ECONOMIC IMPACTS OF RCRA APPROACHES
TO THE
REGULATION OF GENERATORS OF SMALL
VOLUMES OF HAZARDOUS WASTES
PREPARED FOR:
US. ENVIRONMENTAL PROTECTION AGENCY
BY:
TEMPLE, BARKER & SLOANE, INC.
33 HAYDEN AVENUE
LEXINGTON, MASSACHUSETTS 02173
JANUARY 5, 1980
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ECONOMIC IMPACTS OF RCRA APPROACHES
TO THE
REGULATION OF GENERATORS OF SMALL
VOLUMES OF HAZARDOUS WASTES
PREPARED FOR:
US. ENVIRONMENTAL PROTECTION AGENCY
BY:
TEMPLE, BARKER & SLOANE, INC.
33 HAYDEN AVENUE
LEXINGTON, MASSACHUSETTS 02173
JANUARY 5, 1980
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CONTENTS
Page
PREFACE
LIST OF TABLES
LIST OF FIGURES AND EXHIBITS
PART I. OVERVIEW
Chapter 1. Introduction and Findings I—i
Chapter 2. Methodology of the Study 1—31
PART II. IMPACTS OF REGULATORY OPTIONS ON SMALL VOLUME
HAZARDOUS WASTE GENERATORS
Chapter 1. Characteristics of Small Volume
Generators 11—2
Chapter 2. SICs Selected for Economic Impact
Analysis 1 1—11
Chapter 3. Generator Tasks and Unit Costs of
Compliance 11—15
Chapter 4. Evaluation of Regulatory Option:
Exemption by Quantity of Waste——
Industry Impacts 11—28
PART III. IMPACTS OF REGULATORY OPTIONS ON STATE
AND AGENCY STAFFS AND BUDGETS
Chapter 1. Status of States’ Hazardous Waste
Programs 111—2
Chapter 2. Projected State and Agency Expend-
itures for RCRA Exclusive of Small
Volume Generator Costs 11 1—8
Chapter 3. Tasks and Unit Costs to States and
Agency for Regulation of Small
Volume Generators 111—17
Chapter 4. Evaluation of Regulatory Option:
Exemption by Quantity of Waste—-
State and Agency Impacts 111—25
(continued)
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CONTENTS
(continued)
Page
PART IV. REGULATORY OPTION--EXEMPTION BY QUANTITY OF
WASTE: RESPONSE TO CONSTRAINTS IN PROGRAM
IMPLEMENTATION
Chapter 1. Phasing IV—3
Chapter 2. Technical and Administrative
Modifications IV—9
PART V. APPENDICES
Appendix A. Data Sources A—i
Appendix B. Generator Compliance Strategies
and Costs B—i
Appendix C. State and Agency Regulatory Tasks
and Costs C—i
Appendix D. Waste Generation Rates D—i
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PREFACE
This draft report has been submitted to the U.S. Environ-
mental Protection Agency in partial fulfillment of Contract
Number 68—01-4778 by Temple, Barker & Sloane, Inc., 33 Hayden
Avenue, Lexington, Massachusetts.
The contributions of Hugh Holman, EPA Project Monitor, the
staff in the State Programs group of EPA’s Office of Solid Waste,
and Regional and State EPA offices proved to be invaluable.
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LIST OF TABLES
Table No. Page
I—i Regulatory Option: Exemption by Quantity
of Waste——Total One—Time Costs to Industry 1—8
1—2 Regulatory Option: Exemption by Quantity
of Waste——Percent and Number of Generators
with Compliance Costs Greater than Two
Percent of Sales 1—12
1—3 Regulatory Option: Exemption by Quantity
of Waste——Percent and Number of Generators
with Compliance Costs Greater than Profits
before Taxes 1—14
1—4 Regulatory Option: Exemption by Quantity
of Waste——National One—Time Costs to the
Agency: Small Volume Generator Notification 1—15
1—5 RCRA Baseline Costs to the States and EPA
Regions 1—19
1—6 RCRA Baseline Funding to the States and
EPA Regions for Selected Activities 1—20
1—7 Regulatory Option: Exemption by Quantity
of Waste——Estimated RCRA Program Costs for
Fiscal Years 1981 Through 1985 at Selected
Generator Exemption Levels 1—21
I—B Regulatory Option: Exemption by Quantity of
Waste—-Estimated RCRA Program Shortfalls for
Fiscal Years 1981 Through 1985 at Selected
Generator Exemption Levels 1—25
1—9 Regulatory Option: Exemption by Quantity
of Waste——Per Ton Costs to the States and
Agency of Regulation at 0 kg/mo Cutoff:
Fiscal Years 1981 to 1985 1—26
1—10 Quantity-Based Phasing Option for All
Generators of Less than 5,000 kg/mo and
More than 100 kg/mo 1—29
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2
Table No. Page
1 1—1 Estimated Number of Establishments and
Waste Quantities for Establishments in
Various Waste Generation Range Categories 11—4
11—2 Contributions of Selected SICs to the Small
Volume Hazardous Waste Generation Picture 11—5
11—3 Relative Distribution of SICs by Profits
and Sales 11—9
11—4 Number of Generators and Volumes of Wastes
for Selected SICs 11—12
11—5 Characteristics of Industries Selected for
Economic Impact Analysis 11—13
11—6 Estimated Percent Distribution of Small
Quantity Waste Generators and Waste
Quantities by Disposal Method 11—15
11—7 Estimated Total Number of Small Waste
Generators and Waste Quantities by Disposal
Method 11—16
11—8 Estimated Total Number of Small Quantity
Waste Generators and Waste Quantities for
Selected Disposal Methods 11—19
Small Volume Generator One—Time Administra-
tive Costs 11—21
11—10 Small Volume Generator Annual Administrative
Costs 11—22
11—11 Small Volume Generator Annual Technical Costs 11—24
11—12 Regulatory Option: Exemption by Quantity of
Waste——Total One—Time Costs to Industry 11—29
11—13 Regulatory Option: Exemption by Quantity of
Waste——Small Volume Generator Annual Costs
for Selected SICs 11—34
11—14 Regulatory Option: Exemption by Quantity of
Waste——Percent and Number of Generators with
Compliance Costs Greater than Two Percent of
Sales 11—35
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3
Table No. Page
11—15 Regulatory Option: Exemption by Quantity of
Waste——Percent and Number of Generators with
Compliance Costs Greater than Profits before
Taxes 11—36
11-16 Regulatory Option: Exemption by Quantity of
Waste——Projected National Impacts on Small
Volume Generators at a Waste Quantity
Exemption of 0 kg/mo Cutoff 11—40
1 1 1—1 State Legislation Applicable to Hazardous
Waste Generators 111—6
111—2 Summary of Provisions in State Hazardous
Waste Management Rules and Regulations 111—7
111—3 Annual State and Agency Costs for Regulating
Large Volume Generators 11 1—11
111—4 RCRA Baseline Costs to the States and EPA
Regions 111—12
111—5 RCRA Baseline Funding to the States and
EPA Regions for Selected Activities 111—13
111—6 Exception Reports——State and Agency Resource
Requirements 111—20
111—7 Costs to the States and Agency for Regulation
of Small Volume Generators 111—23
111—8 Regulatory Option: Exemption by Quantity of
Waste—-National One—Time Costs to the Agency
of Regulation: Small Volume Generator Noti-
fication 111—26
111—9 Regulatory Option: Exemption by Quantity of
Waste——Annual Program Operation Costs to
States and Agency for Alternative Enforcement
Assumptions: Small Volume Generators 111—30
111—10 Regulatory Option: Exemption by Quantity of
Waste——Baseline Scenario and Alternative
Authorization Scenarios 111—33
111—11 Regulatory Option: Exemption by Quantity of
Waste——State and Agency Recurring Costs for
Regulating Small Volume Generators Under
Three Authorization Scenarios 111—33
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4
Table No. Page
111—12 Regulatory Option: Exemption by Quantity of
Waste——Estimated RCRA Program Shortfalls for
Fiscal Years 1981 Through 1985 at Selected
Generator Exemption Levels 111-35
111—13 Regulatory Option: Exemption by Quantity of
Waste——Per Ton Costs to the States and Agency
of Regulation at 0 kg/mo Cutoff: Fiscal Years
1981 to 1985 111—40
IV—1 Quantity—Based Phasing Option for All
Generators of Less than 5,000 kg/mo IV—5
IV—2 Quantity—Based Phasing Option——Percent of
Waste Quantities and Generators Controlled
in RCRA Program IV-6
IV—3 Quantity—Based Phasing Option for All Generators
of Less than 5,000 kg/mo and More than 100 kg/mo IV—8
IV—4 Quantity—Based Phasing Option——Percent of Waste
Quantities and Generators Controlled in RCRA
Program with a 100 kg/mo Cutoff in the Fifth
Year IV-8
IV—5 Components of Recurring Compliance Costs Under
Alternative Definitions of Establishments
Exempted from Testing IV-i1
IV—6 Assumption of Duties: Annual Administrative
and Testing Cost Savings IV—13
A—i Inflation Rates Used in Industry Impact
Analysis to Project 1978 Sales A—6
B—i One—Time Administrative Costs to Industry B—3
B—2 Recurring Administrative Costs to Industry B—4
B—3 Transportation Cost Parameters for Small
Volume Generators B—6
B—4 Estimated Hauling Costs for Small Volume
Hazardous Waste Generators B—7
B—5 Generator Disposal Costs B—9
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5
Table No. Page
B—6 Estimated Total Number of Small Volume Waste
Generators Using Non—Recycling Disposal
Methods B—il
B—7 Regulatory Option: Exemption by Quantity of
Waste——Projected Annual Compliance Costs to
Small Volume Generators B—14
C—i State Program Development——Unit Manpower
Requirements C—2
C—2 Unit Manpower and Cost Estimates for
Small Volume Generator Regulatory Tasks C—6
C—3 Volume—Adjusted Estimates of Manpower and Budget
Needs for Review of Exception Reports C—9
C-4 Regulatory Option: Exemption by Quantity of
Waste——Cumulative State and Agency Hazardous Waste
Program Costs for Selected Exemption Levels for
Fiscal Years 1981 Through 1985 C—15
D—l Generation Factors for the Calculation of
Estimated Quantities of Hazardous Waste
Generated by Manufacturing Industries D—3
D—2 Linear Correlation Between Employment
and Waste Quantity D—4
D—3 Model and Worst Case Waste Generation Rates
Corresponding to Percentile Sales D—12
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LIST OF FIGURES AND EXHIBITS
Figure or
Exhibit No. Page
I—i National Hazardous Waste Generation Profile——
All Generators 1—5
1—2 National Hazardous Waste Generation Profile——
Small Volume Generators 1—6
1—3 Regulatory Option: Exemption by Quantity
of Waste——Recurring National Cost to Small
Volume Generators 1-9
1—4 Regulatory Option: Exemption by Quantity
of Waste—-Marginal Recurring Cost to Small
Volume Generators 1-10
1-5 Regulatory Option: Exemption by Quantity
of Waste——National Recurring Costs to the
States and Agency of Regulating Small
Volume Generators 1—17
1-6 Regulatory Option: Exemption by Quantity
of Waste——State and Agency Marginal
Recurring Costs of Regulating Small Volume
Generators 1—18
1—7 Fiscal Year 1981: RCRA Program Costs
to the States and Agency 1—22
1—8 Fiscal Year 1982: RCRA Program Costs
to the States and Agency 1—23
1—9 Fiscal Years 1983—1985: Total RCRA Program
Costs to the States and Agency 1—24
1—10 Methodology for Estimation of Total Costs
for Alternative Regulatory Options 1-33
11—1 Technical Compliance Alternatives for
Generators of Hazardous Wastes 11—18
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2
Figure or
Exhibit No. Page
11—2 Regulatory Option: Exemption by Quantity of
Waste——Annual Costs per Generator 11—26
11—3 Regulatory Option: Exemption by Quantity
of waste——Recurring National Cost to
Industry by Functional Components——Small
Volume Generators 11—30
11—4 Regulatory Option: Exemption by Quantity
of Waste——Recurring National Cost to
Industry by Fixed and Variable Components——
Small Volume Generators 11—31
11—5 Regulatory Option: Exemption by Quantity of
Waste——Generator Marginal Recurring Cost 11—32
1 11—1 Comparison of RCRA Baseline Costs to the
States and Agency with Expected RCRA Funding
Levels for Fiscal Years 1981 and 1982 111—14
111—2 Comparison of RCRA Baseline Costs to the
States and Agency with Expected RCRA Funding
Levels for Fiscal Years 1983 Through
1985 111—15
111-3 Regulatory Option: Exemption by Quantity
of Waste——National Recurring Costs to the
States and Agency of Regulating Small
Volume Generators 111—28
111—4 Regulatory Option: Exemption by Quantity of
Waste——National Recurring Costs to the States
and Agency for Program Operation by Function-
al Components——Small Volume Generators 111—29
111—5 Regulatory Option: Exempti’on by Quantity
of Waste——State and Agency Marginal Recurring
Costs of Regulating Small Volume Generators 111-31
111-6 Fiscal Year 1981: RCRA Program Costs to the
States and Agency 111—36
111—7 Fiscal Year 1982: RCRA Program Costs to the
States and Agency 111—37
111—8 Fiscal Years 1983—1985: Total RCRA Program
Costs to the States and Agency 111-38
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3
Figure or
Exhibit No. Page
C-i EPA Manpower Needs for Review of Notification
Documents C-8
C—2 State amd Agency Manpower Needs for Review of
Generator Exception Reports c-io
C—3 State and Agency Manpower Needs for Entry of
Annual Report Data into ADP System C-i2
D—i Cumulative Distribution of Generators by
Waste Generation Ranges for Selected SICs D—8
D—2 Cumulative Distribution of Generators by
Waste Generation Ranges for All SICs D—ii
D—3 Regulatory Option: Exemption by Quantity of
Waste—-Annual Costs per Generator D—14
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Part I
OVERVIEW
Chapter 1 of this part presents a concise statement of
findings and conclusions of the study of economic impacts of
regulatory approaches to small volume generators. These are
discussed within the framework of RCRA requirements for large
volume generators, transporters, and operators of treatment,
storage, and disposal facilities.
Chapter 2 of this part presents the methodology of the
economic analysis, as performed by EPA ’s economic consultants.
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1—2
Chapter 1
INTRODUCTION AND FINDINGS
INTRODUCTION
This report presents an analysis of the costs and economic
impacts associated with implementing alternative regulatory ap-
proaches to generators of small quantities of hazardous wastes
under Subtitle C of the Resource Conservation and Recovery Act
(RCRA).
On December 18, 1978, the Environmental Protection Agency
(EPA) proposed regulations for identification and listing of
hazardous wastes and for treatment, storage, and disposal of
hazardous wastes. Generators of less than 100 kilograms per
month (kg/mo) were exempted from the proposed regulations pro-
vided their wastes were disposed of in an approved waste dis-
posal facility. However, the preamble to the proposed regula-
tions drew attention to the importance of regulating generators
of small quantities of wastes in a way that would balance the
need to protect human health and the environment from the ad-
verse effect of careless management of small quantities of
hazardous wastes with the need to contain the administrative
and economic burden of management within reasonable and prac-
tical limits.
The preamble suggested five general categories of adjust-
ments to the regulations to account for the needs of small
quantity generators. These were:
• Varying the quantity threshold between large
and small volume generators,
• Relating the volume threshold to a considera-
tion of the degree of hazard of particular
wastes,
• Exempting small volume generators from fed-
eral regulations where they are regulated in
an approved manner by state regulations,
• Lessening the administrative and/or technical
requirements applicable to small volume gen-
erators, and
• Phasing in the regulatory coverage of small
volume generators over time.
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1—3
The definition of a small volume hazardous waste generator
was based on a physical measure of the waste generated and not
on the economic value of the product. Given this definition,
two important regulatory issues are: (1) the determination of
the threshold between large and small volume generators; and
(2) the design of regulations applying to the latter. Regulatory
requirements for small volume generators that are substantially
similar to those for large volume generators might prove burden-
some to both industry and to states administering the program.
Conversely, substantially dissimilar regulatory requirements may
give smaller establishments a competitive economic advantage.
Consequently, the overall objective of this study of the
costs and economic impacts of small volume hazardous waste
generator regulations under RCRA was to assess the economic
impacts of several alternative regulatory strategies. These
strategies varied in both their regulatory requirements and in
the number of plants covered.
To accomplish this objective, EPA directed its economic
consultants to emphasize three study areas:
• Developing unit administrative and technical
costs of compliance at the plant level for
specific regulations; assessing industry im-
pacts; and aggregating those data to arrive
at a national estimate of costs and impacts.
• Developing state and Agency program costs for
regulatory options under consideration and
comparing those costs to state and Agency
needs for other parts of the RCRA program.
• Identifying constraints in the system that
would prohibit or hinder implementation of
regulatory approaches; and examining ap-
proaches that would provide regulatory
relief.
Parts II, III, and IV of this report, respectively, discuss
these study areas in detail.
SUMMARY OF FINDINGS
It is estimated that approximately 762 thousand establish-
ments in manufacturing, transportation, wholesale, and service
industries could have to comply with RCRA Subtitle C generator
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1-4
regulations when disposing of their 61 million metric tons per
year of waste. The national profile of these generators was
developed by EPA’s technical contractor for this study and is
shown in Figure i_i.1
Establishments generating more than 5,000 kilograms in any
one month were determined in this study to be large volume gen-
erators. 2 They account for 97.7 percent of the wastes and
5.3 percent of the establishments. The generators producing
5,000 kg/mo or less of hazardous wastes contribute 1.4 million
metric tons per year (2.3 percent of the wastes) and the estab—
lishments are estimated to number nearly 722,000 (94.7 percent
of the total number of generators). Figure 1—2 also shows that
generators contributing the smallest quantities on a per estab-
lishment basis (0 to 100 kg/mo) account for a very high percent
of generators. Specifically, generators producing less than
100 kg/mo of hazardous waste account for 74 percent of the
generators, yet they contribute less than 0.3 percent of the
total waste produced each year.
The universe of generators can further be separated into
manufacturing and non—manufacturing sectors. Among small volume
generators, manufacturing industries account for 13 percent of
all generators and 47 percent of the total waste, while non—
manufacturing industries account for 87 percent of the genera-
tors and 53 percent of the wastes. Most generators in the non—
manufacturing sector produce very small quantities of waste——
82 percent of that group are in the 0 to 100 kg/mo waste genera-
tion range——while the distribution is more balanced in the man-
ufacturing sector. The average waste generation rate for the
small generators in the manufacturing sector is 576 kg/mo while
in the non—manufacturing sector it is 98 kg/mo.
1 Tbe number of generators and waste quantities was based on
criteria broader than the current RCRA Subtitle C lists. The
technical contractor included waste streams that, in the future,
may be designated as hazardous. Excluded from these estimates
were retailers and waste oil generators.
2 The December 18, 1978, regulations (40 CFR Part 250, page 58946)
proposed a 100 kg/mo cutoff as the exemption cutoff for small
generators and referred to a suggested alternative cutoff level
of 1,000 kg/mo. A 5,000 kg/mo generation rate for defining small
generators was selected here to allow examination of even higher
exemption cutoff levels.
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Figure I—i
NATIONAL HAZARDOUS WASTE GENERATION PROFILE
ALL GENERATORS
I
Thousands of Qimulative %
Generators of Generators
cumulative %
of Hazardous
Wastes from
Millions of
Metric Tons
Per Year
Generators
7618
685.6
609.4
533.2
.
100
90
80
70
.
•
I
I
I
I
I
/
S
I
I
I
I
100
90
70
80
.
•
•
61)7
54.6
42.5
48.5
457.1
60
/
I
I
60
36.4
38o.1
so
/ .
I
I
50
•
30.3
304.7
40
-
I
I
I
40
24.3
228.5
30
I
g
I
I
I
30
18.2
152.4
- 20
I -
I
I
I
I
20
•
12.1
76.2
10
-
I
I
/ WASTE QUANTITY
,
I I
10
6.1
0
0
1,000 2,000 3.000 4,000 5 ,000
WASTE GENERATION RATE (kg/mo)
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Figure 1—2
NATIONAL HAZARDOUS WASTE GENERATION PROFILE
SMALL VOLUME GENERATORS
cumulative , , Cumulatsve %
Thousands of of small of Hazardous
Small Volume Volume Wastes From Millions of
Generators Generators - Small Volume Metric Tons
Generators Per Year
721.6 100
- 1ÔO 1.4
90 1.2
649.5 90
577.3 80 . 80 1.1
505.1 70 . 70 1.0
WASTE QUANTITY
433.0 60 60 0.8
I -I
360.9 50 50 0.7
288.6 40 0.6
216.5 30 30 0.4
144.3 20 20 0.3
72.2 10 . 10 0.1
0 __ I I I ___ 0
0 1 ,000 2,000 3.000 4,000 5,000
WASTE GENERATION RATE (kg/mo)
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1—7
The major contributing industries in the manufacturing
sector, based on the quantity of wastes generated by small volume
establishments, are SIC 35——machinery, except electrical; SIC
34——fabricated metal products; and SIC 27——printing and publish-
ing. These three SICs contribute 58 percent of the generators
and 47 percent of the waste quantity in the manufacturing
sector. ‘
In the non—manufacturing sector, the major contributing
SICs in terms of waste quantities are SIC 55——automotive dealers
and gasoline service stations; and SIC 76——miscellaneous repair
services. These two SICs account for just over 50 percent of
the wastes. In terms of number of generators, two SICs account
for more than 50 percent of the establishments though they con-
tribute just 16 percent of the wastes. These are SIC 72——
personal services; and SIC 17——construction, special trade.
The following sections present a summary of the economic
impacts to small volume generators and regulators of one regu-
latory option——exemption by quantity of wastes.
ECONOMIC IMPACTS-—EXEMPTION BY QUANTITY OF WASTES
Industry Costs——Small Volume Generators
National costs to industry will have both one—time and re-
curring cost components. These costs will vary as the number of
generators and quantity of wastes in the RCRA system vary.
One—time costs including comparison to list, waste testing,
notification and design of procedures, as shown in Table I—i,
will reach a maximum of $71.4 million dollars (in constant 1978
dollars) as the quantity exemption is lowered to zero. The most
important contribution to total one—time costs is the number of
generators included at low quantity cutoffs. At a zero cutoff,
722,000 generators incur a relatively low average cost of approx-
imately $100 each. At a cutoff of 2,000 kg/mo, the average cost
per generator for the 11,300 small volume generators in the sys-
tem is approximately $280.
3 Throughout this report industries are identified by SIC code.
This Standard Industrial Classification system is maintained
by the U.S. Department of Commerce, Bureau of the Census.
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1—8
Table I-i
REGULATORY OPTION: EXEMPTION BY QUANTITY OF WASTE
TOTAL ONE-TIME COSTS TO INDUSTRY
(millions of constant 1978 dollars)
Total Cost per Task
Quantity Waste Total NLmlber
Cutoff Quantity Regulated of Generators Comparison Design of Total Cost
( kg/mo) ( thousand HT/yr) ( thousands) to List Testing Notification Procedures All Tasks
5,000 0 0 SO SO SO SO SO
2.000 474 11.3 0.8 0.8 0.4 1.2 3.2
1,000 753 26.8 1.3 2.0 0.9 2.8 7.0
500 949 49.8 2.1 2.0 1.6 5.1 10.8
100 1,248 158.5 4.3 2.0 3.8 10.5 20.6
0 1,388 721.6 15.6 2.0 15.1 38.7 71.4
Recurring costs, shown in Figure 1—3, include administra-
tive and technical costs, and total as much as $719 million (in
constant 1978 dollars) when the quantity exemption is lowered
to 0 kg/mo. The major components of these costs are the admin-
istrative tasks of comprehensive and sample testing of wastes
and the technical tasks of hauling and disposal of wastes.
The task of performing an annual comprehensive test is esti-
mated to cost approximately $500 per generator at waste genera-
tion quantity ranges below 5,000 kg/mo. The importance of this
fixed cost relative to total compliance costs at the lower vol-
ume ranges is demonstrated by the marginal cost of compliance
per metric ton as the quantity cutoff is lowered. (Marginal
cost analysis in this study shows the cost of regulating the
tons of waste brought into the RCRA system as the quantity range
is lowered, for example the cost to generators per ton of waste
in the 500 to 1,000 kg/mo range as the cutoff moves from a
1,000 kg/mo cutoff to a 500 kg/mo cutoff.) Figure 1—3 shows
that the national cost of compliance to generators at a 1,000
kg/mo cutoff is approximately $91 million for the 753,000 metric
tons per year added to the system by generators in the 1,000 to
5,000 kg/mo range. That yields an average cost per ton of ap-
proximately $121, as shown in Figure 1—4. Lowering the quantity
cutoff to 500 kg/mo adds 196,000 metric tons to the system at an
additional cost of $36 million or $184 per ton. A further de-
crease in the cutoff to 100 kg/mo adds 300,000 metric tons at
a total cost of $114 million or $380 per ton while setting the
quantity cutoff at 0 kg/mo yields an average cost of about $3,400
per ton for the 140,000 metric tons added to the system.
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Figure 1—3
REGULATORY OPTION: EXEMPTION BY QUANTITY OF WASTE
RECURRING NATIONAL COST TO SMALL VOLUME GENERATORS
(Constant 1978 Dollars)
99.74%
98.48%
700
719
ANNUAL
COST
(Millions of
Dollars)
250
200
150-
TESTING COST
DISPOSAL COST
HAULING COST
ADMINISTRATIVE
COST
100
90
80
70
60
50
40
30
20
10
0
0
100%
VOLUME CUTOFF (kg/mo)
0
97.7%
99.26% 98.94%
PERCENTAGE OF ALL HAZARDOUS WASTES CONTROLLED
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1—10
MARGINAL
cosi
(Dollars Per
Metric Ton)
Figure 1—4
REGULATORY OPTION: EXEMPTION BY QUANTITY OF WASTE
MARGINAL RECURRING COST TO SMALL VOLUME GENERATORS
(Constant 1978 Dollars)
1000
900
$00
700
600
500
400
0
121
100
100%
500
99.74%
VOLUME CUTOFF (ks/mo)
99.28%
1000
0
98.94% 97.70%
CUMULATIVE PERCENTAGE OF ALL HAZARDOUS WASTES CONTROLLED
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I—li
The costs of hauling and disposal shown in Figure 1—3 are
based on the assumed availability of commercial haulers and off-
site hazardous waste disposal facilities. No allowance has been
made for the possibility that capacity may be constrained in both
industries and haulers and disposers may be reluctant to take on
the business of small quantity generators in a constrained market.
The total national available capacity of off—site facilities to
receive hazardous wastes is estimated to be approximately 25 per-
cent less than the capacity required for the off—site disposal of
hazardous wastes from large volume generators. Likewise, commer-
cial hazardous waste haulers operate at close to 100 percent of
capacity currently, and demand for their services is expected to
increase as large volume generators discontinue their self—haul-
ing activities rather than comply with stricter RCRA requirements
for transporters. The implications of these potential shortfalls
will be discussed in the following section on industry impacts.
Industry Impacts
One measure of the economic impacts of RCRA—induced compli-
ance costs on particular industries is the ratio of these costs
to industry sales. As in the Draft Economic Impact Analysis of
17 major industries, the small volume generator study classified
an industry as experiencing high impact if compliance costs were
estimated to be higher than 2 percent of sales, while percentages
of 0.5 to 2.0 were defined as having moderate impacts.
Table 1—2 lists the percent and number of plants on a na-
tional basis that would incur impacts of more than 2 percent of
sales. Based on a detailed analysis of nine industries, and
projecting that analysis to the national profile, the following
conclusions can be reached:
• No impacts are anticipated among manufacturing
industries, even at a quantity cutoff of 0 kg/mo.
However, individual plants, in a limited number
of cases, may experience higher than expected
impacts. This distortion results from varying
waste generation rates and, therefore, varying
compliance costs among firms with the same sales
volumes.
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1—12
• Among non—manufacturing industries, impacts are
anticipated primarily among establishments with
low annual sales volumes. At a quantity cutoff
of 0 kg/mo, 45 percent of non—manufacturing
establishments will have impacts greater than
2 percent of sales. Three industry groups will
be particularly affected:
——Special trade contractors (SIC 17), especially
plumbing, heating, air conditioning, painting,
paperhanging, and decorating;
——Personal services (SIC 72), especially beauty
parlors, barber shops, laundries, and funeral
services; and
-—Auto services (SICs 55 and 75), especially
gasoline service stations, auto repair shops,
and new and used car dealers.
• Setting the quantity exemption at any level above
O kg/mo greatly reduces the number of impacted
establishments. Only Agricultural services (SIC
07) has impacts above a zero cutoff due to steeply
rising waste generation rates that do not conform
to those in other industries. These results con-
firm that it is the fixed costs of participating
in the hazardous waste system and not the variable
costs of disposal that result in major impacts.
Table 1-2
REGULATORY OPTION: EXEMPTION BY QUANTITY OF WASTE
PERCENT AND NUMBER OF GENERATORS WITH COMPLIANCE COSTS
GREATER THAN NO PERCENT OF SALES
SIC Description
Volume Cutoff
0 kg/mo 100 kg/mo 500 kg/mo
Percent Number Percent Number Percent Number
25 4,500 1 200
07 Agricultural Services
17 Special Trade Contractors
55 Auto Dea’ers and Service
72 Personal Services
73 BusIness Services
75 Auto Repair
76 Miscellaneous Repair
79 Recreational Services
38 7,000
61 92,000
7 12,000
67 12B,000
33 10,000
44 29,000
61 15,000
29 2,000
45 295.000
Total
1
4,500
0
200
-------
1—13
Capacity constraints in the hauling and disposal industries
may lead to increases in the rates small volume generators pay
for these services. Increases would be relatively more burden-
some to larger volume generators than smaller volume generators,
as more of the recurring costs of compliance are comprised of
hauling and disposal costs as the quantity of waste increases.
Sensitivity analysis was performed to determine how high these
costs would have to be before total compliance costs exceeded
2 percent of sales. For SICs showing no impacts in Table 1—2
at 100 kg/mo and 500 kg/mo, hauling and disposal costs would
have to increase at least tenfold for compliance costs to exceed
2 percent of sales.
A second way to assess the economic impacts of RCRA on
establishments is by measuring the profitability rates before
and after incurring compliance costs. Assuming that the costs
of compliance are not passed through to customers in the form
of price increases, negative profitability, and therefore a high
likelihood of plant closures and job losses, would be experi-
enced in several SICs.
Table 1—3 shows the percent and number of plants on a na-
tional basis that would incur negative profitability. The fol-
lowing conclusions can be reached:
• Impacts are likely to occur at a quantity cut-
off of 0 kg/mo only. Above that level, no in-
dustries would be vulnerable based on profits
before tax. However, as with impacts based on
sales, it is possible that some individual gen-
erators in these industries may experience nega-
tive profitability because of baseline profit-
ability or waste generation rates that deviate
from the mean for the industry as a whole.
• In the manufacturing sector, no industries that
currently have positive profitability would ex-
perience negative profitability. Only SIC 3471——
plating and polishing——would show negative prof-
itability, but available financial data indicate
that pre—RCRA profits are already negative in
that industry.
• In the non—manufacturing sector, impacts range
from a low of 8 percent of the generators in
agricultural services (SIC 17) to a high of 58
percent in business services (SIC 73).
-------
1-14
Table 1-3
REGULATORY OPTION: EXEMPTION BY QUANTITY OF WASTE
PERCENT AND NUMBER OF GENERATORS
WITh COMPLIANCE COSTS GREATER THAN
PROFITS BEFORE TAXES
(at quantity exeeption of 0 kg/mo)
Generators
SIC Description Percent Number
07 Agricultural Services 8—25 1,000—5,000
17 Special Trade Contractors 53 80.000
55 Auto Dealers and Service 14 24,000
72 Personal Services 34-52 65,000-99,000
73 Business Services 29-58 9,000—18,000
75 Auto Repair 32 21,000
76 MIscellaneous Repair 42-56 10,000-13,000
79 Recreational ServIces 9 1,000
Total 32—40 210,000—260,000
It is clear from Tables 1—2 and 1—3 that, among exposed
non—manufacturing establishments, impacts are anticipated based
on both sales and profits. The maximum impact, accounting for
either criterion, will be about 48 percent, or 315,000 establish-
ments.
Closures are likely among candidate firms only if the costs
of compliance cannot be passed through to customers. Price in-
creases necessary for the median closure candidate firm to avoid
closure are 7 to 8 percent. Several factors will affect the
proportion of candidates that actually close, including:
• Price elasticities,
• Ease of entry and exit, and
• National economic conditions.
Demand for special trade contractors and personal services
is closely tied to national economic conditions, and low capital
requirements result in considerable ease of entry and exit among
smaller establishments. In a recessionary economy, closures
would be extremely likely, at least among the lower 25 percent
of establishments in sales. Both incremental RCRA costs and
economic conditions would be responsible for closures. In a
healthy economy, establishments should be able to realize the
necessary 7 to 8 percent price increases. In auto services,
capital investments are greater and sensitivity to economic
-------
I —15
conditions varies. Closures would be less likely among these
establishments, but some closures would take place among firms
with low profitability.
State and Agency Costs
National regulatory costs to states and the Agency will
have both one time and recurring cost components. These costs
will vary primarily as the number of generators in the RCRA
system varies.
One—time costs, shown in Table 1—4, will reach a maximum
of $3.1 million (in constant 1978 dollars) as the quantity
exemption is lowered to zero. The total cost for this task
depends only on the number of generators in the system since
the per generator cost is independent of the volume of waste
produced.
Table 1-4
REGULATORY OPTION: EXEMPTION BY
QUANTITY OF WASTE
NATIONAL ONE-TIME COSTS TO ThE AGENCY:
SMALL VOLUME GENERATOR NOTIFICATION
(constant 1978 dollars)
Total Costs
Volume Cutoff Number of (millions
( kg/nm J Generators of dollars )
5,000 0 5 0
1,000 26,765 0.12
100 158,498 0.68
0 721,625 3.10
Recurring costs, shown in Figure 1—5, occur at the program
operation and oversight levels and total as much as $25.5 mil-
lion when the quantity exemption is lowered to 0 kg/mo. Costs
which are determined by the number of generators in the system
represent nearly 95 percent of the costs associated with regula-
tion. Of these costs, the most dominant component is the cost
of enforcement actions. Based on actual experience in several
states that have well—developed hazardous waste management pro-
grams, the likelihood of a generator requiring an enforcement
action is about 3 percent. The large number of generators en-
tering the system as the quantity exemption is lowered to 0 kg/mo
-------
1—16
has a dramatic impact on total enforcement costs, even at that
relatively low rate of enforcement activity.
As with industry costs, the marginal cost of regulating
additional quantities of waste included in the RCRA system
increases significantly at lower volume cutoffs. As the waste
quantity cutoff decreases from 5,000 kg/mo to 1,000 kg/mo the
cost to the states and Agency averages $1.29 per ton, as shown
in Figure 1—6. Lowering the quantity cutoff to 500 kg/mo adds
196,000 metric tons to the system at a marginal cost of $4.23
per ton. Decreasing the cutoff to 100 kg/mo adds 300,000 met-
ric tons at a marginal cost of $12.73. The most substantial
increase in marginal cost occurs as the cutoff is lowered to
0 kg/mo. Including the additional 140,000 metric tons comes
at a cost of $142 per ton.
State and Agency Impacts
A concern frequently expressed by the states and EPA is
the availability of adequate resources for RCRA program imple-
mentation. Therefore, it is appropriate to compare resource
needs for regulating small volume generators at different exemp-
tion quantity cutoffs with resource needs for other elements of
the RCRA program.
Table 1—5 presents projected total costs 4 for RCRA during
the years 1981—1985, excluding state and Agency costs associated
with small volume generator tasks. Costs are larger (in constant
dollars) for the first two years than for later years due to pro-
gram development and notification activities. Approximately two—
thirds of the costs are associated with regulation of non—genera-
tors, where the major cost item is permitting of existing treat-
ment, storage, and disposal facilities (TSDFs), scheduled to be
completed during the first six years of the program.
4 Costs shown in the tables and discussed in the text of this
section on State and Agency Impacts are expressed in current
dollars for the years 1981 through 1985 to demonstrate pro-
jected funding and needs during the first five years of the
program.
-------
1-17
ANNUAL
COST
(Millions of
Dollars)
Figure 1—5
REGULATORY OPTION: EXEMPTION BY QUANTITY OF WASTE
NATIONAL RECURRING COSTS TO THE STATES AND AGENCY OF REGULATING
SMALL VOLUME GENERATORS’
(Constant 1978 Dollars)
25
15 -
10
5
500
1000
5000
VOLUME CUTOFF (kg/mo)
100% 99.74% 9926% 98.94% 97.70%
CUMULATiVE PERCENTAGE OF ALL HAZARDOUS WASTES CONTROLLED
1 Assumlng 37 jurisdiction apply for and receive authorization and EPA regional offices manage program In remaining
19 jurisdictIons.
20
25.5
PROGRAM OVERSIGHT COSTS
PROGRAM OPERATION COSTS
5.6
1.8
0 100
1.0
0
-------
1—18
Figure 1—6
REGULATORY OPTION: EXEMPTION BY QUANTITY OF WASTE
STATE AND AGENCY MARGINAL RECURRING COSTS OF REGULATING
SMALL VOLUME GENERATORS 1
(Constant 1978 Dollars)
VOLUME CUTOFF (kg/mo)
99.74%
99.26%
PERCENTAGE OF ALL HAZARDOUS WASTES CONTROLLED
MARGINAL
COST
(Dollars Per
Metric Ton)
15 -
PROGRAM OPERATION ENDS AT 133
PROGRAM
OVERSIGHT _________
PROGRAM ________
OPERATION
12.73
100
100%
‘Aa.uming 37
19 juri.dictIot s.
98.94%
jur .dIctions apply for and r.celvs authorization and EPA regional offices manag. program in remaining
-------
1—19
Table 1-5
RCRA BASELINE COSTS TO THE STATES AND EPA REGIONS 1
(millions of current dollars)
Fiscal Year
Program Component 1981 1982 1983 1984 1985
Program development S 3.6 S 3.9 S 0 S 0 S 0
Program oversight 2.7 2.9 3.1 3.3 3.6
Regulation of non-
generators
--Permitting 2 27.2 29.5 31.8 34.2 36.8
--Monitoring
Activities 3 9.1 9.9 10.7 11.5 12.4
General program
administration 12.2 13.2 14.2 15.3 16.5
Regulation of large
volume generators 4 3.7 3.8 4.1 4.4 4.7
Total Baseline Cost $58.5 $63.2 $63.9 $68.7 $74.0
1 Assuming 37 jurisdictions apply for and receive authorization
fn 1980 and EPA manages program in the remaining 19 jurisdictions.
2 Pennittlng of 25,100 existing TSDFs assumed to be completed in
the first six years of program operation.
3 Enforceiient, surveillance, report review, lab services.
4 lncludes notification in first year.
Based on current information, it is anticipated that Con-
gress will appropriate $30 million yearly in fiscal years 1981
through 1985 toward financing of state hazardous waste programs
and $15.3 million yearly toward financing of EPA regions’ man-
agement of RCRA programs in unauthorized states and TSDF permit-
ting support in all jurisdictions. Table 1—6 presents the ex-
pected federal and state shares of future RCRA expenditures.
The data are based on the assumptions that states will use fed-
eral grant funds to finance all program development activities
and that the remaining federal grant money allocated for state
use will be matched with state funds on a 75:25 basis to finance
program operation activities.
A comparison of projected needs in Table 1—5 and projected
resources in Table 1—6 shows that there could be shortfalls
ranging from a low of $1.7 million in 1981 to a high of $16.0
million in 1985 without allowance for small volume generator
resource requirements.
-------
1—20
Table 1—5
RCRA BASELINE FUNDING TO TIlE STATES AND EPA REGIONS
FOR SELECTED ACTIVITIES 1
(mlfl Ions of current dollars)
Fiscal Year
Projected ExpendItures 1981 1982 1983 1984 1985
EPA regional efforts 2 $18.0 $18.0 $18.0 $18.0 $18.0
Authorized state efforts
• Progrmii development 3.6 3.9 0 0 0
• Program operation
-—Federal share 26.4 26.1 30.0 30.0 30.0
--State share 8.8 8.7 10.0 10.0 10.0
• Total Expenditures $56.8 $56.7 558.0 $58.0 S58.O
1 Assuming 37 jurisdictions apply for and receive authorization In
1980 and EPA manages program in remainIng 19 jurisdIctions.
2 lncludes program operation In 19 unauthorized states, TSDF permit-
ting support In all states and program oversight In 37 authorized
states.
As small volume generators are included in the analysis,
shortfalls become more pronounced. Table 1-7 shows that set-
ting the quantity exemption at 1,000 kg/mo adds additional bud-
get needs of $1.4 million in 1981 and increases the costs of
regulating generators by a third again over large volume gener-
ator costs.
At a 100 kg/mo cutoff, state and Agency program operation
costs for small volume generators are $8.2 million in 1981. This
cost is more than twice as large as the annual cost of regulating
large volume generators who account for 97.7 percent of all haz-
ardous waste.
At a 0 kg/mo cutoff, state and Agency costs for regulating
small volume generators total to $37.2 million in 1981. This
cost, equal to 40 percent of the $95.7 million cost of all pro-
gram expenditures combined, is approached only by the $27.2 mil-
lion cost of permitting existing TSDFs.
-------
1—21
— Table 1-7
REGULATORY OPTION: EXEMPTION BY QUANTITY OF WASTE
ESTIMATED RCRA PROGRAM COSTS FOR FISCAL YEARS 1981
THROUGH 1985 AT SELECTED GENERATOR EXEMPTION LEVELS
(millions of current dollars)
Generator
Exenpt1on Fiscal Year
Level
( kg/mo ) 1981 1982 1983 1984 1985
5,000* 58.5 63.2 63.9 68.7 74.0
1,000 59.9 64.6 65.4 70.3 75.7
500 61.1 65.7 66.6 71.6 77.2
100 66.7 71.1 72.4 77.9 83.9
0 95.7 99.1 102.6 110.4 118.9
WTotal baseline costs (see Table 1-5).
Two assumptions are particularly germane to this analysis:
• Regulatory agencies will attempt to carry out
the RCRA program according to the full needs of
the states and the full requirements of the pro-
gram.
• Only federal and regional funds and state matching
funds are included in this presentation of avail-
able resources. States perceiving a need for
additional resources may choose to allocate addi-
tional unmatched funds.
Whatever the cutoff selected, the inclusion of small volume
generators in the full RCRA program leads to even greater budget
shortfalls than those estimated earlier. Figures 1—7 through 1-9
illustrate the total program needs as volume cutoffs range from
5,000 kg/mo to 0 kg/mo for fiscal years 1981 through 1985. As
anticipated, state budget needs increase steadily, with the most
dramatic shift in resource needs occurring at cutoffs below
100 kg/mo. To regulate the last 0.23 percent of wastes disposed
by hazardous waste generators, the program would include an
additional 570,000 generators who each contribute less than
100 kg/mo, and total program regulatory costs would have to in-
crease by 40 percent. These needs can be translated to program
-------
Figure I—i
ANNUAL TOTAL
COST
(Millions of
Dollars)
1981
Dollars
FISCAL YEAR 1981: RCRA PROGRAM COSTS TO THE STATES AND AGENCY’
(Current Dollars)
LI
100 99.74 99.26
98.94
2000
VOLUME CUTOFF (kg/mo)
98.48
PERCENTAGE OF ALL HAZARDOUS WASTES CONTROLLED
-j
97.70
‘AssumIng 37 jurisdictions apply for and receive interim authorization and EPA regional offices manage program In remaIning 19 jurisdictions.
‘ LARGE VOLUME
GENERATOR COSTS 2
NON—GENERATOR
AND GENERAL
ADMINISTRATION
PROGRAM OVERSIGHT
PROGRAM DEVELOPMEPIr
SMALL VOLUME GENERATORS 2
56.8
54.8
3__0
2 l j j notification processing cosu.
-------
ANNUAL TOTAL
COST
(Millions of
Dollars)
1982
Dollars
99.1
59.4
56.7
Figure I—B
FISCAL YEAR 1982: RCRA PROGRAM COSTS TO THE STATES AND AGENCY’
(Current Dollars)
V
100 99.74 99.26 98.94
Li ______________
3000
VOLUME CUTOFF (kglmo)
98.48
PERCENTAGE OF ALL HAZARDOUS WASTES CONTROLLED
97.70
6.81
LARGE VOLUME
GENERATOR COSTS
NON—GENERATOR
AND GENERAL
ADMINISTRATION
cOSTS
PROGRAM OVERSIGHT
PROGRAM DEVELOPMENT
I I I
I
1 Assuming 37 jurisdictions apply for and receive interim authorization and EPA regional offices manage program in remaining 19 jurisdictions.
-------
Figure 1—9
FISCAL YEARS 1983—1985: TOTAL RCRA PROGRAM COSTS TO THE STATES AND AGENCY’
1985 1984 1983
DOOMS DolI.rs Dofta- ,
118.9 - 110.4 1O2. -
(Current Dollars)
74.0 - 68.7 -63.9
69.3 - 64.3 - 59.8
58.0
58.0 - —
58.0 - — — —
3.8 - 3.3 - 3.1 -
______ I
.-•:•:•:•:•:-:•:•:-: :•:•:•: :•:•:•:•:•:•:•:•:•:•::•:•:: .: .: .: .19aa EXPENDITURES LEvEL: : :•:•:•:•:•:•:-:•: :•:•:•: .:
: .
:______________ ____ Ek EWd YUAE u veL:•:•: :-: -: -:•:•:•:•:•: :•:•:• :
. .-. .,----::..: .
: •E5ci’ iIiiIIiAEs L \Ei::::::::::::: ::::::::::::::::
:iii: i:•;tiiii:iiiiii:iiiii z:•:i—i Ii : iii—i— :•: : : :: :•:•—t: : : :•: — i -: --t : i: :•: :::::•: :: :::• ::::::•: e&e
-‘ LIJ• tU !:J L J
t LARGE VOLUME
J GENERATOR COSTS
NON—GENERATOR
AND GENERAL
ADMINISTRATION
COSTS
i } PROGRAM OVERSIGHT
0 100 500 1000 2000
3000
4000
5000
VOLUME CUTOFF (kg/mo)
Ii
10099.74 99.26 98.94
98.48
PERCENTAGE OF ALL HAZARDOUS WASTES CONTROLLED
97.0
ANNUAL
TOTAL
WST
(Millions of
Dollars)
VOLUME GENERATORS
1 Assuming 31 jurisdictions apply for and receive full authorization and EPA regional offices manage program in remaining 19 jurisdictions.
-------
1—25
shortfalls as shown in Table 1—8. In 1981 the cost of conducting
the RCRA program without consideration for small volume genera-
tors leads to a budget deficit of $1.7 million. That deficit
increases to $16 million in 1985 due to the difference between
escalated program costs and fixed levels of funding. The def-
icit incurred by regulating generators at a 0 kg/mo cutoff is
$38.9 million in 1981 and increases to $60.9 million in 1985.
Intermediate cutoffs, between 5,000 kg/mo and 0 kg/mo, lead to
corresponding budget deficits.
Table 1-8
REGULATORY OPTION: EXEMPTION BY QUANTITY OF WASTE
ESTIMATED RCRA PROGRAM SHORTFALLS FOR FISCAL YEARS
1981 THROUGH 1985 AT SELECTED GENERATOR EXEMPTION LEVELS
(millions of current dollars per year)
Generator Fiscal Year
E enption
Level 1981 1982 1983 1984 1985
(kg/me)
5,000* 1.7 6.5 5.9 10.7 16.0
1,000 3.1 7.9 7.4 12.3 17.7
500 4.3 9.0 8.6 13.6 19.2
100 9.9 14.4 14.4 19.9 25.9
0 38.9 42.4 44.6 52.4 60.9
*Basellne shortfalls, before regulation of small
volume generators.
These observations suggest a need to examine more closely
the relative cost—effectiveness of regulating small volume gen-
erators. One method of accomplishing this is to compare the
average per ton costs of regulation for the major components of
program operation. Table 1—9 shows that the average per ton
cost of regulating all small volume generators far exceeds the
average costs of regulating TSDFs and large volume generators;
the relative difference approaches one or two orders of magnitude.
Recalling Figure 1—6, which shows the marginal Cost of regula-
ting small volume generators, the $1.29 per ton cost of regula-
ting even the largest (1,000—5,000 kg/mo) small volume generators
still surpasses the average cost of regulating any other program
component.
-------
1—26
Table 1-9
REGULATORY OPTION: EXEMPTION BY QUANTITY OF WASTE
PER TON COSTS TO THE STATES AND AGENCY OF REGULATION AT 0 kg/mo CUTOFF:
FISCAL YEARS 1981 TO 1985
(constant 1978 dollars)
Program Operation Cost
Metric Tons of
Hazardous Wastes Total Annual Average per Ton
Program Component Handled Annually Regulatory Cost Regulatory Cost
Small Volume
Generators 1,388,136 $24 million $17.29/MT
Large Volume
Generators 59,292,384 $2.6 million $O.045/MT
Non-Generators:
Transporters and
T5DFs 59,292,384 $21.9 million $0.47/MT
The average per ton costs of regulation need not be similar
for each part of the program. However, given the constraints on
state resource levels for the next five years, the analysis does
argue that there should be a compelling reason for regulating
small volume generators during the initial years of the program
when their per ton costs of regulation far exceed the per ton
costs of regulating other hazardous waste handling establish-
ments.
REGULATORY RELIEF
The discussion in the preceding sections indicates that
for the regulatory option of exemption by quantity of wastes
total costs to industry are anticipated to be approximately
$720 million per year for generators of less than 5,000
kg/mo, and that costs to the states and Agency for regulating
these wastes would be approximately $25 million per year (in
constant 1978 dollars).
These costs result in major impacts in two areas:
• Potential plant closures due to high costs to
individual generators, especially those with
low sales and waste volumes who would need to
absorb high fixed costs of compliance, and,
-------
1—27
• Near—term constraints on state and Agency re-
sources caused by the need to incorporate large
numbers of generators into the hazardous waste
system.
In both cases described above, the effects of small volume
generator regulations in the absence of some form of relief
could prove counterproductive to the objectives of RCRA. For
generators, the high cost of legally disposing of wastes may
act as an incentive for illegal disposal. For the regulatory
agencies, the requirement to control small volume generators
could divert resources from higher priority problem areas
among large volume generators and TSDFs. Consequently,
regulatory relief measures should be considered which
accomplish the following objectives:
• Control the maximum amount of wastes in the
early years,
• Encourage administrative simplicity for regu-
lators,
• Allow adequate time for the states and Agency
to implement regulations,
• Allow flexibility for states and EPA regional
offices to account for local conditions in
implementing regulations, and
• Avoid discriminatory effects within industries.
Possible Relief Measures
Relief measures can be designed to mitigate impacts on
both generators and regulators. Generator impacts can be
lessened by allowing alternative compliance strategies which
avoid the high fixed cost of compliance while ensuring en-
vironmentally sound hazardous waste disposal. State and
EPA impacts result primarily from tasks such as enforcement
and inspection, as well as from the administrative complexity
of incorporating large numbers of generators into the RCRA
system. Some of these impacts can be addressed primarily by
phasing the introduction of these generators over a period
of years.
A cutoff established by quantity of waste or by industry
group is the primary means of controlling the number of genera-
tors in the RCRA system. Once this cutoff has been established,
-------
T g,
j. — _
phasing the introduction of generators into the hazardous waste
system can be an effective means of alleviating impacts. Al-
though phasing does not, in itself, diminish ultimate costs, a
combination of a quantity exemption and phasing does provide
several important benefits. The major benefits for generators
would be to eliminate the expense of compliance for some genera-
tors, postpone the expense of compliance for other generators,
and lessen a tendency toward monopolistic pricing if demand for
transportation and disposal facilities outpaces supply. Several
important benefits to the regulators would be:
• An opportunity to reduce the absolute number of
generators in the system with minimal sacrifice
in environmental control of the total quantity
of wastes generated;
• An ability to focus limited resources in the
initial stages of the program on high—priority
areas;
• Time to develop adequate Subtitle C treatment,
storage, and disposal facilities;
• Time to develop administrative systems for
monitoring and enforcing compliance; and
• Time to hire and train staff adequate to handle
large numbers of small volume generators.
Table 1—10 presents the number of establishments, waste
quantities, and industry and regulatory agency costs for a
regulatory approach based on a quantity exemption of 100
kg/mo and a phasing period of five years. This program of
regulatory relief would permanently exclude generators of
less than 100 kg/mo from RCRA requirements and would include
all other generators, within a manageable time frame, over
the first five years of the program. Setting the first year
cutoff at 5,000 kg/mo would immediately include 97.7 percent
of all hazardous wastes generated but would bring just over
5 percent of all generators into the system. (The costs to
large volume generators have been developed in separate studies
and are not available here. The costs to the states and EPA
for control of large volume generators are presented in Part III
of this report.)
-------
1—29
Table 1-10
QUANTITY-BASED PHASING OPTION
FOR ALL GENERATORS OF LESS THAN 5,000 kg/mo
AND MORE THAN 100 kg/mo
(constant 1978 dollars)
Number of Small
Annual Cost Volume Generators Cumulative
(S mtll1on) Cumulative (000) Percent of
Cutoff Percent of Establistinents
Year ( kg/nm) Industry State Total Wastes Introduced Regulated Regulated
1 5,000 N.A. SO - 97.7% 0 0 5.3
2 2,000 S 54 1 $ 55 98.4 11.3 11.3 6.8
3 1,000 91 1 92 98.9 15.5 26.8 8.8
4 500 127 2 129 99.3 23.0 49.8 11.8
5 100 241 5 246 99.7 108.7 158.5 26.1
N.A. • Not available.
*Cost for regulating generators of less than 5,000 kg/mo.
As the cutoff is lowered to the quantity exemption level
of 100 kg/mo, the RCRA program would cover 99.7 percent of all
wastes and 26.1 percent of generators. Seventy—four percent of
all generators would be excluded permanently from regulatory
responsibility, though only 0.3 percent of hazardous wastes
would not be tracked administratively.
This approach is especially attractive when examining the
small volume generators separate from larger volume generators.
During the second year of the program 34 percent of the wastes
from generators producing less than 5,000 kg/mo enter the system,
yet only 1.6 percent of these generators are introduced. Dur-
ing the third year, more than half the wastes are controlled,
while the generators represent only 4 percent. These figures
emphasize that states and EPA would be able to focus their
resources on high—priority, larger volume generators.
Economically, a quantity—based phasing approach could dis-
criminate among generators within the same industry. In par-
ticular, among generators in SICs whose waste generation rates
are spread over a broad range of quantity categories, a quantity—
based phasing option may place low volume generators at a com-
petitive advantage to high volume generators. However, this
study has shown that low volume generators are at a disadvantage
due to the high fixed costs of the RCRA requirements. Therefore,
implementing a combined quantity exemption and phasing approach
would provide relief to nearly all the potentially impacted
-------
1-30
generators. A corollary to the advantage gained by low volume
generators may be an incentive for generators to concentrate
their wastes in order to fall below the quantity exemption.
Disadvantages of a quantity—based phasing option, however,
may be significant. Environmentally, it does not differentiate
among categories of wastes. Consequently, although it covers a
very large percentage of the quantity of wastes, it may leave
unregulated until the later years certain important categories
of wastes. Administratively, it may be difficult to enforce
with respect to generators close to a quantity cutoff. The
burden of determining whether a particular generator is or is
not included under the cutoff for a given year will fall on the
regulatory agencies, and may result in significant additional
legal and administrative expenses.
State and federal regulators may mitigate the administra-
tive problems by requiring generators who are not yet in the
system to keep records of disposal activities, including such
information as quantities produced, characteristics of waste
streams, collection and disposal methods, and destination of
wastes. These records could be made available through an
annual report or on request if questions arise regarding
disposal practices.
Other regulatory relief measures could be proposed as addi-
tional data regarding characteristics of wastes become available.
In the interim period, the approach proposed here is responsive
to the RCRA objectives environmentally, administratively, and
economically.
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1—31
Chapter 2
METHODOLOGY OF THE STUDY
GENERAL APPROACH
The purpose of this study was to evaluate, from an economic
standpoint, alternative approaches to regulation of hazardous
wastes from small volume generators. As was explained in the
preceding chapter, the regulatory approaches to be studied were:
• Exemption by quantity of wastes, and
• Exemption by classification and quantity
of wastes.
At this point in the study, the first regulatory approach
has been studied. EPA directed its economic consultant to
analyze this option in terms of:
• Costs to and impacts on selected industries and
upon industry in general, and
• Costs to and impacts on state and Agency hazard-
ous waste staffs and budgets.
The cost analyses were based on the total costs of regulat-
ing generators disposing of fewer than 5,000 kg/mo of hazardous
wastes. EPA determined that this approach was appropriate in
order to focus on those segments of the national generator popu-
lation for whom regulatory alternatives to the full RCRA require-
ments were a viable possibility. Generators disposing of 5,000
or more kg/mo of hazardous wastes would not be considered serious
candidates for a management approach less stringent than that
which was currently proposed.
The impact analyses addressed incremental impacts. Industry
impacts were determined for industries with small volume genera-
tors. State and Agency impacts were assessed in terms of incre-
mental effects on total RCRA program costs.
Impacts on generators and regulators were further analyzed
to determine the constraints to implementation of the option.
Alternative responses to constraints were investigated. These
included:
• Phasing implementation of the program over a
five—year period, and
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1—32
• Allowing administrative relief, especially in
requirements for testing, reporting, and par-
ticipating in the manifest system.
ANALYTIC APPROACH--INDUSTRY,
STATE, AND AGENCY COSTS
The general methodology used to estimate industry, state,
and Agency costs, as shown in Figure I—iC, may be conveniently
divided into four steps:
• Step I: Identification of option tasks and
generator categories
• Step II: Development of task unit costs and
estimation of sizes of generator categories
• Step III: Formulation of expected compliance
strategies
• Step IV: Computation of total and marginal
costs
The following paragraphs outline the key elements of this
methodology. More specific information on the derivation of
cost components may be found in Appendix B (Generator Compliance
Tasks and Costs) and Appendix C (State and Agency Tasks and
Costs). Appendix D provides detailed information on generator
categories and waste generation rates.
Step I: Identification of Option
Tasks and Generator Categories
Presently, one regulatory option——exemption by quantity of
waste——was examined in depth to determine the specific mandatory
obligations of generators and regulatory agencies. These re-
sponsibilities were translated into compliance tasks required
of generators and regulatory activities, expected of state and
federal agencies.
The regulatory option was reviewed to identify and further
characterize the generator categories that would be covered.
The exemption by quantity of waste distinguished between genera-
tors on the basis of waste generation rate and altered the small
volume and large volume generator populations by setting the
regulatory cutoff at lower or higher waste generation rates.
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Figure 1-10
METHODOLOGY FOR ESTIMATION OF TOTAL COSTS
FOR ALTERNATIVE REGULATORY OPTIONS
Detailed Examination of Regulatory Option
I
Identification of
generator categories
Development of task
unit costs
1 ’ __
Identification of
industry compliance
tasks and state and
Agency regulatory
activities
Step I:
Step II:
Step III:
Step IV:
Estimation of the
number of generators
in each generator
category
Development of unit
costs of compliance
strategy (industry)
and regulatory
strategy (state
and Agency)
Estimation of the
number of generators
in each generator
category choosing
a particular
cornpl i ance strategy
Computation of total compliance
cost to industry and regulatory
costs to states and Agency for
managing particular generator
categories and all generator
categories
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1—34
Step II: Development of Task Unit
Costs and Estimation of Number of
Generators
Estimates of industry and regulatory agency unit resource
requirements for specific tasks were obtained from EPA documents,
RCRA studies prepared for EPA by its contractors, and from state
and industry sources. These data sources have been documented
in Appendix A, and their cost estimates are presented in Appen-
dices B and C.
Wherever possible, the economic analysis attempted to
develop cost assumptions that would be consistent with those
used in major EPA documents. For example, it was assumed that
one out of every 24 manifested shipments would require an
exception report to be filed with an authorized state regulatory
agency; that was consistent with an assumption used in the EPA
Reports Impact Analysis. ’ In this way, EPA has tried to ensure
comparability of the results of the small volume generator study
with results from related studies.
However, some unit cost estimates were not necessarily the
same as those used in earlier studies. One major point of de-
parture was that the small generator industry cost estimates
reflected the scale of operations of small generators relative
to all generators. For example, the Draft Environmental Impact
Statement 2 estimated that the average cost to generators for
system design would be $925 per generator. This earlier anal-
ysis was based on average expected costs for large volume gen-
erators in manufacturing industries. It was determined that
this estimate was too high for generators with less than 5,000
kg/mo of waste, and a more appropriate estimate was developed
for the task of system design ranging from $50 to $400 per
generator depending on the volume of wastes produced. This
scaling technique was performed for a number of compliance
activities.
Another point of difference was the costing base for unit
estimates. Many reports expressed unit costs on several bases——
for example, per generator, per report, per shipment, and per
state. This study reported all unit costs on a per generator
basis. The data and assumptions underlying the conversion of
specific estimates are presented in Appendices B and C.
1 Reports Impact Analysis, Resource Conservation and Recovery
Act, Subtitle C——Hazardous Waste Management , Draft report,
USEPA, March 1979.
2 Subtitle C, Resource Conservation and Recovery Act of 1976——
Draft Environmental Impact Statement , Volumes I and II, USEPA,
January 1979.
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1—35
The technical contractor provided estimates of the number
of generators in each generator category. The estimates are
summarized in succeeding chapters of this report. The means by
which these estimates were obtained, however, were not part of
the economic study, but were reported completely in the com-
panion technical study. 3
Step III: Formulation of Expected
Compliance Strategies
In each regulatory option, generators would incur a combi-
nation of technical and administrative requirements. Generally,
administrative requirements would be fixed, but technical dis-
posal means could vary to a limited degree within a particular
generator category. For example, generators regulated under
full RCRA would be required to dispose of their hazardous wastes
in a permitted Subtitle C facility, but generators would have a
choice of actual disposal techniques including secure landfills,
incineration facilities, deep injection wells, or other avail-
able approved methods. The economic consultant, in cooperation
with the technical contractor, estimated the proportion of gen-
erators in each generator category that would choose each of
the available disposal methods.
After the compliance strategy for a regulatory option was
determined, unit costs per generator for each task included in
the compliance strategy were summed to yield a total cost per
generator. This calculation was performed for industry costs
and state costs.
Step IV: Computation of Costs
Using the compliance cost data developed in Step III and
the generator population data developed in Step II, estimates
were made of the total costs to industry, states, and EPA of one
specific regulatory option. Using hazardous waste volume data
provided by the technical contractor, the analysis computed the
marginal cost per kilogram of hazardous waste regulated.
This study examined the incremental costs and the im-
pacts resulting from those costs under alternative regulatory
approaches. Incremental costs refers to extra costs incurred
3 Tecbnical Environmental Impacts of Various Approaches for Regu-
lating Small Volume Hazardous Waste Generators , TRW, Inc.,
December 10, 1979.
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1—36
in regulating small volume generators under the more demanding
full RCRA requirements rather than the less stringent exemption
approach. The convention within this report is to express total
incremental costs as zero when all small volume generators are
required to dispose of their wastes at a Subtitle D (4004) facil-
ity; that is, when the exemption volume cutoff is 5,000 kg/mo.
At the other end of the regulatory scale these smaller generators
could be managed as strictly as the larger generators, that is,
under full RCRA requirements. It is the difference between the
national costs of these two regulatory extremes that is being
presented here. Intermediate approaches are also presented to
aid the decision makers in assessing the magnitude of costs
associated with varying levels of environmental benefits.
ANALYTIC APPROACH-- INDUSTRY IMPACTS
Given the large number and variety of small volume gener-
ators——more than 760,000 generators distributed over 100 groups
of SIC codes are potentially affected——the analysis of industry
impacts focused on two basic objectives:
• To concentrate the major portion of the anal-
ysis on industry segments that are most likely
to be impacted, and
• To assess representative impacts that would
allow some projection to national impacts.
To accomplish these objectives, this study analyzed four
characteristics of all SICs that contain small volume generators.
These included the number of establishments, volume and type of
wastes, type of industry, and annual sales and profitability.
Based on an analysis of these characteristics nationally, nine
SICs were selected as representative of the more vulnerable
industries.
Physical and economic profiles were developed for the nine
industries chosen for economic impact analysis. These profiles
addressed the distribution of establishments by annual sales,
the current profitability and operating characteristics of the
industry, and future trends and conditions.
The incremental costs of compliance with potential RCRA
regulations were then applied to the physical and economic
profiles of the nine industries. Impacts were assessed at the
plant and industry levels, and projected to the national level.
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1—37
At the plant level, compliance costs were expressed as a
percent of sales. In keeping with the Draft Environmental Impact
Statement , a hurdle rate of 2 percent was used to categorize a
plant as a high impact candidate with the understanding that
plant closures and job losses are most likely to occur in the
high impact segments. The economic analysis developed model
case and worst case plant characteristics to which compliance
costs could be applied.
For a model case in the analysis of plant impacts, it was
assumed that sales and volume of wastes were correlated——that
is, that a plant in the 25th percentile in terms of sales has a
waste generation rate in the 25th percentile. As is discussed
in Appendix D, there is little evidence available to substantiate
a direct correlation between wastes and sales at lower volume
ranges. Consequently, sensitivity analysis was performed as-
suming that an establishment has a waste generation rate larger
than the rate that would correspond to it under a direct cor-
relation assumption. The methodology for determining the worst
case waste generation rate is discussed in Appendix D.
Another indicator of likely plant closures and job losses
is low profitability. The model case plants were used to assess
closure possibilities in the nine industries, where closure
candidates were defined as plants whose profits would become
negative as a result of compliance with RCRA. Three factors
determine status as a closure candidate:
• High compliance costs,
• Low annual sales, and
• Low profitability.
For those SICs where closure candidates were identified, the
contribution of each of these factors was estimated. Sensitivity
analysis was performed on the measure of profitability using the
same methodology as in the sales analysis.
The analysis was carried a step further for SICs where
closure candidates were identified. For these industries,
the price increase required for the median closure candidate
firm to reach a positive profitability was computed. The
likelihood of a price increase of this magnitude was then
examined on the basis of the industry’s competitive and pricing
structure and its future trends.
For small volume generator firms, capital or one—time costs
of compliance do not contribute a major component of costs.
Consequently, an examination of the ability of individual firms
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1-38
to raise capital was not a critical aspect of the analysis. In
some cases, however, cash flow difficulties or the availability
of credit could hamper a plant’s operations, and these were con-
sidered on the basis of available information in a qualitative
manner.
Because the nine selected SICs were characteristic of the
national profile of small volume generators, impacts in selected
SICs or portions of SIC5 could be projected to the national
level. These impacts were stated in terms of the likelihood of
plant closures and job losses as a result of high cost of sales
and/or low profitability.
ANALYTIC APPROACH—-STATE
AND AGENCY IMPACTS
Though it is important to present the incremental costs to
the states and Agency for selected approaches to regulating
small volume generators, it is equally important to contrast
these incremental resource requirements with current hazardous
waste control expenditures and with projected expenditures for
other parts of the RCRA program. As it is likely that all RCRA
activities will be competing for limited staff and funds, this
comparison addresses the relative administrative and economic
feasibility of selected approaches. To present this perspective
on a national level, the study examined the relationships
between:
• Projected total hazardous waste control appro-
priations and expenditures and budget needs for
regulating small volume generators; and
• Current and projected total hazardous waste staf-
fing levels and staffing needs, and staffing needs
for regulating small volume generators.
In evaluating the costs of regulating small volume gener-
ators, a major consideration was the impact of these costs on
state and Agency hazardous waste control budgets. Substantial
regulatory costs in this area may diminish the states’ willing-
ness to accept responsibility for RCRA programs. The small
generator economic study analyzed estimates that had been de-
veloped by the Agency of total RCRA allocations, appropriations,
and program needs. These were compared with expected small
volume generator regulatory expenditures over a five—year time
horizon. Potential budget shortfalls were identified and areas
of uncertainty in the projections were identified.
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1—39
A persistent constraint in the RCRA program will be the
availability of basic resources. Just as landfill capacity may
initially be a constraint in industry compliance, so might the
availability of qualified supervisory and technical personnel
be a constraint on states’ initial regulatory capabilities. To
quantify the likelihood of a staffing shortfall, this study
compared expected national staffing needs for regulation of
small volume generators with current and projected total staff-
ing levels for control of hazardous waste. Consideration was
given to the fact that a significant proportion of state man-
power efforts is currently devoted to program development and
could later be directed toward regulation of hazardous waste
generators.
When budget and staffing shortfalls were detected, a cost—
effectiveness analysis was performed. The analysis compared
the per ton costs of regulation for small volume generators,
large volume generators, transporters, and TSDFs to determine
the program component most demanding of limited state resources.
Alternate Authorization Scenarios
The state impact analysis assumed that 37 jurisdictions
would apply for and receive full authorization in the near fu-
ture. This assumption is based on the best available EPA
information indicating that some rather than all jurisdictions
are prepared to apply for authorization. The appropriate
regional EPA offices would be responsible for implementing the
RCRA program in those jurisdictions that do not apply for au-
thorization. Therefore, a brief sensitivity analysis was per-
formed to project state and Agency impacts under two alternate
authorization scenarios.
One scenario assumes that EPA is forced to take responsi-
bility for hazardous waste management in all 56 jurisdictions.
This serves as a “worst case” analysis in terms of potential
EPA workload in regulating small volume generators. The second
alternate scenario assumes that all states will apply for and
receive authorization, and that the programs will interface
with Agency activities through headquarters’ oversight respon-
sibilities.
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Part It
tMPACTS OF REGULATORY OPTIONS ON SMALL VOLUME
HAZARDOUS WASTE GENERATORS
The objective of this part of the study is to present a
profile of small volume generators based on selected criteria
for exemption from RCRA, and to develop and evaluate economic
impacts on the generator populations of the alternative regu-
latory approaches.
Chapter 1 discusses physical and economic characteristics
of small volume generators. Chapter 2 provides a detailed
discussion of the industries selected for economic impact
analysis. Chapter 3 presents tasks required of generators
included in the RCRA program and the unit costs associated
with those tasks, and Chapter 4 evaluates the impacts of one
regulatory approach, that of exemption based on quantity of
wastes.
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11—2
Chapter 1
CHARACTERISTICS OF SMALL VOLUME GENERATORS
The establishments potentially affected by RCRA regulation
of small volume generators cover a wide range of industries. Over
100 four—digit SIC codes or groups of SIC codes 1 in all major in-
dustrial sectors contain small volume generators. 2 Given the
wide distribution of small volume generators, their physical and
economic characteristics differ widely. Further complicating
the situation, the profile of small volume generators varies sub-
stantially depending on the cutoffs used to define small volume
generators.
In the sections that follow, small volume generators will be
described in terms of three critical characteristics:
• Number of establishments and quantity
of wastes,
• Type of industry, and
• Financial condition.
These characteristics will subsequently serve as the rationale
for selecting SICs for economic impact analysis.
NUMBER OF ESTABLISHMENTS
AND QUANTITY OF WASTES
The technical contractor had primary responsibility in a
companion part to this study for developing the composite
profiles of small volume hazardous waste generators. The
national composition of generators producing less than 5,000
1 Throughout this report industries are identified by SIC
code. This Standard Industrial Classification system is
maintained by the U.S. Department of Commerce, Bureau of
Census.
2 The proposed regulations anticipated an exemption cutoff of
100 kg/mo for small generators and referred to a suggested
alternative cutoff level of 1,000 kg/mo. EPA selected a 5,000
kg/mo generation rate as an upper bound for defining small
volume generators to allow examination of even higher ex-
emption cutoffs.
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11—3
kg/mo of hazardous wastes was based on individual profiles of
those SICs judged by the technical contractor to contain
small generators. 3
Table I l—i presents these conclusions regarding the esti-
mated number of generators and waste quantities in the United
States. Nationally, the total quantity of wastes requiring
disposal by 762,000 generators is approximately 61 million metric
tons per year (MT/yr). Of this total, the 722,000 generators
producing less than 5,000 kg/mo account for 2.3 percent of the
total waste quantity produced, while generators producing 100
kg/mo or less account for 74 percent of the generator population
and 0.23 percent of the total waste quantity.
Overall, manufacturing SICs account for 58 million metric
tons or 96 percent of the wastes while non—manufacturing SICs
account for the remaining 2.5 million metric tons or 4 percent
of the wastes. Conversely, non—manufacturing SICs make the
largest contribution to national generator totals. Overall,
83 percent of the generators are in non—manufacturing indus-
tries. The proportion in non—manufacturing industries is even
more dramatic at the lower volume levels where the largest num-
bers of generators are concentrated——92 percent of the gen-
erators of less than 100 kg/mo are non—manufacturers. Above
a 1,000 kg/mo cutoff over 74 percent of the generators are in
manufacturing SICs. Based on the technical data, the average
waste generation rates for generators below 5,000 kg/mo are
576 kg/mo in the manufacturing sector and 98 kg/mo in the
non—manufacturing sector.
Table 11—2 presents data on the estimated contributions
of specific SICs to the total number of generators and quantity
of wastes in this study. A few large SICs, concentrated in
the lower volume ranges, dominate the national number of gen-
erators. The four largest SICs account for nearly 69 percent
of the generators but only 29 percent of the wastes. SIC 27——
Printers——is numerically the largest manufacturing SIC but it
ranks eighth nationally in terms of number of generators, ac-
counting for just over 3 percent of the generator population
and 5 percent of the waste quantity.
3 Because of unique features of waste oils and waste oil gen-
erators (large number of generators, fuel value of waste oil,
existence of recycling industry), the Agency has excluded them
from this study and will consider them separately. Thus, the
profiles presented here are for t ’non—oil” hazardous wastes.
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11-4
Table Il—i
ESTIMATED NUMBER OF ESTABLISHMENTS AND WASTE QUANTITIES FOR ESTABLISHMENTS
IN VARIOUS WASTE GENERATION RANGE CATEGORIES
Waste Generation
Range (kg/mo )
Less than 100
100.1,000
1,000-5,000
More than 5,000
U.S. Total
Non .Manufacturing SICs
Establisimients Waste Quantity
Percent Metric Percent
Number Total Tons/Year Total
519,537 81.8 115.133 4.64
98,171 15.5 331,360 13.36
10,522 1.7 293,892 11.85
6,752 1.1 1,739,987 70.15
634,982 100 2,480,372 100
Source: TRW, Inc., Technical Enviromnental Impacts of Various Approaches for Regulating Small Volume Hazardous Waste Generators ,
December 10. 1979.
U.S. Total Manufacturtng SICs
Establisirents Waste Quantity Establislanents Waste Quantity
Percent Metric Percent Percent Metric Percent
Number Total Tons/Year Total Number Total Tons/Year Total
563,127 73.9 140.376 0.23 43,590 34.4 25,242 0.04
131,733 17.3 495,000 0.82 33,562 26.S 162,456 0.30
26,765 3.5 752,760 1.24 16,243 12.8 658,868 0.80
40,130 5.3 59.292,384 97.7 33,378 26.3 57,552,384 98.90
761,755 100 60,680,520 100 126,773 100 58,198,932 100
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11—5
For most SICs the number of generators is the single most
important determinant of both the SIC t s contribution to overall
national costs and of SIC—specific impacts. As will be discussed
in more detail in Chapter 3, fixed costs dominate generator com-
pliance costs at the lower volume levels. For example, fixed
costs account for 95 percent of total compliance costs of $850
for an average generator of less than 100 kg/mo. By way of con-
trast, fixed costs are only 18 percent of total annual compliance
costs for an average generator of 2,000 to 5,000 kg/mo. Above
that level, the volume of waste becomes an increasingly sig-
nificant determinant of total national costs and SIC—specific
impacts. As a rule, costs for the non—manufacturing industries
predominant in the lower volume ranges depend on the number of
generators. For manufacturing SICs that are concentrated in
the higher volume ranges, volume of wastes influences costs
more strongly.
Table 11-2
CONTRIBUTIONS OF SELECTED SICs TO THE SMALL VOLUME
HAZARDOUS WASTE GENERATION PICTURE
Small Volume Generators
Industry Manufacturing/
Non— Percent Waste Percent
SIC Description Manufacturing* Number of Total ( MT/Yr) of Total
72 Personal Services NM 191,000 26.6 97,200 7.0
17 Construction-—Special Trade NM 152.000 21.1 26.400 1.9
55 Gas Service Stations NM 98,000 13.6 225,600 16.3
75 Automotive Repair NM 53,100 7.4 57,600 4.1
/3 Business Services NM 30,400 4.2 46,800 3.4
116 Miscellaneous Repair Services NM 24,300 3.4 154,800 11.2
82 Educational Services NM 23,300 3.2 13,200 1.0
Z7 Printing and Publishing N 22,800 3.2 69,600 5.0
0/ Horticultural Service NM 17,800 2.5 22,800 1.6
35 MachInery N 17,600 2.4 140,700 10.1
Other 90,000 12.5 533,300 38.4
Total 722,000 100.0% 1,388,000 100.0%
Manufacturing, NM Non—manufacturing.
In some SICs generators are concentrated within narrow waste
generation ranges while in others there is a relatively wide dis-
tribution among volume categories. The impacts of compliance may
be different depending on the distribution of waste generation
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11—6
categories within an SIC. In industries that have all generators
within a fairly narrow range, the cost of compliance as a percent
of sales will be greater for economically smaller establishments.
SICs that have wide distribution among waste generation categories
will have a wider spread in compliance costs which may place estab-
lishments with higher waste generation rates at a competitive dis-
advantage. This situation will exist in particular if there is no
correlation between waste generation and output——that is, if the
cost of compliance per unit of output varies widely.
The technical consultaiit developed SIC—specific profiles
of waste generation by quantity ranges. 4 These data show
that, in virtually all cases, the largest concentration by
number of generators occurs in the 0—100 kg/mo range. However,
the data can fluctuate widely. Overall, 37 percent of the SICs
have less than a quarter of the establishments in any single
waste generation category while 23 percent of the SICs have a
concentration of more than three—quarters of their establish-
ments in a single waste generation category.
A breakdown of the concentration data by type of industry
reveals marked contrasts. Among the 59 manufacturing SICs in
TRW ’s study, only one SIC has more than half of the generators
within a single waste generation category, while 36 SICs have
less than 25 percent of the generators in a single category.
Since, as has been noted, manufacturing SICs tend to have large
waste volumes for which volume—related variable costs are an
important component, the wide distribution of waste generation
categories implies a broad range of compliance costs within a
given industry. For non—manufacturing SICs, the picture is
reversed, with nearly one—half of the SICs having concentra-
tions of more than 75 percent of the establishments in a single
waste generation range. This fact, coupled with the importance
of fixed costs at the lower volume ranges, where non—manufactur-
ing SICs predominate, means that compliance costs within non—
manufacturing SICs will be relatively constant.
In some cases, the types of wastes disposed will affect
compliance costs more strongly than the volume of wastes.
Small volume generators are expected, as a rule, to use off—
site landfills for hazardous waste disposal. In a limited
number of cases, establishments may choose sophisticated
“me number of generators and quantity of wastes were reported
for the following ranges (kg/mo): 0—100, 200—300, 300—400,
400—500, 500—600, 600—700, 700—800, 800—900, 900—1,000,
1,000—2,000, 2,000—5,000, over 5,000.
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11—7
incineration procedures. The cost of incineration of wastes
with these characteristics can be 5 to 15 times as high as
that of off—site landfill disposal. These costs and their
impacts will be discussed more fully in later chapters.
TYPE OF INDUSTRY
One effect of extending RCRA to lower volume levels will
be to extend its scope to a large number of non—manufacturing
establishments. 5 The obvious differences between manufacturing
and non—manufacturing SICs in terms of number of establishments,
volumes of wastes, and concentrations in specific waste genera-
tion categories have been discussed above. In this section
some of the differences in economic characteristics between
manufacturing and non—manufacturing industries will be discussed.
Non—manufacturing industries are smaller than manufactur-
ing industries in economic as well as in waste generation terms.
The 70 industries examined as potential candidates for economic
analysis were arrayed according to annual sales. Among these
industries, 84 percent of the SIC codes with annual sales above
the 75th percentile were in manufacturing industries while
68 percent of the SIC codes with annual sales below the 25th
percentile were non—manufacturers (including the nine smallest).
Although significant exceptions exist, manufacturing indus-
tries have greater investments in plant and equipment per unit
of sales than do non—manufacturing industries. The implication
of the higher asset base in manufacturing industries is that there
exists greater ease of entry and exit among non—manufacturing
industries. Hence, the latter industries may be more volatile
in their responses to increasing costs and changing economic
conditions.
Manufacturing establishments tend to employ more people
than do non—manufacturing establishments. According to County
Business Patterns, 6 66 percent of service establishments have
one to four employees, while only 32 percent of the manufactur-
ing firms fall within this range.
5 This study did not include retail establishments in the non—
manufacturing sector as the December 1978 proposed regulations
exempted retailers from the RCRA program.
6 County Business Patterns , U.S. Department of Commerce, Bureau
of the Census, 1976, 1978.
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11—8
Other factors will also influence the responses of manu-
facturing and non—manufacturing industries to incremental costs.
These factors too may differ for the two types of industries.
Price elasticities, for example, may not be determined by the
same forces. Non—manufacturing industries are not as vulnerable
to product substitution and foreign competition as are manufac-
turing industries, yet they may be more dependent on economic
conditions. Frequently, non—manufacturing industries provide
services that persons and businesses postpone as economic con-
ditions worsen. In addition, factors such as convenience and
location may influence demand for non—manufacturing industries
more strongly than price.
SALES AND PROFITABILITY
As was discussed above, fixed costs are a major component
of the total cost of compliance at the lower waste generation
ranges. Given these high fixed costs, the cost of compliance
will constitute a larger percent of annual sales for establish-
ments with low annual sales than for establishments with high
annual sales. 7
The current profitability of individual establishments is
also an important factor affecting economic impacts. Plant
closures for establishments incurring the cost of hazardous
waste management will depend on the ability of the enterprises
to earn adequate profits. Clearly this ability will in great
measure depend on the current profitability of the establish-
ments, as well as on their ability to pass additional costs
through to their customers.
To determine both what SICs would be most heavily impacted
based on compliance costs as a percent of sales and what SICs
would be most likely to experience plant closures, the economic
consultant arrayed 70 SICs in a matrix as illustrated in
Table 11—3. Industries were located along the horizontal axis
from left to right in order of increasing annual sales and on
the vertical axis from bottom to top in order of increasing
profitability. Industries were then separated into quartiles
7 mis relationship may also depend on the correlation between
annual sales and waste generation rates. As noted in Appendix
D, this correlation is uncertain at best. In non—manufacturing
SICs, however, most establishments fall within narrow waste
generation ranges. Among these establishments, impacts on
those with low annual sales will be greater than those with
high annual sales.
-------
11-9
Table 11-3
RELATIVE DISTRIBUTION OF SICs 1 BY PROFITS AND SALES 2
7211(6)*
7221.7333*
7512(3)
2! 7542
i8O11
3544
3599
2421
3421( 3,5.9)
3442*
ANNUAL SALES
3021(69)
3251
3494
3531(2)
3612(13,21)
3825
3841(3)
2 72 1*
2831(3,4)
2861(5,9)
3431(2)
3462
3533
3562
3573
3631(2,3,4,5,6)
3714
1 SICs 20—39 are manufacturing Industries; all others are non-manufacturing industries.
2 Based on 1978 Annual Statement Studies , Robert Morris Assoc., 1978.
Selected for more detailed Study.
uJ
U-
U-
0
7261
I
j
4214 2522
2731’
3273
3398
3444*
3451(2)
3465(6,9)
3496
3671(2,4,6,7
2514 3662
2761 3811
2841 3823
3321(2,4,5) 3944
3361(2,9)
3411
3433
3561(4,6,7,9)
3585
2253(4,7,8)’
2451
2844
3711
3792
0781(2,3) 2371
1721* 2752*
4212 2791*
7538 3471(9)
3851
3993
5161 2541(2,9)
7391 2751*
8051(9) 3443*
3541(2,5)
2511
2515
3523
3645(6)
3861
4213 2033(4)
2231
2732*
2851
3651
1711’ 2789’
. j
1742’ 3271(2)
1752* 3995
1761*
4131
: 3 ’
C, —
.1
0181,5191, 2261(2)’
5261
5511 3295
7213 3441*
3731(2)
- 3911
2272’ -—
2512
2821
2873(4)
5122 2252’
5151 2435
5541’ 3111
3723
Lower Quartile (4)
Upper Quartile (1)
-------
11—10
in order of both sales and profitability. Thus an industry in
the top right corner would be in the first (highest) quartile
in both sales and profits. An industry in the lower left
corner would be in the fourth (lowest) quartile in both sales
and profits. 8
The greatest impacts would be anticipated in the shaded
area of the matrix in Table 11—3. Industries in the lower
left corner would be most heavily impacted in terms of clo-
sures resulting from inadequate profitability and low sales.
Industries along the bottom of the matrix were considered
likely to contain plants that might close on the basis of in-
adequate profitability. In this area, however, it is neces-
sary to differentiate the incremental effects of the regula-
tion in causing closures from those of inadequate baseline
profitability. Several industries, for example, had profits
averaging less than 2 percent and it is likely that these
industries would experience plant closures without RCRA.
Costs of compliance will be the largest as a percent of
annual sales for industries along the left hand side of the
matrix. In this area, the cost of compliance may seriously
diminish profits and result in plant closures or significant
impacts even for establishments with a relatively high baseline
profitability. It is among these plants that plant closures
may be directly attributable to RCRA.
The three characteristics of: number of establishments
and volume of wastes, type of industry, and sales and profit-
ability, were used in this chapter to develop a profile of
small volume generators. In the following chapter, the use of
these same characteristics to select the SICs that were analyzed
in greater depth will be described.
8 Data were also available for approximately two—thirds of the
industries on establishments with less than $250,000 in assets.
(This generally included firms with sales and asset bases below
the industry average as reported by the U.S. Bureau of the Census.)
To test the representativeness of the original matrix for small
firms, these establishments were also arrayed by sales and
profits and divided into quartiles. The distribution of indus-
tries in the matrix was very similar when all plants and when
only small plants were considered.
-------
h—h
Chapter 2
SICs SELECTED FOR ECONOMIC IMPACT ANALYSIS
Several key factors were identified in the previous chapter
that could be potential contributors to RCRA impacts on small
volume generators. These are:
• The large number of small, non—manufacturing
firms that would be included in the RCRA pro-
gram, especially if no quantity exemption were
adopted;
• The variability in waste generation rates, es-
pecially among manufacturing firms and between
manufacturing firms and non—manufacturing firms.
Small but profitable firms with high waste
generation rates could experience more severe
impacts than similar firms with lower genera-
tion rates; and
• The high fixed costs of regulatory requirements,
which would be particularly large relative to
the sales and profits of small firms.
In view of the variability in the characteristics of the
small volume generators, it was necessary to focus the analysis
of industry impacts on two basic objectives:
• To assess representative impacts of potential
regulations allowing some projection of na-
tional impacts; and
• To concentrate on industry sectors that are
most likely to be impacted.
With these objectives in mind, the economic consultant selected
nine groups of SICs for economic analysis as representative of
the salient features of the national small volume generator
population. The nine selected groups are shown in Table 11—4
along with the numbers of generators and volumes of wastes in
each group. These SICs account for 52 percent of the total
number of generators in the nation, but they account for only
34 percent of the waste from generators of less than 5,000
kg/mo, indicating that the selection of SICs for analysis
was somewhat biased toward numerically large but low volume
industries.
-------
11—12
Table 11—5 illustrates the main features of the industries
selected in terms of the characteristics of the small volume gen-
erators discussed above. In general, the SICs selected are rep-
resentative of all small volume generators. However, as with
the bias toward low volume generators, the industries selected
have sales and profitability rates that are generally in the
lowest quartile according to one of the two indicators or they
are below the median in both. Both these facts reflect the
objective of focusing the economic analysis on the more heavily
impacted sectors.
Four manufacturing and five non—manufacturing industry
groups were selected for analysis. Two of the non—manufacturing
industries are heavily concentrated in the lower volume ranges
as is characteristic of the non—manufacturing groups. The
other three non—manufacturing industries had somewhat broader
waste generation ranges to represent those non—manufacturing
SICs where the generators are not heavily concentrated.
Price elasticities among the non—manufacturing SICs are
difficult to ascertain, but it appears that demands in SIC 07
(agricultural services) will be sensitive to substantial com-
petition from within the industry and from substitutions from
without as farmers may do the work themselves in lieu of paying
higher prices. Demand in SIC 17 (special trade contractors)
will depend more on general economic conditions than on prices.
The photoprocessing industry, on the other hand, may be sensi-
tive to both prices and general economic conditions. Histor-
ically, demand for dry—cleaning services has varied with eco-
nomic conditions, but price increases could reinforce current
trends from commercial to coin—operated establishments.
Table U-4
NUMBER OF GENERATORS AND VOLUMES OF WASTES FOR SELECTED SICs
Total
Number Waste
of Small Quantity
Volume (thousands
SIC Description Generators of MTfyr )
O711,z1,29 Agricultural Services 3,235 22.008
1700 Special Trades Contractors 152,462 26.676
2231,225,226, 2272 Textiles-—Dyeing and
Finishing 1,689 11.196
2700 PrInting 28,060 89.16
3440 Fabricated Metals 6.063 40.356
3471 Electroplating 2,470 9.864
5541 GasolIne Service Stations 127,985 188.652
7215,6 Dry Cleaning 40,404 3.452
7221, 7333, 7395 Photoprocessing 13,180 43.044
Total in Selected SICs 375,548 474.408
National Total 721,625 1388.136
Percent Selected 52. 0 34.2%
-------
Table Il-S
QIARACTERISTICS Of INDUSTRIES SELECTED FOR ECONOMIC IMPACT ANALYSIS
Median
Quartile Quartile Waste Price
Other Sales/Profits Sales/Profits Generation Elasticity
SIC Description Manufacturing Services Industry --All --Small Rate (kg/mo) of Demand
0711.21.29 Agricultural Services Z N.A. N.A. 900 High
1700 Special Trades Contractors 1 4/4 N.A./4a 10 Low
2231,224.225
2272 Textiles—-Dyeing and Finishing 1 2/3 N.A. 350 High
2700 Printing I 4/3 1/3 75 Low
3440 Fabricated Metals 1 2/4 1/4 100 High
3471 Electroplating 1 4/3 2/2 200 Low
5541 Gasoline Service Stations 1 1/4 1/4 75 High
7215(6) Dry Ceaning 1 4/1 4/1 50 Low
7395 Photoprocessing K 4/4 4/4 75 Moderate
N.A. • Not available; 4 • lowest quartile, 1 — highest quartile.
afor the small group, contractor sales figures are not coirçarable with those of other SICs.
Source: 1978 Annual Statement Studies , Robert Morris Assoc. . 1978.
-------
11—14
The five manufacturing SICs have higher waste generation
rates than do the non—manufacturing industries reflecting the
higher waste volume characteristics of the manufacturing SICs.
On the other hand, the manufacturing SICs selected have much
smaller generator populations than do the non—manufacturing
industries. None of the manufacturing SICs is heavily concen-
trated in any single waste generation volume, although all of
them have moderate concentrations in the 0—100 kg/mo category.
Because of the greater variation in waste volumes, compliance
costs for these SICs selected vary more widely. Two of the
manufacturing SICs——textiles and fabricated metals——currently
face strong foreign competition and have little price elasticity.
Recent studies performed for EPA, on the other band, indicate
that on a product— and region—specific basis, electroplaters
have generally good pricing flexibility.
In later chapters of this report, economic impacts on the
nine industries discussed above will be examined. Although the
industries were not selected as a statistically valid cross—
section of small volume generators nationally (a random selection
of industries would have been more appropriate for this purpose),
they do represent types of vulnerable industries. Consequently,
the results of this analysis will be most useful in assessing
the types of impacts that might be anticipated in other similar
industry sectors and in examining the reasons for these impacts.
For example, the analysis can be used to examine the impacts
that small non—manufacturing industries may incur based on the
results of the study of special trades contractors and dry
cleaners. On the basis of the national distribution of plants
represented by the nine industries, it will also be possible to
project, generally, impacts on other industries.
-------
11—15
Chapter 3
GENERATOR TASKS AND UNIT COSTS OF COMPLIANCE
A range of technical and administrative tasks will be
required of small volume generators under possible RCRA regula-
tions. These tasks and their costs will be examined in this
chapter. First, current disposal practices will be analyzed to
determine a baseline cost of disposal. Following the discussion
of current practices, technical compliance alternatives will be
examined and their costs described. In the final section of
this chapter, the costs of compliance with RCRA administrative
requirements will be estimated by adjusting existing estimates
for large volume generators to account for the circumstances of
small volume generators.
CURRENT DISPOSAL PRACTICES
Table 11—6 illustrates the use of various disposal methods
by small volume generators in the manufacturing SIC5. Approxi-
mately 25 percent of the waste is disposed of on—site, and the
remaining 75 percent is transported to off—site disposal facil-
ities. Over 50 percent of these generators use landfill dis-
posal, which accounts for 46 percent of the waste. Next to
landfill, recycling is the most frequently used disposal method.
Other disposal methods are less commonly used. The single most
prevalent of the remaining methods is landspreading, which ac-
counts for only 7 percent of the generators and 7 percent of
the waste.
Table 11-6
ESTIMATED PERCENT DISTRIBUTION OF
SMALL QUANTITY WASTE GENERATORS AND WASTE QUANTITIES
BY DISPOSAL METHOD
(manufacturing SICs only)
Generators Waste Quantity
Disposal Method On—site Off-site Total On—site Off-site Total
Landfill 2.9 48.4 51.3 3.4 42.4 45.8
Incineration 1.5 2.6 4.1 1.6 5.0 6.6
Lagoon 2.6 0.3 2.9 3.9 0.5 4.4
Deep-well injection 0.1 2.2 2.3 0.3 5.6 5.9
Landsoreading 5.8 1.2 7.0 5.0 2.1 7.1
Others 6.6 2.8 9.4 5.1 2.8 8.9
Recycle 2.6 20.4 23.0 2.3 19.0 21.3
Total (percent) 22.1 77.9 100.0 22.6 77.4 100.0
Source: TRW. Inc.. Technical Environmental Impacts of Various
Approaches for Regulating Small Volume Generators , Decemoer 10, 1979.
-------
11—16
Among non—manufacturing SICs, off—site landfill disposal is
virtually universal except for auto and truck service stations
that recycle waste oil and medical facilities that incinerate
infectious wastes. Consequently, when manufacturing and non—
manufacturing industries are combined, the percent of genera-
tors and wastes using landfill disposal rises dramatically.
Table 11-7 depicts the use of various disposal methods by both
manufacturing and non—manufacturing industries, and indicates
that over 84 percent of all establishments would use landfill
disposal and almost 65 percent of all wastes would be disposed
of by landfill.
Table 11—7
ESTIMATED TOTAL NUMBER OF
SMALL WASTE GENERATORS AND WASTE QUANTITIES
BY DISPOSAL METhOD
(all SICs)
Generators Waste Quantities
Disposal Method Number Percent MT/yr Percent
Landfill 690,000 84.2 1,104 63.0
Incineration 5,000 0.6 72 4.1
Lagoon 3,000 0.4 36 2.1
Deep-well injection 8.000 1.0 48 2.7
Landspread lng 11,000 1.3 60 3.4
Others 5,000 0.6 72 4.1
Recycle 99,000 12.1 360 20.5
Total 819,000 100.0% 1,752 100.0%
Source: TRW, Inc.
The percent of wastes disposed of in landfills is smaller
than the percent of generators using landfill disposal. This
condition reflects the fact that landfill disposal is more
heavily utilized at the lower volume ranges. Virtually all
generators of less than 100 kg/mo would use landfill disposal.
On the other hand, among generators of more than 2,000 kg/mo,
where manufacturing SICs are more prevalent, the percent of
generators using the various forms of disposal would more
closely reflect the distribution among disposal methods for
manufacturing SICs.
Except in the few states where hazardous waste manifests
are currently required, existing administrative procedures for
hazardous waste disposal are minimal. Some procedures exist,
though they may be independent of state administrative require-
ments. For example, contracts are entered into by generators
and disposers for the disposal of a given amount of wastes with
pickups at a particular frequency.
-------
11—17
Current disposal costs are difficult to determine precisely
because of the large number and variety of hazardous waste gen-
erators. The basic assumption has been made, however, that the
average baseline cost for all generators is $8/MT——the cost of
transporting to and disposing in a non—secure sanitary landfill.’
For some generators using more rudimentary disposal methods,
this assumption may overstate current costs, while for others——
those using incineration, for example——it may understate current
costs. These inaccuracies, however, are relatively insignifi-
cant in view of the prevalence of small volume generators cur-
rently using landfill disposal.
TECHNICAL COMPLIANCE ALTERNATIVES
Figure Il—i illustrates the technical compliance alterna-
tives open to hazardous waste generators. Decisions to select
various disposal methods are assumed to be made on a combination
of technical and economic grounds. Wastes that can be recycled
at a cost lower than the cost of compliance with RCRA will be
recycled, thereby avoiding the administrative and technical
costs of compliance.
Among wastes that are disposed of under RCRA, the decision to
select on— or off—site disposal will be made on economic grounds.
Fixed costs of on—site disposal are bigh; therefore, significant
economies of scale are available to large off-site facilities
and to large volume on—site disposers. In the case of landfill
disposal, for example, costs per metric ton decline as landfill
capacity increases up to about 70,000 MT/yr. On—site disposal
avoids transportation and administrative costs associated with
RCRA compliance. Consequently, an individual generator will
select on—site disposal in cases where the total cost of on—site
disposal is less than combined costs of disposal, transportation,
and administrative tasks at an off—site facility.
The savings using off—site facilities rather than on—site
facilities are sufficiently great for all small volume generators
to use off—site disposal. Even a generator of 5,000 kg/mo has
an annual waste volume of only 60 MT/yr-—less than 0.1 percent
of the volume at which the cost per metric ton of landfill dis-
posal levels off. This means that by using off—site disposal
facilities, even the largest generators in this study will
benefit from the substantial economies of scale available to
off—site facilities.
1 U.S. Environmental Protection Agency, Subtitle C, Resource
Conservation and Recovery Act of 1976——Draft Environmental
Impact Statement , Volumes I and II, January 1979.
-------
Figure lI—i
TECHNICAL COMPLIANCE ALTERNATIVES FOR GENERATORS
OF HAZARDOUS WASTES
Recycle
On—Site Disoosal
Landfill
Incineration
Deep—well Injection
L qoon
Landsoread
Other
J.andf ill
I Incineration
Off—Site Disposal I Deep—well Injection
Yes
Yes
No
‘ -I
03
No
1 Other
-------
11—19
It is anticipated, based on current practices, that three
main methods of off—site disposal——landfill, incineration, and
deep—well injection——will be utilized. (Lagooning and land—
spreading are primarily on—site practices.) Recycling will
continue to be an active practice and it is likely that the
practice will grow as RCRA requirements encourage generators to
find appropriate recycling programs. However, that analysis is
beyond the scope of this study. As indicated by Table 11—8,
future landfill disposal will be, by a significant margin, the
most widely used disposal practice. If restrictions are placed
on the types of substances that can be disposed of in a landfill,
the percent of generators and wastes using this means of dis-
posal will decrease. The use of incineration and deep—well
injection will increase correspondingly, although deep—well
injection will remain a more geographically restricted form of
disposal than incineration.
Table 1 1-8
ESTIMATED TOTAL NUMBER OF
SMALL QUANTITY WASTE GENERATORS AND WASTE QUANTITIES
FOR SELECTED DISPOSAL METHODS’
Generators Waste Quantities
Qugnt ity
Disposal Method 2 Number Percent ( 10 kg/yr) Percent
Landfill 709,000 98.2 1,272 91
Incineration 5,000 0.7 72 5
Deep—well injectIon 8,000 1.1 48 4
Total 722,000 100.0% 1,392 100%
1 The estimates shown here do not include recycled wastes.
2 Other methods Include lagoon and landspreading. These will
be included in the landfill category for the economic analysis.
COSTS OF COMPLIANCE
Costs of compliance with RCRA will consist of the technical
costs of transporting and disposing of wastes as well as admin-
istrative costs associated with testing requirements and report-
ing. These costs will be discussed in the sections that follow.
-------
11—20
Administrative Costs
Two general classes of administrative costs will be re-
quired by RCRA——one—time costs of first entering the hazardous
waste system and recurring costs of participating in that system.
In addition, within both classes of administrative costs there
are two further cost categories——testing costs and record—keeping
and reporting costs. Both one—time and recurring costs have been
developed by making adjustments to large volume generator costs
presented in the Draft Economic Impact Analysis (EIA) and in the
Reports Impact Analysis.(2,3 ) Because administrative costs
or small volume generators frequently vary with the volume of
wastes disposed, these costs will be presented below for each
of the waste generation ranges used in the technical contrac—
tor’s report.
One—Time Costs
Appendix B presents one—time costs developed in the EIA
for 17,000 large volume generators. Two cost elements dominate
one—time administrative costs for large volume generators——the
costs of designing compliance systems at $927 per generator and
the costs (for those generators electing to do so) of testing
wastes to contest designation as a hazardous waste generator.
(The latter cost, ranging from $455 to $1,000, may be both
higher and more frequently incurred if a system of categories
of wastes is introduced.)
As Table 11—9 indicates, the economic contractor has
adjusted significantly downward both cost components mentioned
above for most small volume generators. It is estimated that
even generators of 5,000 kg/mo will not be of sufficient size
to require the more sophisticated compliance system assumed in
the EIA. The Reports Impact Analysis attributes no cost to
the design of procedures for generators other than the 17,000
covered by the EIA. It appears more reasonable to assume,
however, that even small volume generators will spend a minimum
of four hours becoming acquainted with RCRA requirements and
that this cost will increase with waste volume and complexity.
2 Arthur D. Little, Inc., Draft Economic Impact Analysis: Sub-
title C, Resource Conservation and Recovery Act of 1976 ,
January 1979.
3 U.S. Environmental Protection Agency, Reports Impact Analysis,
Resource Conservation and Recovery Act, Subtitle C——Hazardous
Waste Management , Draft report, revised March 19, 1979.
-------
11—21
Table 11-9
SMALL VOLUME GENERATOR
ONE-TIME ADMINISTRATIVE COSTS
(per generator)
(constant 1978 doflars)
(bie-Time Administrative Tasks
Quantity Testing/ Comparison of Notification Design of
( kg/mo) Documentation Wastes to List Applications Procedures Total
Less than 100 - $20 $20 $ 50 S 90
lOOtoSOO 20 20 50 90
500 to 1,000 35 31 100 166
1,000 to 2,000 5455 - $1,000 35 31 100 621-1,166
2,000 to 5,000 $455 - $1,000 71 31 300 857-1,402
Testing costs will be the same for both large and small
volume generators. Since small volume generators will have
lower compliance costs, however, their expected benefit from
successfully contesting designation as a hazardous waste
generator will be less. Consequently, generators of less than
1,000 kg/mo are unlikely to go to the expense of testing while
10 percent of generators of more than that amount have been
assumed to test their wastes; this rate is the same as that of
large volume generators. It should be noted that among small
volume generators, as among large volume generators, both the
cost and the likelihood of testing will be greater if a system
of waste categories is introduced.
Recurring Costs
The major components of large volume generator recurring
administrative costs are the cost of supervising the manifest
system and the cost of annual comprehensive waste testing and
less extensive sample testing of each waste delivered to a
disposal facility. Both these tests are required for disposal
facilities under Section 3004 but their cost would be passed on
to generators. These are shown in Appendix B and are based on
the estimates presented in the EIA.
Small volume generator costs, shown in Table 11—10, are
analogous to those for large volume generators. The major cost
item——comprehensive and sample testing——is approximately the
same for both classes of generators. Small volume generators
frequently have organic wastes such as solvents that require
expensive testing procedures and they have less sophisticated
-------
11—22
waste segregation systems than do large volume generators.
Combined wastes from small volume generators will, therefore,
require complex tests. On the other hand, a large number of
small volume generators will have single waste streams for
which comparatively simple tests can be developed. In the ag-
gregate, the differences between large and small volume generator
testing costs are not sufficiently great to justify using dif-
ferent costs for each waste quantity generation range.
The other major large volume generator recurring admini-
strative cost——manifest preparation and supervision——will be
different for small volume generators. In the EIA separate
costs were developed for continuing supervision of a manifest
system and for preparation of individual manifests. This
approach is appropriate in cases where manifests are fre-
quently prepared and a continuing system is in place. Among
small volume generators four to eight manifests will be prepared
annually (96 percent of the generators at a zero cutoff will
prepare four manifests annually). For these generators the
approach used in the Reports Impact Analysis——assuming a
higher cost per manifest but no supervision cost——is more
appropriate.
Technical Costs
Technical costs will consist of the cost of transporting
wastes to the disposal facility and the cost of disposing of
wastes at that facility. The cost of transportation will be
markedly different for small and large volume generators while
the cost of disposal per unit volume (excluding the costs of
testing discussed above) will depend only on the volume of
waste disposal.
Table 11-10
SMALL VOLUME GENERATOR
ANNUAL ADMINISTRATIVE COSTS
(per generator)
(constant 1978 dollars)
Quantity
( kg/mo )
Recurrinq Administrative Tasks
Less than 100
100 to 500
500 to 1,000
1,000 to 2,000
2,000 to 5,000
Manifest Exception Reports
Comprehensive Annual Annual Number of Annual Annual Total
and Sample Reevaluation Number of Manifest Exception Exception Report Recurring
Testing of EPA Lists Manifests Cost Reports Report Costs Cost Costs
$680
680
680
680
800
$0
0
10
10
20
4
4
4
4
6
$24 .17
24 .17
24 .17
24 .17
36 .25
$9
9
9
9
13
$12 $725
12 725
12 735
12 735
24 893
-------
11—23
Transportation Costs
Transportation costs for small volume generators are pre-
sented in Table Il—il. These costs were developed using the
following assumptions:
• All small volume generators will ship wastes
in 55—gallon drums which will be picked up
by trucks with a 30—drum capacity,
• Round—trip distances to disposal facilities
will average 200 miles,
• Travel time between generators will be one—
half hour, and
• Loading time will vary depending on the number
of barrels.
Costs using these assumptions were developed on the basis of a
model 30—drum flatbed truck used in an analysis for EPA of the
impact of RCRA on the hazardous waste transportation industry. 4
Disposal Costs
For the purpose of this analysis, it is assumed that all
generators of less than 5,000 kg/mo would use off—site disposal
facilities and that three disposal methods would be utilized——
secure landfill, incineration, and deep—well injection. Dis-
posal costs using these methods relate exclusively to the
volume of wastes.
Costs for secure landfill disposal of hazardous wastes are
based on a report recently prepared for the New England Regional
Commission (NERCOM). 5 According to this report, the cost of
landfill disposal decreases as landfill capacity increases, down
to approximately $70/MT at a landfill with 70,000 MT/yr capacity.
It is likely that off—site secure landfills would be built to
these dimensions to make full use of possible economies of scale.
4 Artbur D. Little, Inc., Characterization of Hazardous Waste
Transportation and Economic Impact Assessment of Hazardous
Waste Transportation Regulations , EPA Contract No. 68—01—4381,
August 1978.
5 Arthur D. Little, A Plan for Development of Hazardous Waste
Management Facilities in the New England Region , Draft report,
August 1979.
-------
11—24
Consequently, the cost of off—site landfill disposal is approx-
imately $70/MT. 6 These costs, by quantity ranges, are shown
in Table 11—11.
Table 11-11
SMALL VOLUME GENERATOR
ANNUAL TECHNICAL COSTS
(per generator)
(constant 1978 dollars)
Recurring Technical Tasks
Quantity
( kg/mo) Hauling Disposal Total
Less than 100 S 107 S 16 S 123
100 to 500 174 223 397
500 to 1,000 323 558 881
1,000 to 2,000 582 1,116 1,690
2,000 to 5,000 1,262 2,604 3,866
Incineration and deep—well injection are the two other
methods of off—site disposal determined to be commonly used by
small volume generators. Future use of these methods of dis-
posal by small volume generators is uncertain. Depending on
the substances incinerated, costs of incineration per unit
volume can be more than five times as high as costs of landfill
disposal if removal efficiencies required by RCRA are to be
obtained. Consequently, it is likely that only wastes which
are explicitly excluded from landfills will be incinerated.
Deep—well injection is outside the jurisdiction of RCRA as that
practice is regulated under the Underground Injection Control
program.
The economic contractor determined industry disposal costs
using two sets of assumptions. The first set involved all gen-
erators now using landfill continuing to use that method and 40
percent of generators currently using incineration shifting to
landfill disposal because of the high cost of incineration. The
second set of assumptions involved no shifts from incineration
to landfill disposal. Costs used in this study were based on a
40 percent shift from incineration to landfill. If no generators
switch methods, national disposal costs will be $8.4 million
higher——b percent of total disposal costs and 1 percent of total
compliance costs.
analysis assumes a perfect supply of capacity at off—site
disposal facilities. To the extent that this supply is con-
strained, the $70/MT cost may be a low estimate of post—RCRA
disposal costs.
-------
11—25
TOTAL GENERATOR COMPLIANCE COSTS
The previous sections of this chapter examined functional
tasks and unit costs associated with RCRA requirements. Another
way to look at generator compliance costs is by their fixed and
variable components, where fixed costs are independent of the
quantity of wastes controlled and variable components are depen-
dent on the quantity. These are demonstrated in Figure 11—2
and discussed below.
Administrative costs are primarily fixed costs and these
dominate total costs at the lower volume cutoffs. For a gen-
erator of 21 kg/mo (the average for generators of less than
100 kg/mo), fixed administrative expenses would be $725——con—
tributing 85 percent of a generator’s total compliance costs of
approximately $850. The major contributions to the fixed ad-
ministrative expenses are the annual comprehensive testing of
wastes costing $500 and the less extensive testing of wastes
required each time a shipment is delivered to a disposal
facility, costing $180 annually. 7
Variable administrative costs are relatively insignificant
for industry. These costs can include the cost of preparing
additional manifests if more than the required minimum of four
annual shipments to a disposal facility are made. Variable
administrative costs may also include the increased costs of
record—keeping and supervision as waste streams become larger
and more complex.
Hauling costs vary more strongly with the volume of wastes
generated than do administrative costs; however, these too have
a fixed component that is dominant at the lower volume ranges.
Fixed hauling costs are the minimum required for compliance
with the regulations——pickup from the generator and delivery of
one 55—gallon drum to the disposal facility every 90 days.
This component of costs would constitute more than 50 percent
of hauling costs for generators of less than 100 kg/mo. Beyond
this point, the pro rata costs of a generator’s share of the
30—drum capacity of a truck become more important to total haul-
ing costs.
Since disposal costs are entirely dependent on the volume
of wastes, these costs dominate other aspects of compliance at
the higher volumes. For example, for a generator of 21 kg/mo,
$6o per test a minimum of three times a year when wastes are
delivered; once a year a comprehensive test substitutes for
the less extensive tests.
-------
11—26
ANNUAL
COST PER
GENERATOR
5.000
4,000
3,000
1,000
Figure 11—2
REGULATORY OPTION: EXEMPTION BY QUANTITY OF WASTE
ANNUAL COSTS PER GENERATOR
(Constant 1978 Dollars)
TOTAL COMPLIANCE
COST
VARIABLE COSTS OF
TESTING. ADMINISTRATION
AND HAULING /
/
//
/
/
I .
DISPOSAL COSTS
500
1,000 1,500
2,000 2,500 3,000 3.500
WASTE GENERATION RATE (kg/mo)
4,000 4,500
5,000
S45 an adminsstrative cos and $88 pickup cost
-------
11—27
the cost of waste disposal in a secure landfill is 2 percent of
the total cost, while for a generator of 3,500 kg/mo the cost
of disposal in the same manner is 55 percent of total compliance.
These tasks and unit costs per generator will provide the
foundation for the discussion In the following chapter on in-
dustry compliance costs and impacts for a specific regulatory
option——exemption based on quantity of wastes.
-------
11—28
Chapter 4
EVALUATION OF REGULATORY OPTION:
EXEMPTION BY QUANTITY OF WASTE——INDUSTRY IMPACTS
This chapter describes the effects on industry of the RCRA
regulatory approach of exemption based on the quantity of wastes
disposed. First, national costs will be presented as one—time
and recurring costs, and the contribution of several cost com-
ponents will be analyzed. The costs to the nine selected SICs
will be assessed, and the impacts on those SICs will be examined.
The chapter will then present national impacts based on a pro-
jection of the impacts on selected SICs to the aggregate indus-
trial profile. The final section of this chapter will highlight
sensitivities and limits in the analysis.
NATIONAL INDUSTRY COSTS
National costs to industry will have both one—time and
recurring cost components. These will be discussed below, with
particular emphasis being placed on the variation in costs as
the quantity of wastes in the RCRA system varies.
One—Time Costs
The major contributions to one—time costs to industry are
comparison to the RCRA list, testing to contest designation as
a hazardous waste generator, notification, and system set—up. 1
Table 11—12 illustrates total one—time costs as a function of
the quantity exemption selected. These total costs are based
on the unit costs presented in the preceding chapter. It is
clear from this table that the single most important contribu-
tion to total one—time costs is the number of generators
included at low quantity cutoffs. At a zero cutoff, 722,000
generators incur a relatively low average one—time cost of
approximately $100 each. At a cutoff of 2,000 kg/mo, the
average cost per generator is $280, but the number of generators
is only 11,300.
LAithough it is estimated that 10 percent of generators in the
waste quantity range of 1,000 kg/mo to 5,000 kg/mo will test
their wastes, the analysis assumes that all generators will re-
main in the system. This is a simplifying assumption for the
purpose of presentation of impacts.
-------
11—29
Table 11-12
REGULATORY OPTION: EXEMPTION BY QUANTITY OF WASTE
TOTAL ONE—TIME COSTS TO INDUSTRY
(millions of constant 1978 dollars)
Total Cost per Task
Quantity Total Number
Cutoff of Generators Comparison Design of Total Cost
( kg/mo) ( thousazids) to List Testing Notification Procedures All Tasks
5,000 0 50 SD SO SO SO
2,000 11.3 0.8 0.8 0.4 1.2 3.2
1,000 26.8 1.3 2.0 0.9 2.8 7.0
500 49.8 2.1 2.0 1.6 5.1 10.8
100 158.5 4.3 2.0 3.8 10.5 20.6
0 721.6 15.6 2.0 15.1 38.7 71.4
Recurring Costs
Recurring industry costs, developed from unit costs pre-
sented in Tables 11—10 and 11—11, are illustrated in Figures 11—3
and 11—4. As with unit costs, the most dramatic increase in
costs occurs as the volume cutoff is lowered from 100 kg/mo to
0 kg/mo. The large number of generators entering the system
and the contribution of fixed administrative costs to total
costs account for this increase.
The importance of fixed costs to total compliance costs at
the lower volume ranges is reflected in the marginal cost of
compliance per metric ton as the volume cutoff is lowered. 2 For
example, the national cost of compliance at a 1,000 kg/mo cutoff
is approximately $91 million for the 750,000 MT/yr added to the
system by generators in the 1,000 to 5,000 kg/mo range. That
yields an average cost per ton of $121. Moving from a 1,000
kg/mo cutoff to a 500 kg/mo cutoff would add $36 million, regu-
lating an additional 196,000 metric tons at a cost of $184
per ton. A further decrease in the cutoff to 100 kg/mo adds
300,000 metric tons at a total cost of $114 million or $380 per
ton. Moving from a 100 kg/mo cutoff to no quantity exemption
(zero cutoff) would add $478 million, regulating an additional
140,400 metric tons at a cost of $3,400 per ton. The marginal
costs per metric ton of moving from a 5,000 kg/mo cutoff to a
zero cutoff are illustrated in Figure 11—5.
stated in Part I of this report, marginal cost analysis
shows the cost of regulating the additional tons of waste
brought into the RCRA system as the quantity cutoff is lowered.
-------
Figure 11—3
700
ANNUAL
COST
M llions
of Dollars)
300
200
719
100%
REGULATORY OPTION: EXEMPTION BY QUANTITY OF WASTE
RECURRING NATIONAL COST TO INDUSTRY BY FUNCTIONAL COMPONENTS
186
158
SMALL VOLUME GENERATORS
(Constant 1978 Dollars)
TESTING COST
DISPOSAL COST
HAULING COST
ADMINISTRATIVE COST
127
: ::::: : j
91
1 11L1H
100 200 300 400
99.74% 9967% 99.46% 99.35%
H L1H
500 700 800
VOLUME CU OFF (k1.no)
99.26% 99.19% 99.i % 99.06%
1 j 1
900 1000. 2000
99.0% 98.94% 98.48%
0
5000
97.7%
‘-4
0
140
118
0
54
CUMULATIVE PERCENTAGE OF ALL HAZARDOUS WASTES CONTROLLED
-------
Figure 11—4
700
ANNUAL
COST
(Md ons
of Dollars)
300
200 L
100%
REGULATORY OPTION: EXEMPTION BY QUANTITY OF WASTE
RECURRING NATIONAL COST TO INDUSTRY BY FIXED AND VARIABLE COMPONENTS
SMALL VOLUME GENERATORS
(Constant 1978 Dollars)
VARIABLE COST
186 FIXED COST -
__ __ iTi
2000
600 70.0
VOLUME CUTOFF (kg/mo)
99.45% 99.35% 99.26% 99.19% 99.12% 99.06% 99.0% 98.94% 98.48%
CUMULATIVE PERCENTAGE OF ALL HAZARDOUS WASTES CONTROLLED
FIXED COST ENDS AT 586
99.74% 99.57%
0
50u0
97.7%
-------
Figure 11—5
4000
MARGINAL
COST
(Dollars Per
Metric Ton)
0o.
2000
1000-
100%
REGULATORY OPTION: EXEMPTION BY QUANTITY OF WASTE
GENERATOR MARGINAL RECURRING COST
(Constant 1978 Dollars)
9974% 99.57% 99.45% 99.36% 99.26% 99.19% 99.12% 99.06%
CUMULATIVE PERCENTAGE OF ALL HAZARDOUS WASTES CONTROLLED
200
300
VOLUME CUTOFF (kg/mo)
112
2000
1000
990% 98.94% 9848%
-------
11—33
IMPACTS OF COMPLIANCE ON
SELECTED INDUSTRIES
This section delineates the impacts of compliance on the
nine industries selected for economic impact analysis. The
analysis will be presented for four quantity exemptions——O, 100,
500, and 1,000 kg/mo——to illustrate the variability of industry
impacts as a function of the quantity exemption. Total costs
for each industry will be described first. The percent of firms
in each industry potentially incurring a compliance cost greater
than 2 percent of sales will then be presented. On the basis
of these compliance costs and on the basis of the profitability
of firms in each SIC, the likelihood of plant closures will be
examined.
The sensitivity of the analysis to the model case assump-
tions will be analyzed by identifying what waste generation
rate would be necessary for impacts to occur in a given SIC and
by assessing the likelihood of that waste generation rate on
the basis of the methodology described in Appendix D.
National Costs for Selected Industries
National cost estimates for the nine industries studied,
based on per generator costs of full compliance and generator
profiles provided by the technical contractor, are depicted in
Table 11—13. These costs include only the recurring annual
costs for the firms in each SIC that are small volume generators.
As shown in this table, the costs for the selected SICS, which
include 52 percent of the generators and 34 percent of the
wastes, account for 48 percent of the total national cost of
small volume generator regulations at a zero cutoff and 18
percent of total national costs at a cutoff of 1,000 kg/mo.
The disproportionately high percentage of total costs included
at the zero cutoff results from the deliberate selection of
several industries with large numbers of generators and high
fixed compliance costs that are concentrated in the lowest
waste generation range. I
At a zero volume cutoff the costs presented in Table 11—13
constitute 0.04 to 1.5 percent of annual revenues for the nine
SICs. Costs are greater than 0.5 percent of sales for photo—
processing, laundries, and agricultural services. According to
the definition used in the Draft Economic Impact Analysis these
industries would incur a moderate impact. On an industry—wide
basis the compliance costs as a percent of sales also indicate
the increase in industry prices necessary for compliance costs
to be fully passed through to customers.
-------
11—34
In the case of small volume generators, total industry
costs as a percent of sales are not a particularly revealing
measure of industry impacts. Total industry sales are dominated
by a relatively small number of firms with high sales while,
given high fixed compliance costs, impacts are likeliest to
occur among the firms with the lowest annual sales. Conse-
quently, to avoid understating actual impacts on the economi-
cally smallest firms, several different methods to measure
effects were developed. These are discussed in the following
sections.
Table 11—13
REGULATORY OPTION: EXEMPTION BY QUANTITY OF WASTE
SMALL VOLUME GENERATOR ANNUAL COSTS FOR SELECTED SICs
(millions of constant 1978 dollars)
Volume Cutoff (kg/mo)
SIC Description 0 100 500 1,000
0711,21,29 Agricultural Services S 4.703 S 3.414 S2.516 S2.0O7
1700 Special Trade Contractors 130.2 1.72 1.08 0.86
2231,225,226,2272 Textiles 2.00 1.53 1.18 0.84
2700 Printing 30.55 13.15 8.74 5.98
3440 FabrIcated Metal Products 8.58 6.35 4.39 3.36
3471 Electroplating 2.87 1.87 .930 .56
5541 GasolIne Service Stations 118.81 57.40 1.82 0
7215,16 Laundries 35.55 7.55 1.27 0.30
7221,7333,7395 Pt%otoprocessing 14.63 7.68 4.10 2.75
Cost to Selected SICs
347.89
100.65
26.0
16.53
Percent of National Cost
48.3
41.6
20.3
18.0
Firms That Would Incur Costs
Greater Than 2 Percent of Sales
Table 11—14 shows the percent of plants that would incur
costs of more than 2 percent of sales at selected quantity cut-
offs. These percentages are based on the model case assumptions
described in Appendix D and on distributions of SICs by annual
sales derived from U.S. Census data. As shown in the table,
impacts range from a low of 0 to a high of 62 percent of the
establishments in SIC 7215 (laundries).
-------
11—35
Table 11-14
REGULATORY OPTION: EXEMPTION BY QUANTITY OF WASTE
PERCENT AND NUMBER OF GENERATORS WITH COMPLIANCE COSTS
GREATER THAN TWO PERCENT OF SALES
(for selected SICs)
Volume Cutoff
0 kg/mo 100 kg/mo 500 kg/mo
SIC DescriptIon Percent Number Percent Number Percent Number
0711,21,29 AgrIcultural Services 38% 7,000 25% 4,500 1% 200
1700 SpecIal Trade Contractors 61 92,000 - -
2231,225, Textiles —
226,2272
2700 Printing
3440 Fabricated Metal Products —
3471 Electroplating —
5541 GasolIne Service Stations 9 11,500
7215 LaundrIes 62 9,500
7216 Conrerclal Laundries 27 7,000
7221,7333, Photoprocessing 17 400
7395
No impacts greater than 2 percent of sales were detected
in the manufacturing SICs despite the fact that the most vulner-
able manufacturing SICs were selected for analysis. Impacts
greater than 2 percent of sales were identified only among
non—manufacturing SICs with very low annual sales and generally
low waste generation rates. Only SIC 07 had impacts at volume
cutoffs above zero. These were demonstrated at 100 kg/mo and
500 kg/mo due to SIC 07’s steeply rising waste generation rate.
These results confirm that it is the fixed costs of participat-
ing in the hazardous waste system and not the variable costs of
disposal that result in the major impacts.
As discussed earlier, the analysis assumed a direct rela-
tionship between annual sales and waste generation. However,
the results proved to be insensitive to the model case assump-
tions. Using Sensitivity analysis, the economic consultant
estimated the waste generation rates that would be necessary
for compliance costs to exceed 2 percent of sales. This hurdle
is exceeded by printers (SIC 27) if they have sales in the
lower 50th percentile and a waste generation rate that is five
times as great as the expected rate of 50 kg/mo. Electroplaters
(SIC 3471) with sales in the lower 25th percentile may incur
costs greater than 2 percent of sales if their waste generation
rate exceeds the rate expected at the largest of the plants in
the small volume generator group.
-------
11—36
Firms That Would Experience
Negative Profitability
A second way to assess the impacts of compliance costs on
establishments is by measuring the profitability rates before
and after incurring these costs. Table 11—15 shows the percent
and number of plants in the selected SICs that would incur
costs greater than the current profits before taxes. Assuming
that the costs of compliance are not passed through to customers
in the form of price increases, negative profitability would be
experienced in several SICs but only at the zero cutoff. In
the manufacturing sector, only SIC 3440 would be impacted, but
financial data available for this study indicate that pre—RCRA
profits are already negative in that industry. In the non—
manufacturing sector, impacts range from a low of 3 percent of
the generators in SIC 7216 to a high of 53 percent in SIC 17.
Like other portions of the analysis, the analysis of plant
profitability was not sensitive to the model case assumption.
Necessary waste generation rates for costs to exceed profits
were computed, and in all cases these rates were significantly
above the rates expected at the largest plants in this study.
Table 11—15
REGULATORY OPTION: EXEMPTION BY QUANTITY OF WASTE
PERCENT AND NUMBER OF GENERATORS
WITH COMPLIANCE COSTS GREATER THAN
PROFITS BEFORE TAXES
(for selected SICs)
Generators
SIC Description Percent Nualber
0711,21,29 Agricultural Services 8—25 1,000—5,000
1700 SpecIal Trade Contractors 53 80,000
2231,225, TextIles
226,2272
2700 PrintIng
3440 FabrIcated Metal Products --
3471 Electroplating —
5541 Gasoline Service Stations 14 23,000
7215 Laundries 14-43 2,200—6,500
7216 Conrierclal Laundries 3 750
7221,7333, Photoprocesslng 28 655
7395
‘Impacts were seen at a volume cutoff of zero only. Above a zero
cutoff, no generators would be Impacted based on profits before tax.
“Baseline profItability Is negative for small establisMents in
this SIC.
-------
11—37
Plant Closure Analysis
Plants would be closure candidates if RCRA compliance
costs, when not passed through to customers, would result in a
negative profit rate. Based on the above analysis, the economic
consultant identified these plants, computed the price increase
necessary for the plants to reach a positive profit rate, and
assessed the likelihood of plants to increase prices to the
levels required.
Three operating characteristics, singly or in combination,
provide the environment for a firm to be a closure candidate.
These include:
• High compliance costs,
• Low annual sales, and/or
• Low profitability.
The nine industries selected for detailed analysis illustrate
these possible conditions:
• Plants in the manufacturing SICs have estab-
lishments with waste generation rates up to
5,000 kg/mo. The costs of compliance for
the average establishment in the 2,000 to
5,000 kg/mo range is approximately $4,900
compared to $850 for the smallest generators.
• Dry cleaners have generally adequate profit
margins but low annual sales.
• Special trade contractors, with low annual
sales and low profit margins, are potentially
impacted by both.
Recalling the earlier table of the relative distribution of
SICs by profits and sales (Table 11—3), it is clear that the
strongest indicator of closure potential is the level of annual
sales. The common characteristic among the industries with
sales impacts and/or profitability impacts is low annual sales.
The single exception is gasoline service stations (SIC 5541),
but even that industry has a relatively large number of estab-
lishments with low annual sales, and it is these that are the
closure candidates.
Closure potential in the dry cleaning industry results
from low sales, despite a profit rate in the top quartile
among small volume generators. Photofinishers and contractors
-------
11—38
have low profit rates as well as low sales, but there would be
closure candidates in these industries even if profit rates
were raised to the top quartile.
Closure candidates also exist among small establishments
in SIC 3441——fabricated structural steel. Baseline profitabil-
ity for these establishments is —1.14 percent, indicating that
closure candidates exist in the absence of hazardous waste
regulations. Compliance with RCRA would lower the median
profitability for these establishments even further. Highly
localized markets for small establishments and intense foreign
competition result in very limited pricing flexibility, and it
is doubtful that establishments in this SIC could pass addi-
tional costs through to customers. Consequently, closures are
likely to result from RCRA requirements, but it is difficult to
differentiate these closures from those resulting from the weak
financial condition of the industry.
Closures are likely among candidate firms only if the
costs of compliance cannot be passed through to customers.
Price increases necessary for the median closure candidate firm
to avoid closure are 7 to 8 percent. The likelihood that price
increases of this magnitude can be realized will vary from
industry to industry. In general, since closure candidates
requiring 7 to 8 percent increases in price are concentrated
among the smallest establishments, compliance with RCRA will
improve the competitive position of large establishments. For
example, whereas a small establishment will need to raise its
prices by 7 to 8 percent in order to maintain a positive profit
rate, for a large establishment the same percent increase in
prices will translate into an increase in profits of virtually
that amount. Thus one effect of RCRA may be to foster concen-
tration among larger firms in the heavily impacted industries.
Demand for special trade contractors follows general eco-
nomic conditions, and the feasibility of realizing an 8 percent
price increase will depend on the condition of the national
economy. With a vigorous economy and a high level of housing
starts, an 8 percent price increase would not affect demand
significantly. In a depressed economy, it is probable that an
8 percent price increase will cause many small contractors to
go out of business, at least temporarily. Since there are low
barriers to entry and exit in the industry, these contractors
may re—enter once economic conditions improve.
-------
11—39
Demand for dry cleaning and photoprocessing services is
influenced as much by location, convenience, and quality as by
price. Both services also depend on general economic conditions
in that as economic conditions worsen, individuals and businesses
can dispense with them. Thus, price will be only one of a number
of important factors influencing demand for these services. In
addition to the above, two further factors influence the dry
cleaning industry: first, price increases may reinforce an
historical trend from commercial to coin—operated dry cleaners;
second, the dry cleaning industry is highly energy—intensive
and is already facing the prospect of price increases as a
result of escalating energy prices.
PROJECTION OF SIC IMPACTS TO
NATIONAL IMPACTS
Table 11—16 lists the results of the analysis of the
percent and number of plants on a national basis that would
incur impacts of more than 2 percent of sales and/or negative
profitability.
No impacts are anticipated among manufacturing SICs at a
zero quantity cutoff as there was an absence of projected im-
pacts among the most vulnerable SICs. It should be recognized
that individual plants, in a limited number of cases, may ex-
perience higher than expected impacts. This distortion results
from varying waste generation rates and, therefore, varying
compliance costs among firms with the same sales volumes. Dif-
ferent generation rates may be the result of product or process
differences or inefficient hazardous waste management practices.
Plants in the latter category may be more capable of adjusting
their waste generation rates than plants in the former category.
Among non—manufacturing SICs, impacts are anticipated,
based on sales and profits, primarily among establishments with
low annual sales volumes. Based on Table 11—16, 45 percent of
non—manufacturing SICs will have impacts greater than 2 percent
of sales. Thirty—two to 40 percent will be closure candidates
as a result of compliance costs that are greater than pre—tax
profits. Most establishments will be impacted based on both
criteria. The maximum impact, based on either criteria, will
be 48 percent, or 315,000 establishments.
-------
11-40
Table 11-16
REGULATORY OPTION: EXEMPTION BY QUANTITY OF WASTE
PROJECTED NATIONAL IMPACTS ON SMALL VOLUME GENERATORS
AT A WASTE QUANTITY EXEMPTION OF 0 kg/mo CUTOFF
Basis of Impacts
Costs Exceed
2 Percent Costs Exceed
of Sales Baseline Profits
Total
Establishments Number Number
SIC Description ( thousands) Percent ( thousands) Percent ( thousands )
07 Horticultural Services 18 38 7 8—25 1-5
17 Special Services Contractors 152 61 92 53 80
55 Car Dealers and Service StatIons’ 164 7 12 14 24
72 Personal Services’ 191 67 128 34—52 65-99
73 Business Services 31 33 10 29—58 9-18
75 Auto Services 66 44 29 32
76 RepaIr Services 24 61 15 42-56 10-13
79 RecreatIonal Services 7 29 2 9 0.6
Total 653 45 295 32—40 210-260
‘More service stations will have impacts based on low profits than on low sales.
2 Among the 191,000 establishments In Personal Services are 120,000 beauty parlors (SIC5 723,724) of
whIch 100,000 have Impacts greater than 2 percent of sales and 60,000 to 89,000 have costs greater
than profits before taxes.
alncludes 50 percent of SIC 751 which has negative profits before tax nong smaller establishments.
The largest number of potentially affected establishments
are in three industry groups:
• Special trade contractors (SIC 17),
• Personal services (SIC 72), and
• Auto services (SICs 55 and 75).
SIC 17 consists of special trade contractors with various
specialties. The largest group——53,000——is in SIC 1711, plumb-
ing, heating, and air conditioning. The next largest group——
29,000——is in SIC 1721, painting, paperhanging, and decorating.
These generators have a higher waste generation rate than the
other segments of this industry.
SIC 72 consists of purveyors of various personal services.
The largest groups of generators are in SICs 7231 and 7241,
beauty parlors and barber shops, respectively, with a combined
total of 120,000 generators. Other sectors that have large num-
bers of generators are SIC 721, laundries, with 44,000 generators,
and SIC 7261, funeral services, which has 14,500 generators.
-------
11—41
SICs 55 and 75 consist of automotive dealers and repair
shops. The largest number of generators——128,000——are in SIC
5541, gasoline service stations. There are 49,000 generators
in SIC 753, auto repair shops, and 36,000 generators in SIC
5511, new and used car dealers. Car washes and auto rental
establishments have relatively few establishments in this
industry.
Several factors will affect the proportion of closure
candidates that actually close because they are unable to
realize the price increases of 7 to 8 percent that would be
necessary for the average firms to have positive profit
rates. Among these are:
• Price elasticities,
• Ease of entry and exit, and
• National economic conditions.
In SICs 17 and 72, demand for services is closely tied to
national economic conditions, and low capital requirements
result in considerable ease of entry and exit among smaller
establishments. In a recessionary economy, closures would be
extremely likely, at least among the lower 25 percent of
establishments in sales. Both incremental RCRA costs and
economic conditions would be responsible for closures. In a
healthy economy, impacted establishments should be able to
realize the necessary 7 to 8 percent price increases.
In SICs 55 and 75, capital investments are greater and
sensitivity to economic conditions varies. Closures would be
less likely among these establishments, but some closures would
take place among low profit establishments.
LIMITS OF THE ANALYSIS
The analysis described above is based on several important
assumptions. In addition to the model plant assumption concern-
ing waste correlation, assumptions made for this study concern:
• Cost estimates for fixed and variable costs,
and
• Applicability of available financial data.
In the following sections the sensitivity of the analysis to
these assumptions will be discussed.
-------
11—42
Cost Estimates
Cost estimates for small volume generators have been
developed from previous estimates for large volume generators.
Limited empirical data for small volume generators are available
and estimates used for this study could overstate or understate
overall costs. There are several sources of uncertainty:
• Total costs and impacts reported here are de-
pendent in large measure on the population of
generators. The number of generators included
in this analysis is the total number estimated
by the technical contractor to produce poten-
tially hazardous wastes. The actual number of
generators may vary for several reasons:
——The technical contractor included a much
broader spectrum of wastes as potentially
hazardous than those designated as hazard-
ous by EPA and appearing on the December
18, 1978, EPA list of hazardous wastes.
In exercising this engineering and tech-
nical judgment, the universe of hazardous
waste generators defined by the contractor
was more comprehensive than that of pre-
viously compiled inventories.
——More generators will test their wastes
than actually have hazardous wastes in
order to determine that they should be
excluded from the system. This will in-
crease the one—time costs of comparison
to the list and testing.
——Some generators who do not produce ha-
zardous wastes but are uncertain of the
components of their wastes may choose to
enter the system rather than incur expen-
sive testing costs. To the extent that
this occurs, the regulated population
will be larger than estimated.
• The analysis was performed assuming landfill
disposal for all wastes because precise data
on the impacts of RCRA on establishments using
recycling and incineration were not available.
-------
11—43
• Costs were developed on the assumption that
hauling and disposal capacity will exist. To
the extent that such capacity does not exist,
excess demand may increase costs above the
levels estimated.
• Haulers and disposers may be reluctant to deal
with small volume generators and may charge a
premium to service them. The Draft Economic
Impact Analysis , for example, states that
large landfill operators would tend to charge
small volume disposers higher prices.
• Administrative costs for small volume generators,
in particular the annual cost of testing, may
differ from estimates reported here. Comprehen-
sive testing Costs were assumed to average $500
as stated in the Draft Economic Impact Analysis .
This cost could be lower for small volume gen-
erators if their waste streams are less complex
than are those of large volume generators.
However, ADL recently estimated that comprehen-
sive testing may cost as much as $750 to $2,000.
As might be anticipated at the lower volume levels, the
analysis is relatively insensitive to changes in the variable
costs of hauling and disposal, but extremely sensitive to fixed
administrative costs. For example, a $100 increase in the cost
of landfill disposal (from $70 to $170 per metric ton) has only
a 5 percent incremental effect on costs for an average generator
of less than 100 kg/mo, but a $100 decrease in the cost of com-
prehensive testing (from $500 to $400) decreases total generator
costs by 12 percent.
At the higher volume levels where variable costs are
dominant, changes in disposal costs affect total costs much
more significantly than changes in testing costs. For example,
for a generator of 1,500 kg/mo, a doubling of disposal costs
translates into a 41 percent increase in total costs while
halving of testing costs results in only a 23 percent decrease
in per generator costs. Therefore, to the extent that disposal
costs are higher than estimated, they will affect the larger
generators relatively more than the smaller generators.
-------
11-44
Representativeness of
Available Financial Data
Firms that would be candidates for closure are generally
the firms within an industry that have lower annual sales.
These data are weakest for the smallest firms within a given
industry. Analyzing available data, the economic consultant
determined that profitability figures were fairly consistent
within an industry. Where possible in the analysis, profit
rates were mapped to the appropriate annual sales figures. For
the smallest plants in a given SIC, however, it was not possible
to determine actual profit rates, and the rates for the smallest
establishments available were used even though these establish-
ments are larger than many of the plants in the SICs analyzed.
The study approach assumed, therefore, that the profit-
ability rate (expressed as a percent of sales) of very small
establishments was similar to that of establishments that are
only slightly smaller than average. This assumption may under-
state the number of closure candidates in an industry because
closure candidates were assumed to be firms whose post—RCRA
profits would be less than zero.
The sensitivities in the analysis will be explored fur-
ther in Part IV. That part will focus on possible approaches
to regulatory relief for small volume generators, especially in
areas of program implementation for generators of waste quan-
tities less than 100 kg/mo.
-------
Part III
IMPACTS OF REGULATORY OPTIONS ON STATE
AND AGENCY STAFFS AND BUDGETS
The federal RCRA program was passed by Congress because
of a growing awareness of the need for state and local agencies
to draw on federal financial and technical assistance in the
management of solid waste disposal. This section addresses
those needs. It is presented in foui parts. Chapter 1 dis-
cusses the status of state programs prior to the passage of
RCRA and the activities of states during the initial period of
RCRA program development. Chapter 2 presents a summary of
state and Agency program development, operation, and oversight
tasks required by RCRA for the regulation of large volume gen-
erators, transporters, and treatment, storage, and disposal
facilities. Chapter 3 discusses tasks and unit costs associ-
ated with small volume generator regulations. Chapter 4
presents an evaluation of one specific regulatory option for
small volume generation, that of exemption of generators by
quantity of wastes produced. The option is then examined
!ithin the framework of state and Agency program resource
requirements for other parts of the RCRA program.
-------
111—2
Chapter 1
STATUS OF STATES’ HAZARDOUS
WASTE PROGRAMS
OVERVIEW
Prior to the passage of RCRA, only a handful of states had
addressed the problem of hazardous waste control through a well—
defined regulatory strategy. The more common state approach
was to handle hazardous waste disposal problems on a case—by—
case basis under the broad authority of existing solid waste,
public health, water resource, or environmental law.
This approach was limited for several reasons. First,
since explicit regulations or standards defining minimally
acceptable disposal methods did not exist, both the public and
the state regulatory agencies lacked common guidance as to
appropriate disposal procedures. Second, since state agencies
were often not given a clear directive to regulate hazardous
wastes per Se, relatively few resources could be targeted to
such problems, except in situations presenting imminent hazards
to health.
In recent years, states have been increasingly devoting
resources to the development of programs that willbe similar
in coverage and structure to the federal standard. EPA has
been providing both funding and technical assistance in this
effort to upgrade hazardous waste management systems nationwide.
A brief overview of the current status of state hazardous
waste management programs is provided in the following para-
graphs. The discussions cover three areas:
• Current state legislative authority,
• Current state regulations and standards, and
• Current state program resources.
As will be seen, the states have already adopted a variety
of regulatory approaches and mechanisms for controlling hazar-
dous wastes. However, this heterogeneity in management strat-
egies is rapidly undergoing change, with the states moving
toward a more standardized and comprehensive level of control
exemplified in the federal regulations. And, although some
states have already implemented management programs comparable
in coverage to the federal program, the major problem for all
state programs is the availability of adequate resources.
-------
111—3
STATE LEGISLATIVE AUTHORITY
OVER HAZARDOUS WASTES
The legal authority through which hazardous wastes are
controlled varies from state to state. Although some states
regulate hazardous wastes through the authority directly
granted in specific hazardous waste legislation, other states
do so under the broad authority of solid waste law or by using
implicit authority granted under existing public health,
environmental protection, or natural resources law.
The categories of hazardous wastes controlled vary from
state to state. These variations can result from different def-
initions of hazardous waste, or from specific statutory limita-
tions. An example of the latter can be found in Michigan, where
only off—site disposal practices are regulated.
The administrative responsibilities for control of hazar-
dous wastes may be vested in one or more state agencies. Some
states, Minnesota for example, have delegated management author-
ity to local governments.
Since RCRA’s passage, 31 states and territories have adop-
ted new hazardous waste legislation or have modified existing
laws to encompass regulation of hazardous waste.’ Eleven
states are relying on pre—RCRA hazardous waste authority to
control hazardous wastes. 2 Eight states still have hazardous
waste legislation pending approval by state legislatures. 3
Only eight jurisdictions do not possess some form of hazardous
waste authority, though several of these are in the process of
drafting enabling legislation. 4
1 New Hampshire, Rhode Island, Vermont, New York, Puerto Rico,
Virgin Islands, Maryland, District of Columbia, Alabama, Georgia,
Kentucky, Mississippi, North Carolina, South Carolina, Tennessee,
Illinois, Minnesota, Ohio, Wisconsin, Arkansas, Louisiana, New
Mexico, Oklahoma, Texas, Iowa, Kansas, Missouri, Utah, California,
Hawaii, and Oregon.
2 Arizona, Delaware, Idaho, Massachusetts, Montana, Nebraska,
New Jersey, Pennsylvania, Virginia, Washington, and West
Virginia.
3 Connecticut, Maine, Florida, Illinois, Indiana, Michigan,
Ohio, and Wyoming; Ohio and Illinois have previous hazardous
waste authority.
4 Alaska, Nevada, South Dakota, North Dakota, Colorado, Guam,
American Samoa, and N. Mariana Islands.
-------
111—4
STATE HAZARDOUS WASTE
REGULATIONS AND STANDARDS
As is the case for legislative authority, states vary
widely in their regulatory emphases, provisions, and overall
coverage. States may concentrate their regulatory efforts on
generators, transporters, or treatment, storage, and disposal
facilities (TSDFs). Specific waste management elements incor-
porated into state programs may or may not include: waste clas-
sification schemes, permits, licenses, manifest systems, reports
to the state, record—keeping, notification, groundwater and
leachate monitoring, minimal construction or operating require-
ments, fee systems, and post—closure requirements.
According to an internal draft EPA document prepared in
mid—1979, approximately half of the states and territories are
awaiting the promulgation of the federal hazardous waste regula-
tions before promulgating their own regulations.
STATE HAZARDOUS WASTE
MANAGEMENT PROGRAMS
In January 1979, the General Accounting Office (GAO) re-
leased a study showing that states currently lack the resources
necessary to carry out the hazardous waste management require-
ments of RCRA. 5 For the 26 states studied, the estimates of
state officials indicated that, although these states’ fiscal
year 1978 budgets totaled $5.1 million, yearly expenditures of
$14.4 million would be necessary in order to implement controls
similar to the federal requirements. This represents nearly a
twofold increase over their 1978 spending levels.
Using state budget information from the GAO report, the
EPA 1978 Assessments, and other EPA background papers, this study
estimated that 46 states and territories spent up to $7.3 million
in fiscal year 1978 on hazardous waste control measures. These
funds were applied to a variety of program tasks including:
development of comprehensive hazardous waste legislation and
regulations, identification and inspection of generators, trans-
porters, and TSDFs; technical assistance to industry; design of
data collection and management systems; staff hiring and train-
ing; licensing of transporters and TSDFs; and initiation of
enforcement proceedings against non—complying establishments.
Hazardous Waste Management Programs Will Not Be Effective:
Greater Efforts Are Needed , General Accounting Office,
January 1979.
-------
111—5
As the states provided general rather than specific budget in-
formation, it was not possible to determine the total resources
devoted to each task.
CURRENT REGULATORY COVERAGE
OF HAZARDOUS WASTE GENERATORS
The most comprehensive information on states’ current reg-
ulatory coverage of hazardous waste generators may be found in
the Draft Environmental Impact Statement . This information,
reproduced on the following page as Table 111—1, was gathered
by the Agency in 1978 from state and EPA offices.
As may be seen in the table, although legislative authority
exists in one—quarter to one—half of the states for many of the
basic RCRA requirements, only one—tenth to one—fifth of the
states possessed the regulations and standards with which to
implement this authority. The situation has improved since the
time of the survey, but, even though states have passed more
stringent generator legislation and regulations, their regula-
tory programs continue to be in their beginning stages.
Versar, in its 1978 review of state programs for hazard-
ous and solid waste management, reports on 25 states representing
either the top hazardous waste generating states or those states
with well—established hazardous waste management activities.
Versar concluded that RCRA programs are gaining momentum in the
majority of states. However, most states lack a comprehensive
program; the general provisions emphasize enforcement while
generator provisions emphasize reporting and manifest system
requirements. These conclusions are shown in Table 111—2.
States are still gathering information on the identities
and activities of hazardous waste generators. The GAO report
indicated that 35 states had conducted or were in the process
of conducting surveys. The technical contractor for the small
generator study was able to obtain usable survey information
from 20 states in its effort to compile a national database of
plant—specific hazardous waste generation.
At the present time, it is not clear whether small volume
generator exemptions occur in states with operating hazardous
waste management programs. Exemption by quantity of waste was
not encountered in reviewing available state legislation and
regulations, though it is possible that such exemptions may exist
in practice where funding is limited.
-------
111—6
Table I l l-i
STATE LEGISLATIOi ! APPLICABLE TO HAZARDOUS WASTE GENERATORS
P.T i1 .a .LI.s1 1.po tth tn.p.cltQn
s 1..
A1a . . 1 (pruposud)
ALaU 1
Anion.
Li
Cmiito rnLa
(
5?
£
X
1
x
Z
x
*
x
x
x
x
Colo rado
Conosottiwi
Oslasans
ruico .1 CoLosbl.
Florida (propo.sd)
I
I
x
*
5.0 r11
ma lt
Ida ho
I llinois
odL..oa
I
I
I
I
I
x
I
x
I
I
I
lo o n
lanai.
5.o laiky
L owLoIaoa
mains
i
I
i
I
I
I
‘laryiaod
lass achu os l l o
tich i a .
liananola (pruponsd)
Ils aiuippi
I
I
I
*
I
I
I
I
I
I
I
I
I
I
I
li l i a n
i cosa
Isbrn.i.
livid.
l i v
I
I
I
I
I
5
I
I
I
I
I
I
I
I
I
losJsn..p
1 .Na .5ao
Isv lark
larch Carolina (prapsssd)
lank lilac.
I
I
I
1
I
7
I
1
I
1
I
1
I
1
I
I
Ohio
Ikla
Or. .o
isonsyivinli
ihod. l.iand
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
Sooth Cola.
Saud Dakota
.nnuhs,
I. . ..
Ida
I
I
I
I
I
I
I
I
S
I
I
I
m
I
I
I
Zir in.i .
4.11 Vir!.L
di .congi , ,
,fur .ltr 1v Mzardavs w est. only. ____________
Source: Subt tle C, qesource Conservation and Recovery . ct of 1976——Oraft
Environnmencai Impact Statement ,
I
______________________________ January LvIv. PD.
irirornat-on presenteo ii nis ;a e was preoared by MITRE Corp.,
based on personal cols ’lunlc3tlon with representatives from state
offices and t’ie Environmental 5 rotect ion 1 cency.
-------
111—7
The following chapter presents the specific program develop-
ment, operation and oversight tasks, and costs that are required
when a state applies for and receives authorization to carry
out an approved RCRA program.
Table 111—2
SUMMARY OF PROVISIONS IN STATE HAZARDOUS WASTE MANAGEMENT RULES AND REGULATIONS’
(25 states)
Regulatory Tasks
Record— Permit Manifest Inspect
Keeping Reports Monitoring System System and Semple Enforcement
General Provisions 2 3 2 0 0 4 11
Generator Provisions 8 13 1 7 15 5 1
‘Includes draft regulations of two states (Arizona and Minnesota) expected to be
adopted in 1979.
Source: Status of State Prograns for Hazardous and Solid Waste Management, 1978.
Annual State Report . Versar, Inc.. July 18, 1979. p. 18.
-------
111—8
Chapter 2
PROJECTED STATE AND AGENCY EXPENDITURES FOR RCRA
EXCLUSIVE OF SMALL VOLUME GENERATOR COSTS
This chapter presents estimates of the projected costs
of RCRA to the states and EPA regional offices over the five—
year period of 1981—1985, exclusive of the costs for regulating
small volume generators. These baseline costs were developed
assuming that 37 jurisdictions receive full authorization and
that EPA regional offices operate the program in the remaining
19 jurisdictions. The estimates include expenditures for pro-
gram development, operation, and oversight, and were developed
on an aggregate level for:
• Development of state hazardous waste programs,
• Regulation of non—generators, i.e., transporters
and treatment, storage, and disposal facilities,
• Regulation of large volume generators, and
• Implementation of general program administra-
tive activities such as staff hiring and train-
ing, technical assistance to industry, and
coordination with other regulatory agencies.
The Resource Requirement Summary , prepared by EPA in March
of 1979, served as the basis for the majority of the costs pre-
sented here. 1 Large volume generator regulatory costs, however,
were developed using cost assumptions similar to those used in
the small volume generator cost analysis.
The following paragraphs present a general description of
the RCRA program components and the method for computing the
costs of these tasks. Originally developed in constant 1978
dollars, these program costs have been converted into current
dollars and combined to project RCRA expenditures for fiscal
years 1981 through 1985. Limits to this analysis are discussed
at the end of the chapter.
U.S. Environmental Protection Agency, Resource Requirement
Summary on Implementation and Maintenance of Programs Authorized
under the Resource Conservation and Recovery Act (RCRA) Subtitle
C Programs , Draft report, revised March 3, 1979.
-------
111—9
PROGRAM DEVELOPMENT
Based on information from the Resource Requirement Summary ,
the national cost of program development will be approximately
$14.2 million. This total is based on resource needs for the
following activities:
• Developing or modifying hazardous waste
legislative authority,
• Developing and promulgating hazardous waste
regulations and standards,
• Conducting hazardous waste surveys,
• Managing the public participation requirements
of RCRA, and
• Hiring and developing the necessary initial
staff for program implementation.
Based on data from EPA and EPA contractor reports, states
were approximately one—quarter completed with program develop-
ment at the end of 1978. Remaining costs of development, $10.7
million, were annualized over the 1979 to 1982 period to develop
an annual development cost of $2.7 million.
PROGRAM OVERSIGHT
Current estimates from EPA indicate that $18 million will
be available for Agency use in conducting RCRA hazardous waste
program activities in fiscal year 1981. Of this amount, approxi-
mately 15 percent, or $2.7 million, is expected to be used by
EPA regional offices in conducting oversight functions in
authorized states.
In the first years of program operation, regional oversight
will primarily consist of providing policy and technical guidance
to state program offices, although some funds will be used in
conducting inspection of major hazardous waste management faci-
lities. As state programs mature, though, regional oversight
will tend to shift to monitoring activities, such as review of
state reports and programs.
-------
111—10
REGULATION OF NON-GENERATORS
Using cost data from the Resource Requirement Summary and
later EPA sources, this study estimated that the recurring costs
of regulating transporters and treatment, storage, and disposal
facilities will total to $27.9 million annually. The cost com-
ponents for this estimate include:
• Surveillance costs for transporters and treat-
ment, storage, and disposal facilities,
• Monitoring report review costs for treatment
and disposal facilities,
• Enforcement costs for transporters and treat-
ment, storage, and disposal facilities, and
• Permitting costs for existing treatment,
storage, and disposal facilities.
Permitting costs account for three—quarters of the annual
cost of regulating non—generators for the first five years of pro-
gram operation. Surveillance and enforcement costs represent less
than a fifth of total expenditures in regulating non—generators.
Current indications are that the bulk of the one—time costs
of permitting are scheduled to occur over the next six years as
existing facilities apply for permits. The most recent EPA
estimates of the resource requirements for this activity reveal
that it will take 6,030 man—years, at a cost of $125 million, to
process permits for the existing 25,000 facilities. However,
there is considerable uncertainty suri’ounding this estimate for
two reasons: it may be impossible to accomplish this task
within the six—year schedule; and the unit manpower requirements
for permit processing may change as more complex facilities are
constructed.
GENERAL PROGRAM ADMINISTRATION
It is estimated that general program administration ac-
tivities will cost the states and Agency $9.4 million yearly.
This cost was obtained using the unit cost estimates provided
in the Resource Requirement Summary and includes:
-------
111—11
• Technical assistance, training, and
education costs,
• Staff maintenance costs,
• Inter—agency coordination costs,
• Data handling and processing costs, and
• Support services costs.
Support services costs account for half of these expenditures,
while the remainder is distributed relatively evenly among the
first four activities.
REGULATION OF LARGE VOLUME GENERATORS
Annual costs for regulation of large volume generators are
expected to total $2.6 million. The unit cost assumptions used
to develop this total are summarized in Table 111—3. The major
components of large volume generator costs are for inspection
and enforcement, which represent nearly 90 percent of total costs.
Administrative activities account for approximately 12 percent
of total costs of regulating large volume generators.
Table 111—3
ANNUAL STATE AND AGENCY COSTS FOR REGULATING
LARGE VOLUME GENERATORS
(constant 1978 dollars)
Task
Task Unit
Regulatory Task Frequency Cost
• Review exception reports 1/generator/year S 6.00
• Enter annual reports into ADP 1/generator/year 1.95
• Inspect ion 1/generator/year 30.55
• Enforcement 3 percent of
generators/year 27.30
$65.80
Large Volume Generator Population: 40,130
Regulatory Cost per Generator: $65.80
Total Annual Large Volume Generator Regulatory Cost: $2.6 million
-------
111—12
In addition to the tasks associated with the $2.6 million
annually, during the first year of the program large volume
generators will submit notifications to the EPA regional
offices. The total cost to the Agency of processing large
volume generator notifications will be $173,000, based on an
average per document processing cost of $4.30.
TOTAL BASELINE EXPENDITURES
Table 111—4 presents total costs for RCRA over a five—year
time horizon exclusive of the costs of regulating small genera-
tors. Approximately two—thirds of the costs are associated
with regulation of non—generators, where the major cost item is
permitting of existing TSDFs. A fifth of total RCRA program
costs involve general administrative activities. A relatively
small share of total costs is required for regulation of large
volume generators.
Table 111-4
RCRA BASELINE COSTS TO THE STATES AND EPA REGIONS 1
(millions of current dollars)
Fiscal Year
Program Component 1981 1982 1983 1984
Program development S 3.6 S 3.9 S 0 S 0 S 0 I
Program oversight 2.7 2.9 3.1 3.3 3.6
Regulation of non—
generators
——PermItting 2 27.2 29.5 31.8 34.2 36.8
--Monitoring
Activities 3 9.1 9.9 10.7 11.5 12.4 I
General program
administration 12.2 13.2 14.2 15.3 16.5
Regulation of large
volume generators 4 3.7 3.8 4.1 4.4 4.7
Total Baseline Cost $58.5 $63.2 $63.9 $68.7 $74.0
1 Assuming 37 jurisdictions apply for and receive authorization
in 1980 and EPA manages program in the romalning 19 jurisdictionsi
2 Permitting of 25,100 existing TSDFs assumed to be completed in
the first six years of program operation. I
3 Enforcenent, surveiflance, report review, lab services.
4 lncludes notification in first year.
-------
111—13
Of the total federal funds appropriated for RCRA program
needs in fiscal year 1981, $30 million will be distributed
among the authorized states for program development and oper-
ation, and $18 million will be used by the Agency in conducting
program operation and oversight activities. Assuming this
funding pattern will continue over the next five years, Table
111—5 presents the expected state and federal shares of future
RCRA expenditures. The figures are based on the assumptions
that states will use federal grant funds to finance all pro-
gram development activities and that the remaining federal
grant money will be matched with state funds on a 75:25 basis
to finance program operation activities. States perceiving a
need for additional resources may, of course, choose to allo-
cate additional unmatched funds.
Table 111—5
RCRA BASELINE FUNDING TO THE STATES AND EPA REGIONS
FOR SELECTED ACTIVITIES’
(millions of current dollars)
Fiscal Year
Projected Expenditures 1981 1982 1983 1984 1985
EPA regional efforts 2 $18.0 $18.0 $18.0 $18.0 $18.0
Authorized state efforts
• Prograil development 3.6 3.9 0 0 0
• Progran operation
——Federal share 26.4 26.1 30.0 30.0 30.0
——State share 8.8 8.7 10.0 10.0 10.0
• Total Expenditures $55.8 $56.7 $58.0 $58.0 $58.0
Assuming 37 jurisdictIons apply for and receive authorization in
1980 and EPA manages program In renamIng 19 jurisdIctions.
2 lncludes program operation In 19 unauthorized states, TSDF permit-
ting support in all states and program oversight in 37 authorized
states. I
Figure 111—i compares the baseline costs of RCRA for fis-
cal years 1981 and 1982 to the expected expenditure levels for
these years. Figure 111—2 does the same for fiscal years 1983
through 1985. Shortfalls are indicated for all five years,
with shortfalls of $1.7 million in fiscal year 1981 and $6.5 mil-
lion in fiscal year 1982. Shortfalls become even greater in
the following three years, totaling $5.9 million, $10.7 million,
and $16.0 million in fiscal years 1983, 1984, and 1985, respec-
tively.
-------
111—14
Figure Ill—i
COMPARISON OF RCRA BASELINE COSTS TO THE STATES AND AGENCY WITH
EXPECTED RCRA FUNDING LEVELS FOR FISCAL YEARS 1981 AND 19821
(Current Dollars)
1982 1981
DOLLARS DOLLARS
63.2- 58.5
56.8
59.4- 54.8—
56.7 ————
46.2— 42.6—
36.2 33.5 —
6.8 6.3-
3.9 3.8
0 0
LARGE VOLUME
GENERATOR COSTS 2
GENERAL
ADMINISTRATION
COSTS
L NON—GENERATOR
COSTS
PROGRAM OVERSIGHT
COSTS
PROGRAM DEVELOPMENT
COSTS
1 As.umlng 37 juriedlctions apply for and receiv• interim authorization and EPA regional offices manage program in
remaining 19 jurIsdictions.
1981, $0.2 million In notification procsulng coste are Incurred and included here. These coste are not incurred
beyond 1981.
ANNUAL
COST
(Millions of
Curr.nt
Dollars)
1981 EXPENDITURES LEVEL
1982 EXPENDITURES LEVEL
I
MO.
ATOR
TI V IT I ES 3
PERMITTING
J
I
I
3 Enforcsment, surveillance, report reviews, lab services.
-------
111—15
Figure 111—2
COMPARISON OF RCRA BASELINE COSTS TO THE STATES AND AGENCY WITH
EXPECTED RCRA FUNDING LEVELS FOR FISCAL YEARS 1983 THROUGH 19851
(Current Dollars)
ANNUAL
COST
(Millions of
Current
Dollars)
74.0 - 68.7 • 63.9 —
60.3- 64.3- 59.8—
68.0
58.0 ———— —
58.0 ———— —
52.8 49.0 — 45.6 —
40.4 - 37.5 — 34.9 —
3.6- 3.3 3.1
0 0
0
LARGE VOLUME
GENERATOR COSTS
GENERAL
ADMINISTRATION
COSTS
NON—GENERATOR
COSTS
PROGRAM
OVERSIGHT
COSTS
for and r.cive full auLnorizatiun and EPA r.gional off icas man.g. program in
1985 1984 1963
DOLLARS DOLLARS DOLLARS
I
— —
1984 EXPENDITURES LEVEL
E pI S . . .LE L
• • • NOM— EN RAtbR :.
MONITORINGATIITIES •iI
PERMITTING.
Auumlng 37 jurisdictions apply
remainIng 19 jurIsdictions.
surveIllance, report rsvssws, lab services.
-------
111—16
The bar—chart format used in Figures I l l—i and 111—2 does
not imply a hierarchy of importance of program components.
Where a national shortfall is shown, states will cut back on
those activities considered least pressing from their specific
environmental management perspective. Most likely, states will
reduce their overall level of effort in all activities rather
than sacrifice implementation of any specific program component.
LIMITS TO THE ANALYSIS
Several assumptions were employed in the baseline cost
analysis, including:
• 37 states will be fully authorized by 1983,
• Full regulatory cpverage and enforcement will
be implemented at the beginning of fiscal year
1981, and
• The RCRA program will be carried out according
to the full needs of the states and the full
requirements of the program.
These assumptions will overstate costs to the states and
Agency in the program’s early years, since:
• In fiscal years 1981 and 1982, states with
interim authorization are unlikely to have the
legal or regulatory authority to administer
the full requirements of the federal RCRA pro-
gram, and
• There will be an initial regulatory “lag” as
the states and Agency accumulate the necessary
resources and information for full program man-
agement.
-------
111—17
Chapter 3
TASKS AND UNIT COSTS TO STATES AND AGENCY FOR REGULATION
OF SMALL VOLUME GENERATORS
Following the brief period of program development in which
states establish the legal and operational structure for carry-
ing out RCRA, the extended period of program operation begins.
The tasks of hazardous waste management are carried out either
by an authorized state agency or by a regional EPA office in
states that do not apply for or receive authorization. The
regulatory tasks of program operation serve to identify hazard-
ous waste—generating establishments, transporters, and TSDFs
and to monitor their waste management activities.
This study concentrates on the costs of program operation
and oversight that are related to the regulation of small vol-
ume generators. For the options studied, the key regulatory
activities are:
• Review of notification documents,
• Review of exception reports,
• Entry of annual reports into the regulatory
automatic data processing (ADP) system,
• Inspection of generator facilities, and
• Enforcement against non—complying generators.
Each of these program elements is discussed separately
below.
REVIEW OF NOTIFICATION DOCUMENTS
All persons conducting hazardous waste activities are
required to submit notification documents to an authorized
regulatory agency. This requirement is clearly stated
under Section 3010 of RCRA:
“Not later than ninety days after promulgation or
revision of regulations under Section 3001 identify-
ing by its characteristics or listing any substance
as hazardous waste subject to this subtitle, any
person generating or transporting such substance . .
-------
111—18
shall file with the Administrator (or with states
having authorized hazardous waste permit programs
under Section 3006) a notification stating the
location and general description of such activity
and the identified or listed hazardous wastes
handled by such person . . . •“
Certain generators are exempt from the notification re-
quirement, including domestic establishments and, currently,
establishments that dispose of fewer than 100 kg/mo of hazard-
ous waste. Under the current RCRA timetable, notifications
are to be submitted to EPA rather than to the states since it
is unlikely that any state program will be authorized to receive
notifications before notifications are due. Following review
by the staff at the appropriate regional EPA office, the infor-
mation in completed documents will be converted into computer—
compatible formats and entered into the ADP system.
Notification information includes the name, address, and
principal activity of the establishment, description of the
type(s) of hazardous waste activity conducted, and a description
of the types of hazardous wastes handled. The information con-
tained within these documents will constitute the initial regu-
latory database on the identities and activities of hazardous
waste generators. Later, as periodic reports are received from
generators, the database will be expanded into a continuing,
up—to—date summary of the generation, movement, and disposition
of all hazardous waste handled within the country.
Based on unit manpower estimates from the Reports Impact
Analysis , this study estimated that the entire review and data
entry process will take 25 minutes per “average’ t document re-
ceived. 1 This estimate includes an allowance for incomplete or
improperly completed documents. 2 The expected staffing mix for
this program task is 10 percent supervisory personnel, 55 percent
technical personnel, and 35 percent clerical personnel. Using
annual salary levels of $27,000, $16,000, and $9,000 for sup-
ervisory, technical, and clerical staff, respectively, the
weighted average annual salary level for this task is $14,650
‘U.S. Environmental Protection Agency, Reports Impact Analysis,
Resource Conservation and Recovery Act, Subtitle C——Hazardous
Waste Management , Draft report, revised March 19, 1979.
properly completed document requires 20 minutes of “review
and entry” time. An improperly completed document requires
35 minutes. Improperly completed documents are estimated to
represent one—half of all documents originally received.
-------
111—19
per man—year. Assuming 230 man—days per man—year, 8 man—hours
per man—day, and overhead costs of 30 percent of salary levels,
this translates into a regulatory budget requirement of $4.30
per generator included in the system.
REVIEW OF EXCEPTION REPORTS
Under Section 3002(6) of RCRA, generators are required
to submit periodic hazardous waste reports to the EPA Adminis-
trator or to an authorized state agency. One such report is
the exception report, required under Section 250.23O(a)(1),
describing:
• movements of all hazardous waste to permitted
facilities, for which a signed original manifest
has not been received from the permitted facility,
within 45 days of the date of acceptance by the
initial transporters.” 4
Required only for off—site shipments, such reports consist
of a copy of the manifest for which the generator has not had
confirmation of delivery and a cover letter describing efforts
taken by the generator to locate the shipment. These reports,
therefore, serve as warning indicators for detection of possi-
ble cases of improper disposal.
An exception report, when submitted to an authorized state
agency or an EPA regional office in an unauthorized state, is
reviewed by enforcement personnel to determine the probable
status of the incomplete shipment. Two situations are possible:
• The shipment has been received by the intended
disposal facility, but the original of the
manifest is late or has not yet been sent, or
• The shipment has been lost in transport due to
spills, illegal disposal, or other types of mis-
management.
3 mese manpower conversion assumptions and overhead levels
are used in computing unit costs throughout the regulatory
cost analysis.
‘ Revised regulations, EPA Smoothing Committee Draft No. 1,
September 4, 1979.
-------
111-20
The Reports Impact Analysis estimated that the review
process will require an average of 30 minutes per report.
This includes time to read the report, make phone calls
to the transporter and intended disposal facility, and to
decide on the probable disposition of the wastes. Cases of
suspected illegal activity will be referred to enforcement,
and the specifics of the incident will be entered into the
ADP system.
The Reports Impact Analysis also estimates the requisite
staffing mix for this activity to consist of a 15/75/10 mix of
supervisory, technical, and clerical personnel. Using the
salary levels stated above, the weighted average salary level
for this task is $16,950 per man—year. This translates into a
cost of $6.00 per report reviewed. This report cost can be
converted into a per generator cost on the basis of generator
shipping frequencies and the likelihood that the manifest will
be incomplete. The shipping frequencies assumed in this report
were stated in the section on generator administrative tasks
and costs. The annual probabilities are summarized in Table
111—6 below, as are the resource requirements for each gener-
ator volume category.
Table 111—6
EXCEPTION REPORTS-—STATE AND
AGENCY RESOURCE KEQUIREMENTS
(per generator)
(constant 1978 dollars)
Annual
Generator Probabi1ity Annual Annual
Volume of an Staffing Budget
Category Exception Need Need
Report ( man-minutes) ( dollars )
0-2,000 .17 5 51.00
2,000-5,000 .25 7.5 1.50
Based on the assumption that one out of every 24
shipments will lead to an exception report.
ENTRY OF ANNUAL REPORTS INTO ADP SYSTEM
Another of the periodic reports required of all gener-
ators is the annual report. This report, described in Section
250.230(a)(2) of the RCRA regulations, contains a summary of
the hazardous waste types, quantities, and movements from each
generator. As a group, these reports provide the states and
-------
111—21
Agency with yearly information on hazardous waste activity and
disposition. These data are added to the original notification
data to be compiled in a variety of status, planning, and over-
sight reports.
Following consultation with persons experienced in data
entry costs, the study estimated that the task of reviewing
these reports for completeness and entering them into the ADP
system will require, on the average, 15 minutes per report.
Since the report format is designed for an ADP system, pro-
cessing the annual report is expected to be a mechanical pro-
cess, quickly completed. A 10/0/90 staffing mix of supervis-
ory, technical, and clerical personnel is assumed to be re-
quired for this task. The weighted average salary level for
one man—year of effort at this task is therefore $10,800 per
man—year, or $1.95 per generator.
INSPECTION
A minimal inspection frequency has not been specified for
states with authorized programs. Inspections are, however, an
essential part of any regulatory program. They allow a state
to check the validity of the self—reporting done by generators,
and provide an opportunity for informal exchange of views on
hazardous waste management.
This report has assumed a per generator inspection fre-
quency of one inspection every 10 years, an estimate obtained
from the Resource Requirement Summary . It is likely that the
states and Agency will not follow a rigid timetable of one
inspection per facility every 10 years. Rather, generators
will probably be inspected at a frequency proportional to the
volume and relative toxicity of the waste disposed. However,
this variance in inspection frequency cannot be quantified at
the present time.
Again, based on information from the Resource Requirement
Summary , this report estimates that three inspections can be
scheduled and conducted in one man—day. Combining data on
expected inspection frequency and inspection time, an annual-
ized estimate of per generator inspection time would be 0.27
man—hours per generator per year (based on one inspection every
10 years and 2.67 man—hours per inspection). The staffing mix
for this program activity is expected to be a 15/65/20 mix of
supervisory, technical, and clerical personnel. The weighted
annual average salary level is therefore $16,250 per man—year,
or $3.05 per generator per year.
-------
111—22
ENFORCEMENT
Since the Agency has not yet finalized a national RCRA
enforcement strategy, state and Agency officials having experi-
ence in hazardous waste and NPDES enforcement activities were
consulted to provide guidance in this area. State sources
have emphasized that enforcement actions focus on serious in-
cidents of non—compliance, that is, on chronic violators who
have not responded to enforcement techniques such as mailing
letters to notify a generator of an infraction or making infor-
mal visits to non—complying generators to explain the need for
and techniques of compliance.
Most likely estimates of non—compliance that were provided
to this study are summarized here. State sources suggested
that as few as 1 percent and as many as 5 percent of all small
volume generators would require enforcement actions, though the
specific number would vary from state to state and would be
about 3 percent for the average state.
Additionally, states have estimated that an average of 10
days, and a range of five to 15 days, of case preparation and
review are required by hazardous waste enforcement personnel
for each case processed. This does not include time spent by
attorneys in the state attorney general’s office in conducting
prosecution, but does include time spent by hazardous waste
program personnel in collecting evidence, documenting the
facts of the case, comparing the present case facts with the
available disposal history of the generator, and reviewing the
case for legal sufficiency.
This information can be converted into a unit resource
requirement per generator regulated. That is, if 3 percent
of all generators are expected to undergo serious enforcement
action that requires 10 man—days of case preparation and review,
then for the generator population considered the unit resource
requirement for enforcement may be restated as 2.4 man—hours
of effort per typical generator.
The expected enforcement staffing mix is consistent with
that assumed in the Resource Requirement Summary : 15 percent
supervisory, 40 percent technical, 25 percent legal, and 20 per-
cent clerical. Using salary levels of $27,000, $16,000, $16,000,
and $9,000 for these staffing categories, the weighted average
annual salary level for this task is $16,250, and the average
per generator cost is $27.30.
-------
111—23
Table 111—7 shows that enforcement activity results in the
largest recurring cost of program operation; the estimate of
$27 is almost nine times the cost of the next most expensive
program component (inspection) and over four times the combined
costs of report review, annual report data entry, and inspection.
The impact of the enforcement estimate will be discussed more
fully in Chapter 4 of this section.
Table 111-7
COSTS TO THE STATES AND AGENCY FOR REGULATION
OF SMALL VOLUME GENERATORS
(per generator)
(constant 1978 dollars)
Regulatory Task Budget Requirement
One-Time Cost
Review notification $ 4.30
Annual Cost
Review exception report S 1.00 - $3.00
Process annual report 1.95
Inspect 3.05
Enforce* 27.30
Total annual cost $33.30 - 535.30
Assianes 3 percent of generators require enforcement
actions.
PROGRAM OVERSIGHT
In program oversight, state—managed hazardous waste pro-
grams are monitored by the appropriate EPA regional office.
Oversight activities include: review of state reports; inspec-
tion of generators, transporters, and TSDFs; review of major
facility permits; and annual review of state programs. Of
these, the most significant monitoring activity relating to
small volume generators will be inspection of generator facil-
ities.
Under Section 123.37 of the proposed Consolidated Permit
regulations, the federal inspection frequency for non—major
hazardous waste management facilities, generators, and trans-
porters may be specified in the Memorandum of Agreement between
EPA regional administrators and state program directors. Sec-
tion 250.74 of the RCRA regulations establishes an upper limit
to inspection of 10 percent of regulated establishments.
-------
111—24
The regional oversight costs developed in this report are
based on a 10 percent inspection frequency and a unit manpower
requirement of 2.67 man—hours per inspection. The expected
task staffing mix and staff salary levels are those estimated
for inspection activities conducted under program operation.
On a per generator basis, the annual cost to EPA will be $3.05.
-------
111—25
Chapter 4
EVALUATION OF REGULATORY OPTION:
EXEMPTION BY QUANTITY OF WASTE——
STATE AND AGENCY IMPACTS
This chapter examines the total costs and impacts result-
ing from exempting generators from RCRA regulations based on
the quantity of wastes produced. The exemption volume cutoffs
studied range from 0 to 5,000 kg/mo, where a zero cutoff brings
all generators into the RCRA Subtitle C program, and a 5,000
kg/mo cutoff excludes all generators in this study from the
RCRA Subtitle C program.
The first section of this chapter examines regulatory
costs, reporting on the magnitude of resource needs at the
state and Agency level as increasing numbers of small volume
generators are managed under full RCRA requirements. The
second section addresses impacts, discussing resource con-
straints, cost—effectiveness issues, and implementation prob-
lems that are likely to occur in a quantity—based regulatory
option.
NATIONAL COSTS
Three major aspects of national regulatory costs will be
addressed in this analysis: total costs, incremental costs,
and the distribution of costs between the states and EPA.
Total costs are further separated into one—time and recurring
cost components. The cost analysis also examines the sensi-
tivity of the projected national costs to major costing assump-
tions used.
The national costs of regulation are presented for a
scenario in which 37 jurisdictions apply for and receive full
authorization and EPA regional offices operate the program in
the 19 unauthorized states. This represents a “most likely”
scenario for cost estimation. However, due to the current un-
certainty surrounding future authorization, alternative author-
ization scenarios will be examined later in the analysis.
-------
111—26
Total Costs
One—Time Costs
In the first year of program operation, the Agency will
incur the one—time cost of reviewing notification documents
from small volume generators included in the full RCRA manage-
ment system. Table 111—8 depicts this cost as a function of
the volume cutoff selected.
Table 111—8
REGULATORY OPTION: EXEMPTION BY
QUANTITY OF WASTE
NATIONAL ONE-TIME COSTS TO THE
AGENCY OF REGULATION:
SMALL VOLUME GENERATOR NOTIFICATION
(constant 1978 dollars)
Total Costs
Volume Cutoff Number of (millions
_____ Generators of dollars )
5,000 0 S 0
1,000 26,765 0.12
100 158,498 0.68
0 721,625 3.10
Since the per generator cost to the Agency of reviewing
notification documents is assumed to be the same for each
generator regardless of the volume of waste produced, the total
cost for this task depends only on the number of generators in
the system. For example, the cost at a 0 kg/mo cutoff is 4.5
times greater than the cost at a 100 kg/mo cutoff because there
are 4.5 times more generators in the system at a zero cutoff.
Recurring Costs
Recurring costs of regulation occur at the program opera-
tion and oversight levels as the states and EPA monitor genera-
tors’ compliance activities. For program operation, the recur-
ring regulatory activities studied include:
• Review of generator exception reports,
• Entry of annual generator reports into the ADP
system,
• Periodic inspection of generator facilities,
and
-------
111—27
• Enforcement action against non—complying
generators.
For program oversight, inspection of generator facilities in
authorized states was determined to be the most significant
regulatory activity for management of small volume generators.
Figure 111—3 illustrates the annual costs of program oper-
ation and oversight for various volume cutoffs. Overall, the
costs of program operation are more than an order of magnitude
higher than the costs of program oversight. More specifically,
federal oversight costs represent 5 to 6 percent of total small
volume generator regulatory costs. This figure is consistent
with the proportion that oversight costs represent of total
RCRA baseline program costs, i.e., 5 percent.
Recurring costs of regulation are almost entirely deter-
mined by the number of small volume generators included under
full RCRA requirements. The only variable cost component asso-
ciated with regulation of small volume generators is review
of exception reports, where the volume of wastes determines the
number of shipments to TSDFs, which then serves as an indicator
for the number of exception reports. The task represents about
5 percent of total regulatory costs.
Costs which are determined by the number of generators in
the system, therefore, represent roughly 95 percent of the costs
associated with regulation. Of these costs, the dominant com-
ponent is the cost of enforcement action. Figure 111-4 shows
that enforcement actions account for nearly 80 percent of the
total recurring costs of program operation, while administrative
and inspection activities contribute only 11 and 9 percent,
respectively, of total program operation costs.
As the projected national costs are most sensitive to the
cost assumptions for enforcement actions, these will be exam-
ined more closely. It was assumed that each generator respon-
sible for an enforcement action would require the same effort
by the regulator regardless of the volume of wastes produced.
There is actually some room for variation in this assumption:
it is expected that the extent of non—compliance will be greater
for the smallest generators because the relative cost of com-
pliance with full RCRA requirements is much higher. However,
offsetting this is the expectation that the average time spent
in preparing material for an enforcement action would be rela-
tively less for smaller generators due to their more homogeneous
waste streams and more limited options. These two expectations
would offset each other to lead to a relatively constant en-
forcement resource need per generator regulated.
-------
111—28
Figure 111—3
REGULATORY OPTION: EXEMPTION BY QUANTITY OF WASTE
NATIONAL RECURRING COSTS TO THE STATES AND AGENCY OF REGULATING
SMALL VOLUME GENERATORS 1
ANNUAL
COST
(Millions
of
Dollars)
20
15
10
(Constant 1978 Dollars)
VOLUME CUTOFF (kg/mo)
98.94%
I _____
5000
97.70%
CUMULATIVE PERCENTAGE OF ALL HAZARDOUS WASTES CONTROLLED
tAa.uming 37 juriadictlons apply for and receive authorization and EPA regional offices manage program In remaining
19 juri.dictlons.
PROGRAM OVERSIGHT COSTS
PROGRAM OPERATION COSTS
5
0
100%
99.74%
500 1000
99.26%
-------
(Constant 1978 Dollars)
ADMINISTRATIVE COSTS
INSPECTION COSTS
ENFORCEMENT COSTS
111-29
Figure 111—4
REGULATORY OPTION: EXEMPTION BY QUANTITY OF WASTE
NATIONAL RECURRING COSTS TO THE STATES AND AGENCY FOR PROGRAM
OPERATION BY FUNCTIONAL COMPONENTS
SMALL VOLUME GENERATORS 1
CUMULATIVE PERCENTAGE OF ALL HAZARDOUS WASTES CONTROLLED
1 Auuming 37 juriadictlons apply for and receive authoi1z tion and EPA regIonal offices manage program in remaining
19 jurisdictions.
100%
0.9
wj
0
VOLUME CUTOFF (kg/
1000
mo)
5000
99.26%
98.48%
97.70%
ANNUAL
COST
(Millions of
Dollars)
20
15
5
0
10
500
99.74%
-------
111—30
The likelihood of a generator requiring an enforcement
action was assumed to be 3 percent, based on discussions
with several state regulators. The range in their estimates
was 1 percent to 5 percent. Table 111—9 presents program oper-
ation costs for regulation of small volume generators based
on enforcement assumptions of 1 percent, 3 percent, and 5 per-
cent. At a 0 kg/mo cutoff, a 2 percent increase in the enforce-
ment assumption can raise total costs to $37 million per year,
while a 2 percent decrease can lower total costs to $11 million
per year, compared to the estimate of $24 million per year,
assuming a 3 percent non—compliance rate.
The states may be expected to exercise some discretion in
enforcement in the initial years of program operation, owing to
data scarcity, personnel shortages, and competing program pri-
orities. Additional resources can be targeted to enforcement
efforts when one—time tasks such as program development, noti-
fication, and permitting are completed.
Table 111—9
REGULATORY OPTION: EXEMPTION BY QUANTITY OF WASTE
ANNUAL PROGRAM OPERATION COSTS TO STATES AND AGENCY
FOR ALTERNATIVE ENFORCEMENT ASSUMPTIONS
SMALL VOLUME GENERATORS
(millions of constant 1978 dollars)
Percentage Generator Non—Compliance
Volume Cutoff
( kg/mo) 1 Percent 3 Percent 5 Percent
0 $11.0 $24.0 $37.0
100 2.5 5.3 8.1
1,000 0.4 0.9 1.4
Total regulatory costs are not as sensitive to other cost-
ing assumptions in this analysis. For example, if the inspec-
tion frequency for small volume generators is increased to once
every five years rather than once every 10 years, total program
operation costs increase only 10 percent. If exception reports
are expected once every 12 shipments rather than once every 24
shipments, total program operation costs increase only 5 percent.
Marginal Costs
Another means of evaluating regulatory costs is to exam-
ine the marginal costs of including increasing numbers of
small volume generators in the Subtitle C program of RCRA.
Figure 111—5 presents the incremental per ton costs of program
operation and oversight for volume cutoffs ranging from 5,000
to 0 kg/mo.
-------
Figure 111—5
MARGINAL
COST
(Dollars Per
Metric Ton)
10
0
0
L
19.6
REGULATORY OPTION: EXEMPTION BY QUANTITY OF WASTE
STATE AND AGENCY MARGINAL RECURRING COSTS
OF REGULATING SMALL VOLUME GENERATORS’
(Constant 1978 Dollars)
99.74% 99.57% 99.45% 99.35% 99.26% 99.19% 99.12% 99.06%
PERCENTAGE OF ALL HAZARDOUS WASTES CONTROLLED
99.0% 98.94% 98.48%
PROGRAM OPERATION ENDS AT 133
20
‘-4
‘-I
‘ -4
100%
VOLUME CUTOFF (kg/mo)
2.0
0.9
1000
2000
‘AssumEng 37 luriedictions y for and receive authorization and EPA mgianai oft Icas sianage program In remaining 19 jurledictions.
-------
111—32
As was true for the marginal per ton industry costs, the
cost per additional ton of hazardous waste regulated increases
significantly at lower volume cutoffs. As the waste quantity
range decreases from 5,000 kg/mo to 100 kg/mo, the incremental
costs for controlling the wastes increase from $1 per ton to
$20 per ton. Furthermore, the marginal cost per ton of con-
trolling the 0.23 percent of hazardous wastes contributed by
the smallest generators, those generators in the 0 to 100 kg/mo
category, amounts to $142 per metric ton.
Authorization Scenarios
Both the states and EPA share the regulatory responsibil-
ity for implementation of RCRA. However, the total costs and
the distribution of costs depend on the number of states apply-
ing for and receiving authorization for Subtitle C program
management. If all jurisdictions receive full authorization,
then national costs will be composed of full program operation
and oversight costs. If no state receives authorization, then
EPA will be responsible for the national costs of program oper-
ation, and no oversight costs will be incurred. Between these
two extremes are situations in which some states apply for and
receive authorization, EPA assumes national program operation
responsibilities for the remaining states, and EPA oversees
only the authorized state programs.
Table 111—10 presents three authorization scenarios for
the split of regulatory responsibilities between the states and
EPA. The first scenario, representing a “most likely” authori-
zation scenario, is based on current projections made within
EPA’s Office of Solid Waste and shows 37 states receiving au-
thorization and 9 jurisdictions having their Subtitle C pro-
grams run by EPA. The second and third scenarios lead to maxi-
mum regulatory costs to EPA and to the states, respectively.
Table 111—11 shows the possible range in national regula-
tory costs for these scenarios assuming volume cutoffs of
1,000, 100, and 0 kg/mo. National costs of regulation appear
to be substantially the same across all scenarios for the same
volume cutoff; the degree of variance is at most 9 percent be-
tween scenarios II and III. Comparing scenarios II and III
with scenario I, it can be seen that totaiprogram costs could
be, at most, 6 percent lower or 3 percent higher than the costs
estimated for the “most likely” authorization scenario. This
reflects the relatively minor contribution of oversight activi-
ties to total regulatory costs for small volume generators.
However, what is important is the distribution of costs.
EPA regional offices may be responsible for 8 to 100 percent of
-------
111—33
Table 1 1 1-10
REGULATORY OPTION: EXEMPTION BY QUANTITY OF WASTE
BASELINE SCENARIO AND
ALTERNATIVE AUTHORIZATION SCENARIOS
Scenario Description
37 jurisdictions receive full authorization
(baseline) and EPA manages hazardous waste prograiis in
the renaming 19 jurisdictions
II EPA manages hazardous waste progrens in
56 jurisdictions
III 56 jurisdIctions receive full authorization
Table 1 1 1—11
REGULATORY OPTION: EXEMPTION BY QUANTITY OF WASTE
STATE AND AGENCY RECURRING COSTS FOR REGULATING
SMALL VOLUME GENERATORS UNDER THREE AUTHORIZATION SCENARIOS
(millions of constant 1978 dollars per year)
Authorization Scenario
Volume Cutoff
! 1! ILL
0 States: 15.89 States: 0 States: 24.05
EPA: 9.62 EPA: 24.05 EPA: 2.21
Total: 25.51 Total: 24.05 Total: 26.26
100 States: 3.50 States: 0 States: 5.30
EPA: 2.12 EPA: 5.30 EPA: 0.49
Total: 5.62 Total: 5.30 Total: 5.79
1,000 States: 0.61 States: 0 States: 0.92
EPA: 0.36 EPA: 0.92 EPA: 0.08
0.97 0.92 . 1.00
-------
111—34
total costs for regulating small volume generators, with the
current most likely estimate being 38 percent of total costs.
STATE AND AGENCY IMPACT ANALYSIS
This section presents an evaluation of the economic and
management implications of including small volume generators in
the RCRA hazardous waste control program. The analysis first
compares resource needs for regulating small volume generators
at different exemption quantity cutoffs with resource needs
for the basic RCRA program. Following this is an examination
of the extent of resource constraints for the complete RCRA
program, particularly as a function of the generator waste
quantity cutoff selected. The analysis concludes with a gen-
eral consideration of the relative cost-effectiveness of regu-
lating small volume generators.
Resource Needs and Constraints
At a 0 kg/mo cutoff, program operation and oversight costs
for regulating small volume generators total to $25.5 million
annually. This cost, equal to 57 percent of the cost of all
other program expenditures combined, is approached only by the
$20.9 million annual cost of permitting existing TSDFs.
At a 100 kg/mo cutoff, state and Agency regulatory costs
for small generators drop to $5.6 million per year. Although
lower than permitting costs, this cost is over twice as large
as the annual cost of regulating large volume generators which
account for 97.7 percent of all hazardous waste.
At a 1,000 kg/mo cutoff, small volume generator regula-
tory costs are nearly $1 million per year. This represents
2 percent of all other program operation costs and one—third
the cost of regulating large volume generators.
Whatever the cutoff selected, if small volume generators
are brought into the full RCRA hazardous waste management sys-
tem, even greater budget shortfalls than those estimated ear—
her can be expected. Table 111—12 shows the amount of the
budget shortfalls expected, while Figures 111—6 through 111—8
illustrate the change in total program budget needs for volume
cutoffs ranging from 0 to 5,000 kg/mo for fiscal years 1981
through 1985.
-------
111—35
Table 111-12
REGULATORY OPTION: EXEMPTION BY QUANTITY OF WASTE
ESTIMATED RCRA PROGRM4 SHORTFALLS FOR FISCAL YEARS
1981 THROUGH 1985 AT SELECTED GENERATOR EXEMPTION LEVELS
(millions of current dollars per year)
Generator Fiscal Year
Exenpt Ion
Level 1981 1982 1983 1984 1985
(kg/mo) — — — —
5,000 1.7 6.5 5.9 10.7 16.0
1.000 3.1 7.9 7.4 12.3 17.7
500 4.3 9.0 8.6 13.6 19.2
100 9.9 14.4 14.4 19.9 25.9
0 38.9 42.4 44.6 52.4 60.9
As can be expected, program budget needs increase steadily
as lower cutoffs are contemplated, with the most dramatic shift
in resource needs occurring at cutoffs below 100 kg/mo.
In order to control wastes from small generators, states
will have to decide on one or more of the following courses of
action:
• Obtain additional funding, either from in-
creases in state appropriations or from the
federal government,
• Reduce regulatory efforts in other program
activities by as much as 80 percent, or
• Refuse to apply for authorization, shifting
responsibility for administration of the
program to EPA regional offices.
This problem of resource constraints is even more acute
when examined from the perspective of current state budget
and manpower levels. Based on available information on recent
levels of hazardous waste control expenditures and staffing
levels in 46 states, the study determined that their combined
hazardous waste expenditures for fiscal year 1978 totaled
$7.3 million. Projecting these expenditure levels to national
totals, it appears that a typical state in this group would
have to increase its current level of expenditures by a factor
of six just to meet the baseline costs of RCRA.
A similar analysis was performed on the manpower levels
for 30 states. These states currently have 191 persons on
their hazardous waste staffs. Total national RCRA baseline
-------
r ure 111—0
1981
Dollars
96.7
ANNUAL TOTAL
COST
(Millions of
Dollars)
FISCAL YEAR 1981: RCRA PROGRAM COSTS TO THE STATES AND AGENCY’
(Current Dollars )
58.5
56.8
54.8
0 100 500 1000
3000
LARGE VOLUME
GENERATOR COSTS 2
NON-GENERATOR
AND GENERAL
ADMINISTRATION
COSTS
PROGRAM OVERSIGHT
PROGRAM DEVELOPMENT
VOLUME CUTOFF (kg/mo)
I_I I
100 99.74 99.26 98.94
98.48
PERCENTAGE OF ALL HAZARDOUS WASTES CONTROLLED
1 suming 37 jurlsdj iona apply for and receive Interim authorization and EPA regional offices manage program In remaining 19 jurIsdictions.
SMALL VOLUME GENERATORS 2
6.3
3.6
I
I
I,
2000
I . : j I
4000 5000
-j
97.10
ales catf ocei 0151
-------
Figure Ill—i
FISCAL YEAR 1982: RCRA PROGRAM COSTS TO THE STATES AND AGENCY’
1982 (Current Dollars)
Dollars
99.1
ANNUAL TOTAL
a: si
(Millions of
Dollars)
VyUME GENERATORS
_______________ _______ _______ _______ _______ ________________ GENE 1 L TS
NON—GENERATOR
AND GENERAL
ADMINISTRATION
COSTS
r
lw t
— _1_ ______ f PROGRAM OVERSIGHT
‘ . , . . . PROGRAM DEVELOPMENT
VOLUME CUTOFF (kg/mo)
Li I I
100 99.14 99.26 99.94 98.48
PERCENTAGE OF ALL HAZARDOUS WASTES CONTROLLED
Assuming 31 Iurhdictlons apply for and receive Interim authorization and EPA regional offices manage program in remaining 19 jurisdictIons.
-------
1985 1984 1983
! ? Uan Dollars Dollars
118.9 -110.4
ANNUAL
TOTAL
COST
(Millions of
Dollars)
74.0
69.3
— 68.7
- 64.3
68.0
102.(
58.0 - ___ _
3.6 - 33 - 3.1
Figure 111—8
FISCAL YEARS 1983—1985: TOTAL RCRA PROGRAM COSTS TO THE STATES AND AGENCY’
(Current Dollars)
4!’4+P ‘l+I’+M+ + M+M441 4 + 14+ 1983 EX ITURESLEV! - -- -- .
_____ _____ _____ ____ _____ I g4 XI ENdIYUA L )EL
.—.-.-.-. - - .. .-.-.-. .- . I
iéos EXPENDITURES LEVEL
- .&&J.-• t t g i t ‘!J/Lfl .rt LL* jr t -s L .5 .i ¶ ¶i I?
V
I I__ — I S_ ‘ ‘ I I ø
0 100 600 1000 2000
Li ____
100 99.74 9926 98.94 98.48
3000 4000 5000
-J
97.0
VOLUME CUTOFF (kg/mo)
- I
PERCENTAGE OF ALL HAZARDOUS WASTES CONTROLLED
SMALL VOLUME GENERATORS
- 63.f
- 59.8
58.0
I LARGE VOLUME
I GENERATOR COSTS
NON-GENERATOR
AND GENERAL
ADMINISTRATION
COSTS
PROGRAM OVERSIGHT
‘AssumIng 31 jurisdictions apply for and receive full authorization and EPA regional offices manage program In remaining 19 jurisdictions.
-------
111—39
resource needs will be 1,830 persons for fiscal years 1981-1982
and 1,100 persons for fiscal years 1983—1985. Projecting cur-
rent manpower levels to national totals, it is estimated that
a typical state in this group would need to increase its pro-
gram personnel significantly, by a factor of seven, to cover
baseline RCRA resource needs.
Cost—Effectiveness of Regulating
Small Volume Generators
Two major points emerge from the analysis of the costs of
regulating small volume generators:
• There are not enough near—term federal and
state resources to implement programs even with-
out regulation of small volume generators; and
• To regulate the last 0.23 percent of wastes dis-
posed of by hazardous waste generators, the pro-
gram would include an additional 570,000 genera-
tors who each contribute less than 100 kg/mo,
and total regulatory program costs would have to
increase by 40 percent.
These observations suggest a need to examine more closely
the relative cost—effectiveness of regulating small volume gen-
erators. One method of accomplishing this is to compare the
average per ton cost of regulation for the major components of
program operation.
Table 111—13 compares the per ton costs of regulation for
small volume generators to the per ton costs for large volume
generators and non—generators.’
Clearly, the average per ton costs of regulating all small
volume generators far exceed the average costs of regulating
transporters, treatment, storage, and disposal facilities, and
large volume generators——the relative difference approaches one
or two orders of magnitude. Recalling Figure 111—5, which shows
the incremental costs of regulating small volume generators, the
1 These average costs were obtained by dividing total annual
regulatory costs for the program component by the total tonnage
of hazardous wastes handled.
-------
111—40
Table 111—13
REGULATORY OPTION: EXEMPTION BY QUANTITY OF WASTE
PER TON COSTS TO THE STATES AND AGENCY OF REGULATION
AT 0 kg/mo CUTOFF: FISCAL YEARS 1981 TO 1985
(constant 1978 dollars)
Program Operation Cost
Metric Tons of
Hazardous Wastes Total Annual Average per Ton
Program Component Handled Annually Regulatory Cost Regulatory Cost ’
Small Volume
Generators 1,388,136 S24 million $17.29/MT
Large Volume
Generators 59,292,384 $2.5 million SO.045/MT
Non-Generators:
Transporters and
TSDFs 59,292,384 $27.9 million $0.47/FIT
1 Exclusive of one-time cost of processing notifications from large and small
volume generators.
$0.83 per ton cost of regulating even the largest (2,000—5,000
kg/mo) small volume generators still surpasses the average cost
of regulating any other program component.
The average per ton Costs of regulation need not be simi-
lar for each part of the program. However, given the con-
straints on state and Agency resource levels for the next five
years, the analysis does argue that there should be a compelling
reason for regulating small volume generators during the initial
years of the program when their per ton costs of regulation far
exceed the per ton costs of regulating other hazardous waste
handling establishments.
-------
Part IV
REGULATORY OPTION—EXEMPTION BY QUANTITY OF WASTE:
RESPONSE TO CONSTRAINTS IN PROGRAM IMPLEMENTATION
The analysis in the preceding parts of this report indi-
cates that for the regulatory option of exemption by quantity of
wastes, total costs of approximately $720 million per year for
generators with hazardous waste volumes of less than 5,000 kg/mo
are anticipated, and that program operation costs to the states
and Agency for regulating these wastes would be approximately
$24 million per year. This part will examine possible measures
to alleviate the impacts of these costs. Aside from a quantity
cutoff which exempts a portion of the generator population,
relief measures fall into two major categories——phasing which
primarily alleviates impacts on the states and EPA, and modified
technical and administrative requirements which primarily alle-
viate impacts on generators. Types of phasing and possible
modified requirements will be discussed in the following
chapters after a brief recapitulation of the major impacts
identified.
MAJOR IMPACTS
Major impacts resulting from potential regulation of small
volume hazardous waste generators were identified in two areas:
• Near—term constraints on state and EPA resources
caused by the need to incorporate large numbers
of generators into the hazardous waste system.
• High costs to individual generators (in particular
those with low sales and waste volumes) caused by
the fixed costs of compliance with RCRA.
In both cases described above, the effects of small volume
generator regulations in the absence of some form of relief
could prove counterproductive to the objectives of RCRA. For
the regulatory agencies, the requirement to control small volume
generators could divert resources from higher priority problem
areas among large volume generators. For generators, the high
cost of legally disposing of wastes may act as an incentive for
illegal disposal. Consequently, effective relief measures
should both relieve major economic impacts without sacrificing
environmental quality and allow the RCRA system to operate
efficiently in high—priority areas.
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IV-2
POSSIBLE RELIEF MEASURES
Relief measures can be designed to mitigate impacts on
both regulators and generators. State and Agency impacts
result primarily from tasks such as enforcement and inspection,
as well as from the administrative complexity of incorporating
large numbers of generators into the RCRA system. Some of the
impacts can be addressed primarily by phasing the introduction
of these generators over a period of years. Generator impacts
can be lessened by allowing alternative compliance strategies
which avoid the high fixed cost of compliance while ensuring
environmentally sound hazardous waste disposal.
In the discussion that follows, the advantages and dis-
advantages of alternative approaches to regulatory relief will
be described in terms of the degree to which they accomplish the
following objectives:
• Control of the maximum percentage of wastes
in the early years;
• Administrative simplicity for states and EPA;
• Allowance of adequate time for states and EPA
to implement regulations;
• Flexibility for states and EPA to account for
local conditions in implementing the regula—
t ions;
• Equalization of additional costs to states,
Agency, and industry over the phasing—in
period; and
• Avoidance of discriminatory effects within
industries.
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IV—3
Chapter 1
PHASING
The two largest RCRA regulatory costs are the costs of
enforcement and inspection. These are largely level—of—effort
costs that cannot be diminished significantly by modifying
regulatory requirements. Regulatory administrative tasks, such
as reviewing and processing reports, which depend on regulatory
requirements, account for only about 10 percent of total pro-
gram operation costs. Consequently, state and Agency impacts
can be alleviated more effectively by controlling the number of
generators entering the RCRA system than by altering regulatory
requirements for those generators.
A cutoff established by quantity or category of waste or
by industry group is the primary means of controlling the number
of generators in the RCRA system. Once this cutoff has been
established, phasing the introduction of generators into the
hazardous waste system can be an effective means of alleviating
state and Agency impacts. Although phasing does not diminish
ultimate RCRA program operation costs, it does provide several
important benefits. Among these benefits are:
• An ability to focus limited resources in the
initial stages of the program on high—priority
areas;
• Time to develop adequate Subtitle C treatment,
storage, and disposal facilities;
• Time to develop administrative systems for
monitoring and enforcing compliance; and
• Time to hire and train staff adequate to handle
large numbers of small volume generators.
In addition .to these benefits to the states and Agency, an
important benefit from the Agency’s perspective would be that
by phasing the implementation of RCRA, the program could be
made more manageable for the states. This would encourage
more states to apply for authorization.
Generator benefits from phasing would be less significant
than state and Agency benefits. The major benefits for genera-
tors would be to postpone the expense of compliance for some
-------
IV- 4
generators and to lessen a tendency toward monopolistic pric-
ing if demand for transportation and disposal facilities
outpaces supply.
Hazardous waste regulations can be phased in using several
approaches including phasing by waste category, by industry
group, or by quantity of waste. It is appropriate to evaluate
only the approach of phasing by quantity of waste at this time
for the following reasons:
• The Agency does not have sufficient data at
this time to define wastes from small volume
generators by category or characteristic of
waste. It is likely that these data will be
available as a result of recordkeeping and
reporting requirements of the RCRA program.
In the interim, it would be inappropriate to
set priorities for the regulation of small
volume generators, who are mainly in non—
manufacturing industries, based on the char-
acteristics of wastes of large volume gen-
erators who are predominately in manufacturing
industries.
• An industry—based phasing option was elimi-
nated by EPA for environmental and economic
reasons:
——Environmentally, this option would po-
tentially exclude large quantities of
wastes, produced by individual genera-
tors, from the RCRA system during the
early years of the program.
——Economically, this approach would create
equity distinctions between industries.
The federal program would be responsible
for ordering specific industries to in-
cur environmental compliance costs in
advance of other industries. To the
extent that competitive market conditions
are hampered, as with product pricing,
the RCRA program will have created in-
equities.
PHASING BY QUANTITY OF WASTE
Table IV—l presents the number of .establishments, waste
quantities, and industry and regulatory agency costs of a
five—year phasing option on the basis of waste quantities.
-------
IV- 5
Additional annual costs under this option are approximately
equalized if cutoffs are established at 1,000 kg/mo initially,
100 kg/mo the second year, and zero at the end of the fifth
year.
A quantity—based approach to phasing has several environ-
mental advantages. By definition, it introduces generators
producing the largest quantities of wastes in the early years;
and, hence, it covers more than 50 percent of the wastes pro-
duced by small volume generators (less than 5,000 kg/mo) by the
end of the first year and 90 percent by the end of the second
year. In addition, since it introduces the less numerous large
volume generators initially (only 4 percent of the small volume
generators are covered at the end of the first year and 22 per-
cent at the end of the second year), it allows regulatory agen-
cies to focus their resources on high—priority large volume
generators.
Further perspective on the quantity—based phasing option
is provided in Table IV—2. In the aggregate, small volume gen-
erators contribute a very small percent of the total quantity
of hazardous wastes yet contribute the overwhelmingly large
number of generators. Phasing the small volume generators into
the full RCRA program over a five—year period assures regulatory
control over 98.9 percent of the wastes in the first year and
99.7 percent in the second year, while the generators in the
full system are 8.8 percent and 26 percent in the respective
years.
Table IV—1
QUANTITY—BASED PHASING OPTION
FOR ALL GENERATORS OF LESS THAN 5,000 kg/mo
(constant 1978 dollars)
Annual Program
Operation Cost
(S million)
State
Cutoff and
Year ( kg/mo) Industry Agency Total
Cumulative
Percent of
Wastes
1 1,000
2 100
3
4
5 0*
$100 5 1 $101
N.jnber of Small
Volume Generators
(000)
Introduced Regulated
54
250 5 255 90
405 12 417
560 18 578
67
Cumulative
Percent of
Establi shments
Regulated
67
720 24 744 100
131
9
198
563
Reduce Cutoff to zero over a three-year period according to States own priorities.
2
100
761
-------
IV—6
Table [ V-2
QUANTITY-BASED PHASING OPTION
PERCENT OF WASTE QUANTITIES AND GENERATORS
CONTROLLED IN RCRA PROGRAM
Cumulative Cumulative
Cutoff Percent of Percent of
Year ( kg/mo) Total Wastes All Establishments
1,000 98.9 8.8
2 100 99.7 26.0
I
5 0 100.0 100.0
*In year 1 generators producing over 5,000 kg/mo account
for 97.7 percent of the waste quantities and 5.3 per-
cent of the generators.
The quantity—based phasing option also has administrative
advantages. Its definition of establishments that are intro-
duced into the system in the early years is simple, minimizing
the likelihood of controversy regarding the definition of affect-
ed generators. In addition, in the later years of the phasing
period the option described above allows states and EPA regional
offices flexibility to account for local conditions in the
introduction of generators of less than 100 kg/mo.
Additional annual costs for both regulatory agencies and
industry are also spread out relatively evenly under the
quantity—based phasing option. Industry costs are $100 million
initially and increase by approximately $150 million each year
thereafter. State and Agency costs are only $1 million initially
(allowing regulators to focus their resources on other areas
such as permitting of disposal facilities) and increase by
approximately $6 million annually in subsequent years.
Disadvantages of a quantity—based phasing option, however,
may also be significant. Environmentally, it does not differen-
tiate among categories of wastes. Consequently, although it
covers a very large percentage of the volume of wastes, it may
leave unregulated until the later years certain important
categories of wastes. Administratively, it may be difficult to
enforce with respect to generators close to a quantity cutoff.
The burden of determining whether a particular generator is or
is not included under the cutoff for a given month will fall on
the regulatory agencies, and may result in significant additional
legal and administrative expenses. Economically, a quantity—
based phasing approach may discriminate among generators within
-------
IV—7
the same industry. In particular among generators in SICs whose
waste generation rates are spread over a broad range of quantity
categories, a quantity—based phasing option may place low volume
generators at a competitive advantage relative to high volume
generators. A corollary to the advantage gained by low volume
generators may be an incentive for generators to concentrate
their wastes in order to fall below the quantity cutoff.
CONCLUS IONS
Through phasing, the states and Agency can maximize the
effectiveness of their limited resources. As regulatory agen-
cies gain in experience and trained personnel, their waste
management programs can expand to include lower priority estab-
lishments.
However, the advisability of proceeding to a 0 kg/mo
exemption level must be examined further. As was shown in the
small volume generator cost analyses, the marginal per ton
costs of control increase exponentially as smaller waste
categories are included. The most dramatic cost increase
occurs in regulating the smallest generators, whose per ton
cost of compliance is $3,365, and who are managed at a cost
of $146 per ton to the states and Agency.
By adopting a phasing approach ending at 100 kg/mo rather
than 0 kg/mo, 99.7 percent of all hazardous wastes can be man-
aged in an environmentally sound manner at a total cost of $255
million per year. Tables IV—3 and IV—4 depict an alternative
quantity-based phasing approach proceeding from a 5,000 kg/mo
cutoff in the first year, to a 1,000 kg/mo cutoff in the third
year, ending at a 100 kg/mo cutoff in the fifth year. This
phasing strategy establishes immediate regulatory control over
100 percent of large volume generator wastes in the first year
and includes 90 percent of small volume generator wastes by
the fifth year. Total yearly cost savings over a zero cut-
off approach are nearly $500 million: $470 million savings
to industry, $19 million savings to the states and Agency.
-------
IV- 8
Table P1-3
QUANTITY-BASED PHASING OPTION
FOR ALL GENERATORS OF LESS THAN 5,000 kg/mo
AND MORE THAN 100 kg/mo
(constant 1918 dollars)
Annual Program
Cost Operation
(S million) Number of Small
Voliai,e Generators Cumulative
State Cumulative (000) Percent of
Cutoff and Percent of — Establishmentr
Year (kg ) Industry Agency Total Wastes Introduced Regulated Regulated
1 5,000 $0 $0 $0 0 0 0 0
2 2,000 54 1 55 34 11.3 11.3 1.6
3 1,000 91 1 92 54 15.5 26.8 3.7
4 500 127 2 129 68 23.0 49.8 6.8
5 100 241 5 246 90 108.7 158.5 21.9
Table P1—4
QUANTITY-BASED PHASING OPTION
PERCENT OF WASTE QUANTITIES AND GENERATORS
CONTROLLED IN RCRA PROGRAM
WITH A 100 kg/mo CUTOFF IN TIlE FIFTH YEAR
Cumulative Cumulative
Cutoff Percent of Percent of
Year ( kg/mo) Total Wastes All Establlsflments
1 5,000 91.7 5.3
2 2.000 98.4 6.8
3 1,000 98.9 8.8
4 500 99.3 11.8
5 100 99.7 26.1
This general strategy does not preclude lowering the
exemption cutoff to 0 kg/mo for the most hazardous wastes,
either during the phasing—in period or afterward. It does,
however, present regulators and industry with an acceptable
timetable for resource planning purposes, as well as encourage
most effective use of currently available resources. Moreover,
it allows the Agency the time to investigate more fully the
environmental and economic impacts of waste classification
approaches.
-------
IV-9
Chapter 2
TECHNICAL AND ADMINISTRATIVE MODIFICATIONS
TESTING REQUIREMENTS
The analysis in this report has indicated that major
industry impacts result from the high fixed cost of compliance
with RCRA. Virtually all impacts identified occur among low
waste volume SICs. For generators in these SICs the cost of
testing——consisting of $500 for an annual comprehensive test
and $60 for a limited test of each waste shipment——constitutes
80 percent of the total cost of compliance. Consequently,
impacts detected can be traced directly to the high fixed costs
of testing. Since testing costs do not increase significantly
with the volume of wastes disposed, their contribution to total
costs of compliance among higher volume generators is less
important.
Testing requirements, therefore, are the logical focus for
an effort to alleviate impacts among low waste volume generators.
Moreover, waste streams among low volume generators may be more
predictable and consistent across establishments than among
higher volume manufacturing generators. Consequently, it may
be possible to modify testing requirements without significant
sacrifices in environmental protection.’
Two types of decisions are necessary in modifying testing
requirements:
• What establishments will be exempted from
full testing requirements?
• What testing requirements will exist for
these establishments?
Testing requirements can be modified in several ways. Some
possibilities are:
‘At the present time, there are insufficient data to correlate
the degree of environmental hazard with the nature and composi-
tion of generator wastes; however, based on available data, it
appears that most establishments in the same SIC will have simi—
lar waste streams (e.g., perchloroethelyne from dry cleaners
and solvents from painters).
-------
IV— 10
• Require the $500 comprehensive test once when a
generator initially enters the hazardous waste
system and require only the $60 minimal test sub-
sequently each time a shipment is made.
• Permit generic comprehensive testing of wastes
for specific industries (possibly through in-
dustry trade associations) and require only
sample testing of each shipment.
• Maintain the industry generic testing require-
ment but eliminate the sample testing require-
ments at the landfill.
Establishments exempted from full testing can be defined
by volume cutoff, by industry, or by a combination of volume
and industry. A 100 kg/mo cutoff would exempt most of the
establishments seriously affected by the high fixed costs of
compliance with RCRA.
A more far—reaching 1,000 kg/mo cutoff would exempt 90
percent of the establishments while still subjecting 99 percent
of the wastes to full testing requirements. Exemption by in-
dustry categories would have the same environmental, administra-
tive, and economic advantages as were described for phasing
regulatory coverage by industry categories. For example, ex-
emption of non—manufacturing industries would exempt 83 per-
cent of establishments but less than 4 percent of the wastes.
Table IV—5 depicts total national testing and non—testing
components of compliance for potentially exempted categories of
generators. In the following paragraphs, possible approaches
to modified testing requirements will be examined as they would
apply to three categories of potentially exempted establishments.
Making the comprehensive test a one—time requirement and
retaining other requirements unchanged would sacrifice the
protection afforded by an annual comprehensive test. As shown
in Table IV—5, savings in recurring costs of $248 to $307 mil-
lion could be realized by eliminating the requirement for an
annual comprehensive test. Recurring costs of compliance,
however, would still be significant and a $248 to $307 million
one—time cost of compliance would remain depending on the defi-
nition of exempted establishments. In addition, maintaining
the sample test would not alleviate administrative and technical
burdens at disposal facilities.
-------
‘v—li
Table IV-5
COMPONENTS OF RECURRING COMPLIANCE COSTS UNDER ALTERNATIVE DEFINITIONS
OF ESTABLISHP NTS EXEMPTED FROM TESTING
(millions of constant 1978 dollars per year)
Generator Categories Considered for
Testing Exemption
< 100 kg/mo < 1,000 kg/mo Non-Manufacturing
Total Industry Costs Without Exemption 720 720 720
Non-Exempted Requirements Costs* 336 247 292
Comprehensive Testing Costs for
Potentially Exempted Establishments $248 $307 $277
Sample Testing Costs for Potentially
Exempted EstablIshments 136 166 151
Sample Plus Comprehensive Testing Costs 384 473 428
*Includes non-testing costs for potentially exempted establishments and full RCRA costs
for generators without testing exemption.
By allowing a one—time, single comprehensive testing of
wastes for an entire industry, it would be possible to eliminate
the one—time cost of comprehensive testing for individual estab-
lishments described above. The sacrifice in terms of environ-
mental protection would be minimal provided that wastes are
consistent across generators in a given industry. This situ-
ation may exist among non—manufacturing SICs such as dry
cleaners, beauty parlors, or contractors whose wastes do not
vary from establishment to establishment. Manufacturing estab-
lishments would be much more difficult to exempt from comprehen-
sive testing requirements because waste characteristics among
these establishments can vary significantly depending on the
industrial process used.
Allowing generic industry comprehensive testing and elimi-
nating sample testing would virtually abolish testing costs for
exempted establishments. In addition, administrative and tech-
nical burdens on disposal facilities would be alleviated. Na-
tional savings under this approach would amount to $384 to $473
million depending on the definition of exempted establishments,
resulting in total recurring program costs to generators of
$336 to $247 million. This approach, however, would depend
strongly on proper labeling practices and responsible compliance
by transporters. Improper labeling could interfere with or en-
danger the efficient operation of the disposal facility.
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IV— 12
ASSUMPTION OF DUTIES
Another approach to administrative relief for generators
and regulators would be to allow “assumption of duties” con-
tracts between generators and transporters. Under this system,
licensed transporters and permitted TSDFs would contract with
generators to perform all or part of the generator duties spe-
cified in Section 3002 of RCRA. Under contract, transporters
or TSDFs would become independently liable for administrative,
manifest, and reporting requirements. In addition, transporters
would be encouraged to segregate wastes according to generating
industries. Comprehensive and sample testing could then be
required, not on each generator’s wastes, but on the combined
wastes for a group of generators with similar wastes. For
example, individual tests on percbloroethelyne arriving from
30 separate dry cleaners would not be required. Instead, a
sample test on the entire waste shipment would suffice.
For industry, the benefits from this option would result
from economies in four tasks:
• Comprehensive and sample testing,
• Manifest preparation,
• Annual report preparation, and
• Exception report preparation.
For the regulators, the expected economies would take the form
of reduced resource needs for review of exception and annual
reports.
In estimating the potential for cost reduction in an assump-
tion of duties option, unit costs were developed for tasks that
could be contracted out at lower costs to transporters. The
costs would be similar to those of large volume generators and
transporters would allocate costs among their generator customers
in proportion to their shipping frequency.
Major assumptions used in the economic analysis are:
• Seventy percent of all generators would adopt
the assumption of duties option.
• Each truckload would be composed of wastes of
similar characteristics and would be described
in a single manifest.
-------
IV—13
• One annual report would be submitted to describe
all wastes transported by a particular truck.
Table IV—6 illustrates the potential for cost savings using
assumption of duties at selected quantity cutoffs. Savings to
states and Agency would be modest, at most 3 percent of total
program operation costs, since assumption of duties does not
affect enforcement and inspection costs. Savings to industry
would be substantial. At a cutoff of 0 kg/mo, total industry
costs would be reduced by 44 percent, or $316 million per year.
Most of the savings are due to changes in the comprehensive and
sample test procedure. Cost reductions would be greatest for
the smallest generators since more generator shipments would be
carried on a single truck. At quantity cutoffs at or above
1,700 kg/mo, each generator would require a full truckload for
each shipment and therefore no economies of scale would be
realized.
Table IV-6
ASSUMPTION OF DUTIES: ANNUAL ADMINISTRATIVE AND TESTING COST SAVINGS 1
(millions of constant 1978 dollars)
Industry
State
Volume Cutoff Sample Comprehensive Total and
( kg/mo) Administrative Testing Testing Industry Agency
0 21.6 78 216 316 0.71
(3)S (11)% (30)% (44)% (3)%
100 4.3 12 33 49 0.16
(1.8)% (5)% (13.6)% (20)% (3)S
1,000 0.7 0 0 0.7 0.044
(1)% (O)% (O)% (1)% (2)%
1 Assumes 70 percent of small volume generators will enter into assumption
of duties agreenents with transporters.
The major benefit of an assumption of duties approach
would accrue to the generators in the form of substantial cost
savings. This would provide a strong incentive to generators
to participate in the RCRA program.
Transporters and TSDF operators would benefit from this
regulatory approach since their participation would foster the
growth of their businesses. However, transporters would assume
increased responsibility for assuring proper labeling and con-
tainerization of wastes, and for assuring that wastes delivered
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IV—14
to a TSDF were compatible. This shift in liability from gen-
erators to transporters could lead to a crowding out of certain
generators whose wastes were inconvenient for transporters to
handle; for example:
• If a generator had wastes whose characteristics
were different from others in the geographic
area,
• If particular waste characteristics were the
focus of community resistance to disposal at a
local site,
• If administrative procedures were more complex
for certain shipments, or
• If generators with similar wastes were widely
separated from one another.
Some measure of economic relief through assumption of
duties contracts would accrue to state and Agency regulators,
though there could be environmental sacrifices. The elimina-
tion of exception and annual reports from generators could
result in less effective program enforcement. Contamination
problems might be difficult to trace to a particular generator
or might go undetected for a longer period of time due to the
less frequent reporting requirements. Furthermore, unless clear
and comprehensive federal guidelines are developed, these con-.
tracts may present legal enforcement difficulties, for example,
in assigning liability for non—compliance with Section 3002
requirements, or in determining regulatory jurisdiction where
contracts are drawn between generators and transporters of
different states.
In summary, the major appeal of an assumption of duties
option lies in its potential for significantly reducing compli-
ance costs for the most vulnerable generators. Regulatory costs
for the states and Agency are not significantly diminished, and
may even increase if monitoring and enforcement activities are
stepped up to compensate for the elimination of exception and
annual reports from contracting generators.
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Part V
APPEND ICES
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Appendix A
DATA SOURCES
I. BIBLIOGRAPHY
General Studies and Sources
1. “Resource Conservation and Recovery Act of 1976, Public
Law 94—580,” 94th Congress, 5. 2150, October 21, 1976.
2. “U.S. EPA Proposed Hazardous Waste Regulations and Guide-
lines”:
• Sections 3001, 3002, 3004; 43 FR 58946,
December 18, 1978 -
• Section 3006; 43 FR 4366, February 1, 1978
• Section 3010; 43 FR 29908, July 11, 1978
• Consolidated Permit Regulations, 44 FR 34244,
June 14, 1979.
3. TRW, Inc., Technical Environmental Impacts of Various
Approaches for Regulating Small Volume Hazardous Waste
Generators , Volume I, December 10, 1979.
4. U.S. Environmental Protection Agency, Office of Solid
Waste, Reports Impact Analysis, Resource Conservation
and Recovery Act, Subtitle C——Hazardous Waste Management ,
Draft report, revised March 19, 1979.
5. U.S. Environmental Protection Agency, Subtitle C, Resource
Conservation and Recovery Act of 1976——Draft Environmental
Impact Statement , Volumes I and II, January 1979.
Industry Studies
1. Arthur D. Little, Inc. (ADL), Characterization of Hazard-
ous Waste Transportation and Economic Impact Assessment of
Hazardous Waste Transportation Regulations , EPA Contract
Number 68—01—4381, August 1978.
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A— 2
2. Arthur D. Little, Inc., Draft Economic Impact Analysis:
Subtitle C, Resource Conservation and Recovery Act of 1976 ,
January 1979.
3. Arthur D. Little, Inc., A Plan for Development of Hazard—
ous Waste Management Facilities in the New England Region ,
Draft report, August 1979.
4. Batte].le Columbus Laboratories, Cost of Compliance with
Hazardous Waste Management Regulations , Draft report,
May 1978.
5. Bank of America, “Service Stations,” Small Business
Reporter , 1971.
6. Bank of America, “Coin—operated Laundries,” Small Business
Reporter , 1979.
7. Chemical & Engineering News , “Photo Firm Achieves Zero
Waste Discharge,” July 17, 1978.
8. Dun & Bradstreet Corporation, Expenses in Retail Business ,
1977.
9. Eastman Kodak Corporation, Financial Statistics——1973 ,
1974.
10. Energy Resources Co. Inc. (ERCO), Economic Impact Analysis
of Hazardous Waste Management Regulations on Selected
Generating Industries , Final report, Contract number 68—
01—4819, June 1979.
11. Financial Research Associates, Financial Studies of the
Small Business , 1978.
12. Foster D. Snell, Inc., “Potential for Capacity Creation
in the Hazardous Waste Management Service Industry,”
Contract number 68—01—3266, August 1976.
13. MITRE Corporation, Subtitle C, Resource Conservation and
Recovery Act of 1976——Draft Environmental Impact State-
ment , Volumes I and II, prepared for U.S.—EPA, January 1979.
14. Modern Photography, Wolfman Report on the Photo Industry
in the U.S. , New York, l9lB.
15. Photo Marketing Association, 1977—8 Cost of Doing Business
Survey .
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A— 3
16. Robert Morris Associates, ‘ 78 Annual Statement Studies ,
Philadelphia, Pennsylvania, 1978.
17. U.S. Bureau of the Census, 1972 Census of Construction
Industries , issued March 1975.
18. U.S. Bureau of the Census, 1972 Census of Manufacturing .
19. U.S. Bureau of the Census, 1972 Census of Retail Trade .
20. U.S. Bureau of the Census, 1972 Census of Selected Service
Industries .
21. U.S. Bureau of the Census, 1974 Census of Agriculture .
22. U.S. Bureau of the Census, 1976 Annual Survey of Manufac-
turers .
23. U.S. Bureau of the Census, 1977 Census of Manufacturers,
Preliminary Reports .
24. U.S. Department of Commerce, “Photographic Studies,”
Urban Business Profile , 1972.
25. U.S. Department of Commerce, Bureau of the Census, County
Business Patterns, 1976 , 1978.
26. U.S. Department of Commerce, Bureau of the Census,
Statistical Abstract of the U.S. , 1978.
27. U.S. Department of Commerce, Industry and Trade Administra-
tion, 1979 U.S. Industrial Outlook , January 1979.
28. U.S. Environmental Protection Agency, Office of Planning
and Evaluation, Economic Analysis Division, Economic
Analysis of Proposed Pretreatment Standards for Existing
Sources of the Electroplating Point Source Category ,
December 1977, EPA—230/1—78—001.
State Studies
1. The Bureau of National Affairs, Inc., State Solid Waste——
Land Use , Washington, D.C., 1979.
2. Data Resources, Inc., Review of the U.S. Economy , August,
1979.
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A—4
3. National Association of Attorneys General/Committee on the
Office of Attorney General, Legislative Responses to the
Disposal of Hazardous Wastes , Environmental Control Special
Report, January 1979.
4. National Wildlife Federation, “State Background Papers
(EPA Regions I, V, I v, X),” 1979.
5. U.S. Environmental Protection Agency, “Smoothing Committee
Draft No. 1——RCRA Hazardous Waste Regulations (Sections
3001—3004),” September 4, 1979.
6. U.S. Environmental Protection Agency, EPA State Hazardous
Waste Task Force, Draft Model Attorney General’s Statement ,
September 25, 1979.
7. U.S. Environmental Protection Agency, Office of Solid
Waste, FY ‘78 Assessments, 1979.
8. U.s. Environmental Protection Agency, Office of Solid
Waste, Resource Requirement Summary on Implementation
and Maintenance of Programs Authorized under the Resource
Conservation and Recovery Act (RCRA) Subtitle C Programs ,
Revised draft, March 3, 1979.
9. U.S. General Accounting Office, Hazardous Waste Manage-
ment Programs Will Not Be Effective: Greater Efforts
Are Needed , Report to Congress, January 23, 1979.
10. Versar, Inc., Status of State Programs for Hazardous and
Solid Waste Management——1978 , Draft Annual State Report——
1978, revised April 6, 1979, and Annual State Report-—1978,
Final, Contract number 68—01—4767, July 18, 1979.
II. ADDITIONAL INDUSTRY DATA SOURCES
Financial data on industry segments containing small vol-
ume generators were obtained from Robert Morris Associates’ (RMA)
‘ 78 Annual Statement Studies . In its role as the national as-
sociation for bank loan and credit officers, RMA has developed
composite financial profiles of small businesses, grouped by in-
dustry type and firm size. Profiles consist of financial state-
ment data and commonly used financial ratios. The 1978 profiles
are based on 52,000 statements from 305 lines of business, in-
cluding manufacturing, wholesaling, retailing, services, and
Contracting.
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A— 5
The Statement Studies provides the most comprehensive
database available on small businesses. However, in using its
profiles, several qualifications must be kept in mind:
• Profiles were developed from establishments
qualifying for bank loans. Hence, the weakest
companies were excluded from the samples.
• Accounting methods vary between industries and
may sometimes vary within the same industry.
However, RMA did attempt normalization of
financial data.
• The financial statements were not obtained
through random sampling techniques. Rather,
member banks submitted available statements
from companies whose total assets were less
than $50 million and whose fiscal years ended
between June 30, 1977, and March 31, 1978.
RMA statistics were compared with those reported in Finan-
cial Research Associates’ Financial Studies of the Small
Business and Dun and Bradstreet’s Expenses in Retail Business .
Although different categories and statistics were utilized,
there tended to be general agreement among these sources.
Since RMA provided the most extensive coverage of small
businesses’ financial characteristics, its data were utilized
heavily. For SICs not covered by the Statement Studies or
other sources, probable SIC profitability was inferred from a
similar SIC or group of SICs.
The widely accepted U.S. Census data were used in deter-
mining size distribution of firms within an industry by re-
ceipts. Since the most recent census data (1977) have not yet
been published, data from the 1972 census were used, following
adjustment, for six years of inflation. Inflation rates for
1972 through 1978 were taken from the 1978 Statistical Abstract
of the United States published by the U.S. Bureau of the Census.
Table A—i displays the rates used for the industry segments
studied.
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A—6
Table A-i
INFLATION RATES USED
IN INDUSTRY IMPACT ANALYSIS
TO PROJECT 1978 SALES
(Base Year: 1972)
Textile Products and Apparel 1.38
Fabricated Structural Metal
Products 1.79
Miscellaneous Metal Products 1.64
Photo Equ1pi nt and SupplIes 1.34
Services Except Household,
Medical, and Transport
All Conrodlties 1.53
All Services 1.55
III. ADDITIONAL STATE AND AGENCY DATA SOURCES
Much recent information on the status of state legislation,
regulations, and programs was acquired from the State Hazardous
Waste Programs Office in the Office of Solid Waste in EPA. Of-
ficials in this office provided the economic contractor with
in—house working papers documenting current state authority
and resources. These materials:
• Identified state statutory authority, rules,
and standards,
• Summarized state progress in development of
hazardous waste legislation and regulations,
• Identified legislative and regulatory impedi-
ments to state efforts in developing programs
equivalent to the federal program, and
• Provided a tentative determination of states’
probable acceptance of Subtitle C responsibil-
ities.
In addition, EPA files on state programs were opened to
study researchers. Data in these files included:
• State assessment and planning reports,
• State grant application summaries,
• Regional EPA office reports on state capabil-
ities, and
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A- 7
• An assortment of published material on hazard-
ous waste program resource needs.
Of particular use were the EPA Fiscal Year ‘78 Assessments
documenting states’ and territories’ hazardous waste control
expenditures and activities from October 1977 through September
1978.
The extent of state progress in developing comprehensive
hazardous waste authority and programs was further clarified
through talks with state and Agency officials and with re-
searchers working in this area. Agency staff in the Region I
office proved particularly helpful in lending their expertise
and experience throughout the project. These persons provided
up—to—date information on state efforts as well as suggestions
for research direction.
Information on Agency policy and resources was also pro-
vided to the economic contractor. -Zero base budgeting docu-
ments, guidance and strategy papers, and meetings with EPA
officials served as especially useful data sources.
Estimates of enforcement needs in state programs were
obtained from knowledgeable state and Agency officials. Study
researchers spoke with state officials in:
• California: Department of Health Services,
Hazardous Materials Management Section
• Texas: Department of Water Resources
• Maryland: Water Resources and Environmental
Health Administration
• Illinois: Environmental Protection Agency,
Division of Land/Noise Pollution and Division
of Enforcement
• New York: Nassau County Health Department,
Bureau of Wastewater Management
In addition, Agency enforcement staff at EPA headquarters and
in the Region I office provided the economic contractor with
general program enforcement estimates.
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Appendix B
GENERATOR COMPLIANCE STRATEGIES AND COSTS
Recognizing the reduced scale of operations and the prac-
ticable disposal techniques available to small volume generators
of hazardous wastes, the study developed compliance strategies
and unit costs appropriate to these establishments. Data pro-
vided in previous and current RCRA industry studies were util-
ized to develop compliance projections and estimates that were:
• Consistent with costing assumptions used in
related RCRA studies, and,
• When appropriate, scaled for small volume
generators to be representative of the costs
and conditions these establishments would
face in complying with full RCRA requirements.
The following discussion presents the information bases and
assumptions used in developing industry administrative and tech-
nical costs. Since a chapter of this report (Part II, Chapter 3)
discusses the general scaling and compliance strategy assumptions
used, the discussion in this Appendix serves primarily as docu-
mentation of the costs and data considered and the specific
assumptions used in the cost analysis.
ADMINISTRATIVE TASKS AND COSTS
The administrative activities required of generators by RCRA
are comprised of one—time and recurring tasks. One—time activ-
ities include determination of generator status, generator no-
tification, and design of compliance procedures; recurring
activities include regular testing of wastes, participation in
the manifest system, and reporting to the regulatory agencies.
The costs of these activities are addressed for large volume
generators in two major RCRA documents:
• Draft Economic Impact Analysis (EIA), by ADL,
and
• Reports Impact Analysis (RIA), by EPA.
The EIA served as the basis for testing, notification, and
set—up costs while the RIA was used for reporting and manifest
costs. -
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B—2
One—time Administrative Costs
Table B—i summarizes: (1) unit costs for one—time activ-
ities developed in the EIA and RIA for generators disposing of
greater than 100 kg/mo of hazardous wastes and (2) the small
volume generator estimates developed for this analysis. Since
generators’ wastes will undergo the same tests (when a generator
does choose to test his wastes), testing costs will not vary as
a function of waste quantity. However, due to their lower
disposal frequency and less complex waste streams, smaller
generators will experience relatively lower costs for other
one—time activities.
For example, small generators will incur fewer expenses
in designing compliance procedures. Due to their low disposal
frequency, small generators will have less need of formalized
design changes in their general operating procedures. These
generators will, however, expend some effort in reviewing RCRA
literature and in providing for the waste documentation required
under RCRA. Due to their less complex waste streams, costs for
notification and for comparison of wastes to the EPA hazardous
waste list will also be reduced, though not as significantly as
design costs. Notification costs will remain relatively constant
across generator size categories, while the costs of EPA list com-
parison are assumed to decrease somewhat more for the lowest volume
categories where waste streams remain relatively homogeneous.
Recurring Administrative Costs
Table B—2 presents estimates of recurring costs utilized
in the RIA, EIA, and present studies. For the most part, the
present study has relied on the RIA for manifest and reporting
costs, while the EIA provided cost data for the remaining
recurring compliance activities.
In developing lower annual compliance costs for small
volume generators, the small generator economic analysis has
generally reduced the frequency of an activity’s occurrence
rather than downscale the costs on a per item basis. For
example, the preparation of exception reports and manifests has
been assumed to cost the same on a per document basis, across
all volume categories. Furthermore, the per test costs of
comprehensive and sample testing will not vary for different
volume categories. However, what will vary is the frequency of
disposal, which will consequently affect the annual costs for
these activities.
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B-3
Table 9-1
ONE-TIME ADMINISTRATIVE COSTS TO INDUSTRY
EIA Small Volume
Generator
ACTIVITY OPTION 61 OPTION C ’ RIA Economic Analysis
• Testing of Wastes 5455 _ 11000 a 5105 _ 250 a
(to contest desig— avg. $750 avg. $175 N.A.
nation)
• Waste Documentation
-—Documentation of
criteria testing $170 $170 N.A.
-—Documentation of
inventory 570 570 N.A.
• Comparison of Wastes
to EPA Lists $71 $71 N.A. S20—71
• Notification $31.50 $31.50 $31.50 520—31
• Design of Procedures
-—Compliance systems
design 5776 • 50 b $ 492 •5b SOC
550-300
-—Initial supervisory
design cost $150 $150
N.A. — Not available.
1 Option B costs are for regulations similar to the proposed regulations. Option C
costs are tar a less stringent level of regulation in which: (a) the characteristic
for toxic wastes Is eliminated, (b) only generators above 1,000 kg/mo are regulated,
(C) manifest requirements are simplified, and (d) the exception reporting requirement
is eliminated.
aADL assumes that 10 percent of the generators will test their wastes.
bc 05 ts are based on costs for large volume manufacturers with complex waste streams.
C 05 of system design assumed to apply only to generators examined in the ADI study.
dme economic contractor assumes that generators of less than 1,000 kg/mo will not test
their wastes while about 10 percent of the generators of more than 1,000 kg/mo will in-
cur testing costs of $455 to $1,000.
In projecting small volume generator disposal frequency,
it is expected that generators will try to minimize compliance
costs by consolidating disposal shipments as much as possible.
This reduces both paper work and disposal costs. The minimum
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B-4
Table 8-2
RECURRING ADMINISTRATIVE COSTS TO INDUSTRY
Small Volume
EIA Generator
Economic
ACTIVITY OPTION 6 OPTION C ’ RIA Analysis
• Annual Re-evaluation
of EPA List $35 $35 N/A 50—20
• Annual Cost of Exception
Report Preparation S1O3 N/A 5 52b S9 i3c
• Annual Report Prepar-
ation $36 $36 536 512-24
• Supervision $45 0 d $300d
$6 56
• Manifest Preparation
(per manifest) $2.67 N/A
• Manifest Storage
and Filing S68 N/A N.A. negligible
• Waste Testing at TSDF
(per test)
--Comprehensive ?;8 oo 5200:8 N.A. $500
S 1 540-80 540-80 N A 560
-— amP e avg. $60 avg. $60
N.A. not available, N/A not applicable.
‘OptIon 3 denotes a level of regulation similar to that currently proposed. Option
C denotes a less stringent level of regulation.
aE IA assumes a cost of $25.75 per report and four reports submitted annually.
bRIA asstmies a cost of 551.50 per report, and that the generators not looked at by
the ADL report will need to report an exception only once every two years, i.e., one
out of 24 manifests will require an exception report.
CAssumes one out of 24 manifests will require an exception report.
dAssumed for large volume manufacturing generators with complex waste streams.
elhree year retention time. -
Off-s1te disposal costs.
disposal frequency for any generator will be quarterly, since
wastes accumulated for over 90 days necessitate generator re-
classification as a storer and compliance to section 3004 and
3005 regulation. At the same time, generators will attempt to
ship full truckloads of wastes to the disposal site in order
to minimize fixed costs per shipment. Assuming 230 kg/55 gal—
ion drum and 30 drums per disposal truck, generators producing
less than 2,000 kg/mo of hazardous wastes can be expected to
dispose of their wastes on a quarterly basis. For generators
producing over 2,000 kg/mo of hazardous wastes, this study
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B-5
assumes that these establishments will ship their wastes as
soon as one full truckload is accumulated. Therefore, these
generators will have an average disposal frequency of six times
per year.
These disposal frequencies determine the annual costs for
manifests, exception reports, and sample testing. Manifest
costs, estimated to be $6 per document, will range from $24 to
$36 per generator. Exception reports are anticipated for one
out of every 24 shipments at a cost of $52 per report, with
annual per generator costs of $9 to $13. Sample testing costs,
incurred with each shipment to a disposal facility, would range
from $240 to $360 per generator, except that one sample test
each year will likely be replaced by the annual comprehensive
test. Hence, annual sampling costs are actually $180 to $300
per operator.
Costs for annual report preparation are reduced due to the
decreased number of shipment entries for smaller generators. For
small generators, this study estimates preparation costs of $12
to $24.
Like the one—time initial cost for comparison of wastes to
the EPA list, re—evaluation costs for small generators are also
expected to be less. Furthermore, it is expected that the
smallest generators will spend a negligible amount of time on
this task.
Finally, all generators will take on the $500 average cost
of comprehensive waste testing, since the TSDFs to which generator
wastes are shipped will pass these costs back to their customers.
TECHNICAL TASKS AND COSTS
Technical compliance costs are comprised of expenditures
for hauling and disposal, where hauling is done by a licensed
transporter and disposal is at a permitted Subtitle C facility.
These costs are higher for larger generators, who would tend
to dispose of their greater waste quantities on a more frequent
basis.
Hauling Costs
The ADL report, Characterization of Hazardous Waste Trans-
portation , was the most comprehensive report available on trans-
portation costs under RCRA. However, the information presented
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B—6
was, in general, more applicable to determination of waste
hauling costs for large volume generators than for small
volume generators.
Of the transport modes examined in the ADL report, the
method most likely to be used in hauling wastes from small
volume generators is the for—hire motor carrier. In particular,
small bed—loading trucks are expected to be the preferred ve-
hicle type for this function, since:
• Bed—loading allows transport of a variety of
non—compatible wastes packaged in separate
drums, whereas tank units are restricted to
transport of similar waste types, and
• Small trucks will present fewer loading difficul-
ties in urban areas, where many small generators
are concentrated.
Table B—3 presents transportation cost parameters used in
this report for assessing future hauling costs for small gen-
erators. The figures shown are derived primarily from estimates
developed in the ADL report for the vehicle type shown.
Table 9—3
TRANSPORTATION COST PARAIIETERS
FOR SMN.L VOLUME GENERATORS
• Transportation vehicle: straight bed truck with
20—foot bed, thirty 55-gallon drums:
-—Capital cost: 524,000
——Operating cost:
(1) Fuel: 6 miles/gallon @ 51.00/gallon
(2) Overhead: 20 percent of annual costs
(3) Profit: 10 percent of annual costs
• Vehicle driver:
——Work day: 8 hours/day, 5 oays/week
-—Work year: 250 days/year I
-—Salary, including fringe oenefits: 523,000
The ADL data were also used as the basis for the unit
hauling costs shown in Table B—4. The assumptions on which
these costs are based are as follows:
(1) Annual number of shipments: minimum shipping
frequency is four shipments per year; higher
shipping frequencies occur upon accumulation
of a full truckload.
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B- 7
Table 8-4
ESTIMATED HAULING COSTS FOR SMALL VOLUME HAZARDOUS WASTE GENERATORS
(constant 1978 dollars)
Annual Cost per Pickup Total Total
Generator Average Annual Number (dollars) Annual Annual Annual
Volume Waste Number of of Pickup Transport Hauling
Category Volume Shipments Drums Fixed Variable Cost Cost Cost
(kg/mo) (kg/mo per (per (per (doTli s per (dolTä i per (dolliFs per
generator) generator) generator) generator) generator) generator)
0-100 21 4 4 16 6 88 19 107
100-200 150 4 8 16 6 88 38 126
200-300 250 4 13 16 6 88 62 150
300-400 350 4 18 16 12 112 86 198
400-500 450 4 23 16 12 112 110 222
500—600 550 4 29 16 12 112 139 251
600-700 650 4 34 16 18 136 163 299
700-800 750 4 39 16 18 136 187 323
800-900 850 4 44 16 24 160 211 371
900-1,000 950 4 50 16 24 160 240 400
1,000-2,000 1,500 4 78 16 36 208 374 582
2,000-5,000 3.500 6 183 16 48 384 878 1,262
(2) Annual number of drums: determined by establish-
ment’s waste generation rate, with 230 kg/drum
and a minimum of four drums/year.
(3) Fixed cost per pickup: each generator shipment
will absorb the cost of 30 minutes of travel
time between generator pickups plus 10 minutes
of time devoted to shipment inspection and
documentation. The cost of this activity is at
a $24/hour rate computed from the data presented
in Table B—3.
(4) Variable cost per pickup: this cost varies
with the number of drums loaded per pickup.
The relationship used in this report is as
follows:
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B-8
Waste Generation Drum Loading Time!
Rate (kg/mo) Shipment (minutes )
0—300 15
300—600 30
600—800 45
800—1,000 60
1,000—2,000 90
2,000—5,000 120
(5) Annual transport cost: this was estimated to
be $4.80/drum, assuming:
• Average round trip transport distance
from generator location to TSDF——200 miles
• Average truck speed——40 miles/hour
• Average transport cost——$24/hour
• Average truck unloading time——one hour
at $24/hour.
Disposal Costs
In developing disposal costs for this study, efforts con-
centrated on techniques that were appropriate for small volume
generators. Capital—intensive on—site disposal methods such as
landspreading and lagooning are techniques employed by the
largest generators; small volume generators are far more likely
to use off—site disposal methods, such as:
• Landfills,
• Incineration, and
• Deep—well injection.
• Landfills
Disposal costs for sanitary and secure landfills were avail-
able in several reports. However, as may be seen in Table B—5,
the per ton estimates of disposal cost varied widely for secure
landfill costs, ranging from $15 to $70 per ton.
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B—9
Table B—S
GENERATOR DISPOSAL COSTS
(dollars per metric ton)
Data
Source
Small Volume
Type of Generator
Facility EtA 1 NERCOM 2 Battelle 3 Economic Analysis
• Landfill
-—Sanitary sa M.A. N.A. 8
--Secured 15 _ 55 b 7 0 C 43 9 7d 70
• Incineration
——General 3 2 .1,1 03e N.A. N.A. 375
——Non—halogenated liquids lOOt 479 77—11OJ 47
——Halogenated liquids 324 100 _ 265 k 324
——Halogenated solids 7411 741
M.A. • Not available.
‘Arthur 0. Little, Inc., Draft Economic Impact Analysis: Subtitle C, Resource
Conservation and Recovery Act of 19Th, January 1979 .
2 Arthur 0. Little, Inc., A Plan for Development of Hazardous Waste Management
Facilities in the New England Region , draft report, August 1979.
3 Battelle Columbus Laboratories, Cost of Compliance with Hazardous Waste
Management Reaulations , draft report. May 1978.
asanitary landfill without liner, leachate collection system, or monitoring and
testing equipment.
bAss s large volume generators will dispose of wastes in facilities sized greater
than 70,000 MT/year, and small volume generators will dispose of their wastes in
medium—sized facilities with higher per ton disposal costs. January 1977 dollars.
cDouble liner (Design II) landfill with 50,000 Cu. meters/yr capacity.
d8attelle Pathways III approach, weighted average cost of disposal for hazardous
wastes, excluding mining and smelting wastes.
eADL incineration costs were obtained from the Versar, Inc. report, ‘Alternatives
for Hazardous Waste Management in the Inorganic Chemicals Industry.’ Draft report.
January 1977.
Average Pathways Level III incineration costs for those waste types which were not
included In general cost estimates provided by Versar.
9 Cost for liquid burning incinerator with particulate control, 30,000 MI/yr capacity.
hCost for liquid burning incinerator with chemical scrubber, 130,600 MT/yr capacity.
1 Cost for rotary kiln incinerator with afterburner and chemical scrubber, 21,100 MT/yr
capacity.
Average cost.
kAverage cost.
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B- 10
The small generator economic analysis utilized the
$8/MT sanitary landfill disposal cost developed in the AOL
Economic Impact Analysis to ensure overall cost consistency
with AOL and other RCRA contractors’ assumptions. Since AOL
has oversight responsibility for current RCRA studies, this
estimate is considered the best available at the current time.
Pope—Reid, the contractor responsible for providing tech-
nical costs of compliance with RCRA disposal standards, has not
yet released its report. Since the present report was scheduled
for completion before these cost data were expected to become
available, ADL advised using the NERCOM value of $70/MT to
represent secure landfill disposal costs. The justification
for this is as follows: Preliminary estimates by Pope—Reid
indicate that its eventual estimate for disposal in a secure
landfill will average close to $50 to $60/MT for all generators.
For smaller generators, the average per ton cost of disposal
will likely be higher, due to the technical and administrative
inefficiencies inherent in handling very small shipments of
hazardous wastes. Therefore, of the costs reviewed in Table
B—5, the NERCOM figure of $70/MT appears to be the most reason-
able estimate to apply in estimating small volume generators’
average costs of disposal in secure landfills.
Incineration
Depending on the process utilized and the waste inciner-
ated, incineration costs can range from $32/MT to $1,103/MT.
A weighted average per ton cost of future incineration was
developed from AOL’s NERCOM figures since:
• The Pope—Reid estimates are not yet available,
and
• The NERCOM figures offer the most current and
generally applicable estimates of future
incineration needs and costs.
Of the 53 million gallons of wastes estimated to be
incinerated annually in the New England area, AOL estimated
that:
• 48 percent of these wastes would go to liquid
burning incinerators with particulate control,
• 44 percent would be appropriately disposed of
in rotary kilns, and
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B-il
• 8 percent would require use of a liquid burning
incinerator with chemical scrubbers.
In addition, the Economic Impact Analysis baseline cost of
$100/MT was used to represent the current cost level for in-
cinerating wastes. Again, this ensures cost consistency across
current RCRA reports.
Deep—well Injection
Unit costs were not developed for this disposal method
since the costs of compliance are a function of Underground
Injection Control (UIC) regulatory requirements. A cost of
disposal of zero dollars per metric ton was used to describe
the RCRA portion of these costs.
TECHNICAL COMPLIANCE STRATEGIES
As was shown in Table 11—7, the technical contractor for
the small generator analysis estimated that 84 percent of all
small volume generators currently dispose of their wastes in
landfills, 12 percent recycle their wastes, and the remaining
4 percent utilize landfarming, deep—well injection, incineration,
lagooning, and other disposal means. Eliminating from considera-
tion generators who recycle their wastes (since these establish-
ments do not have to comply with the Subtitle C requirements of
RCRA), it is clear from Table B—6 that, of the remaining 722,000
generators, over 95 percent rely on landfills for hazardous waste
disposal.
Table 8-6
ESTIMATED TOTAL NUMBER OF SMALL VOLUME
WASTE GENERATORS USING NON-RECYCLING DISPOSAL METHODS
Generators Waste Quantities
Number Percent 106 kg/mo Percent
landfill 690,000 95.6 92 79.3
Incineration 5,000 0.7 6 5.2
Lagoon 3,000 0.4 3 2.6
Deep-we 11
InJection 8,000 1.1 4 3.4
Land Spreading 11,000 1.5 5 4.3
Others 5,000 0.7 6 5.2
Total 722,000 100.0 116 100.0
-------
B- 12
These relative percentages for disposal methods may not
hold when RCRA is implemented. First, it is not clear that
lagooning will be a permissible method of disposal in the near
future, since the Agency is currently contemplating a ban on
this interim disposal method. Second, for small volume gen-
erators, landfarming may cease to be an economically viable
option due to the more stringent management requirements for
this technique in RCRA. Third, small volume generators using
“other” disposal methods may be using techniques not in keeping
with the environmentally protective intentions of RCRA, and
will likely turn to more acceptable methods when regulated.
It has therefore been assumed that small volume generators
currently using lagooning, landspreading, and other disposal
methods will, under RCRA, eventually resort to disposal at
a secure landfill. Moreover, generators currently utilizing
sanitary landfills are also expected to use secure landfills
for disposal when regulated under Subtitle C of RCRA. Hence,
98.2 percent of small volume generators and 91 percent of all
small volume generators’ wastes are expected to turn to secure
landfill disposal upon implementation of RCRA. Generators
currently incinerating their hazardous wastes or injecting
their wastes into deep disposal wells may or may not turn to
secure landfills.
In projecting national costs of future disposal, it is
likely that, on the average, small volume generators will ex-
perience an incremental per ton cost of disposal similar to
the cost experienced by the typical small volume generator,
i.e., a generator currently using a sanitary landfill and,
under RCRA management, sending his wastes for disposal at a
secure landfill. Hence, in computing disposal costs, all waste
tonnage managed under Subtitle C was assumed to be disposed at
an average incremental cost of $62/MT.
In using this approach, the analysis of technical costs
has overstated incremental per ton disposal costs for those
generators using deep—well injection who will continue to use
this method, and understated incremental per ton disposal costs
for those generators using incineration who may turn to more
complete combustion methods. If all generators currently using
these methods were to continue utilizing the same type of dis-
posal practice, then the analysis would have understated total
disposal costs by, at most, 9 percent.
The cost development presented in this report assumes
that particular classes of hazardous wastes will not be banned
from secure landfills. Were certain waste types, such as
-------
B- 13
ignitables, or Toxic Organics Class I wastes, to be banned
from landfills, it is not clear bow much this would increase
disposal costs for small generators, since:
• Data are not available for small volume generators’
waste quantities by waste type, and
• It is not possible to predict the alternative
disposal response of small volume generators to such
a ban, i.e., use of incineration, deep—well injection,
or recycling.
Moreover, were the Agency or the states to ban certain
waste types from landfills, it is likely that generators dis—
posing of these wastes might also have to face more stringent
administrative requirements, in light of the environmental
hazard presented by these waste types.
TOTAL COSTS
Table B—7 presents total RCRA compliance costs. The na-
tional costs of compliance with the administrative requirements
of RCRA were computed by multiplying the number of generators
in each volume category by the appropriate unit costs shown in
Tables 11—9 and 11—10. National costs of compliance with the
technical requirements of RCRA were computed by multiplying the
expected hauling and disposal costs for the average generator
in each volume category by the number of generators estimated
for that category. Cumulative compliance costs were computed
by summing total costs for the regulated volume categories.
-------
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-------
Appendix C
STATE AND AGENCY REGULATORY TASKS AND COSTS
The purpose of this appendix is to explain, in detail, the
derivation of the specific cost components used in the state
and Agency cost analysis. This appendix begins by discussing
the regulatory tasks considered in this analysis. Following
this is a task—by—task discussion of the bases of the study’s
unit resource requirements for state and Agency tasks. Con-
cluding this section is a table documenting total RCRA program
costs for fiscal years 1981 through 1985 at various generator
exemption levels.
REGULATORY TASKS EVALUATED
Costs were presented for regulatory tasks in two major
areas: (1) all RCRA program components except small volume
generator regulatory tasks, and (2) small volume generator
regulatory tasks. The former group will be discussed briefly.
The latter group will be discussed in greater detail, since new
information was developed by the study in this area, and the
data became the foundation for the state and Agency impact
analysis presented in this report.
RCRA Program Components Except
Small Volume Generator Tasks
Four major areas were addressed in estimating the RCRA
program baseline costs including:
• Program development,
• Non—generator regulatory activities,
• General program administrative activities,
and
• Large volume generator regulatory activities.
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C—2
The major reference document for baseline costs was the
Agency’s Resource Requirements Summary, ’ issued in March 1979.
Large volume generator costs are presented in Section III of
this report; the remaining costs are presented here.
Program Development Costs
Table C—i
STATE PROGRAM DEVELOPMENT--UNIT MANPOWER REQUIREMENTS*
Unit Manpower Requirettent per State
Small State Medium State Large State
Activities ( man—years) ( man—years) ( man—years )
• Hazardous waste survey 2 3 4
• Develop or medify
authorizing legislation 0.75 0.75 0.75
• Develop and promulgate
rules and regulations
and conduct public
particIpation 3.25 3.40 3.50
• Staff hiring and
development (per year) 1.0 1.0 1.5
*The RRS estimates that there are 20 small jurisdictions.
24 medIum—size jurisdictions, and 12 large jurisdictions.
Total manpower needs for program development are 690 man—years
of effort. However, approximately one—quarter of this effort
was completed by the end of 1978. With 515 man—years of effort
remaining for program development, and assuming a weighted
average salary level of $16,000 per year (plus a 30 percent
fringe benefit level), total remaining program development
costs are $10.7 million. For those states in which the EPA
regional office manages the RCRA program, program development
funds are assumed to be used to supplement regional office
staff and administrative resources.
1 U.S. Environmental Protection Agency, Resource Requirements
Summary on Implementation and Maintenance of Programs Author-
ized under the Resource Conservation and Recovery Act (RCRA)
Subtitle C Programs , revised Draft, March 3, 1979.
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C-3
Non—Generator Regulatory Costs
• Transporters (N = 21,700)
(1) Surveillance
( 21 ,700)(1/10 )
230 = 9.4 man—years/year
(2) Enforcement
( 21 ,700)(1/10)(iO )
230 = 94 man—years/year
Total cost = (103.4)($16,0 00)(1.30) = $2,200,000/year
• Treatment, storage, and disposal facilities
(N = 25,100)(20,050 = on—site; 5,025 = off—site)
(1) Permitting 2
( 20,05o)(58) + (955)015) + (4,070)(28 )
230
= 6,030 man-years
= 1,005 man—years/year over six years
(2) Surveillance
[ 5,025+ (1/2)(20,050)] [ 1 ] + [ (1/2)(2o,o5o)] [ 1/loI + ( 10,025)0/10 )
1 3 3
230
= 68 man—years/year
(3) Review of monitoring reports
( (20,050)(.5) + 1(5,025)]) * 4
C 10) (230)
= 26.2 man—years/year
2 Permitting costs are based on the following Agency assumptions:
(a) Six—year permitting period.
(b) Major off—site facilities represent 19 percent of all off—
site facilities.
(c) Unit manpower requirements for permitting are as follows:
(1) Major off-site facilities: one—half year per permit.
(2) Minor off—site facilities: 28 man—days per permit.
(3) On—site facilities: one—quarter year per permit.
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C-4
(4) Enforcement
[ (5,025) + (10,025)1 * (.1) * (10 )
230
= 65.4 man—years/year
(5) Laboratory services
[ (10,025 + 5,025) * (1)1 + (10,025)(1/10 )
230
= 70 man—years/year
Total cost = (1,005 + 68 + 26 ÷ 65 + 70) = 1,234
*16K
*1.3
$25, 700,000/year
General Program
Administrative Activities
Small State Medium State Large State
( man—years) ( man—years) ( man—years )
1. Technical assis-
tance, training
and education 1.0 1.5 2.0
2. Coordination with
other agencies 0.5 0.5 0.5
3. Data handling and
processing 0.5 1.0 2.0
4. Staff hiring and
development 1.0 1.0 1.5
3.0 4.0 6.0
*20 *24 *12
60 + 96 + 72
Subtotal (228)($16,000)(1.30) $4.8 million/year
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C- 5
5. Support services
(a) Meeting costs: $0.1 million
(b) Laboratory equipment: $30K*56/5 = $.03 million
(c) Equipment and supply: $1OK*56 = $0.6 million
(d) Surveillance safety equipment: $0.1 million
(e) Consulting Costs: $30K*56 = $1.7 million
(f) ADP costs: ($20K)(20) + ($35K)(24) + ($50K)(12) =
$1.8 million
Subtotal = $4.6 million/year
Total = $9.4 million/year
Small Volume Generator Tasks
As was discussed in the methodology section of this
report, unit costs were derived for those regulatory tasks
whose costs clearly and directly varied with changes in the
number of generators managed. For program operation, these
tasks include:
• Review of notification documents,
• Review of generator exception reports,
• Entry of generators’ annual reports into the
ADP system,
• Inspection, and
• Enforcement actions.
Development of Unit Manpower
and Cost Estimates
Table C—2 presents the unit manpower and cost estimates
used in this report. These estimates are the economic bases
from which “full RCRA” total regulatory costs were computed for
small volume generators.
It was not appropriate to develop unit estimates for
regulatory activities directed toward generators who are ex-
empted from RCRA by quantity of wastes for two reasons:
• •These establishments have no administrative
requirements necessitating state and Agency
administrative activity.
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C-6
• Since these establishments are outside the ju-
risdiction of Subtitle C of RCRA, inspection
and enforcement activities against such estab-
lishments are likely to be the responsibility
of the states’ Subtitle D programs.
Major data sources for unit cost estimates included:
• Resource Requirements Summary on Implementation
and Maintenance of Programs Authorized under the
Resource Conservation and Recovery Act (RCRA)
Subtitle C Programs (revised March 2, 1979),
prepared by the EPA Office of Solid Waste to
estimate resource needs for regulatory agencies
in carrying out the requirements of Subtitle C
of RCRA;
• Reports Impact Analysis (revised March 1979),
prepared by the Agency to estimate in depth the
cost impacts of the RCRA reporting requirements
on industry, states, and the Agency; and
• Information collected from states with currently
operative hazardous waste programs.
Table C-2
UNIT MANPOWER AND COST ESTIMATES
FOR SMALL VOLUME GENERATOR REGULATORY TASKS
Task
Regulatory Manpower Requirement Staffing Budget Requirement 2
Activity ( per generator ) Mix 1 ( per generator )
• Review notification
documents 25 minutes 10/55/35 S 4.30
• Review generator
exception reports
-—For generators
disposing of fewer
than 2,000 kg/mo 5 minutes/year 15/75/10 S 1.00/year
-—For generators
disposing of 2,000
to 5,000 kg/mo 7.5 minutes/year 15/75/10 S 1.50/year
• Enter annual
generator reports
into AOP system 15 minutes/year 10/0/90 S 1.95/year
• Inspection 16 minutes/year 15/65/20 S 3.05/year
• Enforcement
-—Assuming 3 percent
non—compliance 144 minutes/year 15/65/20 527.30/year
1 Supervisory/profess lonal—technical/clerical personnel nix.
2 Thirty percent overhead in salary levels assumed. Constant 1978 dollars.
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C-7
Wherever possible, the small generator study estimated
manpower and cost requirements that would be in close agreement
with those already presented in the first two reports mentioned
above to facilitate comparison between the results of these
related reports. In some cases, though, adjustments had to be
made to downscale estimates that were more appropriate for
larger volume generators than for the small volume generators
examined in this study.
Review of Notification Documents
It is estimated that, on the average, 25 minutes of effort
will be required to process a typical notification document.
This task unit manpower requirement is based on the estimate
presented in EPA’s Reports Impact Analysis (RIA). Although
most of the cost subcomponents were addressed, the RIA cost
analysis does omit costs for some subcomponents, specifically:
mailing costs, key punching costs, and ADP systems operation
costs (except for the cost of data entry).
Exhibit C—]. displays the unit resource requirements
estimated in the small generator study for this task. For the
most part, the study estimate matches the RIA estimate. How-
ever, some modifications have been made. These modifications
are denoted in Exhibit C—i and explained below.
First, the subtask of converting the information in a
significant number of the completed notification documents into
a common ADP format has been eliminated. The original premise
of the RIA in including this subtask was that some authorized
states would mail out their own versions of notification forms.
These would eventually require conversion to the federal ADP
format. However, since the regional EPA offices have currently
been assigned the entire responsibility for notification, it is
likely that a standardized federal format will be used nation-
wide, eliminating the need for ADP conversion.
Second, it is estimated that the subtask of key punching
notification data into the ADP system will require five minutes
of effort per document. Moreover, a staffing mix of 10 percent
supervisory personnel and 90 percent clerical personnel is as-
sumed for this subtask.
Last, the small generator economic analysis has eliminated
the ADP data entry cost of $450,000 estimated by the RIA. In
fact, all ADP system operation costs have been excluded from
this analysis. The effects of this omission will be discussed
in the limits to the analysis.
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C—8
Exhibit C-i
EPA MANPOWER NEEDS FOR REVIEW OF
NOTIFICATION DOCUMENTS
Subt ask
Staffing
Subtask Mix
Manpower (supervisory!
Requirement professional!
Subtask (per document) clerical)
1. For Correctly Completed Forms:
• Mail Out Notification Form N.A. N.A.
• Receive Notification Form Negligible N.A.
• Check Form for Completeness 15 Minutes 10/80/10
• Mail Out Certification of Notification N.A. N.A.
• Convert Relevant Information in Document
into Common ADP Format N/A* N/A
• Keypunch Relevant Information 5 Minutes* 10/0/90*
• Enter Information into ADP System N.A.* N.A.
• Generate ADP Reports N.A. N.A.
• Manually File Notification Form 0.25 Minutes 5/0/95
Total 20.25 Minutes 10/60/30
2. For Incorrectly Completed Forms:
• All Subtasks Expected for Correctly
Completed Forms 20.25 Minutes 10/60/30
• Initial Check for Completeness 5 Minutes 10/80/10
• Request Additional Information from
Establishment 5 Minutes 10/0/90
Total 30.25 Minutes 10/55/35
3. For the “Average” Form:
Since correctly and incorrectly completed forms are each expected
to represent half of all forms submitted, the average notification
document is expected to require 25 minutes of review time, with a
staffing mix of 10 percent supervisory personnel, 55 percent profes-
sional personnel, and 35 percent clerical personnel.
N.A. = Not available.
N/A = Not applicable.
*
Small volume generator study modifications to RIA estimates.
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C-9
In terms of unit manpower requirements, the net effect of
these changes is zero. The RIA and small generator study
manpower estimates are both 25 minutes of effort per hlaverageu
document.
Review of Generator Exception i eports
The small generator study has used the RIA manpower
estimate of 30 minutes for reviewing an average exception re-
port. The derivation of this estimate is shown in Exhibit C—2.
Although not all cost subcomponents have been estimated, the
most critical (and most labor-intensive) component has been
estimated.
However, the above estimate must be combined with infor-
mation on the average number of exception reports expected
annually from the various generator categories. As was ex-
plained in Appendix B, it was assumed that one out of every 24
shipments will exhibit a shipping irregularity requiring an
exception report. The minimum shipping frequency is four
shipments per year (due to the 90—day storage constraint),
and the maximum shipping frequency is assumed to be six ship-
ments per year for small volume generators.
Table C—3 presents, for two general generator volume
categories, the adjusted estimates of annual shipping fre-
quencies, annual exception report probabilities, and an-
nualized per generator regulatory manpower and budget needs
for review of exception reports.
Table C-3
VOLUME-ADJUSTED ESTIMATES OF MANPOWER AND
BUDGET NEEDS FOR REVIEW OF EXCEPTION REPORTS
Generator Shipments Annual per Generator Annualized Annualized
Volume per Probability of an Unit Manpower Unit Budget 1
Category Year Exception Report Reguirenent Repuirenent
< 2,000 kg/mo 4 .17 5.0 mlns/gen. S1.OO/gen.
2,000—5,000 kg/mo 6 .25 7.5 mlns/gen. $1.50/gen.
1 Constant 1978 dollars.
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c-b
Exhibit C-2
STATE AND AGENCY MANPOWER NEEDS FOR REVIEW OF
GENERATOR EXCEPTION REPORTS
Subt ask
Staffing
Subtask Mix
Manpower (supervisory!
Requirement professional!
Subtask (per document) clerical)
• Receive Exception Report Negligible N.A.
• Review Report to Determine Whether Situation
Requires Enforcement Action 30 Minutes 15/75/10
• Place Relevant Information into Common ADP
Format Negligible N.A.
• Keypunch Relevant Information N.A. N.A.
• Enter Information into ADP System N.A. N.A.
• Generate AOP Reports N.A. N.A.
• Manually File Report 0.25 Minutes 5/0/95
Total 30.25 Minutes 15/75/10
N.A. = Not available.
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c-li
Entry of Annual Report Data
into the ADP System
The RIA provided very little substantive data on the unit
resource requirements for the entry of the annual report into
the ADP system. Though the RIA clearly presented the subtask
report flow, only the cost of manually filing these reports
was estimated. This study, therefore, estimated a unit manpower
requirement for this task after consultation with persons ex-
perienced in computer data entry costs.
Exhibit C—3 presents estimates of staffing needs for the
entry of annual report data into the state ADP system. The
estimate of 15 minutes of staff time per report refers to the
cost of key punching and checking the information submitted in
the annual report. Since the annual report is formatted for easy
information transferral into the ADP system, manpower needs for
ADP conversion are nonexistent. However, key punching can re-
quire a more extensive effort if the information is not clearly
presented, e.g., barely legible, or improperly completed. No
adjustments for this possibility have been made.
Inspection
Although not explicitly called for in the RCRA regulations
for authorized state programs, inspection is, nonetheless, a
vital constituent of a program with adequate enforcement. A
regular surveillance schedule is essential for purposes of
report verification. Moreover, these on—site inspections fre-
quently serve as a means for informal technical assistance by
regulatory officials.
It has been estimated that, on the average, three on—site
inspections can be completed and documented in one man—day of
effort. The expected task staffing mix is 15 percent management
personnel, 65 percent technical personnel, and 20 percent cler-
ical personnel. These estimates are equivalent to those util-
ized in EPA’s Resource Requirement Summary (RRS) for projecting
manpower and budget needs for Subtitle C of RCRA as proposed
earlier.
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C- 12
Exhibit C-3
STATE AND AGENCY MANPOWER NEEDS FOR ENTRY OF
ANNUAL REPORT DATA INTO ADP SYSTEM
Subt ask
Staffing
Subtask Mix
Manpower (supervisory/
Requirement professional!
Subtask (per document) clerical)
• Receive Annual Report Negligible N.A.
• Place Relevant Information into Common ADP
Format N/A N/A
• Keypunch Relevant Information 15 Minutes 10/0/90
• Enter Information into ADP System N.A. N.A.
• Generate ADP Reports N.A. N.A.
• Manually File Report 0.25 Minutes 5/0/95
Total 15.25 Minutes 10/0/90
N.A. = Not available.
N/A = Not applicable.
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C- 13
Additionally, as was assumed in the RRS, the present study
assumes an average inspection frequency of once per facility
every 10 years. Regulatory agencies may choose to inspect large
volume generators more frequently than small volume generators,
or establishments disposing of one class of wastes more frequently
than establishments disposing of similar volumes of another class
of wastes, but no definite statement can be made as to how much
more frequently. Therefore, the inspection frequency has been
applied equally to all generators, regardless of generator
category.
In order to estimate the total staff required to maintain
this inspection frequency, an annualized per generator inspec-
tion manpower estimate was developed. This was calculated by
multiplying the manpower requirement for a single completed
inspection (2.67 man—hours) by the annual per generator prob-
ability of an inspection (0.10). From this was obtained an
annualized estimate of 0.267 man—hours per generator as an
estimate of unit staffing needs for the task of inspection.
Enforcement Actions
Upon detection of non—compliance from field operations or
through receipt of exception reports, the next step for a regu-
latory agency is to attempt to remedy the situation. In most
cases, non—complying establishments will initiate corrective
action upon receipt of a letter from the state or Agency ex-
plaining the nature of the detected violation. Sometimes,
further state and operator interaction, in the form of on—site
meetings or formal compliance conferences, is required before
the violation can be corrected. In extreme cases, the regula-
tory agency may have no recourse but to bring legal action
against chronic offenders.
Such enforcement actions can call upon a substantial por-
tion of the program’s human resources. Since the RRS provided
no estimate of enforcement resources required for generator
regulation, a phone survey of enforcement activities was con-
ducted for this study in five states with established hazardous
waste control programs (California; Illinois; Maryland; Nassau
County, New York; and Texas). Officials from each state pro—
gram were asked to estimate:
• The extent of serious non—compliance among
generators, expressed as a percent of all reg-
ulated hazardous waste—generating establish-
ments, and
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c—i 4
• The unit manpower needs for a typical enforce-
ment action.
Estimates of non—compliance ranged from 1 to 5 percent,
with an average of 3 percent of all regulated establishments.
Estimates of unit manpower needs ranged from 5 to 15 days,
with an average of 10 days per typical enforcement action.
This latter estimate includes the time spent in:
• Gathering and documenting evidence of non-
compliance,
• Writing up the case facts and history for
internal agency review, and
• Assessing the legal sufficiency of the case.
This analysis uses an average non—compliance estimate of
3 percent for projecting future enforcement needs. The staffing
mix in this activity has been assumed to be that of the RRS:
15 percent supervisory personnel, 65 percent professional per-
sonnel (technical and legal), and 20 percent clerical personnel.
TOTAL RCRA PROGRAM COSTS:
FISCAL YEARS 1981 THROUGH 1985
Table C—4 presents total state and Agency program costs
for fiscal years 1981 through 1985. The data are presented
first for all program activities exclusive of the regulation of
small volume generators. To those program Costs are added the
costs of bringing small volume generators into the system at
volume cutoffs ranging from 5,000 kg/mo to 0 kg/mo. The cost
analysis assumes that 37 jurisdictions receive interim authori-
zation in 1981 and full authorization in 1983 and that EPA
regional offices manage the program in the 19 unauthorized
states. Permitting is projected to occur over a six—year
period beginning in 1981. Costs originally developed in 1978
dollars were converted to current dollars using GNP price
deflators from Data Resources, Inc. 3
3 Review of the U.S. Economy , Table 22.1, Data Resources, Inc.,
August 1979.
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C- 15
Table C-4
REGULATORY OPTION: EXEMPTION BY QUANTITY OF WASTE
CUMULATIVE STATE AND AGENCY HAZARDOUS WASTE PROGRAM
COSTS FOR SELECTED EXEMPTION LEVELS FOR FISCAL YEARS
1981 THROUGH 1985
(millions of current dollars) 1
Fiscal Year
Program
Activity 1981 1982 1983 1984 1985
Program
Development 3.6 3.9 0 0 0
Program
Oversight 6.3 6.8 3.1 3.3 3.6
Non—Generator and
General Adminis-
trative Costs 54.8 59.4 59.8 64.3 69.3
Large Volume
Generator Costs 58.5 63.2 63.9 68.7 74.0
Small Volume
Generator Costs
at Cutoffs of
(kg/mo):
5,000 58.5 63.2 63.9 68.7 74.0
2,000 59.1 63.8 64.5 69.4 14.7
1,000 59.9 64.6 65.4 70.3 75.7
900 60.1 64.7 65.5 70.4 75.9
800 60.2 64.8 65.7 70.6 76.1
700 60.5 65.2 66.0 71.0 76.5
600 60.7 65.3 66.2 71.1 76.6
500 61.1 65.7 66.6 71.6 77.2
400 61.6 66.2 67.1 72.2 77.7
300 62.3 66.9 67.9 73.0 78.7
200 63.8 68.3 69.4 74.6 80.3
100 66.7 71.1 72.4 77.9 83.9
0 95.7 99.1 102.6 110.4 118.9
Impllcit GNP price deflators obtained from
Table 22.1 of Data Resources, Inc., August 1979,
Review of the U.S. Economy :
1979: 9.0%
1980: 8.2%
1981: 8.2%
1982: 7.8%
1983: 7.2%
1984: 7.1%
1985: 7.1% (est.)
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Appendix D
WASTE GENERATION RATES
The approach taken in this study in analyzing the potential
industry impacts of small volume generator regulation has been
to compare the costs of compliance to the annual sales and
profitability at a particular plant. A portion of the cost
of compliance depends on the volume of wastes. Consequently,
it has been necessary to postulate a correlation between the
volume of wastes generated and some measure of a plant’s eco-
nomic size. This appendix addresses the relevance to this
study of past efforts to develop such a relationship and it
outlines the current approach to the waste correlation issue.
RELEVANCE OF PAST STUDIES
The most common methods for developing waste generation
factors are based on the relationship between hazardous waste
quantities generated and total employment in the establishment,
number of production employees, quantity of product produced
or value added. In previous studies, MITRE,’ TRW, 2 and ERCO
attempted to determine this relationship empirically. This
section will discuss the relevance of those efforts to the small
volume generator population.
MITRE Study
The MITRE study used state and regional survey data to
calculate average generation rates for each two—digit manu—
facturing SIC. These factors were then correlated with U.S.
Bureau of Census employment data to determine national
generation rates (shown as calculated generation factor in
‘ Subtitle C, Resource Conservation and Recovery Act of 1976
Draft Environmental Impact Statement, Volume I and Volume II ,
prepared by MITRE Corp. for U.S. EPA, January 1979.
2 Technical Environmental Impacts of Various Approaches for
Regulating Small Volume Hazardous Waste Generators , Volume I,
TRW, Inc., December 1979.
3 Economic Impact Analysis of Hazardous Waste Management
Regulations on Selected Generating Industries , Energy Re-
sources Co., Inc., June 1979.
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D- 2
Table D—l). MITRE pointed out several problems with this
methodology:
• Definitions and criteria for hazardous waste
included in the state surveys were not consis-
tent. Though MITRE attempted to standardize
the data, some discrepancies remained in the
database.
• State surveys concentrated on larger companies
in industry groups rather than smaller compa-
nies. MITRE concluded that larger companies
would tend to produce less hazardous waste
per employee than smaller companies due to
economic scale in the production process.
• Company—supplied data, though generally reli-
able, contained some errors. Companies might
be reluctant to provide data that could result
in unwelcome regulatory policies or that could
reveal proprietary information regarding pro-
duction processes, volumes, or employment.
Some firms might misinterpret the survey ques-
tions or might be uninformed regarding the
constituents of the waste streams.
• Aggregation to two—digit SICs, due to lack
of sufficient data at a more detailed level,
grouped industries which may have had markedly
different production processes and waste
generation characteristics.
• MITRE’s national generation factors overlooked
the likelihood that establishments of different
sizes might generate relatively different
quantities of hazardous wastes per employee,
and that regional variations might exist.
However, MITRE lacked the necessary data to
present results at a regional level.
However, for the purposes of the present study, the
largest problem with the MITRE data was that the generation
factors were not applicable to small volume generators. MITRE
pointed out that the state surveys concentrated on large firms
almost entirely and included those firms that were thought to
create large amounts of hazardous waste.
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D— 3
Table D—1
GENERATION FACTORS FOR ThE CALCULATION OF
ESTIMATED QUANTITIES OF HAZARDOUS WASTE
GENERATED BY MANUFACTURING INDUSTRIES
(based on employment)
Total Percent
Calculated Number 1975 U.S. of U.S.
SIC Generation of Employment Employment Employment
Code Factor’ States ( thousands) ( thousands) Represented
20 0.19 6 279 1.528 18
22 0.17 4 16 870 2
23 0.11 1 (Md) 6 1.221 1
24 0.13 5 11 600 13
25 0.59 5 30 408 7
26 4.86 4 55 581 9
27 0.12 5 101 1.079 9
28 3.72 8 168 849 20
29 6.29 8 57 151 38
30 0.38 7 98 593 17
31 2.49 5 14 266 5
32 .2.34 7 89 593 15
33 3.49 8 189 1,098 17
34 1.27 8 250 1,398 21
35 2.35 8 445 1,979 22
36 0.13 7 349 1,533 23
37 0.59 7 179 1,599 11
33 0.13 6 85 1,915 4
39 0.64 5 54 422 13
Totals 2,591 18,684 14
(percent
of national
total)
Metric tons/employee/year.
Source: Subtitle C, Resource Conservation and Recovery Act
of 1976. Draft Environmental Impact Statement,
Appendices , January 1979, p. H—16.
TRW Study
The TRW analysis of the correlation between waste genera-
tion rate and number of employees was based on its computerized
state database of small volume generators (less than 5,000
kg/mo) and a few observations for large volume generators.
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D-4
The entire database included responses to state surveys in 20
states and covered 90 two—digit, three—digit, or four—digit SICs.
Of the more than 3,000 generator responses, only 170 provided
employment data that could be correlated with waste generation
data. These generators covered 11 SICs, as shown in Table D—2.
Linear correlation analysis revealed discouraging results in
ten SICs and highly significant correlation in one manufacturing
SIC, metal heat testing (SIC 3398).
Table 0—2
LINEAR CORRELATION BETWEEN EMPLOYMENT AND WASTE QUANTITY
Critical Value Percentage**
Calculated of r for Explained
S nple Correlation Significant Variat Ion,
SIC Size, n Coefficient, r Correlation Conclusion lOOr’
282 26 0.275 0.388 No correlation
2891 6 0.14 0.811 No correlation
2893 7 —0.31 0.754 No correlation
3398 32 0.54 0.449 Highly signifIcant t 29.2
3479 12 -0.284 0.576 No correlation
355 16 0.186 0.497 No correlation
359 5 -0.49 0.878 No correlation
1662 32 0.341 0.349 No correlation
7218 18 0.339 0.468 No correlation
7391 4 0.57 0.950 No correlation
753 12 0.31 0.576 No correlation
t lhese critical values are chosen to reject the hypothesis of no correlation
at a significance level of 1 percent; all others shown are the 5 percent level.
**
Percentage of the total variation of waste quantity that can be explained
due to its linear correlation with number of employees.
Source: Technical Environmental Impacts of Various Approaches for Regulating
Small Volume Hazardous Waste Generators , Volume I, TRW, Inc.,
December 1979.
TRW stated some concerns with the quality of the state
database relative to its usefulness in this exercise:
• Data varied widely from state to state due
to differences in state survey methodologies,
especially in definitions and criteria for
hazardous waste and selection of specific
facilities to be surveyed.
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D— 5
• The number of establishments in an SIC covered
by state data varied from a low of one to a
high of 69. This represented a small frac-
tion of total establishments in each SIC on
a national basis. Even fewer establishments
reported employment data.
• Employment data were available from a few
large states (New York, California, and Texas),
and these might not be representative of other
states or the national average. However,
these were used to perform the linear correla-
tion as no other data were available.
ERCO Study
The ERCO study of several major industries that generate
hazardous waste included firms of all sizes and volumes of
wastes. For each industry, ERCO defined a model and a worst
case firm to assess economic impacts of RCRA regulations. The
model firm was designed to be representative of the majority
of firms within the industry from the standpoint of financial
and technical characteristics. The worst case firm was repre-
sentative of a potentially exposed firm due to its small size,
poor financial condition, high waste generation rate, or some
combination of these characteristics.
Typical waste quantity volumes for model plants and worst
case plants were estimated for each industry uniquely. For
the electric utility industry, ERCO selected a 500—megawatt
plant as its model plant size and used process engineering
data developed in a TVA/EPA study that examined the specific
volumes and components of wastes for a powerplant of that
size.
For the pulp and paper industry, ERCO based its analysis
on an earlier ADL study that reported plant operating character-
istics for all sectors of that diverse industry. Industry
contacts on a plant—by—plant basis provided detailed informa-
tion on process and waste stream quantities and constituents.
ERCO’s model plant represented the industry average plant in
the unbleached kraft linerboard sector, while the worst case
plant represented a folding boxboard mill with lower than aver-
age product per year and higher than average waste due to the
addition of coal wastes. Again, ADL’s material balance data
provided the necessary volumes for impact analysis.
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D- 6
Waste quantities for gasoline service stations and automo-
tive repair shops were estimated by ERCO based on discussions
with station owners, industry personnel, and waste oil collec-
tors. Both the model plant and worst case plant were assumed
to generate the same amount of wastes, though the worst case
plant was assumed to have lower sales.
In its study of the drum reconditioning industry, ERCO
surveyed firms to determine the average quantities of waste
material to be disposed. ERCO concluded that there was a clear
correlation between number of drums processed and generation
of waste, unless the companies used different precleaning tech-
niques. ERCO provided ranges in the order of plus and minus
60 percent for each estimate of waste quantity to reflect the
variances in firm responses. Worst case analysis was performed
by increasing the waste generation rate to a level well above
the industry average.
ERCO estimates of waste generation rates in other indus-
tries that were analyzed in the same study were based on indus-
try contacts and discussions with operators at large, medium,
and small firms. Based on these discussions, generation rates
were related to production process rather than to number of
production employees or total employment in the establishment.
None of the studies reviewed above produced a generally
applicable empirical relationship between plant environment
and waste generation for small volume generators in the manu-
facturing sector. However, appropriate components of the
studies cited above have been combined to develop a reasonable
approximation of waste generation rates for the model plants
in the SICs included in this study.
CURRENT STUDY APPROACH
The current study differs from the studies reviewed above
in two major ways:
• The small volume generator study is examining
the impacts on relatively small firms in almost
100 SICs, whereas prior studies focused on large
plants in about 20 manufacturing industries that
produce large volumes of hazardous wastes.
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D— 7
• As the small generator study encompasses a broad
range of manufacturing and non—manufacturing
industries, it was necessary to analyze selected
industries which generally characterized the
universe. Prior studies developed industry—
specific results which were aggregated to pro-
duce a complete profile of impacts of RCRA on
approximately 95 percent of the wastes covered
by RCRA.
The remainder of this appendix will discuss how the
present study approached the waste generation issue for small
volume generators. It will examine, first, for what classes of
SIC codes the waste generation issue is a problem and subse-
quently outline the chosen study method for resolving the
issue.
Types of Industries Affected by Waste Correlation
Waste correlation is an issue in an economic impact analy-
sis because to the extent that establishments within an SIC
generate different volumes of waste they are correspondingly
subject to varying compliance costs. It becomes important,
therefore, to relate the compliance cost a particular establish-
ment will incur to its economic size. If waste volume and size
are closely related, then larger establishments will have higher
compliance costs. If they are not related, small establishments
may have higher compliance costs than large establishments.
Figure D—l illustrates the waste distribution by percent
of generators for the SICs selected for economic analysis. For
example, the figure shows that for SIC 3471——electroplaters——
about 40 percent of the establishments generate less than 100
kg/mo of wastes while 80 percent generate less than 5,000 kg/mo
of wastes. Several conclusions can be drawn from the waste
distribution illustrated in Figure D—1.
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Figure D—1
CUMULATIVE DISTRIBUTION OF GENERATORS BY WASTE GENERATION RANGES
FOR SELECTED SICs
PERCENT OF
7221, 7333, 7396
70
60
3471
ELECTROPLATERS
50
,
6 ’
p
/
I
/
,
/
/
/
..—..
..
07110721,0729 ..-
AGRICULTURAL SERVICES ,. ..
,‘ .—.
.—.
. -
WASTE GENERATION RATE (kg/mo)
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D-9
• The SICs characterized by waste distribution
over a range of volume categories are:
——0711, 0721 Soil preparation,
0729 crop planting, and
general services
——2231, 225 Textile dyeing and
226, 2272 finishing
——27 Printing
——3440 Fabricated metals
——3471 Electroplating
——5541 Service station
——7221, 7333, 7395 Photoprocessing
In all these SICs no single waste category
contains more than 40 percent of the genera-
tors, and the remaining generators are dis-
tributed over a broad waste generation range.
• The SICs that are not characterized by a distri-
bution over a broad range of waste categories
are:
——17 Special trades
contractors
——7215 Coin—operated dry
cleaners
——7216 Commercial dry
cleaners
In SICs 17 and 7215, 100 and 94 percent of the
establishments, respectively, are concentrated
in the less than 200 kg/mo category; and in SIC
7216, 74 percent of the establishments generate
less than 100 kg/mo, and 96 percent generate
less than 500 kg/mo.
Overall, the distributions in the SICs selected for further
analysis parallel the national total where 73 percent of the
generators fall into the less than 100 kg/mo category and 90
percent generate less than 1,000 kg/mo. The national profile
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D— 10
is shown in Figure D—2 for manufacturing and non—manufacturing
SICs. It is apparent from this figure that non—manufacturing
firms have a more uniform and smaller generation rate than do
manufacturing firms.
Small Volume Generator Study Methodology
The methodology selected for addressing the waste correla-
tion problem varied depending on the industry analyzed. For
the three SICs that were concentrated within a narrow waste
generation range, the costs of compliance were assumed to be
close enough for there not to be a significant cost di:fferential
among establishments. The remaining SICs were examined on an
industry—by—industry basis.
Available data on two of the most affected industries——
service stations and soil preparation services——relate waste
generation directly to indicators of economic activity. These
indicators are number of oil filters changed in the case of
service stations and number of crop dusting airplanes in the
case of soil preparation and crop services. In these cases
it has been assumed that economic size and waste generation
are related.
For the remaining four affected SICs there were no data
available relating economic size and waste generation. As a
model or average case, it was assumed that for these SIC5, as
for the two discussed above, waste generation and economic size
related directly. In this case a plant in, for example, the
25th percentile in sales would have a waste generation rate in
the 25th percentile.
The danger of this model case assumption is that it may
underestimate impacts on plants that generate a volume of wastes
out of proportion to their annual sales. To counteract this
possibility, a worst case assumption was developed in which the
waste volume a plant generates is expected not to be related to
its sales. Rather, it was assumed that there is no relationship
between waste volume and sales, and (for the worst case) that a
plant always generates more wastes than the volume that would
relate to its sales.
If there is no relationship between wastes and sales, the
expected value of a plant’s waste generation is the average of
all plants. Thus, for electroplaters a plant with sales in
the 25th percentile would generate not the 50 kg/mo in wastes
that would correspond to the 25th percentile in wastes, but
330 kg/mo——the average of all plants. For larger plants above
the 100 kg/mo category, the approach is somewhat different.
-------
Figure D—2
CUMULATIVE
PERCENT OF
GENERATORS
CUMULATIVE DISTRIBUTION OF GENERATORS BY WASTE GENERATION RANGES
FOR ALL SICs
• •
NON—MANUFACTURING SICi — — — — — — —
-—--
— —
— — TOTAL FOR ALL SICi
MANUFACTURING SIC.
300 400 500 600 700 800 000 1000
WASTE GENERATION RATE (kg/mo)
2000
3000 4000 6000
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D— 12
For example, a plant with sales in the 60th percentile would
generate 350 kg/mo of waste if waste volume and sales related
directly. Making the two assumptions that no correlation
exists and that a plant always generates more wastes than cor-
respond to its sales yields a worst case volume of 500 kg/mo.
This is the average for all electroplating plants generating
more than the 350 kg/mo that corresponds to sales in the 60th
percentile.
The above analysis was also applied for SIC 27——printers——
that are moderately affected by the waste generation issue.
The remaining moderately affected category——photofinishing
laboratories and portrait studios——was similar to service sta-
tions and soil preparation services in that waste generation
relates directly to economic activity——in this case square
meters of film processed.
Table D—3 lists the five SICs for which worst case sce-
narios were developed with the model and worst case volumes
corresponding to given percentiles in annual sales.
Table 0-3
MODEL AND WORST CASE WASTE GENERATION
RATES CORRESPONDING To PERCENTILE SALES
Generation Rate
Sales
SIC Percentile Model Case Worst Case
2231,225,226 25 100 775
50 350 1,240
75 2,000 2,830
3441 25 50 740
50 150 1,110
75 750 2,080
3471 25 50 460
50 200 775
75 1,500 2,375 -
27 25 25 350
50 50 540
75 300 1,390
Economic Sensitivity
The sensitivity of the analysis to the model case assump-
tion depends both on the difference in volume between the
model case and the worst case and on the additional costs that
-------
D— 13
would be incurred as a result of this difference. Figure D—3
illustrates the contribution of fixed and variable components
to per generator costs for generators in different volume cate-
gories, assuming landfill disposal techniques. It is apparent
from Figure D—3 that at the lower volume ranges the contribution
of fixed costs to total generator costs is very large. In these
volume ranges the cost differential between the model case and
worst case is very small. At higher volume ranges, where the
contribution of variable costs is greater, the analysis is more
sensitive to the model and worst case assumptions. In this
case, however, since annual sales are higher, the impact as a
percent of sales diminishes.
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D- 14
ANNUAL
COST PER
GEN ERATOR
6,000
5,000
4,000
3,000
2,000
1,000 1,500
Figure D—3
2,000
REGULATORY OPTION: EXEMPTION BY QUANTITY OF WASTE
ANNUAL COSTS PER GENERATOR
(Constant 1978 Dollars)
TOTAL COMPLIANCE COST
VARIABLE COSTS OF
‘TESTING, ADMINISTRATION,
AND HAULING
/
/
,
//
/
/
/
/
/
/
DISPOSAL COSTS
FIXED TESTING COSTS
2.500 3,000
VOLUME OF WASTE (kg/mo)
3,500 4,000 4,500 6,000
$45 in administrative costs and $88 pickup cost.
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