a
capital recovery factor of  0.176 (based on an interest rat? of 12 percent
and straight-line depreciation over 10 years); this result was added to the
incremental operating cost  to calculate the incremental annualized cost for
each line  size.  The total  number of lines and the incremental cost per
line are shown  in Table 8-39.  The last column of Table 8-39 gives the
product of the  number of lines and the incremental  cost per line.  The sum
of the figures  in this column, $18 million, is well under the $100 million
threshold.  Thus, none of the regulatory alternatives qualifies as a major
action by  this  criterion.
8.5.2  Product  Price Criterion
     To determine if the implementation of Alternative III would increase
product prices  by more than 5 percent, it was necessary to construct a
weighted average price increase  for  the overall  industry price  level from
the price  impacts presented in  Tables 8-31 and 8-36.  This was  done by
multiplying  each price impact under  Alternative  III by a weighting factor
and summing  the results.  The weighting factor has three components:
(1) the proportions of the  increase  in annual output  accounted  for by new
and by modified facilities, (2)  the  proportions  of the increase  in annual
output accounted  for by  facilities in CTG  and in numerical  limit areas, and
 (3) the proportions of the  increase  in annual output  accounted  for by
 small, medium,  and  large facilities.
      The  increases  in  annual  output  accounted for by  new and modified
 facilities were calculated  from information  in Section 8.1.2.2.   It was
                                   8-84

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         TABLE 8-39.  INCREMENTAL ANNUALIZED COST OF COMPLIANCE WITH
                      REGULATORY ALTERNATIVE III, 1985a
                          lines
Incremental  cost per
   line,  l,000sc
Cost per line
size, l,000sa
New facilities
Large
Medium
Small
Modified facilities
Large
Medium
Small
Total incremental cost

15
10
10

15
15
15


450.9
198.5
66.2

297.6
171.9
103.2


6,763.5
1,985.0
662.0

4,464.0
2,578.5
1,548.0
18,001.0
Calculations assumed that all facilities were located in CTG areas.
 Taken from Section 8.1.  It is assumed that the number of new and
 modified facilities projected annually all take place in the fifth year
 after implementation.
Calculated from costs presented in Tables 8-29 and 8-34.   A capital  recovery
 factor of 0.176 was calculated using a depreciation of 10 years  and  an
 interest rate of 12 percent.   This factor was used to annualize  the  incre-
 mental capital  investment required under Alternative III.
dThe product of  the number of lines and the incremental  annualized  cost
 per line.
                                 8-85

-------
assumed that three large facilities,  two medium facilities,  and two small
facilities would be constructed each  year;  in addition,  three large,  three
medium, and three small  facilities would be modified each year.   The total
additional output from new facilities and from modified facilities was
divided by the total annual increase  in output to calculate  two weights:
(1) new facilitrs would account for  81.3 percent of total additional
output and (2) modified facilities would account for 18.7 percent.
     To estimate the proportions of the increase in annual output from
facilities in CTG and in numerical limit areas, it was assumed that the
present proportions of facilities in  these areas would be maintained in
future new source construction and existing source modification.  Thus,
30 percent of the increase in annual  output would occur in CTG facilities
and 70 percent would occur in numerical limit facilities.  Finally, the
proportions of the  increase in annual output accounted for by small, medium,
and large new sources and by small, medium, and large modified sources were
determined by reapplying the assumptions used to determine the first part
of the weighting factor described above.  For example, small new  facilities
were estimated to account  for 13.8 million m2 (4.6 million m2 per line
times  3 new lines per year) of the 121.2 million m2 additional annual
output from new  facilities, which is 7.6 percent of the additional output.
     The  three components were multiplied together to determine a unique
weight for  each  facility size that was  dependent on whether  it was a  new  or
modified  facility  and on whether  it  was located  in a CTG  or  numerical  limit
area.  The  weighting  factors and  the unweighted  price  impacts  are shown in
Table  8-40.   The weighted  price  impacts in  this  table  are the  products of
 the weight  and  the unweighted  price  impact.   The sum of  these  products,
 3.1 percent,  is  the estimated  percentage increase  in the  overall  industry
 price  level.
      Because  these price  impacts  are not insignificant,  even if they do  not
 exceed the  5  percent  threshold,  it is  of some interest to see  what impact
 on the Consumer Price Index (CPI) an increase in the  price  of  coil coating
 services  would  have.   The input-output tables of the  U.S. economy were used
 to simulate this impact.   A price increase of 3.1  percent was  assumed to
 take  place in the metal coating and  allied services industry (SIC 3479).
 (Recall  that the coil  coating industry accounts only for roughly 20 percent

                                   8-86

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       TABLE 8-40.  OVERALL PRICE IMPACT OF REGULATORY ALTERNATIVE III
                              Unweighted
                                 price
                              impacts, %
                 Weights'
              Weighted
                price
              impacts, %
 New facilities
   CTG areas
        Small
        Medium
        Large

   Numerical  limit areas
        Smal 1
        Medium
        Large

 Modified  facilities
   CTG areas
        Small
        Medium
        Large

   Numerical limit areas
        Small
        Medium
        Large

         Total
 1.87
 2.82
 4.10
 0.81
 0.37
 0.22
45.52
26.69
23.48
15,04
 5.20
 2.03
0.019
0.056
0.169
0.043
0.131
0.394
0.006
0.017
0.034
0.013
0.039
0.079

LOOO
0.03
0.16
0.69
0.03
0.05
0.09
0.25
0.45
0.79
                                     3.10

                                     Price
 'Unweighted price impacts for new facilities taken from Table 8-31.
 impacts for modified facilities taken from Table 8-36.
bThe product of three factors:  (1) proportions of additional annual  output
 accoSnled for by new anS modified facilities, (2) the .Proportions of; the
 additional annual output accounted for by facilities in CTG and in numerical
 limit arias? and (3) the proportions of the additional gnual  output
 accounted for fay small, medium, and large facilities.  See text for  a
 description of how these components were estimated.
Product of the unweighted price impact and the weighting factor.
                                  8-87

-------
of the value of shipments of this industry group;  the actual  price increase
that would occur in SIC 3479 is thus much lower than the 3.1 percent used
in this exercise.)  After the increase has worked its way through the
economy, the results show that the CPI would increase by one-hundredth of
one percent, a nominal amount.  For these reasons, it is concluded that the
regulatory alternatives do not qualify as a major action by this criterion.
8.6  FINANCIAL DATA FOR COIL COATING FIRMS
     This section provides the statistics for individual firms that were
used to compile the averages for the coil coating industry given in Sec-
tion 8.4.2.2.  This information  is given  in Table 8-41.
     The weighted average cost of capital (WACC)  is  the return on a firm's
investment  necessary to guarantee a continued inflow of investment funds.
The cost of capital for any  new  project  is the cost  of  equity, debt,  and
preferred stock, weighted by the percentage of funds generated by each  type
of financing.  That is,

                       kc =  ke T +  k1   I  +*p  I  •                 (8-8)
where
      kc =   cost of capital
      kg  =   cost of equity  capital
      k^  =   cost of debt capital
      k   =   cost of preferred stock capital
      E   =   the amount of equity used to finance a given investment
      D   =  the amount of debt used to finance a given investment
      P   =  the amount of preferred stock used to finance a given investment
      I   =  the total funds needed for the investment.
      The first step in estimating Equation 8-8 is to determine the relevant
 weights for the three types of  financing.  It is assumed that the proportion
 of debt, equity, and preferred  stock to  be used on  any new project will be
 the same as currently exists  in the firm's capital  structure.  This  implies
 that the firm is currently  using the optimal mix of financing.  Figures for
 the three  types of funds came from the  Value Line  Investment Survey  for
 each firm's fiscal years ending in 1978.  Common equity included the par
 value  of common  stock,  retained earnings, capital  surplus,  self-insurance

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                                  TABLE 8-41.   FINANCIAL STATISTICS FOR COIL COATING  FIRMS
00

CO
10
Sales/
inventories
1977 1978
Alcan
Alcoa
Amax
Armco
Arvin Industries
Bendix
Bethlehem Steel
Chamberlain
Chroma! loy
Consolidated
Foods
Cyclops
Freuhauf
Groff
Hexel
Inland Steel
Kaiser
Ki rsch
LTV
Marathon
Martin Marietta
National Steel
Phelps Dodge
Republic Steel
Revere Copper
Reynolds Metals
Sears
Stanley
Teledyne
Wolverine
Average
3.0
5.3
3.9
6.1
6.5
5.0
7.9
NA
5.6

7.7
NA
7.4
9.6
10.2
8.1
4.8
3.9
NA
3.9
6.9
6.2
4.2
6.1
4.1
3.6
6.8
NA
NA
NA
5.9
3.6
6.1
4.6
8.9
6.1
5.3
9.7
NA
5.8

7.0
NA
7.3
7.2
100.1
9.3
5.1
40.0
NA
4.2
8.8
6.6
7.0
7.4
4.7
4.2
6.6
NA
NA
NA
12.0
Sales/
receivables
1977
5.5
6.9
8.3
8.1
8.7
8.5
9.9
NA
7.8

12.1
8.1
8.5
2.3
7.8
7.8
10.0
6.2
113.5
6.8
6.3
9.9
8.2
11.4
9.7
7.9
2.6
9.4
8.8
3.6
11.6
1978
4.9
6.8
7.1
8.5
7.5
7.7
9.2
5.6
7.7

9.2
7.9
6.9
3.1
8.9
9.5
8.6
6.1
7.6
7.1
6.2
8.4
7.2
10.3
7.4
7.1
2.6
9.8
8.6
7.8
7.4
Current assets/
current
liabilities
1976
2.3
2.2
2.2
2.0
3.5
1.9
2.0
NA
1.8

2.3
1.9
2.0
2.8
NA
1.9
NA
4.0
NA
2.3
2.2
1.7
1.4
1.8
2.7
2.6
1.6
NA
NA
2.8
2.3
1977
2.3
2.2
2.4
1.8
5.4
1.8
1.5
32.0
2.0

2.4
1.8
1.8
2.8
2.2
1.9
0.2
4.1
1.4
1.9
1.9
1.8
1.5
2.2
1.8
2.6
1.6
2.8
2.0
2.0
3.2
1978
2.2
2.1
1.5
1.7
4.0
1.7
1.6
3.0
1.9

1.9
1.8
1.8
2.3
2.4
1.7
1.6
3.3
1.6
1.6
1.6
1.7
2.1
2.9
2.7
2.4
1.6
3.0
2.0
2.1
2.1
Debt/total l
capitalization, %
1976
39.7
40.7
28.7
27.4
44.0
26.4
27.5
NA
48.8

21.8
30.0
46.2
NA
NA
30.3
NA
29.2
NA
29.7
27.0
37.1
38.5
22.0
57.0
46.3
24.0
NA
30.0
18.0
33.5
1977
34.4
38.6
29.2
25.9
42.0
23.0
34.6
NA
48.1

19.5
30.0
44.5
NA
33.7
34.9
NA
27.1
NA
21.9
23.0
36.1
36.7
25.3
46.2
42.6
22.4
NA
30.0
28.0
32.4
1978
29.2
34.3
25.3
23.6
37.9
26.9
29.8
30.3
46.5

26.5
30.0
45.7
10.0
33.7
34.2
NA
27.8
NA
16.4
14.9
34.2
40.8
24.1
56.6
41.9
23.4
NA
30.0
24.0
30.7
978 weighted
average
cost of
capital , %
13.1
11.5
10.9
12.5
NA
13.4
12.6
NA
11.5

12.1
12.8
10.9
NA
NA
11.2
NA
12.9
NA
NA
13.8
11.1
10.7
12.8
10.2
11.5
13.1
NA
13.3
NA
12.1
        NA = not available.

-------
reserves,  and capital  premium,  while  debt included all  obligations due more
than a year from the company's  balance sheet date.   Preferred stock repre-
sented the net number of preferred shares outstanding at year end multiplied
by the involuntary liquidating  value  per share.
     The next step in calculating Equation 8-8 is to estimate the cost of
equity financing.  The capital-asset  pricing model (CAPM) was used to
estimate this cost.   The CAPM examines the necessary returns on a firm's
stock in relation to a portfolio comprised of all existing stocks.  The
required return on equity is

                          ke = i + P  (km - i)  ,                      (8-9)

where
      i  =  the expected risk free interest rate
km ~  i  =  the expected excess return on the market
      p  =  the firm's beta coefficient.
      Figures  for Equation 8-9 were developed in the following manner.  The
expected risk-free  rate was assumed equal to the yield on a 3-month Treasury
Bill, as reported in  the October  1, 1979, Wall Street Journal.  The current
yield was  10.46  percent.  This corresponds to the yield  from a bond with  no
possibility  of default  and offering no  chance of  a  capital  loss and is
therefore  riskless.   The firm's beta  coefficients came from the September 24,
1979• Value  Line Investment Survey.   The  expected excess return equalled
2.9646  percent,  the 5-year average (July  1974 through June  1979)  of the
monthly excess  returns  on the  Standard  & Poor's  500 Stock Index multiplied
by  12.
      The  third  step in  estimating Equation  8-8  is calculating  the cost  of
debt  financing.   This would be a  relatively easy estimation if  interest
rates did  not change over time.   Past yields on  old issues  of  bonds would
suffice.   Since  interest rates have  been increasing,  it was felt  that a
more  forward-looking rate was  required.   The method selected was  to  take
the average  yield as given  in  the October 1 through September  3,  1979,
Moody's Bond Survey for the  firm's bond ratings class as the necessary
yield the  firm  must offer on  long-term debt.   The firm's ratings  class came
from  the  September 1979 Moody's Bond Record or the  1979 Moody's Industrial
                                   8-90

-------
  Manual.  This was used as the necessary yield on long-term debt.   Table 8-42
  presents the yields by ratings class and the prime rate used for the cost
  of debt funds.
       The yield on long-term debt does not represent the aftertax cost of
  debt financing since interest charges are tax deductable.   To arrive at the
  after-tax cost,  the yield must be multiplied by one minus  the marginal  tax
  rate,

                               k.  = k(l -  t)   ,

 where
       k  =  the yield on  bonds
       t  =  the marginal  tax  rate.
 It is assumed that the firms  in the sample are profitable, so that taxes
 must be paid, and that their marginal tax rate is 48 percent.
      The last step in estimating Equation 8-8 is to arrive at the cost of
 preferred stock financing.  Unlike debt,  preferred stock does not have a
 maturity date, so that the current yield should approximate the yield on
 new issues.   The yield is
where
      D =  stated  annual  dividend
      P =  the price  of a share  of  preferred  stock.
The figures for dividends and share price came from the October 1, 1979,
Wall Street Journal  or,  if not  included in this source, from the January 1,
1979, listing in  the Daily Stock Price Record.
8.7  REFERENCES
 1.   Coil  Coating:  The Better Way.  National Coil Coaters Association.
     Philadelphia, Pennsylvania.  December 1978.
 2.   Unpublished Survey of the Coil Coating Industry.   Effluent Guidelines
     Division,  U.S.  Environmental  Protection Agency.   Washington,  D.C.
     1978.
                                8-91

-------
TABLE 8-42.   YIELDS BY RATING CLASS FOR COST OF DEBT FUNDS, 1979
                    (prime rate = 15.00 %)

    Ratings class                              Yield, %
AAA
AA
A
BAA
BA
B
9.25
9.59
9.72
10.38
11.97
12.395
                             8-92

-------
   3.   Moody's Industrial Manual 1979.  2 volumes.  Dun and Bradstreet, Inc.
       New York,  New York.   1979.

   4.   Current and Suggested End Uses of Pre-coated Metal  Strip.   National
       Coil  Coaters Association.  Philadelphia, Pennsylvania.   Technical
       Bulletin No.  IV.   1975.

   5.   1977  Survey of Plant Capacity.   Current Industrial  Reports.   Bureau of
       the Census,  U.S.  Department of Commerce.  Washington,  D.C.   Publica-
       tion  No. MQ-C1(77)-1.   1978.

   6.   Letter  and attachments  from Fege,  David, Water  Economics Branch,  U.S.
       Environmental  Protection  Agency,  to  Lawrence, Jere,  National  Coil
       Coaters Association.  March 14, 1979.   Attachment B.  Fact sheet  on
       the coil coating  industry.

  7.   Preliminary Quantitative  Economic Assessment for the Coil Coating
       Industry.  JRB Associates.  McLean, Virginia.  EPA Contract No.
      68-01-3892.  November 16, 1978.

  8.  Estimate of Total Shipments of Prepainted or Precoated Metal  Coil by
      Coaters Located in the United States, Canada, and Mexico.   News Release.
      National Coil Coaters Association.  Philadelphia, Pennsylvania.
      May 15, 1978.

  9.  Telecon.  Wright, Milton, Research Triangle Institute,  with Benson,
      John,  Chairman, National Coil Coaters Association Marketing Committee,
      Roll  Coater,  Inc.   September 12, 1979.   Discussion of market  competi-
      tion with coil  coated metal.

 10.   Telecon.  Wright,  Milton,  Research Triangle Institute,  with Graziano,
      Frank,  Chairman,  National  Coil  Coaters  Association Technical  Section,
      Prefinish Metals,  Inc.   August  30, 1979.  Discussion  of  market compe-
      tition with coil  coated  metal.

 11.   Predicast Basebook.   Predicast,  Inc.  Cleveland,  Ohio.   1976.

 12.   Why Coil  Coating's Growth  Continues.  Special PF  Report.  Products
      Finishing.  November  1974.   p.  60-63.

 13.   Wright   Milton   Trip Report:   Chesapeake Finished Metals-Baltimore
      Maryland    Research Triangle Institute,  Research Triangle Park, North
      Carolina.   December 12, 1978.

14.   Bernard, Paul.  What's Happening in Finishes for Steel Appliances?
      Products Finishing,   p. 66-73.  November 1979.

15.   Letter from Whike, Alan S.,  B & K Machinery  International Limited, to
     McCarthy, J. M., Research Triangle Institute.  October 10,  1979.
     Response to letter requesting cost information.
                                  8-93

-------
16.  Letter from Mil ley, Herbert J.,  Hunter Engineering, to McCarthy,
     J.  M., Research Triangle Institute.   October 15, 1979.  Response to
     letter requesting cost information.

17.  Letter from Blazejewski, Ed, C-E Air Preheater, to McCarthy, J. M.,
     Research Triangle Institute.  October 18, 1979.  Response to letter
     requesting cost information.

18.  Letter from Archibald, J. M., Smith Environmental, to McCarthy, J. M.,
     Research Triangle Institute.  October 26, 1979.  Response to letter
     requesting cost information.

19.  Telecon.  McCarthy, J. M., Research Triangle Institute, with Vu, Thai,
     Smith Environmental.  November 2, 1979.  Discussion of cost data
     submitted through letter by Smith Environmental.

20.  Letter from Grenfell, Thomas N., REECO, to McCarthy, J. M., Research
     Triangle Institute.  October 9,  1979.  Response to letter requesting
     cost information.

21.  Telecon.  McCarthy, J. M., Research Triangle Institute, with Orr
     L.  W., Schweitzer Industrial.  December 7, 1979.  Cost of coatinq
     rooms.

22.  Neveril  R  B., J  U. Price  and K. L. Engdahl.  Capital and Operating
     Costs of Selected Air Pollution Control Systems-V.  Journal of the Air
     Pollution Control Association.  28:1254.  December 1978.

23.  Telecon.  McCarthy, J. M.,  Research Triangle Institute, with Brewer,
     Gerald, Air Correction Division, UOP,  Inc.  December  11, 1979.  Dis-
     cussion of design and operating parameters for  95 percent solvent
     destruction.

24.  Vilbrandt, C. and C. E.  Dryden.   Chemical Engineering  Plant Design.
     New York, McGraw-Hill Book  Company, 1959.  p.  205-207.

25.  Telecon.  McCarthy, J. M.,  Research Triangle Institute, with
     Blazejewski, Ed, C-E-Air Preheater.   December  7, 1979.  Discussion of
     design and operating parameters for 95 percent  destruction.

26.  Telecon.  McCarthy, J. M.,  Research Triangle Institute, with Dombeck,
     Jerry, Precoat Metals.  October 26, 1979.  Discussion of costs of new
     line.

27.  Telecon.  McCarthy, J. M.,  Research Triangle Institute, with Wilson,
     Russ, Harnischfeger Corporation.  October 29,  1979.   Cost of overhead
     cranes.

28.  Telecon.  McCarthy, J. M.,  Research Triangle Institute, with Dwyer,
     Larry, Supracote,  Inc.  January 8, 1980.  Operating costs of coating
     lines.
                                  8-94

-------
  29.   Telecon.   McCarthy, J. M., Research Triangle Institute, with Orr,
       L.  W.t Schweitzer Industrial.  December 28, 1979.  Modifications to
       coil  coating lines.

  30.   United States Congress.   Federal Water Pollution Control Act, as
       amended November 1978.  33 U.S.C. 1251 et seq.   Washington, D.C.  U.S.
       Government Printing Office.   December 1978.

  31.   Telecon.   Scott,  Marsha,  Research Triangle Institute, with Kukulka,  J.,
       Effluent  Guidelines  Division, U.S.  Environmental Protection Agency.
       December  10,  1979.   Cost  of  water pollution control  regulations in the
       coil coating  industry.

  32.   Industrial  Ventilation Manual.   American Conference  of Governmental
       Industrial  Hygienists.  Washington,  D.C.  n.d.

 33.  United  States Congress.   Toxic  Substances  Control  Act.   15 U.S.C.  2601
      et seq.  Washington, D.C.  U.S.  Government Printing  Office.   October
      1976.

 34.  Telecon.  Scott, Marsha,  Research Triangle Institute, with Beronja, G.,
      Office of Toxic Substances, U.S. Environmental Protection  Agency.
      December 10, 1979.  Impact of toxic substances control  on  the coil
      coating industry.

 35.  1977 Census of Manufacturers Preliminary Report.   Bureau of the Census,
      U.S. Department of Commerce.   Washington, D.C.   Table 3.  n.d.

 36.   Source  Category Survey Report:  Phase I, Metal  Coil Surface Coating.
      Research Triangle Institute,  Research Triangle  Park,  North Carolina.
      1979.   pp.  18-20.

 37.   1972 Census  of Manufacturers.   Bureau of the Census,  U.S.  Department
      of Commerce.   Washington,  D.C.   Table 5.   n.d.

 38.   Bussey,  L.  E.  The Economic Analysis  of Industrial  Projects.   Englewood
      Cliffs,  New  Jersey, Prentice-Hall,  Inc.,  1978.  p.  220.

 39.   Reference 38,  p. 222, n. 13.

40.   Reference 38, p. 73.

41.   Reference 38, p. 78.
                                  8-95

-------
                   APPENDIX A
EVOLUTION OF THE BACKGROUND INFORMATION DOCUMENT

-------
                                  APPENDIX A
               EVOLUTION OF THE BACKGROUND INFORMATION DOCUMENT

       The contractor for the Metal  Coil  Surface Coating source category,
  Research Triangle Institute (RTI),  began work on  the project  on  October  12,
  1978.   Table A-l lists  major events and accomplishments  in  the evolution of
  the  Background  Information  Document (BID).   The initial  activities consisted
  of formulating  a Phase  I  Work Plan  and  making contacts with industry offi-
  cials.   The  National Coil Coaters Association (NCCA)  agreed to provide tech-
  nical and economic  information and  provided  such at various stages throughout
  the project.  The Air Pollution Technical Information Center conducted a
  literature search on the  coil coating industry in November 1978.   Project
 personnel reviewed this information during the next month.
      A series of seven visits to coil coating plants was begun with two
 visits in December 1978.  In January and February  of 1979 priority was
 given to completing Phase I, with the submission of the Source Category
 Survey Report and the Phase  II and III Work  Plan.   Four more facilities
 were  visited in  March 1979,  and one  in October 1979.   The plants  were
 selected to  provide  information on a wide range of  emission  control systems
 and types of coatings.   In March  1979,  the project  staff  met with industry
 representatives  at NCCA  Headquarters in  Philadelphia  to'discuss the types
 of information needed from the Association.
     An  emission test plan was outlined  in April 1979; however, the first
 test was  delayed until August  1979,  at which  time it was  carried  out success-
 fully by  Midwest  Research  Institute  (MRI)  in  cooperation with RTI.  In
May 1979  a meeting was held with officials of  Midland-Ross Corporation,  a
vendor of coating equipment,  ovens, and emission control systems.   Much  of
the information  regarding control systems was obtained from vendors by
letters and telephone conversions during the  remainder of 1979.
                                 A-3

-------
         TABLE A-l.   MAJOR EVENTS AND  ACCOMPLISHMENTS  IN  THE  EVOLUTION OF  THE BACKGROUND  INFORMATION DOCUMENT
            Month
                                                                                     Event
-P.
  October 1978
  November 1978
  December 1978

  January 1979
  February 1979
  March 1979

  ApriT  1979
  Hay  1979
  June 1979
  July 1979
  August 1979
  September 1979
 October 1979

 December 1979
 January 1980
 Aprfl 1980
 June 1980
June 1980
  Work begun by Research Triangle Institute (RTI).   National  Coil  Coaters Association (NCCA) contacted.
  Phase I Work Plan submitted.  Literature search carried out.
  Plant visits conducted to Roper Eastern Corporation and Chesapeake Finished Metals, Baltimore.   Formal request
  for information sent  to NCCA.
  Phase II and III  Work Plan completed.
  Source  Category Survey Report completed.   Phase I  completed.
  Plant visits made to Precoat Metals, St.  Louis; Modern Materials, Detroit;  and Rollcoater, Greenfield and
  Kfngsbury, Indiana.   Meeting held  at NCCA headquarters.
  Emission Test Plan completed.  Preliminary model plants and regulatory alternatives defined.
  Meeting with Midland-Ross Corporation officials.
  Survey and economic  data obtained  from EPA Effluent Guidelines Division and Water Economics Branch.
  Requests for  samples sent to coating manufacturers.
 Model  plants  and regulatory alternatives defined.   Emission  test  at Precoat Metals begun.
 Emission  test at Precoat Metals completed.  Requests for cost  information sent to equipment vendors.
 NCCA Technical Meeting, Chicago,  attended.  Technical background  chapters of Background Information Document
 (BID) completed.  Plant visit made  to Kaiser Aluminum, Toledo.
 Chapters 3-6 of BID sent to  industry officials for comment.  Cost study completed.
 REECO representative gave presentation at  EPA on REECO emission control system.
Economic analysis completed.   NAPCTAC package completed.
NAPCTAC meeting held.
Steering  Committee  package mailed on consent agenda.  No meeting held.

-------
                 APPENDIX B
INDEX TO ENVIRONMENTAL IMPACT CONSIDERATIONS

-------
                                APPENDIX B
               INDEX TO ENVIRONMENTAL IMPACT CONSIDERATIONS

     Table B-l lists the locations in this document of certain information
pertaining to environment impact, as outlined in Agency Guidelines (39 FR
37419, October 21, 1974).
                                B-3

-------
              TABLE B-l.   LOCATIONS OF INFORMATION CONCERNING
      ENVIRONMENTAL IMPACT WITHIN THE BACKGROUND INFORMATION DOCUMENT
Agency guidelines for preparing
regulatory action environmental
impact statements (39 FR 37419,
October 21, 1974)
Location within the Background
Information Document
Background and summary
of regulatory alternatives

Statutory basis for proposing
standards

Relationships to other regulatory
agency actions

Industry affected by the regula-
tory  alternatives

Specific processes affected
by the regulatory alternatives
Chapter 1, Section 1.1
Chapter 2, Section 2.1
Chapters 3, 7, and 8
Chapter 3, Section 3.1, and Chapter  8,
Section 8.1

Chapter 1, Section 1.1, and Chapter  3,
Section 3.2.
                                  B-4

-------
       APPENDIX C
EMISSION SOURCE TEST DATA

-------
                                    APPENDIX C
                             EMISSION SOURCE TEST DATA

 C.I  INTRODUCTION
      Six emission tests of coil coating lines with thermal  incinerators
 have been identified, and a test sponsored by the U.S.  Environmental  Pro-
 tection Agency (EPA) was completed during the course of this  study.   Each
 test is discussed below.
 C.I.I  Emission Test 1
      In 1971,  Scott Research Laboratories performed a series  of  emission
 tests on two coil coating lines with thermal  incinerators.  Control unit
 031 was designed to heat 4.2 mVs  (9,000  scfro)  of gases  to 760°  C  (1,400° F),
 with a design  residence time of 0.8 s.  Control  unit 033 had  a residence
 time of 0.8  s  at a design flow of  1.2 mVs  (2,600 scfm)  and at a temperature
 of  760° C (1,400° F).   The coatings in  each case  were white acrylic coatings
 containing 40  percent solids by weight.   The  methods of  analysis are sum-
 marized in Table C-l.
      During  the  testing,  Unit  031  was operating at  less  than design flow
 rate  while Unit  033 was  operating  at  greater  than design flow rate.  For
 reasons not  explained in the report,  the  operating  temperatures were esti-
 mated at approximately 38°  C (100°  F) greater than  the measured outlet
 temperatures.  The  results  of  the  testing are summarized in Tables C-2 and
 C-3.   Unit 031 achieved  an  average  99.5 percent reduction in hydrocarbons;
 Unit  033  achieved only 89 percent,  probably because of the lower actual
 operating temperature  and  residence time due to overloading.   Unit 033
produced  a higher level  of products of partial combustion than Unit 031,
although  compounds present in the  inlet streams predominated in the outlet
streams  in each case.  Higher concentrations of nitrogen oxides were pro-
duced  in  Unit 031, probably as a result of the higher actual  operating
temperatures.

                                  C-3

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              TABLE C-l.   PROCEDURES  USED  IN  EMISSION TEST  1
       Parameter
     Method of measurement
Nitric oxide & nitrogen dioxide
Carbon monoxide
Carbon dioxide
Total aldehydes
Total hydrocarbons

Individual hydrocarbons
Odor

Gas velocity
Gas temperature
Modified Saltzmun Procedure
Continuous infrared analyzer
Continuous infrared analyzer
MBTH method
Continuous total hydrocarbon
  analyzer, flame ionization
Gas chromatography
Modified ASTM Standard
  Method D 1391-57
Pi tot tube traverse of  duct
Thermocouple traverse of  duct
                                   C-4

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TABLE 02.   CONDITIONS AND COMPOSITION OF GASES AT THE INLET AND OUTLET OF CONTROL UNIT  031.  EMISSION TEST  1
Inlet flow








o
i
Ul
Run
no.
1
2
3
4
5
Avg.



rate Temperature, °C
nrVs

3.40
3.20
3.36
3.13
3.27



(scfm)
-
(7,200)
(6,790)
(7,120)
(6,640)
6,940



Inlet
-
316
321
321
307
316



Outlet
688
721
682
699
699
698



Nitric oxide,
ppm
Inlet Outlet
31
44
2.2 22
2.0 13
2.4 17
2.2 27



Nitrogen
dioxide, ppm
Inlet
-
8.3
4.8
3.8
8.2
6.3



Outlet
17
3.5
5.1
4.9
12
8.5



Aldehydes,
ppm H2CO
Inlet Outlet
30
20
31 11
32 5.1
34 10
32 15



Carbon
monoxide, ppm
Inlet
180
40
100
100
120
110



Outl et
690
30
250
250
480
340



Carbon
dioxide t %
Inlet Outlet
-
2.70
2.25 4.05
2.70 4.35
2.55 4.00
2.55 4.13



Total nonme thane
hydrocarbons ,
ppm CaH8
Inlet Outlet
2,120 15
2,470 12
17
2
2,720
2,440 11



Odor
reduction.
dilutions
300
300
200
300
300
280




-------
           TABLE 03.  CONDITIONS  AND COMPOSITION OF  GASES AT THE INLET AND OUTLET OF CONTROL UNIT  033, EMISSION TEST  1
Run
no.
1
2
3
Avg.
Inlet flow
rate
ni-Vs
1.40
1.49
1.34
1.41
(scfm)
(2,960)
(3,070)
(2,840)
(2,960)
Temperature. °C
Inlet
304
293
293
297
Outlet
582
566
582
577
Nitric oxide,
PP*i
Inlet
-
2.3
2.8
2.6
Outlet

10
11
11
Nitrogen Aldehydes, Carbon
dioxide, ppm ppm H2CO monoxide, ppm
Inlet

2.1
4.2
3.2
Outlet Inlet

3.6 38
8.7 51
6.2 45
Outlet Inlet
285
1. 9 270
23 569
13 375
Outlet
2,450
5,360
5,930
4,580
Carton
dioxide, %
Inlet
2.59
2.35
(2.20)
2.38
Outlet
3.33
3.06
-
3.20
Total normtettiane
hydrocarbons ,
ppm C3Ha
Inlet
-
'2,200)
2,570
2,385
Outlet
-
230
304
267
Odor
reduction,
dilutions
-
8
100
54
        NOTE:  Parenthesis indicates values estimated on the basis of incomplete data.
o
i
en

-------
 C.I.2  Emission Test 2
      Environmental Technology and Engineering Corporation conducted an
 emission test of a REECO Re-therm system in April 1976.   The Re-therm unit
 incorporates thermal incineration and regenerative heat recovery.   Gas
 samples were collected upstream and downstream of the unit in heated (121° C,
 250° F), stopcocked, 500 m£ gas sampling bottles.  Approximately 40 £ of
 sample were drawn through the sampling train before the stopcock was closed.
 A gas chromatograph equipped with a flame ionization detector was  used in
 the analysis of samples.   Flow rate determinations were made with  a stand-
 ard pitot tube to do velocity traverses of 12 points each.   The results  for
 each sample are given in Table C-4.   The air flow rates  and retention times
 in the incinerator are not reported.   The types of coatings used during  the
 testing are listed in Figure C-l.   The incinerator system achieved an
 average solvent reduction of 94 percent of the hydrocarbons entering the
 device.
 C.I.3  Emission Test 3
      An emission test was done by  Midland-Ross Corporation  on a thermal
 incinerator controlling emissions  from a coil  coating line  in November 1976.
 The line  was running a steel  strip 1.2 m (48 in.) wide at 1.0 m/s  (200
 ft/s).  The wet coating thickness  was  0.089  mm (.0035 in.),  and the  coating
 contained 50 percent solids  (basis unknown).   Details of the  testing proce-
 dure  are  not known.   Based on  three samples, the  average inlet  concentra-
 tion  to the incinerator was  2,700  ppmv;  the  average outlet  concentration
was 36  ppmv (both concentrations probably as methane).  The average solvent
 reduction across the  incinerator was 98  percent.
C.I.4.  Emission Test  4
     An emission test of  a 1.2 m (48 in.) aluminum coating  line was carried
out in January 1977 by  Clayton Environmental Consultants of Southfield,
Michigan.   The incinerator temperature was 700° C (1,300° F).  A single
pair of samples were taken, one upstream and one  downstream of the Incimra-
tor; the corresponding  concentrations of nonmethane hydrocarbon were
4,530 ppm as methane  (upstream) and 560 PP» as methane (downstream)   The
solvent reduction across  the incinerator was thus 88 percent.  Total hydro-
carbons were determined by an on-line hydrocarbon analyzer based on a flame
                                  C-7

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Sample time
                     TABLE C-4.   RESULTS OF EMISSION TEST 2
    Incinerator
exhaust temperature
                       C
              F)
  Concentrations
hydrocarbons,  ppim'
  Inlet    Outlet
                                                                  Efficiency
0910
1020
1105
1150
1235
1255
1415
1435
Avg
700
700
700
700
700
700
700
700
700
=====
(1,300)
(1,300)
(1,300)
(1,300)
(1,300)
(1,300)
(1,300)
(1.300)
(1,300)
._
400
420
673
653
540
560
450
477
52?
=======
61
54
23
10
47
7
10
23
29
=f. 	
85
87
97
98
91
99
98
95
94
                                  C-8

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 Time of test
                               Prime coat
                                                 Finish coat
   Front side
Back side
Front side
Back side
0910 though
1200
1200 through
1600

Epoxy 141

Epoxy 153

Epoxy 141

Epoxy 141

Polyester 189

Fluorocarbon618

Polyester 189

Polyester 189
Chemical Composition of Coatings

Epoxy Primer 141
Epoxy Primer 153
31.9% Nonvolatile;
  4.5% Butanol
17.0% Xylol
13.4% Solvesso 100
28.8% Diacetone
  4.4% Butyl cellosolve


33.7% Nonvolatiles
44.8% Cellosolve acetate
16.3% Solvesso 150
 2.7% Toluol
 2.5% Isopropyl alcohol
        Polyester 189  53.0% Nonvolatiles
                       2.9% Butanol
                       3.4% Xylol
                       2.6% Solvesso 100
                      31.5% Solvesso 150
                       4.2% Butyl carbitol
                       2.4% Butyl cellosolve

    Fluorocarbon618  37.0% Nonvolatiles
                      51.0% Isophorene
                       6.8% Xylol
                       5.1% Butyl cellosolve
           Figure C-1.  Description of coatings used during emission test 2.

                                            C-9

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iom'zation detector.   Methane was measured with the same analyzer preceded
by an activated carbon column; nonmethane hydrocarbons were calculated as
the difference.  The gas flow rate to the incinerator was measured at
5.29 mVs (11,200 scfm).  Measurements of the flow rate and hydrocarbon
concentration of the air being exhausted from the coating room indicated
that approximately 20 percent of the total nonmethane hydrocarbons that
could potentially have reached the incinerator actually were exhausted to
atmosphere through exhaust ducts.
C.I.5  Emission Test 5
     H & M Engineering and Research Company performed an emission test of a
coil coating line in October 1978.  The line had been retrofitted with
multiple, oven-mounted incinerators (zone incinerators).  Although coating
usage was recorded, the only gas streams actually tested were the exhaust
streams from the final afterburners.   The results of the testing are given
in Table C-5.  Flow rates were measured by velocity traverses.   Each hydro-
carbon data point in Table C-5 represents a sample that was collected in a
glass chromatography collector and analyzed with flame ionization calibrated
for methane.  Based on the solvent usage rates measured at the coating
rooms, the solvent reduction across the entire topcoat system was greater
than 99 percent at afterburner temperatures of 482° C (900° F) or greater.
C.I.6  Emission Test 6
     An emission test was performed on a total of nine incinerators that
were being used to burn recycled hydrocarbons to two ovens.  The incinera-
tors were mounted external to the ovens.  The average of the inlet concen-
trations to the five incinerators on the prime coat oven was 733 ppmv; the
average of the outlet concentrations from the five incinerators was 55 ppmv,
for an efficiency of 92 percent.  The average temperature was 716° C
(1,320° F).  The average of the inlet concentrations to the four incinera-
tors on the topcoat oven was 3,718 ppmv; the average of the outlet concen-
trations was 32 ppmv, for an effectiveness of 99 percent.  The exhaust
temperature was 760° C (1,400° F).
C.1.7  EPA Sponsored Emission Test
     An emission test was done by Midwest Research (MRI) Institute of Kansas
City, Missouri, in August and September 1979.  The work was done under con-
tract with the Emission Measurement Branch of EPA.  The coating line being
                                  C-10

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TABLE C-5.   RESULTS OF EMISSION TEST 5
Gas stream tested
Final exhaust from
prime coat system
Final exhaust from
topcoat system


Gas flow rate
m3/s

3.07

3.80
3.83
2.97
(scfm)

(6,510)

(8,060)
(8,110)
(6,300)
Total
hydrocarbons
ppmv as CH4

1.0

150
20
0.45
Total hydrocar-
bon emissions
kg/h

.002

0.50
.059
.001
(Ib/h)

(.005)

(1.1)
(-13)
(.002)
Solvent
i nput
kg/h

95

223
223
223
(Ib/h)

(210)

(492)
(492)
(492)
Afterburner Percent
temperature reduc-
0 C (° F) tion

649

482
593
649

(1,200)

(900)
(1,100)
(1,200)

99.9

99.8
99.9
99.9

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tested was equipped with ovens having zone incinerators and individual
final afterburners with waste heat boilers.
     Emission measurements were made before and after each final after-
burner.  Temperatures in the afterburners were changed for separate test
runs to measure the efficiency of these units at several temperatures.  A
material balance of coatings was done for each run to estimate the overall
efficiency of the control systems.  Sampling was done to measure quantity
and solvent concentrations of the coatings used; nitrogen oxides at the
afterburner outlets; volumetric flow rates at the afterburner inlets and
outlets; and volatile organic compound (VOC) concentrations at the after-
burner inlets and outlets.  VOC sampling and analyses were done according
to Method 25 for total gaseous nonmethanc organic emissions.
     The results of the testing indicate that the final afterburners, when
operated at 760° C (1,400° F), achieved destruction efficiencies of 93 to
96 percent.  The resulting overall destruction efficiencies of the system
were estimated at greater than 99 percent.  There are inconsistencies in
the data between the Method 25 results and the THC (FID only) results at
lower concentrations for all afterburner temperature settings.  These
inconsistencies are being investigated by EPA.  Further interpretation of
the data is awaiting release of the final report.
     As best as can be determined from the reports, the MRI emission test
is the only test performed according to Proposed Method 25, "Determination
of Total Gaseous Nonmethane Organic Emissions as Carbon:  Manual Sampling
and Analysis Procedure."
C.2  REFERENCES

1.   A Study of the Gaseous Emissions of the Coil Coatinq Process and Their
     Control   Scott Research Laboratories,  Inc.  Plum ?eadvilie! Pennsyl-
     vania.  Report Number SRL 1233 07 1071.  October 1971   DD  3-13
     through 3-18, AIII-2 through AIII-15, and AIII-46 through AIII-55.
2.
     Report of Hydrocarbon Emission Test.  Environmental Technology and
     Engineering Corporation.  Elm Grove, Wisconsin.  May 1976
3.   Letter from Zuffante, V. M., Midland-Ross Corporation  to Fletcher
     George, Metal Koting.  May 31, 1977.  Emission test       Fletcher>
4.   Hydrocarbon Emission Study,  Rolled Aluminum Strip-Coatinq Process
     Clayton Environmental Consultants, Inc.   Southfield, Michigan.
                                  C-12

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5.   Stack Sampling Report.  H & M Engineering and Research Company.
     Address Unknown.  October 1978.

6.   Emission Test of a Coil Coating Plant in St. Louis, Missouri.  Midwest
     Research Institute.   Kansas City, Missouri.   November 1979.
                                 C-13

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                  APPENDIX D
EMISSION MEASUREMENT AND CONTINUOUS MONITORING

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                                  APPENDIX D
                EMISSION MEASUREMENT AND CONTINUOUS  MONITORING

 D. 1   EMISSION  MEASUREMENT METHODS
       During  the  standard  support study for the coil coating industry, the
 U.S.  Environmental Protection Agency  (EPA) conducted a test for volatile
 organic compounds (VOCs)  at one  coil  coating plant.  The primary purpose of
 this  test program was  to  determine  the  VOC control efficiency of the two
 incinerators employed  to  control prime  coat and finish coat curing oven
 emissions.
      VOC emission tests were conducted  at  three different incinerator
 temperatures for both  the prime coat and the finish coat incinerator to
 establish an estimate  of the relationship between incinerator temperature
 and VOC control efficiency.  Each incinerator was tested separately.
      A second objective of the test program was  to determine the amount of
 coating used during  the individual  test runs.   No attempt,  however,  was
 made to assure  that  the coatings tested represented the "average"  coating
 at this plant or  in  the industry.
      Three test runs  were  conducted at each of three different  incinerator
 temperatures  on each  of the two  incinerators for  a  total  of  18  test  runs.
 Each  run  spanned  approximately 30 minutes.   During  each run, tests were
 conducted  at  the  main exhaust  of the prime coat (or finish coat) curing
 oven  (the  inlet to the incinerator)  and at the exhaust  of the applicable
 incinerator.  These tests  included  determining the  average VOC concentration
 with  Reference  Method 25,  determining  percent oxygen and carbon dioxide
 with  Fyrite equipment,  and determining  moisture content with Reference
 Method  4.  In addition,  the nitrogen oxide  and continuous VOC concentrations
 were measured at  the  incinerator exhaust with a chemiluminescent and flame
 ionization analyzer (FIA),  respectively.  The volumetric flow rate at the
 inlet of the incinerator being tested was determined daily with Reference
Method 2.  Additional testing was conducted during the last day of the test
                                 D-3

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program to estimate VOC emissions from the finish oven quench exhaust by
(1) measuring the VOC concentration according to proposed Reference Method 25
and FIA and (2) measuring flow measurements according to Reference Method 2.
     The coating used was determined by measuring the volume of coating
used during the run.  Samples of the coating were collected at the start
and end of each  un.  Some of these samples were analyzed for VOC content
to determine the applicability of Reference Method 24.
D.2  PERFORMANCE TEST METHODS
     Performance test methods are needed to determine the VOC content of
the coating and to determine the overall control efficiency of an add-on
VOC control system.
D.2.1  Coating VOC Content
     The volatile organic content of the coating may be determined by the
manufacturer's formulation or from Reference Method 24, "Determination of
Volatile Organic Content (as Mass) of Paint, Varnish, Lacquer, or Related
Products."
     Reference Method 24 combines several American Society for Testing and
Materials (ASTM) standard methods that determine the volatile matter content,
density, volume of solids, and water content of the paint, varnish, lacquer,
or related coating.  From this information, the mass of VOCs per unit
volume of coating solids is calculated.  The estimated cost of analysis per
coating sample is $150.  For aqueous coatings, there is an additional $100
cost per sample for water content determination.  Because the testing
equipment is standard laboratory apparatus, no additional purchasing costs
are expected.
D-2-2  Control Efficiency of Add-on VOC Control System
     If the VOC content of the coatings used exceeds the level of the
recommended standard, the efficiency of the add-on control system must be
determined.  This information would be used in conjunction with the VOC
content of the coating used to determine compliance with the recommended
standard.
     For those types of control systems that do not destroy or change the
nature of VOC emissions, the recommended procedure is a material balance
system where the mass of the VOCs recovered by the control system is
                                  D-4

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 determined and used  in conjunction with the mass of VOCs  in the coating used
 over the same period of time.  The length of time during which this material
 balance is conducted will be dependent upon the Agency decision on whether
 to require continual compliance or to demonstrate compliance during an
 initial performance test.  Examples of control systems where this procedure
 would be applicable are refrigeration and carbon adsorption systems.
      A different approach is recommended for those control systems (such as
 incinerators) that alter the VOC emissions.  Ideally, the procedure would
 directly measure all VOCs emitted to the atmosphere.   However, this procedure
 would require measurement of the VOC emissions that escape capture prior to
 the incinerator (control  system) by construction of a complex ducting
 system and measurement of the VOC emissions exhausting to the atmosphere
 from the control  system.
      The recommended procedure requires  simultaneous  measurement  of the
 mass of VOCs  (as  carbon)  entering the control  system  and  exiting  the  control
 system to  the atmosphere.   Methods 1,  2,  3,  and 4 are  recommended  to  deter-
 mine the volumetric flow measurements.   Reference Method  25  is  recommended
 to  determine  the  VOC (as  carbon)  concentration.   These results  are then
 combined to give  the mass  of  VOCs  (as  carbon)  entering the control  system
 and exiting the control  system to  the  atmosphere.  The control  efficiency
 of  the  control system is  determined from these  data.
     The average  of three  runs  should  be adequate to characterize  the
 control  efficiency  of the  control  system.  The  length  of each run  would be
 dependent upon the  operational  cycle of the control system employed.
 Minimum  sampling  time would be  in  the  range of  30 minutes and would be
 dependent upon the  size of the  evacuated tanks  and the sampling rate employed
 to  obtain a sample.  The control agency should  also consider the represen-
 tativeness of the solvents and  coatings used during the test program.  It
 is  assumed that the manufacturers of the oven and incinerator will design
the system based on a miximum organic  loading that would occur at  the
maximum line speed with use of  the highest percent solvent content coating
and the lowest molecular weight solvent (which are typically the most
difficult to combust).  The designer would also assume 100 percent capture
(i e   no fugitive losses).  Although the actual testing time using Reference
                                 D-5

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Method 25 is only a minimum of 90 minutes, the total  time required for one
complete performance test is estimated at 8 hours, with an estimated overall
cost of $4,000.
D.3  MONITORING SYSTEMS AND DEVICES
     The purpose of monitoring is to ensure that the emission control
system is being properly operated and maintained after the performance
test.  One can either directly monitor the regulated pollutant or, instead,
monitor an operational parameter of the emission control system.  The aim
is to select a relatively inexpensive and simple method that will indicate
that the facility is in continual compliance with the standard.
     For carbon adsorption systems, the recommended monitoring test is
identical to the performance test.  A solvent inventory record is maintained,
and the control efficiency is caluclated every month.  Excluding reporting
costs, this monitoring procedure should not incur any additional costs for
the affected facility since these process data are normally recorded
anyway and since the liquid volume meters were already installed for the
earlier performance test.
     For incinerators, two monitoring approaches were considered:  (1)
directly monitoring the VOC content of the inlet, outlet, and  fugitive
vents  so that  the monitoring test would be similar to the performance
tests; and  (2) monitoring the operating temperature  of the incinerator as
an indicator of compliance.  The  first alternative would require at  least
two  continuous hydrocarbon monitors with  recorders (about $4,000 each) and
frequent calibration and maintenance.  Instead,  it is recommended that a
record be  kept of the  incinerator temperature.   The  temperature  level for
indication  of  compliance should  be  related to the average temperature
measured during the performance  test.  The averaging time for  the tempera-
ture for monitoring purposes should be related to the time period for the
performance test-90 minutes, in this case.  Since a temperature monitor  is
usually  included as a  standard feature for incinerators, it  is expected
that this  monitoring  requirement will not incur  additional costs  for the
plant.   The cost of purchasing and  installing an accurate temperature
measurement device and recorder  is  estimated at  $1,000.
                                  D-6

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D.4  REFERENCES
1.    (Proposed) Method 25—Determination of Total Gaseous Nonmethane Organic
     Emissions as Carbon:  Manual Sampling and Analysis Procedure.  Federal
     Register. 40 CFR Part 60, Vol. 44, No. 195.  October 5, 1979.  p. 57808.

2    (Proposed) Method 24 (Candidate 2)--Determination of Volatile Organic
     Compound Content (as mass) of Paint, Varnish, Lacquer, or Related
     Products.  Federal Register, 40 CFR Part 60, Vol. 44, No.  195.   October 5,
     1979.   p. 57807.
                                 D-7

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           APPENDIX E
REVISED REGULATORY ALTERNATIVES

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                                 APPENDIX E
                       REVISED REGULATORY ALTERNATIVES

 E.1  INTRODUCTION
      During the background study conducted for the metal coil  surface
 coating industry, the best system of continuous emission reduction was
 determined to be incineration with heat recovery and the use of coating
 rooms that are ventilated into the oven or incinerator.   Consequently, the
 regulatory alternatives  that were considered during the  background study
 were based on the use of such control  systems.   The original  regulatory
 alternatives considered  were as  follows:
      I.    No NSPS.
     II.    An emission limit equivalent to  an 85 percent  overall  reduction
           in the emissions  from  the average  industry coating formulation.
    III.    An emission limit equivalent to  a  95  percent reduction in the
           emissions  from the average industry coating formulation.
      Regulatory Alternative II is  based on the  use  of an  incinerator with  a
 95  percent VOC  removal efficiency,  which emission test data indicate can
 consistently be achieved.   This  alternative  relies  upon the normal industry
 practice for capturing VOC  emissions.   Information  in the literature indicates
 that  under these  conditions a capture  efficiency of  about 90 percent could
 be  expected.
      During  site  visits  to  two coil  coating  plants,  three coil coating
 lines were  identified that  have  their  coating application stations enclosed
 in  rooms and  have all of the ventilating air  from the rooms passing into
 the ovens.   This  configuration should  result  in almost complete capture of
 the VOC emissions.  Regulatory Alternative III was therefore based on the
 use of coating  rooms that are ventilated into the oven or incinerator and
the use of a 95 percent efficient incinerator.

                                  E-3

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     When the Background Information Document (BID) and recommended standards
for the coil coating industry were presented to the National Air Pollution
Control Techniques Advisory Committee (NAPCTAC) for review, representatives
of the National Coil Coaters Association (NCCA) presented new data indicating
that the basis of the regulatory alternatives may not be consistently
applicable throughout the industry.   Specifically, the industry data indicate
that the coil coating lines that have all of the coating room ventilation
passing through the oven are not representative of the industry in that, in
most installations, the coating room ventilation requirement is much greater
than the requirement for oven makeup air.  This statement was verified
through contacts with several vendors of coil coating equipment.  Because
all the air that passes through the oven and incinerator must be heated, a
severe energy penalty would be imposed if coil coaters were required to
pass all of the coating room ventilation air through the oven or incinerator.
The NCCA submittal suggested that, with the use of coating rooms and proper
hooding of the coating application stations, a capture efficiency of 95 per-
cent could consistently be achieved.1
     Other information submitted by the NCCA indicated that if the emission
limits for a standard are based on the use of incinerators with a 95 percent
eff1Ciency, very few if any of the waterborne coatings available to the
coil coating industry could achieve compliance.*  It was earlier learned
that approximately 15 percent of the annual production of coil coated metal
is coated with waterborne coatings.   The NCCA and several vendors of coat-
ings for the coil industry stated that the recommended limits were so far
beyond the existing state of the art in low-VOC content coatings that
research and development efforts on these coatings would be stopped.   Data
solicited from coating vendors indicate that the VOC content of available
waterborne coatings ranges from 0.07 kilogram/liter (kg/£) of coating
solids to 0.54 kg/* of coating solids and that 90 percent of them are in
the range of 0.11 to 0.28 kg/Jl of coating solids.3 * s e 7  These figures
are in fact well above the recommended limit of 0.07 kg/* of coating solids.
     In view of the new data obtained during and subsequent to the NAPCTAC
meeting, it became necessary to consider several additional regulatory
alternatives.   A total of five alternatives were considered.  These are as
follows:
                                  E-4

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      I.   No NSPS.
     II.   An emission limit equivalent to an 85 percent overall reduction
           in the emissions from the average industry coating formulation.
    III.   An emission limit the same as Regulatory Alternative II for
           plants that use higher VOC content coatings and incineration and
           a separate emission limit for plants that use low-VOC content
           coatings.
     IV.    An emission limit equivalent to a 90 percent overall  reduction  in
           the emissions  from the average industry coating formulation.
      V.    An emission limit the same as Regulatory Alternative  IV for
           plants that use higher VOC content coatings and incineration  and
           a separate emission limit for plants that use low-VOC content
           coatings.
      As can be seen,  Regulatory Alternatives I and II are the  same as those
 originally considered.   Regulatory  Alternative III is the same  as  Alterna-
 tive  II for plants that  use higher  VOC content coatings but  also contains  a
 separate emission limit  for plants  that use  low-VOC content  coatings.   This
 separate limit would be  based on the VOC  content  of existing coatings of
 that  type.
      Regulatory Alternative IV is similar to the  original  Regulatory Alter-
 native  III  and is based  on  the use  of a 95 percent efficient incinerator
 and coating rooms.   The  capture  efficiency of  the  system  is  estimated to be
 95 percent  because all of the  coating room ventilation  would not be required
 to pass  through the  oven or control  device.
      Regulatory Alternative V  is the  same as Alternative  IV  for plants that
 use higher  VOC  content coatings  but  also  contains  a  separate emission
 limit,  based  on the VOC  content  of existing  coatings, for plants that use
 low-VOC  content coatings.
     The environmental,  energy,  and  economic impacts  of each of the above
 regulatory  alternatives were evaluated.  The results  of these evaluations
 are presented  in  the  following subsections.
 E.2  ENVIRONMENTAL, ENERGY, AND  ECONOMIC  IMPACTS
     The estimated impacts  of  each of the regulatory  alternatives on atmos-
 pheric emissions  of VOCs are given in Table  E-l.  The procedures used to
estimate these  impacts are  the same  as  those described  in Chapter 7.   No
other environmental impacts would be expected from any  of the regulatory
alternatives.

                                  E-5

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                     TABLE E-l.  ESTIMATED ENVIRONMENTAL IMPACTS  IN THE FIFTH YEAR  (Mg/yr  [ton/yr)]
m
 i
01
Regulatory
alternative
I.
II.
III.
IV.
V.
No NSPS
(baseline)
85% control
85% control,
separate limit
for waterbornes
90% control
90% control,
separate limit
for waterbornes
Emissions from Reduction in
new plant emissions from
capacity modified plants
+4,570(+5,035)
+3,315(+3,655) -660(-730)
+3,3800-3,725) -625(-690)
+2,210 (+2,435) -1,245(-1,375)
+2,440(+2,690) -1,125(-1,240)
Overall impact
on emissions
+4,570(+5,035)
+2, 655 (+2, 925)
+2,755(+3,035)
+960(+1,060)
+1,315(+1,450)
Emission reduction
relative to baseline
0
-1,915(-2,110)
-1,815(-2,000)
-3,605(-3,975)
-3,250(-3,585)

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       Tables E-2 and E-3 present the rates of fuel and electrical energy
  consumption for uncontrolled coil coating lines and the rates for each
  level of control considered in the regulatory alternatives.  The data are
  presented for each of the model plant sizes.  Table E-4 gives the overall
  impact on national energy consumption that would result from each of the
  regulatory alternatives.   The energy impact on individual  plants is the
  same for Regulatory Alternatives II and III  and for Regulatory Alterna-
  tives IV and V.   The differences in the national  energy impact result from
  the  fact that fewer plants are  impacted under Regulatory Alternatives II
  and  IV than  under  Regulatory Alternatives  III and  V,   It was  assumed that
  under Regulatory Alternatives II  and  IV, no  plants  would be able  to  comply
  with  the standards  by  using low-VOC content  coatings.  This assumption
  probably results in an overestimate of  the energy  impacts because it is
  likely  that  some plants could comply with low-VOC content coatings,  although
  it is  not possible  to  estimate  the number of  such plants.   Under Regulatory
 Alternatives III and V it  was assumed that 15 percent of the plants  could
 comply with  the standards  by using low-VOC content coatings.
      The cost and economic analyses of the regulatory alternatives were
 made by selecting a specific control methodology by which plants could
 achieve compliance with each alternative.  The control options selected are
 presented in Table E-5.  Tables  E-6, E-7, and E-8 show, for each model
 plant size,  the operating parameters for each of the control options that
 use control  devices.
      The installed  costs  for each of the control  systems  are given in
 Table E-9 for each  model  plant size.   The annual  operating  costs  are given
 in  Table E-10.   The total  annualized costs  of each  control  option  are given
 in  Tables E-ll,  E-12,  and  E-13 for small, medium, and  large  model  plants,
 respectively.   It was  assumed that no  costs are associated with the  use  of
 low-VOC content  coatings as a control  technique.
     Table E-14  presents the  capital costs for a new coil coating  line for
 each model plant  size and gives  the capital costs of the  emission control
 equipment to  achieve each level  of control considered for plants that use
 solvent-borne coatings.
     A comparison of the cost data contained  in Tables E-9 through E-14
with the corresponding  costs  for the original  regulatory alternatives
                                  E-7

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                           TABLE E-2.   RATE OF FUEL ENERGY USAGE OF MODEL COIL COATING LINES1
Level of Control
Model line size
Small
Medium
Large
No emission
control
kW (106Btu/h)
2,100 (7.2)
6,700 (23)
14,000 (48)
64 percent reduction
by incineration at
ovens
kW (106Btu/h)
1,000 (3.4)
3,200 (11)
7,000 (24)
85 percent overall
reduction by incin-
eration at after-
burner
kW (106Btu/h)
1,600 (5.5)
4,700 (16)
10,000 (34)
90 percent overall
reduction by incin
eration at after-
burner with coatini
rooms
kW (106Btu/h)
1,550 (5.3)
4,550 (16)
9,700 (33)
m
 i
00
Energy rates during plant operating time.

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                         TABLE E-3.   RATE OF ELECTRICAL ENERGY USAGE OF MODEL COATING LINES6
Level of Control
Mode] line size
Small
Medi urn
Large
No emission
control
kW
190
680
1,300
64 percent reduction
by incineration at
ovens
kW
190
680
1,300
85 percent overall
reduction by incin-
eration at after-
burner
kW
300
900
1,800
90 percent overall
reduction by incin
eration at after-
burner with coatini
rooms
kW
300
900
1,800
m
        Energy  rates  during  plant  operating time.

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           TABLE  E-4.   ESTIMATED ANNUAL INCREASE IN NATIONAL FUEL
                     CONSUMPTION DUE TO INDUSTRY GROWTH5

Regulatory alternative
I. No NSPS
II. 85% control
III. 85% control,
separate waterborne limit
IV. 90% control
V. 90% control ,
separate waterborne limit
Increase in
First year
TJ (billion Btu)
700 (660)
886 (840)
770 (730)
870 (820)
755 (715)
fuel consumption
Fifth year
TJ (billion Btu)
3,500 (3,300)
4,430 (4,200)
3,850 (3,650)
4,340 (4,110)
3,775 (3,575)
Assumptions:

 L   recon^u?L2ri^eS  ^l'"!!.'^'"*'. -"•"•< -dlflyi/
     reconstruc
     incineration
                          -                         ,
                        US1?S  solvent-bo™e coatings install thermal
                                                Pr1mary and secondary
2.   Systems with  90  percent control include coating rooms

3'                            ""^ * C0atin^ r°°ras and
TJ =
    (MuO°aF)°n temperature  for 85 ^d 90 percent control is 760° C

    formulS rath^tT  T^"95 meet NSPS limits bV choice of coating
    formulation rather  than by  installation of emission control equipment.
    terajoule,  1012  joules.
                                 E-10

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           TABLE E-5.   REGULATORY ALTERNATIVES AND CONTROL OPTIONS
                     CONSIDERED IN THE ECONOMIC ANALYSIS
        Regulatory alternative
        Control  option
 I.     No NSPS
       (SIP  regulations apply)
       SIP = CTG  limits

       SIP = Numerical  limits
 II.    Limiting emissions to the
       equivalent of an 85 percent
       reduction in the emissions
       from the average industry
       coating formulation of
       40 percent solids and 60
       percent VOC

 III.   Same as II with a separate
       limit for waterborne coatings
IV.   Limiting emissions to the
      equivalent of a 95 percent
      reduction in the emissions
      from the average industry
      coating formulation

V.    Same as IV with a separate
      limit for waterborne coatings
 1.
 2.
2.
3.
4.
 Multiple zone incinerators
 and coating rooms
 Thermal  incineration  with
 heat  recovery

 Thermal  incineration  with
 heat  recovery
5.
Thermal incineration with
heat recovery of waterborne
coatings

Thermal incineration with
heat recovery and coating
rooms
Thermal incineration with
heat recovery and coating
rooms or waterborne coat-
ings
                                  E-ll

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                      TABLE E-6.  KEY PARAMETERS FOR CONTROL BY MULTIPLE ZONE INCINERATORS
                                                 AND COATING ROOMS
                                                                   Line size
       Parameter
                                   Small
      Medium
       Large
I\J
 Oven exhaust temperature
 Exhaust volume,  each oven
 Effectiveness of solvent
  capture
 Effectiveness of solvent
  destruction
Average solvent  input
  reaching oven
Average heat  released by
  solvent combustion
Electric power required
  above that of standard
  ovens
                                    316° C (600° F)
                                    2.4 mVs  (5,000  scfm)
                                      95 percent
                                      64 percent
 316° C (600° F)
 4.7 mVs  (10,000  scfm)
      95 percent

      64 percent
                                   0.016 H/s (15.1 gal/h)     0.048 2,/s (45.4 gal/h)
316° C  (600°  F)
9.4 m /s (20,000 scfm)
     95 percent

     64 percent

0.11 £/s (101 gal/h)
                                   720 kW (2.5 MM Btu/h)
                                    Approx.  0
2,200 kW (7.4 MM Btu/h)     4,700 kW (16 MM Btu/h)
    Approx.  0
     Approx.  0
      MM Btu = million Btu/h.

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                   TABLE E-7.   KEY PARAMETERS FOR CONTROL BY THERMAL INCINERATION WITH HEAT RECOVERY
                                                                   Line size
   Parameter
                                          Small
                                  Medium
                                  Large
m
t-1
oo
Oven exhaust temperature
Incineration temperature
Exhaust volume, each oven
Primary heat exchanger duty
Secondary heat exchanger
  duty
Effectiveness of  solvent
  capture
Effectiveness of  solvent
  destruction in  incinerator
Average  solvent  input  reaching
  oven
Average  heat released  by
  solvent  combustion
Electric power  required
  above  that of  standard
  ovens
Volume  of  preheated air to
  ovens
Temperature of preheated  air
  to ovens
316° C (600° F)
760° C (1,400° F)
2.4 mVs (5,000 scfm)
1,000 kW (3.5 MM Btu/h)
1,800 kW (6.3 MM Btu/h)

      90 percent

      95 percent

.014 £/s (13.6 gal/h)

970 kW  (3.3 MM Btu/h)

      106  kW

4.1 mVs (8,600  scfm)

382° C  (720° F)
316° C (600° F)
760° C (1,400° F)
7.1 m3/s (15,000 scfm)
2,900 kW (10 MM Btu/h)
5,600 kW (19 MM Btu/h)

      90 percent

      95 percent

.043H/s (40.9 gal/h)
316° C (600°  F)
760° C (1,400° F)
15.6 ms/s  (33,000  scfm)
 6,700 kW  (23.MM Btu/h)
12,000 kW  (42 MM Btu/h)

      90 percent

      95 percent

.096 Jd/s (90.0 gal/h)
                                                                  2,900  kW  (9.9 MM Btu/h)    6,400 kW (22 MM Btu/h)
                                                                       225 kW
                                                                  12 mVs (26,000 scfm)
                                                                  382° C  (720° F)
                                510 kW
                           27 m3/s (58,000 scfm)
                           382° C (720° F)
    MM Btu/h  =  million  Btu/h.

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                     TABLE E-8.  KEY
                                PARAMETERS FOR CONTROL BY THERMAL INCINERATION WITH HEAT  RECOVERY
                                               AND COATING ROOMS
                                                                   Line size
      Parameter
                                        Small
                                   Medi urn
                                   Large
m
Oven exhaust  temperature
Incineration  temperature
Exhaust  volume, each oven
Primary  heat  exchanger duty
Secondary  heat exchanger
  duty
Effectiveness of solvent
  capture
Effectiveness of solvent
  destruction in incinerator
Average  solvent input reaching
  oven
Average  heat released by
  solvent combustion
Electric power required
  above that of standard
  ovens
Volume of preheated air
  to ovens
Temperature of preheated
  air to ovens
316° C (600° F)
760° C (1,400° F)
2.4 mVs (5,000 scfm)
1,000 kW (3.5 MM Btu/h)
1,800 kW (6.3 MM Btu/h)

     95 percent

     95 percent

0.15 £/s (14.4 gal/h)
316° C (600° F)
760° C (1,400° F)
7.1 mVs (15,000 scfm)
2,900 kW (10 MM Btu/h)
5,600 kW (19 MM Btu/h)

     95 percent

     95 percent

0.46 £/s (43.2 gal/h)
 316° C (600° F)
 760° C (1,400° F)
 15.6 mVs (33,000  scfm)
 6,700 kw (23 MM Btu/h)
12,000 kW (42 MM Btu/h)

       95 percent

       95 percent

 0.10 &/s (95.5 gal/h)
                                      1,035 kW (3.5 MM Btu/h)     3,050  KW  (10.4 MM Btu/h)   6,700 kW (23 MM Btu/h)
                                             106 kW
                                      4.1 nrVs  (8,600  scfm)
                                      382°  C  (720°  F)
                                22C  kW
                          12 mVs (26,000 scfm)
                           382°  C  (720°  F)
                                   510  kW
                           27 mVs  (58,000  scfm)
                            382°  C (720°  F)
      MM Btu/h = million Btu/h.

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TABLE E-9.   CAPITAL COSTS OF CONTROL OPTIONS
Control option
Multiple zone
incinerators and
coating rooms
Thermal incineration
with heat recovery
Thermal incineration
with heat recovery
and coating rooms
Percent overall
solvent
destruction
64
85
90
Size
model
line
Small
Medium
Large
Small
Medium
Large
Small
Medium
Large
Installed cost,
$l,OOOs
214
289
405
278
548
1,178
388
680
1,322
                    E-15

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          TABLE E-10.   ANNUAL OPERATING COSTS OF CONTROL OPTIONS

                           	Annual  operating costs. $1.000s
                                                        Labor,
Control    Model  line                                 maintenance,
 level        si/-         Electricity      Fuel        materials      Total
64%


Small
Medi urn
Large
0
0
0
(25)
(143)
(304)
10
14
20
(15)
(129)
(284)
  85%       Small              17            (25)         14             6
            Medium             36            (83)         28           (19)
            Large              82           (178)         60           (36)

  90%       Small              17          (26.5)         20            10
            Medium             36            (88)         35           (17)
 	 Large              82           (188)         67           (39)
                                  E-16

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                TABLE E-ll.   ANNUALIZED  COST OF  VOC CONTROL OPTIONS  FOR SMALL MODEL LINE
Percent Overall
Control option for overall effectiveness of Annual ized
facilities that use solvent VOC reduction capital costs.
solvent-borne coatings destruction Mg/yr ton/yr $l,OOOs
Multiple zone 64 176 194 37
incinerators and
coating rooms
Thermal incineration 85 235 259 48
with heat recovery
Thermal incineration 90 261 288 68
with heat recovery
and coating rooms
Overall cost
Direct Total annual ized (savings )/unit
cost (savings), cost (savings), VOC removal
$l,OOUs 51,000s $/Mg $/ton
(15) 22 120 110


6 54 230 208

10 78 295 270


Facilities that use waterborne coatings were not considered for add-on controls.

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                         TABLE  E-12.   ANNUALIZED COSTS OF VOC CONTROL OPTIONS FOR MEDIUM  MODEL  LINE
m
i
t—i
oo
Percent Overall
Control option for overall effectiveness of Annual ized
facilities that use solvent VOC reduction capital costs,
solvent-borne coatings destruction Mg/yr ton/yr $l,OOOs
Multiple zone 64 530 584 50
incinerators and
coating rooms
Thermal incineration 85 708 780 95
with heat recovery
Thermal incineration 90 787 866 118
with heat recovery
and coating rooms
Direct
cost (savings),
$1.000s
(129)
(19)
(17)
Overall cost
Total annual ized (savings)Ainit
cost (savings), VOC removal
$l,OOOs $/Hg
(79) (149)
76 107
101 122
$/ton
(135)
97
117
        Facilities that use waterborne coatings were not considered for add-on controls.

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                          TABLE E-13.   ANNUALIZED COSTS OF VOC CONTROL OPTIONS FOR  LARGE MODEL LINE
Percent Overall
Control option for overall effectiveness of Annualized
facilities that use solvent VOC reduction capital costs,
solvent-borne coatings destruction Mg/yr ton/yr $l,OOOs
Multiple zone 64 1,060 1,168 70
incinerators and
coating rooms
Thermal incineration 85 1,411 1,556 205
with heat recovery
Thermal incineration 90 1,568 1,729 230
with heat recovery
and coating rooms
Direct
cost (savings),
$l,OOOs
(284)
(36)
(39)
Overall cost
Total annualized (savings)/unit
cost (savings), VOC removal
51,000s $/Mg $/ton
(214) (202) (183)
169 120 109
191 115 110
m
         facilities using waterborne coatings were not considered for add-on controls.

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       TABLE E-14.  CAPITAL COSTS OF NEW COIL COATING FACILTIES
Cost item
Mechanical equipment-- line
Ovens
Installation of mechanical
equipment and ovens *
Total basic line cost
Building cost
Total facility cost less
control equipment
Total facility cost,
including control
equipment, to meet
Control Options 1, 2,
and 3a
Control Option 1—64
percent overall
destruction
Control Option 2—85
percent overall
destruction
Control Option 3—90
percent overall
destruction
Costs
Small
2,700
630
1,110
4,440
2.870
7,310

7,520
7,590
7,700
for each size
$l,OOOs
Medium
4,000
800
1,600
6,400
3,870
10,270

10,560
10,820
10,950
model line,
Large
5,150
1,090
2,080
8,320
5,200
13,520

13,920
14,700
14,840
Applicable only to lines that use solvent-borne coatings.
                                 E-20

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contained in Tables 8-11 through 8-21 shows that, for plants that use
solvent-borne coatings, the costs associated with Regulatory Alternatives II
and III are the same as the costs associated with the original Regulatory
Alternative II.  Such a comparison further shows that, for plants that use
solvent-borne coatings, the costs associated with Regulatory Alternatives IV
and V are the same as the costs associated with the original Regulatory
Alternative III except for a very small difference in fuel consumption.
This difference in fuel consumption is, at most, about 5 percent, and the
difference in total annualized costs is much smaller than 5 percent.
Because these cost differences are well within the estimated accuracy of
the overall  data collection and analysis procedures, the economic analyses
described in Chapter 8 are applicable to the regulatory alternatives dis-
cussed in this appendix.   The price impacts and the return on investment
(ROI) impacts that were estimated for the original Regulatory Alternative II
are applicable to Regulatory Alternatives II and III for plants that use
solvent-borne coatings, and the impacts estimated for the original Regula-
tory Alternative III are applicable to Regulatory Alternatives IV and V for
plants that use solvent-borne coatings.  The difference between the economic
impacts of Regulatory Alternatives II and III is that fewer plants would
have an economic impact under Alternative III than under Alternative II.
This difference occurs because, under Alternative III, some plants could
achieve compliance with the standard by using low-VOC content coatings
rather than switching to solvent-borne coatings and incineration.  The
difference between the economic impacts of Regulatory Alternatives IV and V
occurs for the same reason.
     The result of these differences is that the national impact on product
price could be up to 15 percent smaller for Regulatory Alternatives III and
V than the values for II and IV, respectively.  In Table 8-40, the price
increase estimated to result from the original Regulatory Alternative III
is 3.1 percent.  This same price increase is estimated to occur as a result
of Regulatory Alternative IV.  Under Regulatory Alternative V, the national
price increase could be reduced to 2.6 percent.
                                   E-21

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E.3  REFERENCES

1.    Graziano, Frank D.   Statement by the National  Coil  Coaters Association.
     In:   National  Air Pollution Control  Techniques Advisory Committee—Minutes
     of Meeting June 4 and 5,  1980.   Research Triangle Park, North Carolina,
     U.S.  Environmental  Protection Agency.   June 25, 1980.   p.  111-14.

2.    Reference 1, p. 111-13.

3.    Telecon.  Wright, Milton, Research Triangle Institute, with Bates,
     Jack, Desoto,  Incorporated, June 25, 1980.   Waterborne coatings for
     coil.

4.    Telecon.  Wright, Milton, Research Triangle Institute, with Miller,
     M. W., DuPont, June 26,  1980.  Waterborne coatings for coil.

5.    Telecon.  Wright, Milton, Research Triangle Institute, with Uphoff,
     John, Enterprise Chemical Coatings,  Inc., June 26, 1980.  Waterborne
     coatings for coil.

6.    Telecon.  Wright, Milton, Research Triangle Institute, with Chernich,
     Jim, Valspar Corporation, June 26, 1980.  Waterborne coatings for
     coil.

7.    Telecon.  Wright, Milton, Research Triangle Institute, with Kinzly,
     H. B.,  Cook Pain and Varnish Company, June 27, 1980.  Waterborne
     coatings for coil.
                                   E-22

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                                   TECHNICAL REPORT DATA     .
                            (Please read Instructions on the reverse before completing}
1. REPORT NO.

  EPA-450/3-8Q-035a
                              2.
4. TITLE AND SUBTITLE
  Metal  Coil  Surface Coating Industry - Background
  Information for Proposed  Standards
             5. REPORT DATE
              October  1980
             6. PERFORMING ORGANIZATION CODE
7. AUTHOR(S)
3. PERFORMING ORGANIZATION NAME AND ADDRESS
  Office  of Air Quality Planning and Standards
  U.S.  Environmental  Protection Agency
  Research Triangle Park,  NC  27711
                                                            10.
             11. CONTRACT/GRANT NO.


                 68-02-3056
12. SPONSORING AGENCY NAME AND ADDRESS
                                                            13. TYPE OF REPORT AND PERIOD COVERED
  DAA for  Air Quality Planning and Standards
  Office of Air, Noise, and  Radiation
  U.S.  Environmental Protection Agency
  Research Triangle Park.NC   27711	
                                                                 Final
             14. SPONSORING AGENCY CODE
                 EPA/200/04
15. SUPPLEMENTARY NOTES
16. ABSTRACT
                 This document contains information used as the  basis for
           developing proposed New Source Performance Standards  for the
           metal coil surface coating industry.   The document  includes
           an industry description, descriptions  of model plants and
           regulatory alternatives considered, and environmental,  energy,
           and economic impact analyses of the regulatory alternatives.
17.
                                KEY WORDS AND DOCUMENT ANALYSIS
                  DESCRIPTORS
                                               b.lDENTIFIERS/OPEN ENDED TERMS
                           e.  cos AT I Field/Group
  Air pollution
  Pollution  control
  Standards  of performance
  Metal coil
  Volatile organic compound
  Surface coating
Air Pollution Control
    13B
18. DISTRIBUTION STATEMENT

  Unlimited
19. SECURITY CLASS (This Report)
  Unclassified
21. NO. OF PAGES
    234
20. SECURITY CLASS (Thispage)
  Unclassified
                           22. PRICfc
EPA Form 2220-1 (Rev. 4-77)   PREVIOUS EDITION is OBSOLETE

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