FINAL DRAFT: July 1999
ASSESSMENT OF THE POTENTIAL
COSTS, BENEFITS, & OTHER IMPACTS
OF THE HAZARDOUS WASTE
COMBUSTION MACT STANDARDS:
FINAL RULE
Economics, Methods, and Risk Analysis Division
Office of Solid Waste
U.S. Environmental Protection Agency
401 M Street, SW
Washington, DC 20460
-------
FINAL DRAFT: July 1999
ACKNOWLEDGEMENTS
The Agency recognizes Industrial Economics, Incorporated (ffic), for the overall organization
and development of this report, ffic developed the database and analytical model that allowed for
comprehensive analyses of the final regulatory standards and the options presented in this report.
Lyn D. Luben, Gary L. Ballard, and W. Barnes Johnson, all of the U.S. Environmental Protection
Agency, Office of Solid Waste, provided guidance and review.
-------
FINAL DRAFT: July 1999
TABLE OF CONTENTS
EXECUTIVE SUMMARY ES-1
Overview ES-1
Summary of Findings ES-3
Engineering and Compliance Cost Analysis ES-6
Social Cost and Economic Impact Analysis ES-8
Benefits Assessment ES-9
Other Regulatory Issues ES-10
Regulatory Flexibility Analysis ES-10
Environmental Justice Analysis ES-11
Unfunded Federal Mandates ES-11
Regulatory Takings ES-12
INTRODUCTION AND REGULATORY OPTIONS CHAPTER 1
Background 1-1
Analytical Requirements 1-3
Need for Regulatory Action 1-4
Examination of Alternative Regulatory Options 1-7
Recommended MACT (Final Standards) 1-10
BTF for Mercury and D/F Based on Activated Carbon Injection 1-11
MACT Standards for New Sources 1-11
Potential Environmental Benefits of the MACT Standards 1-11
Timetable for MACT Requirements 1-13
Analytic Approach and Organization 1-14
OVERVIEW OF COMBUSTION
PRACTICES AND MARKETS CHAPTER 2
Combustion Market Overview 2-1
Types of Combustion Facilities 2-3
Number of Combustion Facilities 2-4
On-Site Versus Commercial Combustion 2-5
Fuel Blenders and Other Intermediaries 2-7
-------
FINAL DRAFT: July 1999
TABLE OF CONTENTS
(continued)
Characteristics of Combusted Waste 2-8
Major Sources of Combusted Hazardous Wastes 2-10
Market and Regulatory Forces Influencing Combustion Industry 2-10
Regulatory Requirements Encouraging Combustion 2-13
Liability Concerns 2-14
Economic Forces Encouraging Combustion 2-14
Current Regulatory Framework 2-15
Regulations Governing Waste-Burning Kilns 2-15
Regulations Governing Hazardous Waste Incinerators 2-16
Ash Disposal 2-16
Effect of Regulatory Differences on Market Competition 2-17
Combustion Market Performance 2-18
Historical Performance 2-18
Overcapacity and Effects on Poor Market Performance 2-19
Structural Advantages for Waste-Burning Kilns 2-21
Market Performance Across Combustion Sectors 2-22
Financial Performance and Profitability 2-22
DEFINING THE REGULATORY BASELINE CHAPTER 3
Baseline Economic Assumptions 3-3
Hazardous Waste Combustion Prices 3-4
Hazardous Waste Quantities 3-5
Energy Savings 3-7
Avoided Transportation Costs 3-8
Baseline Waste-Burning Costs 3-8
Future Capacity 3-10
Emissions and Pollution Control Practices 3-16
Emissions 3-16
Air Pollution Control Practices 3-18
Summary 3-20
11
-------
FINAL DRAFT: July 1999
TABLE OF CONTENTS
(continued)
COMPLIANCE COST ANALYSIS CHAPTER 4
Introduction 4-1
Costing Methodology for Existing Combustion Systems 4-2
Air Pollution Control Measures 4-4
Continuous Emissions Monitoring Costs 4-6
Other Compliance Costs 4-8
Results of Compliance Cost Analysis for Existing Sources 4-10
Compliance Costs for New Combustion Sources 4-16
Caveats and Limitations of Compliance Cost Analysis 4-17
Government Costs 4-18
Summary 4-19
SOCIAL COST AND ECONOMIC IMPACT ANALYSIS CHAPTER 5
Overview of Results 5-2
Social Cost Results 5-2
Economic Impact Measure Results 5-3
Social Cost Methodological Framework 5-4
Combustion Market Structure Used for Modeling 5-4
Economic Welfare Changes 5-5
Government Costs 5-8
Social Cost Framework Summary 5-8
Hazardous Waste Combustion Market Modeling 5-8
Total Compliance Costs Under Static Assumptions 5-9
Modeling Market Dynamics 5-10
Total Compliance Costs Under Dynamic Assumptions 5-15
Summary 5-17
in
-------
FINAL DRAFT: July 1999
TABLE OF CONTENTS
(continued)
Social Cost Results 5-17
Compliance Cost Results for the Static Scenario 5-17
Compliance Cost Results for the Dynamic Scenario 5-19
Summary 5-20
Economic Impact Measures 5-22
Market Exits 5-23
Hazardous Waste Reallocated 5-26
Employment Impacts 5-30
Combustion Price Increases 5-36
Other Industry Impacts 5-40
Economic Impact Summary 5-42
BENEFITS ASSESSMENT CHAPTER 6
Risk Assessment Overview 6-2
Human Health Benefits 6-4
Human Health Benefits Methodology 6-5
Human Health Benefits Results 6-12
Ecological Benefits 6-20
Ecological Benefits Results 6-21
Waste Minimization Benefits 6-21
Methodology for Characterizing Waste Minimization Benefits 6-23
Waste Minimization Analysis Results 6-24
Caveats and Limitations 6-26
Conclusions 6-27
IV
-------
FINAL DRAFT: July 1999
TABLE OF CONTENTS
(continued)
EQUITY CONSIDERATIONS AND OTHER IMPACTS CHAPTER 7
Assessment of Small Entity Impacts 7-2
Environmental Justice Analysis 7-4
Approach 7-6
Results 7-7
Summary 7-12
Children's Health Protection Analysis 7-14
Approach 7-15
Summary of Results 7-15
Joint Impacts of Three EPA Rules on the Cement Industry 7-16
Unfunded Mandates Analysis 7-17
Tribal Governments Analysis 7-18
Regulatory Takings Analysis 7-19
COMPARISON OF COSTS, BENEFITS, AND OTHER IMPACTS CHAPTER 8
Cost-Effectiveness Analysis 8-1
Overview 8-1
Cost-Effectiveness: Dollar per Unit of Reduced Emission 8-2
Cost-Effectiveness: Dollar per Health and Ecological Benefits 8-5
Caveats and Limitations 8-9
Cost-Benefit Comparison 8-10
REFERENCES
-------
FINAL DRAFT: July 1999
APPENDICES
Appendix A: Core Data Inputs
Appendix B: Baseline Cost Report
Appendix C: Detailed Cost Model Results
Appendix D: Print-Out of Cost Model Contents
Appendix E: Methodology for Employment Impacts Analysis
Appendix F: Waste Minimization Report
Appendix G: Assessment of Small Entity Impacts Associated with the
Combustion MACT Final Rule
Appendix H: Environmental Justice Data Tables
Appendix I: Reduced Risk to Children's Health
Appendix J: Multi-Rule Analysis
VI
-------
FINAL DRAFT: July 1999
LIST OF EXHIBITS
Exhibit ES-1: Regulatory Alternatives for Existing Sources
Exhibit ES-2: Overview of System-Specific Compliance Cost Analysis
Exhibit ES-3: Summary of Social Cost Estimates
Exhibit 1-1: Aggregate and System Average Baseline National Emissions
Exhibit 1-2: Proposed MACT Standards
Exhibit 1-3: Regulatory Alternatives for Existing Sources
Exhibit 1-4: Regulatory Standards for New Sources
Exhibit 1-5: Percent Decrease in Total Emissions from the Baseline
Exhibit 1 -6: Timeline for HWC MACT Requirements
Exhibit 2-1: Hazardous Waste Combustion Market Structure
Exhibit 2-2: Universe of Regulated Entities
Exhibit 2-3: Combustion Facility Structure
Exhibit 2-4: Waste Quantities Managed by Combustion Systems
Exhibit 2-5: Industrial Sectors Generating Combusted Waste
Exhibit 2-6: Average Capacity Utilization at Hazardous Waste-Burning Facilities
Exhibit 3-1: Waste Prices for Final Economic Impact Model
Exhibit 3-2: Hazardous Waste Quantities From 1991 to 1995
Exhibit 3-3: Annual Baseline Costs for Existing Combustion Systems
Exhibit 3-4: Systems That Appear Non-Viable in the Short Term Baseline
Exhibit 3-5: Long Term Baseline Operating Profits Per Ton of Hazardous Waste Burned
Exhibit 3-6: Factors Influencing Viability of Combustion
Exhibit 3-7: Baseline National Emissions from Combustion Systems (Aggregate)
Exhibit 3-8: Average Baseline National Emissions Per System
Exhibit 3-9: Baseline APCDs by Combustion Sector
Exhibit 4-1: Overview of System-Specific Compliance Cost Analysis
Exhibit 4-2: Air Pollution Control Measures Assigned in Compliance Cost Analysis
Exhibit 4-3: Average Per-System Total Annual Costs of Continuous Emissions Monitoring
forPM
Exhibit 4-4: Summary of Other Compliance Cost Components
Exhibit 4-5: Average Total Annual Compliance Costs Per Combustion System (Assuming No
Market Exit)
Exhibit 4-6: Percentage of Systems Requiring Control Measures (Before Consolidation)
Exhibit 4-7: Percentage of New Compliance Costs by Control Measure (Before Consolidation)
Exhibit 4-8: Total Annualized System Costs for New Combustion Sources
Exhibit 4-9: Summary of HWC MACT Incremental Costs to Government
vn
-------
FINAL DRAFT: July 1999
LIST OF EXHIBITS
(continued)
Exhibit 5-1: Framework for Analyzing Economic Welfare Loss
Exhibit 5-2: Scaling Factors for National Cost Estimates
Exhibit 5-3: Demand for Combustion Alternatives
Exhibit 5-4: Combustion System Consolidation Module
Exhibit 5-5: Total Annual Compliance Costs (Excludes baseline non-viable systems, no
system consolidation or market exits)
Exhibit 5-6: Total Annual Compliance Costs (No market adjustments; total costs for all
facilities, including baseline nonviable systems)
Exhibit 5-7: Total Annual Pre-Tax Compliance Costs After Combustion System
Consolidations
Exhibit 5-8: Summary of Social Cost Estimates
Exhibit 5-9: Summary of Facility Market Exit Impacts (Short Term)
Exhibit 5-10: Summary of Facility Market Exit Impacts (Long Term)
Exhibit 5-11: Routine for Calculating Quantity of Waste Diverted
Exhibit 5-12: Summary of Quantity of Hazardous Waste That Could Be Diverted in the Short
and Long Term
Exhibit 5-13: Regional Analysis of Diverted Waste and Remaining Capacity
Exhibit 5-14: Procedure Used to Estimate Employment Dislocations
Exhibit 5-15: Procedure Used to Estimate Employment Gains
Exhibit 5-16: Summary of Estimated Employment Dislocations
Exhibit 5-17: Summary of Estimated Employment Gains
Exhibit 5-18: Simplified Example of Determination of New Market Price for Combustion
Exhibit 5-19: Weighted Average Combustion Price Per Ton and Increase in Prices Due to
Assumed Price Pass Through
Exhibit 5-20: MACT Compliance Costs as a Percentage of Total Pollution Control
Expenditures for Industries with On-Site Incinerators
Exhibit 5-21: Summary of Economic Impact Analysis
Exhibit 6-1: Diagram of 16 Sector Polar-Based Grid Used in the Risk Assessment
Exhibit 6-2: Summary of Mortality Valuation Estimates
Exhibit 6-3: Costs of Illness Associated with PM
Exhibit 6-4: Costs of Illness Associated with Various Birth Defects
Exhibit 6-5: Benefits Summary: Baseline to MACT Floor
Exhibit 6-6: Benefits Summary: Baseline to Recommended MACT
Exhibit 6-7: Benefits Summary: Baseline to BTF-ACI MACT
Exhibit 6-8: Benefits Summary: Cases Avoided by Source, Baseline to MACT Standard
Exhibit 6-9: Ecological Benefits Summary
Exhibit 6-10: Waste Minimization Methodology Flow Chart
Vlll
-------
FINAL DRAFT: July 1999
LIST OF EXHIBITS
(continued)
Exhibit 7-1: Small Entity Analysis Results
Exhibit 7-2: Minority Populations Near Combustion Facilities, Site-by-Site Basis
Exhibit 7-3: Low-Income Populations Near Combustion Facilities, Site-by-Site Basis
Exhibit 7-4: Potentially Exposed General and Minority Populations
Exhibit 7-5: Potentially Exposed General and Low-Income Populations
Exhibit 8-1: Expected Incremental Annual Emission Reductions
Exhibit 8-2: Cost-Effectiveness Results
Exhibit 8-3: Cost-Effectiveness Per Unit Health and Ecological Improvement
Exhibit 8-4: Total Monetized Health Benefits
Exhibit 8-5: Total Social costs
IX
-------
FINAL DRAFT: July 1999
LIST OF ACRONYMS
ACFM Actual Cubic Feet per Minute
APCD Air Pollution Control Device
ATTIC Alternative Technology Information Center
BDAT Best Demonstrated Available Technology
BEQ Breakeven Quantity
BIF Boiler or Industrial Furnace
BRS Biennial Reporting System
BTF Beyond the Floor
CAA Clean Air Act
CEM Continuous Emissions Monitoring
CERCLA Comprehensive Environmental Response, Compensation and Liability Act
CETRED Combustion Emissions Technical Resources Document
GIF Cost, Insurance and Freight
CFR Code of Federal Regulations
CK Cement Kiln
CKD Cement Kiln Dust
CKRC Cement Kiln Recycling Coalition
C12 Chlorine
CO Carbon Monoxide
CRF Capital Recovery Factor
CWA Clean Water Act
D/F Dioxin/Furan
DOM Design, Operation, and Maintenance
DPRA DPRA, Incorporated
DRE Destruction and Removal Efficiency
EER Energy and Environmental Research Corporation
EPA Environmental Protection Agency
ESPs Electrostatic Precipitators
GDP Gross Domestic Product
GPM Gallons per Minute
HAP Hazardous Air Pollutant
HBL Health Benchmark Level
HC Hydrocarbons
HC1 Hydrochloric Acid
Hg Mercury
HQ Hazard Quotient
HSWA Hazardous and Solid Waste Amendments
HWC Hazardous Waste Combustion
HWIR Hazardous Waste Identification Rule
ICR Information Collection Request
-------
FINAL DRAFT: July 1999
LIST OF ACRONYMS
(continued)
IWS Ionizing Wet Scrubbers
LDR Land Disposal Restrictions
LVM Low Volatile Metals
LWA Lightweight Aggregate
LWAK Lightweight Aggregate Kilns
MACT Maximum Achievable Control Technology
MTEC Maximum Theoretical Emissions Concentration
NACR National Association of Chemical Recyclers
NHWCS National Hazardous Waste Constituent Survey
NSPS New Source Performance Standards
O&M Operating and Maintenance
OAQPS Office of Air Quality Planning and Standards
OMB Office of Management and Budget
OSW Office of Solid Waste
PCDD Polychlorinated Dibenzo-P-Dioxins
PCDF Polychlorinated Dibenzo Furans
PCI Pollution Control Industries
PIC Products of Incomplete Combustion
PM Particulate Matter
POTW Publicly Owned Treatment Work
PSPD Permits and State Programs Division
RCRA Resource Conservation and Recovery Act
RFA Regulatory Flexibility Act
RIA Regulatory Impact Assessment
SBA Small Business Administration
SQB Small Quantity Burner
SVM Semi-Volatile Metals
TCI Total Chlorine
TEQ Dioxin/Furan Toxic Equivalents
THC Total Hydrocarbons
UMRA Unfunded Mandates Reform Act
VISITT Vendor Information System for Innovative Treatment Technologies
XI
-------
FINAL DRAFT: July 1999
EXECUTIVE SUMMARY
OVERVIEW
In May of 1993, the Environmental Protection Agency (EPA) introduced a draft Waste
Minimization and Combustion Strategy to reduce reliance on the combustion of hazardous waste and
encourage reduced generation of these wastes. Among the key objectives of the strategy is the
reduction of health and ecological risks posed by the combustion of hazardous waste. As part of this
strategy, EPA developed more stringent MACT emissions standards for hazardous waste combustion
facilities. These final MACT standards address a variety of air pollutants, including dioxins/furans,
particulate matter, mercury, semi-volatile and low-volatility metals, and chlorine. In addition,
emissions of carbon monoxide and hydrocarbons will be regulated as proxies for non-dioxin, non-
furan toxic organic emissions. The rule establishes emission levels for commercial incinerators,
waste-burning cement kilns and lightweight aggregate kilns (LWAKs), and on-site incinerators. The
final rule is scheduled for promulgation in July 1999.
As part of this Rulemaking, EPA considered multiple MACT alternatives for limiting
emissions of hazardous and non-hazardous air pollutants at combustion facilities. On April 19,
1996, the Agency proposed MACT standards for hazardous waste combustion facilities. To support
this proposal, EPA conducted a Regulatory Impact Assessment (RIA) that examined and compared
the costs and benefits of the proposed standards, along with eleven additional regulatory alternatives.
The RIA and two Addendums to the RIA are available in the RCRA docket established for the
proposed rule.
This economic assessment (the Assessment), which replaces the earlier RIA, analyzes the
costs of the rule and the impacts that these costs would have on waste burning behavior, and
compares these costs to the benefits of the regulation. In this document, we analyze the impacts of
the final rule (referred to as the Recommended option in later chapters of $\Q Assessment), as well
as the MACT floor and a more stringent "beyond the floor" (BTF) MACT option for dioxins/furans
and mercury based on activated carbon injection technology (the "BTF-ACI" MACT option).
Exhibit ES-1 lists the emission standards by pollutant and combustion source category for the three
MACT alternatives analyzed in this document.
The Assessment also seeks to satisfy OMB's requirements for regulatory review under
Executive Order 12866, which applies to any significant regulatory action. This document also
fulfills the requirements of the Regulatory Flexibility Act, as amended by the Small Business
Regulatory Enforcement Fairness Act of 1996; Executive Order 12898, "Federal Actions to Address
Environmental Justice in Minority Populations"; the Unfunded Mandates Reform Act of 1995; and
ES-1
-------
FINAL DRAFT: July 1999
Exhibit ES-1
REGULATORY ALTERNATIVES FOR EXISTING SOURCES
MACT
MACT Floor
Recommended
MACT
(Final Standards)
BTF-ACI
MACT
Source
Category
Incinerators
Cement Kilns
LWAKs
Incinerators
Cement Kilns
LWAKs
Incinerators
Cement Kilns
LWAKs
Chlorinated
D/F (ng TEQ/dscm)
WHB: 0.2; or 12 and temperature at inlet to PM
control device < 400° F
Others: 0.2; or 0.4 and temperature at inlet to PM
control device < 400° F
0.2; or 0.4 and temperature at inlet to PM control
device < 400° F
0.2; or 4. 1 and temperature at inlet to PM control
device < 400° F
0.2; or 0.4 and temperature at inlet to PM control
device < 400° F or 0.4 for incinerators using wet PM
control device
0.2; or 0.4 and temperature at inlet to PM control
device < 400° F
0.2; or 0.4 and rapid quench to PM control device <
400° F at the exit of the kiln
0.2
0.2
0.2
PM
0.015
gr/dscf
0.15
kg/Mg dry
feed
0.025
gr/dscf
0.015
gr/dscf
0.15
kg/Mg dry
feed
0.025
gr/dscf
0.015
gr/dscf
0.15
kg/Mg dry
feed
0.025
gr/dscf
Hg
(^g/dscm)
130
120
47
130
120
47
10
25
10
SVM
(^g/dscm)
240
650
1700
240
240
250
240
240
250
LVM
(^g/dscm)
97
56
110
97
56
110
97
56
110
TO
(ppmv)
77
130
1500
77
130
150
77
130
150
CO
(ppmv)
100* or
100 or
100 or
100 or
100 or
100 or
100 or
100 or
100 or
100 or
100 or
100 or
HC
(ppmv)
10*
10(4)
~~ 20~(0~
20
10
10(4)
~~ 20~(0~
20
10
10(4)
~~ 20~(0~
20
Notes:
1 . Across all options, cement kilns sources have the option to continuously comply with a CO standard of 100 ppmv in lieu of complying with the HC standard. Cement kilns that choose to do this, however,
must demonstrate compliance with the HC standard during the comprehensive performance test.
2. Incinerators and LWAKs may choose to comply with either the CO or the HC limit.
3. WHB are incinerators with waste heat boilers.
4. Shaded cells indicate that the standards represent BTF levels. Bold figures in the BTF-ACI option indicate that the pollutant is controlled with more stringency under the recommended MACT.
5. Across all regulatory alternatives, a DRE of 99.99% is required (99.9999% for sources burning dioxin-listed wastes) to control emissions of non-dioxin/furan organic HAPs.
(*) Incinerators with high temperature rapid quench design can comply with the HC standard in lieu of the CO standard. Incinerators that use wet scrubbers can comply with the CO standard
in lieu of the HC standard.
(+) Cement kilns with bypass ducts have the option to comply with either a CO standard in the bypass duct of 100 ppmv, or an HC standard in the bypass duct of 10 ppmv (no main stack standard).
(0) Cement kilns without bypass ducts have the option to comply with either a CO standard in the main stack of 100 ppmv, or an HC standard in the main stack of 20 ppmv.
ES-2
-------
FINAL DRAFT: July 1999
Executive Order 12630, "Government Action and Interference with Constitutionally Protected
Property Rights"; and Executive Order 13084, "Consultation and Coordination with Indian Tribal
Governments."
SUMMARY OF FINDINGS
This Assessment provides estimates of the costs and benefits of EPA's final MACT standards
for hazardous waste combustion facilities. The total social costs of the final rule are estimated at
between $65 and $73 million, with an upper bound of $95 million. Approximately $300,000 of the
social costs are attributed to government administrative costs. As the cost of waste-burning
increases, the market will adjust. These market responses will take the form of higher combustion
prices, decisions to stop burning hazardous waste (these primarily take place in the on-site
incinerator and cement kiln sectors), reallocation of waste from systems that stop burning, and
employment shifts. Overall, we find that many of the marginal facilities are likely to exit the market
even in the absence of the combustion MACT standards. Promulgation of the MACT standards will
accelerate and slightly increase the consolidation that is already taking place in the combustion
industry.
Human health benefits, and to a lesser extent ecological improvements, are also expected to
result from decreased emissions associated with the MACT standards. EPA's multi-pathway risk
assessment suggests that both mortality and morbidity risk reductions will result from the MACT
standards. For the final rule, the mortality risk reductions translate into approximately two avoided
premature deaths per year. Morbidity risk reductions (on an annual basis) include a small number
of avoided hospital admissions associated with respiratory and heart conditions; 20,000 avoided
restricted activity days; 25 avoided cases of chronic bronchitis; and over 250,000 avoided asthma
attacks. Reductions in lead and mercury emissions may also provide some additional health benefits
to children.
The remainder of this section summarizes the central conclusions of the Assessment.
• Compliance costs for kilns are higher on average than those for
incinerators. Under the final MACT standards, average annual costs for
incinerators are approximately $300,000 per system, while average annual
compliance costs are $800,000 for cement kilns and $600,000 for LWAKs.
ES-3
-------
FINAL DRAFT: July 1999
Government administrative costs are estimated at $300,000 per year.
These government costs are associated with administering and enforcing the
final MACT standards and related MACT requirements (e.g., notice of intent
to comply).
Total social costs of the final rule are between $65 and $73 million
annually, and are not expected to exceed $95 million. Total social costs
include about $300,000 in government administrative costs. At the Floor,
total social costs decrease by about 10 percent to between $57 and $66
million annually. The increase in total costs for the BTF-ACI are more
dramatic: relative to the final rule, costs increase by about 90 percent to
between $124 and $140 million annually.
For the final rule, between one and two cement kilns and between 7 and
16 on-site incinerators will stop burning waste entirely, rather than incur
the rule's compliance costs. Additional waste consolidation will occur at
other facilities where wastes are consolidated into fewer combustion systems.
Market exit and waste consolidation activity is expected to result in
between 23,000 and 54,000 tons of waste that will be reallocated from
combustion systems that stop burning. This quantity corresponds to
between 1 and 2 percent of total combusted wastes. If waste burned at
baseline nonviable systems (i.e., systems we expect will exit the market in the
baseline regardless of the MACT standards) is included in this total, the
estimate increases to about 160,000 tons, or about 5 percent of total
combusted wastes. Under the BTF-ACI MACT option, the quantity of
reallocated wastes (incremental to the baseline) increases to between 55,000
and 90,000 tons. Reallocated wastes may be sent to other combustion
facilities that remain open because there is currently adequate capacity in all
combustion sectors and geographic regions to absorb these shifts.
Employment shifts will occur in the combustion and pollution control
industries. As the market adjusts to new output levels post MACT and
combustion facilities invest in additional pollution control and monitoring
equipment, employment shifts will occur. At facilities that consolidate waste
burning or that stop burning altogether, employment dislocations of between
100 and 300 full time equivalent jobs are expected. Over half of these
dislocations occur in the on-site sector and the remainder occur at kilns.
Employment dislocations increase by almost 20 percent when going from the
Recommended option to the BTF-ACI option. Employment gains of
approximately 100 full time equivalent jobs are expected in the pollution
control industry and gains of approximately 150 full time equivalent jobs are
ES-4
-------
FINAL DRAFT: July 1999
expected at combustion facilities that continue waste burning. Gains nearly
double from the Recommended to the BTF-ACI option.
Combustion prices will likely increase by about $15 per ton for kilns (6
percent price increase) and $12 per ton for incinerators (2 percent price
increase). As combustion facilities incur compliance costs of the MACT
rule, they have an incentive to increase prices for combustion. Our
evaluation of waste management alternatives suggests that combustion
demand is relatively inelastic, which will enable combustion facilities to pass
through a significant share of the compliance costs to their customers.
Human health benefits will result from the MACT standards. The
MACT standards are expected to result in reduction of the following adverse
health effects on an annual basis: approximately two premature deaths, six
hospital admissions associated with respiratory ailments and heart conditions,
25 cases of chronic bronchitis, over 250,000 asthma attacks, and nearly
20,000 days of work loss or restricted activity. These human health benefits
are valued at $30 million per year.
Potential ecological improvements. Thirty-eight square kilometers of water
may experience a decrease in potential risks to ecosystems. For terrestrial
areas, the amount of land that may experience reductions in risk ranges
between 115 and 147 square kilometers.
Waste minimization. While a variety of waste minimization alternatives are
available for managing those hazardous waste streams that are currently
combusted, the costs of these alternatives generally exceeds the cost of
combustion. When the additional costs of compliance are taken into account,
waste minimization alternatives still tend to exceed the higher combustion
costs.
Across regulatory options, costs exceed monetized benefits more than two-fold. For both the
final and floor MACT options, costs are about three times greater than monetized benefits. For the
BTF-ACI option, costs are almost four times greater than monetized benefits. However, the MACT
standards are expected to provide other benefits that are not expressed in monetary terms. These
benefits include health benefits to sensitive sub-populations such as subsistence anglers and
improvements to terrestrial and aquatic ecological systems. When these benefits are taken into
account, along with equity-enhancing effects such as environmental justice and impacts to children's
health, the benefit-cost comparison becomes more complex. Consequently, the final regulatory
decision becomes a policy judgment which takes into account efficiency as well as equity and
regulatory concerns.
ES-5
-------
FINAL DRAFT: July 1999
ENGINEERING AND COMPLIANCE COST ANALYSIS
We use engineering cost models based on system-specific parameters to estimate compliance
costs for the MACT standards for hazardous waste combustion facilities. Under this approach,
individual combustion systems are assigned air pollution control measures and corresponding cost
estimates using engineering parameters such as gas flow rates, waste feed composition, and
combustion chamber temperature. From this assignment of pollution control measures, we derive
the capital, and fixed and variable operating costs that each combustion system in the economic
analysis would incur in complying with the standards. The estimates of compliance costs also
include the costs associated with permitting, testing and record keeping and reporting requirements.
The compliance cost analysis is summarized in Exhibit ES-2.
• Cement kilns consistently have the highest average system compliance costs
across MACT options. Average compliance costs for cement kilns under the
final rule are approximately $800,000 per system. At the Floor, average costs
for cement kilns are $670,000. Costs increase, on average, to over $1 million
per cement kiln under the BTF-ACI option.
• Average system costs tend to be lower for incinerators than for kilns,
although under the BTF-ACI option, costs escalate significantly for
government incinerators (to $1 million per system), and are comparable to
cement kiln costs. Under the final MACT standards, average system costs
are $290,000 for commercial incinerators, $270,000 for privately-owned on-
site systems, and $190,000 for government incinerators.
Government administrative costs, borne primarily by EPA offices and state
environmental agencies, total $300,000 per year.
Compliance costs vary significantly across individual combustion systems, due to the
different air pollution controls the systems currently have in place and due to the differences in
combustion systems and waste types handled. For the final MACT standards, the variation in
compliance costs is summarized below.
ES-6
-------
FINAL DRAFT: July 1999
Exhibit ES-2
OVERVIEW OF SYSTEM-SPECIFIC COMPLIANCE COST ANALYSIS
Set allowable
emissions for
HAPs of concern
1
Set design level* for
costing purposes
(50%, 70%)
^^^^^
/
\
Calculate %
reduction required
for each HAP
1
Baseline emissions // APCDs //Gasflow // Total // stack /^Temperature // /
for each // "« // rate // cU»n; // moisture // at APCD // System type /
combustion svstem// lnPlace // // mfted // // ^ // /
/
Evaluate what new APCDs or DOMs would be
required to achieve the emissions reduction
(accounts for joint control of multiple HAPs)
Estimate HW feed control
costs and/or retrofit costs
Add additional compliance
costs (e.g., CEMs, permitting)
Total new \
compliance costs
per system /
KEY
Input
Process/
Calculation
( ) Output/Result
NOTES
1. Setting of allowable emissions for hazardous air pollutants (HAPs) based on MACT analysis using Trial Burn Reports. Baseline emissions also determined
using Trial Burn Reports (measured at the stack) and imputation. See U.S. EPA, Draft Technical Support Document for HWC MACT Standards, Volume I:
HWC Emissions Database, March 1998.
2. All other data inputs from U.S. EPA, Draft Technical Support Document for HWC MACT Standards, Volume I: HWC Emissions Database, March 1998.
3. A DOM is a design, operation, or maintenance change to an existing Air Pollution Control Device (APCD). CEMs are continuous emission monitoring systems.
* The design-adjusted MACT emission requirement differs from the MACT standard by a factor that incorporates a design safety factor (50% or 70%).
Engineering
design levels are described more fully in Chapter 4.
ES-7
-------
FINAL DRAFT: July 1999
Cement Kilns: Annual system compliance costs range from $0 to $3.6
million, with an average cost of $800,000 per system.
Commercial Incinerators: Annual system compliance costs range from
$14,000 to $880,000, with an average cost of $290,000 per system.
LWAKs: Annual system compliance costs range from $450,000 to
$850,000, with an average cost of $640,000 per system.
Private On-Site Incinerators: Annual system compliance costs range from
$7,000 to $870,000, with an average cost of $270,000 per system.
Government On-Site Incinerators: Annual system compliance costs range
from $0 to $790,000, with an average cost of $190,000 per system.
SOCIAL COST AND ECONOMIC IMPACT ANALYSIS
Total social costs of the MACT standards include the value of resources used to comply with
the standards by the private sector, the value of resources used to administer the regulation by the
government, and the value of output lost due to shifts of resources to less productive uses. As
explained in more detail in Chapter 5, we estimate the value of the private sector resource shifts
using a simplified approach designed to bracket the welfare loss attributable to the MACT standards.
The high end of the economic welfare loss range is based on a static market scenario in which all
combustion facilities, excluding those we expect will exit the market in the baseline, continue to
operate at current output levels and comply with the MACT standards. The low end of the economic
welfare loss range is based on a dynamic market scenario and uses a lower output equilibrium
estimated by modeling market adjustments in response to the increased costs associated with the rule
(i.e., waste consolidation, market exits and price increases are incorporated in the model). We also
develop a conservative upper bound estimate assuming that all facilities, including those we project
will exit the market in the baseline, continue to operate at current output levels and comply with the
MACT standards.
We develop social cost estimates by adding government cost estimates to the economic
welfare loss estimates. (We estimate the value of government costs using results from an EPA
Information Collection Request.) As shown in Exhibit ES-3, total annual social costs of the final
rule are between $65 and $73 million, with an upper bound of $95 million. Almost half of the social
costs are attributed to on-site incinerators; this is due to the large number of sources in this
combustion sector. Total social costs increase by almost 90 percent to between $124 and $140
million for the BTF-ACI option due to the costly carbon injection and carbon bed equipment that
is required to meet the BTF mercury levels. At the MACT Floor, total social costs of the rule are
between $57 and $66 million, about 10 percent less than social costs of the Recommended option.
ES-8
-------
FINAL DRAFT: July 1999
Total incremental government costs represent less than 1 percent of total social costs across all
MACT options.
Floor
Recommended
BTF-ACI
Best Estimate
$57 - $66
$65 - $73
$124 -$140
Upper Bound
$90
$95
$166
Exhibit ES-3
SUMMARY OF SOCIAL COST ESTIMATES
(millions of 1996 dollars)
NOTES:
1. Government administrative costs of $300,000 annually are included in the social cost estimates. In
order to simplify the analysis, we assume that government costs do not vary across MACT options or
market adjustment scenarios.
2. Because the government costs are small (less than 1 percent) relative to the compliance costs for
affected sources, the social cost estimates do not change relative to compliance costs.
3. Cost ranges for best estimates reflect different combustion price elasticities and market adjustments (the
static scenario assumes that 100 percent of compliance costs can be passed through to generators/fuel
blenders; the dynamic scenario assumes 75 percent).
PM CEM costs not included.
Upper bound estimates assume that all facilities, including those nonviable in the baseline, continue to
operate at current output levels and comply with the standards, passing 100% of the compliance costs to
hazardous waste generators/fuel blenders.
6. Costs for upper bound estimates reflect engineering design levels of 50%. Costs for best estimates
reflect engineering design levels of 70%.
BENEFITS ASSESSMENT
Benefits from the rule include avoidance of premature mortality and a variety of other
adverse human health effects. In addition, improvements to aquatic and terrestrial ecosystems may
result from reduced emissions associated with the MACT standards. Finally, the MACT standards
may also increase waste minimization practices by making these alternatives less expensive relative
to combustion.
The basis for the benefits assessment is a multi-pathway risk assessment that estimates risks
in the baseline and for the three final MACT options. A multi-pathway analysis that models both
inhalation and ingestion pathways is used to estimate human health risks, whereas a less detailed
screening-level analysis is used to identify the potential for ecological risks.
The risk modeling suggests that human health benefits will result from the MACT standards.
Risk reductions are expected to result in approximately two fewer premature deaths per year.
ES-9
-------
FINAL DRAFT: July 1999
Particulate matter accounts for most of the avoided premature deaths; reductions in carcinogenic
pollutants only account for the remainder of the avoided premature deaths. Reductions in parti culate
matter also contribute to many avoided nonfatal health effects. In particular, under the final rule,
hospital admissions for heart and respiratory ailments are expected to be reduced by approximately
six cases per year. In addition, over 250,000 asthma attacks, 25 cases of chronic bronchitis, and
nearly 20,000 days of work loss or restricted activity will be avoided annually due to the MACT
standards. Reductions in lead and mercury emissions may also provide some additional health
benefits to children.
Ecological improvements may also result from the MACT standards. Thirty-eight square
kilometers of water may experience a decrease in potential risks to ecosystems. For terrestrial areas,
the amount of land that may experience reductions in risk ranges between 115 and 147 square
kilometers.
To develop monetary values for the human health benefits, we use established economic
valuation techniques for mortality and morbidity benefits. For mortality benefits, we apply the value
of a statistical life (VSL) to the fatal risk reduction expected from the MACT standards. The VSL
is based on an individual's willingness to pay (WTP) to reduce a risk of premature death. For
morbidity benefits, we assign monetary values using a direct cost approach which focuses on the
expenditures and opportunity costs averted by decreasing the occurrence of an illness or other health
effect. While the WTP approach used for valuing the cancer risk reductions is conceptually superior
to the direct cost approach, measurement difficulties, such as estimating the severity of various
illnesses precludes us from using this approach. Applying these valuation techniques to the health
benefit estimates yields a benefits value of about $30 million annually.
It is important to note that because certain sensitive sub-populations — namely children,
subsistence fishermen, and subsistence farmers — who may face greater risks could not be
enumerated in the risk assessment, the monetized benefit estimates do not include benefits to these
individuals. We also do not include monetary estimates for the potential ecological improvements
because we cannot translate the potential improvements into an end-point benefit measure, such as
increased fish populations, for which a benefits transfer approach could assign monetary values. The
monetized benefits, therefore, do not reflect the full spectrum of benefits expected from this rule.
Any comparison of the costs with the benefits of the rule must account for this limitation.
OTHER REGULATORY ISSUES
Regulatory Flexibility Analysis
In general, the Combustion MACT standards will not have significant impacts on a
substantial number of small entities. In particular, the direct impacts on small business combustion
facilities and the indirect impacts on small business generators are minor. Only the indirect impacts
ES-10
-------
FINAL DRAFT: July 1999
on fuel blenders are notable; however, the absolute number of facilities affected is very small. Only
six combustion facilities (about 3.5 percent) are classified as small businesses. With the exception
of two facilities (both owned by a common parent company), compliance costs represent less than
1 percent of total sales for the combustion facilities. These two facilities are expected to incur costs
associated with this final rule representing between 1 and 3 percent of total sales.
Environmental Justice Analysis
The HWC MACT Standards should not have any adverse environmental or health effects on
minority populations and low-income populations. Any impacts the rule has on these populations
are likely to be positive because the rule will potentially reduce emissions from combustion facilities
near minority and low-income population groups. To assess whether the MACT Standards will have
disproportionate effects on minority populations or low-income populations, we analyzed
demographic data for areas nearby combustion facilities. The results from this analysis suggest that
hazardous waste incinerators are not necessarily more likely to be located in areas with
disproportionately high minority or low income populations. However, hazardous waste burning
cement kilns are somewhat more likely to be located in areas where minority populations within one
mile exceed county averages. Kilns are also more likely to be located in areas with low income
populations. In addition, a small number of commercial hazardous waste incinerators located in
highly urbanized areas are found to have disproportionately high concentrations of minorities and
low-income populations within one and five mile radii. The reduced emission at these facilities due
to the MACT Standards could represent environmental and health improvements for minorities and
low-income populations in these areas.
Unfunded Federal Mandates
Executive Order 12875, "Enhancing the Intergovernmental Partnership" (October 26, 1993),
calls on federal agencies to provide a statement supporting the need to issue any regulation
containing an unfunded Federal mandate and describing prior consultation with representatives of
affected state, local, and tribal governments. Signed into law on March 22, 1995, the Unfunded
Mandates Reform Act (UMRA) supersedes Executive Order 12875, reiterating the previously
established directives while also imposing additional requirements for federal agencies issuing any
regulation containing an unfunded mandate. Federal rules are exempt from the UMRA requirements
if the rule implements requirements specifically set forth in law, or, compliance with the rule is
voluntary for state and local governmental entities.
Based on the criteria set forth by the UMRA and Executive Order 12875, the final HWC
MACT rule does not contain a significant unfunded Federal mandate. Because the Agency is issuing
today's final HWC MACT standards under the joint statutory authority of the Clean Air Act (CAA)
and the Resource Conservation and Recovery Act (RCRA), the rule should be exempt from all
ES-11
-------
FINAL DRAFT: July 1999
relevant requirements of the UMRA. In addition, compliance with the rule is voluntary for non-
federal governmental entities since state and local agencies choose whether or not to apply to EPA
for the permitting authority necessary to implement the MACT standards.
Regulatory Takings
Executive Order 12630, "Government Actions and Interference with Constitutionally
Protected Property Rights" (March 15, 1988), directs federal agencies to consider the private
property takings implications of proposed regulation. Under the Fifth Amendment of the U.S.
Constitution, the government may not take private property for public use without compensating the
owner. Though the exact interpretation of this takings clause as applied to regulatory action is still
subject to an ongoing debate, a framework for interpretation has been established by legal precedent
through a series of prominent court cases.
Based on our review of relevant case law and mainstream legal interpretation, the final HWC
MACT standards are not likely to result in any regulatory taking. Today's action will not require that
private property be invaded or taken for public use. The rule also will not interfere with reasonable
investor expectations because it does not ban hazardous waste combustion but merely authorizes
operating parameters. Furthermore, these operating parameters and performance-based emissions
standards originate in statutory authority established over the past twenty-eight years. The
investment-backed expectations of anyone opening a hazardous waste combustion facility since then
would include a recognition of the existence of impending regulatory requirements. Persons already
engaged in combustion would have had more than eight years to adjust their expectations and to
prepare for accommodation of the forthcoming regulation. As a result, no facility owner should be
able to assert interference with reasonable investment expectations sufficient to support a taking.
Because the rule does not prohibit the burning of hazardous waste, it does not deny the
facility owners all viable economic use of their property. Nor does the rule prevent owners from
putting their property to other profitable uses should they decide to cease combustion in the face of
the regulation. In the case of on-site incinerators, cement kilns, and LWAKs, the primary economic
use of property comes from other activities not directly associated with hazardous waste combustion.
Even if these facilities stop burning waste, they will still be able to manufacture their primary
products, such as cement, lightweight aggregate, or chemicals. In terms of commercial incinerators,
any facilities that may stop burning hazardous waste can still use their property for other industrial
purposes.
ES-12
-------
FINAL DRAFT: July 1999
NOTE TO READERS:
This document does not contain the final standards and associated costs and benefits. We refer
you to the Addendum to this document, also included in the EPA RCRA docket, for a copy of this
document.
INTRODUCTION AND REGULATORY OPTIONS CHAPTER 1
BACKGROUND
In May 1993, the U.S. Environmental Protection Agency (EPA) introduced a draft Waste
Minimization and Combustion Strategy designed to reduce reliance on the combustion of hazardous
waste and encourage reduced generation of these wastes. Among the key objectives of the strategy
is the reduction of the health and ecological risks posed by the combustion of hazardous waste. As
part of this strategy, EPA is developing more stringent performance-based emissions standards based
on the "maximum achievable control technology" (MACT) approach. These final MACT standards
are being promulgated by EPA under Section 112 of the Clean Air Act, as amended (CAA).1'2 Three
categories of hazardous waste combustion facilities are subject to these revised standards:
• Hazardous waste incinerators, both commercial and on-site;
• Hazardous waste-burning cement kilns; and
• Hazardous waste-burning lightweight aggregate kilns.
1 Section 112 of the Clean Air Act requires EPA to promulgate MACT standards for major
sources emitting hazardous air pollutants, including hazardous waste combustion facilities. While
some hazardous waste combustion facilities may qualify as area sources, these sources must also be
regulated under the MACT due to the Agency's finding that these sources present a potential threat
of adverse effects to human health and the environment.
2 In contrast to the proposed rule, this final rule eliminates the existing RCRA stack
emissions national standards for hazardous waste combustion facilities because this would be
duplicative. However, under the authority of RCRA's "Omnibus" provision (Section 3005(c)(3)),
RCRA permit writers may still impose additional terms and conditions on a site-specific basis as
may be necessary to protect human health and the environment.
1-1
-------
FINAL DRAFT: July 1999
After issuing several notices of data availability (NOD A) and responding to peer review and public
comments on MACT standards proposed in April 1996, EPA is issuing final standards for these
facilities.
A Regulatory Impact Assessment (RIA) was prepared in November 1995 to support the
analysis of various regulatory alternatives under consideration for the proposed rule (61 FR 17358).
This Assessment reflects revisions to methodologies and assumptions employed in the RIA
supporting the proposed rule. The revisions reflect public and peer review comments on the
proposed rule, as well as refinements necessitated by changes in the rule. Below, we list the major
revisions between the RIA at proposal and the Assessment for the final rule.
• Improved benefits analysis. We used results from an extensive multi-
pathway risk assessment to develop human health and ecological benefit
estimates. We determine the monetary value of the human health benefits
using established economic valuation techniques.
• Improved waste minimization analysis. This document includes an
expanded and significantly improved analysis of waste minimization
alternatives. The refined analysis uses a more detailed decision framework
for evaluating waste minimization investment decisions that captures the full
inventory of costs, savings and revenues, including indirect, less tangible
items typically omitted from waste minimization analysis, such as liability
and corporate image.
• Compliance costs more clearly distinguished from social costs. We clarify
the difference between compliance costs and social costs, and explain how
the rule will likely affect producers and consumers. In Chapter 5, we
describe the economic framework used for the social cost analysis and also
explain how compliance costs are used as inputs for both the social cost
analysis and the assessment of economic impacts.
• Waste markets modeled to reflect segmentation across waste types. The
pricing approach used in this economic assessment assigns different prices
to different types of wastes and uses actual data on waste characteristics to
determine the type of waste burned at modeled combustion facilities.
• Revised baseline and compliance costs. Baseline and compliance costs
were substantially revised. Instead of using a model plant approach for
assigning compliance and baseline costs to modeled combustion facilities,
costs for the final rulemaking have been estimated using combustion
parameters specific to the actual combustion source, including gas flow rate,
baseline emissions, APCDs currently in place, total chlorine in the feed, stack
moisture and temperature at the APCD inlet.
1-2
-------
FINAL DRAFT: July 1999
Data inputs updated to reflect most recent information. The most recent
available data were used in this analysis, including waste data from the 1995
BRS and supplemented with EPA's 1996 National Hazardous Waste
Constituent Survey Database, plus 1996 and 1997 energy data from the
Energy Information Administration and Portland Cement Association.
ANALYTICAL REQUIREMENTS
EPA's Office of Solid Waste prepared this Assessment of the Potential Costs, Benefits, and
Other Impacts of the Hazardous Waste Combustion MACT Standards, (the Assessment) to evaluate
the benefits and costs of the Hazardous Waste Combustion MACT standards, along with other
economic, distributional, and equity impacts. This Assessment satisfies OMB's requirements for
regulatory review under Executive Order 12866, which applies to any significant regulatory action.
According to Executive Order 12866, the economic analysis should "provide information allowing
decisionmakers to determine that:
• There is adequate information indicating the need for and consequences of
the regulatory action;
• The potential benefits to society justify the potential costs, recognizing that
not all benefits and costs can be described in monetary or even in quantitative
terms, unless a statute requires another regulatory approach;
• The regulatory action will maximize net benefits to society (including
potential economic, environmental, public health and safety, and other
advantages; distributional impacts; and equity), unless a statute requires
another regulatory approach;
• Where a statute requires a specific regulatory approach, the regulatory action
will be the most cost-effective, including reliance on performance objectives
to the extent feasible;
• Agency decisions are based on the best reasonably obtainable scientific,
technical, economic, and other information."3
This document also fulfills the requirements of the Regulatory Flexibility Act, as amended
by the Small Business Regulatory Enforcement Fairness Act of 1996; Executive Order 12898,
"Federal Actions to Address Environmental Justice in Minority Populations and Low-Income
3 Office of Management and Budget (OMB). January 1996. Economic Analysis of Federal
Regulations Under Executive Order 12866, 1.
1-3
-------
FINAL DRAFT: July 1999
Populations"; the Unfunded Mandates Reform Act of 1995; and Executive Order 12630,
"Government Action and Interference with Constitutionally Protected Property Rights"; and
Executive Order 13084, "Consultation and Coordination with Indian Tribal Governments."
NEED FOR REGULATORY ACTION
The Hazardous Waste Combustion MACT standards will reduce the level of hazardous air
pollutants and other toxics currently emitted from combustion facilities. These pollutants include
dioxins/furans, mercury, metals, particulate matter, chlorine gas, carbon monoxide, and
hydrocarbons. As shown in Exhibit 1-1, carbon monoxide, particulate matter, and total chlorine are
the pollutants with the highest total mass emission levels. With the exception of low volatility
metals (LVMs) and chlorine, cement kilns emit the highest average levels of pollutants per
combustion system.
While combustion facilities currently have some air pollution control devices in place,
pollutants from combustion facilities still present both human health and ecological risks.4 Human
exposure to the combustion air toxics occurs both directly via inhalation of pollutants, as well as
indirectly via ingestion of contaminated soil and food products. These exposures lead to cancer,
respiratory diseases, and developmental abnormalities. A preliminary screening analysis also
suggests that aquatic and terrestrial ecosystems may be at risk from these air pollutants.
Several combustion facilities have closed over the past several years and this trend may
continue over the next few years, slightly reducing air pollution from hazardous waste combustion
facilities. This trend in market consolidation should level off as supply comes into line with demand
for hazardous waste combustion services and the market reaches equilibrium. Thus, EPA expects
that the air pollution problem and the human health and ecological damages will continue to exist
if MACT standards are not implemented.
The market and other private sector institutions have failed to correct the air pollution
problem from hazardous waste combustion facilities for several reasons. First, because individuals
not responsible for the air pollution bear the costs in human health and ecological damages, no
incentive exists for combustion facilities to incur the additional costs for implementing pollution
control measures. In this case, the private industry costs of combustion do not fully reflect the
human health and environmental costs of hazardous waste combustion. This situation, referred to
as an "environmental externality," represents a type of market failure discussed in OMB's
Guidelines.5 Therefore, a non-regulatory approach, such as educational outreach programs, would
4 The Assessment provides a more detailed description of the current control technologies
installed at combustion facilities in Chapter 2.
5 Office of Management and Budget (OMB). January 1996. Economic Analysis of Federal
Regulations Under Executive Order 12866, 3-5.
1-4
-------
FINAL DRAFT: July 1999
45,000,000
40,000,000 j-
35,000,000 —
jj 30,000,000 —
fc 25,000,000 - -
15,000,000 —
10,000,000 —
5,000,000 -J-
0
CO
Exhibit 1-1
AGGREGATE AND SYSTEM AVERAGE BASELINE NATIONAL EMISSIONS
BASELINE NATIONAL EMISSIONS FROM COMBUSTION SYSTEMS (AGGREGATE)
QCement Kilns
ClLWAKs
• incinerators
PM
THC
TCI
E Cement Kilns
QLWAKs
• incinerators
SVM Dioxins/ LVM
Furans*
"Units for Dioxins/Furans are milligrams, not pounds.
AVERAGE BASELINE NATIONAL EMISSIONS PER SYSTEM
1 ,200,000 -
-------
FINAL DRAFT: July 1999
be ineffective because the people who are made aware of the potential health risks (i.e., those people
living nearby combustion facilities) have no power to reduce emissions without incurring significant
costs.
Second, the parties injured by the combustion pollutants cannot obtain compensation from
the damaging entity (the combustion facility) through legal or other means due to the high
transaction costs involved and the difficulty in establishing a causal relationship between the damage
incurred and activity at the combustion facility. Establishing a direct link between a specific
combustion facility and human health and other damages incurred may be especially difficult
because many combustion facilities are located in heavily industrialized areas, with multiple sources
of pollutants; consequently, isolating the damaging effects from the combustion facility is difficult.
Lastly, emissions from hazardous waste combustion facilities directly affect the air, which
is accessible to all people, and thus represents a "public good." Individuals who pay for reduced
pollution cannot exclude others who have not paid from also enjoying the benefits of improved air
quality. As a result, in the absence of government intervention, the free market will not provide
public goods, such as clean air, at the optimal quantity and quality desired by the general public.
To internalize the environmental costs and to correct market distortions, government
intervention is necessary. Consequently, EPA is issuing MACT standards for hazardous waste
combustion facilities. EPA has selected this approach instead of a non-regulatory approach or
another type of government intervention for three key reasons:
• First, due to the complex nature of pollutants, waste feeds, and the diverse
nature of the regulated entities, alternative schemes (such as taxes, fees, or
educational outreach programs) would be difficult to develop and implement;
• Second, Section 112 of the Clean Air Act requires the MACT standards;
Third, the emission standards also satisfy EPA's obligation under RCRA to
ensure that hazardous waste combustion is conducted in a manner adequately
protective of human health and the environment; and
• Lastly, the MACT standards are generally consistent with the terms of the
1993 settlement agreement between the EPA and a number of groups who
challenged EPA's final RCRA rule for cement kilns, "Burning of Hazardous
Waste in Boilers and Industrial Furnaces."
Consequently, establishing the MACT standards is the most effective strategy for internalizing
environmental costs and correcting market distortions.
1-6
-------
FINAL DRAFT: July 1999
EXAMINATION OF ALTERNATIVE REGULATORY OPTIONS
As part of this Rulemaking, EPA considered multiple MACT alternatives for limiting
emissions of hazardous and non-hazardous air pollutants at hazardous waste combustion facilities.
On April 19, 1996, the Agency proposed MACT standards as specified in Exhibit 1-2. Since that
time, EPA significantly expanded, updated, and revised the hazardous waste combustor database
containing the emissions and ancillary data necessary for MACT standards development. After
critically analyzing different methodologies for establishing the MACT floor and for evaluating the
degree and cost of further reducing emissions "beyond the floor" (BTF), EPA has established its
final recommended MACT. This economic assessment also evaluates two alternatives, the MACT
floor for each source category, as well as a more stringent BTF MACT for dioxins/furans and
mercury based on activated carbon injection technology. This more stringent option will be referred
in the remainder of this document as the "BTF-ACF' MACT. These three options are summarized
in Exhibit 1-3 and provide limits for the following air pollutants:
• Dioxins/furans (D/F) — chlorinated dioxin and furan emission standards are
based on toxicity equivalents (TEQs).
• Total Chlorine (TCI) — the total chlorine jointly limits emissions of
hydrochloric acid (HC1) and chlorine gas (C12), both of which are designated
HAPs. HC1 and C12 are controlled by a combined MACT standard because
the test method used to determine HC1 and C12 emissions may not be able to
distinguish between the compounds in all situations and because both of these
HAPs can be controlled with the same type of pollution control measure.
• Mercury (Hg) — mercury is the only high-volatility metal for which
emission limits are specified.
• Semi-volatile Metals6 (SVM) — semi-volatile metals are comprised of lead
and cadmium.
• Low Volatile Metals (LVM) — low volatile metals are comprised of
arsenic, beryllium, and chromium.
• Particulate Matter (PM) — the particulate matter standard is a surrogate
control for the following non-enumerated metal HAPs: antimony, cobalt,
manganese, nickel, and selenium. These metals are not included in the
volatility groups because of inadequate emissions data and the relatively low
toxicity of antimony, cobalt and manganese.
6 Toxic metals are grouped by volatility because emission control strategies are determined
by metal volatility.
1-7
-------
FINAL DRAFT: July 1999
Exhibit 1-2
PROPOSED MACT STANDARDS (APRIL 1996)
Ontion
Floor Levels
Proposed Standards
Source
Category
Incinerators
Cement Kilns
LWAKs
Incinerators
Cement Kilns
LWAKs
D/F
(im/dscm TEO)
0.5
0.5
0.5
0.20
0.20
0.20
PM
(er/dscf)
0.015
0.03
0.015
0.030
0.030
0.030
Hg
(im/dscm)
30
40
30
50
50
72
SVM
(u2/dscm)
60
60
60
270
57
12
LVM
(u2/dscm)
80
80
80
210
130
340
HC1
fnnmV)
25
60
1300
280
630
450
C12
fnnmV)
1
1
2.5
280
630
450
CO
fnnmV)
100
NA
100
100
100
100
HC
fnnmV)
20
20
20
12
20_£*)_
6.7(**)
14
Notes:
(*) Main stack.
(**) By-pass.
1-8
-------
FINAL DRAFT: July 1999
Exhibit 1-3
REGULATORY ALTERNATIVES FOR EXISTING SOURCES
MACT
MACT Floor
Recommended
MACT
(Final Standards)
BTF-ACI
MACT
Source
Category
Incinerators
Cement Kilns
LWAKs
Incinerators
Cement Kilns
LWAKs
Incinerators
Cement Kilns
LWAKs
Chlorinated
D/F (ng TEQ/dscm)
WHB: 0.2; or 12 and temperature at inlet to PM
control device < 400° F
Others: 0.2; or 0.4 and temperature at inlet to PM
control device < 400° F
0.2; or 0.4 and temperature at inlet to PM control
device < 400° F
0.2; or 4. 1 and temperature at inlet to PM control
device < 400° F
0.2; or 0.4 and temperature at inlet to PM control
device < 400° F or 0.4 for incinerators using wet PM
control device
0.2; or 0.4 and temperature at inlet to PM control
device < 400° F
0.2; or 0.4 and rapid quench to PM control device <
400° F at the exit of the kiln
0.2
0.2
0.2
PM
0.015
gr/dscf
0.15
kg/Mg dry
feed
0.025
gr/dscf
0.015
gr/dscf
0.15
kg/Mg dry
feed
0.025
gr/dscf
0.015
gr/dscf
0.15
kg/Mg dry
feed
0.025
gr/dscf
Hg
(^ig/dscm)
130
120
47
130
120
47
10
25
10
SVM
(^ig/dscm)
240
650
1700
240
240
250
240
240
250
LVM
(^ig/dscm)
97
56
110
97
56
110
97
56
110
TO
(ppmv)
77
130
1500
77
130
150
77
130
150
CO HC
(ppmv) (ppmv)
100* or 10 *
100 or 10 (+)
100 or 20 (0)
100 or 20
100 or 10
100 or 10 (+)
100 or 20 (0)
100 or 20
100 or 10
100 or 10 (+)
100 or 20 (0)
100 or 20
Notes:
1 . Across all options, cement kilns sources have the option to continuously comply with a CO standard of 100 ppmv in lieu of complying with the HC standard. Cement kilns that choose to do this, however,
must demonstrate compliance with the HC standard during the comprehensive performance test.
2. Incinerators and LWAKs may choose to comply with either the CO or the HC limit.
3. WHB are incinerators with waste heat boilers.
4. Shaded cells indicate that the standards represent BTF levels. Bold figures in the BTF-ACI option indicate that the pollutant is controlled with more stringency under the recommended MACT.
5. Across all regulatory alternatives, a DRE of 99.99% is required (99.9999% for sources burning dioxin-listed wastes) to control emissions of non-dioxin/furan organic HAPs.
(*) Incinerators with high temperature rapid quench design can comply with the HC standard in lieu of the CO standard. Incinerators that use wet scrubbers can comply with the CO standard
in lieu of the HC standard.
(+) Cement kilns with bypass ducts have the option to comply with either a CO standard in the bypass duct of 100 ppmv, or an HC standard in the bypass duct of 10 ppmv (no main stack standard).
(0) Cement kilns without bypass ducts have the option to comply with either a CO standard in the main stack of 100 ppmv, or an HC standard in the main stack of 20 ppmv.
1-9
-------
FINAL DRAFT: July 1999
Carbon Monoxide (CO) and Hydrocarbons (HC) — carbon monoxide and
hydrocarbons are controlled as surrogates for non-dioxin, non-furan toxic
organic emissions.7
In addition to control of these specific pollutants, EPA is also maintaining its current (baseline)
RCRA destruction and removal efficiency (DRE) standard of at least 99.99 percent to ensure MACT
control of nondioxin/furan organic hazardous air pollutants.8 The 99.99 percent DRE standard,
commonly referred to as "four-nines DRE," is the MACT floor (and final) standard.
Recommended MACT (Final Standards)
As indicated by the shading in Exhibit 1-3, the recommended MACT reduces emissions for
certain pollutants below floor levels. Changes beyond the floor levels are specified for each of the
combustion sectors below:
• Incinerators: The recommended MACT specifies beyond-the-floor control
only for dioxins/furans at incinerators with waste heat boilers that also choose
to implement temperature control. For these incinerator units, the BTF
standard is reduced from 12 ng/dscm at the floor to 0.4 ng/dscm.
• Cement Kilns: The recommended MACT specifies beyond-the-floor control
only for semi-volatile metals at cement kilns; the floor standard is reduced
from 650 jig/dscm at the floor to 240 jig/dscm.
• LWAKs: The recommended MACT specifies beyond-the-floor control for
dioxins/furans at LWAKs using temperature control; the standard is reduced
from 4.1 ng/dscm at the floor to 0.4 ng/dscm. BTF control is also specified
for semi-volatile metals, reducing emissions from 1700 |ig/dscm at the floor
to 250 |ig/dscm; and for total chlorine, reducing emissions from 1500 ppmv
at the floor to 150 ppmv.
7 Emission standards for municipal waste combustors and medical waste incinerators also
limit emissions of CO to control non-D/F organic HAPs.
8 A 99.9999 percent DRE is required for those hazardous waste combustors burning dioxin-
listed wastes (i.e., F020-023 and F026-027); this is also a current (baseline) RCRA requirement.
1-10
-------
FINAL DRAFT: July 1999
BTF for Mercury and D/F Based on Activated Carbon Injection
The BTF-ACI option would establish stricter standards than the recommended MACT for
dioxins/furans and mercury. For dioxin/furan control, EPA sets uniform standards at 0.2 ng/dscm
across all combustion sources. With regard to D/F control, unlike the Floor and the Recommended
MACT, the BTF-ACI option does not allow facilities to use temperature control. With regard to
mercury control, the BTF-ACI option sets beyond-the-floor levels at 25 jig/dscm for cement kilns
and 10 |ig/dscm for LWAKs and incinerators.
MACT Standards for New Sources
In addition to the regulatory options governing existing waste combustion facilities, this rule
also establishes MACT standards for new sources. Exhibit 1-4 presents the specific standards for
each FLAP emitted by new sources. As shown, the basic option includes standards for dioxins/furans,
PM, and CO/HC that are commensurate with the Recommended MACT for existing sources. The
cement kiln standard for low-volatility metals and the cement kiln and LWAK standards for semi-
volatile metals are more stringent than the Recommended MACT. In addition, for all combustion
sectors, the mercury standard for new sources is more restrictive than the recommended MACT.
POTENTIAL ENVIRONMENTAL BENEFITS OF THE MACT STANDARDS
Following imposition of the Recommended MACT standards, emissions will decrease
substantially, as shown in Exhibit 1-5. On average, incinerators will reduce their hazardous air
emissions by the greatest percentage following the MACT standards. Across all pollutants for which
MACT standards are established, the average total decrease is 64 percent for incinerators, 40 percent
for LWAKs, and 26 percent for cement kilns. If all incinerators comply with the MACT standards,
incinerators will reduce semi-volatile metals emissions by an average of 96 percent and both low-
volatile metals and dioxin/furan emissions by 86 percent. LWAKs will reduce total chlorine by an
average of 88 percent and dioxins/furans by 83 percent, while cement kilns will reduce semi-volatile
metals by an average of 84 percent. None of the combustion sectors are expected to reduce carbon
monoxide, and neither cement kilns nor LWAKs are expected to reduce total hydrocarbons.
1-11
-------
FINAL DRAFT: July 1999
Exhibit 1-4
REGULATORY STANDARDS FOR NEW SOURCES
Source
Category
Incinerators
Cement Kilns
LWAKs
D/F
(ng TEQ/dscm)
0.2
0.2; or 0.4 and temperature
at inlet to PM control
device < 400°F
0.2; or 0.4 and rapid
quench <400°F
PM
0.015 gr/dscf
0.15kg/Mgdryfeed
0.025 gr/dscf
Hg
(ug/dscm)
45
56
33
SVM
(ug/dscm)
240
180
43
LVM
(ug/dscm)
97
54
110
TCI
(ppmv)
21
86
41
CO
(ppmv)
100
100 or
100 or
100 or
HC
(ppmv)
10
10(4)
20(0)
20
Notes:
(4) Cement kilns with bypass ducts can comply with either the CO standard in the bypass duct of 100 ppmv, or the HC standard in the bypass duct of 10 ppmv.
However, new cement kilns at Greenfield sites must comply with the main-stack 50 ppmv standard for HC and do not have the option of complying with the
CO standard of 100 ppmv in lieu of the HC standard. These new sources must also comply with the bypass duct standard of 10 ppmv for HC.
(0) Cement kilns without bypass ducts can comply with either the CO standard in the main stack of 100 ppmv, or the HC standard in the main stack of 20 ppmv.
Shaded cells indicate that the standard is set at levels beyond the MACT floor for existing sources.
A DRE of 99.99% is also required (99.9999% for sources burning dioxin-listed wastes) to control emissions of non-dioxin/furan organic HAPs; this is the same DRE
standard as for existing sources.
1-12
-------
FINAL DRAFT: July 1999
Exhibit 1-5
PERCENT DECREASE IN TOTAL EMISSIONS FROM THE BASELINE
100
OCement Kilns
• Lightweight Aggregate Kilns
D Incinerators
40
20
Carbon
Monoxide
Particulate Total
Matter Hydrocarbon
Total Semi-volatile Dioxins/
Chlorine Metals Furans
HAPs
Low-volatile
Metals
Mercury
Note: Emission estimates are based on the recommended MACT standards.
EPA anticipates that establishing MACT standards for hazardous waste combustion facilities
will reduce human health and environmental risks from these facilities and may also lead to reduced
generation of hazardous wastes. In particular, reductions in cancer risks are expected from decreased
dioxin emissions, reductions in respiratory diseases are expected from decreased particulate matter
emissions, and reductions in developmental abnormalities in children may result from decreased
mercury emissions. In addition, dioxin and mercury reductions may also decrease risks to terrestrial
and aquatic ecosystems.
TIMETABLE FOR MACT REQUIREMENTS
EPA allots three years for hazardous waste combustion facilities to come into full compliance
with the MACT standards. A one-year extension may be granted to facilities for which complete
system retrofits cannot be implemented within three years despite a good faith effort to do so.
Exhibit 1-6 specifies other requirements that must be met during this three- or four-year time-frame.
Within the first 10 months following the promulgation of the rule, facilities must hold public
meetings to discuss the upgrades necessary for meeting the new standards. Within one year
following the rule promulgation, combustion facilities must submit to EPA a notice of intent to
1-13
-------
FINAL DRAFT: July 1999
comply with the new emission standards. Two years after the rule promulgation, facilities that intend
to meet the standards must submit a progress report and facilities that do not intend to comply must
cease burning waste. Three years after the promulgation of the rule, all facilities must be in
compliance with the MACT standards.
MACT
Standards
Promulgation
Facilities hold public
meetings by this date to
discuss the upgrades
necessary for meeting
the new standards.
Exhibit 1-6
TIMELINE FOR HWC MACT REQUIREMENTS
Facilities must submit
to EPA a notice of
intent to comply with
the new emission
standards within one year
of rule promulgation.
If facilities intend to comply,
they must submit a progress
report by this date.
If facilities do not intend to
comply, they must cease burning
hazardous waste by this date.
All facilities burning
hazardous waste are
required to be in
compliance with the
MACT Standards
unless they have
received extensions
from EPA.
10 Months 1 Year
I Years
3 Years
4 Years Time
ANALYTIC APPROACH AND ORGANIZATION
This Assessment evaluates the costs of the rule and impacts that these costs would have on
waste burning behavior, and compares these costs to the benefits of the regulation. The Assessment
analyzes the Final MACT standards along with two alternative MACT options that EPA also
considered in development of the final rule. For statutory reasons under the CAA, one key metric
used for evaluating decisions to go beyond the floor is a cost-effectiveness measure, which estimates
compliance expenditures divided by emissions reduced for each pollutant. The Assessment evaluates
cost-effectiveness from the baseline to the floor, and incrementally from the floor to beyond-the-
floor.
The analysis discussed in the subsequent chapters of this report begins by establishing the
baseline costs and waste management practices of the regulated facilities, and then determines the
change in costs post-MACT and assesses the impacts of these increased costs on the combustion
market. We also evaluate the benefits of the MACT standards and impacts to low-income and
minority populations, small business, local governments, and private property owners. We discuss
these analyses in seven subsequent chapters:
1-14
-------
FINAL DRAFT: July 1999
Chapter 2: Overview of Combustion Practices and Markets
Presents background information on the combustion market and characterizes
the industry and sectors affected by the MACT standards, examining current
waste burning practices, types of hazardous waste managed by combustion
sector, types of generating industries that use combustion services, and
overall market trends.
Chapter 3: Defining the Regulatory Baseline
Describes the data used for specifying the baseline, which defines "the world
absent the HWC MACT standards." We discuss current practices and future
trends with regard to revenue and cost assumptions, future capacity
projections, emission profiles, and pollution control practices.
Chapter 4: Compliance Cost Analysis
Explains how we develop compliance cost estimates for hazardous waste
combustion facilities by using engineering cost models and examining other
private sector compliance costs and government administrative and
implementation costs.
Chapter 5: Social Cost and Economic Impact Analysis
Analyzes social costs and economic impacts of the MACT standards by
examining the incentives and reactions of the regulated community. We
analyze the following economic impacts: market exists, employment
impacts, combustion prices changes, and the quantity of waste that may be
diverted from combustion facilities that stop burning.
Chapter 6: Benefits Assessment
Evaluates human health and environmental benefits, including the number of
cancer cases avoided and other mortality risk reductions, morbidity risk
reductions, and risk reductions for terrestrial and aquatic ecosystems using a
multiple pathway risk assessment.
Chapter 7: Equity Considerations and Other Impacts
Assesses distributional and equity impacts of the MACT standards, including
small entity impacts, environmental justice implications, children's health,
impacts to Tribal Governments, and assessments of the potential for
unfunded mandates and regulatory takings resulting from the rule. Also
analyzes the joint impacts of three other EPA rules on the cement industry.
Chapter 8: Comparison of Costs, Benefits, and Other Impacts
Compares the benefits with the costs of the rule, focusing on the cost-
effectiveness of the final options under consideration.
1-15
-------
FINAL DRAFT: July 1999
OVERVIEW OF COMBUSTION
PRACTICES AND MARKETS CHAPTER 2
This chapter presents an overview of the hazardous waste combustion industry to provide a
context for assessing the costs and economic impacts of the rule. Various aspects of the combustion
industry, from economic and technological issues to combustion facility relationships, can have a
significant impact on the effects of the MACT standards. In this chapter, we first describe the types
of facilities that combust hazardous waste and characterize the current market structure. We then
discuss the quantity and characteristics of combusted hazardous wastes, and the industries that
generate these wastes. Following this, we present an overview of waste burning services and the
factors that underlie the demand for these services. We then describe the current regulatory
framework and the types of pollution control devices currently in place at combustion facilities.
Finally, we explore the current market and financial performance of the various combustion industry
sectors.
COMBUSTION MARKET OVERVIEW
Three key segments constitute the hazardous waste combustion industry: hazardous waste
generators, fuel blenders and other intermediaries (e.g. waste brokers), and commercial combustion
facilities.1 We illustrate the market structure and waste flows in Exhibit 2-1. As shown in the
exhibit, some hazardous waste generators manage their wastes on-site and some send their wastes
directly to commercial combustion facilities such as commercial incinerators and less often directly
to waste-burning kilns.2 Other generators manage their wastes through waste brokers or fuel
blenders, who subsequently send the wastes to commercial combustion facilities.
1 Some generators also burn their hazardous wastes on-site in boilers. Because this
rulemaking does not regulate on-site hazardous waste boilers and the boilers do not significantly
affect market dynamics, we do not discuss them in the Assessment.
2 The commercial/non-commercial division is not always clear-cut; a few generating facilities
with on-site incinerators do accept some waste commercially even though most of the waste burned
originates on-site.
2-1
-------
FINAL DRAFT: July 1999
Exhibit 2-1
HAZARDOUS WASTE COMBUSTION MARKET STRUCTURE
Hazardous Waste Generators
Hazardous Waste Generators
with On-Site Incinerators
Commercial
Incinerators
Waste-Burning
Kilns
(cement kilns and LWAKs)
Note: The dotted line indicates that few generators send wastes directly to kilns; most generators send wastes to some type of intermediary who in turn,
send the wastes to kilns.
2-2
-------
FINAL DRAFT: July 1999
Types of Combustion Facilities
Hazardous waste is combusted at three main types of facilities: commercial incinerators, on-
site incinerators, and waste-burning kilns. In addition, the MACT standards also apply to mobile
incinerators, which are used to treat soils and other contaminated media at Superfund sites.3 These
combustion units are called mobile incinerators because they are transported to hazardous waste sites
as complete units or as parts which are later re-assembled. Because only a few mobile incinerators
are currently operational, the incremental costs and resulting economic impacts of regulating mobile
incinerators are expected to be small relative to the total national costs of the rule.4 For this reason,
this Assessment does not include mobile incinerators in the cost, economic impact, and benefit
analyses.
Incinerators generally burn wastes to destroy toxic characteristics, although some also recover
a portion of the energy contained in the wastes.5 Commercial incineration facilities manage a wide
variety of waste streams generated across a range of industries. On-site incinerators tend to manage
waste streams with more uniform characteristics generated by certain product lines. Commercial
incinerators, therefore, tend to be larger in size and are generally designed as rotary-kilns, which can
manage solid wastes as well as liquid wastes. On-site incinerators may be designed as liquid-
injection incinerators, which handle liquids and pumpable solids, or as rotary kilns, depending on
the wastes generated and burned at these facilities.
3 Technically, mobile and transportable incinerators differ in that firms can move a mobile
incinerator as a single unit but must disassemble, transport, and reassemble a transportable
incinerator. The MACT standards, however, consider both types of incinerators as mobile
incinerators.
4 Using EPA's BRS database, the RCRA Corrective Action Information Database (RCAID),
and the Resource Conservation and Recovery Information System (RCRIS), between six and 12
mobile incinerators are currently operational in the United States. (Gwen Fairweather et al, ICF
Incorporated, "Memorandum: QRT #1, WAB-30, EPA Contract 68-W6-0061," prepared for Lyn
Luben, U.S. EPA, June 12, 1998).
5 Energy recovery is possible at incinerators if they burn the cleaner liquid solvent streams
to fuel their afterburners. (Phil Retallick, Rollins Environmental Services, personal communication,
September 13, 1994.)
2-3
-------
FINAL DRAFT: July 1999
In contrast, cement kilns and lightweight aggregate kilns (LWAKs) burn hazardous wastes
to generate heat and/or power for manufacturing purposes. While kilns traditionally burned
conventional fuels like coal and oil, the high energy requirements of manufacturing cement and
lightweight aggregate motivated many firms to modify their kilns to burn hazardous wastes as well.6
Using hazardous waste as fuel provides two primary benefits to kilns: reduced energy requirements
and additional revenues from tipping fees paid by generators or fuel blenders to kilns for managing
the hazardous waste. Cement kilns and lightweight aggregate kilns can also incorporate a portion
of the residual ash from combustion (of both hazardous and non-hazardous fuels) in their products,
slightly reducing raw material requirements.
Number of Combustion Facilities
One hundred seventy two facilities are currently permitted to burn hazardous waste in the
United States.7 As shown in Exhibit 2-2, on-site incinerators comprise the greatest percentage of
combustion facilities, with 129 on-site incinerators.8 The commercial sector includes a relatively
small number of facilities, with only 20 commercial incineration facilities, 18 cement kiln facilities,
and five lightweight aggregate kiln facilities.
6 However, due to limitations on the quantities of hazardous waste that facilities can burn
without affecting product quality, conventional fuels still provide the majority of the energy needed
to produce cement. (Portland Cement Association. June 1994. U.S. Cement Industry Fact Sheet
Twelfth Edition, 17.)
7 Using additional information, we updated the 1997 list of combustion facilities to establish
this universe of 172 combustion facilities.
8 As previously discussed, between six to twelve mobile incinerators are currently in
operation, but we do not include them in our analysis because they represent a small portion of the
total incinerators currently burning hazardous waste.
2-4
-------
FINAL DRAFT: July 1999
Exhibit 2-2
UNIVERSE OF REGULATED ENTITIES
Type of Combustion Device
Cement kilns
Lightweight aggregate kilns
Commercial incinerators
On-site incinerators
Total
Estimated
Number of
Systems
33
10
26
163
232
Number of
Facilities
18
5
20
129
172
Average Waste
Burning
Systems/Facility
1.83
2.00
1.30
1.24
1.35
Notes:
(1) The analysis includes facilities that are currently burning hazardous waste, as well as facilities that are
no longer burning but have not commenced formal closure procedures.
(2) We do not include mobile incinerators in this analysis.
Sources:
(1) U.S. EPA, PSPD, List of Permitted Hazardous Waste Combustion Facilities, February 1996.
(2) Update of OSW Hazardous Waste Combustion Database (Revised Technical Standards for Hazardous
Waste Combustion Facilities, NOD A, January 7, 1997 (62 FR 960.)
As shown in Exhibit 2-3, at a given location, a facility may have more than one combustion
system. In general, a combustion system has one combustion unit connected to a single stack.
However, some systems have multiple units connected to a shared single stack. Because most
systems comprise only one unit and because this distinction is not critical to the analysis and
presentation of the Assessment, we use the terms "system" and "unit" interchangeably.
The number of systems per facility ranges from one to four. On average, cement kilns and
lightweight aggregate kilns have more waste burning combustion systems per facility than do
incinerators. On-site facilities have the lowest average number of systems per facility.
On-Site Versus Commercial Combustion
Companies that generate large quantities of hazardous waste typically choose to combust
the waste themselves. These non-commercial facilities are usually located at the generator's
production site, and are referred to throughout this report as "on-site" incinerators. Generators
choose to burn their wastes on-site rather than sending wastes off-site for several reasons:
2-5
-------
FINAL DRAFT: July 1999
• The costs of on-site combustion are often less than the costs of managing
wastes at commercial facilities, especially for large quantity generators.
• Generators remain somewhat insulated from price fluctuations in the
commercial sector.
• Generators of specialized wastes may not be able to send their wastes off-site
because commercial incinerators will not accept certain wastes (e.g.,
explosives) or because transportation is too risky or difficult (e.g., gaseous
wastes).
• Finally, generators limit liability risks by controlling the entire treatment
process. For many firms, cradle-to-grave internal waste management is a
corporate policy.
For facilities that generate small to medium quantities of waste and do not already have an
incinerator, paying a commercial facility to burn the waste is usually less costly than constructing
and maintaining an on-site incinerator.
Exhibit 2-3
Facility
r
i
Combustion I
Systems 1
1-
1
1
Units
1 -
^^_
COMBUSTION FACILITY
^^M
i ^^^H ^^^M ^m
APCDi
^H
^^^^ ^^^H •
APCDi
STRUCTURE
1
APCDi APCDi 1
-r-r -p-p- 1
n n
y^v !
i
i
J
2-6
-------
FINAL DRAFT: July 1999
Fuel Blenders and Other Intermediaries
Hazardous waste combustion intermediaries include waste brokers and fuel blenders. Waste
brokers arrange the movement of wastes from the generator to the combustion facility without
additional processing. In contrast, fuel blenders collect waste from a number of generators and
process it to meet the requirements of their customers in the commercial combustion market,
primarily cement kilns.9 As of March 1997, 92 active fuel blenders were in operation, compared to
58 in 1996, 73 in 1993, and 74 in 1994.10 Many of these fuel blenders are vertically integrated with
kilns, and may be located on-site or adjacent to the cement facility.11 The National Association of
Chemical Recyclers (NACR) estimates that 55 percent of the waste received by its membership is
recycled (often at solvent recovery facilities), while kilns use 45 percent as fuel.12
Fuel blenders mix wastes used as fuels to meet customer requirements for energy content,
viscosity, and acceptable concentrations of hazardous constituents. A consistent energy content is
important for both kilns and incinerators. For kilns, the waste fuels replace conventional fuels in a
production process with specific energy requirements. For incinerators, a variable thermal loading
can reduce efficiency and potentially damage the combustion unit. Viscosity affects the ability to
pump wastes into the combustion chamber in a uniform manner. Criteria for hazardous constituent
concentrations are important both for controlling emissions and for protecting the stability of the
production process and the quality of the product (in the case of cement kilns and LWAKs). Fuel
blenders have continually worked to improve their blending abilities, and have had a large impact
on hazardous waste combustion markets. We discuss activity of fuel blenders in more detail below.
9 See Daphne McMurrer, Bob Black, and Tom Walker, Industrial Economics, Inc.,
"Memorandum: The Processing and Use of Waste Fuels," prepared for Lisa Harris, Office of Solid
Waste, U.S. EPA, December 13, 1994.
10 These figures were derived from the U.S. EPA, 1993 Biennial Reporting System (BRS);
the U.S. EPA, 1995 Biennial Reporting System (BRS); and Allen White and David Miller, Tellus
Institute, "Economic Analysis of Waste Minimization Alternatives to Hazardous Waste
Combustion," prepared for U.S. EPA, July 24, 1997.
11 In a CKRC survey of 21 cement companies, 17 facilities reported having fuel blending
done on-site or adjacent to the facility. Cement Kiln Recycling Coalition. Fall 1994. "CKRC
Cement Facility Questions on Hazardous Waste Fuel Blending and Burning."
12 Chris Goebel, National Association of Chemical Recyclers, personal communication, May
20, 1997.
2-7
-------
FINAL DRAFT: July 1999
CHARACTERISTICS OF COMBUSTED WASTE
Waste quantities burned at combustion facilities are a function of industrial activities in
generating industries (e.g., chemicals, pharmaceuticals), regulatory requirements, remedial activity,
and available waste management substitutes. In 1995 combustion facilities burned about three
million tons of hazardous waste annually. As shown in Exhibit 2-4, on-site incinerators burned about
49 percent of the total combusted wastes. Commercial kilns burned approximately 31 percent, and
commercial incinerators burned the remainder.13
Exhibit 2-4
WASTE QUANTITIES MANAGED BY COMBUSTION
SYSTEMS (Tons)
Commercial
Incinerators
665,615
(20%) /^ ^\ Commercial
Kilns
1,007,380
(31%)
\ ^7
On-Site/Captive
Incinerators
1,610,000
(49%)
Total Demand: 3,282,995
Source: EPA Biennial Reporting System.
Notes:
1)
2)
We adjusted the on-site/captive incinerator tons data to account for a data entry error involving
the Dow facility in Plaquemine, L.A. While available 1995 BRS data indicate that the facility
combusted 2,099,059 tons of waste, the facility actually combusted 22,639 tons.
This analysis excludes wastes burned at mobile incinerators.
13 U.S. EPA. 1995. Biennial Reporting System (BRS).
2-8
-------
FINAL DRAFT: July 1999
In general, hazardous waste used for fuel in cement kilns and LWAKs differs from the waste
burned at commercial facilities. Waste burned in kilns tends to be liquid, high-Btu waste (e.g.,
solvents and organic liquids) that is most suitable for use as fuels. This type of waste is easy to
pump, burns cleanly, and results in a relatively small amount of solid residue. Under the Boiler and
Industrial Furnace (BIF) rule,14 the waste burned for energy recovery must have a minimum heat
value of 5,000 Btu/lb. In practice, the blended waste burned by cement kilns has an average heat
value of 12,000 Btu/lb.15
Wastes burned in incinerators include streams that kilns cannot accept, such as highly
contaminated solids with low heating value. In addition, incinerators also burn liquid wastes and
solids with low levels of contaminants. Unlike kilns, incinerators burn waste that typically has a low
heat value; the average is only 6,700 Btu/lb.16 Incinerators often supplement wastes with
conventional fuels to ensure temperatures high enough to destroy organic toxics.
Increasingly, improvements in blending technologies and storage units are allowing kilns to
handle more solids and other wastes that have historically been sent to commercial incinerators.17
Fuel blenders can mix solids and other wastes together with high Btu liquid wastes to create a slurry
suitable for use as fuel. According to industry representatives, in 1997 hazardous wastes used as fuel
typically contained between 20-25 percent suspended solids.18 Blending also ensures that
contaminants, such as metals and chlorine, do not exceed allowable levels in fuels sent to
combustion units.
14 The final rule was published on February 21, 1991 (56 FR 7134).
15 The 1994 weighted average heat value of fuels supplied to kilns by fuel blenders in the
National Association of Chemical Recyclers (NACR) was 12,073 Btu/lb., with a minimum value of
8,800 Btu/lb. and a maximum of 14,000 Btu/lb. See NACR, NACR Waste Processing Survey, August
1994, question 1. Values vary by type of waste; see Appendix B for heat content values assumed in
the EPA economic impact model.
16 Average heat content of waste at medium and large commercial rotary kiln incinerators
from Energy and Environmental Research Corporation combustion database.
17 Technology improvements in storage units include improved dispersion tanker with
agitators and storage tanks with pulverizers. These technologies keep the solids mixed with the
liquids and ensure that the slurry is pumpable.
18 Personal communication with fuel blender, May 29, 1997.
2-9
-------
FINAL DRAFT: July 1999
MAJOR SOURCES OF COMBUSTED HAZARDOUS WASTES
Most of the waste managed by combustion comes from a relatively narrow set of industries
as shown in Exhibit 2-5. The entire chemical industry in 1995 generated 74 percent of combusted
waste.19 Within this sector, the organic chemicals subsector was the largest source of waste sent to
combustion, providing about 32 percent of all combusted waste. The pesticide and agricultural
chemical industry generated 12 percent of the total. No other single sector generated more than 10
percent of the total.
MARKET AND REGULATORY FORCES
INFLUENCING COMBUSTION INDUSTRY
Regulatory requirements, liability concerns, and economics affect the demand for combustion
services. Regulatory forces influence the demand for combustion by mandating certain hazardous
waste treatment standards and by establishing technical requirements for the combustion systems.
Liability concerns of waste generators affect combustion demand because combustion, by destroying
organic wastes, greatly reduces the risk of future environmental problems.20 Finally, if alternative
management options are more expensive, hazardous waste generators will likely choose to combust
their wastes to increase their overall profitability. However, this industry is not a fluid market and
changes in waste management practices often present logistical and regulatory challenges. For
example, a firm that wants to burn its own wastes faces many barriers, mostly regulatory, and
typically require very long lead times.
19 We exclude industries with SICs corresponding to refuse systems from our analysis
because they are likely to be fuel blenders.
20 Note that some, albeit much reduced, liability exposure remains in the form of residual
incinerator ash that must be disposed of in a hazardous waste landfill. With some cement kilns and
LWAKs, even this problem is minimal because much of the combustion residuals are integrated into
the product.
2-10
-------
FINAL DRAFT: July 1999
Exhibit 2-5
INDUSTRIAL SECTORS GENERATING COMBUSTED WASTE, 1995
Industrial Organic Chemicals, N.E.C.
Pesticides and Agricultural Chemicals, N.E.C.
Business Services, N.E.C.
Organic Fibers, noncellulosic
Medicinal Chemicals and Botanical Products
Pharmaceutical Preparations
Plastics Materials and Resins
Petroleum Refining
Industrial Inorganic Chemicals, N.E.C.
Unknown
Nonclassifiable Establishments
Services, N.E.C.
Paints, Varnishes, Lacquers, Enamels
Cyclic Organic Crudes and Intermediates, and
Organic Dyes and Pigments
SIC
Code
2869
2879
7389
2824
2833
2834
2821
2911
2819
9999
8999
2851
2865
Corresponding
NAIC Codes
32511,325188,
325193,32512,325199
32532
51224,51229,541199,
81299,54137,54141,
54142,54134,54149,
54189,54193,54135,
54199,71141,561421,
561422, 561439,
561431,561491,
56191,56179,561599,
56192,561591,52232,
561499,56199
325222
325411
325412
325211
32411
325998,331311,
325131,325188
71151,51221,54169,
51223,541612,
514199,54162
32551
32511,325132,325192
Volume
(tons)
853,216
321,869
245,241
190,209
157,520
105,881
93,043
92,023
64,826
61,487
46,108
30,585
29,837
29,667
%of
Volume
31.82
12.00
9.15
7.09
5.87
3.95
3.47
3.43
2.42
2.29
1.72
1.14
1.11
1.11
2-11
-------
FINAL DRAFT: July 1999
Exhibit 2-5 (cont.)
INDUSTRIAL SECTORS GENERATING COMBUSTED WASTE, 1995
Air, Water, and Solid Waste Management
Photographic Equipment and Supplies
Scrap and Waste Materials
Synthetic Rubber (Vulcanizable Elastomers)
Special Warehousing and Storage, N.E.C.
Primary Aluminum
Chemicals and Chemical Preparations, N.E.C.
Sanitary Services, N.E.C.
Alkalies and Chlorine
Local and Suburban Transit
Chemicals and Allied Products, N.E.C.
All Other SIC Codes
Total:
SIC
Code
9511
3861
5093
2822
4226
3334
2899
4959
2812
4111
5169
Corresponding
NAIC Codes
92411
333315,325992
42193
325212
49312,49311,49319
331312
32551,311942,
325199,325998
48819,56291,56171,
562998
325181
485111,485112,
485113,485119,
485999
42269
Volume
(tons)
28,033
27,356
18,768
17,025
14,914
12,648
10,303
10,089
9,567
9,471
7,337
201,826
2,681,509
%of
Volume
1.05
1.02
0.70
0.63
0.56
0.47
0.38
0.38
0.36
0.35
0.27
7.53
100.00
Notes:
1 ) We exclude refuse systems (SIC code 4953) from the analysis because they are likely to be fuel blenders; our intent was
to characterize the original sources of hazardous waste.
2) We adjusted the tons data to account for a data entry error involving the Dow facility in Plaquemine, LA. While the
state-reported data used in the 1995 BRS indicate that the facility combusted 2,099,059 tons of waste, the facility
actually combusted 22,639 tons.
3) The total tons listed does not equal the total in Exhibit 2-4 because only the 1995 BRS GM forms contained SIC codes,
yet the GM forms do not capture data from small quantity generators. (To obtain the information in Exhibit 2-4 we were
able to use the 1995 BRS WR forms, which list the wastes received from small and large quantity generators.) In
addition, reporting errors on the part of generators and data entry errors on the part of EPA affect the accuracy of the
tons combusted.
Source: 1995 BRS data.
2-12
-------
FINAL DRAFT: July 1999
Regulatory Requirements Encouraging Combustion
While industry began incinerating some of their hazardous wastes as early as the late 1950s,
the current market for hazardous waste combustion emerged largely from EPA regulation of
hazardous waste disposal. Two major regulatory forces directly encouraging combustion are the land
disposal restrictions under the Hazardous and Solid Waste Amendments (HSWA) of 1984 and the
"Records of Decision (RODs)" documenting clean-up agreements for Superfund sites.21
EPA's Land Disposal Restrictions (LDRs) prohibit hazardous waste generators from sending
untreated wastes directly to landfills and mandate alternative waste treatments, known as Best
Demonstrated Available Technologies (BDATs). Many of these standards are based on the
performance of combustion technology.
The Records of Decision establish the cleanup plan for contaminated sites under the
Comprehensive Environmental Reclamation, Compensation, and Liability Act (CERCLA). Since
contaminated soil at Superfund sites is subject to the LDRs, incineration is sometimes a technology
chosen during remediation. Between 1982 and 1991, incineration was the single source control
remedy selected most often (in 28 percent of the RODs issued).22 In more recent years, however, use
of incineration as the cleanup method at Superfund sites has been declining. Through fiscal year
1995, EPA chose incineration as the cleanup method in only 6 percent (43 times) of the RODs
issued.23
The percentage of source control RODs stipulating mobile incinerators as the management
technology started at about 6 percent in 1986 and increased to about 11 percent in 1987. In recent
years, however, the use of mobile incinerators to treat hazardous waste at Superfund sites has also
declined. Since Superfund cleanups create the majority of the demand for mobile thermal treatment
units, the demand for mobile incinerators has decreased significantly. In 1994 and 1995, for
example, treatment remedies at Superfund sites declined as containment-only remedies increased;
in addition, within the category of treatment remedies selected by EPA, mobile incinerators' share
decreased steadily. By 1995 mobile incinerators constituted only 4 percent of the treatment
technologies selected by EPA.24
21 Robert Graff and Thomas Walker, Industrial Economics, Inc., "Factors that Require,
Encourage, or Promote Combustion of Hazardous Waste," memorandum to Walter Walsh, Office
of Policy Analysis, U.S. EPA, November 11, 1993, 12.
22 Graff and Walker, op. cit, p. 10.
23 US General Accounting Office. 1997. Superfund: EPA Could Further Ensure the Safe
Operation ofOn-Site Incinerators.
24 US EPA, Solid Waste and Emergency Response, Technology Innovation Office. 1997.
"Clean Up the Nation's Waste Sites: Markets and Technology Trends: 1996 Edition."
2-13
-------
FINAL DRAFT: July 1999
Other pending EPA rules could also affect the combustion industry. For example, the
Hazardous Waste Identification Rule (HWIR) could potentially reduce the quantity of waste sent to
combustion facilities as some treated hazardous wastes could exit the RCRA Subtitle C regulatory
system. The HWIR media rule would have a similar effect on the combustion industry because the
rule gives generators of clean-up wastes greater flexibility in managing their wastes on-site.25
Liability Concerns
Remediation regulations also affect generators' hazardous waste management policies by
increasing firms' liability. For example, CERCLA created a liability system in which a generator
that ships waste to a licensed disposal site can be liable for up to the entire cost to clean the site if
environmental damages occur. With such large potential costs, generators found combustion's
ability to destroy the wastes, rather than simply dispose of them, extremely attractive.
Fears of product liability exposure through the courts have also increased demand for
combustion. In addition, many manufacturers want to be certain that off-specification products (e.g.,
Pharmaceuticals) are destroyed so they do not illegally enter the market. The Hazardous Waste
Treatment Council estimated that 15 to 30 percent of waste handled by destructive incineration is
not classified as hazardous by any agency.26
Economic Forces Encouraging Combustion
Economic forces can encourage combustion over alternative treatment in various ways. For
example, combustion can treat a wide variety of waste streams and may be cheaper than segregating
and managing streams with different methods.27
25 "Redefining Hazardous Waste." 1996. Environmental Business Journal., 5.
26 However, this non-hazardous waste helps combustion units cover their fixed costs of
operation, an important attribute during periods of excess combustion capacity. (Graff and Walker,
op. cit, pp. 15-16.)
27 For larger waste streams, however, waste segregation can often lead to large cost savings
because it allows facilities to handle less toxic fractions less expensively.
2-14
-------
FINAL DRAFT: July 1999
CURRENT REGULATORY FRAMEWORK
A number of regulations govern emissions from combustion units and the processes by which
residuals must be managed. Because different sets of regulations apply to different segments of the
combustion market, they influence the relative costs across different combustion sectors. Below,
we discuss the regulatory framework separately for waste-burning kilns and hazardous waste
incinerators (both commercial and on-site units). We then explain the regulations that govern ash
disposal from combustion facilities. Finally, we explain how the regulations may affect the nature
of competition across sectors of the combustion market.
Regulations Governing Hazardous Waste-Burning Kilns
Currently, emissions from hazardous waste-burning kilns are regulated under the 1991 Boiler
and Industrial Furnace Rule.28 This rule establishes destruction and removal efficiency requirements
(DREs) for dioxin-listed wastes and other organic hazardous wastes. In addition, the rule establishes
emission limits for toxic metals, hydrogen chloride, chlorine, and particulate matter. The rule also
controls products of incomplete combustion (PICs) by limiting flue gas concentrations of carbon
monoxide and hydrocarbons. In addition, the rule establishes Part B RCRA permit requirements to
ensure that kilns are operating within the specifications of the rule. Although several waste-burning
kilns have applied for final Part B RCRA permits, as of mid-1997 only one of these facilities has
actually obtained a final permit. Hazardous waste-burning kilns that do not have RCRA permits
operate under "interim status," which requires compliance with the substantive emission controls
for metals, chlorine, particulates, and carbon monoxide (and, where applicable, HC and dioxins and
furans).
The BIF rule conditionally exempts from regulation kilns that burn small quantities of
hazardous waste fuel. This exemption is known as the "small quantity burner exemption." The
small quantity burner exemption is a risk-based exemption mentioned in the statute. The exemption
is provided only to hazardous waste fuels generated on-site and is conditioned on a number of
requirements, including a one-time notification and recordkeeeping.
28 Emissions from cement kilns that do not burn waste will be regulated under the Portland
Cement MACT (proposed March 13, 1998). Cost estimates in the Assessment are incremental to the
current baseline and do not account for the proposed Portland Cement MACT (see Chapter 4).
2-15
-------
FINAL DRAFT: July 1999
Regulations Governing Hazardous Waste Incinerators
Title 40 in the Code of Federal Regulations, Parts 264 and 265, regulate hazardous waste
incinerators.29 This rule establishes performance standards for dioxins and other organic pollutants,
particulate matter, and hydrogen chloride. In general, standards for these pollutants are more
stringent than those set for kilns. However, the existing regulations for incinerators do not directly
control either toxic metal emissions or products of incomplete combustion (PICs).
Unlike RCRA combustion units, incinerators used for CERCLA cleanups must comply with
the substantive requirements of the RCRA and Title VICAA regulations (e.g., emission levels) but
not with the administrative requirements (e.g., reporting).30 In fact, CERCLA units do not require
Title V permits to operate; they must simply meet applicable, relevant, and appropriate requirements
(ARARs).31
Ash Disposal
Ash from hazardous waste incinerators is also considered a hazardous waste. Facilities must
dispose of the material in a permitted hazardous waste landfill at a cost of $74 to $147 per ton.32 By
comparison, ash from cement kilns or LWAKs is often integrated into their products. Even when
ash cannot be used in their products, the kilns can sell the ash or deposit it on-site as a non-hazardous
material at a cost of slightly over $3 per ton.33 This ash from kilns can be treated as non-hazardous
because it is exempt under RCRA Subtitle C, as discussed in Section 3001(b)(3)(A), the so-called
Bevill Amendment.
29 40 CFR 264.343 (1997)
30 Robin Anderson, U.S. EPA, OSWER, personal communication, May 21, 1998.
31
Andrew Opalko, U.S. EPA, personal communication, May 8, 1998.
32 Mohsen Zadeh, Energy and Environmental Research Corporation, personal
communication, March 11, 1997.
33 U.S. EPA, 1993. Report to Congress on Cement Kiln Dust, 9-10.
2-16
-------
FINAL DRAFT: July 1999
EPA regulatory initiatives are likely to change this balance within a few years. Future
regulation of cement kiln dust (CKD), the ash from cement production, will likely increase the cost
of managing residuals at kilns that combust hazardous wastes.34 The impact of this change on
hazardous waste markets is unclear. To the extent that waste-burning and non-waste burning kilns
face the same CKD management costs, it is likely that cement markets rather than waste-burning
markets will change as a result.
Effect of Regulatory Differences on Market Competition
Differences in the requirements for fully permitted facilities can create economic advantages
for one sector over another. In addition, interim status under the BIF rule can create temporary
benefits for BIFs that disappear once a unit is fully permitted. In reality, these temporary benefits
can sometimes last many years.35 Representatives from each industry claim that their facility type
is more stringently regulated than the other, and thus subject to higher costs. In addition to
differences in the disposal requirements for combustion residuals, already discussed above, industry
representatives claim that waste-burning kilns have lax standards for metal emissions relative to
commercial incinerators. These representatives also argue that the destruction and removal
efficiency (DRE) verification does not need to occur for BIFs until a full permit is issued.
Conversely, the cement kiln industry asserts that incinerators have an advantage under current
regulations. For example, Subpart O regulations do not require extensive feed rate analysis on a
continuous basis and do not establish metal-specific emission limits.36
34 In January 1995 EPA published a regulatory determination which stated that additional
control of the cement kiln dust from hazardous waste-burning kilns and non-hazardous waste
burning kilns is warranted. In the regulatory determination EPA agreed to develop additional
regulations under RCRA Subtitle C and, if necessary, the Clean Air Act. Currently, RCRA does not
regulate cement kiln dust, which the 1980 Bevill amendment excluded from regulation pending EPA
study.
35 As of June 1995, for example, all waste burning cement kilns were operating under interim
status. (Karen Randolph, U.S. EPA, personal communication, June 13, 1995.)
36 The incinerator regulations do not require metal emissions standards, but limit particulate
matter emissions. Since low particulate matter emissions do not necessarily correspond with low
toxic metals emissions, opponents view the controls as inadequate. (Bureau of National Affairs.
1995. "Cement Industry 'Enforceable Agreement' Would Replace Agency's Plan for Kiln Dust."
Environmental Reporter, 1645).
2-17
-------
FINAL DRAFT: July 1999
The validity of these claims is difficult to gauge. Baseline emissions (described in Chapter
1) suggest that BIFs have higher average emissions of mercury and semi-volatile metals than do
incinerators. Incinerators emit more low volatility metals. However, these data cannot be used to
compare emissions per ton of waste burned across sectors. Nor do they provide insights into the cost
savings to any sector attributable to higher emissions. The MACT will alleviate some of these cost
advantages because the standards are likely to ensure that human health and the environment are
protected equally across combustion sectors and on a nationwide basis.
COMBUSTION MARKET PERFORMANCE
Historical Performance
Throughout much of the 1980s, hazardous waste combustors enjoyed a strong competitive
position. In spite of their high capital costs, incinerators were extremely profitable. EPA regulations
requiring combustion greatly expanded the waste tonnage requiring treatment. Federal permitting
rules, as well as powerful local opposition to incinerator siting, constrained the entry of new
combustion units. As a result, combustion prices rose steadily, reaching nearly $640/ton for clean
high-Btu liquids and $l,680/ton for sludges and solids in 198737 Profits were equally high. For
example, after-tax profits earned by Rollins Environmental Services, a firm operating primarily in
the incineration sector, peaked at 16.4 percent that year.38 The high profits induced many firms to
enter the permitting and siting process for new combustion units, despite the inevitable delays in
obtaining the required operating permits.
Hazardous waste combustion markets have changed significantly since the 1980s. In the
early 1990s, the industry entered a period of substantial overcapacity, resulting in fierce competition,
declining prices, poor financial performance, numerous new project cancellations, and some facility
closures. Within the past few years, several additional combustion facilities have closed; many of
those that remain open have combined with other combustion facilities and then further consolidated
their operations.39
37 Midpoint values from industry survey data presented in ICF Incorporated, 1990 Survey of
Selected Firms in the Hazardous Waste Management Industry, prepared for the U.S. Environmental
Protection Agency, Office of Policy Analysis, July 1992, 2-5.
38 Wayne Nef June 24, 1994. "Rollins Environmental Services." Value Line, 3.52.
39 EPA's List of Permitted Hazardous Waste Combustion facilities indicates that some
commercial facilities have retracted pending permits and others have exited the market. (See: Shaye
Hokinson, Alice Yates, Alexi Lownie, and Doug Koplow, "Core Combustion Data Update,"
memorandum prepared by Industrial Economics, Incorporated for U.S. EPA, 23 August 1996.
2-18
-------
FINAL DRAFT: July 1999
The demand for combustion at mobile incinerators has also decreased in the 1990s. Two
factors are largely responsible for the decline: the high cost of incineration and the public and
governmental opposition to high-temperature incinerators, due to potential human health risks.40
As a result, several mobile incinerators have ceased operating or have merged with other companies.
In addition, some of these firms have moved a portion or all of their processes overseas.41
Overcapacity and Effects on Poor Market Performance
Despite the recent consolidation activity in the combustion industry, overcapacity remains.
According to surveys of the combustion industry, capacity utilization estimates have decreased
significantly from 1980 levels, which were in the 80 percent range. By 1995, the capacity utilization
rates dropped to rates of around 50 percent. As shown in Exhibit 2-6, commercial incinerators have
the lowest capacity utilization, at an average of 42 percent.42
Although EPA-promulgated land disposal restrictions (LDRs) increased waste quantities
managed across combustion sectors, these increased quantities were insufficient to offset the
following factors:
• New Combustion Supply. Most of the new combustion supply came on-line
in the 1980s. The new supply came both from new and expanded combustion
units. In recent years, however, companies have canceled many projects with
the price declines of the past few years. The closing of certain facilities,
however, has prompted others to expand so that they can attract the new
waste streams in the market. In addition, the elimination of waste processing
bottlenecks (e.g., waste storage capacity) has also expanded the capacity of
some facilities already in operation. New combustion capacity is also
expected to come on-line in the near future; the Louisiana Department of
Environmental Quality is issuing a permit that will allow an additional
550,000 tons per year of capacity at a GTX incinerator.
40 US EPA, Solid Waste and Emergency Response, Technology Innovation Office. April
1997. "Clean Up the Nation's Waste Sites: Markets and Technology Trends: 1996 Edition"; Gwen
Fairweather, Steven Brown, and Michael Berg, ICF, "Memorandum: QRT #1, WA B-30, EPA
Contract 68-W6-0061," prepared for Lyn Luben, OSW/EPA, and Kevin Brady, ffic, June 13, 1998.
41 Gwen Fairweather, Steven Brown, and Michael Berg, ICF, "Memorandum: QRT #1, WA
B-30, EPA Contract 68-W6-0061," prepared for Lyn Luben, OSW/EPA, and Kevin Brady, ffic, June
13, 1998.
42 Actual tons figures are from 1995 BRS; capacity estimates are converted from trial burn
feed rate data and assume operating rates of 8,000 hours per year.
2-19
-------
FINAL DRAFT: July 1999
Exhibit 2-6
AVERAGE CAPACITY UTILIZATION AT HAZARDOUS WASTE-BURNING FACILITIES
3,000,000
2,500,000 --
2,000,000 --
o 1,500,000-'
1,000,000 --
500,000 --
42%
51%
58%
• Remaining Practical Capacity
E Actual Tons Burned
Commercial
Incinerators
Cement
Kilns
On-Site
Incinerators
Source: 1995 BRS; "HW Feed Data Update" (Electronic communication from EER), July 14, 1998.
Increased Solids-Burning Capability in Kilns Fuel blenders have
improved their ability to suspend solids in liquid wastes. One fuel blender,
for example, estimates that suspended solids comprise 20 to 25 percent of the
facility's hazardous waste-derived fuel.43 Suspending solids in liquid waste
has greatly expanded the effective solids burning capacity among kilns that
could previously only burn liquids and has driven down prices in this
formerly high-profit segment. This practice has also improved the financial
performance of fuel blenders. As discussed in the April/May 1995 issue of
Hazardous Materials Management, "To improve margins, fuel blenders have
recently increased the solid content of the mixtures they send to the kilns."
43 Fuel blender, personal communication, May 29, 1997.
2-20
-------
FINAL DRAFT: July 1999
Waste Minimization Efforts. Industry efforts to minimize hazardous waste
generation have reduced the quantity of wastes requiring treatment.
Substitution of Alternative Technologies in Remediation Market. On-site
units are likely to handle much of the future combustion demand for remedial
wastes. In addition, new alternative technologies, such as thermal desorbers,
have further weakened demand.
Structural Advantages for Waste-Burning Kilns
Kilns possess two major structural advantages in the combustion of hazardous wastes that
will remain regardless of federal regulatory actions. First, they are able to recover the energy content
of the wastes in their production process. Second, they can use existing production capital
equipment to combust hazardous wastes.
• Energy Recovery. Waste-burning kilns can use the heating value of
hazardous waste fuels to offset purchases of virgin fuels that would otherwise
be necessary to achieve required heating temperatures to a much greater
extent than can incinerators.44 A commercial incinerator uses process heat to
break down and destroy hazardous organic wastes, while a cement kiln uses
the heat both to break down wastes and to manufacture cement, a saleable
end product.
• Shared Capital. Even in the absence of energy recovery advantages, cement
kilns still enjoy an advantage based on their ability to produce a saleable
product. A commercial incinerator must purchase all of its capital equipment
to combust hazardous wastes and control emissions from the process. In
contrast, a cement kiln purchases capital equipment to manufacture cement,
and this equipment can also destroy hazardous wastes. While there are some
incremental capital purchases required for a kiln to burn hazardous wastes,
these are small relative to the overall cost of an incineration unit.
44 Incinerators can use some cleaner solvent streams to fuel their afterburners. However,
while some broader energy recovery is done at European incinerators, it is unlikely to be done in the
United States. When the heat recovery process runs hot gas through a heat exchanger, the
temperature of the gas flow drops, increasing the likelihood that chlorine PICs can re-form dioxins.
This increases the dioxin emissions from the stack. (Retallick, op. cit.)
2-21
-------
FINAL DRAFT: July 1999
The result is that the incremental cost of burning a ton of hazardous waste in a kiln is lower than the
cost of burning it in an incinerator.
Market Performance Across Combustion Sectors
While the hazardous waste combustion sector overall has experienced declining prices, such
a decline has affected commercial incinerators more than kilns until recently.45 In the commercial
incineration sector, industry representatives report that average prices for liquid organics fell by
about 10 percent and solid prices declined by almost 20 percent between 1991 and 1993. From 1994
to 1996, prices began to level off, although for some waste categories, such as cleaner liquid streams,
prices declined slightly. Prices in the cement kiln sector remained mostly stable from 1991 to 1993,
as measured by the prices that fuel blenders paid to cement kilns. However, the prices have declined
slightly in 1994 through 1996. Kilns continued to accept wastes at lower prices than incinerators.
This is due, in part, to the kilns' lower costs and in part to the higher heat content of the waste
streams they receive.
Financial Performance and Profitability
Financial performance indicators help contrast the condition of incinerators and cement kilns
but are subject to two caveats. First, financial data for Rollins Environmental Services, which has
recently merged with Laidlaw Environmental Services, Inc., serves as a proxy for the entire
commercial incinerator sector because data on other firms include substantial non-incinerator assets
and because Rollins was a large portion of the industry. Performance of incinerators owned by other
firms may be somewhat different from Rollins, though we have no reason to believe that these
differences are large. Second, cement markets heavily influence financial performance for cement
kilns. Nonetheless, the baseline costs of hazardous waste combustion in the kilns (detailed in
Appendix B) suggest strong returns on waste burning.
45 As demand for mobile incineration diminishes and firms introduce new remediation
technologies, prices for mobile incineration have also declined.
2-22
-------
FINAL DRAFT: July 1999
Examining financial returns for Rollins Environmental Services provides some insights into
the economics of the incineration segment of the market because Rollins derived nearly 80 percent
of revenues from incineration. The firm's net profit margin peaked at 16.4 percent in 1987, and
remained quite high until 1992. The net profit margin dropped to 5.6 percent in 1993, and the firm
lost money in 1994, 1995, and 1996.46
Cement industry profits, which are presently stronger than in the commercial incineration
segment, have followed an upward trend over the past few years. Net profit margins were 2.8
percent in 1993, 5.7 percent in 1994, and 8.1 percent in 1995. Net profits continued to increase to
9.5 percent in 1996 and 10.4 percent in 1997.47
The return-on-equity ratio (ROE) measures the financial returns to investors in a firm or
industry. As these returns fall, it becomes more difficult for firms to raise new funds in capital
markets. Rollins' ROE between 1985 and 1988 was above 20 percent, a better performance than the
environmental services sector overall. With the increase in incineration overcapacity, Rollins' ROE
declined steadily to only 5.6 percent in 1993 and turned negative in 1994.
Average returns to shareholders in the cement industry dropped from 8.6 percent in 1990 to
only 0.1 percent in 1991 as a result of the recession. The ROE had recovered to 6.8 percent in 1993,
and 10.3 percent in 1994.48 By 1997 the ROE was 16.9 percent.49 This implies that the cement
industry may be able to raise investment capital more readily than the commercial incineration sector
over the next few years.
46 Wayne Nef March 24, 1995. "Rollins Environmental Services." Value Line, 350; SEC's
Edgar Database - Internet Address: www.sec.gov/archives/edgar/data.
47 Thomas Mulle. January 20, 1995. "Cement and Aggregates." Value Line, 891;
Christopher Coyle. April 17, 1998. "Cement and Aggregates." Value Line, 894.
48 Mulle, op. cit, p. 891; Christopher M. Coyle. April 17, 1998. "Cement and Aggregates."
Value Line, 894.
49 Christopher M. Coyle. April 17, 1998. "Cement and Aggregates." Value Line, 894.
2-23
-------
FINAL DRAFT: July 1999
DEFINING THE REGULATORY BASELINE CHAPTER 3
This chapter provides the necessary information for specifying the regulatory "baseline,"
which describes the world absent the hazardous waste combustion MACT standards. Specifying the
baseline is necessary for accurately estimating incremental MACT compliance costs and risk-
reduction benefits, as well as for evaluating economic and distributional effects of the MACT
standards (e.g., market exits, employment shifts). According to the Office of Management and
Budget, "the baseline should be the best assessment of the way the world would look absent the
proposed regulation. That assessment may consider a wide range of factors, including the likely
evolution of the market, likely changes in exogenous factors affecting benefits and costs, likely
changes in regulations promulgated by the agency or other government entities, and the likely degree
of compliance by regulated entities with other regulations."1 While Chapter 2 provides a general
description of the market, regulations, and other exogenous factors (i.e., energy price fluctuations),
this chapter summarizes conclusions from Chapter 2 critical for the baseline specification. We
organize this chapter into two main sections - a baseline profitability analysis and a discussion of
emissions and pollution control practices. Each section describes the assumptions and data sources
for the baseline elements identified below.
The "Baseline Economic Assumptions" section presents our assumptions about key
characteristics of hazardous waste combustion markets in the absence of the MACT rule. This
includes characterization of the following elements:
• Hazardous Waste Combustion Prices — the price that combustion
facilities charge for their services affects the facilities' ability to cover
operating costs and any additional costs imposed by the MACT standards.
This section describes our assumptions about the anticipated evolution of
combustion prices and the prices we use in the economic impact analysis.
1 Office of Management and Budget (OMB). 1996. Economic Analysis of Federal
Regulations Under Executive Order 12866, p. 9.
3-1
-------
FINAL DRAFT: July 1999
Quantities of Combusted Hazardous Wastes — like prices, changes in
hazardous waste quantities managed by combustion affect the degree to
which combustion facilities cover operating costs. Due to the high fixed
costs of certain types of hazardous waste combustion, waste quantities are
especially important to a firm's profitability. This section describes our
source for hazardous waste quantity estimates and how market changes will
affect quantities combusted over time.
Energy Savings — for waste-burning kilns, the decision to burn also
depends on savings from avoided energy purchases. This section includes
information on the conventional fuel mix at kilns and fuel prices.
Transportation Costs — for on-site incinerators, avoided costs also include
shipping costs. This section describes our data assumptions for transportation
costs.
Baseline Costs of Waste-Burning — we require baseline cost estimates to
assess baseline profitability and to identify marginal facilities that may exit
the market even in the absence of the MACT standards. This section
summarizes the approach and results from the baseline cost analysis.
Future Capacity — after developing data assumptions for the revenue and
cost components above, we then project longer term capacity trends in light
of current profitability.
The "Emissions and Pollution Control Practices" section establishes baseline emission
profiles and current pollution control practices in the industry. We describe the following baseline
elements in this section:
• Baseline Emissions — we characterize baseline emissions so that emission
reduction projections and subsequent human health and ecological benefit
estimates are incremental to the baseline.
• Pollution Control Practices — we define baseline pollution control
practices to assess the type of engineering retrofits and other pollution control
measures needed at specific combustion facilities. Characterizing this
baseline element ensures that compliance cost estimates are incremental to
the baseline (i.e., we do not assign pollution control costs if a facility
currently employs this particular control).
3-2
-------
FINAL DRAFT: July 1999
BASELINE ECONOMIC ASSUMPTIONS
We evaluate baseline economics of hazardous waste combustion facilities to assess whether
facilities will continue waste burning, even in the absence of the increased costs associated with the
MACT standards. This information is then used to assess other economic impacts, such as
employment shifts and waste quantities diverted, on an incremental basis. As described in Chapter
2, current overcapacity in the combustion market has resulted in poor financial performance across
the combustion industry (e.g., declining and even negative operating profits). By identifying the
combustion facilities that are non-viable in the baseline, we can avoid attributing the market exit of
these facilities to the MACT standards. Given market performance, we do not expect any significant
activity in terms of new entry to the market.
We assess baseline profitability of each modeled system by determining whether a
combustion system is burning enough waste to adequately cover the costs of operation and realize
a reasonable return on capital.2 Operating profits are calculated as follows:
Operating Profits = Waste Burning Revenues - Waste Burning Costs
Where:
Waste Burning Revenues = Combustion revenues + Avoided energy costs (for cement kilns
and LWAKs) + Avoided transportation costs (for on-site
incinerators)
Waste Burning Costs = Baseline costs of hazardous waste burning
Operating profits are calculated before tax and deductions for plant and corporate overhead. After-
tax profits would be lower. We describe each of the baseline revenue and cost components in more
detail below.
As shown in the equations above, we require a number of data inputs to calculate baseline
revenues and costs for each modeled combustion system. We describe our assumptions for each of
the revenue and cost components below, in light of the current and future expected activity in the
combustion market.
2 Because baseline costs of burning also include a capital recovery factor, at breakeven,
facilities also realize a reasonable return on capital.
3-3
-------
FINAL DRAFT: July 1999
Hazardous Waste Combustion Prices
The combination of decreasing demand and overcapacity in the hazardous waste market has
contributed first to declining prices, then to fairly constant, low prices, which we assume will
approximate the hazardous waste combustion prices at the end of the 1990s. In the Assessment we
specify prices for seven waste categories, reflecting differences in waste form (liquid, sludge, or
solid), as well as other waste characteristics, such as contaminant concentrations (e.g., metals,
mercury), heat content, and water content. Pricing data are shown in Exhibit 3-1 and represent
average market prices.3
Liquids
Comparable
Fuels
$20 (Baseline)
$0 (post-MACT)
With
Suspended
Solids
$70
Highly
Contaminated
$301
Sludges
Less
Contaminated
$320
Highly
Contaminated
$630
Solids
Less
Contaminated
$683
Highly
Contaminated
$1,281
Exhibit 3-1
WASTE PRICES FOR FINAL ECONOMIC IMPACT MODEL
(price per ton in 1996 dollars)
Notes:
1.
2.
We base the prices on information obtained from industry representatives in 1997. We use the GDP
implicit price deflator to convert these values to 1996 dollars.
Contaminants evaluated include halogen, mercury, lead, cadmium, and water. (Lauren Fusfeld, Alice
Yates, Tom Walker, Industrial Economics, Inc., November 17, 1997. "Preliminary Findings from
NHWCS Database to Inform Distribution of Waste Types Across Combustion Systems," Memorandum
prepared for Lyn Luben, U.S. EPA.)
We expect that combustion facilities will not charge a tipping fee for comparable fuels, and thus the price
drops to $0 post-MACT.
CKRC, the hazardous waste burning cement kiln industry group, reported revenue estimates for wastes
burned by cement kilns of about $67 per ton (cement kilns generally burn liquids with lower-contaminant
levels than commercial incinerators). This difference may be a result of pricing arrangements between
cement kilns and fuel blenders. EPA conducted a sensitivity analysis to assess the impact of this pricing
difference and found that market exit estimates did not change. (For more information, see: "Evaluation
and Use of Data Submitted by the Cement Kiln Recycling Coalition," 30 June 1999 (Docket Number F-
97-CS4A-FFFFF).
3 We incorporate price changes associated with the comparable fuel exclusion to project
prices post-MACT. The comparable fuel exclusion is one component of the "Fast-Track"
rulemaking that allows a conditional exclusion from RCRA Subtitle C for wastes that are similar to
conventional fossil fuels (verified by testing and analysis). We expect that combustion facilities will
not charge a tipping fee for comparable fuels, and thus the price drops to $0 post-MACT.
3-4
-------
FINAL DRAFT: July 1999
The price estimates we use in this document represent the prices received by combustion
facilities, and not intermediaries (e.g., we use tipping fees paid to cement kilns, and not to fuel
blenders).4
With the exception of a few on-site facilities handling specialized wastes, we apply the prices
in Exhibit 3-1 to estimate waste-burning revenues. However, for those few facilities known to burn
specialized waste such as explosives and low-Btu aqueous wastes, we adjust prices upward to reflect
the actual market prices for these waste types.5
Hazardous Waste Quantities
The total quantity of waste combusted for destruction and energy recovery has varied slightly
over the 1990s, as shown in Exhibit 3-2. In total, combustion facilities managed about three million
tons in 1995.6 From 1991 to 1993, the quantity of waste combusted increased approximately 1
percent; from 1993 to 1995, combusted waste quantities increased by 9 percent. From 1991 to 1993,
the greatest increase occurred in the on-site incinerator sector. From 1993 to 1995, the greatest
increase in tonnage combusted occurred in the commercial incineration sector. In more recent years,
the growth rate of combusted hazardous waste quantities has slowly decreased in both the
commercial incineration and on-site incineration sectors. In fact, industry representatives note that
the absolute quantities of waste combusted by commercial energy recovery facilities decreased in
1995 and 1996. As discussed in Chapter 2, several factors contributed to the diminished growth rate
of demand for hazardous waste in the 1990s. These include waste minimization, source reduction,
and the substitution of alternative remediation treatment technologies, such as thermal desorbers.7
4 This practice is consistent with public comments. For example, one industry trade group,
CKRC, points out, "the revenues that accrue to the cement kilns are far more relevant to assessing
the impact of the proposed MACT rule than are revenues received by the fuels managers," (Susel
and Sessions 1997, 10).
5 We adjust prices for two of the 34 private on-site incinerators and one of the 1 5 commercial
incinerators in the economic model.
6
Note that our waste analysis does not include wastes handled by mobile incinerators.
7 Maureen M. Cromling. December 1996. "A Year of Challenges and Achievements."
Environmental Business Journal, 11; "Redefining Hazardous Waste." June 1996. Environmental
Business Journal, 5; "Commercial Hazardous Waste Management Facilities: 1997 Survey of North
America." March/ April 1997. Hazardous Waste Consultant, 4.2, 4.6.
3-5
-------
FINAL DRAFT: July 1999
As indicated in Exhibit 3-2, our primary data source for hazardous waste quantities managed
at combustion facilities is EPA's Biennial Reporting System, a national system that collects data on
the generation and management of hazardous waste. The BRS captures data on two groups of
RCRA-regulated hazardous waste handlers: non-household Large Quantity Generators and
Treatment, Storage, and Disposal facilities (TSDs). These facilities must submit a report every other
year detailing the quantities and composition of the waste, along with the management method used
for handling the waste. BRS data exist for odd-numbered years; 1995 is the latest year for which
final BRS data are currently available.8 Thus, while prices are from 1997, because we do not expect
any significant changes in total hazardous waste quantities combusted from 1995 to 1997, this
difference in years should not bias the results.
1,800,000
1,600,000
Exhibit 3-2
HAZARDOUS WASTE QUANTITIES FROM 1991 TO 1995
c
°
• Commercial Incinerators
-Hazardous Waste-Burning
Kilns
-On-site Incinerators
1991 1993 1995
Year
Sources: 1991,1993, and 1995 Biennial Reporting Systems.
Note: The analysis does not include wastes managed at mobile incinerators.
We use facility-specific tons burned data from the 1995 BRS in the economic assessment
model. To match the waste streams with the available pricing data, we group wastes by BRS form
code (i.e., wastes are categorized as liquids, solids, or sludges) for each facility and then further
characterize the wastes using sector averages from EPA's National Hazardous Waste Constituent
8 The U.S. EPA, 1997, Biennial Reporting System (BRS) data are expected in late 1998 or
early 1999.
3-6
-------
FINAL DRAFT: July 1999
Survey (NHWCS) which provides more detailed constituent concentration data. For facilities for
which there was no form code information, we use sector averages to distribute the waste across the
seven waste categories. For facilities that have more than one combustion system, we evenly
distribute waste quantities across systems.
While total waste quantities combusted have not changed significantly over the past several
years, for particular facilities, tons burned may vary significantly from year to year. This may make
certain facilities appear non-profitable in the baseline or post-MACT, where in fact, these facilities
are willing to operate at a loss for a single year, with the expectation that in the following year they
will more than regain their losses. Year-to-year variability may also make certain facilities appear
more economic if the quantities from 1995 are high-volume due to special circumstances. On the
whole, these factors should cancel out each other, such that the economic impact results presented
in Chapter 5 are not biased either upward or downward, particularly given the relatively constant
level of overall demand for combustion services.
Because the demand for hazardous waste combustion has leveled off over the past few years
and we do not foresee any significant changes in the factors contributing to decreased demand, using
facility-specific information from 1995 should be adequate for the purposes of this analysis. It is
important to note, however, that economic impact results are sensitive to the tons burned
assumptions. The economic analysis would need to be revisited if waste generation or management
behavior change markedly.
Energy Savings
In addition to the revenues facilities earn from combustion fees, we estimate the savings to
cement and lightweight aggregate kilns from avoided energy purchases. To calculate energy savings,
we first convert the waste quantities burned into an energy equivalent (in million Btus per pound).9
We compare the energy content of the waste fuels to the energy content of conventional fuels
displaced by waste burning. Then we calculate the quantity of conventional fuel the cement kilns
would have to buy if they were unable to obtain hazardous waste. We assume that conventional fuel
for cement kilns is 91.1 percent coal and 8.9 percent natural gas.10
9 We used the average Btu/lb estimates used in the baseline cost models. These models
assumed 13,111 Btu/lb for liquids burned by cement kilns and 10,767 Btu/lb for liquids burned by
lightweight aggregate kilns. For sludges and solids burned by both types of kilns, we used an
average heat content of 9,733 Btu/lb. See Appendix B for more information.
10 Portland Cement Association, Economic Research Department. 1996. U.S. Cement
Industry Fact Sheet: 14th Edition, Table 24: Fossil Fuel Mix, 17.
3-7
-------
FINAL DRAFT: July 1999
Avoided Transportation Costs
We also account for transportation costs in the avoided costs of on-site incinerators.
Assuming an average distance of 200 miles, the cost of transporting liquid waste to a commercial
incinerator was estimated to be $53/ton in 1996 dollars. The cost of transporting sludges and solids
was estimated to be $50/ton in 1996 dollars.11
Baseline Waste-Burning Costs
To evaluate baseline profitability we also need estimates of the baseline costs of combustion
for each modeled facility. Baseline costs suggest important differences across combustion segments
that significantly influence competitiveness. The results of the baseline cost analysis provide a core
input to the combustion cost model. Below, we summarize how these baseline costs are estimated.
A more detailed description of the approach, as well as detailed results, can be found in Appendix
B.
The objective of the baseline cost analysis is to estimate the total costs (variable and fixed)
of burning a ton of hazardous waste in combustion units of different types. In the case of
incinerators, this baseline cost is simply the variable and fixed costs of the facility (prior to new
pollution control requirements), since incineration is the sole function of the facility. For cement
kilns and LWAKs, the decision is whether to burn hazardous waste or some other fuel. In this case,
we need to know the incremental costs introduced by the decision to burn hazardous waste rather
than conventional fuel; this is the cost that would be avoided if the facility chose to burn
conventional fuel. These incremental costs might include permitting costs, the cost of insurance, and
the cost of special hazardous waste handling procedures and equipment. Because the same kiln is
required for cement production regardless of hazardous waste combustion activities, no kiln capital
costs are included in the baseline cost estimates for cement kilns.
The baseline cost analysis involved three key tasks:
• Identification and classification of combustion cost components;
• Quantification of combustion cost components; and
• Development of annualized baseline combustion cost estimates for each
combustion system in the cost model.
11 DPRA, Incorporated, September 1994, "Estimating Costs for the Economic Benefit of
RCRA Non Compliance," Prepared for U.S. EPA, Office of Regulatory Enforcement. 5-4. Data
were inflated to 1996 prices using the GDP implicit price deflator.
3-8
-------
FINAL DRAFT: July 1999
EPA first identified the key elements of baseline costs for kilns and incinerators. For cement
kilns, key cost components include waste storage, waste sampling and analysis, and waste-specific
labor. For incinerators, key components include the cost of the combustion system and air pollution
control device (APCD) units already installed, labor, and incinerator ash disposal. Both cement kilns
and incinerators incur permitting costs. These costs are also included in the baseline costs.
We then classified the baseline cost components into three categories: fixed annual capital;
fixed operating and maintenance costs (O&M); and variable costs. Fixed annual capital costs refer
to expenditures lasting multiple years. This includes capital equipment and operating permits. Costs
have been annualized using a 10 percent interest rate to convert the total capital cost to a series of
equal annual payments over the estimated life of the capital.12 Fixed O&M costs include items such
as annual machine repairs. These costs recur every year, but do not vary significantly in proportion
to the quantity of hazardous waste burned. Variable costs include items such as supplemental fuel
and some labor costs that increase in proportion to the amount of waste burned. Annual variable
costs are derived by multiplying variable costs per ton of waste burned by the number of tons burned.
After identifying the key cost components to include in the baseline analysis, engineering cost
models were developed separately for incinerators and kilns to estimate baseline costs for each
combustion system.13 The engineering cost models use combustion system-specific parameters such
as the size and type of the unit (e.g., wet vs. dry, rotary vs. liquid injection) to calculate costs for each
combustion system. The cost components for each system were divided into fixed and variable costs
of hazardous waste combusted. We separated annual capital recovery figures from the other annual
fixed costs because annual fixed O&M costs would cease if a unit stopped combusting hazardous
waste, while capital costs apply to equipment already purchased and therefore could not be
recovered.14 We relied on a number of sources, including trade journals, discussions with
12 A 10 percent real rate of return was used to calculate a capital recovery factor (CRF) using
the following equation:
. t~ An
CRF = —-^-—-—.where i = 10% and n = 10, 15, or 20 years.
(i+O" -i
The 10 percent annualization factor matches the rate of return recommendation for private
investment in the OAQPS Control Cost Manual, January 1990.
13 Energy and Environmental Research Corporation, Revised Estimation of Baseline Costs
for Hazardous Waste Combustors for FinalMACTRule, Prepared for Industrial Economics, Inc. and
US EPA, Office of Solid Waste Management Division, August 20, 1998.
14 The distinction between fixed O&M and fixed capital is important in our calculation of
short-run breakeven quantities. While fixed capital is sunk and need not be recovered for a unit to
continue burning waste, fixed O&M is a recurring cost and must be recovered through revenues.
3-9
-------
FINAL DRAFT: July 1999
facilities, and engineering judgment, to quantify the baseline cost components. The sources for each
component along with more detailed information about the baseline cost methodology are provided
in Appendix B.
Based on the judgment of engineering experts, the baseline cost estimates assume continuous
operation for every combustion sector, except on-site incinerators. We assume on-site incinerators
operate in batch mode because they are generally small, combust relatively small quantities of
hazardous waste, and would consume a great deal of energy if they were to be operated
continuously.15 On-site incinerators are also assumed to burn only hazardous wastes. To the extent
that non-hazardous wastes are also burned, the fixed costs per ton of hazardous waste burned would
decline. (This issue, along with other factors affecting the economics of on-site burning is discussed
further in Chapter 2.)
Baseline combustion costs for the different combustion sectors are summarized in Exhibit
3-3. As shown, baseline costs for incinerators differ dramatically from those for kilns. We expect
this difference because baseline costs for kilns do not include capital costs. Baseline costs vary most
widely across on-site incinerators. This is a product of the different types and sizes of on-site
incinerators. Across all sectors, larger systems have a lower fixed costs per ton of capacity. These
economies of scale illustrate the importance of capacity utilization; a large facility can have
extremely high costs per ton of waste actually burned if much of its combustion capacity is not being
utilized.
Future Capacity
We project future capacity in the combustion industry by assessing the baseline profitability
of each system in the model. We first determine if the combustion system is covering its short-term
costs (which include both fixed and variable operating and maintenance costs). We then assess
longer term future capacity by evaluating profitability over the capital replacement cycle. We use
future capacity projections so that costs and economic impacts are incremental to the baseline. In
other words, if a facility is not currently covering its long-term costs, we do not attribute market exit
to the MACT rule because we expect that over the longer term, this facility will exit the market even
in the absence of the MACT standards. To reflect the uncertainty of the data assumptions, we also
estimate costs and economic impacts assuming constant capacity.
15 This assumption leads to lower annual O&M costs, reducing the cost per ton combusted.
3-10
-------
FINAL DRAFT: July 1999
Exhibit 3-3
ANNUAL BASELINE COSTS FOR EXISTING COMBUSTION SYSTEMS
Sector
Cement
Kilns
LWAKs
Commercial
Incinerators
Private
Incinerators
Average
Tons Per System
26,567
(11,526-96,012)
331,397
(102,248 - 675,620)
25,034
(206 - 96,080)
16,703
(0-113,217)
Average Capital
(Annualized) Costs
$389,075
($262,828 -$601,529)
$242,574
($189,363 -$314,260)
$1,669,073
($437,841 -$3,141,895)
$678,926
($191,292 -$1,780,392)
Average Fixed
O&M Costs
$503,959
(409,690-677,138)
$461,803
($410,004 -$565,880)
$1,306,425
($864,210 -$1,874,319)
$320,416
($110,771 -$812,304)
Average Variable
O&M Costs
$832,076
(338,773-2,728,03)
$184,473
($126,491 -$246,3 12)
$2,606,140
($77,533 - $7,403,559)
$1,572,833
($21 -$13,078,031)
Total Costs
(Capital Costs + O&M)
$1,725,110
($1,152,352 -$3,696,451)
$888,849
($766,155 -$1,073,878)
$5,581,639
($1,379,584 -$11,587,124)
$2,568,183
($421,287 -$14,294,148)
Median Total
Cost Per Ton
$67
($35 -$121)
$4
($1-$10)
$278
($76 - $6,697)
$303
($23 -$1,381,339)
Notes:
1. Baseline costs not included for government incinerators because we assume these systems remain operational regardless of cost. While this assumption may
overstate costs and understate closures post-MACT, EPA believes this is a reasonable assumption because in general these systems burn specialized wastes.
2. Cost averages appear at the top of each cell, except the "Total Cost per Ton" column which presents the median values. Minimum and maximum values appear
in parentheses.
3-11
-------
FINAL DRAFT: July 1999
In the short term, most combustion systems are adequately covering their baseline waste-
burning costs. Exhibit 3-4 shows the results of the short-term profitability analysis. Every cement
kiln and LWAK in the model is currently burning enough waste to cover its operating and
maintenance costs. Most incinerators, both commercial and on-site units, are also meeting their
short-term costs. As shown in the exhibit, with the exception of one on-site incinerator, the systems
not covering their short term costs are burning waste quantities significantly below the median tons
burned in that sector. This result is due to the fact that the quantity of wastes burned at a facility is
the most important determinant of whether a combustion system is profitable.
In the long term, over the capital replacement cycle, the total number of systems that are not
covering their baseline waste-burning costs increases by a factor of five. We assess baseline
profitability over the longer term by determining whether a combustion system is burning enough
waste to cover the costs of operation and capital replacement and to realize a reasonable return on
capital.16 Exhibit 3-5 summarizes our results. In comparison with the short term results, one
additional commercial incinerator and 40 additional on-site incinerators cannot cover waste-burning
costs over the longer term capital replacement cycle. We expect these facilities will exit the
combustion market over the longer term because there is no incentive for these facilities to invest
in new equipment if growth for combustion services remains stagnant (i.e., we expect these facilities
will leave the market regardless of the MACT standards).
Based on the profitability analysis, we expect some additional consolidation in the
commercial incinerator sector and no changes in future capacity of the kiln sectors. We expect a
significant number of on-site incinerators will discontinue burning over the capital replacement
cycle, as they find it less expensive to ship wastes off-site to a commercial incinerator or to other
waste management alternatives. Future capacity over the longer term in the on-site sector is expected
to decrease by approximately 35 percent.
The profitability analysis also provides us with insights regarding the economic performance
across combustion sectors. In general, kilns have lower operating profits per ton on an absolute
dollar basis than commercial incinerators, reflecting the fact that they burn lower-priced liquid
wastes. However, the kilns' lower baseline costs of waste burning keep all kilns operating within
healthy profit margins. As noted earlier, on-site incinerators appear to be the worst performers and
have many unprofitable systems.
16 Because baseline costs of burning also include a capital recovery factor, at breakeven,
facilities also realize a reasonable return on capital.
3-12
-------
FINAL DRAFT: July 1999
Exhibit 3-4
SYSTEMS THAT APPEAR NON-VIABLE IN THE SHORT TERM BASELINE
Site ID
Hazardous Waste Quantity Burned
(Tons)
Breakeven Quantity
(Tons)
Commercial Incinerators
324
359
206
2,234
4,601
5,017
Total Number of Non- Viable Commercial Incinerator Systems: 2 systems ( 10%)
Private On-Site Incinerators
708
711
504
904
340
342
229
725
6,492
205
0
0
44
211
860
269
13,886
3,189
1,943
436
526
629
1,748
-
Total Number of Non-Viable Private On-Site Incinerator Systems: 8 systems ( 15%)
Notes:
1.
2.
3.
4.
5.
6.
All cement kilns and LWAKs in the model appear viable in the short run baseline.
The source of the hazardous waste quantities data is the 1995 BRS.
We do not include government incinerators in this analysis because we assume that they will continue
burning wastes post-MACT and will not affect future capacity projections.
The average and median tons per system for commercial incinerators are 25,034 and 17,092 tons,
respectively. The average and median tons per system are 16,703 and 5,746 tons, respectively, for on-site
incinerators.
Number in parenthesis represents the percent of systems non-viable in the short term baseline.
Where there is no breakeven quantity reported, the variable costs are significant enough to prevent the
facility from being profitable.
3-13
-------
FINAL DRAFT: July 1999
Exhibit 3-5
LONG TERM BASELINE OPERATING PROFITS PER TON OF HAZARDOUS WASTE BURNED
(Number of Systems Falling in Profit Range)
Cement Kilns
LWAKs
Commercial
Incinerators
On-Site
Incinerators
<$0
0
0
o
J
48
$0-$50
0
0
1
13
$51-$100
8
8
1
11
$101-$150
15
o
J
1
11
>$150
10
0
20
56
Notes:
1 . Estimates taken from model exhibit "Baseline Operating Profits Per Ton of Hazardous Waste Burned."
2. Baseline operating profits = weighted average price per ton + weighted average energy savings per ton -
total annual baseline costs per ton. Total annual baseline costs include fixed annual capital costs, fixed
annual operating and maintenance costs, and annual variable costs.
This analysis is subject to numerous uncertainties. In particular, profitability calculations are
sensitive to waste quantity data, which are not fully up-to-date and vary from year to year. The
calculations are also sensitive to combustion prices. We rely on national average prices, and
therefore may understate or overstate waste burning revenues. In addition, declining combustion
profits over the past several years may reduce the ability of some kilns to cross subsidize marginal
cement operations with hazardous waste revenues. EPA does not expect this to be a major issue
because cement markets are extremely healthy now and because most kilns do not subsidize cement
production with waste-burning profits.17
In the on-site incinerator sector, uncertainties may lead us to understate future capacity and
overstate consolidation in the baseline. Four key factors may lead to overestimates of the number
of incinerators likely to stop burning hazardous wastes in the baseline:
• Waste quantity burned data for on-site incinerators are three years old and are
self-reported by combustion facilities. Inaccuracies could be substantial.
• Operators of some on-site incinerators may continue to operate units at a loss
to avoid liabilities associated with off-site shipments.
17 For a more detailed discussion on this issue, see the "Joint Impacts Analysis" for cement
kilns in Chapter 5.
3-14
-------
FINAL DRAFT: July 1999
Some on-site incinerators may spread the fixed costs of combustion over both
hazardous and non-hazardous wastes burned at the incinerators, reducing the
total costs of hazardous waste combustion.
Finally, avoided costs of off-site treatment for on-site incinerators that burn
specialized wastes are higher than our average commercial prices suggest.
While we adjust avoided costs for two on-site incinerators that burn
specialized waste streams, we may not account for all such on-site
• • IS
incinerators.
To further evaluate the economics of waste burning at on-site combustion systems, we
conducted interviews with plant managers and other staff at eight facilities with on-site
incinerators.19 In this research, we found that several factors contribute to firms' decisions to
incinerate waste on-site, including economic issues, self-sufficiency goals, liability issues,
specialized waste treatment, and non-hazardous waste combustion. Energy recovery, which we
thought might be an important consideration for firms with on-site incinerators, does not appear to
affect decisions regarding the continued operation of the incinerators in any significant manner. In
addition, we found that technical and other physical limitations constrain waste consolidation at on-
site facilities.
As shown in Exhibit 3-6, industry staff reported economic and liability issues as the main
factors for burning waste on-site, rather than sending it to an off-site combustion facility such as a
commercial incinerator or waste-burning kiln. With the exception of one on-site facility, all the
facilities noted that the current costs of burning their hazardous wastes off-site exceed the costs of
burning their wastes on-site. These economic issues should be adequately captured in the economic
impacts model. Unlike economic concerns, we were not able to quantify liability issues for
incorporation into the economic impact model. Avoiding liability risks associated with off-site
disposal liability is often driven by corporate policy, regardless of costs. By managing wastes on-
site, the facilities limit the risks posed by the transportation of dangerous materials and by the
handling of these materials in commercial facilities that are not as familiar with the wastes.
18 We might not have identified all such facilities in the model and/or the facilities included
in the model may not be representative of all on-site facilities in the universe.
19 A summary of our findings can be found in "Summary of On-Site Incinerator Analysis,"
Memorandum Prepared for Lyn Luben, U.S. EPA, Prepared by Lauren Fusfeld and Alice Yates,
Industrial Economics, Incorporated, 20 February 1998.
3-15
-------
FINAL DRAFT: July 1999
Exhibit 3-6
FACTORS INFLUENCING VIABILITY OF COMBUSTION
Company
American Cyanamid
Ashland Chemical
Bayer
Dupont
Eastman Kodak
Novartis
Pharmaceuticals
Olin Chemicals
Vulcan
Economic
Issues
*
*
*
*
*
O
•
*
Liability
*
•
•
*
•
*
O
Specialized
Wastes
*
*
*
Energy
Recovery
•
•
0
O
•
•
Self-
Sufficiency
*
•
*
Combustion
of Non-
Hazardous
Wastes
•
*
•
•
•
Note: * Factor is very important to facility.
• Factor is somewhat important to facility.
O Factor is not important to facility.
A blank cell indicates that the facility did not mention the factor.
EMISSIONS AND POLLUTION CONTROL PRACTICES
This section establishes baseline emission profiles and current pollution control practices
in the industry. We characterize baseline emissions so that emission reduction projections and
subsequent human health and ecological benefit estimates are incremental to the baseline. We define
baseline pollution control practices to assess the type of engineering retrofits and other pollution
control measures needed at specific combustion facilities. Characterizing this baseline element
ensures that compliance cost estimates are incremental to the baseline (i.e., we do not assign
pollution control costs if a facility currently employs this particular control).
Emissions
The risk assessment for the hazardous waste combustion MACT rule uses baseline emissions
as the starting point for estimating the health and ecological benefits of the rule (see Exhibit 3-6 and
Exhibit 3-7). These emissions are based on trial burn test and certification of compliance testing
3-16
-------
FINAL DRAFT: July 1999
data, and are a product of the type of waste fed, pollution controls in place, and other operational
conditions during the tests.20 (See Chapter 1 for a graphical depiction of the emissions profiles across
combustion sectors and pollutants.) The characteristics of waste fed during normal operations may
differ significantly from that fed during trial burns. In particular, facilities often "spike" the waste
feed at the trial burns with high levels of metals, chlorine, and mercury. During testing, facilities
operate under worst-case conditions to give operators a wide allowable envelope of operating limits
needed to burn a wide array of wastes.
This situation results in emission estimates that likely exceed "typical" emissions. Therefore,
the risk reductions and benefit estimates in Chapter 6 are likely overestimates. We do not expect that
cost estimates will be biased in the same way, however, because EPA expects that sources will likely
operate under the same worst-case conditions for the HWC MACT performance tests as they did
during trial burns (for incinerators) and certification of compliance testing (for kilns). Thus, if
sources want to maintain operational flexibility, they will still need to implement additional pollution
control measures, even if under typical operating conditions, they meet the MACT standards.
Exhibit 3-7
BASELINE NATIONAL EMISSIONS FROM COMBUSTION SYSTEMS (AGGREGATE)
CO
TCI
THC
PM
SVM
Hg
LVM
Dioxins/ Furans
Cement Kilns
(pounds per year)
41,866,939
7,211,308
5,543,943
5,235,808
65,497
3,324
1,810
0.029
LWAKs
(pounds per year)
290,469
4,051,105
32,882
82,637
636
118
223
0.005
Incinerators
(pounds per year)
20,222,247
7,513,779
643,141
4,008,097
128,963
9,708
17,548
0.055
Note: Incinerators include commercial facilities and facilities with on-site systems.
Source: Energy and Environmental Research Corporation, May 5, 1998.
20 These emissions data are based on an updated and significantly expanded database of
emissions and ancillary information. A detailed description of this update can be found in the
January 7, 1997 Federal Register (62 FR 960).
3-17
-------
FINAL DRAFT: July 1999
Exhibit 3-8
AVERAGE BASELINE NATIONAL EMISSIONS PER SYSTEM
CO
TCI
THC
PM
SVM
Hg
LVM
Dioxins/ Furans
Cement Kilns
(pounds per year)
1,268,695
218,524
167,998
158,661
1,985
101
55
0.0009
LWAKs
(pounds per year)
29,047
405,110
3,288
8,264
64
12
22
0.0005
Incinerators
(pounds per year)
108,722
40,397
3,458
21,549
693
52
94
0.0003
Note: Incinerators include commercial facilities and facilities with on-site systems.
Source: Energy and Environmental Research Corporation, May 5, 1998.
Air Pollution Control Practices
The baseline assumes the same pollution controls and operational conditions as during the
trial burn or certification of compliance testing. Combustion facilities already control at least some
of the emissions targeted by the MACT standards.21 This baseline pollution control information is
used in the compliance costing analysis of Chapter 3. We require information on baseline pollution
controls so that we do not assign pollution control measures to facilities that already have this
equipment installed. At the same time, baseline pollution control information is important because
a facility may be able to implement a design or operational change to an existing control to meet the
MACT standard at lower cost than installing a completely new air pollution control device.
Although nearly all facilities have installed some air pollution control devices, there are
distinct differences in the types of controls installed by various types of combustion facilities.
Exhibit 3-8 lists the APCDs that control pollutants, as well as the prevalence of those APCDs by
facility type. The majority of cement kilns (79 percent) already have dry electrostatic precipitators,
which control particulate matter. A significant number of commercial incinerators have quenches,
which control flue gas temperature to reduce formation and emissions of dioxins and furans; low
energy wet scrubbers, which control acid gas and chlorine; and fabric filters, which control
particulate matter and metals. A significant number of private on-site incinerators also have
quenches (76 percent) and low energy wet scrubbers (57 percent). For government incinerators, 88
21 Mobile incinerators, which we exclude from the general baseline pollution control analysis,
often use comprehensive APCD systems, including fabric filters and wet scrubbers (Bruce
Springsteen, EER, personal communication, May 15, 1998).
3-18
-------
FINAL DRAFT: July 1999
Exhibit 3-9
BASELINE APCDS BY COMBUSTION SECTOR
Control Device
Fabric Filter
Dry Electrostatic
Precipitators (ESPs)
Wet Electrostatic
Precipitators (ESPs)
Ionizing Wet
Scrubber
High Energy Wet
Scrubber
Low Energy Wet
Scrubber
Carbon Injection
Quench
Dry Scrubber
Carbon Absorber
Afterburner
High Efficiency
Particulate Air Filter
No Control Devices
Number of Systems in
Sample
Emissions
Controlled
Particulate
matter, metals
Particulate matter
Particulate matter
Acid gas and
particulate matter
Particulate
matter, acid gas,
and chlorine
Acid gas and
chlorine
Mercury and
dioxin/furan
Flue gas
temperature
control
Acid gas and
chlorine
Mercury and
dioxin/furan
Carbon monoxide
and hydrocarbons
Particulate matter
N/A
N/A
Number (Percentage) of Sample Systems Currently Using Device
Cement
Kilns
21%
79%
0%
0%
0%
0%
0%
3%
0%
0%
0%
0%
0%
33
Commercial
Incinerators
54%
4%
12%
15%
23%
73%
4%
77%
46%
0%
0%
0%
0%
26
Private
On-Site
Incinerators
12%
1%
7%
3%
43%
57%
0%
76%
5%
2%
0%
3%
13%
136
Lightweight
Aggregate
Kilns
100%
0%
0%
0%
20%
0%
0%
20%
0%
0%
0%
0%
0%
10
Government
Incinerators
42%
0%
0%
4%
46%
63%
0%
88%
8%
8%
0%
8%
4%
24
Notes:
1 . This analysis excludes one government facility for which no data were available.
2. This exhibit includes imputed data.
3. Sum of percentages will not be 100 percent because a single system may use more than one APCD.
Source: OSW Hazardous Waste Combustion Database prepared by EER, April 23, 1 998. This database includes both actual and
imputed system information.
3-19
-------
FINAL DRAFT: July 1999
percent have quenches and 63 percent have low energy wet scrubbers. In addition, all the
lightweight aggregate kilns have fabric filters. Other interesting issues regarding APCDs include
the following:
• Only one facility currently uses carbon injection, a control technology which
under the BTF-ACI MACT option will frequently be necessary for
dioxin/mercury control.
• Lightweight aggregate kilns rely almost entirely on fabric filters for emission
control.
SUMMARY
Establishing the baseline scenario provides the necessary foundation for the assessment of
combustion facilities' responses to the Hazardous Waste Combustion MACT Standards. The
subsequent chapters rely on the following baseline components:
• Chapter 4 (Compliance Cost Analysis) requires baseline pollution control
equipment data and emission profiles to project engineering system costs of the
MACT standards.
• Chapter 5 (Social Cost and Economic Impact Analysis) requires information
on baseline revenues, costs, and future capacity.
• Chapter 6 (Benefits Assessment) requires baseline emission profiles to
determine risk reductions and corresponding benefits.
The key issue addressed in this chapter is future combustion capacity. For on-site incinerators,
future capacity could decrease by almost 35 percent over the longer term as on-site incinerators
discontinue burning. We expect these economically marginal incinerators will find it less expensive
to manage wastes off-site. In the baseline, commercial incinerator capacity is also expected to decrease,
by approximately 10 percent. Projecting future capacity allows us to adjust post-MACT costs and
economic impacts, such as market exits, so that results are incremental to the baseline. If baseline
future capacity estimates are understated, then incremental costs and economic impacts will be
overstated. Likewise, if future capacity estimates are overstated, then incremental rule impacts will be
understated. To address this uncertainty, we also provide cost and economic impact estimates that do
not account for baseline market adjustments.
3-20
-------
FINAL DRAFT: July 1999
COMPLIANCE COST ANALYSIS CHAPTER 4
INTRODUCTION
Hazardous waste combustion facilities complying with the maximum achievable control
technology (MACT) standards will likely achieve the required emission reductions by installing
pollution control devices, limiting toxics in the waste feed, or through some combination of the two.
In addition, facilities will need to comply with monitoring, reporting, and record keeping
requirements that are part of the standards. This chapter of the Assessment focuses on the costs
associated with all compliance activities for both existing combustion facilities as well as for
potential new sources. We analyze costs incurred by combustion facilities, as well as costs incurred
by various government entities as they administer compliance activities. The chapter is organized
into six sections:
• Costing Methodology for Existing Combustion Systems. In the first
section, we discuss the methodology used to estimate compliance costs borne
by combustion facilities, which involves assigning pollution control measures
to individual combustion systems and estimating costs for these control
measures. This section also describes other compliance cost components
such as continuous emission monitors, permit modifications, testing and
analysis, and other reporting and record keeping requirements.
• Results of Compliance Cost Analysis for Existing Sources. The results
section provides compliance cost estimates for combustion systems and
shows how these costs vary across combustion sectors, assuming all sources
choose to come into compliance with the rule.
4-1
-------
FINAL DRAFT: July 1999
• Compliance Costs for New Combustion Sources. This section describes
the compliance cost methodology and results for new combustion sources.
While market performance suggests that additional market entry is unlikely
in the near-term, we include this section to illustrate the additional costs
potential entrants to the market would need to consider.
• Caveats and Limitations of Compliance Cost Analysis. This section
describes data limitations and uncertainties that are important to highlight as
caveats to the compliance cost analysis.
• Government Costs. This section reviews the incremental costs for
government entities as they administer and enforce the new emission
standards and related MACT requirements.
• Summary. We conclude the chapter with a brief review of key findings from
the cost analysis.
This chapter is designed to provide a summary of the costs that would be faced by combustion
facilities. Based on these costs, combustion facilities must decide whether or not to continue burning
waste. We discuss the market response of combustion facilities to the rule in Chapter 5.
COSTING METHODOLOGY FOR EXISTING COMBUSTION SYSTEMS
Total compliance costs for existing hazardous waste combustion facilities are developed
using engineering models that assign pollution control measures and their costs to each modeled
combustion system.1 Included along with these pollution control costs are other compliance costs
associated with monitoring requirements, sampling and analysis, permit modifications, and other
record keeping and reporting requirements. Exhibit 4-1 provides an overview of the procedure used
in this system-specific compliance cost analysis.
1 These engineering models are different from the models plants approach used to estimate
costs for the originally proposed MACT rule. For this final rulemaking, the engineering models
account for system-specific parameters and thus the engineering costs should better reflect actual
costs the industry will incur. That is, we estimate costs for actual affected sources included in the
economic impact model.
4-2
-------
FINAL DRAFT: July 1999
Exhibit 4-1
OVERVIEW OF SYSTEM-SPECIFIC COMPLIANCE COST ANALYSIS
Baseline emissions
for actual combustion
systems included in
the model
Set design level for
costing purposes
(50%, 70%)
Evaluate what new APCDs or DOMs would be
required to achieve the emissions reduction
(accounts for joint control of multiple HAPs)
Estimate HW feed control
costs and/or retrofit costs
Add additional compliance
costs (e.g., CEMs, permitting)
Total new \
compliance costs
per system f
KEY
Input
Process/
Calculation
( ) Output/Result
NOTES
1. Setting of allowable emissions for hazardous air pollutants (HAPs) based on MACT analysis using Trial Burn Reports. Baseline emissions also determined
using Trial Burn Reports (measured at the stack) and imputation. See U.S. 'EPA., Draft Technical Support Document for HWC MACT Standards, Volume I:
HWC Emissions Database, March 1998.
2. All other data inputs from U.S. EPA, Draft Technical Support Document for HWC MACT Standards, Volume I: HWC Emissions Database, March 1998.
3. Compliance costs are estimated for design levels at 50 percent and 70 percent of a standard. The 50 percent level is more conservative because it incorporates
more stringent design safety factors.
4. A DOM is a design, operation, or maintenance change to an existing Air Pollution Control Device (APCD). CEMs are continuous emission monitoring systems.
4-3
-------
FINAL DRAFT: July 1999
Compliance cost components include those that are estimated using combustion system-
specific parameters and those that are consistent across a particular combustion sector (e.g., cement
kilns) or across the entire regulated universe of hazardous waste combustion facilities. As we
discuss below, cost estimates include the following components:
Pollution control measures;
Continuous emissions monitors2 (CEMs); and
Other compliance costs:
Permitting and other record keeping and reporting requirements,
Testing requirements, and
Shutdown costs.
Air Pollution Control Measures
We developed pollution control costs using engineering models that assign controls and
associated costs to individual combustion systems based on a variety of system-specific parameters,
including system type (e.g., liquid injection, rotary kiln, wet/dry system), gas flow rate, and kiln
temperature. Pollution control systems may include both end-of-pipe controls, which are listed in
Exhibit 4-2, as well as controlling the waste feed, both with regard to total volume fed as well as
limiting toxics in the waste feed.3
As shown in Exhibit 4-1, the engineering cost model uses baseline emission estimates for
each system, and compares these with the design-adjusted emission requirements. The design-
adjusted MACT emission requirement differs from the MACT emission standard by a factor that
2 The cost and economic impact analyses were conducted both with and without PM CEMs.
However, because PM CEMs are not required in the final rule, we focus on results without PM CEM
costs.
3 Feed control costs are upper bound costs based on the cost of technology retrofit that would
potentially be required to control the pollutant. We also considered estimating feed control costs
based on lost revenues (which are a function of both waste quantities and waste type); however,
because detailed waste specifications are not available for each combustion facility, EPA developed
conservative cost estimates for feed control using retrofit costs. A more detailed discussion of the
feed control cost analysis is found in U.S. EPA, Draft Technical Support Document for HWCMACT
Standards, Volume V: Emission Estimates and Engineering Costs, July 1998.
4-4
-------
FINAL DRAFT: July 1999
incorporates a design safety factor. For example, a MACT standard for mercury of 120|ig/dscm
corresponds to an emission requirement of 84|ig/dscm at the 70 percent design level (0.7 x 120 =
84) and an emissions requirement of 60|ig/dscm at the 50 percent design level (0.5 x 120 = 60).
For each combustion system, the system-specific design-adjusted MACT emission
requirement is subtracted from the system-specific baseline emission level to determine the
percentage reduction required for each pollutant. For example, a cement kiln with a baseline
mercury emission level of 210|ig/dscm would need a 60 percent mercury emission reduction to meet
the MACT floor standard of 120|ig/dscm, at the 70 percent design level.
Emissions Reduction = Baseline Emission Level - (MACT Standard x Design Level)
Baseline Emission Level
= [210 - (120 x 0.7)] / 210
= 0.6 = 60%.
The engineering cost model then compares the percentage emission reduction with a variety
of controls that achieve certain emission reductions, assigns the least-cost control that can attain the
necessary level of control, and then assigns retrofit costs associated with the selected control
measure. This procedure is done for all MACT options and pollutants.
Exhibit 4-2
AIR POLLUTION CONTROL MEASURES ASSIGNED
IN COMPLIANCE COST ANALYSIS
Pollutant
PM, Low-Volatile Metals,
Semi- Volatile Metals
HC1 and Chlorine
Mercury
Pollution Control Measures
— Fabric Filter
— Feed Control
— Packed Tower Scrubber
— Spray Tower Scrubber
— Feed Control
— Carbon Injection/Carbon Bed
— Feed Control
Comments
Depending on flue gas temperature and other
site-specific factors, additional flue gas cooling
equipment (e.g., water quench) may be
required to integrate the fabric filter into any
existing wet scrubbing systems.
Carbon injection must be accompanied by a
dry paniculate matter (PM) control device;
Carbon injection and carbon bed is assigned
only under the BTF-ACI MACT option.
4-5
-------
FINAL DRAFT: July 1999
Exhibit 4-2 (continued)
AIR POLLUTION CONTROL MEASURES ASSIGNED
IN COMPLIANCE COST ANALYSIS
Pollutant
Dioxin/Furan
Hydrocarbons and CO
Pollution Control Measures
— Temperature Control
— Carbon Injection/Carbon Bed
— Afterburner
— Design, Operation,
Maintenance (DOM)
Comments
Temperature control applicable only at
operating at higher temperatures.
systems
Notes:
1. U.S. EPA, Draft Technical Support Document for HWC MACT Standards, Volume V: Emission
Estimates and Engineering Costs, July 1998.
2. Control measures assigned in compliance cost analysis include installation of new devices, changes in
design, operation, and maintenance (DOM) to existing devices, or adoption of waste feed control for
particular constituents.
If the emissions reduction required for a particular air pollutant is modest and can be achieved
with devices already existing at the facility, the assigned control measure will involve changing the
design, operation, and maintenance (DOM) of the existing equipment. For example, a modest
particulate matter (PM) reduction may be achievable by optimizing the cleaning cycles and test
procedures on an existing fabric filter system.
Continuous Emissions Monitoring Costs
The MACT rulemaking effort has also considered requiring hazardous waste combustion
facilities to install continuous emissions monitoring (CEM) systems for some hazardous air
pollutants (HAPs). As the name implies, CEMs allow regulators to track emissions from
combustion facilities on a continuous real-time basis. Emissions data can either be transmitted from
the facility to data-receiving points at EPA and state agencies, or it can be stored on-site for review
during inspection.
This technology represents an alternative to the current system whereby most types of
emissions are regulated on the basis of trial burn data gathered for permit applications and renewals
and routine measurement of indicator operating parameters. CEMs would allow EPA to enforce the
MACT standards more closely and help ensure that violations do not occur between periodic
emissions testing.
4-6
-------
FINAL DRAFT: July 1999
EPA has estimated the cost of implementing CEM requirements for individual combustion
systems. The costs depend directly on the set of air pollutants to be monitored by CEMs as well as
the types of combustion facilities required to install the systems. For the final MACT standards,
EPA considered CEM requirements addressing two different groups of pollutants: CO/HC and
particulate matter (PM).4 With regard to the first group of pollutants, all regulated combustion
facilities will be required to install either CO or HC CEMs. However, because it is likely that all
existing waste combustion facilities already have either a CO or HC CEM in place, no incremental
cost will be associated with the CO/HC requirements of the final MACT standards.5 In addition,
regulated combustion facilities that have either CO or HC CEMs in place also generally have oxygen
monitors installed to comply with current RCRA requirements. Therefore, no incremental costs are
associated with oxygen monitors.
For particulate matter CEMs, the EPA considered two different options. Under one option,
PM monitors would be required for all regulated combustion facilities. As shown in Exhibit 4-3,
the total annualized cost of this monitoring is approximately $41,000 to $51,000 per combustion
system. Under the other option, PM continuous monitors would not be required for any facility. The
cost associated with this option is zero. Under the Final Standards, EPA will not require PM CEMs.
Thus, we focus on results without PM CEM costs. Cost and economic impact results that include
PM CEMs are included in Appendix C.
Exhibit 4-3
AVERAGE PER-SYSTEM TOTAL ANNUAL COSTS OF
CONTINUOUS EMISSIONS MONITORING FOR PM
($ thousands)
CK
$41
Source:
Note:
LWAK
$43
Commercial
Incinerators
$46
On-Site
Incinerators
$51
U.S. EPA, Draft Technical Support Document for HWCMACT Standards, Volume
V: Emission Estimates and Engineering Costs, July 1998.
No incremental costs are associated with the CO/HC CEM requirements of the final
MACT standards.
4 The proposed MACT rule also called for the use of CEMs to monitor mercury. However,
due to various factors including the developmental stage of these particular monitors, mercury CEM
requirements will not be incorporated into the final standards.
5 U.S. EPA. July 1998. Draft Technical Support Document for HWC MACT Standards,
Volume V: Emission Estimates and Engineering Costs.
4-7
-------
FINAL DRAFT: July 1999
Other Compliance Costs
In addition to the CEM and pollution control costs that are detailed above, regulated
hazardous waste combustion facilities also will incur costs associated with other compliance
components of the MACT standards. A brief description of these components follows. We provide
a summary of the costs associated with them in Exhibit 4-4.
• Permitting and Other Reporting and Recordkeeping Requirements: The
HWC MACT standards require a number of facility record keeping and
reporting procedures that are associated with permitting and other compliance
activities. These record keeping and reporting procedures are related to both
new compliance activities as well as to modifications of existing CAA and
RCRA permitting and compliance schemes. New requirements include
preparing a Notice of Intent to Comply (NIC) with the MACT standards and
holding public meetings. The incremental permitting, reporting and record
keeping requirements total approximately $5.7 million annually across all
combustion facilities.6
• Performance Testing Requirements: Incremental compliance testing
requirements associated with the MACT standards would cost the existing
172 combustion facilities approximately $441,000 per year in total.7 The
incremental costs are associated with two levels of performance testing of the
pollution control equipment used to comply with the MACT standards: the
Comprehensive Performance Test and the Confirmatory Performance
Assessment. The Comprehensive Performance Test includes stack sampling
for metals, PM, dioxins/furans, total chlorine and organics at two worst-case
operating conditions and is to be performed once every five years for all types
of combustion systems.8 The Confirmatory Performance Assessment
includes sampling for dioxins/furans at normal operating conditions and is to
be performed once every five years for all combustion systems, halfway
between Comprehensive Performance Tests.
6 As part of the "fast track" component of this rule, EPA promulgated a streamlined process
for modifying the RCRA permit, so that affected sources can make necessary changes to their RCRA
permits that may be required during the three year compliance period as sources transition to MACT
compliance and CAA Title V permitting. However, we do not include the cost savings from this
permit streamlining because these impacts are accounted for in an earlier analysis (see U.S.
Environmental Protection Agency, Economic Analysis Report for the Combustion MACT Fast-Track
Rulemaking, March 1998).
7 U.S. EPA. July 1998. Draft Technical Support Document for HWC MACT Standards,
Volume V: Emission Estimates and Engineering Costs.
8 There will be an additional costs for "problematic" sources, those facilities currently not
demonstrating compliance with RCRA destruction and reduction efficiency (DRE) standards. These
additional costs are not included in our estimates.
4-8
-------
FINAL DRAFT: July 1999
Exhibit 4-4
SUMMARY OF OTHER COMPLIANCE COST COMPONENTS
Compliance Component
Annual Cost per
Respondent/Activity
Annual Estimated Number
of Respondents/Activities
Estimated Total
Annual Costs
Requirements Related to CAA Provisions:
Reading of the Regulations (See Note 5)
Construction/Reconstruction Application Requirements
Compliance with Standards and General Requirements (e.g., weekly testing of the
automatic waste feed cutoff (AWFCO) system)
Performance Testing Requirements
Monitoring Requirements (e.g., development of feedstream analysis plan)
Notification and General Reporting and Record Keeping Requirements (e.g., Notice of
Intent to Comply (NIC) with standards)
Application for Extension for Pollution Prevention or Waste Minimization Measures
$600
$7,000
$61,000
$4,800
$8,000
$40,000
$3,000
57
2-3
0-128
0-172
0-6
0-57
23
$34,000
$15,000
$1,958,000
$1,113,600
$47,000
$2,219,000
$75,000
Requirements Related to RCRA Provisions:
Reading of the Regulations
Regulation of Residues (i.e., for chlorinated dioxins and furans)
$200
$200
84
1,488
$18,000
$223,000
ESTIMATED TOTAL ANNUAL INCREMENTAL IMPACT = $5,700,000
Notes: 1. Sources: U.S. EPA, Supporting Statement for EPA ICR #1773.02 "New and Amended Reporting and Recordkeeping Requirements for National Emissions Standards
for Hazardous Air Pollutants from Hazardous Waste Combustors," September 1998; U.S. EPA, Supporting Statement for EPA ICR #1361.08 "New and Amended RCRA
Reporting and Recordkeeping Requirements for Boilers and, Industrial Furnaces Burning Hazardous Waste," September 1998; U.S. EPA, Draft Technical Support
Document for HWC MACT Standards, Volume V: Emission Estimates and Engineering Costs, July 1998.
2. Estimated total annual costs are calculated based on the cost per respondent or activity multiplied by the estimated number of respondents or activities per year. Each
type of component has a number of sub-components (not listed) associated with it, all varying in the number of estimated respondents or activities per year. Depending
on the sub-component, no facilities may comply in a given year, or the same facility might respond multiple times per year (e.g., testing of AWFCO system of multiple
combustion systems each week). Therefore, the total annual costs per component reflect variability in the number of respondents or activities for each sub-component.
3 . With the exception of those for performance testing, estimates reflect only the first three years following the promulgation of the rule, the time period covered by the
Information Collection Requests (ICRs). The total costs of performance testing, a component that will probably not occur until the fourth year of the rule, are calculated
based on the number of estimated systems in the universe multiplied by the median annual costs for the testing procedures at the system level.
4. Estimates reflect a universe of approximately 172 HWC facilities. Totals may not add due to rounding.
5. Hour and cost estimates for reading the regulations are optimistic (i.e., they may be underestimates of the true costs). Because these costs ($34,000 annually) are small
relative to the total costs of the rule (between $65 and $73 million), even if these costs are significantly underestimated, this should not affect our estimates of the overall
cost and economic impacts of the rule.
4-9
-------
FINAL DRAFT: July 1999
Shutdown Costs: We also investigated the significance of shutdown costs
to facilities associated with the installation of equipment or implementation
of other pollution control measures assigned in the compliance cost analysis.
Examination of shutdown periods suggests that virtually all of the
installations could be coordinated along with routine maintenance shutdowns
(which we assume require at least three weeks per year). Because virtually
all technologies have installation times of three weeks or less, we assume that
all retrofits could be made simultaneously during a single facility shutdown,
suggesting that no significant incremental shutdown time is necessary.
RESULTS OF COMPLIANCE COST ANALYSIS FOR EXISTING SOURCES
On average, we expect that each combustion system will spend between approximately
$244,000 and $1,500,000 annually to comply with the MACT requirements, as shown in Exhibit 4-5.
The wide range across these average cost estimates is largely a result of the significant cost variations
of different control measures for different systems. For example, design, operation and maintenance
modifications of existing equipment have annual costs of around $20,000, whereas the annualized
costs of a new quench is about $270,000, and annualized costs for new carbon injection units can
be as high as $1.7 million for larger combustion systems.9 From the MACT Floor to the BTF-ACI
option, average system costs increase by over $200,000 for privately-owned systems and by almost
$1 million for government systems. This cost increase is due to the greater number of systems
assigned costly carbon inj ection equipment for control of mercury under the BTF-ACI option. These
results are supported by Exhibit 4-6, which shows the percentage of combustion systems requiring
particular control measures under each MACT option. Under the Floor (50 and 70 percent) options,
no combustion systems are assigned carbon injection, but this figure jumps to approximately 50
percent across all sectors under the BTF-ACI (50 and 70 percent) options. In Exhibit 4-7, we
provide a comparable set of results by showing the percentage of total compliance costs accounted
for by each of the control measures under different MACT options and within each combustion
sector.
9 Average annualized costs for carbon injection units, however, are around $200,000 per
combustion system.
4-10
-------
FINAL DRAFT: July 1999
Exhibit 4-5
AVERAGE TOTAL COMPLIANCE COSTS PER COMBUSTION SYSTEM10
(Assuming No Market Exit)
MACT Option
Floor (50%)
Floor (70%)
Rec (50%)
Rec (70%)
BTF-ACI (50%)
BTF-ACI (70%)
Cement Kilns
$944,126
$670,373
$1,004,297
$795,888
$1,453,081
$1,157,206
LWAKs
$572,964
$456,109
$651,900
$637,584
$787,451
$788,205
Commercial
Incinerators
$346,569
$300,518
$341,734
$288,152
$515,027
$462,965
On-site
Incinerators
$279,131
$240,717
$302,125
$267,289
$506,121
$482,848
Government
On-sites
$210,317
$187,072
$210,317
$187,072
$1,064,641
$1,024,053
Notes:
1 . No PM CEM costs included.
2. 75% price pass-through scenario assumed.
3. Estimates calculated assuming all facilities comply. Facilities non-viable in the baseline are reflected in
the average total annual compliance costs.
10 The engineering costs are currently being refined and will provide better cost estimates for
feed control; the refined cost estimates will be slightly less than those presented in the exhibit.
4-11
-------
FINAL DRAFT: July 1999
Exhibit 4-6
PERCENTAGE OF SYSTEMS REQUIRING CONTROL MEASURES (Before Consolidation)
Control Measure
Cement Kilns
New Fabric Filters
New Carbon Injection
New Quencher
Fabric Filter DOM
DESP DOM
Combination DOM
Feed Control
None
LWAKS
New Fabric Filters
New Carbon Injection
New Quencher
Fabric Filter DOM
Feed Control
None
Commercial Incinerators
New Fabric Filters
New Carbon Injection
New Quencher
New Reheater
Fabric Filter DOM
IWSDOM
HEWS DOM
Combination DOM
Feed Control
None
Private On-Site Incinerators
New Fabric Filters
New Carbon Injection
New Carbon Bed
New Quencher
New Afterburner
New Reheater
Fabric Filter DOM
WESP DOM
IWSDOM
HEWS DOM
Combination DOM
Feed Control
None
Floor (50%)
33%
0%
45%
12%
6%
3%
55%
12%
0%
0%
88%
38%
100%
0%
15%
0%
55%
0%
15%
10%
15%
5%
85%
5%
65%
0%
0%
17%
6%
0%
2%
2%
2%
10%
2%
48%
6%
Floor (70%)
27%
0%
33%
9%
0%
3%
42%
27%
0%
0%
88%
13%
75%
13%
10%
0%
50%
0%
10%
5%
15%
0%
80%
5%
63%
0%
0%
17%
2%
0%
2%
2%
2%
12%
4%
42%
8%
Rec (50%)
33%
0%
45%
12%
6%
3%
64%
3%
0%
0%
88%
38%
100%
0%
15%
20%
45%
5%
15%
10%
15%
5%
80%
5%
69%
15%
2%
12%
6%
8%
2%
2%
2%
8%
2%
44%
4%
Rec (70%)
27%
0%
33%
9%
0%
3%
52%
21%
0%
0%
88%
13%
100%
0%
15%
20%
40%
5%
10%
5%
15%
0%
75%
5%
67%
15%
2%
12%
2%
8%
2%
2%
2%
10%
4%
38%
6%
BTF-ACI (50%)
61%
45%
39%
6%
3%
3%
73%
3%
63%
63%
50%
13%
100%
0%
40%
85%
20%
35%
15%
0%
5%
5%
70%
5%
85%
71%
6%
10%
6%
60%
2%
0%
0%
2%
2%
52%
2%
BTF-ACI (70%)
52%
36%
30%
6%
0%
3%
55%
18%
50%
50%
50%
0%
100%
0%
40%
85%
15%
35%
10%
0%
5%
0%
65%
5%
83%
71%
6%
10%
2%
60%
2%
0%
0%
4%
4%
50%
2%
4-12
-------
FINAL DRAFT: July 1999
Exhibit 4-6 (continued)
PERCENTAGE OF SYSTEMS REQUIRING CONTROL MEASURES (Before Consolidation)
Control Measure
Govt. On-Site Incinerators
New Fabric Filters
New Carbon Injection
New Quencher
New Afterburner
New Reheater
Fabric Filter DOM
IWSDOM
Combination DOM
Feed Control
None
Floor (50%)
29%
0%
0%
5%
0%
14%
5%
14%
57%
19%
Floor (70%)
24%
0%
0%
5%
0%
15%
5%
14%
52%
19%
Rec (50%)
29%
0%
0%
5%
0%
14%
5%
14%
57%
19%
Rec (70%)
24%
0%
0%
5%
0%
15%
5%
14%
52%
19%
BTF-ACI (50%)
38%
48%
0%
5%
19%
14%
5%
14%
67%
5%
BTF-ACI (70%)
33%
43%
5%
5%
19%
15%
5%
14%
62%
10%
4-13
-------
FINAL DRAFT: July 1999
Exhibit 4-7
PERCENTAGE OF TOTAL NEW COMPLIANCE COSTS BY CONTROL MEASURE (Before Consolidation)
Control Measure
Cement Kilns
New Fabric Filters
New Carbon Injection
New Quencher
Fabric Filter DOM
DESP DOM
Feed Control
Total
LWAKS
New Fabric Filters
New Carbon Injection
New Quencher
Fabric Filter DOM
Feed Control
Total
Commercial Incinerators
New Fabric Filters
New Carbon Injection
New Quencher
New Reheater
Fabric Filter DOM
IWSDOM
HEWS DOM
Feed Control
Total
Private On-Site Incinerators
New Fabric Filters
New Carbon Injection
New Carbon Bed
New Quencher
New Afterburner
New Reheater
HEWS DOM
Feed Control
Total
Floor (50%)
26%
0%
18%
2%
3%
51%
100%
0%
0%
17%
2%
81%
100%
8%
0%
17%
0%
2%
2%
5%
66%
100%
33%
0%
0%
5%
27%
0%
2%
32%
100%
Floor (70%)
23%
0%
21%
2%
0%
53%
100%
0%
0%
21%
0%
78%
100%
7%
0%
18%
0%
1%
1%
6%
68%
100%
45%
0%
0%
6%
6%
0%
4%
38%
100%
Rec (50%)
24%
0%
17%
2%
3%
54%
100%
0%
0%
17%
2%
82%
100%
7%
13%
13%
2%
2%
2%
5%
55%
100%
32%
8%
0%
3%
24%
3%
1%
27%
100%
Rec (70%)
20%
0%
18%
1%
0%
60%
100%
0%
0%
16%
0%
84%
100%
9%
15%
14%
3%
1%
1%
6%
51%
100%
41%
11%
1%
4%
5%
5%
2%
30%
100%
BTF-ACI (50%)
28%
17%
9%
1%
1%
44%
100%
18%
20%
7%
0%
55%
100%
15%
37%
3%
15%
1%
0%
1%
28%
100%
24%
25%
1%
1%
15%
18%
0%
16%
100%
BTF-ACI (70%)
27%
17%
10%
1%
0%
45%
100%
14%
16%
7%
0%
63%
100%
16%
40%
3%
16%
0%
0%
1%
24%
100%
27%
28%
1%
2%
3%
20%
0%
18%
100%
4-14
-------
FINAL DRAFT: July 1999
Exhibit 4-7 (continued)
PERCENT OF TOTAL NEW COMPLIANCE COSTS BY CONTROL MEASURE (Before Consolidation)
Control Measure
Govt. On-Site Incinerators
New Fabric Filters
New Carbon Injection
New Quencher
New Afterburner
New Reheater
IWSDOM
Combination DOM
Feed Control
Total
Floor (50%)
18%
0%
0%
5%
0%
7%
1%
69%
100%
Floor (70%)
17%
0%
0%
6%
0%
8%
1%
68%
100%
Rec (50%)
18%
0%
0%
5%
0%
7%
1%
69%
100%
Rec (70%)
17%
0%
0%
6%
0%
8%
1%
68%
100%
BTF-ACI (50%)
15%
22%
0%
3%
8%
4%
1%
47%
100%
BTF-ACI (70%)
15%
23%
1%
3%
9%
4%
1%
43%
100%
4-15
-------
FINAL DRAFT: July 1999
Compliance costs vary even more markedly when comparing across individual systems
within a given combustion sector. The following compliance cost results for the MACT
Recommended option (at the 70 percent design level) illustrate the wide variability across specific
combustion systems:
• Cement Kilns - Annual per-system compliance costs range from $0 to
$3,579,000, with an average cost of $800,000 per system.11
• Commercial Incinerators — Annual per-system compliance costs range
from $13,823 to $882,842, with an average cost of $290,000 per system.
• LWAKs — Annual per-system compliance costs range from $450,175 to
$846,248, with an average cost of $640,000 per system.
• Private On-Sites - Annual per-system compliance costs range from $7,267
to $871,962, with an average cost of $270,000 per system.
• Government On-Sites - Annual per-system compliance costs range from $0
to $793,466, with an average cost of $190,000 per system.
COMPLIANCE COSTS FOR NEW COMBUSTION SOURCES
While most of this analysis focuses on MACT standards for existing sources, the rule also
finalizes MACT requirements for new facilities entering the hazardous waste combustion market.
The standards would apply to both newly constructed facilities (e.g., a new commercial incinerator)
as well as to cement or lightweight aggregate kilns that choose to begin burning hazardous waste.12
EPA applied the same basic approach in developing compliance costs for new sources as was
used for existing sources. Specifically, EPA determined the set of pollution control measures that
would be needed to meet the MACT standards and then used the cost models discussed above to
estimate engineering costs. These estimates were developed for each category of combustion facility
11 The compliance cost estimates for cement kilns do not take into account the Portland
Cement MACT, which addresses non-hazardous cement kilns. If the Portland Cement MACT is
accounted for in these estimates, the compliance costs for cement kilns under combustion MACT
would likely be lower.
12 Rebuilding a facility can also trigger new MACT standards if the renovation effort requires
over one-half of the capital expenditures associated with constructing an entirely new facility.
4-16
-------
FINAL DRAFT: July 1999
as well as for different size classes. Estimation of the new MACT costs differs from that for existing
sources in that we must first assume a set of baseline pollution controls for each system in order to
meet current regulatory standards (e.g., requirements of the Resource Conservation and Recovery
Act (RCRA) and the Boiler or Industrial Furnace (BIF) rule). For all kilns, the baseline control is
assumed to be a fabric filter system, while the baseline control for incinerators is assumed to include
a water quench cooling tower, a packed tower scrubber, and a venturi scrubber. The net annual costs
of the new MACT standards are then calculated as the incremental pollution control expenditures
beyond these baseline control costs.13 The results of this analysis are provided in Exhibit 4-8.
Exhibit 4-8
TOTAL ANNUALIZED SYSTEM COSTS FOR NEW COMBUSTION SOURCES
Source Category
CK
CK
INC
INC
LWAK
Size
Large
Small
Large
Small
Medium
Baseline
$1,114,316
$489,334
$1,166,935
$454,320
$217,225
Floor
$3,929,891
$1,613,829
$1,834,197
$827,616
$1,259,482
Incremental
$2,815,575
$1,124,495
$667,262
$373,296
$1,042,257
Notes: 1. Estimates from Energy and Environmental Research Corporation, July 1998.
2. Size classification for sources based on waste feed flow rates.
3. Incinerators include private and government on-site incinerators as well as commercial
incinerators.
CAVEATS AND LIMITATIONS OF COMPLIANCE COST ANALYSIS
The analysis of private sector compliance costs for the MACT standards contains a variety
of uncertainties. The most significant include the following:
• Available emissions data are limited for many facilities. Emissions data are
the product of trial burns required for combustion facilities, but information
for some pollutants often is not available. In these cases, the emissions
13 A more detailed explanation of the analysis used to determine costs for new sources can
be found in U.S. EPA, Final Technical Support Document for HWC MACT Standards, Volume V:
Emission Estimates and Engineering Costs.
4-17
-------
FINAL DRAFT: July 1999
reduction requirements are assigned to facilities according to the underlying
statistical distribution for each pollutant (which is based on emissions of the
pollutant at facilities where data are available).14
Information on existing APCDs is not available for a number of systems in
the national universe of combustion facilities. Existing APCD data are
projected for approximately 23 percent of commercial incinerators and
approximately 40 percent of on-site incinerators.15
Due to data limitations with respect to waste feed characteristics, it is difficult
to determine the extent to which feed control may be used as a feasible
alternative method of compliance with the MACT standards.
As a result of these limitations, individual combustion system decision-making may result
in actual compliance behavior different from the pollution control measures assigned using the
engineering cost models. While uncertainty exists, we do not believe that compliance costs are
systematically biased either upward or downward.
GOVERNMENT COSTS
In addition to costs incurred by the private sector, the MACT standards also will affect EPA
and other government entities. The rulemaking will result in incremental costs to government
entities as they administer and enforce the new emissions standards and related MACT requirements.
This section reviews these incremental costs for government entities associated with revised
permitting and reporting requirements.
The incremental HWC MACT government costs are mainly associated with the review of
permits and other combustion facility documents required by provisions of RCRA and the CAA.
Facility documents that require agency review include the following: performance test plans,
emergency safely valve (ESV) and automatic waste feed cutoff (AWFCO) violation reports, and
14 For more information on the approach taken for estimating emissions reduction
requirements, see U.S. EPA, Draft Technical Support Document for HWC MACT Standards, Volume
V: Emissions Estimates and Engineer ing Costs, July 1998.
15 See Energy and Environmental Research Corporation, Revised Estimation of Baseline
Costs for Hazardous Waste Combustors for Final MACT Rule, Prepared for Industrial Economics,
Incorporated and U.S. EPA, August 1998.
4-18
-------
FINAL DRAFT: July 1999
notices of intent to comply (NIC) with the standards. Exhibit 4-9 presents the total annual
government costs for reviewing these documents.16 These figures represent annual costs expended
over the first three years following rule promulgation. Overall, incremental government costs are
projected to be approximately $330,000 per year. Government costs will be assumed by U.S. EPA
Offices as well as by state and local agencies that hold relevant permitting responsibilities. The
distribution of these costs across different government entities depends on which agencies have
responsibility for permitting as well as on the number of combustion facilities in specific permitting
jurisdictions and the current permitting status and other site-specific characteristics of the facilities.
SUMMARY
We use engineering cost models based on system-specific parameters to estimate compliance
costs for the MACT standards for hazardous waste combustion facilities. Under this approach,
individual combustion systems are assigned air pollution control measures and corresponding cost
estimates using engineering parameters, such as gas flow rates, waste feed composition, and
combustion chamber temperature. From this assignment of pollution control measures, we derive
the capital, and fixed and variable operating costs that each combustion system in the economic
analysis would incur in complying with the standards. The estimates of compliance costs also
include the costs associated with permitting, testing, and record keeping and reporting requirements.
Key insights from the compliance cost analysis include the following:
• Average system costs tend to be lower for incinerators than for kilns,
although under the BTF-ACI option, costs escalate significantly for
government incinerators and are comparable to costs for cement kilns.
• Cement kilns consistently have the highest average system compliance costs
across MACT options.
• In general, average system cost estimates under the 50 percent design level
are approximately 10 to 20 percent higher than at the 70 percent design level.
Under the BTF-ACI option, however, costs do not vary as significantly across
design levels. The reason for the smaller cost range is that the
16 Sources: U.S. EPA, Supporting Statement for EPA Information Collection Request
#1773.02 New and Amended Reporting and Recordkeeping Requirements for National Emissions
Standards for Hazardous Air Pollutants from Hazardous Waste Combustors, September 1998; U.S.
EPA, Supporting Statement for EPA Information Collection Request #1361.08 for "New and
Amended RCRA Reporting and Recordkeeping Requirements for Boilers and Industrial Furnaces
Burning Hazardous Waste, " September 1998.
4-19
-------
FINAL DRAFT: July 1999
activated carbon injection system, the major pollution control measure
required under the BTF-ACI option, constitutes a significant portion of the
costs for both of the design levels.
• Government administrative costs, borne primarily by EPA offices and state
environmental agencies, total approximately $330,000 per year.
• Changes in record keeping and reporting activities associated with new
compliance requirements and permit modifications result in total costs of
about $5.7 million across all combustion facilities per year.
These cost estimates, along with cost estimates for government administration of the rule, form the
basis for assessing the social costs and other economic impacts of the rule provided in the following
chapter.
4-20
-------
FINAL DRAFT: July 1999
Exhibit 4-9
SUMMARY OF HWC MACT INCREMENTAL COSTS TO GOVERNMENT
HWC MACT Component
Review of Construction/Reconstruction Applications
Review of Compliance with Standards and General Requirements (e.g., review
of emergency safety valve (ES V) violation reports)
Review of Performance Testing Requirements
Review of Monitoring Requirements (e.g., review of feedstream analysis plans)
Review of Notification, General Reporting and Record Keeping Requirements
(e.g., review of Notice of Intent to Comply (NIC))
Review of Requests for Pollution Prevention or Waste Minimization Control
Extensions
Annual Cost per
Respondent/Activity
$100
$1,000
$4,000
$1,000
$2,000
$200
Annual Estimated
Number of
Respondents/Activities
0-3
0-191
0-46
0-342
43-57
46
Estimated Total
Annual Costs
$200
$9,000
$111,000
$91,000
$112,000
$7,000
ESTIMATED TOTAL ANNUAL INCREMENTAL IMPACT = $330,000
Notes: 1. Estimates from U.S. EPA, Supporting Statement for EPA Information Collection Request #1773.02 "New and Amended Reporting and
Recordkeeping Requirements for 'National Emissions Standards for 'Hazardous Air 'Pollutants from Hazardous Waste Combustors" September
1998 and Supporting Statement for EPA Information Collection Request #13 61. 08 "New and Amended RCRA Reporting and Recordkeeping
Requirements for Boilers and Industrial Furnaces Burning Hazardous Waste" September 1998.
2. Estimated total annual costs for government review activities are calculated using the annual cost per facility respondent or activity (e.g., review
of reconstruction application) multiplied by the estimated number of respondents or activities per year. Each type of component has a number
of sub-components (not listed) associated with it, all varying in the number of estimated respondents per year. Depending on the sub-component,
no facilities may comply in a given year, or the same facility might respond multiple times per year (e.g., submitting performance test plans for
multiple systems). Therefore, the total annual government costs per component vary depending on the number of facility respondents or activities
for each sub-component; total annual costs cannot be derived by multiplying the average cost by the average number of respondents/activities.
3. Estimates reflect only the first three years following the promulgation of the MACT standards, the time period covered by the Information
Collection Requests (ICRs), and are based on a universe of approximately 172 HWC potential respondents or facilities. Totals may not add due
to rounding.
4-21
-------
FINAL DRAFT: July 1999
SOCIAL COST AND ECONOMIC IMPACT ANALYSIS CHAPTER 5
This chapter analyzes social costs and economic impacts of the Hazardous Waste
Combustion MACT standards. Throughout this chapter, we focus on results that do not include the
costs of PM CEMs.1 While Chapter 4 is limited to the modeling of government administrative costs
and potential compliance costs to hazardous waste combustors, this chapter examines the responses
of the regulated community. To model market adjustments, we use data from the baseline
specification to characterize the economics of hazardous waste combustion. This modeling allows
us to estimate how increased compliance costs will affect incentives for hazardous waste combustion
facilities to continue burning and the competitive balance in combustion market segments. We
organize the discussion into five parts:
• Overview of Results — We first present a summary of results from the social
cost and economic impact analyses presented in this chapter.
• Social Cost Methodological Framework ~ This section presents the
economic theory used for analyzing social costs. The social costs of the rule
describe the total value of resources used to comply with the standards and
the total value of lost output resulting from the standards.
• Modeling Market Dynamics ~ This section introduces the approach we
used to model market dynamics and calculate social costs and economic
impacts.
• Social Cost Results — This section presents results from the social cost
analysis, which are made up of economic welfare losses and government
costs.
1 The final rule requires that particulate matter CEMs be installed, but defers the effective
date of the requirement to install, calibrate, maintain, and operate PM CEMs until these actions can
be completed. Model results with PM CEM costs are included in Appendix C.
5-1
-------
FINAL DRAFT: July 1999
Economic Impact Measures ~ Finally, we describe estimates of several
economic impact measures: market exit estimates, the quantity of waste
reallocated from combustion facilities that stop burning, employment
impacts, potential combustion price increases, and other industry impacts,
including potential changes in the cost structure of the combustion sector and
in the profits for hazardous waste combustion facilities and APCD
manufacturers. The economic impact measures are distinct from the social
cost estimates in that they provide insights into the distributional effects of
the rule, impacts that may not represent net costs to society.
OVERVIEW OF RESULTS
The four sections of this chapter present social cost and economic impact results, as well as
a detailed explanation of the approach taken in both of these analyses. The list below summarizes
some of the key results presented in the chapter:
Social Cost Results
Total annual social costs of the final rule (Recommended MACT) are
between $65 and $73 million, with an upper bound of $95 million.
• Total annualized compliance costs under the dynamic scenario (for which
pricing increases and waste consolidation are incorporated into the economic
model) are about 20 percent lower than total compliance costs in the static
scenario (i.e., without any market adjustments). The decrease in compliance
costs is due to market exits expected in the baseline as well as market exits
attributed to the MACT standards.
Almost half of the social costs are attributed to on-site incinerators due to the
large number of sources in this combustion sector.
• Total incremental government costs are less than 1 percent of total social
costs across all MACT options.
5-2
-------
FINAL DRAFT: July 1999
Economic Impact Measure Results
Market exits. Across MACT options, between one and three cement plants
and between seven and 23 on-site incinerators will stop burning hazardous
waste entirely, rather than incur the rule's compliance costs. We do not
expect any commercial incinerators or LWAKs will exit the waste-burning
market as a direct result of the MACT standards.
Hazardous waste reallocated. Market exit and waste consolidation activity
is expected to result in approximately 50,000 tons (90,000 tons under the
BTF-ACI option) tons of waste being reallocated from combustion systems
that stop burning. Adequate capacity currently exists in the hazardous waste
combustion industry to absorb this quantity of waste, which corresponds to
approximately 3 percent of total currently combusted wastes.
Employment impacts. At facilities that consolidate waste burning or stop
waste burning altogether, employment dislocations of between 100 and 300
full-time equivalent employees are expected. At the same time, employment
gains of about 100 full-time equivalent employees are expected in the
pollution control industry, and gains of approximately 150 full-time
equivalent employees are expected at combustion facilities as they invest in
new pollution control equipment.
Combustion price changes. Prices will likely increase by almost 15 percent
(corresponding to increase of about $20 per ton) as combustion facilities face
increased costs under the MACT standards.
Other industry impacts. MACT compliance costs represent less than 2
percent of current total pollution control expenditures in industries with on-
site incinerators but more than 60 percent of current pollution control
expenditures for cement kilns. MACT compliance costs will increase the
total costs of burning hazardous waste by approximately 50 percent for
cement kilns and about 20 percent for commercial incinerators, though
overall waste-burning costs still remain significantly lower for cement kilns
when compared to commercial incinerators. Also, we expect that profits will
decrease by 2 percent for commercial incinerators and by 11 percent for
cement kilns, as these facilities incur the costs of rule compliance. Total
profits for the pollution control industry are expected to increase in total by
about three million dollars.
5-3
-------
FINAL DRAFT: July 1999
SOCIAL COST METHODOLOGICAL FRAMEWORK
Total social costs of the MACT standards include the value of resources used to comply with
the standards by the private sector, the value of government resources used to administer the
regulation, and the value of output lost due to shifts of resources to less productive uses. To evaluate
these shifts in resources and changes in output requires predicting changes in behavior by all affected
parties in response to the regulation, including responses of directly-affected entities (combustion
facilities) as well as indirectly affected private parties (e.g., hazardous waste generators who incur
potential changes in combustion service availability or prices). We group these components of social
costs into two basic elements:
• Economic welfare changes, which include shifts in consumer and producer
surplus, and
• Government administrative costs.
Below, we discuss the market structure we assume for our social cost and economic modeling
of the rule. We then present our approach to analyzing economic welfare changes and government
costs associated with the rule.
Combustion Market Structure Used for Modeling
We assume a competitive market structure for modeling cost and economic impacts
associated with the rule. While the hazardous waste combustion market is not purely competitive
(i.e., individual firms act as price takers), given the extremely competitive nature of the industry (see
Chapter 2), we believe this assumption better reflects the true nature of the market than other market
structures (e.g., oligopolistic).2
The best indicator of the competitiveness of this market is the behavior of prices for waste
combustion. Over the course of the past decade, as cement kilns have entered the market for waste
combustion services, downward pressure on pricing has been intense. Competition for wastes exists
across combustion sectors, and as noted in a June 1996 Environmental Business Journal article,
"[ijncinerators continue to face competition from cement kilns that burn hazardous waste derived
fuel." (Environmental Business Journal 1996, 4). Given the competitive nature of the waste
2 Note that while the Portland cement manufacturing market itself might be characterized as
oligopolistic, our analysis focuses on the hazardous waste-burning component of the cement
manufacturing operations. The olipoloistic nature of the cement industry would only be relevant
to this rule if waste burning is used to cross-subsidize cement manufacture. Our understanding,
based on public comments and other documents, is that such cross subsidization is not a significant
practice in the industry. As such, the assumption that waste burning is a separate profit center
subject to independent decision making is appropriate.
5-4
-------
FINAL DRAFT: July 1999
management market, particularly for wastes that can be burned by both kilns and incinerators, we
have adopted the competitive market structure for our modeling. We believe that this approach
provides the most supportable framework for assessment of the impacts of the rule.
To determine the market structure for the industry, we also assessed whether barriers to entry
(due to logistical and regulatory challenges faced by waste management facilities) would tend to
make this industry less competitive. Barriers to entry do not appear to be a significant factor, as
demonstrated by the significant number of players entering the market in the 1980s when prices were
high. In addition, industries considering entry into, or expanding their presence in the hazardous
waste burning market are well financed and highly sophisticated in their understanding of regulatory
issues. As a result, we do not view barriers to entry playing a major role in reducing the
competitiveness of the industry.
Economic Welfare Changes
This Assessment uses a simplified partial equilibrium analysis to estimate social costs. In the
analysis, changes in economic welfare are measured by summing the changes in consumer and in
producer surplus. For competitive markets, supply and demand can be illustrated graphically as
shown in Exhibit 5-1.3 As shown in the exhibit, the additional costs associated with the MACT
standards will move the supply curve upward (from S0 to Sj). This movement results in lost
consumer and producer surplus, represented by the shaded trapezoid (the sum of areas A and B).4
To calculate the area of the trapezoid (the economic welfare loss), economists typically use
econometric techniques to estimate the supply and demand curves. This estimation procedure relies
on historical price and output information. Because hazardous waste combustion markets have
changed rapidly over the last several years, using historical data to construct these curves does not
provide an accurate picture of the current combustion market. In addition, the hazardous waste
3 The demand curve is drawn with a fairly steep slope, indicating a relatively inelastic
demand for combustion services. Our analysis of the elasticity of demand for hazardous waste
combustion services is discussed more fully in Appendix F, which analyzes waste minimization
alternatives as substitutes for combustion.
4 In simplest terms, the producer surplus refers to the amount of income individuals receive
in excess of what they would require in order to supply a given number of units of a product or
service. The consumer surplus is the benefit consumers receive from consumption of a product or
service in excess of what they pay for it (i.e., the difference between what a consumer is willing to
pay and what a consumer has to pay for a given product or service).
5-5
-------
FINAL DRAFT: July 1999
Exhibit 5-1
FRAMEWORK FOR ANALYZING ECONOMIC WELFARE LOSS
Price
($/ton)
D
Compliance Costs with Market Adjustments = A
Compliance Costs without Market Adjustments = A + B + C
Total Economic Welfare Loss = A + B
Qi Qo
Quantity (tons)
combustion market is somewhat segmented, with different sectors providing different types of
combustion services. Data are not adequate to support econometric analysis at this level of
complexity.
As an alternative to an econometric model, we have developed a simplified approach
designed to bracket the welfare loss attributable to the MACT standards. This approach bounds
potential economic welfare losses associated with the rule by considering two scenarios:
5-6
-------
FINAL DRAFT: July 1999
Static Scenario —
Compliance costs assuming no market adjustments.5 In this first scenario,
we calculate an upper bound estimate of economic welfare losses by
assuming that all combustion facilities continue to operate at current output
levels and comply with the MACT standards. Facilities pass 100 percent of
the compliance costs to the hazardous waste generators. Total compliance
cost estimates for this static scenario are represented by the sum of the shaded
areas A, B, and C in Exhibit 5-1.
Dynamic Scenario —
Market adjusted compliance costs. In the second scenario, we assess
market adjusted private costs by allowing only a portion of costs to be passed
through. As a result, market exits occur as the market adjusts to a lower
output equilibrium. Market-adjusted compliance costs are represented by
shaded area A in Exhibit 5-1. These costs will be borne by both producers
and consumers of combustion services. The extent to which these costs can
be passed through to hazardous waste generators in the form of higher
combustion prices depends primarily on the availability and costs of
alternative waste management options. If substitutes are readily available, the
slope of the demand curve will decrease, thus limiting the extent of
combustion prices increases, and the resulting magnitude of consumer surplus
losses. If the slope is zero, combustion facilities pass 0 percent of the
compliance costs to hazardous waste generators.
The true economic welfare loss of the rule is indicated by shaded areas A and B in Exhibit
5-1. As shown in the exhibit, the true economic welfare loss lies somewhere between market
adjusted compliance cost estimate (A) from the dynamic scenario and total compliance costs with
no market adjustments (A+B+C) from the static scenario.
5 The static scenario also does not account for baseline adjustments. The framework
illustrated in Exhibit 5-1 assumes market equilibrium. In reality, the hazardous waste combustion
market is currently not in equilibrium. The dynamic scenario makes an additional adjustment to
account for the current market over capacity. Thus, results under the static scenario are not the same
as results under the dynamic scenario with 100 percent price pass-through (in which demand is
completely inelastic).
5-7
-------
FINAL DRAFT: July 1999
Government Costs
The final MACT standards also result in costs to government entities which administer and
enforce the new emission standards. The costs for EPA and state environmental agencies to review
permit modification applications and other industry documents and to implement modifications to
their programs and practices following the final HWC MACT standards form the basis of the
government cost estimates. The Assessment analyzes these costs directly in Chapter 4; we use the
results from the Chapter 4 analysis in calculating the contribution of government costs to total social
costs.
Social Cost Framework Summary
While the hazardous waste combustion industry's dynamic, segmented nature prevent us
from estimating demand and supply curves, we are able to approximate the social costs of the MACT
standards by summing total compliance costs and government administrative cost estimates. To
bound the social costs, we use total compliance cost estimates under a static scenario (i.e., constant
output, no market adjustments) and total compliance cost estimates that account for market
adjustments.
HAZARDOUS WASTE COMBUSTION MARKET MODELING
To depict the two scenarios described above, we constructed a spreadsheet model that
incorporates numerous baseline input parameters and compliance cost estimates specific to each
combustion system included in the model. The economic model calculates total compliance cost
estimates necessary for the social cost analysis, as well as a variety of economic impact measures.
Because the economic model includes only a subset of combustion facilities, we use linear scaling
factors for each combustion sector to project total costs and economic impacts. These scaling factors
are shown in Exhibit 5-2 and assume that the facilities in the model are representative of the
combustion universe.6
6 Some uncertainty exists about the number of facilities in the combustion universe that are
actually operating. For instance, facilities may be included in the analysis that are still permitted but
that have actually ceased operation, causing us to overstate the costs of the MACT standards. Also,
the relatively low coverage (38 percent) for private on-site incinerators in the modeling effort may
cause us to over- or under-estimate the impacts of the MACT standards on this combustion sector.
5-8
-------
FINAL DRAFT: July 1999
This section describes the economic model in more detail. We first explain how we estimate
total compliance costs under the static scenario. Next, we describe how we model market dynamics
by allowing combustion facilities to increase prices and by allowing consolidation of wastes across
multiple combustion systems at a given facility. We then explain how we estimate total compliance
costs for the dynamic scenario. We end the section by summarizing how the total compliance cost
estimates relate to economic welfare losses in the context of social costs.
Exhibit 5-2
SCALING FACTORS FOR NATIONAL COST ESTIMATES
Sector
Cement kilns
Lightweight
aggregate kilns
Commercial
incinerators
All on-site
incinerators
Government
on-site
incinerators
Private on-site
incinerators
Number of
Facilities in
Universe
18
5
20
129
18
111
Number of
Facilities in
Model
18
4
15
49
15
34
Number of
Systems in
Universe
33
10
26
163
25
138
Number of
Systems in
Model
33
8
20
73
21
52
Scaling
Factors
1.00
1.25
1.30
2.23
1.19
2.65
Notes:
1. We base scaling factors on system-level information because system-level economics drive plant costs,
compliance costs, and decisions to cease burning.
2. Systems and facilities modeled are considered representative of the combustion universe, allowing for
the use of linear scaling factors (see footnote on the previous page).
Total Compliance Costs Under Static Assumptions
The first social cost scenario assumes constant output and full compliance. We calculate
total compliance cost estimates under this scenario as follows:
5-9
-------
FINAL DRAFT: July 1999
1. Assign MACT compliance costs to each combustion system in the model.
2. Sum compliance costs across all systems for each combustion sector (e.g.,
cement kilns).
3. Multiply sector totals by the appropriate linear scaling factor.
4. Sum scaled sector totals across combustion sectors.
The result from these calculations may represent an upper bound estimate of total economic welfare
loss which assumes that all facilities decide to continue waste burning post-MACT. Because a
number of facilities appear to be currently operating at levels that do not cover the costs of waste-
burning, we also execute the above calculations only for the facilities that currently appear viable.
(See baseline viability projections described in Chapter 3.)
Modeling Market Dynamics
While the static scenario estimates total compliance costs for all existing combustion
facilities, actual costs depend on the incentives and reactions of the regulated community and its
customers. Increased compliance costs affect the incentives for combustion facilities to continue
burning and the competitive balance in different combustion sectors. Combustion facilities may try
to recover these increased costs by charging higher prices to generators and fuel blenders. To
characterize post-MACT scenarios more accurately, we first evaluate the profitability of each
combustion system in the absence of the MACT standards (i.e., baseline profitability).7 Under the
dynamic scenario, we do not include costs for, or economic impacts from, combustion systems that
are not profitable in the baseline. For systems that are profitable in the baseline, we evaluate their
economic viability post-MACT by introducing two dynamic market elements to the economic
model. First, the post-MACT scenario also allows combustion facilities to pass through portions of
the cost increase to generators in the form of higher prices. Secondly, we allow combustion facilities
to consolidate waste burning among multiple combustion systems at the same facility, enabling them
to increase throughput and reducing total facility compliance costs. We discuss these two dynamic
elements below.
7 See page 3-3 for an explanation of the profitability analysis.
5-10
-------
FINAL DRAFT: July 1999
Combustion Price Increases
All combustion facilities that remain in operation will experience increased costs under the
MACT standards. To protect their profits, combustion facilities will have an incentive to pass these
increased costs on to their customers in the form of higher combustion prices. Price increases will
be capped by the availability of substitutes for combustion (i.e., the waste minimization and non-
combustion treatment alternatives discussed in Chapter 6). Characterizing the availability of waste
minimization options allows us to assess the elasticity of demand for combustion services. That is,
if lower cost waste minimization options are readily available for large quantities of combusted
waste, combustion facilities will be less able to pass compliance costs along to generators in the form
of higher combustion prices.
We conducted a waste minimization analysis to inform the expected price change.8 The
analysis considers in-process recycling, out-of-process recycling, and source reduction as alternatives
to hazardous waste combustion. The analysis shows that, while a variety of waste minimization
alternatives are available for managing hazardous waste streams that are currently combusted, the
costs of these alternatives generally exceed the cost of combustion. When the additional costs of
compliance with the MACT standards are taken into account, waste minimization alternatives still
tend to exceed the higher combustion costs. This translates into a demand for combustion that is
relatively inelastic, as indicated by the steep angle of the curve in Exhibit 5-3.9
Due to the variance of price elasticity across different priced waste types and the uncertainties
and limitations of the waste management alternatives analysis, we conducted a sensitivity analysis
by evaluating the impact of the proposed rule under four different price increase assumptions:
1. Combustion prices do not change (i.e., a 0 percent price pass through in
which demand for hazardous waste incineration is completely elastic and
compliance costs are fully borne by the combustion facilities).
2. Combustion prices increase slightly (i.e., combustion price demand elasticity
is nearly constant). Under this price assumption, we assume that combustion
8 The report is included as Appendix F: Allen White and David Miller, Tellus Institute,
"Economic Analysis of Waste Minimization Alternatives to Hazardous Waste Combustion," July
24, 1997.
9 Overall, demand is relatively inelastic. However, demand elasticity varies with (base)
combustion prices: at higher combustion prices, demand is more inelastic than at lower combustion
starting prices.
5-11
-------
FINAL DRAFT: July 1999
Exhibit 5-3
DEMAND FOR COMBUSTION ALTERNATIVES
200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000
Waste Minimization (tons)
-Base Case High Cost Low Cost — - -High Residual
-Low Residual
Notes:
1. Graph excludes potential source reduction activities because the rate of source reduction is not expected to be sensitive to
changes in combustion prices.
2. See Appendix F for more information on source reduction and waste minimization alternatives.
5-12
-------
FINAL DRAFT: July 1999
facilities can pass through 25 percent of the median compliance costs in the lowest-
cost commercial combustion sector.10
3. Combustion prices increase moderately (i.e., combustion demand is relatively
inelastic). Under this price assumption, we assume that combustion facilities can
pass through 75 percent of the median compliance costs in the lowest-cost
commercial combustion sector.
4. Maximum price increase (i.e., no waste management alternatives are economically
available, making demand for hazardous waste incineration completely inelastic).
The maximum price increase corresponds to 100 percent of the median compliance
costs in the lowest-cost commercial combustion sector.11
Waste Consolidation
In a further attempt to model industry behavior more accurately, we allow for consolidation
of waste burning across systems at a given facility. The logic behind this is that many hazardous
waste combustion facilities have more than one permitted combustion system at the same site. Each
system may burn too little waste to cover its costs. However, the facility may be able to consolidate
waste among systems, offering two benefits to the combustion facility. First, consolidation reduces
compliance expenditures because not all systems are brought into compliance for hazardous waste
burning. Second, it increases the throughput at the systems that remain in operation. As a result,
the systems remaining in operation are more likely to cover their costs.12 As shown in Exhibit 5-4,
10 Price increases for kilns and incinerators are somewhat different because kilns and
incinerators do not compete for some waste stream types. We assume, based on what occurs in the
actual marketplace, that kilns and incinerators compete with each other only for liquids and less
contaminated sludges and solids and that only commercial incinerators compete for highly
contaminated solids and sludges.
11 This pricing case differs from the static scenario because in the static scenario every system
(including those non-viable in the baseline) is able to pass through its own full compliance costs.
In contrast, in dynamic scenario 100 percent pass-through pricing case, we only include systems
viable in the baseline, and price increases are uniform across particular wastes and do not vary across
facilities managing the same basic waste types (because we assume markets are competitive).
12 A number of facilities report tons burned at the facility, rather than the system, level. This
method of reporting hides possible variances in tons burned across the systems that would illustrate
that some systems may be able to cover their costs while others are not. The consolidation routine
helps overcome this gap by evaluating how many systems would need to close in order to bring the
remaining systems to levels that cover their costs.
5-13
-------
FINAL DRAFT: July 1999
the consolidation routine closes one system at multi-system facilities and distributes the waste from
the closed system equally among the remaining open systems. We only allow wastes to be shifted
to another system at the same facility if there is adequate capacity. If the open systems still do not
cover costs, the process is repeated until either the systems remaining open are able to cover costs
or there is only a single system left. If the single open system does not cover costs, we assume that
the entire facility will cease burning hazardous wastes, and the waste will be reallocated to other
combustion facilities or waste management alternatives.
Exhibit 5-4
COMBUSTION SYSTEM CONSOLIDATION MODULE
c
Is system i at
Facility X
meeting or
exceeding its
BEQ?
System keeps burning;
complies with regulations
System i stops waste
burning and consolidates
hazardous waste into
remaining systems at
Facility X.
burning; remaining systems
operate at full capacity
Evaluate next system.
Evaluate next system.
5-14
-------
FINAL DRAFT: July 1999
Total Compliance Costs Under Dynamic Assumptions
We calculate total compliance costs under this dynamic scenario by assessing the post-
MACT profitability of each system in the model and by allowing combustion price increases as well
as waste consolidation. To assess profitability, we use the same approach for assessing profitability
post-MACT as in the baseline (see Chapter 3), except in the post-MACT scenario, the costs of
burning are adjusted upward to account for compliance costs. Thus, the basic formula is adjusted
as follows:
Operating Profits = Total Revenues - Total Baseline Costs - Total Compliance Costs
Where:
Total Revenues = [Combustion market price per ton + Energy savings per ton +
Avoided transportation costs per ton] * Tons burned]
p*Q
Total Costs = {Total fixed costs + [(Variable baseline costs per ton + Variable
compliance costs per ton)* Tons burned)]+ Fixed compliance costs}
= {FC + [(VC+CVC)*QJ + CFJ
As shown in the formula above, compliance costs are broken down into fixed and variable
components. While pollution control costs are primarily comprised of fixed costs, the cost of
operating some technologies also vary by the amount of hazardous waste burned.
To assess profitability, we determine whether revenues are adequately covering the costs of
waste burning by comparing the tons burned at each combustion system with the breakeven quantity
(BEQ) for that combustion system. The BEQ measures the quantity of waste that a combustion
system would have to burn for prices to cover the costs of operation.13 We use estimates of
breakeven quantity to assess the likelihood that combustion facilities will stop burning waste in the
face of increased compliance costs and constant hazardous waste prices. We calculate two BEQ
measures — short-run and long-run. Combustion systems will continue to operate in the short run
if they can burn enough waste to cover their variable and fixed O&M costs. Systems must cover
13 For additional information on breakeven analyses, see Eugene Brigham and Louis
Gapenski, Financial Management Theory and Practice, 6th Edition, 1991, The Dryden Press,
Chicago, 483; or Leopold Bernstein, Financial Statement Analysis: Theory, Application and
Interpretation, 1983, Irwin, Howewood, IL, 640-652.
5-15
-------
FINAL DRAFT: July 1999
their fixed capital costs as well if they are to continue operating in the long run. In both the long and
short run, a combustor will not choose to invest in new capital (i.e., pollution control equipment)
unless it is confident that it can burn enough waste to cover the cost of that new equipment.14
Thus, at breakeven, profit equals zero and we can solve for the BEQ using the formula
specified above:
0 = Total Revenues - Total Costs
0 = P*Q-[FC +[(VC+CVC> *Q] + CFC]
CFC + FC= Q[P-VC-CVC]
Q = FC±CFC_= Breakeven Quantity = BEQ
P-VC-CVC
Note that in the short term, FC includes only the new fixed costs of the rule, such as new
pollution control devices plus baseline fixed O&M costs. All of these fixed costs would be avoided
if the facility chose not to continue burning hazardous waste prior to investing in compliance. In the
long term, the company's old equipment will wear out and require replacement. Therefore, FC for
the long-term BEQ includes both the new fixed costs of the rule and the baseline fixed O&M and
capital costs.
The BEQ analysis provides a more precise indication of whether a combustion system is
likely to continue burning waste. To assess whether a combustion system is likely to be able to meet
its breakeven quantity, we can compare the BEQ to the quantity of waste currently burned at the
system. If the BEQ significantly exceeds current tons burned, the system is likely to cease waste
burning. For instance, the lower quantities burned at on-site incinerators will result in more of these
facilities being unable to meet BEQ.
The BEQ analysis is affected by many of the same uncertainties discussed in the baseline
profitability section. Most significantly, inaccuracies in the quantity and type of hazardous waste
burned at each system affect our evaluation of each system's ability to meet the BEQ.
14 As noted in Chapter 3, some firms could decide to operate their combustion systems at a
loss. We anticipate that the vast majority of combustion firms will shut loss-making operations,
however.
5-16
-------
FINAL DRAFT: July 1999
Summary
We use the BEQ analysis to predict which combustion facilities in the model are expected
to stop burning in the face of increased costs. The facilities that exit the market will, of course, not
need to implement any of the MACT requirements. Total compliance costs under the market-
adjusted scenario therefore are less than total compliance costs in the static scenario and provide a
lower bound on welfare losses. The true economic welfare loss lies somewhere between the market
adjusted compliance cost estimates and total compliance costs with no market adjustments.15
SOCIAL COST RESULTS
As described in the methodological framework section, social costs are comprised of
economic welfare losses and government costs. We bound the economic welfare loss estimates by
estimating total compliance costs under the two market scenarios described above (i.e., static and
dynamic scenarios). We also provide an upper bound of total social costs that includes all
combustion systems, even those non-viable in the baseline.16 Below, we present compliance cost
results for the static and dynamic scenarios.17 We then present social cost results that also
incorporate the government cost estimates from Chapter 4.
Compliance Cost Results for the Static Scenario
For the final recommended MACT, annualized compliance costs under the static scenario,
in which all baseline viable combustion facilities comply with the MACT standards, range from $73
to $86 million, depending on the engineering design level (i.e., controls designed for emission
reductions at 70 percent versus 50 percent of the standards). At the Floor, total annualized
compliance costs are about 10 percent lower than costs for the final standards and range from $66
to $83 million, depending on the engineering design level. For the BTF standards, costs almost
double (relative to the final standards), and range from $140 to $155 million. Again, this range
reflects different assumptions about the engineering design levels. For the static scenario, our best
estimate is at the 70 percent engineering design level for the final recommended MACT: $73
million.
15 EPA expects that compliance costs with market adjustments assuming moderate price
increases (i.e., 75 percent price pass-through) is a closer approximation of total economic welfare
loss because demand for hazardous waste combustion services is relatively inelastic, and assuming
the additional costs of output adjustments are minimal.
16 This upper bound analysis is essentially a sensitivity analysis of our baseline viability
analysis (see Chapter 3).
17 Results with PM CEM costs are included in Appendix C.
5-17
-------
FINAL DRAFT: July 1999
As shown in Exhibit 5-5, the MACT standards will introduce aggregate cost impacts that
differ greatly across combustion sectors and across regulatory options (i.e., from Floor and
Recommended to the BTF-ACI option). Looking across combustion sectors shows that cement kilns
and private on-site incinerators make up the majority of the national costs under any given MACT
option. For cement kilns, this significant share of the impact is due primarily to the high costs per
system. For on-site incinerators, the high aggregate costs are primarily due to the large number of
combustion systems within this sector. Total costs are less for commercial incinerators (because of
relative limited costs per system) and for LWAKs (because of the limited number of systems).
Exhibit 5-5
TOTAL ANNUAL COMPLIANCE COSTS (millions)
(Excludes baseline non-viable systems, no system consolidation or market exits)
MACT
Options
Floor
Recommended
BTF-ACI
Cement
Kilns
$22-$31
$26-$33
$38-$48
LWA
Kilns
$5-$6
$6-$7
$8
Commercial
Incinerators
$6-$8
$6-$8
$10-$11
Private
On-Site
Incinerators
$28-$34
$30-$34
$58-$61
Government
On-Site
Incinerators
$5
$5
$26-$27
TOTAL
$66-$83
$73-$86
$140-$155
Notes:
1. Estimates adjusted from costs presented in model exhibit, "Total Annual Compliance Costs (millions)
(Assuming No Market Exit)" by subtracting compliance costs of systems non-viable in the baseline.
2. Ranges reflect design levels of 50% and 70% of the MACT standards.
3 . Costs of PM CEMs not included.
4. Totals may not add due to rounding.
To assess the sensitivity of these results to our baseline viability assumptions, we also
estimated the compliance costs for all combustion systems, including those non-viable in the
baseline. The results from this sensitivity analysis are shown in Exhibit 5-6. As shown in the
exhibit, total costs increase by about 10 percent across all options (relative to total costs excluding
baseline non-viable systems). Depending on whether controls are designed to 50 percent or 70
percent of the standards, total annual costs for the Final standards range from $82 to $95 million.
For the Floor standards, costs range from $72 to $90 million. For the BTF-ACI standards, costs
range from $150 to $166 million. These results provide an upper bound on total compliance costs.
5-18
-------
FINAL DRAFT: July 1999
Exhibit 5-6
TOTAL ANNUAL COMPLIANCE COSTS (millions)
(No market adjustments; total costs for all facilities, including baseline nonviable systems)
MACT
Options
Floor
Recommended
BTF-ACI
Cement
Kilns
$22-$31
$26-$33
$38-$48
LWA
Kilns
$5-$6
$6-$7
$8
Commercial
Incinerators
$8-$9
$7-$9
$12-$13
Private
On-Site
Incinerators
$33-$39
$37-$42
$67-$70
Government
On-Site
Incinerators
$5
$5
$26-$27
TOTAL
$72-$90
$82-$95
$150-$166
Notes:
1. Estimates taken from model exhibit, "Total Annual Compliance Costs (millions) (Assuming No Market
Exit)."
2. Ranges reflect design levels of 50% and 70% of the MACT standards.
3 . Costs of PM CEMs not included.
4. Estimates assume that all facilities comply, including those non-viable in the baseline.
5. Totals may not add due to rounding.
Compliance Cost Results for the Dynamic Scenario
Total annualized compliance costs under the dynamic scenario, for which baseline exits,
pricing increases, and waste consolidation are incorporated into the economic model, are
approximately 20 percent lower than total compliance costs in the static scenario which includes
baseline non-viable systems. This change in total costs results from market exits expected in the
baseline and market exits attributed to the MACT standards. Facilities that exit the market will not
invest in pollution control equipment or incur other MACT-related costs, thus reducing total
compliance cost estimates.
Under the dynamic scenario, total annual compliance costs range from $57 million under the
MACT Floor (70% design level) to $139 for the MACT BTF-ACI (50% design level). These results
are presented in Exhibit 5-7. Our best estimate for compliance costs are provided by this dynamic
scenario. Best estimates for costs also use the 70 percent engineering design level and assume
relatively inelastic demand (modeling using the 75 percent price pass-through assumption). Using
these assumptions, our best estimate of total annual compliance costs for the recommended MACT
is $65 million annually.
5-19
-------
FINAL DRAFT: July 1999
Exhibit 5-7
TOTAL ANNUAL PRE-TAX COMPLIANCE COSTS (millions)
AFTER COMBUSTION SYSTEM CONSOLIDATIONS
MACT Options
Floor (50%)
Floor (70%)
Rec (50%)
Rec (70%)
BTF-ACI (50%)
BTF-ACI (70%)
Cement
Kilns
$30
$21
$32
$25
$42-$43
$34
LWA
Kilns
$5-$6
$4
$5-$7
$5
$7
$7
Commercial
Incinerators
$8
$6
$7
$6
$12
$10
Private
On-Site
Incinerators
$26
$22
$27
$23-$24
$48-$51
$47-$48
Government
On-Site
Incinerators
$5
$5
$5
$5
$27
$26
TOTAL
$73-$74
$57
$76-78
$64-$65
$135-$139
$123-$124
Notes:
1.
4.
Costs for PM CEMs not included. Ranges reflect differences across 25% and 75% price pass-through
scenarios.
Compliance costs after consolidation include the costs for those systems that will continue to burn
waste, as well as the shipping and disposal costs (after the assumed price increase) for on-site
incinerators that decide to stop burning wastes on-site. Other types of combustion systems that stop
burning wastes do not incur compliance costs and therefore are excluded.
Because compliance costs are tax-deductible, the portion of pre-tax costs borne by the firm would be
between 70 and 80 percent of the values shown above, depending on the specific firm's marginal tax
bracket.
"Consolidation" allows for non-viable combustion systems, other than government on-site incinerators,
to consolidate waste flows with other systems at the same facility, or to exit the waste burning market.
As a result, the number of combustion systems incurring compliance costs is reduced. Government
facilities are not included in the consolidation analysis because these facilities are not expected to close
in response to the Hazardous Waste Combustion MACT standards (the costs for government on-site
incinerators reported above are the same as those in the exhibit, "Total Annual Compliance Costs
(Assuming no Market Exit)").
Totals may not add due to independent rounding.
Summary
We develop total social cost estimates by adding government cost estimates to the economic
welfare loss estimates. As discussed in the "Social Cost Methodological Framework" section earlier
in this chapter, our simplified approach for estimating economic welfare losses uses compliance cost
estimates under two scenarios (i.e., static and dynamic). We take the results from these scenarios
(discussed in the sections above) to develop our economic welfare loss estimates.18
18 Economic welfare losses include changes in consumer and producer surplus; we do not,
however, estimate these changes independently.
5-20
-------
FINAL DRAFT: July 1999
We present estimates of total social costs in Exhibit 5-8. This exhibit uses the best estimates
from the static scenario (70% engineering design level, excluding baseline non-viable systems) and
the dynamic scenario (70% engineering design level and relatively inelastic demand (i.e., 75% price
pass through). For the upper bound estimates, we use the static scenario which includes baseline
non-viable systems with pollution systems designed to achieve control at 50 percent of the MACT
standards. For the final rule (Recommended MACT), total annual social costs are between $65 and
$73 million, with an upper bound of $95 million.19'20 Almost half of the social costs are attributed
to on-site incinerators; this result is due to the large number of systems in this combustion sector.
Total social costs increase by about 90 percent to between $124 and $140 million for the BTF-ACI
option due to the costly carbon injection and carbon bed equipment that is required to meet the BTF
mercury levels. At the Floor, total social cost estimates are between $57 and $66 million, about 10
percent less than costs for the Recommended option. Total incremental government costs are less
than 1 percent of total social costs across all MACT options.
Floor
Recommended
BTF-ACI
Best Estimate
$57 - $66
$65 - $73
$124 -$140
Upper Bound
$90
$95
$166
Exhibit 5-8
SUMMARY OF SOCIAL COST ESTIMATES
(millions of 1996 dollars)
NOTES:
1. Government administrative costs of $300,000 annually are included in the social cost estimates. In
order to simplify the analysis, we assume that government costs do not vary across MACT options or
market adjustment scenarios.
2. Because the government costs are small (less than 1 percent) relative to the compliance costs for
affected sources, the social cost estimates do not change relative to compliance costs.
3. Cost ranges for best estimates reflect different combustion price elasticities and market adjustments (the
static scenario assumes that 100 percent of compliance costs can be passed through to generators/fuel
blenders; the dynamic scenario assumes 75 percent).
4. PM CEM costs not included.
5. Upper bound estimates assume that all facilities, including those nonviable in the baseline, continue to
operate at current output levels and comply with the standards, passing 100% of the compliance costs to
hazardous waste generators/fuel blenders.
6. Costs for upper bound estimates reflect engineering design levels of 50%. Costs for best estimates
reflect engineering design levels of 70%.
19 Our best estimate takes into account baseline output adjustments that we expect will occur
as baseline non-viable facilities exit the market and output is adjusted to a new capacity level.
20The compliance cost portion of the lower end of our best estimate range is $65 million,
which is based on the dynamic market scenario assuming moderate price increases (i.e., 75% price
pass-through scenario).
5-21
-------
FINAL DRAFT: July 1999
ECONOMIC IMPACT MEASURES
In addition to providing compliance cost estimates under the static and dynamic market
scenarios, the model also calculates several economic impact measures which describe at a more
detailed level how the market responses change the shape of the combustion industry and affect the
APCD industry. This section describes the approach and findings for each of the following
economic impact measures:21
Market exits. With the MACT standards, total costs of combustion increase,
making it unprofitable for some facilities to continue burning hazardous
waste. In this section, we estimate the incremental number of facilities that
may exit the market as a direct result of the MACT standards.
Hazardous waste reallocated. As certain combustion systems stop burning,
waste is reallocated from these systems to other combustion facilities or to
alternative waste management options. In this section, we estimate the
quantity of hazardous waste reallocated under different MACT options.
Employment impacts. As specific combustion facilities find it is no longer
economically feasible to continue to burn hazardous wastes and therefore exit
the market, workers at these locations may be displaced. At the same time,
the rule may result in employment gains as new purchases of pollution
control equipment stimulate additional hiring in the pollution control
manufacturing sector and as additional staff are required at combustion
facilities for various compliance activities. In this section, we project
employment shifts across these sectors.
Combustion price changes. Combustion prices will likely increase with the
higher costs of waste burning. In this section, we estimate price increases for
each of the MACT alternatives.
Other industry impacts. The MACT standards will also affect the cost
structure of the combustion industry and the profits for hazardous waste
combustion facilities and APCD manufacturers. In this section, we estimate
the increase in profits for the APCD industry, the change in overall costs for
combustion sectors and decrease in profits for hazardous waste combustion
firms, and the relationship between MACT compliance costs and current
pollution control expenditures.
21 We also present economic impact results that include PM CEM costs in Appendix C.
5-22
-------
FINAL DRAFT: July 1999
Market Exits
Based on the dynamic breakeven quantity (BEQ) analysis, we calculate the number of
systems and facilities, likely to exit the hazardous waste combustion market in response to the
MACT standards. Because the hazardous waste combustion market is a dynamic industry, with a
number of facilities dropping out of the market in the past few years, we present market exit
estimates incremental to those projected in the baseline. Incremental exits are those we expect to
result from the MACT standards; baseline exits, on the other hand, are those that we expect to occur
even without the MACT standards.22
The analysis from Chapter 4 provides the information needed to assess whether a particular
combustion system is viable. However, evaluating market dislocations must also incorporate_/ac/7/'/fy-
level impacts. The BEQ analysis feeds directly into this evaluation; where no system at a facility can
meet BEQ (even after wastes are consolidated), we assume the facility will cease burning hazardous
waste completely.23
Facility-level impacts provide the best measure of regional economic dislocations. A cement
plant that consolidates hazardous waste burning in two systems at a single location rather than the
previous three will generate smaller economic impacts than if the plant stops burning waste
altogether. One important caveat is that, for most sectors, exiting the hazardous waste combustion
market is fundamentally different from closing a plant. Cement kilns or LWAKs that stop burning
hazardous fuels do not stop making cement and aggregate. Similarly, on-site incinerators are
generally located at large industrial facilities such as chemical plants or refineries. Production is
likely to continue even if the wastes are sent off-site for management. Only in the case of a
commercial incinerator would exit from hazardous waste combustion markets most likely signal the
actual closure of the plant.
Short Term
In the short term, we expect a relatively small percentage of facilities to stop burning
hazardous waste as a result of the Combustion MACT standards, incremental to baseline exit
estimates. These particular facilities are marginally profitable at present and burn low quantities of
hazardous waste over which they can spread their compliance costs. The consolidation routine
22 Our market exit estimates are a function of several assumptions, including the following:
engineering cost data on the baseline costs of waste burning; cost estimates for pollution control
devices; prices for combustion services; and assumptions about the waste quantities burned at these
facilities. Due to the uncertainty surrounding these data assumptions, we also provide baseline exit
estimates in Appendix K as part of our economic impact assessment sensitivity analysis.
23 Since some systems will stop burning hazardous wastes at facilities that continue to burn
wastes in other systems, facility exit estimates will be lower than system-level exit estimates.
5-23
-------
FINAL DRAFT: July 1999
suggests that for the final recommended standards, the following number of combustion facilities
will cease burning hazardous waste in the short term, with the high-end estimates including facilities
that appear non-viable in the baseline:24
• Cement Kilns — one out of 18 facilities.
• LWAKs — zero out of five facilities.
• Commercial Incinerators — between zero and three out of 20 facilities.
• Private On-Site Incinerators — between 16 and 42 out of 111 facilities.
Long Term
In general, the number of anticipated market exits increases in the long term due to capital
replacement costs.25 However, because this also holds true in the baseline, an increased number of
projected long-term baseline market exits can decrease the number of incremental long-term exits.
The consolidation routine estimates that for the recommended MACT standards, the following
number of combustion facilities will cease burning hazardous waste in the long term as a direct result
of the MACT standards, with high-end estimates including facilities that appear non-viable in the
baseline:
• Cement Kilns — between one and two out of 18 facilities.
• LWAKs — zero out of five facilities.
• Commercial Incinerators — between zero and three out of 20 facilities.
• Private On-Site Incinerators - between seven and 55 out of 111 facilities.
24 These high-end estimates, unlike those in Exhibit 5-8, include facilities that appear to be
non-viable in the baseline regardless of the MACT standards. We include these potential baseline
exits in the ranges presented above to capture the uncertainty surrounding estimates of incremental
market exits.
25 Long term market exits are not incremental to short-term exits (i.e., they are not over and
above exits projected for the short term.
5-24
-------
FINAL DRAFT: July 1999
Summary
Market exits are summarized across the short term and long term in Exhibits 5-9 and 5-10.
As shown, the MACT standards have the greatest impact on on-site incinerators. Market exits are
not significant for any of the commercial sectors.
Exhibit 5-9
SUMMARY OF FACILITY MARKET EXIT IMPACTS
(Short Term)
Baseline
Floor (50%)
Floor (70%)
Rec (50%)
Rec (70%)
BTF-ACI
(50%)
BTF-ACI
(70%)
Facility Market Exits by Combustion Sectors
Cement Kilns
0 (0%)
1
(6%)
1
(6%)
1
(6%)
1
(6%)
1-2
(6%-ll%)
2
(11%)
LWAKs
0 (0%)
0 (0%)
0 (0%)
0 (0%)
0 (0%)
0 (0%)
0 (0%)
Commercial
Incinerators
3 (13%)
0 (0%)
0 (0%)
0 (0%)
0 (0%)
0 (0%)
0 (0%)
Private On-site
Incinerators
26 (24%)
16
(15%)
16
(15%)
16
(15%)
16
(15%)
20
(18%)
20-23
(18%-21%)
Notes:
1 . Market exit estimates taken from model exhibits, "Number of Combustion Facilities Likely to Stop Burning
Hazardous Waste in the Short Term" and "Percentage of Facilities Likely to Stop Burning Waste in the
Short Term" (without PM CEM costs).
2. Ranges reflect differences across 25% and 75% price pass-through scenarios.
3. For the MACT options, market exit estimates are incremental relative to the baseline and include only those
facilities likely to stop burning as a direct result of the Hazardous Waste MACT standards.
4. Government on-site incinerators are not expected to exit as a result of the Hazardous Waste Combustion
MACT standards and therefore are not included in the market exit analysis.
5. Facility market exits only include those facilities at which all systems stop burning waste.
6. Numbers in parentheses indicate the percentage of facilities in a given sector that will exit the market.
5-25
-------
FINAL DRAFT: July 1999
Exhibit 5-10
SUMMARY OF FACILITY MARKET EXIT IMPACTS
(Long Term)
Baseline
Floor (50%)
Floor (70%)
Rec (50%)
Rec (70%)
BTF-ACI
(50%)
BTF-ACI
(70%)
Facility Market Exits by Combustion Sectors
Cement Kilns
0 (0%)
1-2
(6%-ll%)
2
(11%)
1-2
(6%-ll%)
1-2
(6%-ll%)
2-3
(11%-17%)
2-3
(11%-17%)
LWAKs
0 (0%)
0 (0%)
0 (0%)
0 (0%)
0 (0%)
0 (0%)
0 (0%)
Commercial
Incinerators
3 (13%)
0 (0%)
0 (0%)
0 (0%)
0 (0%)
0 (0%)
0 (0%)
Private On-site
Incinerators
42 (38%)
7-13
(6%-12%)
13
(12%)
7-13
(6%-12%)
13
(12%)
13-20
(12%-18%)
13-20
(12%-18%)
Notes:
1. Market exit estimates taken from model exhibits, "Number of Combustion Facilities Likely to Stop Burning
Hazardous Waste in the Long Term," and "Percentage of Facilities Likely to Stop Burning Waste in the
Long Term" (without PM CEM costs).
2. Ranges reflect differences across 25% and 75% price pass-through scenarios.
3. For the MACT options, market exit estimates are incremental relative to the baseline and include only those
facilities likely to stop burning as a direct result of the Hazardous Waste MACT standards.
4. Government on-site incinerators are not expected to exit as a result of the Hazardous Waste Combustion
MACT standards and therefore are not included in the market exit analysis.
5. Facility market exits only include those facilities at which all systems stop burning waste.
6. Numbers in parentheses indicate the percentage of facilities in a given sector that will exit the market.
Hazardous Waste Reallocated
Combustion systems that can no longer cover their costs will stop burning hazardous waste.
As such, waste from these systems will be reallocated to one of the following alternatives:
• Other viable combustion systems at the same facility if there is sufficient
capacity,
5-26
-------
FINAL DRAFT: July 1999
• Other combustion facilities that continue burning, or
• Waste management alternatives (e.g., solvent reclamation).
Because combustion is likely to remain the lowest cost option, we expect a large proportion of the
reallocated wastes will continue to be managed at combustion facilities.26
Waste is reallocated from non-viable systems (i.e., those below BEQ) at both facilities that
exit the market and at facilities that continue waste burning in other combustion units. Exhibit 5-11
summarizes the approach for estimating quantities of reallocated wastes. Wastes are only
consolidated into fewer systems at the same facility if there is sufficient capacity.
As a result of the predicted market exits, we estimate that between 23,000 and 54,000 tons
of currently burned hazardous waste will be potentially reallocated in the long term to other waste
management facilities as a result of the final standards.27 This corresponds to between approximately
1 and 2 percent of the total waste combusted in 1995. These estimates are for the final recommended
MACT at the 70 percent engineering design level, over the long term. This estimate increases to
about 160,000 tons (5 percent) if we include the waste burned in combustion systems non-viable in
the baseline. Exhibit 5-12 summarizes incremental waste reallocated quantity estimates across
MACT options and combustion sectors. Currently there is sufficient capacity across the combustion
market to accommodate managing this reallocated waste, even at the high-end of the waste quantity
estimates.
We also examined the geographic distribution of reallocated wastes to determine whether
market exits and wastes reallocated from these facilities are concentrated in certain areas of the
country. We then determined the amount of remaining combustion capacity at the regional level that
could handle the reallocated wastes. For this analysis, we assume that wastes could be managed at
other combustion facilities located within 200 miles of the systems we predict will stop burning.28
The results of this analysis are shown in Exhibit 5-13.
26 One industry trade association submitted comments to EPA expressing concern that
conditionally exempt small quantity generators (CESQGs) may discontinue sending their hazardous
waste to kilns for use as fuel pos-MACT due to the anticipated price increases and due to the
anticipated exits of kilns from the hazardous waste-burning market. Given the small number of
expected kiln market exits, and the relatively inelastic demand for combustion services, EPA
believes that CESQGs will continue to send their wastes to combustion facilities.
27 We include in this range waste from systems that appear non-viable in the baseline to
capture the uncertainty surrounding estimates of incremental market exits.
28 We examined waste reallocated from facilities where all systems close as well as waste
reallocated due to capacity constraints at facilities with consolidating systems.
5-27
-------
FINAL DRAFT: July 1999
Exhibit 5-11
ROUTINE FOR CALCULATING QUANTITY OF WASTE DIVERTED
c
Is System z at
Facility X Meeting or
Exceeding its BEQ"
Waste Quantity Diverted = 0
No
qj = tons burned at system z
Are There Other Systems
Still Burning Waste at
This Facility?
System Stops Burning
Waste Quantity Diverted = q.
Is Quantity
Burned > Total Excess
Capacity of Remaining
Systems
at Facility?
No
Close System and Consolidate HW
into Remaining Systems at that
Facility.
Waste Quantity Diverted = 0
>
Close Combustion System
and Operate Remaining
Systems at Full Capacity.
Waste Quantity Diverted = q, - excess
capacity of remaining systems
The hazardous waste combustion systems that we expect will stop burning and reallocate
waste post-MACT are scattered across the Eastern and Central regions of the United States, with the
exception of one system on the West Coast. (This pattern is consistent with the baseline geographic
distribution of combustion systems.) The combustion systems that remain open in the Eastern and
Central regions are sufficiently dispersed to handle the types and quantities of waste reallocated in
their areas. However, there are no other combustion facilities nearby the system that we expect will
stop burning on the West Coast.29 Thus, we expect that wastes reallocated from this system,
generated by both large and small quantity generators, have a higher likelihood of being managed
by alternatives to combustion (e.g., pollution prevention).
29 In this geographic analysis, we only examine combustion systems that are included in our
economic model. It is possible that there exists a commercial system on the West Coast not included
in the economic model that could handle the reallocated wastes in this region.
5-28
-------
FINAL DRAFT: July 1999
Exhibit 5-12
SUMMARY OF QUANTITY OF HAZARDOUS WASTE
THAT COULD BE REALLOCATED IN THE SHORT AND LONG TERM
MACT Option
Baseline
Floor (50%)
Floor (70%)
Rec (50%)
Rec (70%)
BTF-ACI (50%)
BTF-ACI (70%)
Quantity of Hazardous Waste by Combustion Sector (tons)
Cement Kilns
Short
Term
0
11,530
11,530
11,530
11,530
26,060-
37,590
37,590
Long
Term
0
11,530-
28,490
28,490-
42,550
11,530-
28,490
11,530-
42,550
37,590-
54,550
37,590-
54,550
LWAKs
Short
Term
0
0
0
0
0
0
0
Long
Term
0
0
0
0-500
500
0-500
0-500
Commercial
Incinerators
Short
Term
3,170
0
0
0
0
0
0
Long
Term
3,170
0
0
0
0
0
0
Private
On-site Incinerators
Short
Term
45,770
1,870
1,870
1,870
1,870
10,600
10,600-
15,430
Long
Term
102,050
0-10,700
10,700
0-10,700
10,700
17,080-
34,020
17,080-
34,020
TOTAL
Short
Term
48,940
13,400
13,400
13,400
13,400
36,660-
48,190
48,190-
53,020
Long
Term
105,220
0-39,190
39,190-
53,250
0-39,690
22,730-
53,750
54,670-
89,070
54,670-
89,070
% of All BRS
Combusted Hazardous
Waste
Short
Term
1
0
0
0
0
1-2
2
Long
Term
3
0-1
1-2
0-1
1-2
2-3
2-3
Notes:
1 . Estimates taken from model exhibits,"Quantity of Hazardous Waste that could be Diverted in the Short Term" and "Quantity of Hazardous Waste that could be Diverted in the Long
Term" (PM CEM costs not included).
2. Ranges reflect differences across 25% and 75% price pass-through scenarios.
3. Combusted hazardous waste reported to BRS in 1995 excluding tonnage burned in on-site boilers: 3,300,000 tons.
4. These figures do not include waste reallocated from systems that consolidate waste into other systems at the same facility.
5. Tons reallocated are incremental to that resulting from consolidation and market exit likely to occur in the baseline (i.e., without the MACT standards).
5-29
-------
FINAL DRAFT: July 1999
Exhibit 5-13
REGIONAL ANALYSIS OF DIVERTED WASTE AND REMAINING CAPACITY
Diverted Waste: 9,720 tons
Sufficient Capacity: Yes
Diverted Waste: 19,982 tons
Sufficient Capacity: Yes
Diverted Waste: 18,230 tons
Sufficient Capacity: Yes
Diverted Waste: 2,279 tons
Sufficient Capacity: Yes
Diverted Waste: 4,823 tons
Sufficient Capacity: No
Diverted Waste: 19,924 tons
Sufficient Capacity: Yes
Diverted Waste: 17,704 tons
Sufficient Capacity: Yes
Diverted Waste: 50,660 tons
Sufficient Capacity: Yes
Note: Regions are definedby a radius of 200 miles, the average distance hazardous waste is typically shipped by generators. (Source: DPRA, Inc., "Estimating Costs for
the Economic Benefit ofRCRA Noncompliance, " prepared for U.S. EPA, Office of Regulatory Enforcement, September 1994, p. 5-10.) Some generators ship hazardous
waste beyond 200 miles for treatment meaning that further capacity exists outside the regions drawn above for handling the diverted waste. Regions on map not drawn
to scale.
Employment Impacts
The proposed MACT standards are likely to cause employment shifts across all of the
hazardous waste combustion sectors. As specific combustion facilities find it no longer economic
to keep all of their systems running or to stay in operation at all, workers at these locations may be
displaced. At the same time, the rule may result in employment gains as new purchases of pollution
control equipment stimulate additional hiring in the pollution control manufacturing sector and as
additional staff are required at combustion facilities for various compliance activities. In the section
below, we describe the approach for analyzing employment shifts.30 We then describe the results
from this analysis for both employment gains and dislocations.
30 See Appendix E for a more detailed discussion of the methodology for the employment
impacts analysis.
5-30
-------
FINAL DRAFT: July 1999
Primary employment dislocations in the combustion industry are likely to occur when
combustion systems consolidate the waste they are burning into fewer systems or when a facility
exits the hazardous waste combustion market altogether. As shown in Exhibit 5-14, for each system
that stops burning, employment dislocations include operating and maintenance labor. For each
facility that exits the market, employment dislocations also include supervisory and administrative
labor.
In addition to employment dislocations, the proposed rule will also lead to job gains as firms
invest to comply with the various requirements of the MACT standards. Employment gains will
occur in the pollution control equipment manufacturing industry, which produces devices to be used
to achieve compliance with the standards.31 We also anticipate employment increases at combustion
facilities as additional operation and maintenance will be required for the new pollution equipment
and as more staff will be needed for other compliance activities, such as new reporting and record-
keeping requirements. Our approach for estimating these gains is illustrated in Exhibit 5-15.
31 This industry also includes the manufacturers of PM continuous emissions monitoring
systems (CEMs), which EPA has considered requiring as part of the standards. Because PM CEMs
are not required in this phase of the rulemaking, we do not include employment gains associated with
PM CEMs in the results presented in this chapter. However, we do include estimates of gains
associated with PM CEMs in the full set of economic impact results presented in Appendix C.
5-31
-------
FINAL DRAFT: July 1999
Exhibit 5-14
PROCEDURE USED TO ESTIMATE EMPLOYMENT DISLOCATIONS
Number of employees
associated with waste
burning for each
combustion system type
Assign system and
facility employee numbers to
each combustion system,
based on system type
Assign system
and facility
employment
dislocations
Assign 0 employment
dislocations to system
Assign only system ^v
employment dislocations )
to system
Sum total employment dislocations
across combustion systems where all
waste burning ceases at the facility
(low-end employment dislocations)
Sum total employment dislocations
across all closing combustion systems
(high-end employment dislocations)
Scale low-end total employment
dislocations to national level
Scale high-end total employment
dislocations to national level
Low-end total estimated
national employment
.dislocations across sectoi
High-end total estimated
national employment
dislocations across sectors
5-32
-------
FINAL DRAFT: July 1999
Exhibit 5-15
PROCEDURE USED TO ESTIMATE EMPLOYMENT GAINS
Pollution
Control
Equipment Costs
CEM Costs
MOperating and
aintenance Costs
EReporting and
Lecord-Keeping
Costs
Multiply each cost category by the percentage
of costs the industry spends on labor
Divide by average hourly wage in that industry
Divide by average total hours a full-time
employee in the pollution control industry
is expected to work each year
Annual employment gains estimate
by category
5-33
-------
FINAL DRAFT: July 1999
We normalize both gain and dislocation estimates as full-time equivalent (FTE) employees
on an annual basis. That is, short-term employment surges may occur in the pollution control
equipment industry as combustion facilities make their initial equipment purchases. We average
these surges over the lifetime of the pollution control equipment so that gain and dislocation
estimates are presented in consistent terms. Results from the employment impact analysis are
summarized in Exhibits 5-16 and 5-17. We also describe these results in more detail below.
Employment Dislocation Results
In general, employment dislocations do not vary a great deal across the MACT options. Total
incremental long-term employment dislocations associated with exiting combustion facilities range
from 80 to 170 FTE jobs under the Floor and the Recommended options.32 Under the BTF-ACI
option, employment dislocations increase by almost 20 percent to approximately 150 to 200 FTEs.
Among the different sectors, on-site incinerators are responsible for most of the total estimated
number of job dislocations. Their significant share of the dislocations is a function of both the large
number of on-site incinerators in the universe as well as the relatively high number of expected exits
within this sector. Cement kilns are responsible for the second largest number of expected
employment dislocations due to the number of systems that consolidate waste-burning at these
facilities.
It is important to note that the employment dislocation estimates are subject to the same
uncertainties characterizing the market exit estimates. To address uncertainties with the baseline
market exit projections, we also estimated employment dislocations that assume constant future
combustion capacity in the baseline (i.e., the static scenario). (See Appendix K.) This sensitivity
analysis estimates conservative upper-bound employment dislocations of up to 580 FTEs in the
combustion industry.
Employment Gain Results
Total annual employment gains associated with the Combustion MACT range from 200 to
500 FTEs. Almost half of the estimated job gains occur in the pollution control equipment industry,
and the other half occurs at the combustion facilities as additional operators and maintenance
workers are needed to manage the pollution control equipment. Additional staff needed for
permitting requirements of the rule are relatively insignificant in comparison.
32 The dislocation estimates are likely to change in the next draft of the report to reflect
corrections to the facility employment requirements. This correction will increase employment loss
estimates moderately.
5-34
-------
FINAL DRAFT: July 1999
Overall, a more stringent regulatory option will lead to both slightly higher job dislocations,
as more systems are expected to stop burning, as well as to more job gains, as the compliance
requirements stimulate additional hiring. While it may appear that this analysis suggests overall net
job creation under particular options and within particular combustion sectors, such a conclusion is
inaccurate. Because the gains and dislocations occur in different sectors of the economy, they should
not be added together; doing so would mask important distributional effects of the rule. In addition,
the employment gain estimates reflect sectoral impacts only and therefore do not account for job
displacement across sectors as investment funds are diverted from other areas of the larger economy.
Exhibit 5-16
SUMMARY OF ESTIMATED EMPLOYMENT DISLOCATIONS
MACT
Option
Floor (50%)
Floor (70%)
Rec (50%)
Rec (70%)
BTF-ACI
(50%)
BTF-ACI
(70%)
Combustion Sectors
Cement Kilns
Low
End
21-42
21-42
21-42
21-42
21-62
42-62
High
End
21-42
21-49
21-42
21-49
21-70
42-70
LWAKs
Low
End
0
0
0
0
0
0
High
End
0-3
3
0-7
3-7
3-7
3-7
Commercial
Incinerators
Low
End
0
0
0
0
0
0
High
End
0
0
0
0
0
0
Private On-site
Incinerators
Low
End
49-129
96-129
49-129
96-129
88-137
88-145
High
End
68-229
115-229
68-229
115-229
107-266
107-274
TOTAL
Low
End
70-150
138-150
70-150
117-150
130-179
130-187
High
End
91-252
159-252
91-252
142-252
151-310
151-318
Notes:
1 . Estimates taken from model exhibits, "Estimated Short-Term Employment Losses at Combustion Systems" and "Estimated Long-
Term Employment Losses at Combustion Systems" (without PM CEM costs).
2. Low-end estimates include employment losses associated only with those systems located at facilities where all systems stop
burning. High-end estimates reflect all employment losses, including those associated with closing systems located at facilities
where at least one system remains open. The low-end estimate assumes that employees associated with closing systems will be
reassigned within a facility where other remaining systems are still burning.
3. Ranges reflect differences across 25% and 75% price pass-through scenarios.
4. Employment loss estimates are incremental, or directly attributable to the Hazardous Waste Combustion MACT standards.
5. Employment impacts are national estimates and are based on primary impacts only. They ignore any secondary spill-over effects.
6. Numbers between this exhibit and the ones listed above may not add exactly due to rounding.
5-35
-------
FINAL DRAFT: July 1999
Exhibit 5-17
SUMMARY OF ESTIMATED EMPLOYMENT GAINS
MACT Option
Floor (50%)
Floor (70%)
Rec (50%)
Rec (70%)
BTF-ACI (50%)
BTF-ACI (70%)
Labor Within
Pollution Control
Equipment Sector
124-125
92
133-135
101-102
207-214
181-187
Labor within Hazardous
Waste Combustion Sectors
O&M
148-150
122-123
167-169
142-144
320-334
290-304
Permitting
10
10
10
10
10
9-10
TOTAL
282-286
223-225
310-314
253-255
537-558
481-501
Notes:
1.
2.
3.
4.
6.
Estimates taken from model exhibits, "Estimated Employment Increases Associated with
Compliance Requirements" (PM CEM not costs included).
Ranges reflect differences across 25% and 75% price pass-through scenarios.
Estimates are sensitive to a number of assumptions, including the wage rates associated
with compliance requirements and the percent of revenues generated due to each of the
compliance requirements.
Estimates are national and based on primary employment impacts only, ignoring any
secondary spill-over effects. Therefore, they do not account for job displacement across
sectors as investment funds are diverted from other areas of the larger economy and should
not be interpreted as net gains.
Estimates are based on long-term annual averages because these provide an upper-bound
estimate of primary employment losses and gains associated with the rule.
Numbers between this exhibit and the one listed above may not add exactly due to
rounding.
Combustion Price Increases
All combustion facilities that remain in operation will experience increased costs under the
MACT standards. To protect their profits, combustion facilities will have an incentive to pass these
increased costs on to their customers in the form of higher combustion prices. Generators potentially
will have to pay higher prices unless they can obtain less expensive waste management alternatives.
5-36
-------
FINAL DRAFT: July 1999
Exhibit 5-18 (below) illustrates how price pass-through would work in theory. This exhibit
illustrates a number of important principles about hazardous waste combustion markets.
• Waste will be sent to the least expensive alternatives first, all else being
equal.33
• Both baseline costs of hazardous waste combustion and new compliance
costs vary significantly across combustion systems, even within the same
sector. Thus, regulatory changes can affect different systems in very
different ways.
• Prices will rise to the point at which all demand for waste management is
met. In Exhibit 5-18, the last tons are managed in the non-combustion/waste
minimization alternative at a cost of $230 per ton. This would become the
market price. Combustion systems A, B, and C would each set their prices
at about $230 per ton in order to maximize their profits. The least efficient
management option would earn just enough to stay in business, but would
not recover capital costs. In this example, combustion system D would exit
the market.
Exhibit 5-18
SIMPLIFIED EXAMPLE OF DETERMINATION OF NEW MARKET PRICE FOR COMBUSTION
Assume 100 Tons
Require Management
Cost/ton of Waste
Tons of capacity
Remaining tons
requiring treatment
Combustion
System
A
$145
35
100-35=65
Combustion
System
B
$175
25
65-25=40
Combustion
System
C
$220
35
40-35=5
Alternative
Management/
Waste Min
$230
100
5-5=0
Combustion
System
D
$240
300
0
33 In fact, other factors such as transportation costs will affect which facilities are the least
expensive to particular generators. In addition, the price of combustion will vary by the method of
delivery (e.g., bulk versus drum), the form of the waste (e.g., liquid versus solid), and the
contamination level (e.g., metals or chlorine content). These factors make it more difficult to
compare various waste management options.
5-37
-------
FINAL DRAFT: July 1999
The real hazardous waste combustion marketplace is much more complex than the five
options shown above. Estimating the cost of combustion at which the last ton of waste would be
combusted is difficult due to pricing variations by region, waste stream, and individual combustion
service providers. Instead, we have adopted some simplifying assumptions that should provide a
reasonable approximation of these markets:
• To calculate the price increase for waste for which all sectors compete, we
first determine which commercial sector has the lowest median total costs per
ton (baseline plus compliance costs). The industry sector with the lowest
costs is the most efficient and will have the greatest power to pass through
compliance costs in the form of higher prices.
• To determine the price increase for more highly contaminated solids and
sludges, we calculate the median cost per ton for commercial incinerators
since commercial incinerators burn the majority of these more highly
contaminated waste streams.
The availability of substitutes for combustion (i.e. waste minimization and non-combustion
treatment alternatives) will cap price increases. These alternatives will constrain both price increases
by the lowest cost sector and the ability of higher cost sectors to match these increases. Given an
absence of good data on the price at which these alternatives are viable, we evaluate the impact of
the proposed rule under both a low and a high price pass through scenario. The low scenario
evaluates market impacts if alternatives are available at close to the current market price of
combustion.
Using the median compliance costs for the lowest cost sector as the basis for a price increase
is a conservative assumption. As Exhibit 5-18 illustrated, the most expensive facility needed to
manage the remaining supply of waste will set the new market price. The capacity that exists at
facilities in the least cost segment with compliance costs at or below the median for that segment will
not be sufficient to manage all the wastes requiring combustion. We believe that the actual price
increase will most likely be higher than the median compliance costs for the lowest cost sector. We
further assume that other combustion sectors will match the dollar value of this increase, even if it
exceeds their new compliance costs, in an effort to maximize profits. We assume that the market
share of each combustion sector will not change because the price differential (in dollars) between
sectors will remain constant.
Available economic data on the cost of waste management alternatives, including source
reduction and other waste minimization options, are not precise enough for us to pinpoint the
maximum price increase that combustors could pass through to generators and fuel blenders.
However, based on an analysis of waste management alternatives (summarized in Chapter 6), we
believe that demand for combustion is relatively inelastic and combustion facilities are likely to pass
5-38
-------
FINAL DRAFT: July 1999
through 75 percent of compliance costs in the least-cost sector. Exhibit 5-19 shows the price
increase estimated across MACT options at both 25- and 75-percent price pass-through scenarios.
As shown in the exhibit, the price increase ranges from one to 30 percent across all MACT options.
Price increases for the Recommended MACT (70% design level) range from between 3 and 9
percent for waste burning cement kilns, 4 and 11 percent for LWAKs, and 1 and 2 percent for
incinerators, depending on assumptions about the elasticity of demand for combustion services.
Based on our analysis of waste management alternatives, EPA believes that demand is relatively
inelastic; thus, price increases of about $15 per ton (6 percent) are expected for kilns and increases
of about $12 per ton (2 percent) are expected for incinerators.
Exhibit 5-19
WEIGHTED AVERAGE COMBUSTION PRICE PER TON AND
INCREASE IN PRICES DUE TO ASSUMED PRICE PASS THROUGH
MACT Options
Current Weighted Average Price
Cement
Kilns
$172
LWA
Kilns
$136
Commercial
Incinerators
$689
On-Site
Incinerators
$728
Increase in price due to compliance costs passed through
Floor (50%)
Floor (70%)
Rec (50%)
Rec (70%)
BTF-ACI (50%)
BTF-ACI (70%)
$9-$28
$4-$ 11
$10-$29
$5-$15
$13-$40
$12-$35
$9-$28
$4-$ 11
$10-$29
$5-$15
$13-$40
$12-$35
$7-$20
$3-$10
$7-$20
$4-$ 12
$10-$29
$9-$27
$7-$22
$4-11
$8-$23
$4-$13
$ll-$33
$10-$29
Notes:
1. Ranges reflect 25% and 75% price pass-through scenarios.
2. Compliance costs do not include PM CEM costs.
3 . Median compliance costs per ton exclude systems currently not burning hazardous waste.
4. The commercial sector with the lowest total cost per ton (baseline + compliance cost) drives the assumed
increase in combustion prices of waste categories managed by that sector.
5. Prices for on-site incinerators reflect the cost per ton of off -site treatment that generators avoid by burning
the waste on-site.
6. Weighted average price per ton = (solids percentage of total waste burned in each sector x solids price) +
(liquids percentage of total waste burned in each sector x liquids price) + (sludges percentage of total waste
burned in each sector x sludges price).
5-39
-------
FINAL DRAFT: July 1999
Other Industry Impacts
Combustion Profit Decreases. On average, hazardous waste-burning profits for all
combustion sectors will decline post-MACT, yet the decline will not be consistent across sectors.
We expect that hazardous waste-burning profits for cement kilns will decrease by about 11 percent,
while profits for commercial incinerators may decrease by about 2 percent. Our profit margin
estimates are based on a simple calculation that subtracts operating costs from revenues. These
estimates provide relative measures of profit changes and should not be used to predict absolute
profit margins in these industries.
Cost Structure of the Combustion Industry. Incremental MACT compliance costs
represent less than 2 percent of the total pollution control expenditures in industries that contain
facilities with on-site incinerators.34 (See Exhibit 5-20.) For cement kilns, MACT compliance costs
are expected to increase total pollution control expenditures by about 60 percent at hazardous waste-
burning facilities.35 Total costs of waste-burning increase by about 50 percent for cement kilns after
the addition of MACT compliance costs, while total costs increase by about 20 percent for
commercial incinerators. However, overall costs still remain significantly lower for hazardous waste
burning cement kilns when compared to commercial incinerators.
APCD Profit Increases. To comply with the MACT standards, many facilities will need to
purchase additional pollution control equipment. From the perspective of the pollution control
industry, these expenditures are translated into additional revenues and profits. We estimate that
additional profits for the APCD industry will total approximately $2.8 million, or about $300,000
annually (undiscounted). This total figure represents about 14 percent of the average annual profits
of three of the largest APCD manufacturers.36
34 We did not include commercial incinerators in this cost structure analysis because the
Pollution Abatement Costs and Expenditures reports do not provide data on service industries, which
is the industry category for commercial incinerators.
35 According to Pollution Abatement Costs and Expenditures: 1994, the total pollution
expenditures for the cement industry in 1994 were $207.50 million, which is $217.61 million in 1996
dollars using the GDP implicit price deflator from the 1998 Economic Report of the President.
Because only 19 percent of cement kilns burn hazardous waste, we use $41.35 million in 1996
dollars (0.19 * $217.61) as the base pollution control figure.
36 To estimate additional profits for APCD manufacturers, we multiply total capital costs
post-MACT by the average profit percentage of net sales for three major APCD manufacturers. (We
calculate the average profit percentage of net sales (after all costs and taxes) for the APCD
manufacturers with data from the firms' 401k forms.)
5-40
-------
FINAL DRAFT: July 1999
Exhibit 5-20
MACT COMPLIANCE COSTS AS A PERCENTAGE OF TOTAL POLLUTION CONTROL EXPENDITURES FOR INDUSTRIES WITH ON-SITE INCINERATORS
Industry
Industrial Organic Chemicals, N.E.C.
Pesticides and Agricultural Chemicals, N.E.C.
Medicinal Chemicals and Botanical Products
Industrial Inorganic Chemicals, N.E.C.
Pharmaceutical Preparations
Plastics Materials and Resins
Petroleum Refining
Photographic Equipment and Supplies
Cyclic Organic Crudes and Intermediates, and
Organic Dyes and Pigments
Secondary Nonferrous Metals
Synthetic Rubber (Vulcanizable Elastomers)
TOTAL
MINIMUM
MAXIMUM
AVERAGE
SIC
2869
2879
2833
2819
2834
2821
2911
3861
2865
3341
2822
Percentage of Hazardous
Waste Combusted On-
Site
38.25%
19.00%
7.10%
3.60%
2.86%
2.65%
1.73%
1.51%
0.93%
0.42%
0.36%
Total Pollution Control
(Capital and Operating)
Costs (millions)
$2,455
$280
$170
$443
$366
$993
$5,664
$179
$397
$115
$168
$11,231
$115
$5,664
$1,021
Total Annual Compliance Costs for
On-Site Incinerators (weighted by SIC)
(hundreds of thousands)
$142
$70
$26
$13
$11
$10
$6
$6
$3
$2
$1
$290
$1
$142
$26
Compliance Cost Percentage of
Total Pollution Control
Expenditures
0.58%
2.51%
1.55%
0.30%
0.29%
0.10%
0.01%
0.31%
0.09%
0.14%
0.08%
0.01%
2.51%
0.54%
Sources: 1. U.S. Department of Commerce, Pollution Abatement Costs and Expenditures: 1994 (MA200(94)-1), Tables 3 and 7, May 1996, 20-24, 34-40.
2. Model Exhibit," Total Annual Compliance Costs (Assuming No Market Exit). "
3. 1998 Economic Report of the President (used to convert total pollution control costs to 1996 dollars).
Notes: 1 . Total pollution control expenditures cover all environmental media (e.g., air, water, solid waste).
2. Statistics cover manufacturing establishments with 20 or more employees.
3. Statistics do not include industries with pollution abatement costs and expenditures less than $1 .0 million.
4. Percentages of hazardous waste combusted on-site do not add to 100% because we exclude industries with percentages lower than 0.36% and we exclude industries omitted from
Pollution Abatement Costs and Expenditures: 1994.
5-41
-------
FINAL DRAFT: July 1999
Economic Impact Summary
In this chapter, we presented analyses of and results for several different economic impacts
expected to result from the MACT standards. We summarize the findings in Exhibit 5-21 and
describe major results below:
• Across MACT options, between one and three cement kilns and between
seven and 23 on-site incinerators will stop burning hazardous waste entirely,
rather than incur the rule's compliance costs. For the Recommended MACT,
between one and two cement kilns and seven and 16 incinerators are expected
to exit the market. Additional waste consolidation will occur at other
facilities where wastes are consolidated into fewer combustion systems.
• For the Recommended MACT, market exit and waste consolidation activity
is expected to result in up to 54,000 tons of waste that will be reallocated
from combustion systems that stop burning (this incremental quantity
corresponds to 2 percent of total combusted wastes). Under the BTF-ACI
MACT option, the quantity of reallocated wastes increases to 90,000 tons
(about 3 percent of total combusted wastes). Across MACT options, the
reallocated wastes come primarily from cement kilns and on-site incinerators
that stop burning. Reallocated wastes may be sent to other combustion
facilities that remain open because there is currently adequate capacity in all
sectors to absorb these shifts.
• As the market adjusts to new output levels post-MACT and combustion
facilities invest in additional pollution control and monitoring equipment,
employment shifts will occur. At facilities that consolidate waste burning
activities or that stop burning altogether, employment dislocations of between
100 and 300 full-time equivalent employees are expected. Over half of these
dislocations occur in the on-site sector and the remainder occur at cement
kilns. Employment dislocations increase by almost 20 percent when going
from the Recommended option to the BTF-ACI option. Employment gains
of approximately 100 full-time equivalent employees are expected in the
pollution control industry, and gains of approximately 150 full-time
equivalent employees are expected at combustion facilities that continue
waste burning as facilities invest in new pollution control equipment. Gains
similarly increase by almost 70 percent from the Recommended to the BTF-
ACI option.
• As combustion facilities incur compliance costs of the MACT rule, they have
an incentive to increase prices for combustion. Our evaluation of waste
management alternatives suggests that combustion demand is relatively
5-42
-------
FINAL DRAFT: July 1999
inelastic and prices will likely increase as a result of the final rule by about
$15 per ton for kilns (6 percent) and $12 per ton for incinerators (2 percent).
MACT compliance costs increase the total costs of burning hazardous waste
by approximately 50 percent for cement kilns and about 20 percent for
commercial incinerators, though overall costs remain much lower for cement
kilns. MACT compliance costs represent less than 2 percent of total
pollution control expenditures in industries that contain facilities with on-site
incinerators. Total pollution control expenditures for cement kilns, however,
increase by approximately 60 percent when MACT compliance costs are
added. On the whole, these compliance costs translate into decreased profits
for hazardous waste combustion facilities and increased profits for APCD
manufacturers. We expect profits will decrease by 2 percent for commercial
incinerators and by 11 percent for cement kilns, as these facilities incur the
additional costs of rule compliance. Total profits for the pollution control
industry are expected to increase by about three million dollars.
Exhibit 5-21
SUMMARY OF ECONOMIC IMPACT ANALYSIS
Economic Impact Measure
MACT Option
Floor
Recommended
BTF-ACI
Market Exits
Cement Kilns
Commercial Incinerators
LWAKs
Private On-Site Incinerators
Quantity of Wastes Reallocated
1-2
0
0
7-16
0-53,250
1-2
0
0
7-16
0-53,750
1-3
0
0
13-23
36,660-89,070
Employment Impacts
Annual Gains
Annual Dislocations
Expected Combustion Price Change
223-286
70-252
$3-$28
253-314
70-252
$4-$29
481-558
130-318
$9-$40
Notes:
1 . Estimates taken from the following model exhibits, "Number of Combustion Facilities Likely to Stop
Burning Hazardous Waste in the Short Term" and "Number of Combustion Facilities Likely to Stop
Burning Hazardous Waste in the Long Term;" "Quantity of Hazardous Waste that could be Diverted in
the Short Term" and "Quantity of Hazardous Waste that could be Diverted in the Long Term;"
"Estimated Short-Term Employment Losses at Combustion Systems" and "Estimated Long-Term
Employment Losses at Combustion Systems;" "Estimated Employment Increases Associated with
Compliance Requirements;" and "Weighted Average Combustion Prices per Ton and Increase in Prices
due to Assumed Price Pass Through."
2. PM CEM costs not included.
3. Ranges reflect 25% and 75% price pass-through scenarios and different engineering design levels (i.e.,
50% and 70% of the standards). Ranges for market exits and quantity of waste diverted also reflect short
and long term estimates.
5-43
-------
FINAL DRAFT: July 1999
BENEFITS ASSESSMENT CHAPTER 6
This chapter presents the benefits assessment for the hazardous waste combustion MACT
standards. We use results from EPA's multiple pathway human health and ecological risk
assessment to evaluate incremental benefits to society of emission reductions at hazardous waste
combustion facilities.1 This chapter also assesses how the MACT standards may potentially lead to
changes in the types and quantities of wastes generated and managed at combustion facilities through
increased waste minimization.
The chapter is organized into five sections:
• Risk Assessment Overview: Provides a brief summary of the methodology
from the multiple pathway risk assessment which forms the basis for the
human health and ecological benefits assessment.
• Human Health Benefits Analysis: Describes the approach and presents
results for characterizing human health benefits from the risk results. Where
possible, we assign monetary values to these risk reductions using different
economic valuation techniques. We also describe benefits to sensitive sub-
populations in quantitative, non-monetary terms.
1 At Proposal, we also included results from a screening analysis to assess the potential
magnitude of property value benefits caused by the MACT standards. We did not expand this
analysis in the Economic Assessment of the Final Rule due to limitations of the benefits transfer
approach and because property value benefits likely overlap with human health and ecological
benefits; including property value benefits would result in double-counting. The benefits assessment
also does not examine how secondary impacts such as emissions from increased coal use at
combustion sources that stop burning hazardous waste as fuel may result in human health and
ecological damages. EPA believes that other air regulations under the Clean Air Act governing these
emissions should provide adequate protection to prevent adverse impacts on human health and the
environment ecological factors.
6-1
-------
FINAL DRAFT: July 1999
• Ecological Benefits Analysis: Describes the methodology and results for the
ecological benefits assessment. Ecological benefits results are described in
qualitative terms due to the screening level nature of the ecological risk
analysis.
• Waste Minimization Benefits: Describes the benefits that the MACT
standards may have on increasing waste minimization practices.
• Conclusions: Summarizes key findings from the benefits assessment.
It is important to note that the benefits analysis assumes a baseline scenario with constant
future capacity and with combustion facilities operating at levels corresponding to trial burn
performance. As explained in the "Regulatory Baseline" chapter, the characteristics of waste fed
during normal operations may differ significantly from that fed during trial burns. In particular,
facilities often "spike" the waste feed at the trial burns with high levels of metals, chlorine, and
mercury. This situation results in emission estimates that likely exceed "typical" emissions.
Therefore, the risk reductions and benefits estimates are likely to overstate true benefits.
RISK ASSESSMENT OVERVIEW
The basis for the benefits assessment is a multi-pathway risk assessment developed by the
Economics, Methods and Risk Analysis Division in EPA's Office of Solid Waste, to estimate
baseline risks from hazardous waste combustion emissions, as well as expected risks after the
MACT standards are implemented.2 This section provides an overview of the risk assessment, which
analyzes both human health and ecological risks that result from direct and indirect exposure to
emissions from facilities that burn hazardous waste.3 A multi-pathway analysis that models both
inhalation and ingestion pathways is used to estimate human health risks, whereas a less detailed
screening-level analysis is used to identify the potential for ecological risks. In most cases, the risk
assessment is carried out for four major scenarios: baseline (no regulation), the MACT Floor, EPA's
Recommended BTF Standard, and the more stringent BTF-ACI Standard (which tightens the dioxin
and mercury levels across combustion sources). The Assessment uses a case study approach in
2"Human Health and Ecological Risk Assessment Support to the Development of Technical
Standards for Emissions from Combustion Units Burning Hazardous Wastes: Background
Document - Final Report," November 1998.
3EPA expects that hazardous waste-burning kilns that use feed control to achieve emissions
reductions will also generate cement kiln dust (CKD) with a lower toxicity than prior to feed control
(in particular, lower SVM content) (USEPA "Selection of MACT Standards and Technology,"
Chapter 12 of Volume 3 Technical Support Document for HWC MACT Standards, July 1999.) The
risk assessment did not address the potential human health and ecological benefits associated with
reduced toxicity CKD.
6-2
-------
FINAL DRAFT: July 1999
which 76 hazardous waste combustion facilities and their site-specific land uses and environmental
settings are characterized.4 The randomly selected facilities in the study include the following: 43
on-site incinerators, 13 commercial incinerators, 15 cement kilns, and five lightweight aggregate
kilns.5
The pollutants analyzed in the risk assessment are dioxins and furans, selected metals,
particulate matter (PM), chlorine, and hydrogen chloride.6'7 The metals modeled in the analysis
include the following: antimony, arsenic, barium, beryllium, cadmium, chromium8, copper, cobalt,
lead, manganese, mercury9, nickel, selenium, silver, and thallium.10 The fate and transport of the
emissions of these pollutants are modeled to arrive at concentrations in air, soil, surface water, and
sediments. To assess human health risks, these concentrations can be converted to estimated doses
to the exposed populations using exposure factors such as inhalation and ingestion rates. These
doses are used to calculate cancer and non-cancer risks if the appropriate health benchmarks are
available. To assess potential ecological risks, soil, surface water, and sediment concentrations are
4 For a more detailed discussion of the land use characterization, see: Zachary Pekar and
Tony Marimpietri. January 27, 1998. Memorandum, "Description of Methodologies and Data
Sources Used in Characterizing Land Use (including Human/Livestock Populations), Air Modeling
Impacts, and Waterbody/Watershed Characteristics for HWC Study Areas," prepared for David
Layland, U.S. Environmental Protection Agency.
5 According to the risk assessment, the random sample of 65 facilities ensures that the
probability of modeling at least one high-risk facility is 90 percent. The other 1 1 combustion
facilities were selected for the risk assessment at Proposal. Because these 11 facilities were not
selected at random, they are handled differently from the 65 randomly selected facilities in
extrapolating risks to reflect the universe of facilities.
6 PM, chlorine, and hydrogen chloride are not evaluated in the screening for ecological risks.
7 The national risk assessment did not include an assessment of the risk posed by nondioxin
products of incomplete combustion (PICs) due to the lack of sufficient emission measurements.
However, as part of this final rule, EPA is recommending that permitting authorities evaluate the
need for conducting Site Specific Risk Assessments (SSRAs) on a case-by-case basis, and therefore
if there is any reason to believe that operation in accordance with the MACT standards alone is not
protective of human health and the environment (due to nondioxin PICs), the permitting authorities
could require additional control based on results from a SSRA. It is important to note that EPA does
not anticipate that a large number of SSRAs will need to be conducted.
8
Both chromium (HI) and chromium (VI) were evaluated in the risk assessment.
9 Includes divalent mercury (via ingestion), elemental mercury (via inhalation), and methyl
mercury (via ingestion).
10 We recognize that these chemicals are not all HAPs; however, the risk assessment analyzed
all chemical constituents covered by the rule for which sufficient data were available.
6-3
-------
FINAL DRAFT: July 1999
compared with eco-toxicological criteria representing protective screening values for ecological
risks.11 Because these criteria are based on de minimis ecological effects and thus represent
conservative values, an exceedence of the eco-toxicological criteria does not necessarily indicate
ecological damages; it simply suggests that potential damages cannot be ruled out.
To characterize the cancer and non-cancer risks to the populations listed above, the risk
assessment breaks down the area surrounding each modeled combustion facility into 16 polar grid
sectors, as illustrated in Exhibit 6-1. For each polar grid sector, risk estimates can be developed for
different age groups and receptor populations (e.g., 0-5 year old children of subsistence fishers).
This approach is used because geographic and demographic differences across polar grid sectors lead
to sectoral variation in individual risks. Thus, individual risk results are aggregated across sectors
and weighted by population in each sector to generate the distribution of risk to individuals in the
affected area.12 An additional Monte Carlo analysis was conducted to incorporate variability in other
exposure factors such as inhalation and ingestion rates for three scenarios that were originally
thought to comprise the majority of the risk to the study area population. These scenarios address
cancer risk from dioxin exposure to beef and dairy farms and non-cancer risk from methyl mercury
exposure to recreational anglers.
HUMAN HEALTH BENEFITS
This section describes in greater detail the approaches for characterizing human health
benefits. The starting point for assessing benefits is identifying those pollutants for which emission
reductions are expected to result in improvements to human health or the environment. We then
summarize the relevant results from the risk assessment for the pollutants of concern, focusing on
population risk results based on central tendency exposure parameters so that benefits can be
appropriately compared with total costs. We express the risk assessment data as indicators of
potential benefits, such as reduced cancer incidence or reduced potential for developing particular
illnesses. Where possible, we assign monetary values to these benefits using a benefits transfer
approach.
11 The methodology used to develop the eco-toxicological criteria is largely a product of the
ecological risk assessment work conducted to support the proposed HWIR for process waste.
12 Some of the exposure levels will not be sector specific (e.g., exposure to dioxin in dairy
products is based on an average concentration at dairies throughout the entire study area).
6-4
-------
FINAL DRAFT: July 1999
Exhibit 6-1
DIAGRAM OF 16 SECTOR POLAR-BASED GRID
USED IN THE RISK ASSESSMENT
Waterbody (lake)
One of 16 sectors ••
.-•U.S. Census Block Group
" " 0-2 km ring
2-5 km ring
5-10 km ring
' 10-20 km ring
Human Health Benefits Methodology
The approach for assessing human health benefits is divided into two components - benefits
from cancer risk reductions and benefits from non-cancer risk reductions. We separate the
discussion in this way because the interpretation of risk reductions for carcinogenic pollutants is very
different than that for non-carcinogens. As explained above, for both cancer and non-cancer
benefits, we focus on population risks because these results form the basis for assessing total benefits
of the MACT standards. In general, these results concern the population overall with regards to
different age groups, though risk reductions associated with certain pollutants, such as lead,
specifically affect children within the population. In these cases, we focus on the benefits to a subset
of children, ages 0-19.13
13 In light of recent federal initiatives and other attention regarding the unique vulnerability
of children to environmental health threats, we provide a more detailed discussion of reduced risks
to children's health in Appendix I.
6-5
-------
FINAL DRAFT: July 1999
In addition to population results, we also describe individual risk results for the hypothetical
worst case scenarios for both cancer and non-cancer risks.14 Because we do not have population data
for the most sensitive sub-populations, we can only describe individual risk results for subsistence
farmers and fishermen and cannot make statements concerning the total number of people that may
experience health benefits associated with the MACT standards.
Approach for Assessing Benefits from Cancer Risk Reductions
The basic approach for assessing benefits from cancer risk reductions relies on two analytic
components. First, we use cancer risk reductions for all non-subsistence receptors in the vicinity of
combustion facilities. These risk reduction estimates are derived from the median individual risk
values and population data for non-subsistence populations.15 Carcinogens included in the risk
assessment are dioxin/furans, arsenic, beryllium, cadmium, chromium (VI), and nickel. Second, we
use cancer risk reductions associated with the ingestion of dioxin-contaminated foods grown or
raised near combustion facilities but distributed nationwide. We then calculate total cancer risk
reductions by summing the avoided cases in communities near combustion facilities with the number
of cases avoided due to reduced dioxin in the national food supply.16 That is,
Total cancer risk reductions = Avoided cases in communities near combustion facilities +
Avoided cases due to reduced dioxin in the national food
supply.
14 As we explain in more detail later on, the hypothetical worst case individual scenarios are
associated with subsistence receptors (i.e., subsistence fishermen and farmers) for whom no
population data are available. As a result, we cannot quantify nor monetize benefits for these groups,
though we qualitatively discuss the pollutants and receptor groups involved.
15 Cancer incidence estimates use direct and indirect exposure pathways for all non-
subsistence receptors, excluding recreational anglers. Population risks could not be calculated for
recreational anglers because detailed population data were not available for this receptor population.
16 Summing these estimates may pose the potential for double-counting, considering that
dioxin-contaminated food ingestion is also evaluated on the local level. However, if we make the
assumption that most of the agriculture products produced within 20 kilometers of the facility are
consumed outside the local area (considering the extensive national food distribution networks that
exist), then we minimize the potential for double-counting. Discussions with EPA and Research
Triangle Institute, the contractor that prepared the Combustion Risk Assessment, confirmed that this
in fact is a reasonable assumption.
6-6
-------
FINAL DRAFT: July 1999
To assign monetary values to cancer risk reduction estimates, we apply the value of a
statistical life (VSL) to the risk reduction expected to result from the MACT standards. The VSL
is based on an individual's willingness to pay (WTP) to reduce a risk of premature death or their
willingness to accept (WTA) increases in mortality risk.17 Because there are many different
estimates of VSL in the economic literature, we estimate the reduced mortality benefits using a range
of VSL estimates from 26 policy-relevant value-of-life studies. As shown in Exhibit 6-2, the
estimated VSL figures from these studies range from $0.7 million to $15.9 million, with an average
value of $5.6 million (in 1996 dollars). To value the mortality risk reductions, we multiply the
expected number of annual premature statistical deaths avoided by the high-end, low-end, and mean
value of the VSL estimates.
Approach for Assessing Benefits from Non-Cancer Risk Reductions
A variety of approaches are used to evaluate the benefits of reducing particulate matter, lead,
and mercury.18 For particulate matter, we estimate both morbidity and mortality benefits; this is the
only non-carcinogen in the risk assessment for which there is sufficient dose-response information
to estimate numbers of cases of disease and deaths from exposures. For lead and mercury, we use
upper bound estimates of the population at risk, because we only have information on the potential
of an adverse effect and we cannot say anything about the likelihood of these effects.
We assign monetary values to non-cancer benefits using a direct cost approach which focuses
on the expenditures averted by decreasing the occurrence of an illness or other health effect. While
the WTP approach used for valuing the cancer risk reductions is conceptually superior to the direct
cost approach, measurement difficulties, such as estimating the severity of various illnesses
precludes us from using this approach here. Direct cost measures are expected to understate true
benefits because they do not include cost of pain, suffering, and time lost. On the other hand,
because we use upper bound estimates of the population at risk, we cannot conclude that the results
are biased in one direction or the other. Below is a more detailed description of our approach for
assessing benefits from specific non-cancer pollutants.
17 We use the VSL approach for the MACT benefits assessment instead of applying estimates
of the Value of a Statistical Life Year (which values the number of life years lost as the result of
premature mortality) because, while we have age stratified cancer incidence data for the local
populations near combustors, we do not have such data for cancer incidence from nationwide
consumption of dioxin-contaminated foods.
18 Particulate matter and lead are the only non-carcinogens for which emission reductions
provide human health benefits. We also include a section on mercury due to the public concerns
regarding this HAP. The risk assessment, however, finds no human health benefits for non-
subsistence populations from mercury emission reductions.
6-7
-------
FINAL DRAFT: July 1999
Exhibit 6-2
SUMMARY OF MORTALITY VALUATION ESTIMATES
Study
Kneisner and Leeth (1991) (US)
Smith and Gilbert (1984)
Dillingham(1985)
Butler (1983)
Miller and Guria (1991)
Moore and Viscusi (1988a)
Viscusi, Magat, and Huber (1991b)
Marin and Psacharopoulos (1982)
Gegaxetal. (1985)
Kneisner and Leeth (1991) (Australia)
Gerking, de Haan, and Schulze (1988)
Cousineau, Lacroix, and Girard (1988)
Jones-Lee (1989)
Dillingham(1985)
Viscusi (1978, 1979)
R.S. Smith (1976)
V.K. Smith (1976)
Olson (1981)
Viscusi (1981)
R.S. Smith (1974)
Moore and Viscusi (1988a)
Kneisner and Leeth (1991) (Japan)
Herzog and Schlottman (1987)
Leigh and Folson( 1984)
Leigh (1987)
Garen(1988)
Type of
Estimate
Labor Market
Labor Market
Labor Market
Labor Market
Contingent Value
Labor Market
Contingent Value
Labor Market
Contingent Value
Labor Market
Contingent Value
Labor Market
Contingent Value
Labor Market
Labor Market
Labor Market
Labor Market
Labor Market
Labor Market
Labor Market
Labor Market
Labor Market
Labor Market
Labor Market
Labor Market
Labor Market
Mean Value
Valuation
(millions 1996$)
0.7
0.8
1.1
1.3
1.4
2.9
3.2
o o
J.J
3.9
3.9
4.0
4.2
4.5
4.6
4.8
5.4
5.5
6.1
7.7
8.5
8.6
8.9
10.7
11.4
12.2
15.9
5.6
Source: Viscusi, W. Kip. Fatal Tradeoffs: Public and Private Responsibilities for Risk. New York: Oxford
University Press, 1992
6-8
-------
FINAL DRAFT: July 1999
Benefits from Reduced Exposure to Particulate Matter
In addition to avoided illnesses and deaths, benefits of reduced PM emissions include
valuation of work loss days and mild restricted activity days (MRAD). To assess benefits from
reduced particulate matter exposure, we first estimate the number of excess mortality cases, cases
of illnesses, restricted activity days, and work loss days in the baseline. We then estimate the
number of cases under three MACT standards: Floor Standard, Recommended MACT Standard,
and BTF-ACI MACT Standard. To determine potential benefits for each option, we then subtract
the number of post-MACT cases from the number of baseline cases. We estimated benefits based
on the dollar value associated with the following health conditions:
• respiratory diseases,
• chronic bronchitis,
• ischemic heart disease,
• congestive heart failure,
• asthma,
• work loss days, and
• mild restricted activity days (MRAD).19
For avoided deaths, we assign monetary values in the same way as for avoided cancer cases, using
a range of estimates for the statistical value of a life (see discussion above). To value the morbidity
risk reductions associated with exposure to particulate matter, we multiply the expected number of
annual reductions for each ailment by the cost of the condition, as shown in Exhibit 6-3. The
estimated cost of each illness includes the hospital charge, the costs of associated physician care, and
the opportunity cost of time spent in the hospital.20 Since these estimates do not include post-
hospital costs or pain and suffering of the afflicted individuals, the cost of illness estimates may
understate the benefits.
19 Work loss days and mild restricted activity days do not necessarily affect a worker's income
and do not generally require hospitalization. It does, however, result in lost economic productivity
and consequently, a loss to society.
20 Opportunity cost of time spent in the hospital is in addition to work loss days and MRAD.
Cost estimates come from the following source: U.S. EPA. October 1997. The Benefits and Costs
of the Clean Air Act, 1970 to 1990, pages I-11 and 1-12. For the following three illnesses, respiratory
illness, ischemic heart disease, and congestive heart failure estimate, physician charges come from
Abt Associates, Incorporated (1992), The Medical Costs of Five Illnesses Related to Exposure to
Pollutants, prepared for U.S. EPA, Office of Pollution Prevention and Toxics, Washington, DC.
Hospital charge estimates for these three illnesses are from A. Elixhauser, R.M. Andrews, and S.
Fox, Agency for Health Care Policy and Research (AHCPR), Center for General Health Services
Intramural Research, U.S. Department of Health and Human Services (1993), Clinical
Classifications for Health Policy Research: Discharge Statistics by Principal Diagnosis and
Procedure.
6-9
-------
FINAL DRAFT: July 1999
Exhibit 6-3
COSTS OF ILLNESS ASSOCIATED WITH PM
Illness
Respiratory Illness
Chronic bronchitis
Ischemic heart disease
Congestive heart failure
Asthma
Work Loss Days
Mild Restricted Activity Day
Estimated Cost Per Incidence (1996 $)
$7,200
$306,000
$12,000
$9,800
$38
$98 (cost per day)
$45 (cost per day)
Source: U.S. Environmental Protection Agency, The Benefits and Costs of the Clean Air Act, 1970
to 1990, October 1997, 111-112
Note: In the case of work loss days and mild restricted activity days estimates represent costs
incurred per day.
Benefits from Reduced Exposure to Lead
The primary effect from chronic exposure to lead is central nervous system effects. Children
are particularly sensitive to the effects of lead and excess exposure can affect a child's nervous
system and cognitive development. We assess benefits from reduced lead exposure by estimating
the number of children whose total blood lead levels are reduced below levels of concern
(10//g/dL).21 Because we could not find an economic valuation study that estimates the cost of
illness associated with children's blood lead levels exceeding 10//g/dL, and due to the low potential
benefits suggested by the risk assessment, we do not attempt to monetize these benefits.
21 The lead modeling in the risk assessment uses a distribution of background lead levels with
a central tendency estimates of 3.6//g/dL. Background concentration at the 99th percentile exceed
10//g/dL.
6-10
-------
FINAL DRAFT: July 1999
Benefits from Reduced Exposure to Mercury
Recreational anglers exposed to mercury above levels of concern are potentially at risk for
bearing children with developmental abnormalities.22 To project the benefits of reduced exposure,
we estimate the median cost of developmental abnormalities using a range of estimates for various
birth defects provided in the Waitzman et al. study (see Exhibit 6-4).23 In a recent survey of the non-
cancer economic literature, this study was found to provide reasonable benefit measures.24 Using
the birth rate of the general population, we assume that 1.67 percent of recreational anglers
potentially at risk will have children in a given year.25 Similar to the other benefits for which we
assign monetary values, this estimate also may understate benefits because it does not include
avoided pain and suffering.
It is important to note that this approach uses upper bound estimates of the population at risk
to compute benefits for mercury. The cost of developmental abnormalities is applied to all
recreational anglers potentially at risk (i.e., those exposed to mercury above levels of concern
(HQ>1)). This approach does not allow us to say anything about the likelihood of an adverse effect
for the anglers at risk; we can only say that we cannot rule out adverse impacts for these individuals.
Subsistence fishermen, those individuals who obtain a significant portion of their dietary fish intake
from their own fishing activities, potentially face even greater risk for bearing children with
developmental abnormalities as a result of higher mercury exposure levels in their daily fish
consumption. Because we do not have population data for subsistence fishermen, we describe
potential health benefits to this sensitive sub-population by describing changes in individual hazard
quotients.
22 Given the current state of scientific knowledge, there is controversy regarding modeling
mercury concentrations in fish. The November 1998 risk assessment uses the IEM-2M model to
evaluate the fate and transport of mercury in waterbodies. This is the same model that was used in
the 1998 Mercury Report to Congress.
23 N.J. Waitzman, R.M Scheffler, and P.S. Romano. 1996. The Costs of Birth Defects.
University Press of America, Inc., Lanham, Maryland. This study provides estimates of the costs
of birth defects involving major structural anomalies, and includes both direct and indirect costs. The
direct costs include medical, developmental, and special education outlays. Indirect costs consist
of the foregone earnings and fringe benefits from premature mortality, excess morbidity, lower
wages, and lower labor force participation rates. In addition, indirect costs include foregone
nonmarket production, based on the cost of hiring people for household work.
24 Industrial Economics, Social Science Discussion Group. September 30, 1997. Handbook
for Non-Cancer Valuation: Draft, prepared for U.S. EPA.
25 U.S. Department of Commerce, Bureau of the Census. 1995. Statistical Abstract of the
United States 1995. 115th ed., 73.
6-11
-------
FINAL DRAFT: July 1999
Exhibit 6-4
COSTS OF ILLNESS ASSOCIATED WITH VARIOUS BIRTH DEFECTS
Health Condition
Spina bifida
Truncus arteriosus
Transposition of great arteries/ Double
Outlet Right Ventricle
Single ventricle
Tetralogy of Fallot
Cleft lip or palate
Tracheoesophageal fistula
Atresia of the small intestine
Colorectal atresia
Renal agenesis
Urinary tract obstruction
Upper-limb reduction
Lower-limb reduction
Diaphragmatic hernia
Gastroschisis
Omphalocele
Down syndrome
Median
Cost per Case (thousands)
$324
$557
$294
$379
$288
$112
$160
$82
$135
$276
$93
$110
$219
$276
$119
$194
$497
$219
Source: Waitzmanetal. (1996).
Note: Figures are in 1996 dollars.
Human Health Benefits Results
Human health benefits are expected from both cancer and non-cancer risk reductions. A
summary of the benefits is provided in Exhibits 6-5 through 6-7. Below, we describe the results in
more detail.
6-12
-------
FINAL DRAFT: July 1999
Benefits from Cancer Risk Reductions
Across MACT standards, less than one cancer case per year is expected to be avoided due
to reduced emissions from combustion facilities. The majority of the cancer risk reductions are
linked to consumption of dioxin-contaminated agricultural products exported beyond the boundaries
of the study area (20 km). Roughly one-third of the cancer risk reductions occur in local populations
living near combustion facilities. Cancer risks for local populations are attributed primarily to
reductions in arsenic and chromium emissions; these pollutants account for almost 80 percent of total
local cancer incidences in the baseline. By applying the full range of VSL estimates to these cases,
total annual cancer risk reductions at the MACT floor are valued between $86,000 to $2 million,
with a best estimate of $0.69 million. The VSL estimates for the two beyond-the-floor scenarios are
considerably higher. The central estimate for the Final Rule is roughly $2 million dollars, with a
range between $0.26 million and $6 million. Benefits for the BTF-ACI standard range between $0.3
million and $6.4 million; the central estimate is $2.3 million.
Across all receptor populations, individual cancer risks are greatest for subsistence farmers
who obtain the majority of their dietary intake of all agricultural commodities from home-
production.26 Dioxin and arsenic are the primary pollutants that drive the cancer risks for this
sensitive receptor population. As mentioned previously, lack of population data prevents us from
quantifying benefits for this hypothetical sub-population, but we can characterize the reduction in
risk from baseline to implementation of the MACT standards. For instance, subsistence farmers
exposed to the highest pollutant levels face getting cancer with a probability of five in 100,000.27
With the exception of one particular scenario, the cancer risk for all subsistence farmers is reduced
below levels of concern after implementation of the MACT standards.28 In addition to the cancer
risk reductions for the overall population, the MACT standards will result in lower cancer risks for
the children of especially sensitive sub-populations.
26 The following pathways pertain to this subsistence receptor: ingestion of home-produced
beef, pork, chicken, eggs, milk, root vegetables, exposed fruit, exposed vegetables, and fish caught
on farm ponds.
27 The hypothetical scenario with the greatest individual cancer risk is that for children (ages
0-5 and 6-11) of subsistence farmers resulting from dioxin associated with commercial incinerator
emissions.
28 Baseline cancer risk for subsistence farmer family members ages 0-5 and 6-11 associated
with cement kiln emissions is 2E-05; it remains 2E-05 following the implementation of either the
Floor or Recommended MACT standards. At the most stringent level, BTF-ACI MACT, the cancer
risk is reduced to 1E-05. It is important to emphasize that because of the absence of subsistence
farmer population estimates, these hypothetical scenarios represent only the upper bound. No
conclusions can be made as to the incidence rates associated with individual risks.
6-13
-------
FINAL DRAFT: July 1999
Exhibit 6-5
BENEFITS SUMMARY: BASELINE TO MACT FLOOR
Human Health Benefit
Cancer deaths avoided
PM10 deaths avoided
PMlO-related disease avoided
hospital admissions
chronic bronchitis
asthma
work loss days/ MRAD
Recreational anglers potentially at
risk for having offspring with
developmental abnormalities
Children age 0-5 with blood lead >
10,wg/dL
Reduction in Number of Cases
per Year
0.12
1.50
6
25
267,600
19,800
0
2
Total Annual Monetary Benefits
Annual Undiscounted Value
(1996 $ millions)
$0.69
($0.09 -$1.96)
$8.40
($1.05 -$23. 85)
$ 18.99
$0.05
$7.77
$ 10.17
$1.00
$0.00
_
$ 28.08
($20.13 - $44.80)
Notes:
1. The average value of a statistical life is $5.6 million, with a low-end estimate of $0.7 million, and a
high-end estimate of $15.9 million.
2. Benefits associated with changes in children's blood levels are not monetized.
3 . We use cost of illness approach for valuing some noncancer health effects. This method tends to
understate the benefits, because it does not account for some indirect costs (i.e. pain and suffering of the
affected individuals).
6-14
-------
FINAL DRAFT: July 1999
Exhibit 6-6
BENEFITS SUMMARY: BASELINE TO RECOMMENDED MACT (FINAL STANDARDS)
Human Health Benefit
Cancer deaths avoided
PM10 deaths avoided
PMlO-related disease avoided
hospital admissions
chronic bronchitis
asthma
work loss days/ MRAD
Recreational anglers potentially at risk
for having offspring with
developmental abnormalities
Children age 0-5 with blood lead >
10,wg/dL
Reduction in Number of
Cases per Year
0.37
1.5
6
25
267,600
19,800
0
2
Total Annual Monetary Benefits
Annual Undiscounted Value
(1996 $ millions)
$2.05
($0.26 -$5.81)
$8.40
($1.05 -$23. 85)
$ 18.99
$0.05
$7.77
$ 10.17
$ 1.00
$0.00
-
$29.44
($23.30 - $48.65)
Notes:
1. The average value of a statistical life is $5.6 million, with a low-end estimate of $0.7 million, and a
high-end estimate of $15.9 million.
2. Benefits associated with changes in children's blood levels are not monetized.
3 . We use cost of illness approach for valuing some noncancer health effects. This method tends to
understate the benefits, because it does not account for some indirect costs (i.e. pain and suffering of
the affected individuals).
6-15
-------
FINAL DRAFT: July 1999
Exhibit 6-7
BENEFITS SUMMARY: BASELINE TO BTF-ACI MACT
Human Health Benefit
Cancer deaths avoided
PM10 deaths avoided
PMlO-related disease avoided
hospital admissions
chronic bronchitis
asthma
work loss days/ MRAD
Recreational anglers potentially at risk
for having offspring with
developmental abnormalities
Children age 0-5 with blood lead >
10,wg/dL
Reduction in Number of
Cases per Year
0.41
1.5
6
25
267,600
19,800
0
2
Total Annual Monetary Benefits
Annual Undiscounted Value
(1996 $ millions)
$2.27
($0.28 - $6.44)
$8.40
($1.05 -$23. 85)
$ 18.99
$0.05
$7.77
$ 10.17
$ 1.00
$0.00
-
$ 29.66
($20.32 - $49.28)
Notes:
1. The average value of a statistical life is $5.6 million, with a low-end estimate of $0.7 million, and
a high-end estimate of $15.9 million.
2. Benefits associated with changes in children's blood levels are not monetized.
3 . We use cost of illness approach for valuing some noncancer health effects. This method tends to
understate the benefits, because it does not account for some indirect costs (i.e. pain and
suffering of the affected individuals).
6-16
-------
FINAL DRAFT: July 1999
Benefits from Non-Cancer Risk Reductions
The non-cancer human health benefits from the MACT standards come from reductions in
particulate matter. Some additional non-cancer benefits come from reduced blood lead levels in
children living near combustion facilities.29 Total annual non-cancer benefits for the Final Standard
are valued between $23 million to $49 million, with a best estimate of $29 million.
Particulate Matter. Benefits from reduced exposure to PM come primarily from emission
reductions at on-site incinerators. There are approximately two avoided premature deaths each year
due to reduced particulate matter emissions; these fatal risk reductions are valued at $8.4 million
annually. However, the majority of the health benefits are due to non-fatal effects (avoided illnesses
and fewer days of restricted activity or work loss); these non-fatal human health benefits are valued
at $19 million per year. Reductions in chronic bronchitis account for almost half of the morbidity
benefits. In addition, over 250,000 asthma attacks and over 19,800 days of work loss or MRAD will
be avoided annually due to the MACT standards. While separate results are not available for
children, it is safe to assume that many of the respiratory health benefits will be experienced by
children, who are thought to be especially vulnerable to the effects of PM exposure.30
Mercury. Across all age groups and populations, hazard quotients in the baseline are below
levels of concern. After the MACT standards are implemented, the risk assessment estimates
relatively small decreases in absolute exposures to mercury. For cement kilns, high-end hazard
quotients in adults are projected to be reduced from a range of 0.09 to 0.4 to a range from 0.06 to 0.2
under the final MACT standards. In children, high-end hazard quotients are projected to be reduced
from a range of 0.2 to 0.8 to a range of 0.2 to 0.6 under the final MACT standards. For lightweight
aggregate kilns, high-end hazard quotients in both adults and children are below 0.1 for baseline
emissions and under MACT. For incinerators, high-end hazard quotients are below 0.01 in adults
and below 0.1 in children for baseline emissions and under MACT. Taken together, these results
appear to suggest that risks from mercury emissions (on an incremental basis) are likely to be small.31
29 Other pollutants were found to pose negligible individual risks and consequently not
included in the results.
30 U.S. EPA. September 1996. Environmental Health Threats to Children. EPA 175-F-96-
001,4.
31 The preamble of the Rule provides a detailed discussion of factors contributing to this
uncertainty.
6-17
-------
FINAL DRAFT: July 1999
Lead. The MACT standards are expected to reduce lead exposure below levels of concern
for two children annually. Also, the MACT standards will result in reduced lead levels for children
of sub-populations with higher levels of exposure. For instance, cumulative lead exposures will be
reduced from approximately 12 to 10.5 //g/dL for the 1 percent of subsistence farmers living near
incinerators with the highest exposure levels. Children of subsistence fishermen, commercial beef
farmers, and commercial dairy farmers who face the greatest levels of cumulative lead exposure will
also experience reductions of about 0.5//g/dL in blood lead levels.
Human Health Benefits Summary
Annual human health benefits associated with emission reductions from the final MACT
standards include approximately two avoided premature deaths, and reductions of six hospital
admissions, over 250,000 asthma attacks, and about 20,000 days of work loss or MRAD. Additional
health and ecological benefits are possible if additional emission reductions are achieved as a result
of a SSRA or less toxic CKD resulting from feed control.32 Exhibit 6-8 summarizes the quantifiable
human health benefits across combustion sources and MACT standards. As shown in the exhibit,
with the exception of cancer risk reductions, human health benefits do not vary across the MACT
regulatory scenarios. Cancer risk reductions vary only slightly across MACT scenarios. Overall,
the majority of human health benefits are due to reductions in incinerator emissions. This result is
primarily due to the fact that incinerators comprise roughly 70 percent of the total number of
hazardous waste combustion systems.
32 EPA does not, however, anticipate a large number of SSRAs will need to be performed.
Also, even if a SSRA is conducted, the results from the SSRA may demonstrate that no additional
control is necessary.
6-18
-------
FINAL DRAFT: July 1999
Exhibit 6-8
BENEFITS SUMMARY: CASES AVOIDED BY SOURCE, BASELINE TO MACT STANDARD
LWAK/Human Health Benefits
Cancer deaths avoided
PM10 deaths avoided
PMlO-related disease avoided
hospital admissions
chronic bronchitis
asthma
work loss days/ MRAD
Recreational anglers potentially at risk for having
offspring with developmental abnormalities
Children age 0-5 with blood lead > 10^g/dL
Cement Kilns/Human Health Benefits
Cancer deaths avoided
PM10 deaths avoided
PMlO-related disease avoided
hospital admissions
chronic bronchitis
asthma
work loss days/ MRAD
Recreational anglers potentially at risk for having
offspring with developmental abnormalities
Children age 0-5 with blood lead > 10^g/dL
All Incinerators/Human Health Benefits
Cancer deaths avoided
PM10 deaths avoided
PMlO-related disease avoided
hospital admissions
chronic bronchitis
asthma
work loss days/ MRAD
Recreational anglers potentially at risk for having
offspring with developmental abnormalities
Children age 0-5 with blood lead > 10/^g/dL
Floor
0
0
0.01
0.07
509
36.5
0
0
Floor
0.01
0
0.04
0.15
10,668
71
0
0
Floor
0.11
1.49
5.85
25
256,371
19,659
0
2
Recommended
0.06
0
0.01
0.07
509
36.5
0
0
Recommended
0.01
0
0.04
0.15
10,668
71
0
0
Recommended
0.29
1.49
5.85
25
256,371
19,659
0
2
BTF-ACI
0.06
0
0.01
0.07
509
36.5
0
0
BTF-ACI
0.03
0
0.04
0.15
10,668
71
0
0
BTF-ACI
0.31
1.49
5.85
25
256,371
19,659
0
2
6-19
-------
FINAL DRAFT: July 1999
ECOLOGICAL BENEFITS
Ecological benefits are based on a screening analysis for ecological risks that compares soil,
surface water, and sediment concentrations with eco-toxicological criteria based on de minimis
thresholds for ecological effects. Because these criteria represent conservative values, exceeding the
eco-toxicological criteria only indicates the potential for adverse ecological effects and does not
necessarily indicate ecological damages. For this reason, we describe benefits of avoiding adverse
ecological impacts qualitatively.
The basic approach for determining whether ecosystems and/or biota are potentially at risk
consists of five steps:
• First, the risk assessment identified susceptible ecological receptors. Because
combustion facilities are located across the country, ecological receptors for
the screening analysis were chosen to represent relatively common species
and communities of wildlife.33
• Second, the risk assessment developed eco-toxicological criteria for receptors
that represent acceptable pollutant concentrations (i.e., at these levels, there
is a low potential for adverse ecological effects).34
• Third, the risk assessment estimated baseline and post-MACT pollutant
concentrations in sediments, soils, and surface water in the study areas.
• Fourth, for each land area or water body modeled, the risk assessment
compared the modeled media concentrations to ecologically protective levels
to estimate eco-toxicological hazard quotients.
• Lastly, to estimate the potential for adverse ecological effects in the study
areas, the risk assessment totaled the area of polar grid sectors (for terrestrial
ecosystems) and water bodies (from aquatic ecosystems) with hazard
quotients exceeding one.
To assess potential ecological benefits from the risk assessment results, we compare the
surface area of land or water bodies potentially at risk in the baseline with the area post-MACT. The
reduction in surface area potentially at risk indicates a potential for avoiding adverse ecological
impacts. We do not assign monetary values to these potential benefits, because no methods are
available for translating the eco-toxicological criteria into a benefit measure, such as increased fish
populations.
33
Threatened and endangered species and/or habitats were not included in the analysis.
34 A description of the eco-toxicological criteria developed can be found in Research Triangle
Institute. February 20, 1998. Memorandum, "Description of the SERA Methodology," prepared for
the U.S. EPA.
6-20
-------
FINAL DRAFT: July 1999
Ecological Benefits Results
Ecological benefits are assessed based on reductions in dioxin/furans and selected metals.
Lead is the only pollutant of concern for aquatic ecosystems. Mercury appears to be of greatest
concern for terrestrial ecosystems. Dioxin and lead emission reductions also provide some potential
benefits for terrestrial ecosystems. Under the Final Standards, the eco-toxicological hazard quotient
is reduced to below the level of concern for 38 square kilometers of water surface area. For
terrestrial ecosystems, the land area that may experience reductions in ecological risk criteria below
levels of concern ranges from 115 square kilometers to 147 square kilometers under the Final
Standards.35 Under the BTF-ACI Standards, up to 161 square kilometers of terrestrial ecosystems
may experience improvements. Ecological benefit results are summarized in Exhibit 6-9.
It is important to note that these reductions of ecological risk criteria below levels of concern
only indicate the potential for an ecological improvement. It is not clear that a stringent MACT
standard would necessarily provide ecological benefits to areas around combustion facilities. Also,
because the screening-level nature of the ecological risk assessment does not allow us to predict the
type or magnitude of benefits, we cannot assign monetary values to these potential ecological
benefits.
WASTE MINIMIZATION BENEFITS
While many facilities may implement end-of-pipe controls such as fabric filters and high-
energy scrubbers to achieve MACT control, emission reductions may also be accomplished by
reducing the volume and/or toxicity of wastes currently combusted. In addition, generators may also
consider waste management alternatives such as solvent recycling. For purposes of this analysis,
these types of responses will be referred to as "waste minimization." This section analyzes the
potential waste minimization benefits of the MACT rule.
As the MACT standards are implemented, the costs of waste burning will increase, thus
shifting market incentives toward greater waste minimization. As discussed in Chapter 5, higher
waste burning costs will result in higher combustion prices, assuming that demand is not completely
elastic. To predict the quantity of waste that could be economically diverted from combustion to
waste minimization, we conducted a comprehensive waste minimization analysis which considers
in-process recycling, out-of-process recycling and source reduction.36 The objective of the analysis
35 The low-end estimate assumes the same waterbodies or land areas are affected by different
pollutants. That is, under the Recommended MACT, the six square kilometers of land nearby
incinerators that experience ecological improvements associated with lead emission reductions are
captured in the 87 square kilometers of land nearby incinerators associated with mercury reductions.
36 The waste minimization report is included as Appendix F: Allen White and David Miller,
Tellus Institute. July 24, 1997. "Economic Analysis of Waste Minimization Alternatives to
Hazardous Waste Combustion."
6-21
-------
FINAL DRAFT: July 1999
was to predict the quantity of hazardous wastes that may be diverted to these waste minimization
alternatives under different combustion price increase scenarios.
Exhibit 6-9
ECOLOGICAL BENEFITS SUMMARY
LWAKs: Reduction in Area (km2) of Land or Water Bodies Impacted
Media Affected & Pollutant of
Concern
Soil- Dioxin
Soil- Lead
Soil- Mercury
Surface Water- Lead
Floor
MACT
0
0
3
0
Recommended
MACT
3
0
3
0
BTF-ACI
MACT
o
J
0
3
0
Cement Kilns: Reduction in Area (km2) of Land or Water Bodies Impacted
Media Affected & Pollutant of
Concern
Soil- Dioxin
Soil- Lead
Soil- Mercury
Surface Water- Lead
Floor
MACT
4
0
25
1
Recommended
MACT
4
0
25
1
BTF-ACI
MACT
4
0
39
1
All Incinerators: Reduction in Area (km2) of Land or Water Bodies Impacted
Media Affected & Pollutant of
Concern
Soil- Dioxin
Soil- Lead
Soil- Mercury
Surface Water- Lead
Floor
MACT
0
6
87
37
Recommended
MACT
19
6
87
37
BTF-ACI
MACT
19
6
87
37
Overall, the analysis shows that a variety of waste minimization alternatives are available for
managing those hazardous waste streams that are currently combusted. The quantity that we expect
to be diverted from combustion to waste minimization alternatives, however, depends on the
expected price increase for combustion services. At price increases of $10 to $20 per ton, which we
anticipate to result from the rule, approximately 240,000 tons of hazardous waste may be diverted
6-22
-------
FINAL DRAFT: July 1999
from combustion to waste minimization alternatives. This corresponds to approximately 8 percent
of waste quantities currently combusted.37
Methodology for Characterizing Waste Minimization Benefits
The overall approach for the waste minimization analysis was deductive, using data on waste
and technologies to build a model of the waste minimization decision-making process on the part
of the generating facility. The model required three basic inputs:
• a characterization of the wastes currently being combusted, particularly with regard to their
original sources;
• characterization of available waste minimization technologies, including both cost profile
and waste stream applicability; and
• a decision framework.
For waste characterization, EPA used the RCRA Biennial Reporting System (BRS), the only national
database that comprehensively tracks combusted hazardous wastes.38 For technology
characterization, EPA solicited information from waste minimization technology vendors and
consultants. For a decision framework, EPA employed Total Cost Assessment (TCA), a method that
Tellus Institute, a non-profit research organization, developed for evaluating investments —
particularly pollution prevention investments.
Using BRS data, we developed a profile of where and how combusted hazardous wastes are
generated, and we identified the dominant waste categories. We then identified the technologies
most applicable to these waste categories, and gathered capital and operating cost information. TCA
enabled us to estimate the profitability of each technology at different scales. We applied these
estimates to the BRS data to develop a relationship between the price of combustion and the demand
for waste minimization.
Lacking a workable, well-defined characterization of source reduction opportunities, we were
unable to analyze opportunities such as process redesign, product redesign, and input substitution
in the same manner as waste minimization technologies. Source reduction is closely tied to the
specifics of the particular production process, so it is not possible to make defensible generalizations
37 It is important to note that there is some overlap in the quantities of waste that are diverted
due to system consolidation and quantity of waste minimization due to price increases.
38 The U.S. EPA 1993, Biennial Reporting System (BRS) was used for the waste
minimization analysis because the 1995 data were not available at the time.
6-23
-------
FINAL DRAFT: July 1999
across facilities or industries. Instead, we elected to develop an alternative approach that uses Toxics
Release Inventory (TRI) data to infer source reduction achievements at a sample of progressive New
Jersey facilities, and then extrapolate to an estimate of future source reduction potential across the
nation. This methodology is presented graphically in Exhibit 6-10.
Waste Minimization Analysis Results
This analysis of waste minimization potential suggests that generators currently burning
hazardous wastes may have a number of options for reducing or eliminating these wastes. At an
average combustion price increase of $20 per ton expected for the Recommended MACT standard
(at the 70 percent design level), EPA predicts that approximately 239,000 tons39 of hazardous waste
will be diverted from combustion to waste minimization alternatives.40 Below we highlight other
interesting results from the waste minimization analysis.
• Chemicals and allied products (SIC 28) generated the majority (64 percent)
of combusted hazardous waste in 1993.41 SIC 28 facilities work with large
quantities of organic chemicals as inputs, solvents, products, byproducts, and
cleaning agents, so it is not surprising that they top the list. We also focus on
oil wastes and waste paint because these wastes are generated by a large
number of facilities and waste minimization technologies are available for
managing these waste types.
• Four technologies — filtration, reverse osmosis, ion exchange for metals, and
oil-water separation — appear to be more cost-effective than combustion
even at combustion prices as low as $50 per ton. Other financial, technical,
and regulatory forces are likely constraining generators from shifting to these
technologies.
39 Due to the timing of the waste minimization analysis, this estimate may not account for
wastes that quality for the comparable fuel exclusion. In a separate analysis, we estimated that about
100,000 tons of currently combusted wastes (excluding wastes burned in on-site boilers) qualify for
the comparable fuel exclusion. (Economic Analysis Report for the Combustion MACT Fast-Track
Rulemaking, prepared by Industrial Economics, Incorporated; prepared for U.S. EPA's Office of
Solid Waste, March 1998.)
40 This result assumes a starting combustion price of $150 per ton.
41 1993 BRS data only reported SIC, NAICS information was not available. See Appendix
G for conversions from SIC to NAICS.
6-24
-------
FINAL DRAFT: July 1999
Exhibit 6-10
WASTE MINIMIZATION METHODOLOGY FLOW CHART
1993 BRS Data
Volume screen
>
?
Source Reduction
Analysis
Select sample
facilities
Waste stream
ranking
1991 - 1995TRI
Data
Infer source
reduction progress
Waste Minimization
Analysis
Select waste
streams
Select technologies
Collect cost data
Extrapolate to BRS
waste universe
T
TCAat
several scales
Estimate source
reduction potential
Aggregate across
waste universe
I C
r I
Demand curve for
I waste minimization I
6-25
-------
FINAL DRAFT: July 1999
Distillation and ion exchange for acids display some sensitivity to
combustion prices. Ion exchange for acids becomes competitive when
combustion prices reach $120 per ton; vacuum distillation becomes
competitive when combustion prices reach $150 per ton for larger generators
and $160 per ton for smaller generators; simple distillation becomes
competitive when combustion prices reach $200 per ton.
The financial analysis suggests that three technologies — diffusion dialysis,
electrodialysis, and pyrohydrolysis — are not cost-competitive with
combustion even if combustion prices for liquids rise to $400 per ton.
Over 500,000 tons of currently combusted waste will likely be eliminated by
source reduction over the next ten to fifteen years, regardless of combustion
prices. The rate of source reduction is not expected to be sensitive to changes
in combustion prices because other benefits, such as improved yields from
reduced waste, decreased downtime from reduced buildup of contaminants,
improved product quality, or improved environmental image are usually more
important than avoided disposal costs in justifying source reduction projects.
Caveats and Limitations
The waste minimization analysis is subject to several caveats and limitations. Most
importantly, the underlying BRS data are broad and lack detail. Information on constituents,
contaminants, and concentrations are vague or absent from the data. Some of the waste streams we
deemed eligible for particular waste minimization technologies may present special circumstances
that require additional investment, whether for superior equipment or for additional processing steps,
that would increase the costs of waste minimization.
Another limitation regards our costing assumptions. The cost information for waste
minimization technologies consists of vendor quotes for basic installations. Though systematically
and aggressively pursued, these price quotes are subject to wide margins of uncertainty. Additional
equipment may be needed in particular cases, beyond the installation cost assumptions that we
developed. Some waste streams may also require additional processing. Neither waste stream data
nor vendor information provided enough information to evaluate these possibilities.
6-26
-------
FINAL DRAFT: July 1999
CONCLUSIONS
Overall, the final HWC MACT standards are expected to result annually in approximately
$29 million in human health benefits. In addition, up to 147 square kilometers of land and 38 square
kilometers of surface water near combustion facilities may experience ecological improvements.
In particular, the MACT standards are expected to result in the following:
• Reductions in premature deaths. Risk reductions associated with the
MACT standards are expected to result in approximately two fewer
premature deaths per year. Particulate matter accounts for most of the
avoided premature deaths; reductions in carcinogenic pollutants account for
a small portion of the avoided premature deaths.
• Reductions in diseases associated with particulate matter exposure.
Avoided cases of chronic bronchitis (25 cases) and asthma (267,600 cases)
account for the majority of health benefits. Nearly 20,000 days of work loss
or restricted activity will also be avoided annually due to the final MACT
standards. In addition, PM reductions are expected to result in six fewer
hospital admissions per year.
• Reductions in Risks to Sensitive Sub-Populations. The risk assessment
reveals that both cancer and non-cancer risks will be reduced for certain
sensitive sub-populations — namely children, subsistence fishermen, and
subsistence farmers - who face potentially higher exposure levels due to
behavior patterns, physiological traits, and other factors. Though in all cases
the benefits are difficult to quantify in terms of avoided deaths or illnesses,
reductions in risk to sensitive sub-populations are of importance in terms of
evaluating distributional impacts from HWC facility emissions.
• Potential reductions in number of children with developmental
abnormalities. The risk assessment reports that baseline mercury levels are
below that of concern. Thus, there are no significant human health benefits
associated with mercury emission reductions. With regard to lead emission
reductions, we expect that there will be two fewer children per year with
abnormal cognitive development due to reductions in lead exposure.
• Potential ecological improvements. About 38 square kilometers of water
may experience a decrease in potential risks to ecosystems. For terrestrial
areas, the amount of land that may experience reductions in risk range
between 115 square kilometers to 147 square kilometers.
6-27
-------
FINAL DRAFT: July 1999
Waste minimization benefits. A variety of waste minimization alternatives
are available for managing those hazardous waste streams that are currently
combusted. At combustion price increases of $10 to $20 per ton,
approximately 240,000 tons of hazardous waste will be diverted from
combustion to waste minimization alternatives. This corresponds to
approximately 8 percent of waste quantities currently combusted.
6-28
-------
FINAL DRAFT: July 1999
EQUITY CONSIDERATIONS AND OTHER IMPACTS CHAPTER?
As required by applicable statute and executive order, EPA must complete an analysis of the
MACT standards with regard to equity considerations and other regulatory concerns. This chapter
assesses the potential impacts of the rulemaking associated with the following areas:
Regulatory flexibility;
• Environmental justice;
Children's health protection;
• Joint impacts of other EPA rules on cement kilns;
Unfunded mandates;
• Tribal governments; and
Regulatory takings.
In the first section, we present the results of our regulatory flexibility analysis, which focuses
on the potential effects of the rulemaking on small entities. Next, we discuss the MACT standards
in terms of potential environmental justice considerations for minority and low-income populations
residing near combustion facilities and in terms of special concerns about the health of all children
exposed to combustion facility emissions. We then describe how other proposed EPA rules, together
with the HWC MACT standards, will likely affect the cement industry. Following this section, we
introduce the regulatory basis for addressing federal unfunded mandates to the private and public
sectors, including Indian tribal governments and their communities, and then present the results of
our analysis in terms of the MACT standards. Lastly, we provide a similar discussion concerning
the potential for regulatory takings of private property associated with the MACT standards.
7-1
-------
FINAL DRAFT: July 1999
ASSESSMENT OF SMALL ENTITY IMPACTS
The Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996 requires
federal agencies to consider impacts on "small entities" throughout the regulatory process.1
According to SBREFA, an initial analysis should be conducted to determine whether small entities
will be adversely affected by the regulation. This section describes the assessment that EPA has
conducted to determine whether the Combustion MACT Standards will adversely impact small
entities. Appendix G contains the full report, Assessment of Small Entity Impacts Associated with
the Combustion MACT Rule.
The primary small entity group that EPA assessed in the analysis was privately-owned
hazardous waste combustion facilities (i.e., small businesses). We did not evaluate other small
HWC entities because the only government facilities are federal (and therefore they are not small)
and we did not identify any HWC facilities owned by nonprofits.2 To come into compliance with
MACT, combustion systems on average will likely spend between $250,000 and $1.5 million per
year on pollution control measures, monitoring, and other regulatory requirements. The first step
in screening these facilities for potential impacts is to identify those combustion facilities that are
small businesses. For this analysis, EPA identified small businesses based on data and guidelines
developed by the Small Business Administration (SBA). Size thresholds were determined in terms
of annual revenues or the number of employees, and vary by business area as identified in the
Standard Industrial Classification (SIC).3 Once the small businesses were identified, we calculated
site-specific compliance costs of the standards as a percentage of total facility sales; we used this
figure as the basis for our assessment of small entity impacts.
As a supplementary analysis, EPA also examined indirect effects on small business
hazardous waste generators and fuel blenders. These industry sectors may be indirectly affected by
the rule as some of the costs are expected to be passed on by combustors in the form of higher
disposal prices. In our analysis, we considered two possible scenarios: a 25 percent and a 75 percent
price pass through from combustors to generators and fuel blenders.4 To determine potential indirect
impacts, we identified small business fuel blenders and generators. Because there are relatively few
fuel blenders, these facilities were analyzed using company-specific financial and employment
information. Generators, however, were analyzed using a screening approach that identified
industries (by SIC code) dominated by small businesses.
1 Small entities include small businesses, small governments, and small nonprofit
organizations.
2 We also did not identify any HWC facilities owned by tribal governments.
3 See Appendix G for conversions from SIC to NAICS.
4 For the 25 percent scenario, the weighted average price increase is $5 per ton of hazardous
waste. For the 75 percent scenario, the increase is $16 per ton.
7-2
-------
FINAL DRAFT: July 1999
Few small combustors will likely be adversely affected by the Combustion MACT rule. Due
to the capital intensive nature of the industry, only six out of 172 identified combustion facilities
were categorized as small entities. Of these six, two would have costs greater than 1 percent of sales
(Exhibit 7-1). Both of these facilities are owned by a common parent that qualifies as a small
business. Therefore, the Combustion MACT rule affects a very limited number of small business
combustors, and has significant effects on only two of these facilities. According to EPA's interim
guidance on SBREFA, a rule that adversely affects less than 100 small entities is presumed not to
have a significant impact on a substantial number of small entities.5
In our supplementary analysis we found that indirect impacts on hazardous waste generators
will not likely be significant. Of the 2,113 small generators identified in our analysis, less than 1
percent (18 generators) would have costs exceeding 1 percent of sales given our 25 percent pass
through assumption (see Chapter 5 for a description of the price pass-through). If we assume a 75
percent pass through, approximately 3 percent of generators (58 facilities) would have costs greater
than 1 percent of sales (Exhibit 7-1). Between 10 and 19 of these facilities would experience costs
exceeding 3 percent of sales. Thus, although there are a relatively large number of small business
generators, the number of these facilities facing significant impacts is very low.
If we assume compliance costs are passed through to fuel blenders alone (and not
subsequently to generators), the potential indirect impacts on small business fuel blenders are more
significant than those for generators and combustors. We do not believe this scenario (in which fuel
blenders bear the full burden of the combustion price increase) is likely, given that generator demand
for such services is relatively inelastic. However, even under this scenario, there are not a substantial
number of blenders affected. Of the 67 fuel blenders in the analysis, twenty-one were identified as
small businesses. As Exhibit 7-1 indicates, between six and 14 of these facilities would experience
costs exceeding 1 percent of sales, and between four and seven would have costs exceeding 3 percent
of sales.
5 U.S. Environmental Protection Agency, Revised Interim Guidance for EPA Rulewriters:
Regulatory Flexibility Act as amended by the Small Business Regulatory Enforcement Fairness Act,
March 29, 1999.
7-3
-------
FINAL DRAFT: July 1999
Exhibit 7-1
SMALL ENTITY ANALYSIS RESULTS
Number of
establishments identified
Number of small entities
(% of total)
Number of small entities
with costs exceeding 1%
of sales
(% of total small entities)
Number of small entities
with costs exceeding 3%
of sales
(% of total small entities)
Direct Impacts
Combustors
172
6
(3.5%)
2
(33%)
0
(0.0%)
Indirect Impacts
Generators
11,054
2,113
(19.1%)
18-58
(0.85%-2.7%)
10-19
(0.47%-0.90%)
Blenders
67
21
(31.3%)
6-14
(29%-67%)
4-7
(19%-33%)
Note: The number of generators and blenders that are indirectly impacted are
independent estimates and should not be added together.
In general, the Combustion MACT Standards will not have significant impacts on a
substantial number of small entities. In particular, the direct impacts on small business combustion
facilities and the indirect impacts on small business generators are minor. Only the impacts on fuel
blenders may be notable; however, the absolute number of these facilities affected is very small.
ENVIRONMENTAL JUSTICE ANALYSIS
Executive Order 12898, "Federal Actions to Address Environmental Justice in Minority
Populations and Low-Income Populations" (February 11, 1994), requires federal agencies to identify
disproportionately high and adverse human health or environmental effects of their programs,
policies, and activities on minority populations and low-income populations.6 Among other actions,
the agencies are directed to improve research and data collection regarding health and environmental
effects in minority and low-income communities.
6 For the purposes of this analysis, minority populations include Black, Asian, American
Indian, Hispanic, and other non-White individuals.
7-4
-------
FINAL DRAFT: July 1999
To comply with this executive order, EPA assessed whether the Combustion MACT
Standards will have disproportionate effects on minority populations or low-income populations. We
accomplished this task by analyzing the demographic data presented in the reports, "Race, Ethnicity,
and Poverty Status of the Populations Living Near Cement Plants in the United States" (EPA,
August 1994), and "Race, Ethnicity, and Poverty Status of the Populations Living Near Commercial
Hazardous Waste Incinerators in the United States" (EPA, October 1994). These reports examine
the number of low-income and minority individuals living near cement kilns and commercial
hazardous waste incinerators, and also provide county, state, and national population percentages
for various sub-populations.
Our analysis of the demographic data in these reports provides several important findings
about the environmental justice impacts of the MACT Standards:
• The Combustion MACT Standards should not have any adverse
environmental or health effects on minority populations and low-income
populations. Any impacts the rule has on these populations are likely to be
positive because it will potentially reduce emissions from combustion
facilities near minority and low-income population groups.
• In general, combustion facilities are not more likely to be located in areas
with disproportionately high minority and low-income populations.
However, current data indicate that hazardous waste-burning cement kilns are
located in areas that have relatively high low-income populations. These
populations may incur some environmental and health benefits as a result of
the MACT Standards.
• A small number of commercial hazardous waste incinerators located in
highly urbanized areas are found to have disproportionately high
concentrations of minorities and low-income populations within one and
five mile radii. The reduced emissions at these facilities due to the MACT
Standards could represent environmental and health improvements for
minorities and low-income populations in these areas.
These findings, as well as our data analysis approach, are further discussed in the remainder of this
section.
7-5
-------
FINAL DRAFT: July 1999
Approach
Our analysis of environmental justice relies on demographic data as an indicator of potential
environmental and health impacts from the Combustion MACT Standards. While a risk assessment
would be the preferred way to determine these impacts, the necessary resources were not available
to complete such an analysis. Instead, we assess the environmental justice impact of the Combustion
MACT Standards by examining demographic data using two separate approaches.
For our first approach, the "facility approach," we assess whether there are a significant
number of combustion facilities located in areas where the nearby populations are disproportionately
minority or low-income. Specifically, we compare populations within one and five miles of each
sample combustion facility to populations at the county, state, and national levels. With this
information, we can determine the percentage of facilities that are located in areas with
disproportionately high minority or low-income populations relative to local, statewide, or national
totals.
For our second approach, the "population exposure approach," we consider the total
population exposed to emissions from combustion facilities. Unlike the facility focus of our first
approach, this method examines total minority and low-income numbers of potentially exposed
people near combustion facilities. Specifically, we combine the general, minority, and low-income
population numbers from within one and five miles of each combustion facility to derive total figures
for all of the facilities, and then compare these totals to county, state, and national levels. This
approach enables us to more easily identify trends that the facility analysis does not make as
apparent. The population exposure approach, for example, is a better indicator of whether
combustion facilities with particularly large surrounding populations have a disproportionate impact
on total exposed populations.
For both the facility and population exposure approaches we use data from the two
aforementioned EPA reports on demographic composition near combustion facilities. These reports
provide minority and low-income population data for 14 commercial hazardous waste incinerators
and 18 hazardous waste burning cement kilns that are currently permitted to burn hazardous waste.7
For each of these combustion facilities, population data are provided at half, one, two, three, four and
7 The report, U.S. EPA, August 1994, "Race, Ethnicity, and Poverty Status of the Populations
Living Near Cement Plants in the United States," includes data on non-hazardous waste burning
cement kilns; however, we did not include these facilities in our analysis because they are not
regulated under the Combustion MACT Standards.
7-6
-------
FINAL DRAFT: July 1999
five mile radii from the site location8 Population data are also included for the counties and states
for each combustion facility. Along with these data, for both of our approaches we use a national
minority percentage of 24 percent and a low-income percentage of 13 percent. Both of these figures
are based on U.S. Census data.
Results
We present our results according to the two different approaches that we use to assess
environmental justice impacts of the Combustion MACT Standards. For each approach, we describe
our results for minority populations followed by low-income population results. At the end of this
section, we present our summary conclusions. Appendix H provides additional data on minority and
low-income populations near hazardous waste-burning cement kilns and incinerators.
Facility Approach
Applying the facility approach, we find evidence that combustion facilities are somewhat
more likely to be located in areas with disproportionately high minority populations compared to the
counties in which they are located, but not with respect to state and national minority populations.
Exhibit 7-2 compares minority populations at one and five mile radii from combustion facilities to
county, state, and national minority levels. As Exhibit 7-2 indicates, combustion facilities appear
more likely to be located in areas with minority levels that are less than state and national levels. For
example, only 34 percent of all combustion facilities have minority percentages within five miles
that exceed the national average, while 66 percent are below the national average. Within one mile,
the value for facilities exceeding the national minority average falls to 31 percent.9 Compared to the
county minority levels, however, combustion facilities are somewhat more likely to be located in
8 Due to resource constraints, of the six radii we only review data at the one and five mile
radii from each combustion facility. However, these two radii provide a sufficient range for our
analysis.
9 Total population within one mile of combustion facilities is below 1,000 at 79 percent of
the incinerators and 39 percent of the cement kilns in this analysis.
7-7
-------
FINAL DRAFT: July 1999
Exhibit 7-2
MINORITY POPULATIONS NEAR COMBUSTION FACILITIES, SITE-BY-SITE BASIS
Hazardous Waste
Incinerators
Hazardous Waste
Burning Cement
Kilns
Total
Percent combustors
where minority %
within 1 mile > county
minority %
50%
72%
63%
Percent combustors
where minority %
within 1 mile > state
minority %
36%
44%
41%
Percent combustors
where minority %
within 1 mile > national
minority %
36%
28%
31%
Percent combustors
where minority %
within 5 miles >
county minority %
50%
56%
53%
Percent combustors
where minority %
within 5 miles > state
minority %
43%
28%
34%
Percent combustors
where minority %
within 5 miles >
national minority %
43%
28%
34%
Notes:
- County and state minority percentages vary according to the location of the combustion facility.
- The national minority percentage is 24 percent.
7-8
-------
FINAL DRAFT: July 1999
areas with disproportionately high minority populations. For instance, 63 percent of all combustion
facilities have minority percentages within one mile that exceed minority percentages for the county
where the facility is located; for hazardous waste burning kilns, the figure is 72 percent. Tables 1
and 2 in Appendix H show comparisons of one mile and five mile minority population percentages
at combustion facilities with county, state, and national levels.
With the facility approach, we find that combustion facilities, particularly cement kilns, are
somewhat more likely to be located in areas with disproportionately high low-income populations
than areas with fewer low-income people. Exhibit 7-3 compares low-income populations at one and
five mile radii from combustion facilities to county, state, and national levels. As the exhibit shows,
more than half of the combustion facilities have low-income population percentages that are greater
than percentages at the county, state, and national levels. For instance, within one mile of all
combustion facilities, 63 percent of the sites have low-income population percentages that are greater
than percentages for this group at the national level. Within one mile of hazardous waste burning
cement kilns, 72 percent of the sites have low-income population percentages that are greater than
the national poverty percentage. For commercial hazardous waste incinerators, the low-income
percentages near these facilities are just as likely to be less than, versus greater than, the percentages
for this group at county, state, and national levels. Tables 3 and 4 in Appendix H compare one mile
and five mile low-income population percentages at combustion facilities with county, state, and
national levels.
Population Exposure Approach
Based on the total population of exposed individuals, our review of potential environmental
justice impacts on minorities results in somewhat different findings from the facility approach.
According to total population numbers, minorities are disproportionately located near commercial
hazardous waste incinerators. However, minority populations are not disproportionately located near
cement kilns. Exhibit 7-4 shows how many people live near combustion facilities and what portion
of the population is comprised of minorities. As the exhibit indicates, 48 percent of the total
population within five miles of commercial hazardous waste incinerators is classified as minority.
This figure is more than twice the national minority percentage (24 percent). The minority
population percentage (45 percent) within one mile of incinerators is also significantly greater than
the national level.10
The high percentage of minorities living near commercial hazardous waste incinerators is
driven primarily by several facilities that are located in highly urbanized areas. These facilities have
large general populations as well as significant minority populations nearby, particularly within five
miles. Since the population exposure analysis considers total population figures, these urban
10 The total population within five miles of incinerators is nearly 50 times greater than the
population within one mile of these facilities.
7-9
-------
FINAL DRAFT: July 1999
Exhibit 7-3
LOW-INCOME POPULATIONS NEAR COMBUSTION FACILITIES, SITE-BY-SITE BASIS
Hazardous Waste
Incinerators
Hazardous Waste
Burning Cement
Kilns
Total
Percent combustors
where poverty %
within 1 mile >
county poverty %
50%
67%
59%
Percent combustors
where poverty %
within 1 mile > state
poverty %
50%
72%
63%
Percent combustors
where poverty %
within 1 mile >national
poverty %
50%
72%
63%
Percent combustors
where poverty %
within 5 miles >
county poverty %
50%
56%
53%
Percent combustors
where poverty %
within 5 miles > state
poverty %
57%
78%
69%
Percent combustors
where poverty %
within 5 miles >
national poverty %
57%
67%
63%
Notes:
- County and state poverty percentages vary according to the location of the combustion facility.
- The national poverty percentage is 13 percent.
7-10
-------
FINAL DRAFT: July 1999
Exhibit 7-4
POTENTIALLY EXPOSED GENERAL AND MINORITY POPULATIONS
Hazardous Waste
Incinerators
Hazardous Waste
Burning Cement
Kilns
Total
Total Population
within 1 mile
18,119
39,858
57,977
Minority
Population within
1 mile
8,182
6,111
14,293
Minority
Percentage within
1 mile
45%
15%
25%
Total Population
within 5 miles
846,511
324,521
1,171,032
Minority
Population within
5 miles
403,021
28,610
431,631
Minority
Percentage within
5 miles
48%
9%
37%
7-11
-------
FINAL DRAFT: July 1999
incinerators are primarily responsible for the high total minority percentages near commercial
hazardous waste incinerators. Incinerators in less densely populated areas, on the other hand, do not
have as significant effect on total and minority population figures. While a few cement kilns have
high surrounding minority population percentages, these facilities are not located in highly urbanized
areas and therefore do not significantly increase total minority percentages. Tables 5 and 6 in
Appendix H present detailed facility-by-facility data that illustrate this trend.
These findings indicate that the MACT Standards may have significant environmental justice
impacts around commercial hazardous waste incinerators in highly urbanized areas. The standards
are likely to reduce emissions from combustion facilities; therefore, populations near these facilities
may accrue significant health and environmental benefits. Overall, a large number of individuals
that will accrue these benefits live in urbanized areas and a significant percentage of these
individuals are minority. Thus, the MACT Standards may have disproportionately positive health
and environmental effects on minority populations near urban incinerators.
Based on the population exposure analysis, low-income populations are also over-represented
near commercial hazardous waste incinerators, though not as significantly as minority populations.
As Exhibit 7-5 shows, the total low-income population percentages within five miles (24 percent)
and one mile (23 percent) of commercial hazardous waste incinerators are nearly twice the national
poverty percentage (13 percent). Low-income population percentages near hazardous waste-burning
cement kilns are nearly equivalent to the national level. Therefore, we conclude that the MACT
Standards may result in environmental and health benefits to low-income populations near
commercial hazardous waste incinerators.
Summary
The two approaches we use to address environmental justice impacts result in somewhat
different findings. With our facility approach, it appears that commercial hazardous waste
incinerators are not necessarily more likely to be located in areas with disproportionately high
minority or low income populations. However, hazardous waste burning cement kilns are somewhat
more likely to be located in areas where minority populations within one mile exceed county
averages. Kilns are also more likely to be located in areas with low income populations.
Based on our population exposure approach, minority and low-income populations in
aggregate are disproportionately located near combustion facilities, particularly within one and five
miles of commercial hazardous waste incinerators. Furthermore, near commercial hazardous waste
incinerators that are located in highly urbanized areas, minority population percentages are
significantly greater than the national level. Thus, using the population exposure approach to
estimate environmental justice impacts, the Combustion MACT Standards may result in significant
health and environmental benefits to minority and low-income populations.
7-12
-------
FINAL DRAFT: July 1999
Exhibit 7-5
POTENTIALLY EXPOSED GENERAL AND LOW-INCOME POPULATIONS
Incinerators
Cement Kilns
Total
Total
Poverty-
Assessed
Population
w/in 1 mile
17,596
36,815
54,411
Low-Income
Population w/in
1 mile
4,013
6,323
10,336
Low-Income
Percentage within
1 mile
23%
17%
19%
Total
Poverty-
Assessed
Population
w/in 5 miles
813,859
302,892
1,116,751
Low-Income
Population w/in
1 mile
197,456
36,343
233,799
Low-Income
Percentage within
5 miles
24%
12%
21%
Note: "Poverty-Assessed Population" is the population for which poverty status has been evaluated. (This population estimate occasionally differs slightly from
total population estimates).
7-13
-------
FINAL DRAFT: July 1999
While these two distinct approaches are both potentially useful, the population exposure
method is probably a more representative measure of environmental justice impacts of the MACT
Standards. Whereas the facility approach weighs each combustion facility equally regardless of the
magnitude of nearby populations, the population exposure approach considers total general,
minority, and low-income populations surrounding each site. This latter technique provides a more
complete picture of the populations residing near combustion facilities, and is therefore more
indicative of the overall potential impacts of the MACT Standards on environmental justice
populations.
CHILDREN'S HEALTH PROTECTION ANALYSIS
Executive Order 13045, "Protection of Children from Environmental Health Risks and Safely
Risks" (April 21, 1997), directs federal agencies and departments to evaluate the health effects of
proposed health-related or risk-related regulations on children.11 For economically significant rules
that concern an environmental health or safety risk that may disproportionately affect children,
Executive Order 13045 also requires an explanation as to why the planned regulation is preferable
to other potentially effective and feasible alternatives considered.12 The HWC MACT standards are
exempt from the requirements of Executive Order 13045 because the rule is a technology-based
regulation (MACT) rather than a risk-based one.13 Nevertheless, the risk assessment performed for
the MACT standards does address threats to children's health by evaluating reduced risks associated
with hazardous waste combustion for children as well as for adults and the population overall.14
11 In addition, two separate directives issued by EPA, "Policy on Evaluating Health Risks to
Children" (October 1995) and "National Agenda to Protect Children's Health from Environmental
Threats" (October 1996), also call for consideration of children's health within risk assessments and
other components of regulatory analyses.
12 As defined in Executive Order 13045, an economically significant rule is any rulemaking
that has an annual effect on the economy of $100 million or more, or would adversely affect in a
material way the economy, a sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or state, local or tribal governments or communities.
13 U.S. Environmental Protection Agency, "EPA's Rule Writer's Guide to Executive Order
13045: Guidance for Considering Risks to Children During the Establishment of Public Health-
Related and Risk-Related Standards," Interim Final Guidance, April 21, 1998, page 3.
14 Appendix I provides a more detailed discussion on reduced risks to children's health.
7-14
-------
FINAL DRAFT: July 1999
Approach
The risk assessment for the MACT standards evaluated both cancer and non-cancer risks for
all exposed sub-populations across four different age groups: 0-5 years, 6-11 years, 12-19 years, and
adults over 20 years.15 Where possible, the MACT risk assessment provided both population and
individual risk results for children. The modeling effort is a multi-pathway analysis that estimates
both inhalation and ingestion pathways in order to examine potential effects of combined exposures
to children. In terms of cancer risks, the assessment considered the combined effects of several
carcinogens, corresponding with one of the goals of EPA's "National Agenda to Protect Children's
Health from Environmental Threats."16 Moreover, areas for potential reductions in risk and related
health effects identified by the HWC MACT risk assessment are all targeted as priority issues by
EPA's children's health protection agenda.
Summary of Results
The key findings from the HWC MACT risk assessment with regards to children's health are
listed below according to cancer and non-cancer risks:17
• Cancer Risks. In general, children do not face significant cancer risks from
hazardous waste combustion emissions. Only in the case of children of
subsistence farmers do baseline cancer risks (driven primarily by dioxin)
exceed IxlO"5 for the most highly exposed children. Following
implementation of the Recommended MACT standards, however, these
cancer risks are expected to be reduced to below levels of concern (
-------
FINAL DRAFT: July 1999
Non-Cancer Risks. The non-cancer risk reductions resulting from
implementation of the MACT standards will most likely benefit children
directly. Non-cancer health benefits to children are associated with reduced
exposures to particulate matter (PM) and lead. A recent EPA report indicates
that these pollutants significantly affect children.18
PM reductions will prevent 268,000 asthma attacks in the general
population. If these cases are equally distributed across age groups,
over 77,000 asthma attacks affecting children will be avoided each
year.
Reduced lead exposures for children are expected post-MACT which
may prevent cognitive and nervous system developmental
abnormalities. In particular, the blood lead levels of two children are
expected to be reduced to below levels of concern (<10//g/dL); also,
the MACT standards will reduce overall blood lead levels for
children of subsistence farmers living near incinerators from
approximately 12 //g/dL in the baseline to about 10.5//g/dL post-
MACT.
As the risk results indicate, the HWC MACT standards will not result in adverse but rather
positive effects for the protection of children's health. In fact, as described above, children are
expected to be the direct recipients for a number of the potential health benefits associated with the
MACT standards.
JOINT IMPACTS OF THREE EPA RULES ON THE CEMENT INDUSTRY
EPA is also promulgating two other rules that affect the cement industry. The Cement Kiln
Dust (CKD) Rule applies to all cement kilns, those that burn hazardous waste as well as those that
only burn conventional fuels. The other EPA rule, the Portland Cement MACT, establishes emission
standards for non hazardous waste-burning cement kilns. This section addresses the joint impacts
of these rules, in conjunction with the Hazardous Waste Combustion MACT standards, on the
cement industry as a whole.19
18 U.S. Environmental Protection Agency, Environmental Health Threats to Children, EPA
175-F-96-001, September 1996, page 4.
19 Detailed results from this analysis are included in Appendix J, "Multi-Rule Analysis."
7-16
-------
FINAL DRAFT: July 1999
The joint impacts analysis uses a revised version of the economic impact model developed
for the Portland Cement (PC) MACT rulemaking to estimate social costs, market impacts and
industry impacts for cement kilns.20 Together, the social costs of the three rules total $186 million
annually.21 For Portland Cement, lost consumer surplus accounts for 60 percent ($113 million) of
the social costs, while lost domestic producer surplus accounts for the remaining social costs ($74
million).22
As a result of the three rules combined, cement kiln earnings are estimated to decrease by
about 6 percent across the entire cement industry.23 These lost earnings are a result of cost increases
of about 2 percent and revenue decreases of almost 3 percent. The increased costs of waste burning
and cement production are expected to result in 15 kilns that may cease cement production and five
kilns that will stop burning hazardous waste. The market exit of only one of the 15 kilns that stops
manufacturing cement is due to the joint impacts of all three rules; the remaining 14 market exits
result from the CKD and the PC MACT alone.
With regard to market impacts, the joint effect of all three rules is expected to cause the price
of Portland cement to increase by 2 percent and Portland cement production to decrease by 4 percent.
Foreign imports of cement are expected to increase by over 10 percent. Consistent with the price
increase expected solely from the HWC MACT (see Chapter 5), hazardous waste combustion prices
are expected to increase by about 9 percent for liquids and 3 percent for solids. Hazardous-waste
burning kilns are expected to burn about 10 percent less hazardous waste as a result of the three EPA
rules.
UNFUNDED MANDATES ANALYSIS
Signed into law on March 22, 1995, the Unfunded Mandates Reform Act (UMRA) calls on
federal agencies that issue any regulation containing an unfunded mandate to fulfill certain
requirements, such as providing a statement supporting the need to issue the regulations and
20 The model also estimates impacts on commercial incinerators and LWAKs. However, we
focus on cement kilns in this summary.
21 This estimate only includes changes in consumer and producer surplus associated with the
manufacture of domestic Portland Cement; we do not include changes in producer surplus associated
with foreign producers.
22 We do not include changes in consumer surplus for the hazardous waste-burning
component of the business because the analysis did not break these losses by combustion sector (e.g.,
cement kilns).
23 Earnings before interest and taxes.
7-17
-------
FINAL DRAFT: July 1999
describing prior consultation with representatives of affected state, local, and tribal governments.24
Requirements in the UMRA apply only to those federal regulations containing a significant unfunded
mandate. The UMRA defines a significant unfunded mandate as a federal rule that either:
1. Results in estimated costs to state, local, and tribal governments in
aggregate of $100 million or more in any one year; or
2. Results in estimated annual costs to the private sector of $100 million
or more in any one year.
Federal rules are exempt from the UMRA requirements if:
1. The rule implements requirements specifically set forth in law; or
2. Compliance with the rule is voluntary for state and local governmental
entities.
Based on these criteria set forth by the UMRA, the MACT standards do not contain a
significant unfunded mandate. As reported in the economic impact results section, the MACT
standards are not likely to result in annualized expenditures of $100 million or more either for the
private sector or for state and local governments in the aggregate under the recommended MACT
option, especially after allowing for market adjustments.25 In any case, because EPA is issuing the
MACT standards under the authority of the Clean Air Act (CAA), the rule should be exempt from
all relevant requirements of the UMRA. In addition, compliance with the rule is voluntary for non-
federal governmental entities since state and local agencies choose whether or not to apply to EPA
for the permitting authority necessary to implement the MACT standards.
TRIBAL GOVERNMENTS ANALYSIS
Similar in purpose to the UMRA, Executive Order 13084, "Consultation and Coordination
With Indian Tribal Governments" (May 14, 1998), addresses related unfunded mandates concerns
with regard to the sovereignly of tribal governments. In terms of specific rulemaking efforts, the
applicable sections of Executive Order 13084 impose requirements on federal agencies that
promulgate regulations, not required by statute, that significantly or uniquely affect Indian tribal
24 Other requirements include a statement concerning estimated costs and benefits,
consideration of regulatory alternatives, consultation with affected government entities, and a small
government plan for those rules "significantly or uniquely" affecting small government agencies.
Even though the MACT standards are exempt from these requirements, as we explain below, many
of them are already satisfied by other components of this Assessment.
25 See Exhibit 5-6, "Total Annual Pre-Tax Compliance Costs (millions) After Combustion
System Consolidations" and Exhibit 4-9, "Summary of HWC MACT Incremental Costs to
Government."
7-18
-------
FINAL DRAFT: July 1999
governments and their communities. The requirements include description of the extent of prior
consultation with affected tribal governments, a summary of the nature of their concerns, and a
statement supporting the need to issue the regulation.
For many of the same reasons described in the UMRA discussion, the requirements of
Executive Order 13084 do not apply to the HWC MACT standards. As mentioned above,
promulgation of the MACT standards is occurring under the statutory authority of the CAA. In
addition, while Executive Order 13084 does not provide a specific gauge for determining whether
a regulation "significantly or uniquely affects" an Indian tribal government, the MACT standards are
not expected to impose substantial direct compliance costs on tribal governments and their
communities because we do not expect that a significant number of hazardous waste combustion
facilities are located in tribal communities.26 Finally, tribal governments will not be required to
assume any permitting responsibilities associated with the MACT standards because, as previously
stated, permitting authority is voluntary for non-federal government entities. In fact, while the CAA
does allow tribal governments to implement its permitting requirements, none have yet assumed the
authority.27
REGULATORY TAKINGS ANALYSIS
Executive Order 12630, "Government Actions and Interference with Constitutionally
Protected Property Rights" (March 15, 1988), directs federal agencies to consider the private
property takings implications of proposed regulation. Under the Fifth Amendment of the U.S.
Constitution, the government may not take private property for public use without compensating the
owner. Though the exact interpretation of this takings clause as applied to regulatory action is still
26 We did not, however, conduct a quantitative geographic location analysis to verify this
assumption.
27 Pechulis, Kevin. U.S. Environmental Protection Agency RCRA Hotline, personal
communication, March 19, 1998 and U.S. Environmental Protection Agency, "Air Pollution
Operating Permit Program Update: Key Features and Benefits," EPA/45 l/K-98/002, February 1998.
7-19
-------
FINAL DRAFT: July 1999
subject to an ongoing debate, a framework for interpretation has been established by legal precedent
through a series of prominent court cases.28
Within the current context of mainstream legal precedent, a regulatory taking of private
property is generally deemed to result if the court determines that the government action satisfies any
of the following criteria:
• Results in a physical invasion of property;
• Denies the owner all reasonable or economically viable use of property;29
• Interferes with reasonable investment-backed expectations for property; or
• Fails to establish a justifiable connection between the requirements imposed
(e.g., permit conditions) and the underlying purposes of the regulation.
Even if a regulatory requirement meets any or all of the designated conditions for a regulatory
taking, courts may still find it exempt from the takings clause if the regulatory action is meant to
prevent a "nuisance" or to provide other benefits to the public. A nuisance is defined as an activity
28 See, for instance, Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922), Penn Central
Transportation Co. v. City of New York 438 U.S. 104 (1978), Lucas v. South Carolina Coastal
Council 112 S. Ct. 2886 (1992), Dolan v. City ofTigard\\4 S. Ct. 2309 (1994), and Nollan v.
California Coastal Commission 483 U.S. 825 (1987). It is also worth noting the number of pieces
of legislation introduced in recent U.S. Congressional sessions that aim to strengthen the defined
framework for analysis of regulatory takings. The main goals of the bills include the following:
expansion of the definition of a regulatory taking; introduction of additional administrative
requirements for federal agencies issuing regulations likely to result in regulatory takings; and
expedition of access to federal courts for parties seeking claims associated with regulatory takings.
If passed, however, none of the legislation contains provisions likely to affect the principles of
mainstream legal interpretation of regulatory takings that is utilized in the following analysis of the
HWC MACT standards.
29 No universally accepted formula exists for determining at what point direct economic
impacts from regulatory action constitute a taking. Rather, courts must make this determination on
a case-by-case basis. In the landmark Lucas decision, the U.S. Supreme Court proclaimed that a
100 percent deprivation in value most often, but not always, constitutes a taking. Recent case law
includes many examples in which regulations deprived owners of as much as 50 percent or more of
the value associated with the economic use of property, yet the court still ruled that the regulations
did not deny the owner all reasonable economic value. For instance, see Concrete Pipe and Products
v. Construction Laborers Pension Trust for Southern California, 113 S.Ct. 2264 (1993).
7-20
-------
FINAL DRAFT: July 1999
or condition that either interferes with the public welfare or with the ability of another private citizen
to enjoy his or her own property.30
Based on our review of relevant case law, the MACT standards are not likely to result in any
regulatory taking. The rule will not require that private property be invaded or taken for public use.
The rule also will not interfere with reasonable investment-backed expectations because it does not
ban hazardous waste combustion but merely authorizes operating parameters. The investment-
backed expectations of anyone opening a hazardous waste combustion facility since then would
include a recognition of the existence of impending regulatory requirements. Persons already
engaged in combustion would have had more than eight years to adjust their expectations and to
prepare for accommodation of the forthcoming regulation. As a result, no facility owner should be
able to assert interference with reasonable investment-backed expectations sufficient to support a
taking.31
Because the rule does not prohibit the burning of hazardous waste, it does not deny the
facility owners all viable economic use of their property. Nor does the rule prevent owners from
putting their property to other profitable uses should they decide to cease combustion in the face of
the regulation. In the case of on-site incinerators, cement kilns, and LWAKs, the primary economic
use of property comes from other activities not directly associated with hazardous waste combustion.
Even if these facilities stop burning waste, they will still be able to manufacture their primary
products, such as cement, lightweight aggregate, or chemicals. In terms of commercial incinerators,
those facilities that stop burning waste can still use their property for other industrial purposes.32
This evaluation of the MACT standards corresponds with the mainstream legal thought that
only in rare instances will regulations be found to result in takings. Using legal precedent as the
basis for this analysis, it is difficult to speculate fully on the potential for extreme takings
interpretations as applied to the impacts of the MACT standards. The only areas where such an
extreme interpretation of takings potentially could arise in the context of the MACT standards are
the issues of deprivation of economically viable use of property and interference with reasonable
investment-backed property expectations. However, it is still fairly easy to refute an extreme
application of the takings clause to the MACT standards that is based on these criteria.
The economic impact results reported earlier do suggest that a number of facilities will exit
the hazardous waste combustion market in the face of compliance costs associated with the MACT
30 Numerous court decisions have upheld regulations, while at the same time acknowledging
the takings claims associated with them, on the basis of nuisance prevention and resource protection
goals, ranging from landmark preservation to the control of industrial pollution in residential areas.
31 SeeRuckelshaus v. Monsanto Co., 467 U.S. 986, 1005 (1984).
32 For instance, many of the commercial incineration facilities provide other waste
management services, like waste recycling, that will not be affected by the MACT standards.
7-21
-------
FINAL DRAFT: July 1999
standards. It is important to note, however, that these closures are influenced more directly by
market forces, such as overcapacity and marginal profit levels, than by the regulatory objectives of
the MACT rule. Even under an extreme takings interpretation, it is doubtful that the MACT
standards would be found to interfere directly with all viable use or economic value of property.
Also, as we described above, the established statutory authority for the standards and the fact that
the rule does not prohibit combustion altogether should exempt it from any claims of interference
with reasonable investment-backed expectations. Regardless, the MACT standards would most
likely qualify for an exemption to any regulatory takings claims because of the doctrines of public
and private nuisance law.
7-22
-------
FINAL DRAFT: July 1999
COMPARISONS OF COSTS,
BENEFITS, AND OTHER IMPACTS CHAPTERS
A final component of the Economic Assessment for the MACT standards at combustion
facilities is a comparison of the costs and benefits of the rule. This chapter uses two metrics for this
comparison. We first consider cost-effectiveness measures which provide estimates of expenditures
per unit reduction of emissions for each air pollutant and estimates of the cost per unit of benefit
achieved by the rule. We then compare the total social costs of the rule with the total monetized
benefits of the rule. Cost-benefit analysis is a central feature of virtually all economic assessments
and evaluates the economic efficiency of environmental policies by measuring incremental costs and
benefits, and hence their net impacts on society. In terms of economic efficiency, if the gainers could
compensate the losers and still remain better off, the policy is deemed to be efficiency enhancing and
therefore "good" from a policy perspective. Cost-benefit and cost-effectiveness analyses, however,
should not be the only tools used in the establishment of any final regulatory action. The HWC
MACT standards are expected to provide other benefits that are not expressed in monetary terms.
When these benefits are taken into account, along with equity-enhancing effects such as
environmental justice and impacts on children's health, the benefit-cost comparison becomes more
complex. Consequently, the final regulatory decision becomes a policy judgement which takes into
account efficiency as well as equity concerns.
COST-EFFECTIVENESS ANALYSIS
Overview
EPA developed two types of cost-effectiveness measures that examine:
• cost per unit reduction of emissions for each air pollutant; and
• cost per benefit (i.e., benefits in the form of health and ecological
improvements).
8-1
-------
FINAL DRAFT: July 1999
The first cost-effectiveness measure is useful for comparisons across various air pollution
regulations. Moreover, EPA has typically used this cost-effectiveness measure (defined as "dollar-
per-ton-of-pollutant-removed") to assess the decision to go beyond-the-floor (BTF) for MACT
standards.1 The second measure, cost per unit benefit, provides some insight into the rule's relative
costs of achieving a given environmental improvement (e.g., cost per avoided premature death).
Cost-Effectiveness: Dollar per Unit of Reduced Emission
There are several dimensions a cost-effectiveness analysis can adopt to examine MACT
standards. One approach is to estimate the aggregate cost-effectiveness of each MACT standard by
summing total costs and dividing by the total emissions reductions across all pollutants. Aggregate
cost-effectiveness figures, however, are misleading because the estimates do not account for the
types of regulated pollutants, their relative toxicities, and their relative volumes of emissions. A
more appropriate analysis requires disaggregating emission reductions and control costs by
individual pollutants. Developing cost-effectiveness estimates for individual air pollutants helps
EPA compare alternative emission standards for individual pollutants. The two analytic components
of the individual cost-effectiveness measures are:
• estimates of emission control expenditures per air pollutant for each
regulatory option; and
estimates of emission reductions under each regulatory option.
Expenditures per air pollutant are based on the engineering costs for various pollution control
measures as described in Chapter 4. Within each combustion sector (cement kilns, incinerators, and
LWAKs), we sum each facility's costs of controlling emissions and amount of emission reductions
for each pollutant. An additional adjustment is needed for control equipment that simultaneously
reduces emissions for more than one air pollutant. For example, carbon injection or carbon beds
can control both mercury and dioxins/furans. In addition, a fabric filter that may be required as part
of a carbon injection system will also increase the capture performance of paniculate matter, semi-
volatile metals, and low-volatility metals. In the case of carbon injection (CI), EPA apportioned
costs based on the required emission reduction for each pollutant. For example, if carbon injection
(CI) equipment is assigned to a combustion system that requires a dioxin reduction of 40 percent and
a mercury reduction of 80 percent, the individual cost calculations for this system are:
1 Martineau, Robert J. and David P. Novello, eds. 1998. The Clean Air Act Handbook.,
American Bar Association Publishing, Chicago.
8-2
-------
FINAL DRAFT: July 1999
Cost for Mercury control = [807(80+40) x CI cost]
Cost for Dioxin control = [407(80+40) x CI cost]
These calculations split the costs of the carbon injection system between dioxin and mercury.
The other component of the individual cost-effectiveness measure is the emission reduction
achieved when combustion facilities comply with the standards for the given regulatory option. In
the emission reduction calculations, we assume emission reductions at the 70 percent design level.
As a result combustion units will not experience emission reductions or incur costs if their emissions
are below the 70 percent design level. However, combustion units that are already emitting below
the standard, but above the 70 percent design level for a particular air pollutant will reduce emissions
and incur costs. In addition, combustion units with emissions exceeding the standard will also
reduce emissions to the 70 percent design level of the standard and incur the associated costs.
The emission reductions for the MACT Floor are calculated as the difference between the
baseline emissions and the 70 percent design levels for the Floor standard. The emission reductions
for the Recommended MACT and the BTF-ACI MACT standards are calculated as the difference
between 70 percent of the Floor Standard and 70 percent of the beyond-the-floor regulatory option.
Exhibit 8-1 indicates where incremental emission reductions are expected for each pollutant under
the various regulatory options. Where there is no value in the table, no emission reductions are
expected. For example, all LWAKs are currently meeting 70 percent of the Floor emission levels
for the following pollutants: dioxins/furans, SVMs, carbon monoxide, and total hydrocarbons.
Exhibit 8-1
EXPECTED INCREMENTAL ANNUAL EMISSION REDUCTIONS
Source
LWAK
INC
CK
Options
Baseline to FLR
FLR to REC
FLR to BTF-ACI
Baseline to FLR
FLR to REC
FLR to BTF-ACI
Baseline to FLR
FLR to REC
FLR to BTF-ACI
Note: Emissions reductions are
TEQ,
g
-
1.96
2.15
3.40
17.93
19.45
5.36
-
3.71
based on
Hg,
Mg
0.03
-
0.02
3.46
-
0.80
0.18
-
0.69
Pollutant
SVM, LVM, PM,
Mg Mg Mg
0.04 2.69
0.17
0.17
55.87 6.86 1345.71
-
.
19.48 0.19 873.13
5.45
5.45
CO, THC, TCI, Mg
Mg Mg
182.32
1433.20
1433.20
45.24 28.21 2672.02
-
.
11.30 383.02
-
-
meeting the 70% design level.
8-3
-------
FINAL DRAFT: July 1999
We develop individual cost-effectiveness (CE) measures for each MACT standard as follows:
• Cost-Effectiveness Measures for MACT Floor — Costs and emission
reductions are incremental to the baseline.
• Cost-Effectiveness Measures for Recommended MACT — Costs and
emission reductions are incremental to the MACT Floor.
• Cost-Effectiveness Measures for BTF-ACI MACT — Costs and emission
reductions are incremental to the MACT Floor.
Cost-Effectiveness Results
We summarize the cost-effectiveness results in Exhibit 8-2 by pollutant, sector, and MACT
standard. Cost-effectiveness results are measured in $1,000 per reduced megagram of emissions for
all pollutants except dioxins. Cost-effectiveness for dioxins applies the metric of $1,000 per reduced
gram of toxicity equivalent. In some cases, we do not present cost-effectiveness figures because
there are no associated (incremental) emission reductions. For example, all LWAKs currently meet
the Floor standards for reducing SVM emissions; thus, we do not report SVM cost-effectiveness
results for LWAKs at the Floor. Similarly, we do not present cost-effectiveness measures for
pollutants where EPA did not consider beyond-the-floor standards as part of its final rulemaking
(e.g., particulate matter and LVMs). Below, we summarize key findings from the results:
• Across MACT standards and combustion sectors, cost-effectiveness measures
exhibit wide variability. As shown in Exhibit 8-2, the cost-effectiveness of
the HWC MACT standards ranges from $1,800 per megagram of reduced
total chlorine emissions to $34 million per megagram of reduced mercury
emissions. Dioxin control ranges from $25,000 to $903,000 per gram
reduced.
• For cases in which we have cost-effectiveness figures for both the Floor and
Recommended standards, the Recommended Standards appear more cost-
effective than the Floor for reducing incinerator emissions of dioxins/furans.2
For LWAK emissions of total chlorine, the cost-effectiveness of the
Recommended Standard is similar to that of the Floor. While the SVM
Recommended Standard for cement kilns appears less cost-effective than the
2 "More cost-effective" means that incremental emission reductions are achieved at lower
cost.
8-4
-------
FINAL DRAFT: July 1999
Floor level, the cost-effectiveness of SVM control for cement kilns is similar
to that of LWAKs at the Recommended Standard.
For cases in which we have cost-effectiveness results for both BTF options
(Recommended and BTF-ACI), the Recommended standard is either more
cost-effective or not substantially different across the two MACT options,
given the uncertainties in the analysis (e.g., SVMs).
Cost-Effectiveness: Dollar per Health and Ecological Benefits
This section evaluates cost-effectiveness per unit benefit (e.g., cost per health case avoided).
EPA developed this second cost-effectiveness analysis to analyze and understand the relative costs
of achieving specific benefits as standards become increasingly more stringent. The two components
of this benefit cost-effectiveness measure are:
estimates of specific health and ecological benefits associated with the
Recommended Standard; and
• estimates of control expenditures associated with the reduction of emissions
for pollutants directly linked to the benefit.
Approach for Calculating Cost-Effectiveness per Unit Benefit
In order to attribute costs to specific benefits, we had to: (i) identify the pollutants associated
with specific benefits; (ii) determine the costs of controlling specific pollutants; and (iii) develop a
cost allocation approach. For determining control costs, the analysis does not apply social cost
estimates. Instead, we apply the same direct compliance (engineering) cost estimates used in
constructing the "dollar per unit of reduced pollutant" metric for determination of control costs
associated with a specific pollutant.3 We focus on the Recommended MACT Standard in the cost-
effectiveness of benefits, because human health and ecological benefits do not vary significantly
across MACT standards.
3 Following this, all caveats regarding the cost methodology discussed in the dollar per unit
of reduced pollutant are also relevant to this benefits cost-effectiveness analysis.
8-5
-------
FINAL DRAFT: July 1999
Exhibit 8-2
COST-EFFECTIVENESS RESULTS
Source Options
TEQ,
S^OOO/g1
LWAK Baseline to FLR
INC
CK
Note:
FLR to REC
FLR to BTF-ACI
Baseline to FLR
FLR to REC
FLR to BTF-ACI
Baseline to FLR
FLR to REC
FLR to BTF-ACI
$25
$535
$903
$368
$762
$898
-
$661
Hg,
$l,000/Mg2
$27,144
-
$34,327
$3,537
-
$ 24,594
$6,274
-
$16,207
SVM,
$l,000/Mg
-
$532
$316
$34
-
-
$67
$502
$414
Pollutant
LVM, PM, CO, THC, TCI,
$l,000/Mg $l,000/Mg $l,000/Mg $l,000/Mg $l,000/Mg
$1,271 $6.7 - - $1.9
$2.0
$2.0
$256 $12.9 $19.6 $12.3 $1.8
-
.
$4,234 $7.1 - $3.3 $3.8
-
-
This table includes pollutants where more than one option was under consideration. Cost-effectiveness is calculated at the 70% design level.
g=gram
Mg=megagram
-------
FINAL DRAFT: July 1999
We use a straightforward cost allocation approach in which the total costs by pollutant are
assigned to each health or ecological effect associated with reduction of that pollutant. For example,
cost-effectiveness for avoided severe health effects (e.g., premature mortality from exposure to
particulates and cancer caused by dioxins and furans) is calculated as follows:
Cost-Effectiveness = Cost of controlling pollutants associated with mortality risks
Number of avoided premature mortality and cancer cases
= Cost of PM control + Cost ofD/F control + Cost of metals control4
Number of avoided premature mortality and cancer cases
= $47 x 106 + 1.8 cases = $26.5 million per life saved.
We calculate cost-effectiveness benefit figures for morbidity and ecological benefits similarly. That
is, we use the total costs of control for each pollutant associated with the health or ecological effect.
This approach tends to overstate costs for particular benefits. Other cost allocation schemes,
however, can underestimate costs if a particular benefit is the only benefit of interest.
Results of Cost-Effectiveness per Unit Benefit Analysis
The primary health and ecological benefits of the HWC MACT standards are avoided
premature mortality (cancer and non-cancer), reduced morbidity, and reduced pollution to aquatic
and terrestrial ecosystems. We group the benefit cost-effectiveness measures into these categories
(as shown in Exhibit 8-3). As explained in the approach section above, in isolation, these cost-
effectiveness per unit benefit measures are somewhat deceptive because they apply the full costs of
control (by pollutant) to a single type of benefit (e.g., lives saved). The cost per unit benefit
measures are therefore overestimates and should only be used as relative measures for comparison
across MACT options. Below, we summarize the results.
4 The cost of metals control reflects controlling SVM and LVM emissions.
8-7
-------
FINAL DRAFT: July 1999
Dollar per avoided case of premature mortality (cancer and non-
cancer)5: The HWC MACT standards result in an estimated cost per life
saved of $26.5 million. This is significantly higher than most estimates of the
value of a "statistical life" found in the economic valuation literature.6 The
costs associated with mortality benefits reflect control of carcinogenic
emissions (dioxin, SVMs, and LVMs) and particulate matter (PM). Benefits
are based on the total number of avoided cases of cancer and premature
mortality due to moving from the baseline to the Recommended MACT
Standard.
Exhibit 8-3
COST-EFFECTIVENESS PER UNIT HEALTH AND ECOLOGICAL IMPROVEMENT
(using unadjusted, maximum cost of control)
Benefit Type
Pollutant(s)
Cost of Control
(Engineering Costs)
(1996 dollars)
Benefit
Cost-Effectiveness
(dollar per unit benefit)
Health Benefits
Avoided
Premature
Mortality
Cases
Avoided
Morbidity
(PM)
Avoided
Morbidity
(lead)
SVM, LVM,
dioxin, PM
PM
SVM
$47.7
million
$23.6
million
$6 million
1.8
cases
287,400
cases
2 cases
$26.5 million
per life saved
$85 per case
$3 million per
case
Ecological Benefits
Reduction
in area of
Land and
Water
Impacted
dioxin,
mercury,
lead
$14 million
349km2
$40,257 per sq.
km.
Notes:
1 . These cost-effectiveness per unit benefit measures are upper bound estimates that apply the full costs of control (by pollutant) to a
single type of benefit (e.g., lives saved). The cost per unit benefit measures should not be reported in isolation from other benefit
estimates; they should only be used as relative measures to compare across MACT standards.
2. All figures are incremental from the baseline to the Recommended MACT Final standards.
3. Mortality cases comprise fatal cancers and fatalities from exposure to particulate matter.
4. PM morbidity cases comprise hospital admissions from respiratory diseases, cases of chronic bronchitis and asthma, work loss
days, and mild restricted activity days.
5. Morbidity cases associated with exposure to lead are cases in which children have blood lead levels above IQug/dL.
5 Although cancer may not be fatal in all cases, for the purposes of this assessment, we apply
the value of statistical life estimates to avoided cancer cases.
1 For more information on the value of a statistical life, see Chapter 6.
-------
FINAL DRAFT: July 1999
Dollar per avoided case of morbidity: Cost-effectiveness for PM control is calculated at
$85 per benefit case. For PM, benefits represent the total number of avoided adverse health
effects, work loss days, and restricted activity days estimated for the Recommended MACT
Standard. Cost-effectiveness for lead control is $3 million per benefit case. For lead,
benefits represent the number of children with blood lead levels reduced to below levels of
concern (i.e., below 10//g/dL).
Dollars per ecological benefit: Cost-effectiveness for ecological benefits is $40,260 per
square kilometer of land and surface water that experience reductions in ecological hazard
quotients to levels below concern (i.e., HQ<1).
Caveats and Limitations
Our method for calculating cost-effectiveness makes several simplifying assumptions. The
two most important address the metrics employed for measuring cost-effectiveness and the actual
methodology used to estimate the cost and emission reduction figures. The analysis used two
separate metrics. For the majority of pollutants, the metric applied was a dollars per megagram of
emissions reduced.7 With the exception of dioxins/furans, the cost-effectiveness metrics do not
incorporate any measure of relative toxicity or scaling to adjust to relative emissions levels.
Consequently, comparisons of cost effectiveness across pollutants are somewhat misleading. For
example, cost-effectiveness values for dioxins/furans average over half a million dollars per gram
reduced. In contrast, cost-effectiveness values for total chlorine (TCI) average $2,300 per megagram
reduced. The stark differences in cost-effectiveness performance would suggest that it is not cost-
effective to regulate dioxins/furans. However, required emission reductions for dioxins/furans range
between 1.96 and 19.45 grams, while TCI reductions range roughly between 182 and 2,672
megagrams. The differences in relative scale of reductions account for the differences in cost-
effectiveness. Moreover, the relative toxicity of dioxins/furans to total chlorine is not reflected.
7 The one exception being dioxins/furans (TEQ), which was measured in dollars per gram
of emissions reduced.
8-9
-------
FINAL DRAFT: July 1999
The second caveat to the cost-effectiveness analysis concerns the methodology for estimating
cost and emission reductions for individual pollutants. The method assumes that all facilities
continue operating and install pollution control equipment or implement feed reductions to comply
with the MACT standards. As discussed in earlier chapters of this Assessment, a number of other
responses to the MACT standards are possible. For example, some facilities may cease waste
burning in the face of increased compliance costs. However, it is difficult to trace the overall effect
that these reactions would have on either expenditures per pollutant or on total emissions of each
pollutant. Beyond this broad caveat, other factors influence the cost-effectiveness estimates:
• The feed control costing approach may lead us to overstate expenditures per
pollutant. Feed control costs are upper-bound costs based on pollution
control equipment and/or design, operation, and maintenance of existing
pollution control equipment. Combustion facilities may in fact be able to
implement waste feed control at lower cost.
• Costs are currently apportioned according to the percentage reduction
required to meet the standard for each pollutant controlled by the device.
While the approach chosen is reasonable, it does not take
engineering/technological issues such as the relative ease with which a
device can control one pollutant versus another into account.
• Finally, the assumption that units control emissions to the 70 percent design
level may lead us to overstate emissions because some combustion facilities
report design levels as low as 30 percent.
COST-BENEFIT COMPARISON
A comparison of the costs and benefits of the rule provides an assessment of its overall
efficiency and impact on society. In this section, we compare the total social costs of the rule with
the total monetized and non-monetized benefits of the rule. The total monetized benefits of the final
standards and each option analyzed are summarized in Exhibit 8-4. As discussed in Chapter 6,
monetized benefits represent only a subset of potential avoided health effects, both cancer and non-
cancer cases. In comparison, the total social costs of the rule are provided in Exhibit 8-5. These cost
ranges represent market- and non-market adjusted scenarios to bound the costs of the rule. Social
costs also include government administrative costs.
8-10
-------
FINAL DRAFT: July 1999
Exhibit 8-4
TOTAL MONETIZED HEALTH BENEFITS
(millions of 1996 dollars)
Combustion Sector
Cement Kilns
LWAKs
Incinerators
(on-site and commercial)
Total Monetized Benefits
MACT STANDARD
Floor
$0.51
($0.46 -$0.61)
$0.04
$27.44
($19.60 -$43.92)
$28
($20 - $44)
Recommended
$0.51
($0.46 -$0.61)
$0.38
($0.85 $1.01)
$28.45
($19.73 -$46.79)
$29
($21 - $48)
BTF-ACI
$0.62
($0.46 - $0.93)
$0.38
($0.85 $1.01)
$28.56
($19.74 -$47.10)
$30
($21 - $49)
Note: Figures may not add due to rounding.
Across all MACT regulatory scenarios, costs exceed monetized benefits more than two-fold.
For the BTF-ACI MACT Standard, costs are more than four times greater than monetized benefits.
However, the HWC MACT standards are expected to provide other benefits that are not expressed
in monetary terms. These benefits include health benefits to sensitive sub-populations such as
subsistence anglers and improvements to terrestrial and aquatic ecological systems. When these
benefits are taken into account, along with equity-enhancing effects such as environmental justice
and impacts on children's health, the benefit-cost comparison becomes more complex.
Consequently, the final regulatory decision becomes a policy judgment which takes into account
efficiency as well as equity concerns.
8-11
-------
FINAL DRAFT: July 1999
Exhibit 8-5
TOTAL SOCIAL COSTS
(millions of 1996 dollars)
Combustion Sector
Cement Kilns
LWAKs
Incinerators
(on-site and commercial)
Output Adjustment Costs
Government Costs
Total Social Costs
MACT STANDARD
Floor
$21
($21 -$30)
$4
($4 - $6)
$33
($33 - $39)
$8
$300,000
$65
($65 - $82)
Recommended
$25
($25 - $32)
$5
($5 - $7)
$34
($34 - $39)
$8
$300,000
$73
($72 - $86)
BTF-ACI
$34
($34 - $43)
$7
$83
($83 - $90)
$8
$300,000
$132
($131 - $142)
Notes:
1. Figures may not add due to rounding.
2. Best estimates are based on 70% engineering design levels.
3. These figures do not include PM CEM costs.
8-12
-------
FINAL DRAFT: July 1999
REFERENCES
Abt Associates, Incorporated. The Medical Costs of Five Illnesses Related to Exposure to
Pollutants. Prepared for U.S. EPA, Office of Pollution Prevention and Toxics, Washington,
D.C., 1992.
Anderson, R., U.S. EPA, OSWER, personal communication, May 21, 1998.
Bernstein, L. Financial Statement Analysis: Theory, Application and Interpretation.
Howewood, IL: Irwin, 640-652, 1983.
Brigham, E., and L. Gapenski. Financial Management Theory and Practice. 6th Edition, Chicago:
The Dryden Press, 483, 1991.
Bureau of National Affairs. "Draft Rule Leaves Question Open on Excluding Some Kilns from
Controls." Environmental Reporter., 17-18, 1997.
Bureau of National Affairs. "Cement Industry 'Enforceable Agreement' Would Replace Agency's
Plan for Kiln Dust." Environmental Reporter, 1645, 1995.
Cement Kiln Recycling Coalition. "CKRC Cement Facility Questions on Hazardous Waste Fuel
Blending and Burning," 1994.
Cement Kiln Recycling Coalition. "Evaluation and Use of Data," (Docket Number F-97-CS4A-
FFFFF), 30 June 1999.
"Commercial Hazardous Waste Management Facilities: 1997 Survey of North America."
Hazardous Waste Consultant, 4.2, 4.6, 1997.
"Concrete Pipe and Products v. Construction Laborers Pension Trust for Southern California." 113
S. Ct. 2264, 1993.
Coyle, C.M. "Cement and Aggregates." Value Line, 894, 1998.
Cromling, M.M. "A Year of Challenges and Achievements." Environmental Business Journal, 11,
1996.
Cromling, M.M. "Redefining Hazardous Waste." Environmental Business Journal, 5, 1996.
Dolan v. City of Tigard.114 S. Ct. 2309, 1994.
-------
FINAL DRAFT: July 1999
DPRA, Incorporated. "Estimating Costs for the Economic Benefit of RCRA Non Compliance."
Prepared for U.S. EPA, Office of Regulatory Enforcement, 5-4, 1994.
Elixhauser, A., R.M. Andrews, and S. Fox, Agency for Health Care Policy and Research (AHCPR),
Center for General Health Services Intramural Research, U.S. Department of Health and
Human Services. Clinical Classifications for Health Policy Research: Discharge Statistics
by Principal Diagnosis and Procedure, 1993.
Fairweather, G., S. Brown, and M. Berg, ICF. "Memorandum: QRT #1, WA B-30, EPA Contract
68-W6-0061." Prepared for Lyn Luben, OSW/EPA, and Kevin Brady, ffic, 1998.
Fusfeld, L., and A. Yates, Industrial Economics, Inc. "Memorandum: Mobile Combustion Systems
Additional Information." Prepared for Lyn Luben, U.S. EPA, 1998.
Fusfeld, L., and A. Yates, Industrial Economics, Inc. "Summary of On-site Incinerator Analysis."
Memorandum Prepared for Lyn Luben, U.S. EPA, 20 February 1998.
Goebel, C., National Association of Chemical Recycler, personal communication, May 20, 1997.
Graff, R., and T. Walker, Industrial Economics, Inc. "Memorandum: Factors that Require,
Encourage, or Promote Combustion of Hazardous Waste." Prepared for Walter Walsh,
Office of Policy Analysis, U.S. EPA, 12, 1993.
"Hazardous Waste: A Segment Under Pressure." Environmental Business Journal. June 1996.
ICF Incorporated. 1990 Survey of Selected Firms in the Hazardous Waste Management Industry.
Prepared for the U.S. EPA, Office of Policy Analysis, 2-5, 1992.
Industrial Economics, Incorporated. "Economic Analysis Report for the Combustion MACT Fast-
Track Rulemaking." Prepared for the U. S. Environmental Protection Agency, Office of Solid
Waste, March 1998.
Industrial Economics, Incorporated, Social Science Discussion Group. Handbook for Non-Cancer
Valuation: Draft. Prepared for U.S. EPA, 1997.
Industrial Economics, Incorporated, "Core Combustion Data Update," Memorandum, prepared for
U.S. Environmental Protection Agency, 23 August 1996.
Lucas v. South Carolina Coastal Council. 112 S. Ct. 2886, 1992.
-------
FINAL DRAFT: July 1999
Martinaue, R. J., and D.P. Novello, eds. The Clean Air Act Handbook. Chicago: American Bar
Association Publishing, 1998.
McMurrer, D., R. Black, and T. Walker, Industrial Economics, Inc. "Memorandum: The Processing
and Use of Waste Fuels." Prepared for Lisa Harris, Office of Solid Waste, U.S. EPA, 1994.
Mulle, T. "Cement and Aggregates." Value Line, 891, 1995.
National Association of Chemical Recyclers (NACR). NACR Waste Processing Survey, 1994.
Nef, W. "Rollins Environmental Services." Value Line., 350, 1995.
Nef, W. "Rollins Environmental Services." Value Line, 352, 1994.
Nollan v. California Coastal Commission. 483 U.S. 825, 1987.
Office of Management and Budget (OMB). Economic Analysis of Federal Regulations Under
Executive Order 12866, 1, 9, 1996.
Opalko, A., U.S. EPA, personal communication, May 8, 1998.
Pechulis, Kevin. U.S. Environmental Protection Agency RCRA Hotline, personal communication.
March 19, 1998.
Pekar, Z., and T. Marimpietri. "Description of Methodologies and Data Sources Used in
Characterizing Land Use (including Human/Livestock Populations), Air Modeling Impacts,
and Waterbody/Watershed Characteristics for HWC Study Areas." Prepared for David
Layland, U.S. EPA, 1998.
Penn Central Transportation Co. v. City of New York. 438 U.S. 104, 1978.
Pennsylvania Coal Co. v. Mahon. 260 U.S. 393, 1922.
Portland Cement Association. "U.S. Cement Industry Fact Sheet: Fourteenth Edition," Table
24: Fossil Fuel Mix, 1996.
Randolph, K., U.S. EPA, personal communication, June 13, 1995.
"Redefining Hazardous Waste." Environmental Business Journal, 5, 1996.
-------
FINAL DRAFT: July 1999
Research Triangle Institute. "Description of the SERA Methodology." Prepared for the U.S. EPA,
1998.
Research Triangle Institute. "Human Health and Ecological Risk Assessment Support to the
Development of Technical Standards for Emissions from Combustion Units Burning
Hazardous Wastes: Background Document - Final Report," Prepared for U.S. EPA, Office
of Solid Waste, 1998.
Retallick, P., Rollins Environmental Services, personal communication, September 13, 1994.
Ruckelshaus v. Monsanto Company. 467 U.S. 986, 1005, 1984.
SEC's Edgar Database. Internet Address: www.sec.gov/archives/edgar/data.
Springsteen, B., EER, personal communication, May 15, 1998.
Susel, Irv and Stu Sessions, Environomics. Memorandum: "Response to lEc Follow-up Questions
on CKRC Comments on EPA's Proposed Hazardous Waste Combustion MACT Standards
(March 13, 1997)," September 22, 1997.
U.S. Department of Commerce, Bureau of the Census. Statistical Abstract of the United States
1995. 115th Edition, 73, 1995.
U.S. EPA. Air Pollution Operating Permit Program Update: Key Features and Benefits
(EPA/451/K-98/002), 1998.
U.S. EPA. Biennial Reporting System (BRS). 1993.
U.S. EPA. Biennial Reporting System (BRS). 1995.
U.S. EPA. "Description of Methodologies and Data Sources Used in Characterizing Land Use
(including Human/Livestock Populations), Air Modeling Impacts, and Waterbody/Watershed
Characteristics for HWC Study Areas," Memorandum prepared for David Layland, January
27, 1998.
U.S. EPA. Draft Technical Support Document for HWC MACT Standards, Volume V: Emission
Estimates and Engineering Costs, 1998.
U.S. EPA. Economic Analysis Report for the Combustion MACTFast-Track Rulemaking, March
1998.
-------
FINAL DRAFT: July 1999
U.S. EPA. Environmental Health Threats to Children. EPA 175-F-96-001, 4, 1996.
U.S. EPA. "Race, Ethnicity, and Poverty Status of the Populations Living Near Cement Plants in
the United States." 1994.
U.S. EPA. Report to Congress on Cement Kiln Dust, 9-10. 1993.
U.S. EPA. Revised Interim Guidance for EPA Rulewriters: Regulatory Flexibility Act as amended
by the Small Business Regulatory Enforcement Fairness Act, March 29, 1999.
U.S. EPA. Solid Waste and Emergency Response, Technology Innovation Office. Clean Up the
Nation's Waste Sites: Markets and Technology Trends: 1996Edition, 1991.
U.S. EPA. "Supporting Statement for EPA ICR for 'New and Amended RCRA Reporting and
Recordkeeping Requirements for Boilers and Industrial Furnaces Burning Hazardous
Waste.'" 1995.
U.S. EPA. "Supporting Statement for EPA ICR for 'Reporting and Recordkeeping Requirements
for National Emissions Standards for Hazardous Air Pollutants from Hazardous Waste
Combustors.'" 1995.
U.S. EPA. Supporting Statement for EPA Information Collection Request #1361.08 "New and
Amended Reporting and Recordkeeping Requirements for Boilers and Industrial Furnaces
Burning Hazardous Waste." September 1998.
U.S. EPA. Supporting Statement for EPA Information Collection Request #1773.02 "New and
Amended Reporting and Recordkeeping Requirements for National Emissions Standards for
Hazardous Waste Air Pollutants from Hazardous Waste Combustors. " September 1998.
U.S. EPA. The Benefits and Costs of the Clean Air Act, 1970 to 1990, II1-112, 1997.
U.S. General Accounting Office. Superfund: EPA Could Further Ensure the Safe Operation ofOn-
Site Incinerators. 1997.
Waitzman, N.J., R.M Scheffler, and P.S. Romano. The Costs of Birth Defects. Lanham, Maryland:
University Press of America, Inc. 1996.
"What Happens to our Hazardous Waste?" Hazardous Materials Management. April/May 1995.
White, A., and D. Miller, Tellus Institute. "Economic Analysis of Waste Minimization Alternatives
to Hazardous Waste Combustion." 1997.
-------
FINAL DRAFT: July 1999
Zadeh, M., Energy and Environmental Research Corporation, personal communication, March 11,
1997.
------- |