United States
Environmental Protection
Agency
Region IV
Air Programs Branch
Atlanta, Georgia 30308
EPA 904/9-79-035
March 1979
SEPA
Economic Impact
of Implementing
RACT Guidelines in
the Non-Attainment
Areas for Ozone
in North Carolina
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EPA 904/9-79- 03S
FINAL REPORT
ECONOMIC IMPACT OF IMPLEMENTING RACT
GUIDELINES IN THE NONATTAINMENT AREAS FOR OZONE
IN NORTH CAROLINA
TASK ORDER NUMBER 6 UNDER:
Basic Ordering Number 68-02-2544
RESEARCH AND DEVELOPMENT SERVICES FOR ASSISTANCE
TO STATES AND EPA CARRYING OUT REQUIREMENTS
OF CLEAN AIR ACT AND APPLICABLE FEDERAL
AND STATE REGULATIONS
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Prepared for:
U.S. ENVIRONMENTAL PROTECTION AGENCY
REGION IV
AIR & HAZARDOUS MATERIALS DIVISION
ATLANTA, GEORGIA 30 308
EPA PROJECT OFFICER: Winston Smith
From:
BOOZ, ALLEN & HAMILTON Inc.
March, 1979
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This air pollution report is issued by Region IV of the
U.S. Environmental Protection Agency (EPA), to assist state and
local air pollution control agents in carrying out their
program activities. Copies of this report may be obtained, for
a nominal cost, from the National Technical Information Service,
5285 Port Royal Road, Springfield, Virginia 22151.
This report was furnished to the EPA by Booz, Allen &
Hamilton Inc. in fulfillment of Task Order Number 6 of Basic
Ordering Agreement Number 68-02-2544. This report has been
reviewed by EPA Region IV and approved for publication. Approval
does not signify that the contents necessarily reflect the views
and policies of the EPA, nor does mention of trade names or
commercial products constitute endorsement or recommendation
for use.
ii
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TABLE OF CONTENTS
CHAPTER TITLE
1.0 EXECUTIVE SUMMARY
2.0 INTRODUCTION AND OVERALL STUDY
APPROACH
5.0 THE ECONOMIC IMPACT OF IMPLEMENT-
ING RACT FOR PLANTS SURFACE COAT-
ING PAPER IN MECKLENBURG COUNTY
13.0 THE ECONOMIC IMPACT OF IMPLEMENT-
ING RACT FOR TANK TRUCK GASOLINE
LOADING TERMINALS IN MECKLENBURG
COUNTY
iii
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2
3
4
1
1
2
3
4
¦ 5
•6
•7
LIST OF EXHIBITS
Exhibit Following Page
LISTING OF EMISSION LIMITATIONS THAT
REPRESENT THE PRESUMPTIVE NORM TO BE
ACHIEVED THROUGH APPLICATION OF RACT
FOR TWO INDUSTRY CATEGORIES 1-3
SUMMARY OF DIRECT ECONOMIC IMPLICATIONS
OF IMPLEMENTING RACT FOR PAPER COATERS
IN MECKLENBURG COUNTY IN THE STATE OF
NORTH CAROLINA 1-7
SUMMARY OF DIRECT ECONOMIC IMPLICATIONS
OF IMPLEMENTING RACT FOR TANK TRUCK
GASOLINE LOADING TERMINALS IN MECKLEN-
BURG COUNTY 1-7
SUMMARY OF IMPACT OF IMPLEMENTING
RACT GUIDELINES IN 2 INDUSTRIAL
CATEGORIES NON-ATTAINMENT AREAS
OF NORTH CAROLINA 1-8
LISTING OF EMISSION LIMITATIONS THAT
REPRESENT THE PRESUMPTIVE NORM TO BE
ACHIEVED THROUGH APPLICATION OF RACT
FOR FIFTEEN INDUSTRY CATEGORIES 2-4
DATA QUALITY—SURFACE COATING OF PAPER 5-5
1976 INDUSTRY STATISTICS—SURFACE
COATING OF PAPER SIC GROUPS IN
NORTH CAROLINA 5-6
COMPANIES COATING PAPER IN MECKLENBURG
COUNTY 5-6
HISTORICAL TRENDS IN VALUE OF SHIPMENTS
OF U.S. PLANTS ENGAGED IN PAPER COATING
($ MILLIONS) 5-6
EMISSION DATA FROM TYPICAL PAPER COATING
PLANTS 5-8
VOC EMISSIONS FROM PAPER COATING FACIL-
ITIES IN MECKLENBURG COUNTY IN 1977 5-10
ACHIEVABLE SOLVENT REDUCTIONS USING LOW
SOLVENT COATINGS IN PAPER COATING INDUSTRY 5-11
IV
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Exhibit
Following Page
5-8 SUMMARY OF ASSUMPTIONS USED IN COST
ESTIMATE 5-16
5-9 SUMMARY OF DIRECT ECONOMIC IMPLICATIONS
OF IMPLEMENTING RACT FOR PAPER COATERS
IN MECKLENBURG COUNTY IN THE STATE OF
NORTH CAROLINA 5-20
13-1 DATA QUALITY 13-3
13-2 INDUSTRY STATISTICS FOR BULK TERMINALS
IN MECKLENBURG COUNTY 13-5
13-3 GASOLINE DISTRIBUTION NETWORK 13-5
13-4 BOC EMISSION CONTROL TECHNOLOGY FOR
TANK TRUCK GASOLINE LOADING TERMINALS 13-8
13-5 DEFINITION OF MODEL TANK TRUCK GASOLINE
LOADING TERMINALS 13-10
13-6 ESTIMATED COST OF VOC CONTROL FOR
MODEL TANK TRUCK GASOLINE LOADING
TERMINALS 13-10
13-7 COSTS OF VAPOR CONTROL SYSTEMS FOR
TANK TRUCK GASOLINE LOADING TERMINALS
IN MECKLENBURG COUNTY 13-11
13-8 SUMMARY OF DIRECT ECONOMIC IMPLICATIONS
OF IMPLEMENTING RACT FOR TANK TRUCK
GASOLINE LOADING TERMINALS IN MECKLEN-
BURG COUNTY 13-14
v
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1.0 EXECUTIVE SUMMARY
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1.0 EXECUTIVE SUMMARY
This chapter summarizes the major elements and most
significant findings of this study to determine the econ-
omic impact of implementing Reasonably Available Control
Technology (RACT) guidelines for volatile organic compounds
for two industrial categories in the non-attainment areas
of North Carolina. Mecklenburg County currently is the only
area designated as "non-attainment" in North Carolina.
Further discussion and data are presented in detail in the
subsequent chapters of the report. This Executive Summary
is divided into two sections:
Objectives, Scope and Approach
Economic Implications of Each RACT
Guideline and Non-Attainment Area
Aggregate
1-1
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1.1 OBJECTIVES, SCOPE AND APPROACH
The Clean Air Act Amendments of 1977 required the states
to revise their State Implementation Plans (SIPs) to provide
for the attainment and maintenance of national ambient air
quality standards in areas designated as nonattainment. The
Amendments require that each state submit the SIP revisions
to the U.S. Environmental Protection Agency (EPA) by January
1, 19 79. These proposed regulations should contain an oxidant
plan submission for major urban areas to reflect the applica-
tion of Reasonably Available Control Technology (RACT) to
stationary sources for which the EPA has published guidelines.
The Amendments also require that the states identify and analyze
the air quality, health, welfare, economic, energy and social
effects of the plan provisions.
1.1.1 Objectives
The major objective of the contract effort was to assist
the states in the determination of the direct economic impact
of selected segments of their SIPs for six states (Alabama,
Georgia, Kentucky, North Carolina, South Carolina and Tennessee)
of Region IV of the U.S. Environmental Protection Agency. These
studies will be used primarily to assist EPA arid state decisions
on achieving emission limitations.
1.1.2 Scope
The scope of this project for North Carolina was to determine
the costs and direct impacts of control to achieve RACT guide-
line limitations in two industrial categories in Mecklenburg
County. The impact was addressed for each industry and for
each state so that the respective studies are applicable to
individual state regulations. Direct economic costs and benefits
from the implementation of the RACT guidelines were identified
and quantified. While secondary (energy, employment, etc.)
impacts were addressed, they were not a major emphasis in the
study. In summary, direct economic impact analysis of each
industrial category was aggregated on a statewide basis (for
North Carolina, only one county is designated as non-attainment
for ozone, therefore the analysis was aggregated county-wide)
for the RACT categories studied.
1-2
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In North Carolina, the economic impact was analyzed for the
implementation of RACT guidelines for the following industry
categories:1
Surface coating of paper
Bulk gasoline terminals
The major study guidelines in the determination of the
economic impact of the RACT guidelines are discussed below.
Emissions sources included were existing
stationary point sources in the applicable
industrial categories with potential VOC
emissions greater than 100 tons in Mecklenburg
County, which is classified an nonattainment
for ozone. This study does not address the
economic impact of implementing RACT guide-
lines in other areas of North Carolina.
The emission limitations for each industrial
category were studied at the control level
established by the RACT guidelines. These are
presented in Exhibit 1-1, on the following page.
All costs and emission data were presented for
1977.
1. In a preliminary draft report, Booz, Allen had studied
10 RACT categories including the following: metal cans,
fabrics, metal furniture, large applicances, solvent
metal cleaning, bulk gasoline plants, service stations,
and use of cutback asphalt as well as the two listed
above. The report included sources with emissions
greater than 3 pounds per hour or 15 pounds per day
in Mecklenburg County and sources with potential
emissions of 100 tons or more in other areas of the
state. This final report is adopted to proposed
changes in the state regulations.
1-3
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EXHIBIT 1-1
U.S. Environmental Protection Agency
LISTING OF EMISSION LIMITATIONS THAT REPRESENT
THE PRESUMPTIVE NORM TO BE ACHIEVED THROUGH
APPLICATION OF RACT FOR TWO INDUSTRY CATEGORIES
Category
RACT Guideline Emission Limitationsa
Surface Coating Categories Based on Low Organic
Solvent Coatings (lbs. solvent per gallon of
coating, minus water)
Surface Coating of Paper
2.9
Bulk Gasoline Terminals
Vapor control system may not allow mass emis-
sions of VOC from control equipment to exceed
80 milligrams per liter (4.7 grains per
gallon) of gasoline loaded.
a. Annotated description of RACT guidelines.
Source: Regulatory Guidance for Control of Volatile Organic Compound Emissions
from 15 Categories of Stationary Sources, U.S. Environmental Protection
Agency, EPA-90512-78-001, April 1978.
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The following volatile organic compounds were
exempted:
Methane
- Ethane
Trichlorotrifluorethane
1,1,1-trichloroethane (methyl chloroform) .
The timing requirement for implementation of
controls to meet RACT emission limitations was
May 1, 1980 for cutback asphalt and May 1, 1982
for the other industry categories.
1.1.3 Approach
The approach applied to the overall study was: a study
team with technology and economic backgrounds utilized avail-
able secondary sources to estimate the emissions, statistics
and costs for each RACT industrial category; then, the study
team completed, calibrated and refined these estimates based
on interviews with industry representatives in the state.
For the two RACT industrial categories studied (surface
coating of paper and bulk gasoline terminals), the potentially
affected facilities, emissions and emission characteristics were
obtained primarily from the North Carolina Department of National
Resources and Community Development. Therefore, the following
generalized methodology was applied:
A list of potentially affected facilities
was compiled from secondary reference sources.
Data from the North Carolina emission inventory
were categorized and compiled for each RACT
industrial category.
Firms not listed in the emission inventory
were identified. Some of these facilities
were then contacted by telephone when there
was doubt concerning their inclusion.
Emissions, emission characteristics, control
options and control costs were studied for
relevant firms.
Interviews were conducted to determine appli-
cable control options and potential control
costs.
The study team then evaluated the control cost
to meet the RACT requirements and the potential
emission reduction.
1-4
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1.1.4 Quality of Estimates
The quality of the estimates that are presented in this
report can be judged by evaluating the basis for estimates of
the individual study components. In each of the chapters that
deal with the development of estimated compliance cost, the
sources of information are fully documented. In addition, the
study team has categorically ranked by qualitative judgment
the overall data quality of the major sources and, therefore,
of the outcomes. These data quality estimates were ranked
into three categories:
High quality ("hard data")—study inputs with
variation of not more than + 25 percent
Medium quality ("extrapolated data")—study
inputs with variation of + 25 to 75 percent
Low quality ("rough data")—study inputs with
variation of + 50 to 150 percent.
Each of these data quality estimates is presented in the
individual chapters. The overall quality ranking of the study
inputs for each RACT industrial category was generally in the
medium quality range.
1-5
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1.2 ECONOMIC IMPLICATIONS OF EACH RACT GUIDELINE
AND NONATTAINMENT AREA AGGREGATE
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1.2 ECONOMIC IMPLICATIONS OF EACH RACT GUIDELINE
AND NONATTAINMENT AREA AGGREGATE
This section presents a summary of the economic impact
for the two RACT categories studied in North Carolina.
The scope of this study is limited because of the appli-
cability of the proposed VOC regulations:
There is only area classified as nonattainment
for ozone in North Carolina — Mecklenburg
County.
The proposed regulations apply only to sources
with potential VOC emissions of 100 tons per
year or greater.
After a review of the potentially affected facilities in
Mecklenburg County, it was determined that facilities in three
RACT categories would be applicable to the proposed regulations
(potential emissions greater than 100 tons annually). These
categories were surface coating of paper, surface coating of
fabrics and bulk gasoline terminals. Only one facility was
potentially affected by the surface coating of fabrics RACT
guideline, therefore, it was determined that surface coating
of fabrics should not be included in this economic impact
study. Although the cost impact might be significant for
the individual fabric coating firm excluded, it is unlikely
that the economic or energy impact would be significant at
the macrolevel (statewide).
1.2.1 Surface Coating of Paper
This study covered two plants in Mecklenburg identified
from the RACT requirements for paper coaters. Excluded from
this study are facilities engaged in publishing, who may
coat paper as a segment of the processing line. The study
assumes that these facilities would fall under other RACT
guidelines currently being developed, such as Graphic Arts.
Further definition of the paper coating category should be
established prior to enforcement.
The retrofit situations and installation costs for add-
on control are highly variable. Based on these variations,
the estimated capital cost to these two plants is between
$1.5 million and $1.9 million, with an annualized cost of
$0.35 million to $0.5 million (approximately 1.3 percent of
the statewide value of shipments). Nationwide some dislocation
in the paper coating industry may occur unless more cost-
effective means of control (such as waterbased coatings) can
be applied.
1-6
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Assuming 35 percent heat recovery, the annual energy re-
quirements are expected to increase by approximately 1,200
equivalent barrels of oil per year. Energy consumption may
decrease if further efficient recovery of incinerator heat is
possible.
Incinerator equipment manufacturers have stated that
there may be significant problems in meeting the anticipated
demand for high heat reocvery incinerators on a nationwide
basis.
Exhibit 1-2 on the following page presents highlights
of the study findings which are presented in detail in Chapter
5 of the report.
1.2.2 Tank Truck Gasoline Loading Terminals
There are an estimated 14 terminal facilities in
Mecklenburg County affected by the limitation requirements.
Emission control of these facilities is expected to require
a capital investment of $3.8 million. Product recovery of
gasoline will be accrued only from bulk terminal emission
control installations, and not from the potential recovery
of vapors from service stations and bulk gasoline plants.
The net annualized cost for implementation of RACT for bulk
gasoline loading terminals is estimated to be $0.81 million.
No significant productivity, employment or market
structure dislocations should be associated with implementing
the RACT guidelines.
Exhibit 1-3 on the following page presents highlights of
the study findings, which are presented in detail in Chapter
13 of the report.
1.2.3 Aggregate Economic Impact for the Two RAGT
Categories Studied
The implementation of RACT emission limitations for two
industrial categories in Mecklenburg County of North Carolina
involves an estimated $5.5 million capital cost and $1.2
million annualized cost per year. The net VOC emission
reduction is estimated to be 3,456 tons annually from a
1977 baseline of 3,928 tons for these categories. Exhibit
1-4, on the following page, presents a quantitative summary
of the emissions, estimated cost of control, cost indicators
and cost effectiveness of implementing RACT guidelines for
six industrial categories.
1-7
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EXHIBIT 1-2(1)
U.S. Environmental Protection Agency
SUMMARY OF DIRECT ECONOMIC IMPLICATIONS OF
IMPLEMENTING RACT FOR PAPER COATERS
IN MECKLENBURG COUNTY
IN THE STATE OF NORTH CAROLINA
Current Situation
Discussion
Number of potentially affected facilities
Indication of relative importance of the
industrial sector to the state economy
Current industry technology trends
1977 VOC emissions (actual)
Industry preferred method of VOC control
to meet RACT guidelines
Assumed method of control to meet RACT
guidelines
Affected Areas in Meeting RACT
Capital investment (countyvide)
Annualized cost (countywide)
Two plants are expected to be affected
by these regulations. However, if this
category were to be interpreted to include
all types of paper coating, including
publishing, far more firms would be affected.
The 1977 value of shipments of these two
plants is estimated to be about $33 million.
They are estimated to employ 505 people.
Gravure coating replacing older systems.
Approximately 881 tons per year from
two plants affected by RACT.
Though low solvent use is increasing,
progress is slow. Add-on control systems
will probably be used.
Thermal incineration with primary heat
recovery and carbon adsorption.
Discussion
Estimated to be $1.5 million to $1.9
million depending on retrofit situations.
This is likely to be more than 100 percent
of normal expenditures for the affected
paper coaters.
$0.35 million to $0.5 million annually.
This represents 1.1 to 1.5 percent of the
value of shipments for the two firms
directly affected.
Price
Assuming a "direct cost pass-through"-- 1.1
to 1.5 percent at the two affected firms.
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EXHIBIT 1-2(2)
U.S. Environmental Protection Agency
Affected Areas in Meeting RACT
Energy
Productivity
Employment
Market structure
RACT timing requirements (1982)
Problem areas
VOC emissions after control
Cost effectiveness of control
Discussion
Assuming 35 percent heat recovery from
the incineration system, annual energy
requirements are expected to increase by
approximately 1,200 equivalent barrels
of oil.
No major impact.
Marginal impact possible.
Marginal impact possible.
Equipment deliverables and installation of
incineration systems prior to 1982 are
expected to present problems. Development
of low solvent systems is likely to extend
beyond 1982.
RACT guideline needs clear definition for
enforcement.
Retrofit situations and installation costs
are highly variable.
Type and cost of control depend on par-
ticular solvent systems used and reduction
in air flow. '
Approximately 167 tons/year (19 percent of
1977 VOC emission level from two affected
plants).
$490 - $700 annualized cost/annual ton
of VOC reduction.
Source: Booz, Allen & Hamilton Inc.
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Exhibit 1-3
U.S. Environmental Protection Agency
SUMMARY OF DIRECT ECONOMIC IMPLICATIONS OF
IMPLEMENTING RACT FOR TANK TRUCK GASOLINE
LOADING TERMINALS IN MECKLEN3URG COUNTY
Current Situation
Number of potentially affected
facilities
Indication of relative importance
of industrial section to state
economy
Current industry technology trends
1977 VOC actual emissions
Industry preferred method of VOC
control to meet RACT guidelines.
Affected Areas in Meeting RACT
Capital investment (countywide)
Annualized cost (countywide)
Price
Energy
Productivity
Employment
Market structure
Discussion
14
1977 industry sales were $616 million. The
estimated annual throughput was 1.45 billion
gallons
New terminals are currently being designed
with vapor recovery equipment
3,048 tons per year
Submerge or bottom fill and vapor recovery
Discussion
$3.8 million
$0.81 million (approximately) 0.12 percent
of value of shipment)
Assuming a direct cost passthrough-$0.0005
per gallon
Assuming full recovery of gasoline-net
savings of 19,200 barrels annually from
terminal emissions
No major impact
No direct impact
No direct impact
VOC emission after control
Cost effectiveness of control
305 tons per year
$295 annualized cost/annual ton of VOC
reduction frcm terminals assuming no gaso-
line credit from vapors potentially
returned from bulk gasoline plants and
gasoline service stations
Source: Booz, Allen & Hamilton Inc.
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EXHIBIT 1-4
U.S. Envi ronmcntal Protection Agency
SUMMARY Or IMPACT OK IMPLEMENTING RACT
GUIDELINES IN 2 INDUSTRIAL CATEGORIES — NON-ATTALNMBNT
AREAS OF NORTH CAROLINA
Emissions
Cost of RACT Control
Industry Category
Surface coating
of paper
Tank Lruck gasoline
TOTAI.
Number of
Facili ties
Potentially
Af fected
H
16
1977 VOC
Emissions
(tons/yr.)
880
3,048
3,928
Estimated VOC
Emissions
After
Implementing
RACT
(tons/yr-)
167
305
472
Net VOC
Emiss ion
Reductions
Capital
Costa
(tons/yr.) ($ millions)
713
2,743
3,456
1.7
3. 8
5.5
Annualized
Cost (Credit)
($ millions)
0.4
0.81
Cost Indicators
Annualized
Cost as
Percent of
Value of
Shipments*3
(percent)
1.3
0.12
Annualized
Cost Per
Unit
Shipment
Cost
Ef fcctiveness
Annua 1i zed
Cost (credit)
Per Ton of VOC
Reduction
(cost per unit) ($ per Lons/yr.)
GOO
0.0005/gal.
295
1.2
Note: Figures presented in this exhibit are rounded and approximated for comparison purposes.
a. Includes one time costs
b. Value of shipments represents the total value in the specific industry category.
Source: liooz. Alien & llamiiton Inc.
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The implementation of the RACT guidelines for the two
industrial categories is estimated to represent a net energy
savings of 18,000 equivalent barrels of oil annually. Assuming
a value of oil at $13 per barrel, this is an equivalent energy
savings of $234,000 annually.
RACT compliance requirements for bulk
gasoline terminals represent a net energy
savings of approximately 19,200 barrels
of oil annually.
RACT compliance requirement for surface
coating of paper represents a net energy
demand of approximately 1,200 equivalent
barrels of oil annually.
* * *
The remaining chapters present details on the findings
that are presented in the Executive Summary.
1-8
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INTRODUCTION AND OVERALL
STUDY APPROACH
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2.0 INTRODUCTION AND OVERALL
STUDY APPROACH
This chapter presents an overview of the study's pur-
pose, scope and methodology. It is divided into six sec-
tions :
Background
Summary of State Implementation Plan revisions
and state's need for assistance
Scope
Approach
Quality of estimates
Definition of terms used.
Each of these sections is discussed below.
The approach and quality of estimates is discussed
in detail in each of the respective chapters dealing with
the specific industrial categories affected by the volatile
organic compounds control regulations.
2-1
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2.1. BACKGROUND
The Clean Air Act Amendments of 1977 required the
states to revise their State Implemtation Plans (SIPs)
to provide for the attainment and maintenance of national
ambient air quality standards in areas designated as
non-attainment. The Amendments require that each state
submit the SIP revisions to the U.S. Environmental
Protecton Agency (EPA) by January 1, 1979. These proposed
regulations should contain an oxidant plan submission
for major urban areas to reflect the application of
Reasonably Available Control Technology (RACT) to stationary
sources for which the EPA has published guidelines. The
Amendments also require that the states identify and
analyze the air quality, health, welfare, economic,
energy and social effects of the plan provisions.
Under the drection of Region IV, the EPA contracted
with Booz, Allen & Hamilton Inc. (Booz, Allen) to
assist the states of Alabama, Georgia, Kentucky, North
Carolina, South Carolina and Tennessee in analyzing the
economic, energy and social impacts of the SIP revisions
proposed by these states. The assignment was initiated
on September 28, 1978, and, as a first step, the proposed
SIP revisions and the type of assistance desired by each
state were reviewed.
After a review with each of the states and EPA
Region IV representatives, a work scope was defined that
would include in the study an analysis of the direct
economic and energy impacts for those industrial segments
most likely to have a significant impact at the statewide
level. For the most part this included industrial
categories that had more than a few facilities potentially
affected. The next section discusses those specific
industrial categories included in this work scope.
2-2
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2.2 SUMMARY OF PROPOSED SIP REVISIONS IN NORTH CAROLINA
AND THE STATE'S NEED FOR CONTRACTOR SUPPORT
North Carolina has recently revised its proposed regula-
tions to reduce volatile organic compounds (VOC) emissions by
implementing the Reasonably Available Control Technology
(RACT) guidelines developed by the EPA for existing station-
ary sources. Its scope is limited to non-attainment areas
for ozone in North Carolina. Currently only one area is
designated as such--Mecklenburg County. The state is also
studying implementation of motor vehicle inspection/mainten-
ance programs in the non-attainment areas.
The state officials were interviewed to determine
their need for support in analyzing the economic impact
of the SIP revisions. The analysis of implementing the
RACT guidelines for reducing VOC emissions was expressed
as the fundamental concern. Specifically, the state
needed assistance in the analysis of 2 of the 15 industrial
categories for which the EPA has published RACT guidelines.
These 2 RACT industrial categories are described in the next
section. The other thirteen industrial categories (surface
coating of coil, automobiles, large appliances, fabrics,
cans metal furniture, and magnet wire insulation; miscellan-
eous refinery sources; bulk gasoline plants; service stations;
use of cutback asphalt; solvent metal cleaning and storage
of petroleum liquids in fixed roof tanks) were excluded from
this study because none or a very limited number of sources
were affected by the proposed regulation in those categories.
Although the cost impact in those categories excluded might
be significant for an individual firm studied, it is unlikely
that the economic or energy impact of the macrolevel (county-
wide) would be significant.
2-3
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2.3 SCOPE
The primary objective of this study is to determine
the costs and impact of compliance with the proposed SIP
revisions for six states in EPA Region IV. The study
will emphasize the analysis of direct economic costs and
benefits of the proposed SIP revisions. Secondary
(employment and energy) impacts will also be addressed but
are not the major study emphasis.
In the non-attainment area of ozone of North Carolina,
the economic impact will be analyzed for the implementation
of RACT guidelines to reduce VOC emissions from the following
2 industry categories:
Surface coating of paper
Bulk gasoline terminals
The major study guidelines in the determination of
the economic impact of the RACT guidelines are discussed
below.
The emission limitations for each industrial
category will be studied at the control level
established by the RACT guidelines. These are
presented in Exhibit 2-1, on the following
page.
All costs and emissions data were presented
for 1977.
Emissions sources included were existing
stationary point sources in the applicable
industrial categories with potential VOC
emissions greater than 100 tons per year
in Mecklenburg county, which is classified
as nonattainment for ozone.
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EXHIBIT 2-1
U.S. Environmental Protection Agency
LISTING OF EMISSION LIMITATIONS THAT REPRESENT
THE PRESUMPTIVE NORM TO BE ACHIEVED THROUGH
APPLICATION OF RACT FOR TWO INDUSTRY CATEGORIES
Category
RACT Guideline Emission Limitations3
Surface Coating Categories Based on Low Organic
Solvent Coatings (lbs. solvent per gallon of
coating, minus water)
Surface Coating of Paper
2.9
Bulk Gasoline Terminals
Vapor control system may not allow mass emis-
sions of VOC from control equipment to exceed
80 milligrams per liter (4.7 grains per
gallon) of gasoline loaded.
a. Annotated description of RACT guidelines.
Source: Regulatory Guidance for Control of Volatile Organic Compound Emissions
from 15 Categories of Stationary Sources, U.S. Environmental Protection
Agency, EPA-90512-78-001, April 1978.
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The following volatile organic compounds were
exempted:
Methane
Ethane
Trichlorotrifluorethane
1,1,1 Trichloroethane (methyl chloroform).1
The timing requirement for implementation of
controls to meet RACT.emission limitations was
May 1, 1980 for cutback asphalt and May 1, 1982
for the other industry categories.
the exemption status of methyl chloroform under these guidelines
may be subject to change.
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2.4 APPROACH
This section describes the overall approach and
methodology applied in this assignment. In general, the
approach varied for each state and also for each industrial
category studied. This section specifically describes
the overall approach that was applied for the State of
North Carolina. The methodology applied to determine the
economic impact for each industrial category in the non-
attainment areas of North Carolina is described in further
detail in the first section of each chapter dealing with
the specific industry category.
There are five parts to this section to describe
the approach for determining estimates of:
Industry statistics
VOC emissions
Process descriptions
Cost of controlling VOC emissions
Comparison of direct costs with selected
direct economic indicators.
2.4.1. Industry Statistics
The assembly of economic and statistical data for
each industrial category was an important element in
establishing the data base that was used for projection
and evaluation of the emissons impact. Some of the
major variables for each industrial category were:
Number of manufacturers
Number of employees
Value of shipments
Number of units manufactured
Capital expenditures
Energy consumption
Productivity indices
2-6
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Current economic (financial) status
Industry concentration
Business patterns (small vs. large; downstream
integration)
Age distribution of facilities
Future trends and developments.
For the industrial categories studied, a more deliberate
approach was applied to determine those facilities potentially
affected.
For the surface coating of paper category,
the facilities potentially affected by the
RACT guidelines were identified from both
the state emission data and secondary data
sources.
These two independently compiled lists
were then correlated to identify the
facilities potentially affected but
not listed as VOC emitters in the
state emission data. The North Carolina
Department of Natural Resources and
Community Development then verified
those potentially affected facilities.
The Booz, Allen study team then per-
formed telephone interviews with the
facilities identified where there was
doubt concerning inclusion.
For bulk gasoline terminals the list of potentially
affected facilities was compiled by the North
Carolina Department of Natural Resources and
Community Development.
Industry category statistical data were compiled
using secondary sources such as:
Department of Commerce
Census of Manufacturers
Trade associations
- Bureau of Labor Statistics
National Technical Information Services.
2-7
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The industry statistical data were refined by
two mechanisms:
Assessing the statistical data for
reasonableness in comparison to the
preliminary list of potentially
affected facilities
Using industry and association
interviews for completion and
validation.
2.4.2 VOC Emissions
An approach that made maximum utilization of the
existing state emission data was defined. State repre-
sentatives were interviewed to determine the completeness
and validity of emission data available for each RACT
industrial category. It was determined that VOC emission
data for all potentially affected industrial sources were
not available. Therefore, emissions were determined by
the Booz, Allen study team using different approaches
depending upon the availability of data on emissions and
characterisitcs of affected facilities.
For bulk gasoline terminals, emissions
were estimated by using facility char-
acteristics data provided by the state
and emission factors developed by U.S.
EPA.
For the surface coating of paper, emissions
were obtained from the state emissions
inventory as well as estimated by using data
provided by the industry to Booz, Allen
during telephone interviews (when not
available in the emissions inventory).
2.4.3 Process Descriptions
For each of the industrial categories, the basic
technology and emission date were reviewed and summarized
concisely for subsequent evaluation of engineering
alternatives. In this task, the RACT documents that had
been prepared for each industrial category and other air
pollution control engineering studies served as the
basis for defining technological practice. Additional
alternatives of control that met the requirements of the
RACT guidelines were identified from literature search.
The most likely control alternatives were assessed and
evaluated by:
Tehcnical staff at Booz, Allen
Interviews with industry representatives
Interviews with EPA representatives
Interviews with equipment manufacturers.
2-8
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2.4.4
Cost of Controlling VOC Emissions
The cost of control to meet the requirements of the
RACT guidelines had been presented in the RACT documents,
other technical EPA studies and trade journal technical
documents and by industry representatives. The approach
applied in developing capital and annualized cost estimates
was to:
Utilize available secondary source information
as the primary data source
Validate the control alternatives industry is
likely to apply
Calibrate these cost estimates provided in
technical documents.
It was not within the purpose or the scope of this
project to provide detailed engineering costs to estimate
the cost of compliance.
Cost data presented within the body of the report
were standardized in the following manner:
All cost figures are presented for a base
year, 1977.
Capital cost figures represent installed
equipment cost including:
Engineering
Design
Materials
Equipment
Construction.
The capital cost estimates do not account for
costs such as:
Clean-up of equipment
Lost sales during equipment downtime
Equipment start-up and testing
Initial provisions (spare parts).
Capital related annual costs are estimated at
25 percent of the total capital cost per year
(unless explicitly stated otherwise). The
estimation procedure applied was built up from
the following factors:
2-9
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Depreciation — straight-line over a
ten-year life
Interest — 10 percent
Taxes and insurance — 4 percent
Maintenance — 5 percent.
The capital-related annual costs do not account
for investment costs in terms of return or
investment parameters (i.e., the "opportunity
cost" of money is not included).
Annual operating costs of compliance with the
RACT guidelines were estimated for each of the
control alternatives studied. The annual
operating costs included were:
Direct labor
Raw material costs (or savings)
Energy
Product recovery cost (or savings)
Maintenance.
Other types of costs, not included in this analy-
sis, involve compliance costs, such as:
Demonstration of control equipment efficiency
Supervisory or management time
Cost of labor or downtime during installa-
tion and startup.
The annualized cost is the total of direct
operating costs (including product or raw
material recovery) and the capital related
annual costs.
2.4.5 Comparison of Direct Cost with Selected Direct
Economic Indicators
In each of the industrial categories studied, after the
costs (or savings) of compliance had been determined, these
costs were compared with selected economic indicators. This
comparison was performed to gain a perspective on the com-
pliance costs rather than to estimate price changes or other
secondary effects of the regulation. Presented below are
typical comparisons of direct costs with indicators that
are presented in this study.
2-10
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Annualized cost in relation to current price—To
gain a perspective on the compliance cost in re-
lation to current prices of the manufactured items
at the potentially affected facilities, the annu-
alized cost is presented in terms of a price in-
crease assuming a direct pass-through of costs to
the marketplace.
This analysis was based on the average cost
change (including those facilities that may
have little or no economic impact associated
with meeting the proposed standards) divided
by the average unit price of goods manufactured.
For this reason as well as many others (that
might be addressed in a rigorous input-output
study to estimate eventual price increase),
this analysis should not be interpreted as
forecast of price changes due to the proposed
standards.
Annualized costs as a percent of current value of
shipment—The annualized costs applied are for all
those facilities potentially affected divided by
the estimated value of shipments for the statewide
industrial category (i.e., including those facilities
which currently may meet the proposed standard).
This approach tends to understate the effect to
those specific firms requiring additional ex-
penditures to meet the proposed standard. There-
fore, when available, the compliance cost is also
presented as a percent of the value of shipments
for only those firms not currently meeting the
proposed regulation.
Capital investment as a percent of current annual
capital appropriations—Estimated statewide capital
investment for the potentially affected facilities
divided by the estimated capital appropriations for
the industry affected as a whole in the state (in-
cluding those facilities that may not require any
capital investment to meet the proposed standard).
2-11
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2.5 QUALITY OF ESTIMATES
The quality of the estimates that are presented in
this report can be judged by evaluating the basis for
estimates of the individual study components. In each
of the chapters that deal with the development of estimated
compliance cost, the sources of information are fully
documented. In addition, the study team has categorically
ranked the overall data quality of the major sources and,
therefore, of the outcomes. These data quality estimates
were ranked into three categories:
High quality ("hard data")—study inputs with
variation of not more than ± 25 percent
Medium quality ("extrapolated data")—study inputs
with variation of ± 25 to 75 percent
Low quality ("rough data")—study inputs with
variation of ± 50 to 150 percent.
Each of these data quality estimates is presented in
the individual chapters. The overall quality ranking of
the study inputs for each RACT industrial category was
generally in the medium quality range.
2-12
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2.6 DEFINITIONS OF TERMS
Listed below are definitions of terms that are used
in the body of the report:
Capture system—the equipment (including
hoods, ducts, fans, etc.) used to contain,
capture, or transport a pollutant to a
control device.
Coating applicator—an apparatus used to
apply a surface coating.
Coating line—one or more apparatuses or
operations which include a coating appli-
cator, flash-off area and oven, wherein
a surface coating is applied, dried and/
or cured.
Control device—equipment (incinerator,
adsorber or the like) used to destroy
or remove air pollutant(s) prior to dis-
charge to the ambient air.
Continuous vapor control system—a vapor
control system that treats vapors displaced
from tanks during filling on a demand basis
without intermediate accumulation.
Direct cost pass-through—the relationship
of the direct annualized compliance cost
(increase or decrease) to meet the RACT
limitations in terms of units produced
(costs per unit value of manufactured goods.)
Emission—the release or discharge, whether
directly or indirectly, of any air pollutant
into the ambient air from any source.
Facility—any building, structure, installa-
tion, activity or combination thereof which
contains a stationary source of air contam-
inants .
Flashoff area—the space between the appli-
cation area and the oven.
Hydrocarbcn--any organic compound of carbon
and hydrogen only.
2-
-------
Incinerator--a combustion apparatus designed
for high temperature operation in which solid,
semisolid, liquid or gaseous combustible
wastes are ignited and burned efficiently
and from which the solid and gaseous residues
contain little or no combustible material.
Intermittent vapor control system--a vapor
control system that employs an intermediate
vapor holder to accumulate vapors displaced
from tanks during filling. The control
device treats the accumulated vapors only
during automatically controlled cycles.
Loading rack—an aggregation or combination
of gasoline loading equipment arranged so
that all loading outlets in the combination
can be connected to a tank truck or trailer
parked in a specified loading space.
Organic material—a chemical compound of
carbon excluding carbon monoxide, carbon
dioxide, carbonic acid, metallic carbides
or carbonates, and ammonium carbonate.
Oven--a chamber within which heat is used
to bake, cure, polymerize and/or dry a
surface coating.
Prime coat—the first film of coating
applied in a two-coat operation.
Reasonably available control technology
(RACT)—the lowest emission limit as defined
by EPA that a particular source is capable
of meeting by the application of control
technology that is reasonably available
considering technological and economic
feasibility. It may require technology
that has been applied to similar, but not
necessarily identical, source categories.
Reid vapor pressure—the absolute vapor
pressure of volatile crude oil and volatile
nonviscous petroleum liquids, except liqui-
fied petroleum gases, as determined by
American Society for Testing and Materials,
Part 17, 1973, D-323-72 (Reapproved 1977).
Shutdown—the cessation of operation of
a facility or emission control equipment.
2-14
-------
Solvent—organic material which is
liquid at standard conditions and which is
used as a dissolver, viscosity reducer or
cleaning agent.
Standard conditions--a temperature of 20°C
(68°F) and pressure of 760 millimeters of
mercury (29.92 inches of mercury).
Startup—the setting in operation of a source
or emission control equipment.
Stationary source—any article, machine,
process equipment or other contrivance from
which air pollutants emanate or are emitted,
either directly or indirectly, from a fixed
location.
Topcoat—the final film of coating applied
in a multiple coat operation.
True vapor pressure—the equilibrium partial
pressure exerted by a petroleum liquid as
determined in accordance with methods described
in American Petroleum Institute Bulletin 2517,
"Evaporation Loss from Floating Roof Tanks,"
1962.
Equivalent barrel of oil—energy demand is
converted into barrels of oil at the conver-
sion rate of 6,000,000 BTU per barrel of
oil.
Vapor collection system—a vapor transport
system which uses direct displacement by the
liquid loaded to force vapors from the tank
into a vapor control system.
Vapor control system—a system that prevents
release to the atmosphere of at least 90
percent by weight of organic compounds in
the vapors displaced from a tank during
the transfer of gasoline.
Volatile organic compound (VOC)—any compound
of carbon that has a vapor pressure greater
than 0.1 millimeters of mercury at standard
conditions excluding carbon monoxide, carbon
dioxide, carbonic acid, metallic carbides
or carbonates and ammonium carbonate.
2-15
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5.0 THE ECONOMIC IMPACT OF IMPLEMENT-
ING RACT FOR PLANTS SURFACE COATING
PAPER IN MECKLENBURG COUNTY
-------
5.0 THE ECONOMIC IMPACT OF IMPLEMENTING
RACT FOR PLANTS SURFACE COATING PAPER
IN MECKLENBURG COUNTY
This chapter presents a detailed analysis of the impact
of implementing RACT for plants, located in Mecklenburg
County in the State of North Carolina, which are engaged in
the surface coating of paper. This is meant to include pro-
tective or decorative coatings put on paper, pressure-sensi-
tive tapes regardless of substrate, related web coating
processes on plastic film and decorative coatings on metal
foil, but does not include conventional printing processes
which apply inks.
This analysis includes those paper coaters in the non-
attainment area with potential emissions greater than 100
tons per year.
The chapter is divided into five sections:
Specific methodology and quality of estimates
Industry statistics
The technical situation in the industry
Cost and VOC reduction benefit evaluations
for the most likely RACT alternatives
Direct economic impacts.
Each section presents detailed data and findings based
on analyses of the RACT guidelines; previous studies of
paper coating; interviews with paper coaters, coating equip-
ment manufacturers and materials manufacturers; and a review
of pertinent published literature.
5-1
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5.1 SPECIFIC METHODOLOGY AND QUALITY OF ESTIMATES
This section describes the methodology for determining:
Industry statistics
VOC emissions
Processes for controlling VOC emissions
Cost of controlling VOC emissions
Economic impacts
for plants engaged in the surface coating of paper. The
quality of these estimates is discussed in the last part
of this section.
5.1.1 Industry Statistics
Paper coating is practiced in a number of industries.
Among products that are coated using organic solvents
are: adhesive tapes; adhesive labels; decorated, coated
and glazed paper; book covers; office copier paper;
carbon paper; typewriter ribbons; photographic film;
paper cartons; and paper drums. The firms coating paper
are classified in a number of groupings in the U.S.
Department of Commerce's Standard Industrial Classifi-
cation system. The major coaters may be found in the
following 16 SIC groups:
SIC Description
2611 Pulp mills
2621 Paper mills, except building paper mills
2631 Paperboard mills
2641 Paper coating and glazing
2643 Bags, except textile bags
2645 Diecut paper and paperboard and cardboard
2649 Paper converting, n.e.c.
2651 Folding paperboard boxes
3291 Abrasive products
3292 Asbestos products
3293 Gaskets, packing and sealing devices
3497 Metal foil and leaf
3679 Electronic components, n.e.c.
3842 Orthopedic, prosthetic and surgical
appliances and supplies
3861 Photographic equipment and supplies
3955 Carbon paper and inked ribbons
5-2
-------
This list does not include plants listed in the SIC
category 2700 (Printing, Publishing and Allied Industries),
where paper coating other than printing may also be a
part of the overall processing of the printed product.
Statistics concerning these industries were obtained
from a number of sources. All data where possible were
converted to the base year 1977 for the state, using
scaling factors developed from U.S. Department of Commerce
data as presented in County Business Patterns. The
primary sources of economic data were the 1972 Census of
Manufactures and 1976 Annual Survey of Manufactures.
The list of firms in Mecklenburg County likely to be
affected by the proposed regulations was compiled by Booz,
Allen using the 1976-77 Directory of North Carolina Manu-
facturing Firms and was crosschecked with the list compiled
by the North Carolina Department of Natural Resources and
Community Development (DNRCD) and the Mecklenburg County
Department of Environmental Health. The state and county
officials conducted telephone interviews with the identified
firms to resolve any conflict between the two lists. Based
on the above information, three firms were identified as
paper coaters in the county, two of which had potential VOC
emissions greater than 100 tons per year.
Employment data for these firms were obtained by Booz,
Allen through telephone interviews with the company repre-
sentees .
5.1.2 VOC Emissions
Source emissions data for the three paper coaters in
Mecklenburg County were obtained from the state and county
officials.
5.1.3 Processes for Controlling VOC Emissions
Processes for controlling VOC emissions from sources
included in the paper coating category are described in
Control of Volatile Organic Emissions from Existing
Stationary Sources, Volume II (EPA-450/2-77-008). The
feasibility of applying the various control methods to
paper .coating discussed in this document was reviewed
with coating firms, coating suppliers, coating equipment
manufacturers and industry associations. These methods
include both coating reformulation and the use of control
devices, such as incinerators and carbon adsorbers.
5-3
-------
Because of the wide variety of coating processes and
coating materials in use, most methods of control will
find some applicability. The situations where emissions
are likely to be controlled by reformulation and by
control devices were estimated based on a review of the
literature and on information obtained from an interview
with several of the North Carolina coaters.
5.1.4 Cost of Control and Estimated Reduction of VQC
Emissions
The overall costs of control of VOC emissions in
accord with the proposed regulations were determined
from:
Generalized cost formulas based on estimated
emissions and judgment as to the type of control
to be used
A development of capital, operating and energy
requirements for the facilities that will be
affected, based on the generalized cost correlations
Aggregation of the findings for each plant
affected.
The generalized cost correlations used are to be found
in:
Control of Volatile Organic Emissions from Exist-
ing Stationary Sources^ Volume I (EPA-450/2-7 6-028)
Air Pollution Control Engineering and Cost Study
of General Surface Coating Industry, Second Interim
Report, Springborn Laboratories
Additional cost data were supplied by equipment and
material suppliers and published literature sources.
Major coaters in other states have been consulted to
determine industry views on acceptable control methods
and, in some cases, to confirm the cost estimating formula.
-------
5.1.5 Economic Impacts
The projected effect of RACT implementation on price
is based on an indicator which is the incremental cost
related to the total sales or cost of the product within
the state. The procedure is described below:
Relate incremental costs to total statewide
figures.
Also relate incremental costs to the part of
the statewide production that is affected by
the regulation (firms not now meeting RACT).
Where data are available, show the range of
ratios for individual locations.
Where the industry has been segmented, show the
range of cost ratios for applicable industry
segments.
The cost per unit of production is an indicator of
potential price effect rather than a prediction of the
price effect to be expected.
The economic impacts were determined by analyzing
the lead time requirements to implement RACT, assessing
the feasibility of instituting RACT controls in terms of
capital and equipment availability, comparing the direct
costs of RACT control to various state economic indicators
and assessing the secondary effects on market structure,
employment and productivity as a result of implementing
RACT controls in the county.
5.1.6 Quality of Estimates
Several sources of information were utilized in as-
sessing the emissions, cost and economic impact of imple-
menting RACT controls on the surface coating of paper in
Mecklenburg County. A rating scheme is presented in this
section to indicate the quality of the data available for
use in this study. A rating of "A" indicates hard data
(data that are published for the base year), "B" indicates
data that were extrapolated from hard data and "C" indicates
data that were not available in secondary literature and
were estimated based on interviews, analysis of previous
studies and best engineering judgment. Exhibit: 5-1, on the
following page, rates each study output listed and the overall
quality of the data.
5-5
-------
EXHIBIT 5-1
U.S. Environmental Protection Agency
DATA QUALITY--SURFACE COATING OF PAPER
Study Outputs
Industry statistics
Emissions
Cost of emissions control
Economic impact
Overall quality of data
B C
A Extrapolated Estimated
Hard Data Data Data
X
X
X
X
Source: Booz, Allen & Hamilton Inc.
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5.2 INDUSTRY STATISTICS
Industry characteristics, statistics and trends for
paper coating in Mecklenburg county are presented in this
section. This information forms the basis for assessing
the total impact of implementing RACT for control of VOC
emissions in the county and for the effect upon individual
firms.
5.2.1 Size of the Industry
The 1976-77 Directory of North Carolina Manufacturing
Firms reports a total of 123 firms m 16 SIC categories
m North Carolina where paper coating, as defined in
proposed RACT guidelines, is the main business of the
firm or may be a part of its manufacturing activity. The
number of firms and other relevant statistics in each SIC
grouping are summarized in Exhibit 5-2, on the following
page.
Total value of shipments for these firms is estimated
to be about $2.31 billion, with a total of about 26,100
employees. New capital expenditures are estimated to be
about $338 million annually, based on the most recent
(1976) Annual Survey of Manufactures.
In Mecklenburg County, only three firms have been iden-
tified as paper coaters, as defined in the proposed regulation.
The three firms are listed in Exhibit 5-3, following Exhibit
5-2. They employ 1,105 employees and have an estimated annual
value of shipment of $7 0,000 per employee, which is character-
istic of the firms in SIC 2641 paper coating.
Two of the three firms (Rexham Corp., Pinesville, and
Rexham Corp., Matthews) have potential emissions sufficiently
high to be affected by the proposed regulations. These two
firms employ a total of 50 5 employees and have an estimated
annual value of shipments of $35.3 million.
5.2.2. Comparison of'the Industry to the State Economy
A comparison of the value of shipments of the 123
plants in the 16 SIC categories listed in Section 5.1.1
with the total state manufacturing economy ($31.4 billion)
indicates that these plants represent about 7.4 percent
of the total value of manufacturing shipments in North
Carolina. These 123 firms employ about 3.7 percent of
5-6
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EXHIBIT 5-2
U.S. Environmental Protection Agency
1976 INDUSTRY STATlSTICS--SURFACE
COATING OF PAPER SIC CROUPS IN NORTH CAROLINA
SiC Code
2611
2621
2631
2641
2643
2645
2649
2651
3291
3292
32*3
3497
3679
3842
306]
3955
Total
D<.'^cript.io/(
fulp mi 1 Is
Paper ailla, except building
paper mills
Paperboard mills
Paper coaling aud glazing
liags, except textile bugs
Oiecut paper and paperboard
and cardboard
fupcr converting, n.e.c.
Folding paperboard boxes
Abrasive products
Asbestos products
Gaskets, packing and settling
devi LCb
Metal toil and leat^
Electronic components, u.e.c.
Orthopedic, prosthetic and
surgical appliances and supplies
Photographic equipment and
suppli es
CjiLon paper and inked ribbons**
5
6
6
?
9
9
12
17
6
7
3
2
10
17
I
123
ToLa 1
Number of
Einploycee
6,925
6,060
5,395
629
673
768
590
1,053
175
719
375
60
956
743
768
m
26,064
Total
Payrol1
($1,000,000)
123
100
90 a
6.21
8.15
9. 10
5.35
13.3
2.36
7.81
4.38
.809
B 54
5-48
13-3
Estimated Value
of Shipments
($1 .ooo.oool
941
581
315
51. J
46.7
53.5
33.6
60.2
10.6
44.5
) 4.3
4.97
41 7
32. 7
65.8
13.7
2,310
Estimated
New Expenditures
($1,000,000)
178
53 6
75.7
1.59
1.35
1.56
.707
I .84
. 342
.939
.5*7
.121
17.7
1.16
2.68
.257
338
a. Estimated by using ratios of (value of shipuicnt/toLal employment) and (capital expendiLuies/toia 1 employment) for each SIC group
as published in 19/6 Annual Survey of Manufactures where value of shipments or expenditures are not Labulated for the state.
b. None listed.
Source: Booz, Allen & Hamilton 1nc 1976 CounLy Business Patterns, and 1976 Annual Survey of Hanufactnres, U.S. Department of
Commerce and the 1976-77 Directory of North Carolina Hanufacnlnnn Firms.
-------
EXHIBIT 5-3
U.S. Environmental Protection Agency
COMPANIES COATING PAPER IN MECKLENBURG COUNTY
Company Name
Town (County)
SIC
Employees
Package Products Co. (3 plants)
2621
600
Charlotte (Mecklenburg)
2643
Rexham Corp.
3079
266
Matthews (Mecklenburg)
2621
Rexham Corp.
2651
239
Pinesville (Mecklenburg)
Total 1,105
Source: Booz, Allen & Harailtion, North Carolina Department of
Natural Resources and Community Development, and the
Mecklenburg County Department of Environmental Health.
-------
the 711,000 manufacturing employees in the state. The
three firms having paper coating operations represent 0.25
percent of the total value of manufacturing shipments in
North Carolina and employ about 0.15 percent of all man-
ufacturing employees in the state.
The two directly affected firms represent 0.11 percent
of the total value of manufacturing shipments in North
Carolina and employ about 0.07 percent of all manufacturing
employees in the state.
5.2.3 Historical and Future Patterns of the Industry
The nationwide value of shipments in the industries
expected to be affected by the proposed paper coating
regulations, in general, exceed the growth rate of the
economy. As summarized in Exhibit 5-4, on the following
page, the value of shipments increased in every category
between 1972 and 1976, with an average annual growth rate
of about 12.1 percent over the period. Compared to an
average inflationary rate of 6 to 8 percent, this is
equivalent to a real growth rate of 4 to 6 percent. In
some individual categories, growth rates were even greater.
Paper production increased by an uncorrected average
annual growth rate of 16.5 percent; metal and foil by
16 percent; paper coating and glazing by about 12 percent,
only slightly less than the average. It is expected that
the growth rate will continue at these rates for the near
future.
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EXHIBIT 5-4
U.S. Environmental Protection Agency
HISTORICAL TRENDS IN VALUE OF SHIPMENTS OF
U.S. PLANTS ENGAGED IN PAPER COATING ($ millions)
SIC Code
1972
1973
1974
1975
1976
2611
710
849
1,525
1,630
2,055
2621
6,385
7,514
9,942
9,650
11,768
2631
4,153
4,862
6,516
6,055
6,724
2641
1,954
2,284
2,645
2,626
3,074
2643
1,886
2,183
2,867
2,980
3,379
2645
676
747
923
943
1,027
2649
631
833
1,079
1,090
1,288
2651
1,487
1,644
1,890
1,952
2,223
3291
888
1,067
1,235
1,222
1,433
3292
763
823
963
900
988
3293
665
723
835
843
1,020
3499
702
753
973
1,065
1 ,267
3679
3,060
3,430
3,210
3,450
4,120
3842
1,450
1,620
1,800
2,090
2,240
3861
5,624
6,435
7,490
7,627
8,844
3955
237
268
309
285
294
Total
31 ,271
36,035
42,400
44,408
51,744
Source: 1976 Annual Survey of Manufactures, U.S. Department of Commerce.
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5.3
TECHNICAL SITUATION IN THE INDUSTRY
This section briefly describes the general process
and materials used in the surface coating of paper and
similar products proposed to be included under the RACT
Surface Coating of Paper regulations. The technology is
fully described in the RACT documents.1 The products
include a myriad of consumer and industry oriented
items, such as pressure-sensitive tapes, adhesive labels,
book covers, milk cartons, flexible packaging materials
and photographic film. Although many of these products
are also printed in one manner or another, the emissions
from printing inks are not included in the RACT regulations
pertaining to paper coating; only the emissions specifically
issuing from the coating operation are included. An
estimate of these emissions for the state is also presented
in this section.
5.3.1 General Coating Process Description
In organic solvent paper coating, resins are dissolved
in an organic solvent mixture and this solution is
applied to a web (continuous roll) of paper. As the
coated web is dried, the solvent evaporates and the
coating cures.
Most organic solventborne coating is done by paper
converting companies that buy paper from the mills and
apply coatings to produce a final product. The paper
mills themselves sometimes apply coatings, but these are
usually waterborne coatings consisting of a pigment
(such as clay) and a binder (such as starch or casein).
However, much additional coating is done by firms only
as part of the manufacturing process.
Solvent emissions from an individual coating facility
will vary with the size and number of coating lines. A
plant may have one or as many as 20 coating lines.
Uncontrolled emissions from a single line may vary from
50 pounds per hour to 1,000 pounds per hour, depending
on the line size. The amount of solvent emitted also
depends on the number of hours the line operates each
day.
Exhibit 5-5, on the following page, gives typical
data from various paper coating applications.
1 Control of Volatile Organic Emissions from Existing Stationary
Sources, Volume II, EPA-450/2-77-008
5-8
-------
Number
of coating
lines
2
5
8
2
10
20
3
3
1
EXHIBIT 5-5
U.S. Environmental Protection Agency
EMISSION DATA FROM TYPICAL PAPER COATING PLANTS
Solvent
Usage
(lb./day)
Solvent
Emissions
(lb./day)
Control
Efficiency (%)'
Control Device
10,000
15,000
9,000
1,200
24,000
55,000
5,000
21,000
10,500
10,000
15,000
9,000
1,200
950
41,000
1,500
840
500
96
90
90
96
96
None
None
None
None
Carbon
adsorption
Carbon
adsorption
(not all lines
controlled)
Carbon
adsorption
Carbon
adsorption
Afterburner
a. Neglecting emissions that are not captured in the hooding system.
Source: Control of Volatile Organic Emissions from Existing Stationary Sources,
EPA-450/2-77-008.
-------
5.3.2
Nature of Coating Materials Used
The formulations usually used in organic solventborne
paper coatings may be divided into the following classes:
film-forming materials, plasticizers, pigments and
solvents. Dozens of organic solvents are used. The
major ones are: toluene, xylene, methyl ethyl ketone,
isopropyl alcohol, methanol, acetone and ethanol.
Although a single solvent is frequently used, often
a solvent mixture is necessary to obtain the optimum
drying rate. Too rapid drying results in bubbles and an
"orange peel" effect in the coating; whereas, slow
drying coatings require more time in the ovens or slower
production rates. Variations in the solvent mixture
also affect the solvent qualities of the mix.
The main classes of film formers used in conventional
paper coating are cellulose derivatives and vinyl resins.
The most commonly used cellulose derivative, nitrocellulose
has been used for paper coating decorative paper, book
covers and similar items since the 1920s. It is relatively
easy to formulate and handle, and it dries quickly, allowing
lower oven temperatures than vinyl coatings. The most
common vinyl resin is the copolymer of vinyl chloride and
vinyl acetate. These vinyl copolymers are superior to
nitrocellulose in toughness, flexibility and abrasion re-
sistance. They also show good resistance to acids, alkalies,
alcohols and greases. Vinyl coatings tend to retain solvent,
however, so that comparatively high temperatures are needed.
In general, nitrocellulose is most applicable to the dec-
orative paper field, whereas vinyl copolymers are used for
functional papers, such as some packaging materials.
In the production of pressure-sensitive tapes and
labels, adhesives and silicone release agents are applied
using an organic solvent carrier. The adhesive layer is
usually natural or synthetic rubber, acrylic or silicone.
Because of their low cost, natural and synthetic rubber
compounds are the main film formers used for adhesives in
pressure-sensitive tapes and labels, although acrylic and
silicone adhesives offer performance advantages for certain
applications. In most cases, tapes and labels also involve
the use of release agents applied to a label carrier or the
backside of tape to allow release. The agents are usually
silicone compounds applied in a dilute solvent solution.
5-9
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5.3.3 VOC Emissions and Current Controls
Current VOC emissions from the three paper coating
firms are 891 tons per year, as shown in Exhibit 5-6, on
the following page. The two affected firms emit 881 tons
per year of VOC.
VOC emissions controls are employed only at the Matthews
plant of Rexham Corp. Of a total of eight coating lines in
this plant, two lines are equipped with carbon adsorption units
with a 95 percent VOC removal efficiency and two more are
equipped with incinerators, also with a 95 percent removal
efficiency. One of the incinerators, however, is used only
when coating specific products, resulting in an annual use
of only 25 percent of plant operating time.
5.3.4 RACT Guidelines
The RACT guidelines for control of VOC emissions
from the surface coating of paper require that emission
discharges of VOCs be limited to 2.9 pounds per gallon of
coating material delivered to the coating applicator.
The recommended methods of achieving this requirement
are:
The application of low solvent content coatings;
or
Incineration, provided that 90 percent of the
nonmethane VOCs (measured as combustible carbon)
which enter the incinerator are oxidized to
carbon dioxide and water; or
A system demonstrated to have control efficiency
equivalent to or greater than that provided by
either of the above methods.
In the following section are discussed several
methods of low solvent and solventless systems which
have been demonstrated to be applicable to some paper
coating products, and the two principal add-on systems,
incineration and carbon adsorption, generally used for
emission control. This information has been extracted
principally from the previously cited EPA report, Control
of Volatile Organic Emissions from Existing Stationary
Sources, Volume II (EPA-450/2-77-008), which should be
5-10
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EXHIBIT 5-6
U.S. Environmental Protection Agency
VOC EMISSIONS FROM PAPER COATING FACILITIES
IN MECKLENBURG COUNTY IN 1977
Firm
Rexham Corp.
Rexham Corp.
Package Products, Co.
Location
Matthews
Pinesville
Charlotte
VOC
Emissions
Actual3
(tons /yr )
850
31
10
VOC
Emissions^
Potential
(tons /yr )
1193
136
44
a. Data provided by North Carolina Department of Natural Resources and
Community Development and Mecklenburg County, Department of
Environmental Health.
b. Booz, Allen estimate based on the operating hours data provided by state
and county officials except for Package Products, Co. which was assumed7
to operate 2,000 hours per year.
Source: Booz, Allen & Hamilton Inc.
-------
consulted for a more thorough discussion. In some instances,
additional information was obtained from coaters, coating
material suppliers and control equipment manufacturers.
5.3.5 Low Solvent and Solventless Coatings
In Exhibit 5-7, on the following page, are listed
several types of coating materials which have found
utility in paper coating, and an estimate of expected
solvent reduction.
5.3.5.1 Waterborne Coatings
Waterborne coatings have long been used in coating
paper to improve printability and gloss. However, newer
coatings have been developed in which a synthetic insoluble
polymer is carried in water as a colloidal dispersion or
an emulsion. This is a two-phase system in which water
is the continuous phase and the polymer resin is the
dispersed phase. When the water is evaporated and the
coating cured, the polymer forms a film that has proper-
ties similar to those obtained from organic-solvent-based
coatings.
5.3.5.2 Plastisols and Organisols
Plastisols are a colloidal dispersion of synthetic
resin in a plasticizer. When the plasticizer is heated,
the resin particles are solvated by the plasticizer so
that they fuse together to form a continuous film.
Plastisols usually contain little or no solvent, but
sometimes the addition of a filler or pigment will change
the viscosity so that organic solvents must be added to
obtain desirable flow characteristics. When the volatile
content of a plastisol exceeds 5 percent of the total
weight, it is referred to as an organisol.
Although organic solvents are not evaporated from
plastisols, some of the plasticizer may volatilize in the
oven. This plasticizer will condense when emitted from
the exhaust stack to form a visible emission.
5.3.5.3 Hot Melt Coatings
Hot melt coatings contain no solvent; the polymer
resins are applied in a molten state to the paper surfaces.
5-11
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EXHIBIT 5-7
U.S. Environmental Protection Agency
ACHIEVABLE SOLVENT REDUCTIONS USING LOW
SOLVENT COATINGS IN PAPER COATING INDUSTRY
Type of Low Solvent-Coating
Waterborne coatings
Plastisols
Hot melts
Extrusion coatings
Pressure-sensitive adhesives
Waterborne
Hot melts
Prepolymer
Silicone release agents
100 percent nonvolatile coatings
Waterborne emulsions
Reduction Achievable (%)"
80-99
95-99
99+
99+
80-99
99
99
99+
80-99
" Based on comparison with a conventional coating containing
35 percent solids by volume and 65 percent organic solvent
by volume.
Source: Control of Volatile Organic Emissions From Existing
Stationary Sources, Volume II, EPA-450/2-77-008.
-------
All the materials deposited on the paper remain as part
of the coating. Because the hot melt cools to a solid
coating soon after it is applied, a drying oven is not
needed to evaporate solvent or to cure the coating.
Energy that would have been used to heat an oven and to
heat makeup air to replace oven exhaust is therefore
saved.
One disadvantage with hot melt coatings is that
materials that char or burn when heated cannot be applied
by hot melt. Other materials will slowly degrade when
they are held at the necessary elevated temperatures.
5.3.5.4 Extrusion Coatings
A type of hot melt coating, plastic extrusion
coating is a solventless system in which a molten thermo-
plastic sheet is discharged from a slotted dye onto a
substrate of paper, paperboard or synthetic material.
The moving substrate and molten plastic are combined in
a nip between a rubber roll and a chill roll. A screw-
type extruder extrudes the coating at a temperature
sometimes as high as 600°F. Low and medium density
polyethylene are used for extrusion coating more than
any other types of resins.
5.3.5.5 Pressure-Sensitive Adhesive Coatings
Waterborne adhesives have the advantage that they
can be applied with conventional coating equipment.
Waterborne emulsions, which can be applied less expensively
than can solventborne rubber-based adhesives, are
already in use for pressure-sensitive labels. A problem
with waterborne adhesives is that they tend to cause the
paper substrate to curl and wrinkle.
Prepolymer adhesive coatings are applied as a
liquid composed of monomers containing no solvent. The
monomers are polymerized by either heat or radiation.
These prepolymer systems show promise, but they are
presently in a developmental stage only.
5.3.5.6 Silicone Release Coatings
Silicone release coatings, usually solventborne,
are sometimes used for pressure-sensitive, adhesive-coated
products. Two low-solvent alternatives are currently on
5-12
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the market. The first is a 100 percent nonvolatile
coating which is usually heat cured, but may be radiation
cured. The second system is a water emulsion coating
which is lower in cost than the prepoiymer coating.
However, because of wrinkling and other application
problems the waterborne coating may be of limited value.
Soifle silicone coating materials which are under
development use single solvent systems that can be
readily recovered by carbon adsorption. Current coatings
are troublesome since some silicone is carried into the
adsorber where it clogs the carbon pores to reduce
adsorption efficiency.
5.3.6 Incineration
Catalytic and direct thermal incineration processes
convert hydrocarbons to carbon dioxide and water at high
temperatures. Incineration is widely accepted as a
reliable means of reducing hydrocarbon emissions by 90
percent or more.
Generally, the major disadvantage of this approach
is the increased energy required to raise the exhaust
gas temperatures above 1,200°F for direct incineration
and 700°F for catalytic incineration. Another problem
is the generation of nitrogen oxides in direct fired
incinerators because of the exposure of air to high-
temperature flames.
The increased energy consumption can, in some
cases, be reduced or eliminated by heat exchange of the
exhaust gases with fresh emissions (primary heat recovery)
or by use of the hot incinerator exhaust gases in process
applications (secondary heat recovery). Typical use of
secondary heat recovery is for oven heat in drying or
baking ovens. In fact, with efficient primary exchange
and secondary heat recovery, total fuel consumption of
an incinerator-oven system can be less than that for the
oven before the incinerator is added. The heat required
to sustain the system comes from the combustion of the
volatile organic compounds in the exhausts.
Paper coaters who use coating machinery for a
multiplicity of processes have commented that catalytic
incineration would probably not be used because of the
possibility of catalyst poisoning. Direct incineration
would be used.
5-13
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5.3.7 Carbon Adsorption
Carbon adsorption has been used since the 1930s for
collecting solvents emitted from paper coating operations.
Most operational systems on paper coating lines were in-
stalled because they were profitable. Pollution control
has usually been a minor concern.
Carbon adsorption is most adaptable to single
solvent processes. Many coaters using carbon adsorption
have reformulated their coatings so that only one solvent
is required. Toluene, a widely used solvent for paper
coating, is readily captured in carbon adsorption systems.
The greatest obstacle to the economical use of
carbon adsorption is that, in some cases, reusing recovered
solvents may be difficult. In many coating formulations,
a mixture of several solvents is needed to attain the
desired solvency and evaporation rates. Also if different
coating lines within the plant use different solvents
and are all ducted to one carbon adsorption system, then
there may be difficulty reusing the collected solvent
mixture. In some cases, such as in the preparation of
photographic films or thermographic recording paper,
extremely high purity solvents are necessary to maintain
product performance and even distillation may be insuffi-
cient to produce the quality of recovered solvent needed.
For most other coating formulations, distillation is
adequate.
Another problem with carbon adsorption is the
potential of generating explosive conditions in the
adsorber because of the localized increases in combustible
organic material concentrations. Ignition apparently
can be caused by static electricity in systems where dry
air at high flow rates is treated. Several explosions
of adsorbers have been reported in paper coating and
other plants.
Also, adsorption of solvents containing water
soluble compounds (such as alcohols, ketones or esters)
can present a secondary pollution problem in the water
effluent, where steam is used for regeneration. Additional
treatment of the condensed steam with its content of
dissolved organics would be required, increasing the
complexity of the solvent recovery system and its cost.
5-14
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5.4 COST AND VOC REDUCTION BENEFIT EVALUATIONS
FOR THE MOST LIKELY RACT ALTERNATIVES
This section discusses the projected costs of control
for paper coating in the state based on the emissions as
discussed in Section 5.3.3 of this report. Where possible,
the validity of the costs were confirmed with coating
firms and equipment manufacturers.
It is projected that the two affected firms in Mecklenburg
County will use incineration or carbon adsorption to comply
with the proposed regulations.
5.4.1 Costs of Alternative Control Systems
Carbon adsorption and incineration system costs were
derived from estimates given in EPA-450/2-76-028. The cost
estimates for both systems are based on the assumption that
exhaust air flow rates can be reduced sufficiently to attain
low explosion limit (LEL) levels of 25 percent. This is
possible with well-designed ovens where excess air can be
reduced or where product characteristics allow. Lower
LEL levels require higher air flow and thus result in
higher control costs.
Several paper coaters indicate that achieving 25
percent of LEL may not be possible with some coating
lines, particularly older ones, or with certain types of
coatings. Coating drying rate is a function of air flow
rate, temperature and vapor concentration in the air. If
air flow rates are to be reduced, drying temperatures or
drying times must be increased. Because of the heat sen-
sitivity of some coatings, temperature increases may not
be possible. Increase in drying time will necessitate
either longer ovens or reduced production rates. Several
coaters of heat sensitive products indicated that, to
achieve special characteristics, they could not increase
emission concentrations above 5 to 6 percent of LEL and
could not use oven temperatures above 140°F. Plants
manufacturing conventional coated products, however, can
decrease air flow rates sufficiently to increase VOC con-
centrations in the exhausts to 40-50 percent of LEL with
only moderate increases in temperatures or changes in
production rates. It has been assumed, for cost estimation
purposes, that a 25 percent LEL can be attained on the
average.
5-15
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Incinerator costs are a function of equipment size,
which varies generally with air flow rate. In most
plants, it is impractical to manifold exhausts so that
all exhausts could be treated in one add-on emission
control system.
The major problem in estimating total installed
costs of control systems is the cost of installation.
The Booz Allen estimates were made on the assumption of a
moderately difficult retrofitted system. In specific
situations, some coaters have found actual installed costs
to be three to five times those presented in the EPA document
referred to earlier.
5.4.2 Estimated Countywide Costs
The total emissions considered to be applicable under
RACT, as discussed in Section 5.3.4 of this report, are
881 tons per year for the two directly affected firms.
The air flow rates for these firms were determined on
the assumption of a 25 percent approach to LEL, other
assumptions summarized in Exhibit 5-8, on the following
page, and each firm's current estimated emissions. These
air flow rates were then used to estimate costs from
EPA-450/2-7 6-028 .
By applying these cost estimating procedures, the
capital costs for add-on groups were estimated to be
SO.5 million, with annualized costs of $45,000. Both are
adjusted for inflationary increases from mid-1975 (base
period for EPA-450/2-76-028 data) to mid-1977.
However, discussions with equipment manufacturers
and coaters and review of published information indicated
that these capital costs are probably three to four times
lower than those experienced in recent retrofit situations.
This issue is also addressed in EPA-450/2-76-028 which
indicated that baseline capital costs could be 1.5 to 3
times higher because of various retrofit difficulties.
Therefore, assuming a 3 to 4 multiplier for capital
costs which includes an adjustment for inflationary
increases from mid-1975 to mid-1977, it is estimated that
actual capital costs for the, county are more likely to
range from $1.5 million to $1.9 million, with corresponding
annualized costs of $0.35 million to $0.5 million.
5-16
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EXHIBIT 5-8
U.S Environmental Protection Agency
SUMMARY OF ASSUMPTIONS USED IN COST ESTIMATE
Assumptions
40 percent of emissions are controlled by incineration with primary heat
recovery; 35 percent by carbon adsorption with recovered solvent credited
at fuel prices.
25 percent LEL is equal to 3,000 ppm of MEK by volume.
Air flow can be reduced to reach 25 percent LEL
No costs are added for distillation or
additional waste disposal.
Other assumptions regarding incinerator and adsorber prices, as
estimated in Control of Volatile Organic Emissions from Existing
Stationary Sources, Vol. I: Control Methods for Surface-Coating
Operations, EPA-450/2-76-028, are valid.
Source: Booz, Allen & Hamilton Inc.
-------
5.4.3 Estimated Emission Reduction
Assuming that 90 percent of all solvents used in
coating operations can be collected by properly designed
hoods and ovens, emissions could be reduced by 714 tons per
year. This is based on a 90 percent capture and 90 percent
destruction of emissions in an incinerator or 90 percent
recovery in a carbon adsorption system (an overall reduction
in emissions of 81 percent).
5-17
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5.5 DIRECT ECONOMIC IMPACTS
This section presents the direct economic implica-
tions of the RACT guidelines for surface coating of paper
on a statewide basis. The analysis includes the availability
of equipment and capital; feasibility of the control
technology; and impact on economic indicators, such as
value of Shipments, unit price (assuming full cost pass-
through), state economic variables and capital investment.
5.5.1 RACT Timing
Current proposed guidelines for paper coating suggest
several compliance deadlines for alternative methods of
compliance.1 Generally, for add-on systems, they call
for installation of equipment and demonstration by mid-1980
or late 1980; for low solvent systems, by late 1980 or
mid-1981, depending upon the degree of research and
development needed. Major coaters, material suppliers
and equipment manufacturers believe these deadlines to be
unattainable.
Normally, large incinerator and carbon adsorp-
tion systems will require about a year or more
from receipt of purchase order to install and
start up the system. Engineering may require
three months or more, fabrication three to six
months and installation and startup as long as
three months.
Only a few companies manufacture incineration
systems with proven high heat recovery. The
cumulative effect of equipment requirements by
all firms in the U.S. needing control devices
could severely impede the ability of these
firms to supply equipment. In some cases, the
most efficient devices are only now undergoing
initial trials, and no production capacity has
been developed.
In general, it appears that if add-on control systems
are used, deadlines may have to be extended based on
national demand.
Regulatory Guidance for Control of Volatile Organic Compound
Emissions from 15 Categories of Stationary Sources,
EPA-905/2-78-001, April 1978.
5-18
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5.5.2 Technical Feasibility Issues
Though low solvent or solventless materials are used
in many paper coating operations at present, many types
of solvent-based systems currently have no satisfactory
replacement. In many cases, the alternative materials do
not meet the product quality standards demanded by the
coaters and their customers. Additional development is
needed and will require the combined efforts of both the
coaters (who must maintain finished product quality) and
the coating material suppliers. While the time required
to develop the low solvent materials is difficult to
estimate, it is unlikely that new coatings can be commercial-
ized by 1981. Ideally, the new coating materials should
be adaptable to existing coating equipment to minimize
additional capital investment.
As discussed above, both incineration and carbon
adsorption are not completely satisfactory add-on control
systems. Incineration requires large volumes of additional
fuel if good heat recovery is not accomplished; carbon
adsorption is not usable on many coating systems because
of the multiplicity of compounds used in solvent mixtures.
5.5.3 Comparison of Direct Cost with Selected Direct
Economic Indicators
The net increase in annualized costs to coaters was
estimated at $0.35 million to $0.5 million. These additional
costs are projected to represent 0.45 to 0.65 percent of
the total annual value of shipments of the three firms
coating paper in Mecklenburg County and 1.06 to 1.5 percent
of the shipments of the two firms directly impacted by the
proposed regulations. Assuming a "direct passthrough" of
these costs, prices at the two firms can be expected to
increase by 1.06 to 1.5 percent.
The above estimates of price increase are based on a
comparison of the cost of control with the total value of
shipments by the affected firms. Since only a part of
some of these firms' business represents paper coating
operations affected by the regulations, the price increase
for the affected products would be higher. Such price
increases might make these firms less competitive with
firms not affected by similar regulations elsewhere.
5-19
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Another major economic impact in terms of cost to
most individual companies will be the large capital
expenditures required for add-on devices. For most
companies, these costs would exceed their current level
of capital expenditures for plant improvement and expansion.
A large pressure-sensitive paper coater in another state,
for instance, has estimated that a capital investment of
about S2 million would be needed to meet proposed guidelines.
His current annual capital expenditure program is normally
in the range of $1.5 million.
5.5.4 Selected Secondary Economic Impacts
Implementing RACT in Mecklenburg County is not expected
to have a significant impact on employment, market structure
and productivity.
5-5.5 Impact of Compliance upon Energy Consumption
Based on the projection that 40 percent of affected
emissions would be controlled by installation of direct
flame incinerators with primary heat recovery (at 35
percent effeciency) and 60 percent by carbon adsorption,
energy consumption is expected to increase by an amount
equal to approximately 1,300 barrels of oil annually.
This is equivalent to approximately 12 million cubic feet
of natural gas annually. This increased requirement is
considered to be negligible compared to current county
consumption.
Jc ~ * *
Exhibit 5-9, on the following page, summarizes the
conclusions reached in this study and the implications of
the estimated costs of compliance for paper coaters.
1The estimate is based further oa the assumption that oven
exhausts are about 300°F, that about 8 pounds of steam are
used per pound of solvent recovered and that a barrel of oil
is equivalent to 6.0 x 106 BTUs.
5-20
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EXHIBIT 5-9
U.S. Environmental Protection Agency
SUMMARY OF DIRECT ECONOMIC IMPLICATIONS OF
IMPLEMENTING RACT FOR PAPER COATERS
IN MECKLENBURG COUNTY
IN THE STATE OF NORTH CAROLINA
Current Situation
Number of potentially affected facilities
Indication of relative importance of the
industrial sector to the state economy
Current industry technology trends
1977 VOC emissions (actual)
Industry preferred method of VOC control
to meet RACT guidelines
Assumed method of control to meet RACT
guidelines
Affected Areas in Meeting RACT
Capital investment (countywide)
Annualized cost (countywide)
Price
Discussion
Two plants are expected to be affected
by these regulations. However, if this
category were to be interpreted to include
all types of paper coating, including
publishing, far more firms would be affected.
The 1977 value of shipments of these two
plants is estimated to be about $33 million.
They are estimated to employ 505 people.
Gravure coating replacing older systems.
Approximately 881 tons per year from
two plants affected by RACT.
Though low solvent use is increasing,
progress is slow. Add-on control systems
will probably be used.
Thermal incineration with primary heat
recovery and carbon adsorption.
Discussion
Estimated to be $1.5 million to $1.9
million depending on retrofit situations.
This is likely to be more than 100 percent
of normal expenditures for the affected
paper coaters.
$0.35 million to $0.5 million annually.
This represents 1.1 to 1.5 percent of the
value of shipments for the two firms
directly affected.
Assuming a "direct cost pass-through"-- 1.1
to 1.5 percent at the two affected firms.
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EXHIBIT 5-9(2)
U.S. Environmental Protection Agency
Affected Areas in Meeting RACT
Energy
Productivity
Employment
Market structure
RACT timing requirements (1982)
Problem areas
VOC emissions after control
Cost effectiveness of control
Discussion
Assuming 35 percent heat recovery from
the incineration system, annual energy
requirements are expected to increase by
approximately 1,200 equivalent barrels
of oil.
No major impact.
Marginal impact possible.
Marginal impact possible.
Equipment deliverables and installation of
incineration systems prior to 1982 are
expected to present problems. Development
of low solvent systems is likely to extend
beyond 1982.
RACT guideline needs clear definition for
enforcement.
Retrofit situations and installation costs
are highly variable.
Type and cost of control depend on par-
ticular solvent systems used and reduction
in air flow.
Approximately 167 tons/year (19 percent of
1977 VOC emission level from two affected
plants).
$490 - $700 annualized cost/annual ton
of VOC reduction.
Source: Booz, Allen & Hamilton Inc.
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BIBLIOGRAPHY
Davidson's Textile Blue Book, 1977.
T. W., Hughes, et al., Source Assessment: Prioritization of
Air Pollution from Industrial Surface Coating Operations,
Monsanto Research Corporation, Dayton, Ohio. Prepared for
U.S. Environmental Protection Agency, Research Triangle Park,
N.C., under Contract No. 68-02-1320 (Tech. 14) Publication
No. 650/2-75-019a.
T. A. Kittleman and A. B. Akell, "The Cost of Controlling
Organic Emissions," Chemical Engineering Progress, April
1978.
Lockwoods Directory of the Paper Industry, 1977.
Springborn Laboratories, Air Pollution Control Engineering
and Cost Study of General Surface Coating Industry, Second
Interim Report. EPA Contract No. 68-0202075, August 23,
1977.
State Industrial Directories Corporation, 1978-79 Illinois
State Industrial Directory, 1978.
Thomas Register of American Manufacturers, 1978.
U.S. Environmental Protection Agency, Control of Volatile
Organic Emissions from Existing Stationary Sources, Volume
I. EPA-450/2-76-028, May 1977.
U.S. Environmental Protection Agency, Control of Volatile
Organic Emissions from Existing Stationary Sources, Volume
II. EPA-450/2-77-008, May 1977.
U.S. Environmental Protection Agency, Regulatory Guidance
for Control of Volatile Organic Compounds Emissions from 15
Categories of Stationary Sources, EPA-905/2-78-001, April
1978.
U.S. Department of Commerce, Annual Survey of Manufactures,
1976.
U.S. Department of Commerce, County Business Patterns, 1976.
U.S. Department of Commerce, Census of Manufactures, 197 2.
Private Conversations with: Rexham Corp., Matthews, N.C.
Rexham Corp., Pinesville, N.C.
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13.0 THE ECONOMIC IMPACT OF
IMPLEMENTING RACT FOR
TANK TRUCK GASOLINE
LOADING TERMINALS IN
MECKLENBURG COUNTY
-------
13.0 THE ECONOMIC IMPACT OF
IMPLEMENTING RACT FOR
TANK TRUCK GASOLINE
LOADING TERMINALS IN
MECKLENBURG COUNTY
This chapter presents a detailed analysis of the impact
of implementing RACT controls for tank truck gasoline loading
terminals in Mecklenburg County. The chapter is divided
into six sections including:
Specific methodology and quality of estimates
Industry statistics
The technical situation in the industry
Cost and VOC reduction benefit evaluations for
the most likely RACT alternatives
Direct economic implications
Selected secondary economic impacts.
Each section presents detailed data and findings based
on the RACT guidelines, previous studies of tank truck
gasoline loading terminals, interviews and analysis.
13-1
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13.1 SPECIFIC METHODOLOGY AND QUALITY OF ESTIMATES
This section describes the methodology for determining:
Industry statistics
VOC emissions
Processes for controlling VOC emissions
Cost of controlling VOC emissions
Economic impact of emission control
for tank truck gasoline loading terminals in Mecklenburg
County.
An overall assessment of the quality of the estimates
is detailed in the latter part of this section.
13.1.1 Industry Statistics
Industry statistics on tank truck gasoline loading
terminals were obtained from several sources. All data
were converted to a base year, 1977, based on the following
specific methodologies:
The number of establishments and the annual
gasoline throughput for 1977 were obtained
from the North Carolina Department of Natural
Resources and Community Development (DNRCD).
The number of employees in 1977 was derived by
determining the number of employees per establish-
ment in 1977.
Sales, in dollars, of motor gasoline for 1977
were estimated by multiplying the number of gal-
lons of gasoline sold from terminals in 1977
by the national dealer tankwagon price in 1977
(42.5£/gallon), which was also reported in the
National Petroleum News fact book, 1978.
13.1.2 VOC Emissions
VOC emissions for tank truck loading terminals were
obtained from the North Carolina DNRCD.
13-2
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13.1.3 Processes for Controlling VOC Emissions
Processes for controlling VOC emissions for tank truck
gasoline loading terminals are described in Control of
Hydrocarbons from Tank Truck Gasoline Loading Terminals,
EPA-450/2-77-026. These data provide the alternatives avail-
able 'for controlling VOC emissions from terminals. Several
studies of VOC emission control were also analyzed in detail.
Interviews with_ petroleum trade associations, terminal
operators and vapor control equipment manufacturers were
conducted to ascertain the most likely types of control pro-
cesses which would be used in terminals.in Mecklenburg County.
The specific studies analyzed were: Demonstration of Reduced
Hydrocarbon Emissions from Gasoline Loading Terminals, PB-
243 3 63; Systems and Costs to Control Hydrocarbon Emissions
from Stationary Sources, PB-23 6 921; and The Economic Impact
of Vapor Control in the Bulk Storage Industry, draft report
to U.S. EPA by Arthur D. Little.
The alternative types of vapor control equipment likely
to be applied to tank truck gasoline loading terminals were
analyzed. Model plants reflecting each control alternative
were defined and each type of control alternative used was
applied to the number of tank truck gasoline loading ter-
minals in the state. The methodology for the cost analysis
of VOC emissions control is described in the following
paragraphs.
13.1.4 Cost of Vapor Control Systems
The costs of vapor control systems were developed by:
Determining the alternative types of control
systems likely to be used
Estimating the probable use of each type of con-
trol system
Defining systems components
Developing installed capital costs for systems
components
Aggregating installed capital costs for each
alternative control system
Defining two model terminals based on throughput
levels
13-3
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Developing costs of the alternative control systems
for the two model terminals including:
Installed capital cost
Direct operating costs
Annualized capital charges
Gasoline credit
Net annualized cost
Assigning model terminal costs to terminals in
Mecklenburg County
Aggregating costs to the total industry in
Mecklenburcr countv.
Costs are determined from analyses of the RACT
guidelines and from interviews with petroleum marketersf
associations, terminal operators and vapor control equip-
ment manufacturers.
13.1.5 Economic Impact
The economic impacts were determined by analyzing the
lead time requirements needed to implement RACT; assessing
the feasibility of instituting RACT controls in terms of
capital availability and equipment availability; comparing
the direct costs of RACT control to various state economic
indicators; and assessing the secondary effects on market
structure, employment and productivity as a result of im-
plementing RACT controls in Mecklenburg County.
13.1.6 Quality of Estimates
Several sources of information were utilized in assess-
ing the emissions, cost and economic impact of implementing
RACT controls on gasoline terminals in Mecklenburg County.
A rating scheme is presented in this section to indicate
the quality of the data available for use in this study. A
rating of "A" indicates hard data (i.e., data that are
published for the base year); "B" indicates data that were
extrapolated from hard data; and "C" indicates data that
were not available in secondary literature and were estimated
based on interviews, analyses of previous studies and best
engineering judgment. Exhibit 13-1, on the following page,
rates each study output listed and the overall quality of
the data.
13-4
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Exhibit 13-1
U.S. Environmental Protection Agency
DATA QUALITY
B C
A Extrapolated Estimated
Study Outputs Hard Data Data Data
Industry statistics
Emissions
Cost of emissions
control
Statewide costs of
emissions
Economic impact
Overall quality of
data
Source: Booz, Allen & Hamilton Inc.
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13.2 INDUSTRY STATISTICS
Industry characteristics, statistics and business
trends for tank truck gasoline loading terminals in
Mecklenburg County are presented in this section. The
discussion includes a description of the number of facil-
ities and their characteristics, a comparison of the size
of the gasoline terminal industry to state economic indi-
cators, a historical characterization and description of
the industry and an assessment of future industry patterns.
Data in this section form the basis for assessing the im-
pact on this industry of implementing RACT on tank truck
gasoline loading terminals in Mecklenburg County.
13.2.1 Size of the Industry
There were 14 tank truck gasoline loading terminals,
as of 1977, in Mecklenburg County. Industry sales were
estimated to be $616 million, with an annual gasoline
throughput of 1.4 5 billion gallons. The estimated number
of employees involved in the terminal operation in the
county in 1977 was 350. The sources of this information
are identified in Exhibit 13-2, on the following page.
13.2.2 Comparison of the Industry to Selected State
Economy Indicators
Employees in the tank truck gasoline loading terminal
industry represent 0.32 percent of the wholesale trade
employment in North Carolina. The value of gasoline sold
from terminals represented approximately 2.9 percent of
the total value of wholesale trade in North Carolina in
1977.
13.2.3 Characterization of the Industry
Tank truck gasoline loading terminals are the primary
distribution point in the petroleum product marketing net-
work as shown in Exhibit 13-3, following Exhibit 13-2.
Terminals receive gasoline from refineries by pipeline,
tanker, or barge.
Most gasoline terminals load all of the petroleum prod-
uct they receive into truck transports at the terminals'
loading racks. These truck transports usually have storage
capacities, between 8,000 and 9,000, and deliver gasoline to
service stations and bulk gasoline plants for further dis-
tribution.
13-5
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Exhibit 13-2
U.S. Environmental Protection Agency
INDUSTRY STATISTICS FOR BULK TERMINALS
IN MECKLENBURG COUNTY
Gasoline
Number of Number of Sales Throughput
Establishments Employees ($ Million, 1977) (Billions of Gallons)
14a 350b 616c 1.45a
a. Data provided by the North Carolina Department of Natural
Resources and Community Development.
b. Booz, Allen & Hamilton Inc. estimate based on the ratio of the
number of employees to the number of establishments-
c. Number of gallons of motor gasoline sold in 1977 multiplied by
the national dealer tankwagon price in 1977 (42.51C/gallon).
-------
Exhibit 12-3
U.S. Environmental Protection Acencv
GASOLINE DISTRIBUTION NETWORK
REFINERY
N
TERMINAL
J
t
V/
V
SMALL
VOLUME
ACCOUNTS
AGRICULTURAL
COMMERCIAL
RETAIL
O
-Y
V
$
\1/
LARGE VOLUME
ACCOUNTS
RETAIL
COMMERCIAL
AGRICULTURAL
o
¦"i
CUSTOMER
PICK-UP
Typical delivery route of truck-trailer
Typical delivery route of account truck
— Typical transaction with consumer coming to supplier
Final Product Usage
Source: Economic Analysis of Vapor Recovery Systems on Small
Bulk Plants, EPA 240/1-77-013, September 1976, p. 3-2.
-------
Over two-thirds of the gasoline terminals in the United
States are owned by major oil companies and refinery mar-
keters. The remaining gasoline terminals are owned by
independents. The major oil companies and regional refin-
ers own most of the large gasoline terminals and a small
number of the small gasoline terminals.
Petroleum companies began to consider gasoline termi-
nals as separate profit centers, about ten years ago.
Terminals are now expected to recover all operating ex-
penses as well as to provide an acceptable return on capital.
Since terminals are now treated as profit centers, petroleum
marketers have closed many uneconomic and marginal facili-
ties throughout the country. Some marketers have withdrawn
from selected regions of the country as part of their over-
all corporate strategy. Gasoline terminals in these markets
are being consolidated, sold or closed.
Gasoline terminals are generally located near refineries,
pipelines and large metropolitan areas. The daily through-
put ranges from 20,000 gallons per day to over 600,000 gallons
per day-
13-6
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13.3 THE TECHNICAL SITUATION IN THE INDUSTRY
This section presents information on tank truck gasoline
loading terminal operations, estimated VOC emissions from
terminal operations in Mecklenburg County, the extent of
current control in use, the requirements of vapor control
required by RACT and the likely RACT alternatives which may
be used for controlling VOC emissions from gasoline terminals
in Mecklenburg County.
13.3.1 Tank Truck Gasoline Loading Terminal Operations
Tank truck gasoline loading terminals are the primary
distribution facilities which receive gasoline from piplines,
tankers and barges; store it in above-ground storage tanks;
and subsequently dispense it via tank trucks to bulk gasoline
plants and service stations. Terminal facilities and oper-
ations are described in detail in Hydrocarbon Control
Strategies for Gasoline Marketing Operations.
13.3.2 Emissions and Current Controls
The 197 5 VOC emissions from 14 tank truck gasoline
loading terminals in Mecklenburg County are 3,04 8 tons.
Based on the data provided by the North Carolina DNRCD,
virtually all gasoline terminals in Mecklenburg County have
floating roof tanks, and they employ top submerged or bottom
filling of storage tanks and outgoing tank trucks.
13.3.3 RACT Guidelines
The RACT guidelines for VOC emission control from tank
truck gasoline loading terminals require:
Top submerged or bottom fill of gasoline storage
tanks and outgoing tank trucks
Vapor collection from trailer-transport truck
loading and vapor recovery or thermal oxidation
of collected vapors
Proper operation and maintenance of equipment.
13-7
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Exhibit 13-4, on the following page, summarizes the RACT
guidelines for VOC emissions control from tank truck, gasoline
loading terminals.
13.3.4 Alternative Vapor Control Methods
There are two alternative methods to control vapor
loss from tank truck gasoline loading terminals:
Vapor recovery using one of the following
techniques
Adsorption/absorption (AA)
Compression refrigeration absorption (CRA)
- Refrigeration (RF)
Thermal oxidation (OX)
Each type of vapor control method is briefly described
below.
13.3.4.1 Vapor Recovery
Of the three vapor techniques mentioned above,
adsorption/absorption and refrigeration are most likely
to be used in Mecklenburg County because they are more
cost effective than the compression refrigeration absorp-
tion technique.
In the adsorption/absorption method, vapors from tank
truck loading operations are collected and directed to one
of two activated carbon beds. Vapors are condensed into
pores in the carbon. These vapors are then regenerated by
applying a vacuum over the bed. Cold gasoline is then
circulated in a separator and the hot vapors are absorbed
into the cold gasoline. This process has recently been
marketed and is becoming competitive with the refrigeration
system described below. It has been reported that less
maintenance is required for this type of vapor recovery
system than for the other"types.
In the compression refrigeration absorption method,
vapors from tank truck loading operations are collected in
a vapor holder. The pressure is increased in the holder,
thus causing vapors to condense. Further condensation is
then achieved by mixing chilled gasoline and vapors under
pressure and the vapors are absorbed into the gasoline.
13-8
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Exhibit 13-4
U.S. Environmental Protection Agency
VOC EMISSION CONTROL TECHNOLOGY FC
TANK TRUCK GASOLINE LOADING TERMING
Facilities Affected Sources of Emissions RACT Control Guidelines
Tank truck ter-
minals with daily
throughput of
greater than 76,000
liters (20,000
gallons) of gaso-
line
Filling tank
trucks and
breathing and
working losses
from storage
tanks
Top submerge or
bottom fill tank
truck and employ
one of the follow-
ing vapor control
systems:
- Adsorption/
Absorption
- Refrigeration
- Compression
Refrigeration
Absorption
- Thermal
Oxidation
Leakage
Maintenance of
areas that may
leak
Source: U.S. Environmental Protection Agency
-------
This system is becoming less popular than the more recently
developed refrigeration system described below and it is
not expected that this type of system will be used in
Mecklenburg County.
The refrigeration technique relies on the condensation
of gasoline vapors by refrigeration at atmospheric pressure.
Vapors displaced from tank truck loading operations enter
a horizontal fin-tube condenser where they are cooled to
a temperature of about -4 0°F and condensed. Because vapors
are treated as they are vented from tank trucks, no vapor
holder is required. Condensate is withdrawn from the con-
denser and the remaining air containing only a small amount
of hydrocarbons is vented to the atmosphere. Because of
the competition from the AA system, refrigeration systems
are priced the same as the AA systems despite higher costs.
13.3.4.2 Thermal Oxidation (OX)
Thermal oxidation or incineration involves coracustion
of the collected gasoline vapors. Because cf fire hazards
associated with the combustion, this method is not likely
to be used for vapor.control in Mecklenburg County.
13-9
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13.4 COST AND HYDROCARBON REDUCTION BENEFIT EVALUATIONS
FOR THE MOST LIKELY RACT ALTERNATIVES
This section first presents the costs of control for
two model terminals which are representative of the termi-
nals in Mecklenburg County. These costs are then extrapolated
to the countywide terminals.
13.4.1 Costs for Two Ilodel Tank Truck Gasoline Loading
Terminals
The characteristics of two model terminals that repre-
sent the terminals in Mecklenburg County are defined in
Exhibit 13-5, on the following page. The terminals in
the county are projected to use either an adsorption/
absorption (AA) or a refrigeration (RF) control system.
The cost of control systems for the two model termi-
nals include:
Installed capital cost, which includes the
cost of:
Equipment ($120,000 for Model Terminal
A and $155,000 for Model Terminal B, for
both vapor control systems)
Installation (equal to equipment cost)
Modification of account truck ($3,000
per truck)
Annual direct operating costs, which include
electricity, maintenance, operating labor and
carbon replacement costs. Maintenance costs for
the adsorption/absorption system are slightly
lower than those for refrigeration
Annualized capital charges which include costs for
depreciation, interest, taxes and insurance and
are estimated to be 21 percent of the installed
capital cost
Net annualized costs, which are the sum of the
capital charges and direct operating costs.
The estimated costs to equip each model terminal with the two
types of vapor control systems are summarized in Exhibit 13-6,
following Exhibit 13-5.
13-10
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Exhibit 13-5
U.S. Environmental Protection Agency
DEFINITION OF MODEL TANK
TRUCK GASOLINE LOADING TERMINALS
Tank Truck Gasoline Loading
Terminal Characteristics Model Terminal A Model Terminal B
Throughput
Loading racks
Storage tanks
Tank trucks
Compartments per account
truck
Vapor control systems
250,000 gallons/day
1
3
6
4
Adsorption/Absorp-
tion (AA)
or
Refrigeration (RF)
500,000 gallons/day
1
3
15
4
Adsorption/Absorp-
tion (AA)
or
Refrigeration (RF)
Source: Booz, Allen & Hamilton Inc.
-------
Cost of Control
Installed capital cost
Annual direct operating costs
. Electricity
. Maintenance
. Operating Labor
. Carbon replacement
Subtotal (Annual direct
operating costs)
Annualized capital charges
Net annualized cost (not
including gasoline credit)
Exhibit 13-6
U.S. Environmental Protection Agency
ESTIMATED COST OF VOC CONTROL
FOR MODEL TANK TRUCK
GASOLINE LOADING TERMINALS
Model Terminal
A
Type of Control
AA1 RF2
Model Terminal
B
Type of Control
AA RF
$258,000 $258,000 $355,000 $355,000
3,900
10,800
1,500
2,400
18,600
54,180
72,780
9,900
13,200
1,500
24,600
54,180
78,780
7,800
13,950
1,500
4,700
27,950
74,440
102,500
19,800
17,050
1,500
38,350
74,550
112,900
1. Adsorption/absorption
2. Refrigeration
Source: Booz, Allen & Hamilton Inc.
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It should be noted that these costs do not include gasoline
credit which will be taken into account when the costs are
projected to the countywide industry.
13.4.2 Projection of Control Systems Costs to the
Countywide Industry
Based on the throughput of 14 tank truck gasoline
loading terminals in Mecklenburg County, it is estimated
that 12 terminals can be represented by model terminal A
and the remaining two by model terminal B. In each case,
one-half of the terminals are likely to use the adsorption/
absorption vapor recovery system, whereas the other half
are likely to use the refrigeration system to comply with
the RACT guidelines.
Using the above information and the model terminals
cost from Exhibit 13-6, the total installed capital cost
to the terminals in Mecklenburg County is estimated to be
$3.8 million. The direct annual operating costs are esti-
mated to be $325,000. The annual gasoline credit is
estimated at $315,000, which includes the emissions reduc-
tion at the terminals only. The annualized cost per ton
of emissions controlled at terminals is estimated to be
$295 per ton. These findings are summarized in Exhibit
13-7, on the following page.
13-11
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Exhibit 13-7
U.S. Environmental Protection Agen
COSTS OF VAPOR CONTROL SYSTEMS FC
TANK TRUCK GASOLINE LOADING
TERMINALS IN MECKLENBURG COUNT
Characteristic/Cost Item Data
Number of terminals 14
Total annual throughput 1.45
(billions of gallons)
Uncontrolled emissions 3,048
(tons/year)
Emissions reduction from 2,743
terminals (tons/year)
Installed capital cost 3.80
($ million, 1977)
Direct annual operating costs 0.325
<$ million, 1977)
Annualized capital charges 0.80
($ million, 1977)
Annual gasoline credit3 0.315
($ million, 1977)
Net annualized cost 0.81
($ million, 1977)
Annualized cost per ton of 295
emissions reduced, (terminal
emissions only)($ per ton)
a This includes emissions recovered from terminal operations only.
Source: Booz , Allen & Hamilton Inc.
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13.5 DIRECT ECONOMIC IMPLICATIONS
This section presents the direct economic implications
of implementing RACT controls to the countywide industry,
including availability of equipment and capital; feasibility
of the control technology; and comparison with selected state
economic indicators.
13.5.1 RACT Timing
RACT is assumed to be implemented by May 1, 1982.
This implies that tank truck gasoline loading terminals oper-
ators must have vapor control equipment installed and oper-
ating within the next three years. The timing requirements
of RACT impose several requirements on terminal operators
including:
Determining appropriate vapor control system
Raising capital to purchase equipment
Acquiring the necessary vapor control equipment
Installing and testing vapor control equipment to
insure that the system complies with RACT.
The sections which follow discuss the feasibility and the
economic implications of implementing RACT within the re-
quired timeframe.
13.5.2 Feasibility Issues
Several tank truck gasoline loading terminals operators
in the United States have successfully implemented vapor
control systems. State adoption of RACT regulations will
generate a new demand for vapor control systems. It is
expected that sufficient leadtime is available to meet the
increased demand of vapor recovery equipment.
It has been reported during industry interviews that
terminal operators have access to capital to purchase vapor
control equipment, and that terminals will not cease opera-
tions because of the cost of implementing RACT.
13-13
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13.6 SELECTED SECONDARY ECONOMIC IMPACTS
Implementing the RACT guidelines for gasoline loading
terminals in Mecklenburg County is not likely to have an
impact on employment and gasoline market structure in the
county.
* * * *
Exhibit 13-8, on the following page, presents a summary
of the findings of this chapter.
13-14
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Exhibit 13-8
U.S. Environmental Protection Agency
SUMMARY OF DIRECT ECONOMIC IMPLICATIONS OF
IMPLEMENTING RACT FOR TANK TRUCK GASOLINE
LOADING TERMINALS IN MECKLENBURG COUNTY
Current Situation
Number of potentially affected
facilities
Indication of relative importance
of industrial section to state
economy
Current industry technology trends
1977 VOC actual emissions
Industry preferred method of VOC
control to meet RACT guidelines.
Affected Areas in Meeting RACT
Capital investment (countywide)
Annualized cost (countywide)
Price
Energy
Productivity
Employment
Market structure
Discussion
14
1977 industry sales were $616 million. The
estimated annual throughput was 1.45 billion
gallons
New terminals are currently being designed
with vapor recovery equipment
3,048 tons per year
Submerge or bottom fill and vapor recovery
Discussion
$3.8 million
$0.81 million (approximately) 0.12 percent
of value of shipment)
Assuming a direct cost passthrough-$0.0005
per gallon
Assuming full recovery of gasoline-net
savings of 19,200 barrels annually from
-erminal emissions
No major impact
No direct impact
Mo direct impact
VOC emission after control
Cost effectiveness of control
305 tons per year
$295 annualized cost/annual ton of VOC
reduction from terminals assuming no gaso-
line credit from vapors potentially
returned from bulk gasoline plants and
gasoline service stations
Source: Booz, Allen & Hamilton Inc.
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BIBLIOGRAPHY
National "Petroleum
News
Fact Book,
1976 ,
IlcGraw
Hill,
Hid-
May 197 6.
National' Petroleum
News
Fact Book,
1977,
McGraw
Hill,
f!id-
May" 1977.
National Petroleum
News
"Fact Book,
1978,
McGraw
Hill,
Mid-
June 1978.
Control of Hydrocarbons from Tank Truck Gasoline Loading
Terminals, EPA-450/2-77-0 26, U.S. Environmental Protection
Agency, October 1977.
The Economic Impact of Vapor Control on the Bulk Storage
Industry, prepared for U.S. Environmental Protection
Agency by Arthur D. Little, draft report, July 1978.
Regulatory Guidance for Control of Volatile Organic Compound
Emissions from 15 Categories of Stationary Sources,
EPA-905/2-78-0 01, April 1978 .
Systems and Costs to Control Hydrocarbon Emissions from
Stationary Sources, PB-23 6 921, Environmental Protection
Agency, September 1974.
1972 Census of Wholesale Trade, Petroleum Bulk Stations and
Terminals, U.S. Bureau of Census.
Demonstration of Reduced Hydrocarbon Emissions from Gasoline
Loading Terminals, PB-234 363.
Private conversation with Mr. Clark Houghton, Mid-Missouri
Oil Company.
Private conversation with Mr. Gordon Potter, Exxon, Houston,
Texas.
Private conversation with Mr. James McGill, Hydrotech,
Tulsa, Oklahoma.
Private conversation with-Mr. Frederick Rainey, Shell Oil
Company, Houston, Texas.
-------
TECHNICAL REPORT DATA
(Plrnsc rend Ir.urucnons on :l;c reverse before toinpkting)
], REPORT NO 2
EPA-904/9-79-MB 035
3 RECIPIENT'S ACCESSION NO.
- TITLE AND SUBTITLE
Economic Impact of Implementing RACT Guide-
lines in the Nonattainment Areas of North
Carolina
5 REPORT DATE
March, 1979
6. PERFORMING ORGANIZATION CODE
7 AUTriOR(S)
8 PERFORMING ORGANIZATION REPORT NO.
9. PERFORMING ORGANIZATION NAME AND ADDRESS
Booz, Allen & Hamilton Inc.
Foster D. Snell Division (Florham Park, N.J.
& Public Management Technology Center
(Bethesda, MD)
10. PROGRAM ELEMENT NO.
\
h 1. CONTRACT/GRANT NO.
68-02-2544, Task 6
12. SPONSORING AGENCY NAME AND ADDRESS
U.S. Environmental Protection Agency
Region IV
Air & Hazardous Materials Division
Atlanta, Georgia
13. TYPE OF REPORT AND PERIOD COVERED
Final Report
14. SPONSORING AGENCY CODE
15. SUPPLEMENTARY NOTES
EPA Project Officer: Winston Smith
16 ABSTRACT
The major objective of the contract effort was to determine the
direct economic impact of implementing RACT standards in North Carolina
The study is to be used primarily to assist EPA and state decisions on
achieving the emission limitations of the RACT standards.
The economic impact was assessed for the following 2 RACT indus-
trial categories: surface coating of paper and bulk gasoline terminals.
The scope of this project was to determine the costs and direct
impact of control to achieve RACT guideline limitations in the non-
attainment areas of North Carolina. Direct economic costs and benefits
from the implementation of RACT limitations were identified and
quantified while secondary impacts (social, energy, employment, etc.)
are addressed, they were not a major emphasis in the study.
17. KEY WORDS AND DOCUMENT ANALYSIS
a. DESCRIPTORS
b.IDENTIFIERS/OPEN ENDED TERMS
c. COSATI Field/Group
Gasoline marketing
Air pollution
Paper coatings
Solvent substitution
Emission limits
Air pollution control
Stationary sources
North Carolina
Economic impact
Hydrocarbon emissions
Coatings
13. DISTRIBUTION STATEMENT
Unlimited
19 SECURITY CLASS (Tins Report)
Unclassified
21 NO. OF PAGES
20 SECURITY CLASS (This page)
Unclassified
22. PRICE
EPA Form 2220-1 (9-73)
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