ECONOMIC IMPACT ANALYSIS FOR THE
UME MANUFACTURING MACT
STANDARD
Final Report
HRTI
INTERNATION*I
-------
flUG.14.2003 li:45fiM . ! NO.034 P.3
EPA-452/R-03-013
July 2003
Economic Impact Analysis for the
Lime Manufacturing MACT Standard
Final Report
By:
Robert H. Beach
Brooks M. Depro
Jui-Chen Yang
RT1 International*
Health, Social, and Economics Research
Research Triangle Park, NC 27709
Prepared for;
Larry Sorrels
U.S. Environmental Protection Agency
Office of Air Quality, Planning and Standards
Innovative Strategies and Economics Group
Research Triangle Park, NC 27711
Contract No. 68-D-99-024
*RTI International is the legal trade name of Research Triangle Institute.
-------
Docket No. OAR-2002-0052
Legacy Docket A-95-41
Item No. IV-A-4
ECONOMIC IMPACT ANALYSIS FOR THE
LIME MANUFACTURING MACT
STANDARD
Final Report
-------
EPA-452/R-03-013
July 2003
Economic Impact Analysis for the
Lime Manufacturing MACT Standard
Final Report
By:
Robert H. Beach
Brooks M. Depro
Jui-Chen Yang
RTI International*
Health, Social, and Economics Research
Research Triangle Park, NC 27709
Prepared for:
Larry Sorrels
U.S. Environmental Protection Agency
Office of Air Quality Planning and Standards
Innovative Strategies and Economics Group
Research Triangle Park, NC 27711
Contract No. 68-D-99-024
*RTI International is the legal trade name of Research Triangle Institute.
-------
CONTENTS
Section Page
Executive Summary ES-1
1 Introduction ". 1-1
— tri~^—-Agency RequiferneatHbran E1A ..:...........:.......--..... i^t-
1.2 Scope and Purpose 1-2
1.3 Organization of the Report 1-3
2 Industry Profile .2-1
2.1 Lime Production 2-2
2.1.1 General Production Process 2-2
2-J-2Kiln Types... . 7.™T7T.~ : ~r.~vT7777777T77":. ~; TTTTT: -2.5
2.1.2.1 Rotary Kilns . 2-5
2.1.2.2 Vertical Kilns 2-6
2.1.2.3 Miscellaneous Kiln Types 2-8
2.1.3 Major Inputs for Lime Production 2-12
2.1.3.1 Fuel 2-12
2.1.3.2 Limestone 2-13
2.1.4 Emissions 2-13
2.1.4.1 Paniculate Matter and Metals Emissions ........ 2-13
2.1.4.2 Hydrochloric Acid . . . , 2-14
2.1.43 Gaseous Pollutants 2-14
2.2 Historical Industry Data 2-15
2.2.1 Quantity Data 2-15
2.2.2 Price Data 2-15
2.2.3 Production Costs 2-20
ui
-------
2.3 Affected Producers 2-20
2.3.1 Manufacturing Facilities 2-20
2.3.2 Companies 2-27
2.4 Consumption and Uses of Lime 2-30
2.4.1 Product Characteristics 2-30
2.4.2 Uses and Consumers 2-32
2.4.2.1 Agriculture 2-32
2.4.2.2 Chemical and Industrial 2-35
2.4.2.3 Construction 2-36
2.4.2.4 Environmental 2-37
2.4.3 Substitution Possibilities in Consumption 2-38
3 Regulatory Control Costs 3-1
3.1 ModelPlants 3-2
3.2 Control Costs 3-5
3.2.1 Paniculate Matter Controls 3-5
3.2.2 Cooler Controls 3-7
3.2.3 Materials Handling Operations Control Costs 3-8
3.2.4 Testing and Monitoring Costs 3-8
3.3 Total Annual Control Costs 3-11
4 Economic Impact Analysis: Methods and Results 4-1
4.1 EIA Methodology Summary 4-1
4.2 Operational Model 4-2
4.2.1 Market Supply 4-2
4.2.2 Market Demand 4-4
4.2.3 Control Cost Inputs and With-Regulation Equilibrium 4-4
4.3 Economic Impact Results 4-5
4.3.1 National Market-Level Impacts 4-6
4.3.2 National Industry-Level Impacts 4-7
4.3.3 Closure Estimates .. 4-9
4.3.4 Employment Impacts 4-11
4.3.5 Social Costs 4-13
4.4 Energy Impacts 4-13
4.4.1 Changes in Lime Manufacturing Energy Consumption 4-14
4.4.2 Assessment 4-16
IV
-------
Small Business Flexibility Analysis .................... . ............ 5-1
5. 1 Identifying Small Businesses ................................ 5-2
5.2 Screening-Level Analysis .................................. 5-2
5.2.1 Small Business Costs ................................ 5-3
5.3 Economic Analysis ........... ............. . .............. 5-4
5.4 Assessment ............................................. 5-5
5.5 Projected Reporting and Recordkeeping Requirements ...... . ..... 5-6
5 . 6 Other Federal Rules That May Impact Lime Manufacturing
;:-:^^^^ ; . ... ,-5-7-
5.7 Small Business Mitigation Efforts ............................ 5-7
References .......................... . ................ .............. R-l
Appendix A Overview of Economic Model Data, Equations, and
Solution Algorithm ..................................... . . A-l
Appendix B Sensitivity Analysis ....................................... B-l
-------
LIST OF FIGURES
Number Page
2-1 General Process Flow Diagram For the Manufacturing and Processing
of Lime 2-3
2-2 Preheater Rotary Kiln System for Lime Production 2-6
2-3 Vertical KM System „ 2-7
2-4 ParaMMow Kin wim Left Shaft C 2-9
2-5 Fluidized Bed Kiln 2-10
2-6 Rotary Hearth Kiln with Cross Sectional View of One Firing Zone 2-11
i
4-1 Market Equilibrium without and with Regulation 4-3
VI
-------
LIST OF TABLES
Number Page
2-1 Production, Captive Supply Use, and Apparent Consumption of Lime:
1971-1999 (103 metric tons) : 2-16
2-2 Exports and Imports of Lime: 1971-1999 '.' 2-18
2-3 Average Lime Prices: 1971-1999 2-19
~2~4 Laix>r, Material^ and New Capital Expenditure Costs tor SIC 3274" ~ ~"
(NAICS 32741) Lime Manufacturing: 1977-1997 , 2-21
2-5a Commercial Lime Manufacturing Plants 2-22
2-5b Captive Supply Lime Manufacturing Plants 2-26
2-6 Company-Level Data for the Lime Industry 2-28
2-7 Characteristics of Small Businesses in the Lime Industry 2-31
2-8 Quantities, Percentages, and Values for Lime by Use: 1999 2-33
2-9 Lime Sold by Producers in the United States, by Use (thousands of
metric tons) 2-34
3-1 Summary of Model Lime Kilns 3-3
3-2 Annual Costs of Upgrading Existing Fabric Filter with New Bags
Throughout (1997$) 3-6
3-3 Annual Costs of Upgrading Existing Wet Scrubber (1997$) 3-7
3-4 Annual Costs of Installing a New Fabric Filter on an Existing
Uncontrolled Kiln (1997$) .3-8
3-5 Annual Costs Associated with Adding an Additional Field for Existing
Electrostatic Precipitators (ESP) (1997$) 3-9
3-6 Annual Costs of Installing a New Fabric Filter on a New Kiln (1997$) .. 3-9
3-7 Kiln Testing and Monitoring Costs (1997$) 3-10
3-8 National Engineering Control Cost Estimates (1997$) 3-12
4-1 National-Level Market Impacts of the Proposed Lime Manufacturing
MACT: 1997 4-7
4-2 National-Level Industry Impacts of the Proposed Lime Manufacturing
MACT (1997$) 4-8
4-3 Distributional Impacts on Facilities Owned by Small Lime Manufacturers ... 4-10
4-4 Full-Cost Absorption Analysis for Small Commercial Lime Plants 4-12
4-5 Distribution of Social Costs Associated with the Proposed Lime
Manufacturing MACT (million 1997$/yr) 4-14
vii
-------
4-6 Energy Usage in the Lime Manufacturing Industry (1994) 4-15
4-7 Significant Energy Action Impact Analysis 4-16
5-1 Summary Statistics for SBREFA Screening Analysis (1997$) 5.4
5-2 Small Business Impacts of the Lime Manufacturing MACT (1997$) 5-5
vui
-------
EXECUTIVE SUMMARY
In the Clean Air Act (CAA), Congress gave the U.S. Environmental Protection
Agency (EPA) broad authority to protect air resources throughout the nation. Under Section
112 of the CAA, EPA is developing a National Emission Standard for Hazardous Air
Pollutants (NESHAP) designed to reduce emissions generated in the production of lime.
Lime is primarily used by chemical and industrial users, with the largest consumption among
that group occurring in the steel industry. Other important categories of lime use include
environmental applications (e.g., use in scrubbers for sulfur dioxide (SO2) emission
reductions), construction, and agriculture. Lime production leads to emissions of particulate
matter (PM), including metals; hydrochloric acid (HC1); and gaseous pollutants, including
carbon monoxide (CO), carbon dioxide (CO2), SO2, and nitrogen oxides (NOJ. The rule is
primarily intended to reduce the emissions of PM/metals from lime kilns. This report
evaluates the economic impacts resulting from the rules.
ES.l Industry Profile
The production of lime begins with the quarrying and crushing of limestone. The
crushed limestone is then converted into lime by heating the limestone in a kiln, a process
known as calcination. When limestone is subjected to high temperatures, it undergoes a
chemical decomposition resulting in the formation of lime (CaO) and the emission of CO2.
Because calcination is a reversible chemical reaction, the CO2 emitted as a result of the
process must be removed to prevent recarbonation.
Lime as it exits the kiln is known as quicklime. It can be either high calcium or
dolomitic, depending on the type of limestone that was calcined. After the quicklime leaves
the kiln, it is screened to remove undersized particles. Quicklime can be converted into
hydrated lime. The process of hydration, also known as slaking, is a chemical reaction
between lime and water. Hydrated lime is produced in a vessel called a hydrator, where a
precise amount of water is slowly added to crushed or ground quicklime and the mixture is
stirred and agitated. The hydrated lime may undergo further refining or proceed directly to
bagging, shipment, and/or storage. The gas resulting from the hydration process contains
ES-1
-------
steam and lime particles. This gas may be vented back into the kiln or sent to a control
device where it is cleaned and then released (EPA, 1996).
Dead-burned dolomite, also called refractory lime, is a sintered or double-burned
form of dolomitic lime. It is used for lining open hearth or electric arc steel furnaces or as an
input in the refractory bricks that line basic oxygen steel furnaces. Dead-burned dolomite
represented less than 2 percent of total U.S. lime production in 1999 (Miller, 1999a).
Lime producers can be broadly characterized as captive and commercial. Captive
lime producers produce lime that is used by other operations within the same company,
frequently at the same plant location. The markets associated with captive lime production
are those for the products the lime is used to produce (e.g., steel, beet sugar). While an
important input, the cost of lime is small enough relative to the total cost of production of the
final goods (lime costs generally represent less than 5 percent of the value of shipments of
beet sugar or iron and steel) that changes in the cost of lime production resulting from this
regulation are not likely to have a significant influence on the markets for those products.
In 1999, production of lime occurred at approximately 257 kilns (EPA, 2000) located
at the 108 plants across the United States that were involved in lime production. However,
11 of these plants are identified by the U.S. Geological Survey (USGS) as hydrating plants
only (DOI, 2000), which, by definition, do not have any kilns. This implies that the average
number of kilns for the 97 plants that have kilns is approximately 2.6 kilns per plant. During
1999, the United States produced 19.6 million metric tons of lime, with quicklime accounting
for 87.2 percent of all lime production and hydrated lime accounting for 11.3 percent of lime
production. The remaining 1.5 percent of lime production was dead-burned dolomite. The
total value of domestic lime shipments in 1999 was $1.2 billion, for an average value of
$60.10 per metric ton.
Because limestone is plentiful in the United States, and transportation for such a
heavy, bulky commodity is expensive, imports make up only a small portion of total
consumption of lime. In 1999, only 0.2 million metric tons were imported, accounting for
0.8 percent of total U.S. lime consumption. Most imported lime is from Canada and Mexico;
small amounts are imported from other countries. Similarly, lime exports consist of a small
percentage of total production. Approximately 0.3 percent of lime produced was exported in
1999. Most exported lime goes to Canada, and small amounts are exported to Jamaica and
Mexico.
ES-2
-------
ES.2 Regulatory Control Costs
EPA's engineering analysis has determined the technology basis for the national
emission standards on major sources of air pollution. Sources of HAP emissions in lime
production include the lime kiln, the lime cooler, and materials handling operations (MHO).
Model plants were developed to evaluate the effects of controls on emissions from these
sources on the lime production industry. The MACT standards will affect all existing major
sources within the industry.1 Costs were estimated for existing lime manufacturers. Area
sources will incur costs only to perform tests to verify their status as area sources. The total
annual cost of this regulation was estimated to be $22.4 million (1997$) in the absence of
market adjustments.
In regard to the applicability of controls for a particular kiln, the engineering analysis
has estimated the proportion of major sources to which each type of control costs (e.g., kiln
PM controls) would apply based on the method of pollution control that the source currently
uses (e.g., fabric filter, wet scrubber, electrostatic precipitator, no control). However, because
of the uncertainty in determining the actual kilns that will be major sources and in
determining which controls those plants will need to install, the economic analysis randomly
determines the applicability of the controls and associated costs to each kiln2. Thus, multiple
simulations of the economic impact model were performed to provide an estimate of the
expected national-level impacts based on the engineering estimates of the proportions of
major sources currently using each type of pollution control device that will incur costs and
the amount of those costs.
ES.3 Economic Impact Analysis
The NESHAP to control HAPs from lime kilns will directly (through imposition of
control costs) and indirectly (through changes in market prices) affect each of the commercial
lime kilns operating in the lime production industry. In addition, a subset of the captive lime
'The controls and associated costs for new sources under the regulation are presented in Section 3 of this report.
However, EPA does not anticipate any differential impact on these sources. Thus, the economic impact
analysis described in Section 4 focuses on the regulatory effects on existing sources only.
2For small companies, the engineers gathered more information so that specific kiln-level costs were assigned to
kilns owned by small companies rather than randomly assigning costs to these kilns. This was done to
facilitate the small business analysis. However, there were insufficient resources to assign kiln-specific
costs to all kilns.
ES-3
-------
kilns will be directly affected. This NESHAP does not apply to lime kilns used captively in
the production of beet sugar or pulp and paper, but captive lime plants operating in other
industries will incur compliance costs. Implementation of the regulations will increase the
costs of producing lime. The compliance costs will vary across kilns depending on their
physical characteristics and existing level of control. The response of producers to these
additional costs will help determine the economic impacts of the regulation. Specifically, the
costs of the regulations may induce some owners to change their current operating rates or
even to close down. These choices affect, and are in turn are affected by, the market price for
lime.
Because of the low value and high transport cost of lime, most lime is consumed
within 300 miles of where it is produced (Miller, 2000a), although access to river transport
allows a firm to expand its market beyond that radius. Thus, each lime plant may consider
the market for its commodity to be regional. Because many of the markets for individual
lime plants overlap, discrete regional markets are not clearly defined, but regional markets
could potentially be defined and the model applied at that level. However, data limitations
preclude estimation of a regional model. To estimate a model of this type, EPA would
ideally have information on the quantities of quicklime and hydrated lime produced for
commercial sale at each lime facility as well as regional market prices for each region.
However, there is no publically available data distinguishing lime produced for commercial
and captive use at the state or regional level, and even data on total lime production are often
not available at the state or regional level because states with small levels of production are
aggregated or not reported to avoid disclosing individual company information. Thus, the
market for lime was modeled as a national perfectly competitive market. The perfectly
competitive market structure reflects the assumption that individual facilities have negligible
power over the market price of the products and thus take the prices as "given" by the market.
Table ES-1 summarizes the national-level economic impact results for a baseline year
of 1997, which reflect the mean impact measures resulting from the model simulations. As
shown, imposing the regulation results in a price increase of roughly 2.1 percent and a
reduction in domestic production of 1.8 percent. Although there is a large percentage
increase in imports, the baseline level of imports is very small (accounting for about 1
percent of the domestic lime market). Thus, even a fairly large percentage increase in
imports leads to only a very small change in absolute terms. The economic analysis also
projects that two plants owned by small businesses will close as a result of the lime
ES-4
-------
Table ES-1. National-Level Market Impacts of the Lime Manufacturing MACT: 1997
Change
Price ($/raetric ton)
Quantity (metric tons/yr)
Domestic
Large
Small
Imports
Baseline
$56.60
16,937,000
16,751,000
14,098,690
2,652,310
186,000
Absolute
$1.17
-310,146
-338,867
34,243
-373,110
28,721
Relative
2.1%
-1.8%
-2.0%
0.2%
-14.1%
15.4%
NESHAP.3 In addition, the Agency estimates that employment in the lime production
industry will be reduced by 98 employees. This is a net change, taking into account increases
in employment for some firms and decreases for others.
Furthermore, the market adjustments in price and quantity allow calculation of the
economic welfare impacts (i.e., changes in aggregate economic welfare as measured by
changes in consumer and producer surplus). These estimates represent the social cost of the
regulation. The estimated social cost of this regulation is $20.3 million (1997$), with
$19.7 million falling on consumers and $0.6 million falling on producers. The majority of
the cost of this regulation ends up falling on consumers in the form of higher prices (and
smaller quantities made available) based on the supply and demand elasticities used and the
presence of projected closures. Although somewhat counterintuitive, the effect of the
estimated closures is to shift more of the cost burden to consumers relative to the case where
no closures occur. This is because the firms projected to close have relatively small
estimated baseline pre-tax earnings from lime production such that producer surplus is not
decreased all that much by reducing their pre-tax earnings to zero (due to closure). However,
eliminating the quantity that this firm produced in the baseline from the market provides
3Plants owned by large firms are aggregated and represented by a single representative supplier because there is
insufficient information to accurately characterize individual kilns or plants owned by large firms. Thus,
closures are not determined for plants owned by large firms in this model.
ES-5
-------
benefits to their competitors by driving up the market price. Based on the market
characteristics used for this model, the increase in price received by all firms that continue to
operate is sufficient to offset a significant portion of the compliance costs for producers and
to shift more of the burden to consumers.
In addition to analyzing economic impacts on the lime manufacturing industry, EPA
examined the impacts on the energy sector. EPA estimates that electricity consumption by
existing sources would increase by about 7.2 million kWh per year as existing wet scrubbers
are replaced with Venturi wet scrubbers, which require more electricity to operate. In
addition, the projected decrease in lime output under regulation (1.8 percent reduction) is
expected to lead to an approximately proportionate reduction in energy use by the lime
industry. These changes are relatively small and partially offset each other because they act
in opposite directions. Thus, it is unlikely that there will be any significant adverse effects on
production, distribution, or use resulting from this rule.
ES.4 Small Business Flexibility Analysis
The Agency prepared a Small Business Flexibility Analysis (SBFA) that examines the
impact of the rule on small entities within the lime manufacturing source category along with
regulatory alternatives that could reduce impacts. EPA identified the businesses that this rule
will affect and conducted an economic analysis to determine whether this rule is likely to
impose a significant impact on a substantial number of the small businesses within this
industry. The Agency also convened a Small Business Advocacy Review (SBAR) panel to
obtain advice and recommendations of representatives of the small entities that would
potentially be subject to the rule. The current economic analysis reflects EPA's incorporation
of Panel comments in the rule, which has greatly reduced the impacts on small entities
compared with earlier draft versions of the rule.
The small business analysis focuses on the economic impact of the regulation on the
14 lime plants operating during 1997 that are owned by the 12 small commercial quicklime
producers and an additional seven small firms that are either captive producers or only
hydrate lime (i.e., they have no kilns and bear no direct costs).4 Small commercial lime
companies are defined according to the Small Business Administration (SBA) size standard
4Two companies own two plants; the other 17 companies own one lime plant apiece. These companies are
identified in Section 2.4.1.
ES-6
-------
for NAICS 327410 as those companies that own lime plants and have fewer than 500 total
employees. For the captive lime operations, the primary NAICS code generally differs from
the code for lime manufacturing. Thus, the small business definition differs from that for the
commercial lime producers. Small companies that are beet sugar manufacturers (NAICS
311313) and pulp and paper mills (NAICS 322110 and 322121) are defined as those with
fewer than 750 total employees, while small iron and steel mills (NAICS 331111) are defined
as those with fewer than 1,000 total employees.
A summary measure of small business impacts is the ratio of annual compliance costs
to baseline revenues (known as the cost-to-sales ratio, or CSR) at lime plants owned by small
businesses. For this calculation, compliance costs are defined as the engineering control
costs imposed on these plants and, thus, do not reflect the individual kiln or plant production
responses to the imposition of these costs and the resulting market adjustments. For the
regulation, the CSR averages 1.6 percent for small companies and 0.01 percent for large
commercial companies.5 For the regulation, 9 of 19 small lime companies are impacted
above 1 percent of sales and 4 are affected above 3 percent of sales. Six small companies
have zero costs either because they produce lime for use in beet sugar production or are
hydrators only, hi either case, they do not incur any direct costs.
Similar analysis of earlier provisions under consideration for inclusion in the
proposed rule indicated much greater impacts on small businesses than the current rule. In
draft versions of this rule, the mean CSR for the small businesses was 2.6 percent. The
Agency estimated that 10 small businesses would experience an impact greater than 3 percent
of sales. The reduction in small business costs between previous drafts of this rule and the
current rule are attributable to EPA's outreach and accommodation for small firms, which
includes the conduct of the SBAR panel.
Additional measures of the economic impact provided by this analysis include the
changes in revenues, costs, and earnings; the post-regulatory compliance costs; lime kiln and
plant closures; and the change in employment attributable to the change in industry output. It
was estimated that total pre-tax earnings for the commercial lime plants owned by small
Because compliance costs were not available for individual large companies, the CSR for large companies was
calculated by dividing the total compliance costs for large companies estimated by the engineering analysis
by their total company revenues. Total compliance costs for these companies are estimated based on the
, proportion of firms expected to receive each type of compliance cost.
ES-7
-------
companies will decrease by 22.1 percent, while similar measures for plants owned by large
companies are increases in pre-tax earnings of 3.5 percent. The market model predicts there
will be two plant closures at small businesses. There is a large variation in impacts across
small firms, however. The reduction in quantity due to the plant closure is increasing the
price of lime for those firms that continue to operate. Therefore, although there is an overall
decrease in pre-tax earnings, firms receiving small compliance costs may have their increase
in cost more than outweighed by the increased market price. In this case, they will actually
experience an increase in pre-tax earnings after regulation.
As a result of the SBAR panel, the final rule contains a significant number of
accommodations for small businesses. The results presented here confirm that the mitigating
measures employed by the Agency have minimized the potential negative impacts of the rule
on small businesses while satisfying the objectives of the CAA. The share of small
companies affected at or above the 3 percent level has fallen from 53 percent to 21 percent.
ES-8
-------
SECTION 1
INTRODUCTION
The U.S. Environmental Protection Agency (referred to as EPA or the Agency) is
developing an air pollution regulation under Section 112 of the Clean Air Act (CAA)
designed to reduce emissions generated in the production of lime. Lime is primarily used by
chemical and industrial users, with the largest consumption among that group occurring in
-Jhe-AteeLii>dnstry. Other important categories of lime use include environmental
applications, construction, and agriculture. Lime production leads to emissions of paniculate
matter (PM), including metals; hydrochloric acid (HC1); and gaseous pollutants, including
carbon monoxide (CO), carbon dioxide (CO2), sulfur dioxide (SO2), and nitrogen oxides
(NOX). The rule is primarily intended to reduce the emissions of PM/metals from lime kilns.
This report presents the results of an economic impact analysis (EIA) in which a market
model was used to analyze the impacts of the air pollution rule on directly and indirectly
affected entities.
1.1 Agency Requirements for an EIA
Congress and the Executive Office have imposed statutory and administrative
requirements for conducting economic analyses to accompany regulatory actions. Section
317 of the CAA specifically requires estimation of the cost and economic impacts for
specific regulations and standards proposed under the authority of the Act. In addition,
Executive Order (EO) 12866 requires a more comprehensive analysis of benefits and costs
for proposed significant regulatory actions.1 Other statutory and administrative requirements
include examination of the composition and distribution of benefits and costs. For example,
the Regulatory Flexibility Act (RFA), as amended by the Small Business Regulatory
Enforcement and Fairness Act of 1996 (SBREFA), requires EPA to consider the economic
impacts of regulatory actions on small entities. Finally, EO 13211 requires EPA to consider
the effects of regulations on the supply, distribution, and use of energy. The Office of Air
'Office of Management and Budget (OMB) guidance under EO 12866 stipulates that a full benefit-cost analysis
is required only for economically significant actions (i.e., when the regulatory action has an annual effect
on the economy of $100 million or more).
1-1
-------
Quality Planning and Standards (OAQPS) has developed the OAQPS Economic Analysis
Resource Document, which provides detailed instructions and expectations for economic
analyses performed by this office that support such rulemakings (EPA, l|999b).
1.2 Scope and Purpose
The CAA's purpose is to protect and enhance the quality of the nation's air resources
(Section 101(b)). Section 112 of the CAA Amendments of 1990 establishes the authority to
set a National Emission Standard for Hazardous Air Pollutants (NESHAP). This report
evaluates the economic impacts of pollution control requirements placed on lime kilns under
these amendments. These control requirements are designed to reduce releases of hazardous
air pollutants (HAPs) into the atmosphere.
To reduce emissions of HAPs, the Agency establishes maximum achievable control
technology (MACT) standards. The term "MACT floor" refers to the minimum control
technology on which MACT standards can be based. For existing major sources,2 the MACT
floor is the average emissions limitation achieved by the best performing 12 percent of
sources (if there are 30 or more sources in the category or subcategory). For new sources,
the MACT floor must be no less stringent than the emissions control achieved in practice by
the best controlled similar source. The MACT can also be chosen to be more stringent than
the floor, considering the costsjandjhgjie^Ithjmfl Fnvirnnrnmtal imparts
The NESHAP will apply to all existing and new lime kilns used to produce lime for
commercial sale located at plants that are major sources.3 In addition, the regulation will
apply to some kilns producing lime for captive use. The rule will not affect lime plants
associated with beet sugar producers or pulp and paper producers. However, firms in other
industries involved in the production of lime for captive use (e.g., steel mills) will be subject
to controls under this regulation. Based on emissions data, EPA has determined that
2 A major source is defined as a stationary source or group of stationary sources located within a contiguous area
and under common control that emits, or has the potential to emit considering control, 10 tons or more of
any one HAP or 25 tons or more of any combination of HAPs.
3The USGS identifies 11 plants that solely hydrate lime (DOI, 2000). By definition, these plants do not have
lime kilns, but purchase quicklime from other plants to use in their production of hydrated lime. Because
these plants do not have lime kilns, they will not be directly affected by the lime NESHAP.
1-2
-------
approximately 150 lime kilns are located at major sources and will be directly affected by the
rule. However, it is unknown which specific kilns are located at major sources.4
This report analyzes the economic effects of the MACT standard on existing sources
using a baseline year of 1997. New plants will also be required to comply with this rule, but
EPA does not anticipate any differential impacts on these sources. Thus, the economic
impact analysis described in Section 4 focuses on the regulatory effects on existing sources
only.
1.3 Organization of the Report
The remainder of this report is divided into four sections that describe the
methodology and present results of this analysis:
• Section 2 provides a summary profile of the production of lime. It presents data
on the manufacturing process, market volumes and prices, manufacturing
facilities, and the companies that own and operate those facilities.
• Section 3 reviews the regulatory control options and associated costs of
compliance. This section is based on EPA's engineering analysis conducted in
support of the NESHAP.
• Section 4 describes the methodology for assessing the economic impacts of the
NESHAP and presents the results of the economic analysis, including^market,
industry, and social cost impacts. In addition, this section describes the economic
impacts of this rule on the energy sector.
• Section 5 provides the Agency's analysis of the regulation's impact on small
businesses.
In addition to these sections, Appendix A further details the economic model used to predict
the economic impacts of the NESHAP and Appendix B presents the results of sensitivity
analyses where the supply and demand elasticities used in the market model are varied.
''The exception to this is for kilns owned by small businesses. EPA gathered more detailed information on these
kilns as part of ensuring compliance with SBREFA requirements. Thus, EPA was able to determine
whether plants owned by small businesses are major sources or area sources. There were not sufficient
resources available to gather this level of information for all affected kilns.
1-3
-------
SECTION 2
INDUSTRY PROFILE
Although lime serves as an important input to production in many industries, the
manufacturing of lime results in the emission of HAPs. Therefore, EPA has compiled
information on lime manufacturing plants as part of its responsibility to develop NESHAPs
under the CAA. This industry profile of the lime manufacturing industry provides
aup^^
the technical and economic aspects of the industry that must be addressed in the EIA.
The production of lime begins with the quarrying and crushing of limestone. The
crushed limestone is then converted into lime by heating the limestone in a kiln, a process
known as calcination. When limestone is subjected to high temperatures, it undergoes a
chemical decomposition resulting in the formation of lime (CaO) and the emission of CO2.
Because calcination is a reversible chemical reaction, the CO2 emitted as a result of the
process must be removed to prevent recarbonation.
Lime as it exits the kiln is known as quicklime. It can be either high calcium or
dolomitic, depending on the type of limestone that was calcined. After the quicklime leaves
the kiln, it is screened to remove undersized particles. Quicklime can be converted into
hydrated lime by adding water. Hydrated lime is produced in a vessel called a hydrator,
where a precise amount of water is slowly added to crushed or ground quicklime and the
mixture is stirred and agitated. The hydrated lime may undergo further refining or proceed
directly to bagging, shipment, and/or storage.
Dead-burned dolomite, also called refractory lime, is a sintered or double-burned
form of dolomitic lime. It is used for lining open hearth or electric arc steel furnaces or as an
input in the refractory bricks that line basic oxygen steel furnaces. Dead-burned dolomite
represented less than 2 percent of total U.S. lime production in 1999 (Miller, 1999a).
Lime manufacturing falls under the Standard Industrial Classification (SIC) code
3274 (North American Industrial Classification System [NAICS] code 32741). All three
types of lime output mentioned above are included in the same SIC and NAICS codes.
2-1
-------
According to the 1997 Census of Manufactures, 85 establishments owned by 47 companies
manufactured lime for commercial sale in 1997 (U.S. Department of Commerce, 1999b). In
1999, production of lime occurred at approximately 257 kilns (EPA, 2000). In 1999, 108
plants across the United States were involved in lime production. However, 1 1 of these
plants are identified by the U.S. Geological Survey (USGS) as hydrating plants only (DOI,
2000), which, by definition, do not have any operating kilns. This implies that the average
number of operating kilns for the 97 plants that have kilns is approximately 2.6 kilns per
plant.
During 1999, the United States produced 19.6 million metric tons of lime, with
quicklime accounting for 87.2 percent of all lime production and hydrated lime accounting
for 11.3 percent of lime production. The remaining 1.5 percent of lime production was dead-
^^
average value of $60.10 per metric ton. In 1997, the baseline year chosen for this analysis,
there were about 19.1 million metric tons of quicklime produced in the U.S. and the average
price of quicklime was $56.60/metric ton.
The remainder of this section provides a brief introduction to the lime manufacturing
industry. Section 2.1 presents a brief overview of the production process. Section 2.2
provides historical market data on U.S. production, consumption, foreign trade, and prices.
n .2,3 .Hp.scriht»s the affected^ILfL_pjxic£^ingJaeU4J:4es-aod the companies that own -------------
them. Finally, Section 2.4 provides data on the consumers and uses of lime and related
products.
2.1 Lime Production
This section gives a brief overview of the lime production process, the different types
of kilns used in lime manufacturing, the major inputs into lime production, and the emissions
resulting from this production process.
2.1.1 General Production Process
As shown in Figure 2-1, the general production process for producing lime consists of
• quarrying and crushing limestone,
• heating the limestone in a kiln to convert it into quicklime (calcination),
2-2
-------
sec
S-S^WIMB
JS > iaSJM«JHTQ JM .IT hi -M
HHM CALCIUM AND DOLOMTIC LIMESTONE j (^-MMlWff
©> 3-os-oi o-oe
' CO • 3-OW19-10
QUARRY AMI MtHE OPERATIONS » "",'""
(DRUJNO. BLASTING. AND © ' MW-"
CONVEYING BROKEN LNE5TONE) 0-&OUK8-12
'
PRIMARY
i
6ECCNDAF
i
j SCREEMMGAND
,
putve
l\l
©d»MB«l»M
©.SO»01(HS
AL8TORAOE ©| ^i^uilM
© ©.««,«
***** ©I @-MS*16-27
©
tVCRUSHNO ©|
©
OASSRCATWN ©hm^m5fiv H CALONA
02MO ©| 1 C001
©
§ 8 C 6CREEMNGANOCLA6SIRCATION ©| j INSPEC
U 1 1 o n
| UhCsraSPKXWCTs ©|< '"SUSP0 ' ^ I 2S
4 i p
QUOOME
•
DESCRIPTION
PNMARYCRUSHMO
CALONIN9
RAW MATERIAL TRANSFER
RAWhtATERlAL UNLOADNO
KVDRATOR: ATMOSPtetIC
RAW MATERIAL STORAGE PILES
PRODUCT COOLER
PRESSURE HYDRATOR
UME6L08
PACXAOINO»ffPPWa
PRODUCT TRANSFER
CONVEYOR TRANSPat. PRMARY
CRUSHED MATERUL
SECONOARVffERTIABY SCR£e«NQ
PRODUCT LOAtMMa. ENCLOSED TRUCK
PRODUCT LOADING. OPEN TRUCK
1
T
no. ©)
©
HO ®|
©
noN 1
©
«NG 1
©
| PEBBLEANDLUMPQUICKUME 1
rSSiSSgaS,?10 1 CHUWNOAND^lVEraHO | aSBSSuT — 1
7 © ©J
T
| mOMTOR ©| f P«ESSUIIEH»OCWTO« © |
I
[ SEPARATOR 1 | MOW
i
Figure 2-1. General Process Flow Diagram For the Manufacturing and Processing of
Lime
Source: Midwest Research Institute (MRI). April 28, 1994. Emission Factor Documentation for AP-42,
Section 11.15, Lime Manufacturing. Prepared for U.S. Environmental Protection Agency, Office of
Air Quality Planning and Standards, Emission Inventory Branch. Gary, NC, Midwest Research
Institute.
2-3
-------
• cooling,
• crushing and pulverizing the quicklime, as necessary (quicklime is available in
various sizes), and
• reacting quicklime with water (for hydrated lime only).
A more detailed description of the production process is provided below.
The first step of lime manufacturing involves crushing the limestone into smaller
pieces. Limestone is then converted into lime through heating in a kiln, a process known as
calcination. When limestone is subjected to high temperatures, it undergoes a chemical
decomposition resulting in the formation of lime (CaO) and the emission of CO2. Because
calcination is a reversible chemical Feaellstfy^ftlfCOj effllttdd ds a itesult of the process must
be removed to prevent recarbonation.
At this point in the production process, the lime is referred to as quicklime.
Quicklime can be either high-calcium or dolomitic, depending on the type of limestone that
was calcined. After the quicklime leaves the kiln, it is screened to remove fines and
undersized particles. Quicklime is sold in the following forms: lump (6.35 cm to 30.5 cm),
pebble (6.35 mm to 6.35 cm pieces), ground (particles less than 2.38 mm), pulverized
into lumps) (Boynton,
1980).
In general, quicklime must be converted into hydrated lime before being used as an
input into a production process.1 The process of hydration, also known as slaking, is a
chemical reaction between lime and water. Hydrated lime is produced in a vessel called a
hydrator, where a precise amount of water is slowly added to crushed or ground quicklime
and the mixture is stirred and agitated. The gas resulting from the hydration process contains
steam and lime particles. This gas may be vented back into the kiln or sent to a control
device where it is cleaned and then released (EPA, 1996).
Another type of lime that may be produced is dead-bumed dolomite, also called
refractory lime. Dead-bumed dolomite is produced by sintering or double-burning dolomitic
lime, a type of lime that has a relatively high magnesium content of between 35 and 46
However, most lime is purchased from lime manufacturing facilities as quicklime and is hydrated by buyers in
their own onsite facilities prior to use.
2-4
-------
percent. This type of lime is used for lining open hearth or electric arc sjeel furnaces or as an
input in the refractory bricks that line basic oxygen steel furnaces. '
2.1.2 Kiln Types
Lime kilns can be categorized into three groups: rotary kilns, vertical kilns, and
miscellaneous. About 90 percent of commercial lime capacity in the U.S. is calcined in
rotary kilns. Most of the remaining capacity is processed with vertical kilns (vertical kilns
are more common in captive supply facilities), and small quantities are processed in other
miscellaneous types of kilns such as calcimatic, fluidized bed, pot, etc. (Gutschick, 1994).
2.1.2.1 Rotary Kilns
a lotialy'iaifi'sysieffl with a prehealer. A rotary kiln is a long
cylinder, ranging in length from 75 to 500 feet, with a diameter between 4 and 1 1 feet. This
cylinder is set at an incline of 3 to 5 degrees and rotates at a rate of 35 to 80 revolutions per
hour. The inner surface of the cylinder is lined with refractory brick. Surrounding the brick
is a layer of insulation*, then an outer casing of steel boiler plate.
Before entering the kiln, the limestone passes through the preheater, where it is
heated with hot exhaust gases from the kiln. Preheaters improve thermal efficiency by using
^ Burning fuel-enters-
cylinder from the lower end, and pre-heated limestone is delivered into the upper end. As
the limestone passes through the cylinder that is filled with flame and hot combustion gases,
it calcines into lime, which is discharged at the lower end of the cylinder (Boynton, 1980).
Lime must be cooled after exiting the rotary kiln. Various types of coolers are used,
including contact coolers, satellite coolers, rotary coolers, and grate coolers. These coolers
operate under different principles, but they serve the same two purposes: to cool the lime for
further handling and to recapture heat. The first two types listed are the most commonly
used because they are the most effective at heat recuperation (Boynton, 1980). Most rotary
kilns are fired by coal; however, with the correct adaptations, coke, oil, and natural gas can
also be used (Gutschick, 1994).
The refractory brick linings in all kilns must be replaced periodically, because heat,
abrasion, and temperature changes cause them to disintegrate. Plants try to avoid cooling
and reheating lime kilns as much as possible because this hastens disintegration. When
plants need to stop production, they will often slow-fire the kilns or maintain their heat until
2-5
-------
Coil silo
Figure 2-2. Preheater Rotary Kiln System for Lime Production
Source: Gutschick, K.A. 1994. "Lime and Limestone." Kirk-Othmer Encyclopedia of Chemical
Technology. 4th Ed. p. 319-359. Vol.15. New York: John Wiley & Sons.
production resumes. It is generally less costly to keep the kilns hot than it is to replace the
liningsortorestartthe^kTlns (Bbyht6h7r980)'. " "
2.1.2.2 Vertical Kilns
The vertical kiln has many different variations, but all operate under the same general
premise. Figure 2-3 is a diagram of a vertical kiln. Vertical kilns are large vertical cylinders
that are completely filled from the top with large chunks of limestone. These kilns have four
zones, or sections: the preheating zone, the calcining zone, the finishing zone, and the
cooling zone. These zones are not physically separated from one another. They are terms
used to indicate areas within the kiln, which is a continuous cylinder.
Burning fuel is injected into the cylinder just beneath the calcining zone, causing the
limestone in this zone to calcine. Hot gasses from the calcining zone migrate upward,
warming the stone in the preheating zone. Finished lime drops into the cooling zone, where
cool air is blown through it. Air blown into the cooling zone carries recovered heat upward
into the calcining zone, where it also provides air for combustion. Cooled lime is removed
from the bottom, making room for the limestone and lime in the upper levels to descend.
2-6
-------
Stone
charging
door
Zones
Storage
shaft
Preheating
Calcining
Nf
Fire box or
fuel ports
Finishing !:
Cooling
Discharge
lime
Figure 2-3. Vertical Kiln System for Lime Production
Source: Gutschick, K.A. 1994. "Lime and Limestone." Kirk-Othmer Encyclopedia of Chemical Technology.
4th Ed. p. 319-359. Vol. 15. New York: John Wiley & Sons.
2-7
-------
Some vertical kilns require an attendant to determine when calcining is complete. The
attendant must open "poke holes" in the kiln and dislodge the mass of hot lime with a long
iron bar, allowing it to drop down into the cooling zone (Boynton, 1980J). The predominant
fuels for vertical kilns are natural gas and fuel oil (Boynton, 1980).
Vertical kilns require large stones (6 to 8 inches in diameter) to allow for the
circulation of combustion gases. Stones that are too small to be used are called "spalls."
Large quantities of spalls can accumulate at plants with vertical kilns and can be difficult or
impossible to dispose of profitably. Depending on the source of limestone, spalls can
constitute from 30 to 70 percent of the limestone intended for use as kiln feed. Rotary kilns
can use small stones that calcine faster and lead to fewer spalls. To solve the problem of
spalls, some plants have installed rotarykilnsin^^ addition to vertical kilns. European
researchers have developed vertical kilns that can use small stones, but this technology has
not been implemented in the United States (Boynton, 1980).
For a number of reasons, rotary kilns have largely replaced vertical kilns in the
United States. They dominate the industry because they can be fired with coal, require less
labor, lead to fewer spalls, and have the highest output and quality of all kilns (Boynton,
1980; Gutschick, 1994). In contrast, vertical kilns are preferred in many other parts of the
world. They require smaller capital investment and have greater fuel efficiency than rotary
Kims.
2.1.2.3 Miscellaneous Kiln Types
Parallel-flow kilns are beginning to gain acceptance in the United States. These kilns
are made up of two side-by-side vertical shafts that are similar to vertical kilns (see
Figure 2-4). The two shafts are connected in the middle, allowing gases to flow from one
shaft to the other. The shafts alternate functions: while one is acting as the calcining shaft,
the other serves as the preheating shaft. Limestone fills the shafts from the top. Hot
combustion gases are fired down the first shaft, calcining the lime. The exhaust then flows
across and up through the second shaft, preheating the lime. Every 12 to 14 minutes, the
flow is reversed. The lime is cooled in the bottom section of each shaft with a countercurrent
flow of air. Finished lime exits from the bottom of each shaft. Parallel-flow kilns can be
fired with natural gas or oil. They are energy-efficient and produce high-quality lime (EPA,
1996; Sauers, Beige, and Smith, 1993b).
2-8
-------
Exhaust
Feed valves
Closed valve.
Open valve
Open valve
Closed valve
Lime
discharge
trap
Cooling air Combustion air
Figure 2-4. Parallel Flow Kiln with Left Shaft Calcining and Right Shaft Preheating
Source: U.S. Environmental Protection Agency. 1996. Memorandum from Wood, Joseph P., U.S.
Environmental Protection Agency, to Chappell, Linda M., U.S. Environmental Protection Agency.
November 6,1996. Engineering industry profile for the economic analysis.
2-9
-------
The Fluo-Solids kiln, which is a fluidized-bed system, looks like a vertical kiln on the
outside but operates on a different principle (see Figure 2-5). It calcines tiny (0.23 to
2.38 jim) particles of limestone. These tiny particles are "fluidized," or suspended in air in
the preheating and calcining zones of the kiln. These kilns require external cooling
equipment, as described in the section on rotary kilns. Because small particles will burn at
lower temperatures, these kilns have relatively low fuel consumption. They also produce
consistently high-quality lime. However, the cost of providing such finely ground limestone
as kiln feed prohibits the use of these kilns in most areas (Boynton, 1980).
Fluidized bed
preheater
To secondary
collection
Lime product
to storage
Fluidized bed
calciner
/Fuel gun
Fluidized bed cooler
Startup burner
, Air
Figure 2-5. Fluidized Bed Kiln
Source: U.S. Environmental Protection Agency. 1996. Memorandum from Wood, Joseph P., U.S.
Environmental Protection Agency, to Chappell, Linda M., U.S. Environmental Protection Agency.
November 6, 1996. Engineering industry profile for the economic analysis.
2-10
-------
The calcimatic kiln (also called a rotary hearth kiln) consists of a circular hearth that
rotates through a kiln (see Figure 2-6). Preheated limestone is loaded onto the hearth. It
rotates through the kiln, and finished lime is removed from the hearth after one complete
rotation. External cooling equipment is also used. These kilns have not been widely
accepted because they can only operate with gas and oil and have poor fuel efficiency
(Boynton, 1980).
Firing ports
Direction of hearth rotation
Direction of gas flow
Figure 2-6. Rotary Hearth Kiln with Cross Sectional View of One Firing
Zone
Source: U.S. Environmental Protection Agency. 1996. Memorandum from Wood, Joseph P.,
U.S. Environmental Protection Agency, to Chappell, Linda ML, U.S. Environmental
Protection Agency. November 6,1996. Engineering industry profile for the economic
analysis.
2-11
-------
2.1.3 Major Inputs for Lime Production
The inputs in the production process for lime include general inputs such as labor and
capital. The inputs that are specific to this industry are the types of fuel used and the
limestone or other calcareous material used. These two specific inputs are discussed below.
2.1.3.1 Fuel
Lime production is extremely energy intensive. Assuming perfect efficiency,
producing a ton of lime from pure calcium carbonate requires 2.77 million Btu. In practice,
the process is considerably less efficient. Lime producers are concerned about the quality of
fuel used in the process because the quality of the resulting lime depends directly on fuel
quality. A-change infuel source can lead tg:a.noticeable change in the characteristics of the
lime produced. For this reason, lime producers do not always choose the cheapest fuel
available (Boynton, 1980). The fuels most widely used in lime production in the United
States are coal, coke, natural gas, and fuel oil (Sauers, Beige, and Smith; 1993a). A brief
discussion of each fuel follows.
Coal. During the energy crisis of the 1970s, when fuel oil and natural gas prices
soared and supplies were limited, many lime producers switched from vertical kilns to rotary
kilns that operate with cheaper, more plentiful coal (Gutschick, 1994). To produce the
highest quality lime, coal must be of moderate to low reactivity. (Reactivity refers to how
freely the coal burns). Coal used to fire lime kilns should also have a low ash content, since
ash provides no heat value, can damage kiln linings, and may contaminate the lime. A low
sulphur content is also desirable. Sulfur in the fuel volatilizes at calcining temperatures and
might contaminate the lime (Boynton, 1980).
Coke. Coke can be produced from either coal or petroleum. Coke is the solid
material that remains after coal has been heated in coke ovens until volatile components are
driven off and collected as coal tar. It is also the solid material remaining after the various
fractions of crude oil have been distilled off during the process of refining petroleum
(Caldwell, 1998).
Coke is lower in both ash and volatiles than coal. Fuels that are high in volatiles
create a stable flame, which is required by rotary kilns. Because coke is low in volatiles, it
cannot be used exclusively in rotary kilns but can be mixed with coal to reduce ash. Kilns
that do not require a stable flame formation, such as the parallel flow kiln, can burn
100 percent coke (Sauers, Beige, and Smith, 1993a).
2-12
-------
Natural Gas. Natural gas is relatively clean burning and is consistent in quality;
therefore, it produces the highest quality lime. Natural gas-fired kilns require about
10 percent more energy than coal-fired kilns, however, and the cost per million Btu is
generally much higher for natural gas than for coal. Kilns operating with natural gas also
require more combustion air and larger vent capacity (Sauers, Beige, and Smith, 1993a).
Fuel Oil. Because fuel oil generally costs more per million Btu than coal or natural
gas, it is seldom used as the primary source of fuel in lime kilns, but it is sometimes
combined with other fuels. It is low in ash and produces high-quality lime (Sauers, Beige,
and Smith, 1993a).
Fuel oils, which are used mostly in nonrotary kilns, are usually Bunker C grade. Fuel
Hr|jgaCBF|«m
operation must be closely monitored to avoid excessive temperatures and everburning
(Boynton, 1980).
2.1.3.2 Limestone
Limestone is a general term that refers to a variety of sedimentary rocks. Limestone
can be either high calcium or dolomitic, depending on its magnesium content. The type of
limestone used by a particular facility is determined by the type of limestone that is available
IrTnearby quarriesT Deposits of limestone occur in nearly everylitMeWTrie United STateT and
every country in the world. However, much of it is not available for commercial use because
it is either too deep in the earth, too far from markets, not sufficiently concentrated in a
particular area, or not pure enough (Boynton, 1980).
2.1.4 Emissions
Lime production leads to emissions of PM; metals; HC1; and gaseous pollutants,
including CO, CO2, SO2, and NOX (Midwest Research Institute, 1994; EPA, 1996). Emission
points are indicated by Source Classification Code (SCC) in Figure 2-1.
2.1.4.1 Paniculate Matter and Metals Emissions
The kiln is the largest ducted source of PM and metals emissions from lime
production. PM and metals emissions can also occur from coolers, but only in plants where
exhaust gases are not recycled back through the kiln. Emissions from ordinary hydrators are
generally readily controlled, whereas emissions from pressure hydrators are somewhat more
difficult to control. In addition to these sources, PM and metals emissions can also occur at
2-13
-------
primary and secondary crushers, mills, screens, transfer points, storage piles, and roads.
Drilling and blasting at the quarry also create PM and metals emissions.
Rotary lime kilns constructed or modified after May 3, 1977, are required by law to
limit their emissions of filterable PM to 0.30 kg/Mg (0.60 Ib/ton) of stone feed. Devices
used to control PM emissions from kilns are fallout chambers and cyclone separators for
large particles and fabric or gravel bed filters, wet scrubbers, and electrostatic precipitators
for smaller particles. Cyclones, fabric filters, and wet scrubbers are also used to control PM
emissions from coolers, crushers, and loaders (Midwest Research Institute, 1994).
Rotary kilns have high potential PM and metals emissions relative to other types of
kilns, because they calcine small pieces of stone using high air velocities and a rotating
chunks of stone using low air velocities, and the material moves slowly through the kiln.
Fluidized bed kilns can potentially produce large amounts of PM and metals emissions,
because they process fine particles in large volumes of air. But emissions from these kilns
are generally well controlled. Calcimatic kilns have relatively low PM and metals emissions
(Midwest Research Institute, 1994). The characteristics of the kiln feed and, if coal is used,
the ash content of the coal can also influence PM and metals emissions (EPA, 1995).
2.1. 4.2 Hydrochloric Acid ______ __ _
HC1 is a combustion by-product emitted by the kiln that originates from the trace
chlorine/chlorides found in the fuels used in lime production (e.g., coal) and the limestone
input. The amount of HC1 being emitted from a kiln is often measured as a proxy for the
emissions of other HAPs and PM. The level of HC1 being emitted is often a major
determinant of whether a particular lime plant is classified as a major source of air pollution.
2.1.4.3 Gaseous Pollutants
As previously mentioned, CO, CO2, SO2, and NOX are produced along with lime. The
source of most SO2 emissions is the fuel used to fire the kiln. The composition of the kiln
feed, the quality of the lime being manufactured, and the type of kiln affect the amount of
SO2 produced. Most of the SO2 from the kiln fuel is never released because it reacts with the
lime within the kiln. Pollution control equipment can further limit SO2 emissions (Midwest
Research Institute, 1994).
2-14
-------
In addition to the gaseous pollutants created by burning fossil fuels, the chemical
reaction that occurs during calcination produces a large volume of CO2. Limestone is
approximately 44 percent CO2 by weight, and this CO2 is released during calcination (Miller,
1997).
2.2 Historical Industry Data
This section presents information on the markets for lime, including historical data
for production, exports, imports, apparent consumption, and the price of lime as well as
production costs.
2.2.7 Quantity Data
—— Tafflei2-l providesrdata on domestically produced quicklime, hydratcdlimei-^nd":
dead-burned dolomitic lime from 1971 through 1999. In 1999, quicklime accounted for over
87 percent of all lime production, while hydrated lime made up over 11 percent of
production, and dead-burned dolomite accounted for less than 2 percent. After decreasing
significantly between the 1970s and the 1980s, lime production generally expanded
throughout the mid to late 1990s.
Because limestone is plentiful in the U.S., and transportation for such a heavy, bulky
-commodity is expensive, importsjnakemp only a small portion of total consumption of lime.
Table 2-2 displays quantities of exports and imports, both metric tons and as percentages of
production and consumption from 1971 through 1999. During this period, imports averaged
only 1.63 percent of total consumption. Similarly, lime exports consist of a small percentage
of total production. Approximately 0.29 percent of lime produced was exported over the
period from 1971 to 1999 (see Table 2-2). The average value of lime exports between 1991
and 1999 was slightly less then $8 million dollars per year (1999$). The great majority of
imported lime comes from Canada, with the balance coming almost entirely from Mexico.
Most exported lime goes to Canada, and small amounts are exported to Jamaica and Mexico.
2.2.2 Price Data
Average lime prices between 1971 and 1999 are presented in both current and 1999
dollars in Table 2-3. The real (inflation-adjusted) price of lime ranges from $54.88 per
metric ton in 1973 to $74.56 per metric ton in 1978. The real price has been on a downward
trend since 1986.
2-15
-------
to
Table
2-1. Production, Captive
Supply Use, and A
(103 metric tons)8
Sold or Used by Producers by Type
Year
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
Quicklime
13,733
15,069
15,631
16,143
14,402
15,353
14,770
15,282
15,924
14,490
14,644
10,615
11,234
11,915
11,791
10,750
11,774
12,760
13,154
13,392
Hydrated Dead-Burned
Lime
3,126
2,362
2,368
2,298
2,126
2,085
2,448
2,342
2,358
2,308
2,067
1,848
1,874
2,088
2,099
1,995
2,239
2,296
2,040
2,098
Dolomite
914
975
1,134
1,159
829
914
878
922
719
448
395
306
379
442
343
385 ;
259
413
365
342
i
pparent Consumption of
Combined Types
Lime
Sold
11,192
12,114
13,058
13,281
11,648
12,722
12,884
13,664
13,992
12,527
12,946
9,848
10,962
11,851
12,164
10,974
11,889
13,368
13,622
14,014
Lime
Used
6,581 !
6,293
6,075
6,319
5,708
5,629
5,211
4,882
5,009
4,718
4,159
2,920
2,526
2,593
2,069
2,156
2,384
2,102 ;
1,937
1,818
Lime: 1971-1999
Total Lime Sold
' and Used"
I 17,773
• 18,407
! 19,133
| 19,601
; 17,357
1 18,351
; 18,096
18,546
19,001
; 17,246
; 17,106
12,769
13,487
14,444
14,234
13,131
14,273
- 15,469
15,560
15,832
Apparent
Consumption0
17,932
18,597
19,402
19,949 .
17,543
18,632
18,449
19,058
19,541
17,643
17,538
13,063
13,718
14,646
14,393
13,298
14,422
15^647
15,728
15,949
(continued)
-------
Table 2-1. Production, Captive Supply Use, and A
(103 metric tons)8 (continued)
Sold or Used by Producers by Type
Apparent Consumption oi
Combined Types
Hydrated Dead-Burned Lime Lime
Year Quicklime Lime Dolomite Sold Used
1991 13,200 2,170 308
1992 13,700 2,230 302
1993 14,200 2,250 315
1994 14,800 2,290 300
1995 15,800 2,390 308
1996 16,500 2,280 271
1997 17,300 2,170 300
1998 17,500 2,340 300
1999 17,100 2,210 300
" Data do not include regenerated lime.
b Data may not add to totals due to rounding.
0 Apparent consumption is calculated as sold or used plus impt
Sources: Miller, M.M. 1996c. Minerals Information: Lime S
Geological Survey.
Miller, M.M. 1994. Minerals Information: Lime. R
Miller, M.M. 1995. Minerals Information: Lime. R
Miller, M.M. 1996a. Minerals Information: Lime, j
teston, VA: U.S. Department o
me/390499.pdf>.
jLime: 1971-1999
Total Lime Apparent
Sold and Usedb Consumption0
15,700 15,800
16,200 16,300
16,700 16,900
17,400 17,500
18,500 18,700
19,100 19,300
19,700 19,894
20,110 20,285
19,610 19,703
VA: U.S. Department of the Interior, U.S.
the Interior, U.S. Geological Survey.
the Interior, U.S. Geological Survey.
r the Interior, U.S. Geological Survey.
Jthe Interior, U.S. Geological Survey.
-------
Table 2-2. Exports and Imports of Lime: 1971-1999
Exports as a
Exports Percentage of
(103 metric tons) Production
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
- 1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
60
34
34
29
49
51
30
41
,_4J~
38
25
21
25
23
17
15
12
14
29
40
47
59
69
74
72
50
80
56
60
0.34
0.18
0.18
0.15
0.28
0.28
0.17
0.22
0.22,.
0.22
0.15
0.16
0.19
0.16
0.12
0.11
0.08
0.09
0.19
0.25
0.3
0.36
0.41
0.43
0.39
0.26
0.41
0.28
0.29
Imports for j Imports as a
Consumption Percentage
(103 metric tons) of Consumption
220
225
303
377
235
331
384
553
581
435
457
316
257
224
176
182
161
191
198
157
158
193
201
204
289
262
274
231
142
1.23
1.21
1.56
1.89
1.34
1.78
2.08
2.90
2.97
2.47
2.61
2.42
I 1.87
1.53
1.22
1.37
1.12
1.22
1.26
0.98
1.00
1.18
1.19
1.17
1.55
1.36
1.39
1.15
0.69
Sources: Miller, M.M. 1996c. Minerals Information: Lime Statistical Compendium. Reston, VA: U.S.
Department of the Interior, U.S. Geological Survey.
Miller, M.M. 1995. Minerals Information: Lime. Reston, VA: U.S. Department of the Interior, U.S.
Geological Survey.
Miller, M.M. 1996b. Minerals Information: Lime. Reston, VA: U.S. Department of the Interior,
U.S. Geological Survey. .
2-18
-------
Table 2-3. Average Lime Prices: 1971-1999
1971
1972
1973
1974
1975
1976
1977
1978
1979
19«0
1981
1982
1983
1984
1985
1986
1987
1988
1989
—L990
1991
1992
1993
1994
1995
1996
1997
1998
1999
Total Value"
mo3)
308,100
339,304
365,849
473,685
523,805
609,010
666,472
749,667
862,459
842,922
884,197
696,207
757,611
811,183
809,000
757,867
786,125
817,893
852,113
901,549
890,000
950,000
965,000
1,020,000
1,100,000
1,140,000
1,200,000
1,210,000
1,180,000
Average Value per Metric Ton
(Current $)
17.39
18.50
19.20
24.27
30.27
33.28
36.93
40.52
45.48
.,,-.. 49,05
51.82
54.53
56.33
56.35
56.98
57.87
55.24
53.04
54.93
5ZQ9
56.69
58.60
57.60
58.80
59.20
61.50
61.00
60.40
60.10
(1999$)
58.70
59.79
54.88
58.35
66.67
70.06
73.19
74.56
74.33
70.26
68.01
I 70.10
71.52
69.90
71.02
74.29
69.12
63.82
62.97
63.14
62.59
64.31
62.31
62.82
61.06
61.06
62.45
60.60
60.10
0 Values are selling values, f .o.b. plant, excluding costs of containers.
Sources: Miller, M.M. 1996c. Minerals Information: Lime Statistical Compendium. Reston, VA: U.S.
Department of the Interior, U.S. Geological Survey.
Miller, M.M. 1999a. Minerals Information: Lime. Reston, VA: U.S. Department of Interior, U.S.
Geological Survey. .
2-19
-------
2.2.3 Production Costs
Table 2-4 provides expenditures for wages, materials, and new capital in lime
manufacturing from 1977 to 1997 in both current and 1997 dollars. Costs of materials
include all raw materials, containers, scrap, and supplies used in production, repair, or
maintenance during the year, as well as the cost of all electricity and fuel consumed. Costs
are included for material whether they are purchased from outside the company or
transferred from within the company.2 New capital expenditures include permanent
additions and alterations to facilities and machinery and equipment used for expanding plant
capacity or replacing existing machinery.
The cost of materials is by far the greatest cost to lime producers. Lime producers
spend three to four times more on material than they do on labOTrwith a large J)6rtT6Wof the
costs being fuels. For 1996, the Annual Survey of Manufactures reported that the lime
industry spent $138.2 million on energy, which is 31.4 percent of total material costs for that
year (U.S. Department of Commerce, 1997) The inputs that are specific to this industry are
the type of fuel and the limestone or other calcareous material used. The fuels most widely
used in lime production in the United States are coal, coke, natural gas, and fuel oil (Sauers,
Beige, and Smith, 1993a).
2:3 AffectttHProdueers ^ •™^—~
The following section briefly describes lime processing facilities and the companies
that own them. It also presents the information used to determine the proportion of lime
output produced by affected facilities versus unaffected facilities.
2.3.1 Manufacturing Facilities
Lime manufacturing plants can be broadly divided into those that produce lime to be
sold (commercial lime plants) and those that produce lime as part of a vertically integrated
production process whose purpose is to produce another good, such as steel, paper, or beet
sugar (captive lime plant). Table 2-5a lists all of the commercial lime facilities in the 50
states and Puerto Rico and provides location, capacity, and kiln information. Alabama has
the largest number of commercial lime facilities (seven) in the country, followed by
Pennsylvania and Ohio with six each. Table 2-5b presents the location and kiln information
for the U.S. captive supply lime industry. Michigan has the largest number of captive supply
^he cost of materials includes the cost of quarrying limestone.
2-20
-------
Table 2-4. Labor, Material, and New Capital Expenditure Costs for SIC 3|74 (NAICS 32741)
Lime Manufacturing: 1977-1997
Wages
Year
Current $(10«) 1997 $(106)
Cost of Materials
New Capital Expenditures
Cuirent$(10')
1997 $(106)
Current $(106)
1997 $(10«)
to
to
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
59.4
74.4
75.9
76.2
85.5
79.4
81.1
91.0
100.4
101.7
103.6
113.9
115.9
111.7
103.4
121.3
125.2
125.5
120.1
168.5
203.5
115.0
133.7
121.1
106.7
109.7
99.8
100.5
110.2
122.2
127.6
126.6
133.9
129.8
120.7
111.5
130.0
132.3
131.0
121.0
171.3
203.5
264.8
317.7
322.4
316.9
359.0
298.2
305.6
347.6
359.2
351.8
364.5
413.9
385.0
300.6
299.8
446.2
480.0
529.9
365.3
378.4
558.0
512.6
571.0
514.6
443.4
460.2
374.6
379.0
421.2
437.2
441.1
445.5
486.5
431.1
324.7
323.3
478.3
507.1
552.9
368.0
384.6
558.0
29.7
62.7
38.3
69.7
56.7
36.0
20.9
72.9
70.1
38.8
33.0
28.0
41.7
43.7
66.4
47.9
35.5
21.6
21.2.
60.4
61.9
57.5
112.7
61.1
97.5
72.6
45.2
25.9
88.3
85.3
48.7
40.3
32.9
46.7
47.2
71.6
51.3
37.5
22.5
21.3
61.4
61.9
Prices were deflated using the producer price index (PPI) from the Bureau of Labor Statistics. . 2000.
'ndustry Series—Concrete, Plaster, and Cut Stone
. M94(AS)-1. Washington, DC: Government
:.M95(AS)-1. Washington, DC: Government
r. Washington, DC: Government Printing
Manufacturing Industry Series—Lime
-------
to
tb
10
Table 2-5a. Commercial Lime Manufacturing Pis
Company
Ash Grove Cement Co.
Ash Grove Cement Co.
Austin White Lime Co.
Blue Circle Inc.
Carmeuse North America (Eastern Region)/
Ohio Lime, Inc
Carmeuse North America (Eastern Region)/ '•
Millersville Lime, Inc
Carmeuse North America (Eastern Region)/
Pennsylvania Lime, Inc.
Carmeuse North America (Eastern Region)
nts
Facility
Springfield
Portland
McNeil
Roberta
Maple Grove
Millersville
Millard
Hannover
Carmeuse North America (Northern Region)/ Detroit
Detroit Lime, Inc.
Carmeuse North America (Northern Region)/ River Rouge
Marblehead Lime, Inc
Carmeuse North America (Southern Region)/ Longview
Dravo Lime, Inc.
Carmeuse North America (Southern Region) Black River (UG)
Carmeuse North America (Southern Region) Maysville (UG)
Carmeuse North America (Southern Region) Pelican
Carmeuse North America (Southern Region)/
Bexar
San Antonio Lime, Inc.
Carmeuse North America (Western Region)/ South Chicago _
Marblehead Lime, Inc.
Carmeuse North America (Western Region) j
Chemical Lime Co. •
Chemical Lime Co. ' ,
-
Buffinton
Alabaster
O'Neal
SF
PC
M
C
M
i
M
Ai
H
D
Ri
Si
Ci
M
Bi
Si
Sc
Bi
Al
G
•
!
i Location
ringfield, MO
jrtland, OR
cNeil, TX
iera, AL
liple Grove, OH
i
jllersville, OH
inville, PA
mover, PA
itroit, MI
ver Rouge, MI
ginaw, AL
(rntown, KY
iysville, KY
ton Rouge, LA
n Antonio, TX
uth Chicago, IL
ffinton, IN
ibaster, AL
lera, AL
Type of Kiln"
v,o
0
R
R
R
R
R
O
R
R
R
R
R
H
R
R
R
R
R
(continued)
-------
to
to
Table 2-5a. Commercial Lime Manufacturing Pla
its (continued)
Company Facility
Chemical Lime Co.
Chemical Lime Co.
Chemical Lime Co.
Chemical Lime Co.
Chemical Lime Co.
Chemical Lime Co. (managed by)
Chemical Lime Co.
Chemical Lime Co.
Chemical Lime Co.
"
Chemical Lime Co.
Montevallo
Douglas
Nelson
Ste. Genevieve
City of Industry
Natividad
Stockton
Tensile
Belen
Apex
Chemical Lime Co. Henderson
Chemical Lime Co.
Chemical Lime Co.
Chemical Lime Co.
Chemical Lime Co.
Clifton
Marble Falls
New Braunfels
Grantsville
Chemical Lime Co. 1 Plant #1
Chemical Lime Co.
Cheney Lime & Cement Co.
Cheney Lime & Cement Co.
Cutler-Magner Corp.
Con Lime Co.
Plant #2
Allgood
Landmark
Superior
Bellefonte (UG)
Falco Lime, Inc. j Vicksburg
Florida Crushed Stone Co. j Brooksville
Global Stone Co. (Global Stone Georgia Hydrate, Inc.) Macon
Global Stone Co. (Global Stone St. Clair, Inc.) j Marble City
M
D
N
S
c
N
• si
B
B
N
H
C
M
Nj
Qi
K
K
• AJ
S
si
B(
V
B]
N
M
Location
htevallo, AL
iglas, AZ
son, AZ
, Genevieve, MO
y- of Industry, CA
ividad, CA
ckton, CA
icroft,ID
en,NM
th Las Vegas, NV
iderson, NV
Eton,TX
rble Falls, TX
w Braunfels, TX
mtsville,-UT
nbalton, VA
nbalton, VA
good, AL
aria, AL
wrior, WI
lefonte, PA
:ksburg, MS
joksvitle, FL
con, GA
irble City, OK
Type of Kiln"
R
R,V
R
R
H
R
H
V,R
H
R
R
R,V
V.R
V,R
R
R
R
H
R
R
R
H
H
H
R
(continued)
-------
Table 2-5a. Commercial Lime Manufacturing Plants (continued)
Company
Global Stone Co. (Global Stone Tenn Luttrell, Inc.)
Global Stone Co. (Global Stone Chemstone, Inc.)
Global Stone Co.
Graymont Ltd. (Continental Lime Inc.)
Facility
jittrell (UG)
Dominion
Winchester
Pacoma
Graymont Ltd. (Continental Lime Inc.) Pilot Peak
Graymont Ltd. (Continental Lime Inc.) Cricket Mountain
Graymont Ltd. (Continental Lime Inc.) Indian Creek
Graymont Ltd. (Genlime)
Graymont Ltd. (Graybec Lime Ltd.)
Genoa
Bellefonte
Graymont Ltd. (Graybec Lime Ltd.) iPleasant Gap
GreerLimeCo. DRiverton
Huron Lime
Pete Lien & Sons, Inc.
Pete Lien & Sons, Inc. (Colorado Hydrate)
Linwood Mining & Minerals Corp.
Mercer Lime and Stone Co.
Mississippi Lime Co.
Huron
Rapid City
Laporte
Linwood (UG)
Branchton
Ste. Genevieve
National Lime & Stone Co. Carey
Palmetto Lime LLC
Palmetto
Puerto Rican Cement Co., Inc. Ponce
Rockwell Lime Co. Manitowoc
Shen- Valley Lime Corp. Stephens City
Southdown Corp.
Lee
U.S. Lime & Minerals, Inc. (Arkansas Lime Co.) 1 Batesville
Lu
Su-
Ch
Ta
W
Del
To
Ge
Bel
Pie
Rrv
Hu
Ra]
Lai
Lii
Br
St<
Ca
cij
Poi
Me
Ste
Le
Ba
Location
i-ell, TN
sburg, VA
IT Brook, VA
>ma, WA
idover, NV
a,UT
•nsend, MT
oa,OH
efonte, PA
sant Gap, PA
brton, WV
an, OH
id City, SD
orte, CO
vood, IA
ichton, PA
Genevieve, MO
jy.OH
rleston, SC
ce,PR
litowoc, WI
>hens City, VA
,MA
esville, AR
Type of Kiln"
R,V
V,R,0
R
R
R
R
R
R
R
R
R
R
R
H
R
R
R,V
O
V
R
R
H
R
V
(continued)
-------
Table 2-5a. Commercial Lime Manufacturing Plants (continued)
Company
U.S.
Lime & Minerals, Inc. (Texas Lime Co.)
Faculty
Plant #1
Cl
1 Location
Type of Kiln"
iburne, TX R
USG Corp.
Vulcan Materials Co.
Vulcan Materials Co.
Western Lime Corp.
Western Lime Corp.
Wyoming Lime Producers
! New Orleans
Manteno
JMcCook
I Green Bay
| Eden
Frannie
N
M fnteno, IL
M! ICook, IL
GieenBay, WI
Ecen.WI
Frinnie, WY
w Orleans, LA
R
R
R
R
R
R
NJ
CBI = Confidential Business Information
NS = Not surveyed/no response
" Tons per year
b V = vertical or shaft; O = other; R = rotary; H = hydrator only
Sources: U.S. Department of the Interior, U.S. Geological Surve;
Surveys. Reston, VA. .
-------
Table 2-5b. Captive Supply Lime Manufacturing Plants
Company
Amalgamated Sugar Co., The
Amalgamated Sugar Co., The
Amalgamated Sugar Co., The
Amalgamated Sugar Co., The
American Crystal Sugar Co.
American Crystal Sugar Co.
American Crystal Sugar Co.
American Crystal Sugar Co.
American Crystal Sugar Co.
Baker Refactories Co.
Bowater Southern Paper Corp.
Dow Chemical Co., The
Elkem Metals Co.
Graymont Ltd .( Continental Lime, Inc.)
Great Lakes Sugar Co., The
Holly Sugar Corp.
Holly Sugar Corp.
Holly Sugar Corp.
Holly Sugar Corp.
Holly Sugar Corp.
Holly Sugar Corp.
Holly Sugar Corp.
Ispat Inland, Inc.
LTV Steel
Martin Marietta Magnesia Specialties, Inc.
Michigan Sugar Co.
Michigan Sugar Co.
Michigan Sugar Co.
Michigan Sugar Co.
Minn-Dak Fanners Coop.
Monitor Sugar Co.
NorthWest Alloys, Inc.
Riverton Corp.
Southern Minnesota Sugar Corp.
Specialty Minerals, Inc.
Western Sugar Co.
Western Sugar Co.
Western Sugar Co.
Western Sugar Co.
Western Sugar Co.
Western Sugar Co.
Facility
Twin Falls
Nampa
Mimi-Cassia
Nyssa
Moorhead
Crookston
East Grand Forks
Drayton
Hillsboro
York
Calhoun
Ludington
Ashtabula
Tacoma _J,. .„
Fremont
Brawley
Tracy
Woodland
Sidney
Hereford
Torrington
Worland
Indiana Harbor
Grand River
Woodville
Sebewaing
/-* |,
Carolton
Croswell
Caro
Minn-Dak
Bay City
Addy
Riverton
Renville
Adams
Fort Morgan
Greeley
Bayard
Mitchell
Scottsbluff
Billings
Location
Twin Falls, ID
Nampa, ID
Paul, ID
Nyssa, OR
Moorhead, MN
Crookston, MN
East Grand Forks, MN
Drayton, ND
Hillsboro, ND
York, PA
Calhoun, TN
Ludington, MI
Ashtabula, OH
Tacoma, WA_.
Genoa, OH ~~
Brawley, CA
Tracy, CA
Woodland, CA
Sidney, MT
Herford, TX
Torrington, WY
Worland, WY
Indiana Harbor, IN
Grand River, OH
Woodville, OH
Sebewaing, MI
— CaroltonrMI —
Croswell, MI
Caro, MI
Wahpeton, ND
Bay City, MI
Addy, WA
Riverton, VA
Renville, MN
Adams, MA
Fort Morgan, CO
Greeley, CO
Bayard, NE
Mitchell, NE
Scottsbluff, NE
Billings, MT
TypeofKUn"
V
0
V
NA
NA
V
V
V
NA
R
R
R
V
JB,
O
V
V
V
V .
V
V
V
R
R
V
V
V • . - . .
V
V
V
V
R
V
V
0
V
0
O
V
V
V
' R = rotary; V = vertical or shaft; O = other; NA = not available
Source: U.S. Department of the Interior, U.S. Geological Survey. 2000. 7999 Directory of Lime Plants in the United
States. Mineral Industry Surveys. Reston, VA. .
2-26
-------
lime facilities, with six, followed by Minnesota with four and California, Idaho Nebraska,
North Dakota, and Wyoming with three facilities each.
In 1999, the United States lime industry overall operated at 76 percent capacity, down
from a rate of 79 percent the previous year (Miller, 1999b). Rates of capacity utilization
ranged between about 65 percent and 88 percent depending on region. Between 1995 and
1999 the lime industry increased capacity more than it increased production, leading to the
decline in the rate of capacity utilization during that period. There has been rapid
consolidation in the industry over the past few years with accompanying renovations,
closings, and expansion of several plants.
2.3.2 Companies
Using information obtained from the USGS (DOI, 2000), the Information Access
Corporation (Information Access Corporation, 1997), American Business Information (ABI,
1997), Dun & Bradstreet (2000), Gale Group (1999), Hoover's Online, Lycos Small
Business Online, and Reference USA (2000), 45 companies were identified that produce
lime for either commercial or captive supply purposes. Twenty-five of these companies
produce lime solely for the commercial market, while 20 engage in captive production, either
entirely, or in combination with some commercial production. Data on companies owning
liffie^larrt«-ara£hewfl4n^ble^6.-^IMs4^ .._
number of facilities, sales, employment and parent companies for commercial and captive
producers. Data are incomplete for some of these companies, typically because they are
privately held subsidiaries.
The Concise McGraw-Hill Dictionary of Modern Economics provides the following
definition of horizontal integration: "The situation existing in a firm whose products or
services are competitive with each other, the term also applies to the expansion of a firm into
the production of new products that are competitive with older ones. Horizontal integration
may be the result of a merger of competing firms in the same market, or involve expansion
of a firm from its original base to a wider area, as in the case in the growth of retail chains.
The advantages of horizontal integration stem primarily form economies of large-scale
management, large-scale buying from supplies, and large-scale distribution. Horizontal
integration may result in a monopoly in a particular market" (Greenwald, 1984). According
to this definition, there is some evidence of horizontal integration among both the
commercial and captive lime producers. Among commercial producers, 11 companies
2-27
-------
Table 2-6. Company-Level Data for the Lime Industry
Ultimate Parent Company Name
Ash Grove Cement Co.
Austin White Lime Co.
Basin Electric Power Cooperative
Blue Circle Industries PLC
Carmeuse Lime Inc.
Chemical Lime Co.
Cheney Lime & Cement Co.
Con Lime Co.
Cutler-Magner Co.
.Florida Crushed Stone
Greer Industries
Huron Lime
McCarthy Bush Corp.
National Lime & Stone Co.
Pete Lien & Sons, Inc.
Puerto Rican Cement
Rockwell Lime
SCANA Corporation
Shen-Valley Lime Corp.
Southdown Inc.
Star Group
United States Lime & Minerals
USG Corp
Vulcan Materials
Western Lime Corp
Alcoa Inc.
Amalgamated Sugar Co.
American Crystal Sugar
Baker Refractories
Bowater Southern Paper Corp.
Dow Chemical Co.
Elkem Holdings Inc.
Falco Lime
Number of
Lime Plants
2
1
1
1
18
19
2
1
1
1
1
1
1
1
2
1
1
1
1
1
1
2
1
2
2
1
4
5
1
1
1
1
1
Sales ($10")
$365
$15
$757
$3,295
$240
$250
$13
$7
$22
, S97
$150
$12
$69
$60
$66
$173
$11
$1,650
$2
$203
$15
$27
$36,000
$2,356
$17
$16,323
$250
$844
$15
NA
$18,929
$400
$35
Employment
1,800 I
150
1,661
18,637
1,200
1,000
50
65
75
600
650
35
300
400 ,
350
1,053
48
5,488
<500
4,100
80
205
143,000
9,245
92
127,000
3,000
1,292
110
1,225
39,239
1,300
65
Small
Business
No
Yes
No
No
No
No
Yes
Yes
Yes
Nft.-
No
Yes
Yes
Yes
Yes
No
Yes
No
Yes
No
Yes
Yes
No
No
Yes
No
No
No
Yes
No
No
No
Yes
Type
M
M
M
M
M
M
M
M
M
—M
M
M
M
M
M
M
M
M
M
M
M
M
M
M
M
C
C
C
C
C
C
C
C
(continued)
2-28
-------
Table 2-6. Company-Level Data for the Lime Industry (continued)
Ultimate Parent Company Name
Graymont Ltd.
Imperial Sugar Co.
Ispat Inland, Inc.
LTV Corporation
Martin Marietta Materials, Inc.
Minerals Technologies Inc.
Minn-Dak Farmers Cooperative
Mississippi Lime
Riverton Corp.
Southern Minnesota Sugar
Sucre Holdings
Tate and Lvle Inc.
Total
M = merchant
C = captive
Number of
Lime Plants
6
13
1
1
1
1
1
1
1
1
7
116
Sales ($10*)
$204
$1,889
$1,075
$4,270
$6,100
$638
. $137
$90
$14
™- -$B5-r
$76
$6,326
$103,621
Small
Employment Business
1,000
3,800
8,200
14,800
1,259
2,236
480
900'
150
- ^ '5QGK
660
22,000
419,500
No
No
No
No
No
No
Yes
No
Yes
--•r-xygp.*-
Yes
No
19
Type
C,M
C
C
C
C
C
C
C
C
-t?"-?- •-•
C
C
NA
Sources: Gale Group. 1999. Ward's Business Directory of U.S. Private and Public Companies. Volume 1.
Detroit: Gale Group.
Seeger, Airline, National Lime Association to Tom Kelly, EPA, June 25, 2001. Correspondence.
(and Some Sales Figures) to Affected Small Lime Firms, With and Without PM CEMS Requirement."
operate more than one facility. Five of the captive producers operate more than a single
facility.
The definition of vertical integration is somewhat more straightforward. A vertically
integrated company produces inputs to be used in its own production process. A company
that has undergone complete vertical integration would be involved in all stages of
production from the processing of the raw materials through the distribution of the final
product (Greenwald, 1984). Operators of captive supply facilities are by definition vertically
integrated. They produce their own lime to be used as an input in the manufacture of a
product such as beet sugar or aluminum. Commercial lime producers are generally vertically
integrated as well. They own and operate limestone mines to supply kiln feed for the
manufacture of lime.
2-29
-------
Firm size, where size is defined in terms of company sales and employment, is likely
to be a factor in the distribution of the impacts of the NESHAP on companies. Grouping the
firms by size facilitates the analysis of small business impacts as required by the RFA of
1982 as amended by SBREFA of 1996.
Firms are grouped into small and large categories using Small Business
Administration (SBA) general size standard definitions based on NAICS codes. For
commercial lime firms, a small company is defined as one having 500 or fewer employees.
For captive supply companies that are pulp and paper producers or beet sugar manufacturers,
a business with 750 or fewer employees is considered small. For captive suppliers that are
steel companies, a small company is defined as one having 1,000 or fewer employees.
re^
lime-producing facilities. Based on the SBA definition of small business, 19 companies are
small. However, seven of these companies will not be affected by this rule because they only
hydrate lime or manufacture lime for use in beet sugar production.
2.4 Consumption and Uses of Lime
Many different industries use lime, but lime use generally falls into one of the
following categories: agriculture, chemical and industrial (including steel production, the
argest smglFus^ff^
describes the consumption and uses of lime.
2,4.1 Product Characteristics
Because the quality and characteristics of lime vary considerably, consumers often
use chemical and physical tests to ensure that the lime being purchased meets their
requirements. The American Society for Testing and Materials (ASTM) provides
specifications and tests for various uses of lime. Many of these tests are too time consuming
and costly for use in routine quality control, so they are performed only occasionally. Less-
involved tests of physical and chemical qualities can be done depending on the consumer's
needs. Depending on the intended end use, consumers may test lime for impurities,
consistency, plasticity, particle size, compressive strength, settling rate, slaking rate, and
chemical composition (Boynton, 1980).
For most purposes, dolomitic and high-calcium lime can be used interchangeably.
For certain purposes, however, one or the other may be preferable. For example, dolomitic
2-30
-------
Table 2-7. Characteristics of Small Businesses in the Lime Industry
Company
Commercial Suppliers
Austin White Lime Co.
Cheney Lime & Cement Co.
Con Lime Co.
Cutler Magner Co.
Falco Lime, Inc.'
Huron Lime Co.
McCarthy Bush Corp.
National Lime & Stone Co.
Pete Lien_& Sons, Inc.
Rockwell Lime Co.
Shen- Valley Lime Corp."
Star Group Corp.
United States Lime & Minerals
Western Lime Corp.
Captive Suppliers
Baker Refractories Co.
Minn-Dak Farmers Coop.b
Riverton Corp.
Southern Minnesota Sugar Corp.b
Sucre Holding Inc.b
Sales ($10')
15
13
7
22
35
12
69
60
66
11
2
15
27
17
15
137
14
135
76
Employment
150
50
65
75
65
35
300
400
350
48
<500
80
205
92
110
480
150
500
660
" These small businesses are hydrators only and are not subject to this rule.
b These small businesses manufacture lime for use in beet sugar production and are not subject to this rule.
Sources: Gale Group. 1999. Ward's Business Directory of U.S. Private and Public Companies. Volume 1.
Detroit: Gale Group.
Seeger, Arline, National Lime Association to Tom Kelly, EPA, June 25,2001. Correspondence.
Wood, Joe, EPA to Eric Crump, EPA, June 1,2001. E-mail. "Summary of Total Annualized Costs
(and Some Sales Figures) to Affected Small Lime Firms, With and Without PM CEMS Requirement."
lime is used for agricultural liming in areas where the soil is deficient in magnesium because
of its higher magnesium content (Boynton, 1980).
Quicklime and hydrated lime are also interchangeable for most purposes. The choice
between quicklime and hydrated lime depends on the quantity needed and the storage
facilities available. Quicklime is more concentrated than hydrated lime and costs about 30 to
2-31
-------
40 percent less per ton. However, quicklime must be stored carefully and must be slaked, or
hydrated, prior to use. The consumer must weigh the cost of owning ancji operating slaking
equipment against the savings from buying less expensive quicklime. High-volume
consumers generally purchase quicklime, while smaller consumers usually buy hydrated lime
(Boynton, 1980).
Almost all quicklime is shipped in bulk in covered hopper rail cars. The small
quantities of quicklime that are packaged are placed in extra-heavy paper sacks. Hydrated
lime is available both in bulk and packaged in multiwall, 50-pound bags. Bulk hydrate is
loaded pneumatically onto tank trucks for shipment (Boynton, 1980).
2.4.2 Uses and Consumers
Table 2-8 presents data on quantities, percentages, and dollar values of lime used by
various industries in 1999. Agriculture consumed less than 1 percent of lime produced in the
United States. Chemical and industrial uses accounted for 64 percent of the lime consumed,
with the steel industry alone consuming 30.5 percent of total lime production. Within the
chemical and industrial category, other significant uses included pulp and paper production
(5 percent), precipitation of calcium carbonate (6.1 percent), and sugar refining (4 percent).
Construction accounted for 10.6 percent of the lime consumed, and most lime in this
category4s^ised4b3^soil^tabiJization, JEnviionmental-Juses-forlime accountedJbr-
23.9 percent of the market. Within this category, the largest use for lime was flue gas
desulfurization (15.9 percent), followed by water purification (7.1 percent).
Table 2-9 contains information on lime use for 1998 and 1999; quantities and
percentages for quicklime and hydrated lime are presented separately. For both years, the
quantity of quicklime consumed was about six times greater than the quantity of hydrate
consumed. The construction industry used more hydrate than quicklime, but for
environmental, steel, and other purposes listed, quicklime use greatly exceeded hydrate use.
All lime sold for refractory purposes was quicklime. The following section discusses some
of the many uses of lime in more detail.
2.4.2.1 Agriculture
Lime is applied to fields to neutralize acid soils, offset acidity created by nitrogen
fertilizers, add nutrients to the soil (calcium and magnesium), and improve soil structure.
Agricultural use of lime in the United States takes place almost exclusively in the east, since
western states tend to have alkaline soils (Gutschick, 1994).
2-32
-------
Table 2-8. Quantities, Percentages, and Values for Lime by Use: 1999"
Agriculture
Chemical and industrial
Glass
Pulp and paper
Precipitated calcium carbonate
Sugar refining
Other chemical and industrial
Metallurgical
Basic oxygen furnaces
Electric arc furnaces
-Qtber .......„, ..........
Total metallurgical
Nonferrous metals
Aluminum and bauxite
Other nonferrous metallurgy
Total nonferous metallurgy
Total metallurgical
Total chemical and industrial
Construction
Asphalt paving
Soil stabilization
Other
Total construction
Environmental
Flue gas sulfur removal
Sewage treatment
Water purification
Other
Total environmental
Refractory lime (dead-burned dolomite)
Grand Total
l,000mtb
23
98
971
1,200
783
1,920
5,000
3,930
1,810
239
5,970
303
1,270
1,570
7,550
12,550
362
1,280
427
2,070
2,750
245
1,400
297
4,690
300
19,600
Percent
0.1
0.5
5.0
6.1
4.0
9.8
25.5
20.1
10.7
1.2
30.5
1.5
6.5
8.0
38.5
64.0
1.8
6.5
2.2
10.6
15.9
1.3
7.1
1.5
23.9
1.5
Value C$103)
1,900
5,650
57,700
71,100
45,800
121,000
303,000
220,000
107,000
14,700
342,000
17,800
73,200
91,000
433,000
736,000
26,500
82,700
42300
152,000
142,000
15,500
88,600
18,600
265,000
24,400
1,180,000
a Numbers include commercial sales and captive supply use. Regenerated lime is not included.
b To convert to short tons, multiply metric tons by 1.10231.
Source: Miller, M.M. 1999b. Minerals Yearbook: Lime. Reston, VA: U.S. Department of the Interior,
Geological Survey, .
2-33
-------
Table 2-9. Lime Sold by Producers in the United States, by Use (thousands of
metric tons)8
Use
Quicklime
Construction
Soil Sabilization
General Construction
Total Construction
Refractory dolomite
Environmental
Stedi iron related
Other chemical and industrial
Total quicklime
Hydrate
Construction
Soil stabilization
General construction
Total construction
Environmental
Steel, iron related
Other chemical and industrial
Total hydrate
All Lime
Total construction sales
Total refractory sales
Total environmental sales
Total steel, iron-related sales
Total chemical and industrial sales
Total sales of lime
12 Months
1998
795
16
816
300
4,544
7.794
4,264
17,718
485
679
1,164
576
46
549
2,335
1,980
300
5,120
7,840
1,950
20,053
Percentages
1998
4.0
0.08
4.1
1.5
22.7
™ o
21.3
88.4
2.4
3.4
5.8
2,9
0.02
2.7
11.6
9.9
1.5
25.5
39.1
9.7
100.0
12 Mbnths
1999
842
32
874
300
4,174
7,528
4,524
17,400
1
438
758
1,196
516
22
476
2,210
2,070
300
4,690
7,550
1,920
19,610
Percentages
1996
4.3
0.2
4.5
1.5
21.3
-3g.*l-
23.1
88.7
2.2
3.9
6.1
2-6
1.1
2.4
11.3
10.6
1.5
23.9
38.5
9.8
100.0
* To convert metric tons to short tons, multiply metric tons by 1.10231.
Source: Miller, M.M. 1999a. Minerals Information: Lime. Reston, VA: U.S. Department of the Interior,
U.S. Geological Survey, .
2-34
-------
2.4.2.2 Chemical and Industrial I
I
Lime serves many diverse and important functions in a broad range of industries. As
previously mentioned, more than 60 percent of the lime consumed per year is used in
chemical and industrial applications, including steel manufacturing, pulp and paper
manufacturing, and sugar refining. Industries can meet their demand for lime by either
purchasing lime from commercial producers or by manufacturing their own lime onsite
(captive production). For example, all beet sugar producers and alkali plants operate their
own lime plants to supply the large quantities of lime and carbon dioxide they require. Some
steel producers, as well as manufacturers of copper, alumina, and magnesium also operate
captive lime kilns (Boynton, 1980). The following section describes in more detail how a
number-ofindustriesLUS&lime.
Iron and Steel Metallurgy. Lime is used as flux in the manufacture of steel. It reacts
with impurities such as phosphorus, silica, and sulfur to form slag, which is removed from
the metal. The types of steel furnaces that consume lime are the basic open-hearth furnace,
the basic Bessemer furnace, and the basic oxygen furnace (Boynton, 1980). The basic
oxygen furnace produces about two-thirds of the steel in the United States. Electric furnaces
that purify steel scrap also use lime as flux. Dead-burned dolomite is used to protect the
refractory linings of open-hearth and electric furnaces and manufacture refractory brick
Nonferrous Metallurgy. The production of magnesium metal or magnesia requires
lime as a raw material. Lime is also used to purify nonferrous ores, including copper, gold,
silver, uranium, zinc, nickel, and lead. Large quantities of lime are used in the production of
alumina from bauxite (Boynton, 1980).
Sugar Refining. The beet sugar industry uses large quantities of both lime and carbon
dioxide in its refining process. (Small quantities are used in the refining of cane sugar.) To
meet their needs, all beet sugar manufacturers maintain their own captive lime kilns and
purchase limestone to use as kiln feed, but they generally do not operate their own limestone
quarries (Gutschick, 1994). Captive lime kilns only operate in the fall after the beet harvest.
Manufacturers use both the lime and the CO2 that captive lime kilns produce (Boynton,
1980).
Precipitated Calcium Carbonate (PCC). PCC is a pure white powder with uniform
particle size, which is an important input in many production processes. It is used as a
2-35
-------
pigment in paint; a coating and filler for paper; a filler in rubber products; and an ingredient
in putties, dentifrices, and Pharmaceuticals. It is manufactured directly from lime and is also
a by-product of the production of soda ash at alkali plants (Boynton, 1980).
Pulp and Paper. Quicklime is used in sulfate-process pulp plants in combination
with "black liquor" (waste sodium carbonate solution), allowing sodium hydroxide (caustic
soda) to be recovered. As part of this process, 92 to 98 percent of lime is also recovered.
Sludge is dehydrated and pelletized, then fed through captive rotary kilns where it is calcined
back into lime for reuse. Pulp plants also use lime to make calcium hypochlorite for
bleaching paper and for treating wastewater (Boynton, 1980). The pulp and paper industry
has been moving away from the sulfate process to an alkaline process, which produces
higher quality paper at lower cost. This process still requires lime, however, in the form of
' --.- '~-^^f^-"-~ " - ' ~3 ~ '" '-' '-•" ',-" -•*_-- .A - • A~ ^ -.•.-. ~-_ . : • ; j .-: 1 _ ~ • "- _ *,_ • • _±_ ™~_- ~, "-- ••'- - - -'-••••:•_-;-.•,"•-_-• • • .- ;,• • ~- :•-. - -^ ._•-_•:-.- i-j _y -^rr -\r j^-.j - ~ -.!•: ,r_- ^i~ - :. • • _ •-,_•'-> -—- "_--•?.•; IT -m— /• -^"Tr-r-^T^r-^-T ; • _^±a£\- . • . .• L*^gfl tSnj9t^~^"r^mi'^S^S:F^:^ f~ '
PCC. As previously mentioned, PCC is used as a filler and coating material for high quality
paper. Some pulp and paper manufacturers have installed PCC plants on site (Gutschick,
1994).
Other Chemical and Industrial Uses. Lime is used in the production of a number of
chemicals, such as soda ash and sodium bicarbonate (alkalies), and calcium carbide. Various
forms of lime are also used to produce plastics and glass. Lime is also used as a carrier for
pesticides and in the production of bleaching agents. Calcium and magnesium salts such as
salts also come rfrom lime. LTrirels
used in refining food-grade salts and in producing numerous food additives (Gutschick,
1994).
2.4.2.3 Construction
The largest use of lime for construction is for soil stabilization. It is used in
constructing roads, parking lots, runways, building foundations, embankments, earthen dams,
railroad beds, and irrigation canal linings. When lime is added to clay soils, which contain
silica, and the soil is then compacted, the lime reacts with the silica, greatly increasing the
soil's stability and strength. For soils low in silica, builders use lime together with fly ash,
which contains silica. Lime is also Used to dry up saturated soils (Gutschick, 1994).
Lime is an important component of asphalt used for paving. It improves the asphalt's
ability to adhere to the surface to which it is applied and adds to its durability (Gutschick,
1994). Lime is also used to produce building materials such as mortar, plaster, and stucco
(Boynton, 1980).
2-36
-------
2.4.2.4 Environmental
Environmental protection is a large and growing market for lime, and lime is used in
various environmental applications. General descriptions of some of these uses are provided
below.
Air Pollution Control. The CAA of 1970 created a new market for lime in the area of
flue gas desulfurization, which has now become the second largest domestic market for lime
(Miller, 1999b). Flue gas desulfurization uses lime to remove SO2 from stack gases at utility
and industrial plants that bum coal. They employ both wet and dry scrubbers. Wet
scrubbers, which use slurries of lime and produce a liquid waste product, can remove up to
99 percent of SO2 from stack gases. Dry scrubbers, which produce a dry waste, can remove
SOllUr Wflrl* i\J w3 ^U-pCKJiMii CiTlCI.WM.^>"^J^lIJiG^
sulfuric acid plants, as well as other wastes such as HC1, hydrofluoric acid, and NOX. It can
also be used to scrub stack gases from incinerators and small industrial coal-fired boilers
(Gutschick, 1994).
Water Treatment. Lime is used to treat potable water for softening (removing
minerals), purifying (killing bacteria), and clarifying. Lime is also effective at preventing
lead and copper from entering distribution systems. It does this by raising the pH of the
these mejaLsjcemain insoluble (GjifcscMcJs^I994X ,__^.
Sewage Treatment. Lime is used to treat wastewater at sewage treatment plants. The
addition of lime to wastewater causes phosphates and most heavy metals to precipitate. It
also causes solid and dissolved organic compounds to coagulate and ammonia to volatilize.
Lime also raises the pH to a point where bacteria, viruses, and odor are destroyed. Lime is
used heavily in the treatment of sewage sludge as well. It controls odors, kills germs, and
precipitates heavy metals, allowing sludge to be disposed of safely in landfills or to be used
as a soil amendment (Gutschick, 1994).
Industrial Wastewater Treatment. Many industries, including the electroplating,
chemical manufacturing, and textile industries, use lime to treat their wastewater. In
addition, lime is used to treat effluents that are high in sulfuric acid and iron oxides from
both abandoned and active coal mines (Gutschick, 1994).
2-37
-------
2.4.3 Substitution Possibilities in Consumption
As mentioned in Section 2.4.1, the various forms of lime can often be used
interchangeably. The chemical properties and composition of the lime p'roduced relate
directly to the characteristics of the limestone used as kiln feed (Gutschick, 1994). Most
plants use kiln feed from an adjacent quarry, so the type of lime the plants manufacture is
limited. However, commercial plants have substitution possibilities regarding the form of
their final product. Lime can be sold as quicklime in various particle sizes, or it can be
further processed into one of the forms of hydrated lime (Boynton, 1980). For some
purposes, limestone can also be used as a substitute for lime. For example, in the flue gas
desulfurization market, high purity limestone can be used instead of lime for scrubbing, and
it is condderablyJessxflSllyIhanlim^
the capital investment required for limestone scrubbers is higher than that for lime scrubbers.
In the steel industry, basic open-hearth furnaces can use limestone instead of lime as flux.
However, the basic oxygen furnace, which uses only lime as flux, has almost entirely
replaced the open-hearth furnace (Gutschick, 1994). Limestone cannot replace lime for soil
stabilization, but for agricultural purposes, ground limestone can be used instead of lime
(Boynton, 1980).
For industrial wastewater treatment, limestone can be used to a limited extent for acid
neutralization, raising pH to 6 to 6.5. However, to precipitate iron and other ferrous metals, a
pH of 9 to 10 is necessary, and for this range, only lime is effective (Gutschick, 1994).
Caustic soda also competes with lime in the acid neutralization market. Caustic soda is
highly effective, but its price tends to be volatile (Miller, 1997).
Whiting, a type of limestone, can be used as a diluent and carrier of pesticides in lieu
of hydrated lime (Gutschick, 1994). Calcined gypsum is an alternative material used in
industrial plasters and mortars. Cement, lime kiln dust, and fly ash are also potential
substitutes for lime in some construction uses (Miller, 1996a).
2-38
-------
SECTION 3
REGULATORY CONTROL COSTS
EPA identified 108 lime plants in the United States and estimated the costs for each
to comply with the NESHAP for lime manufacturing based on model plants developed by
EPA. Only about half of the lime manufacturing plants are directly affected by the rule.
There are three primary reasons why many plants will not be directly affected. First, captive
^
exempt from this rule (25 plants). Second, plants that are hydrating plants only will not be
subject to the rule because they do not have any kilns (11 plants). Finally, only the
approximately 70 percent of kilns located at major sources are subject to controls.1 This
section includes the costs of air pollution controls and testing and monitoring requirements
for new and existing lime kilns, lime coolers, and materials handling operations (MHO).
Control costs have been estimated for kiln models and on a plant-wide basis for MHO. The
HAPs of concern for the kilns and MHO are PM/metals.
All facilities that manufacture lifimestorie intoTime Arougli'heatingVa'process'knbwh
as calcination. When limestone is subjected to high temperatures, it undergoes a chemical
decomposition resulting in the formation of lime (CaO) and the emission of CO2.
Emissions in lime production facilities occur from the following general sources:
• kiln (90 percent of PM emissions),
• coolers, and
MHO.
As described in this section, the Agency estimated the compliance costs for each facility to
install the necessary equipment and process controls that will reduce emissions and bring
1 All nonexempt plants (i.e., those not dedicated exclusively to the production of lime for use in beet sugar or
pulp and paper production) will incur costs associated with an HC1 test using the American Society for
Testing and Materials (ASTM) standard method to verify whether they are major sources. However, only
those kilns located at major sources will incur further compliance costs to add controls under this NESHAP.
3-1
-------
each facility into compliance with the NESHAP. The estimation of these costs is applied to
existing facilities using a baseline year of 1997. The remainder of this section describes the
model plants used in the analysis and the annual control costs. The annual control costs
serve as an input into the economic model. For each of the affected lime plants owned by a
small business, compliance costs specific to that plant were developed. Absent engineering
determination of kiln-specific applicability of controls, a computer model randomly
determines which controls each kiln owned by a large company faces based on rates of
applicability determined by the engineering analysis. The model estimates the impact
variables through multiple simulations given different random assignments of applicability.
The Agency conducted 35 independent simulations and averaged across those simulations to
provide a measure of the total compliance costs expected to fall on large firms.
3.1~ ISodelPlants
The large number of lime kilns in the United States necessitates using model kilns to
simulate the effects of applying the regulatory controls to this industry. A model kiln does
not represent any single actual kiln. Instead, it represents a range of kilns with similar
characteristics that may be affected by the regulation. Model kilns for the existing lime kilns
were based on data provided in questionnaire responses from 55 lime manufacturing plants.
These responses represent 81 percent (55/68) of the commercial lime manufacturing plants in
"the United States~atthe time of ther survey. The moaeis were ^ kilns
by type (e.g., rotary, vertical) and then by annual design production capacity (RTI, 1996).
Table 3-1 summarizes the characteristics for each model kiln as well as the number of
actual kilns in the United States assigned by EPA to each model type. Thirteen model kilns,
designated A through M, are provided for existing kilns (RTI, 1996). Five of these model
kilns (A, J, K, L, M) are being considered confidential business information (CBI) because
summary information about these models would allow identification of individual plant
information that the plants deem confidential. Additional models N, P, Q, and R were
developed for new kilns (RTI, 1997).2 These model kilns serve as the basis for estimating
the compliance costs associated with the MACT standards being promulgated under the
authority of the CAA.
2 A model "O" plant was also developed in this memorandum but was dropped from subsequent analysis
because it was later concluded that no plants of that model type were likely to be built in the near future.
3-2
-------
Table 3-
Model
ID
A
B
C
D
E
F
G
H
I
J
K
L
M
N
1. Summary of Model
Kiln Type
Calcimatic
Rotary
Rotary
Rotary
Rotary
Rotary
Rotary w/preheater
Rotary w/preheater
Rotary w/preheater
Vertical
Vertical
Vertical
Fluidized Bed
Rotary
Lime Kilns
Design
Production
Capacity
(tons/year)
CBI
45,000
115,000
165,000
260,000
460,000
90,000
190,000
300,000
CBI
CBI
CBI
CBI
165,000
Range
Product
Assign
(toi
18,00
60,000
i
140,00
'
240,001
390,001
»f Existing
on Capacity
d to Model
is/year)
CBI
1-50,000
- 140,000
)- 200,000
)- 290,000
)- 530,000
60,00d- 115,000
145,00
240,00
3-200,000
3-380,000
CBI
c
Jf-ITJT
'\—DL
i]
NA
Total Exist
Production As
to Model (ton.
CB
520,54
2,844,11
4,378,81
760,91
3,091,20
379,26
1,266,20
3,283,09
CI
" CB
1
CB
CE
R
Total Number
of Actual
ng Commercial
iigned Kilns Assigned
'year) to Model
: s
: 19
; 34
I 34
4
: 10
6
10
15
[ 20
[ - 6
[ 4
: 4
NA
Type of Air
Pollution
Control
Device"
4 FF, 4 WS
14FF.5WS
17 FF,
14 WS,
3 ESP
21 FF,
11WS,
2 ESP
4FF
10 FF
3 FF, 1 WS, 1
ESP, 1 GB
9 FF, 1 WS
13 FF, 2 GB
NC
6FF
3FF, 1 WS
4WS
FF"
(continued)
-------
Table 3-1. Summary of Model Lime Kilns (continued)
Design Range <
Production Product!
Model Capacity Assigne
ID Kiln Type (tons/year) (ton
P Rotary w/preheater 330,000
Q Rotary w/preheater 462,000
R Double-shaft Vertical 165,000
Totals (excluding production from CBI models)
!
• t
' FF=fabric filter, WS=wet scrubber, ESP=electrostatic precipita
b These model plants were developed for new kilns. All new kil
how many new kilns will be built.
c Total of existing identified commercial kilns only (Models A t
Sources: Research Triangle Institute (RTI). 1996. Memorandui
Environmental Protection Agency. August 19, 1996. i
Research Triangle Institute (RTI). 1997. Memorandui
U.S. Environmental Protection Agency (EPA). Deceit
U.S. Environmental Protection Agency (EPA). Noveri
Cost inputs for economic impacts analysis for the lime
»f Existing
on Capacity Total Exist
i to Model Production As
s/year) to Model (tons
STA . N/
SfA N/
NTA M
16,524, 15<
;
tor, GB=gravel bed filter, and 1*
us are expected to install fabric
irough M).
n from Cole, Jeffrey, Research '
rfodel kilns for lime manufactui
n from Brockmann, Cybele, Re
ber 3, 1997. Memorandum on |i
ber 6, 2002. Memorandum frbi
industry NESHAP. ;
i
| Total Number
of Actual Type of Air
tig Commercial Pollution
jigned Kilns Assigned Control
[year) to Model Device1
1 NA FE*
I NA FF1"
1 NA FF*
1 174 104 FF,
41 WS,
! 6 ESP, 3 GB,
j 20NCC
i
C=no controls.
alters for pollution control, but it is unknown
Wangle Institute, to Joseph Wood, U.S.
ing industry — non-CBI version.
parch Triangle Institute, to Joseph Wood,
lodels for new kilns.
ii James Crowder, EPA, to Ron Evans, EPA.
-------
3.2 Control Costs
The remainder of this section describes the controls based on plant characteristics and
then summarizes their associated costs. Sources of HAP emissions in lime production
include the lime kiln, cooler, and MHO. Based on the engineering analysis, the MACT floor
for existing major sources is defined to include upgrading PM controls, cooler controls, and
MHO, and complying with testing and monitoring requirements. However, due to a
provision in the rule to allow bubbling of PM emissions from the kilns and coolers and the
small percentage of coolers (4 percent) expected to have needed upgrades even without
bubbling, EPA assumes the costs of cooler PM controls are zero. Area sources would not
incur any costs, except the costs to measure HC1 to determine major source status (EPA,
"2002). • ~- -''• :: " ~ ' '•' '" '• '^ "'
3.2.1 Particulate Matter Controls
Control costs have been estimated for major sources to upgrade their current fabric
filters or electrostatic precipitators to control PM at the kilns. For major sources with wet
scrubbers, costs were estimated based on these kilns upgrading their existing wet scrubbers
with Venturi scrubbers. In addition, some kilns are uncontrolled (or use gravel bed filters or
cyclones). For these kilns, costs were estimated for them to install fabric filters^Costsjwere
also estimated for all new kilns to install fabric filters. Tables 3-2 through 3-6 summarize the
costs for each of the categories that must improve their PM controls. Table 3-2 provides the
estimated annual costs associated with upgrading existing fabric filters with new filter bags
for each model plant. Table 3-3 furnishes the estimated annual costs of upgrading existing
wet scrubbers with a new Venturi scrubber. Table 3-4 presents the estimated annual costs of
installing a new fabric filter on an uncontrolled kiln. Table 3-5 summarizes the estimated
annual costs associated with adding an additional field to existing ESPs. Finally, Table 3-6
provides the estimated annual costs of installing a new fabric filter on a new kiln. Costs in
each table are only provided for model plants where corresponding plants with the specified
pollution control device exist and only apply to kilns located at major sources not meeting
the emissions standards.
3-5
-------
Table 3-2. Annual Costs of Upgrading Existing Fabric Filter with New Bags
Throughout (1997$)
Model Kiln ID
A
B
C
D
E
F
: _: , • .^j — — =
H
I
K
L
Total Capital
Investment
(S103)
22
16
37
51
73
112
19 -
35
52
5
23
Annualized
Capital Cost
(S103)
6
5
11
15
22
33
10
15
2
7
Direct Annual Indirt
Cost Annual
(SIO3) (S103
19 11
19 11
19 11
20 11
21 11
23 11
9 11
20 11
21 11
19 11
20 11
ct Total Annual
Cost Cost"-1*
) ($103)
36
35
41
46
54
67
36
42
48
31
38
Notes:
" Total Annual Costs = Annualized Capital Cost + Direct Annual Cost + Indirect Annual Cost.
b Individual costs are rounded to the nearest thousand dollars and may not sum toJh^totals_shown_abQveJ__
-*——EPA expects that~29~percent ot kijns with fabric filters, will not meet the PM emissions limit and those
located at major sources will incur these costs.
Source: U.S. Environmental Protection Agency (EPA). November 6,2002. Memorandum from James
Crowder, EPA, to Ron Evans, EPA. Cost inputs for economic impacts analysis for the lime industry
NESHAP.
For each current air pollution control device (APCD), EPA calculated the percentage
of existing kilns at major sources that are expected to require an upgrade (EPA, 2002). For
the 70 percent of existing lime plants that are expected to be major sources, EPA estimated
that 29 percent of kilns with fabric filters, 33 percent of those with electrostatic precipitators,
90 percent of those with wet scrubbers, and 100 percent of uncontrolled lime kilns will incur
costs to upgrade or replace their APCD systems because they will not meet emissions
standards under the NESHAP.
3-6
-------
Table 3-3. Annual Costs of Upgrading Existing Wet Scrubber (1997$)
I
Model Kiln ID
A
B
C
D
G
H
I
•-r. , - -. ,. ; ., •vi.lsaJkT • -• . ,
M
Total Capital
Investment
(S103)
252
288
520
663
301
499
682
;- ,• i'VK,,35t."
177
Annualized
Capital Cost
(S103)
28
32
57
73
33
55
75
—39
19
Direct Annual
Cost
mo3)
75
88
220
312
102
' 207
326
^429
36
Indirect
Annual Cost
mo3)
11
11
16
19
12
15,
19
... .,,=,-.,4,3,..
9
Total Annual
Cost8'"'*
mo3)
113
131
293
403
146
278
420
.-1*0.
64
Notes:
a Total Annual Costs = Annualized Capital Cost + Direct Annual Cost + Indirect Annual Cost.
b Individual costs are rounded to the nearest thousand dollars and may not sum to the totals shown above.
c EPA expects that 90 percent of kilns with scrubbers will not meet the PM emissions limit and those located
at major sources will incur these costs.
Source: U.S. Environmental Protection Agency (EPA). November 6,2002. Memorandum from James
Crowder, EPA, to Ron Evans, EPA. Cost inputs for economic impacts analysis for the lime industry
NESHAP.
3.2.2 Cooler Controls
The Agency estimated that 4 percent of lime plants have coolers that exhaust directly
to the atmosphere uncontrolled, which may have to be controlled to meet emissions limits.
However, as mentioned earlier, the rule includes a provision for bubbling of PM emissions
from kilns and coolers. EPA assumes that the incremental costs associated with cooler PM
controls are zero because of the small number of kilns with uncontrolled coolers and the fact
that these plants are expected to meet their bubbled emissions limits without cooler controls.
3-7
-------
Table 3-4. Annual Costs of Installing a New Fabric Filter on an Existing Uncontrolled
Kiln (1997$)
Total Capital
Investment
Model Kiln ID ($103)
B 505
C 1,037
D 2,301
E 3,529
F 5,797
G 558
H 984
J 2,395
J 207
Annualized
Capital Cost
($103)
48
98
217
333
547
53
93
— ?26
20
Direct Annual
Cost
($103)
257
570
753
1,153
1,988
437
860
-1-2*3-
89
Indirect
Annual Cost
(S103)
44
55
80
104
150
45
54
.;;,-,,,*,$&,., - -
38
Total Annual
Cost"-1*
(S103)
348
723
1,050
1,590
2,685
534
1,006
— 1:591 — — ~-
147
Notes:
" Total Annual Costs = Annualized Capital Cost + Direct Annual Cost + Indirect Annual Cost.
b Individual costs are rounded to the nearest thousand dollars and may not sum to the totals shown above.
0 EPA expects that 100 percent of the uncontrolled kilns (including those with cyclone or gravel bed filters)
will not meet the PM emissions limit and will incur these costs if located at a major source.
Source: U.S. Environmental Protection Agency (EPA). November 6, 2002. Memorandum from James
Crowder, EPA, to Ron Evans, EPA. Cost inputs for economic impacts analysis for the lime industry
NESHAP.
3.2.3 Materials Handling Operations Control Costs
EPA calculated control costs for improving the MHO at each major source at the
plant level. The Agency estimated that each major source will incur a $68,600 (1997$)
annual cost to control their MHO with fabric filters (EPA, 2002).
3.2.4 Testing and Monitoring Costs
Kilns and MHO will be subject to testing and monitoring costs. Testing and
monitoring costs for kilns would be incurred only at major sources, except that the HC1 tests
would be incurred by every plant to test whether they.are a major source. Table 3-7 provides
the costs for testing and monitoring of the kilns at a plant. Note that the costs for testing
additional kilns at the same plant are lower than the cost of testing the first kiln. Although
3-8
-------
Table 3-5. Annual Costs Associated with Adding an Additional Field for Existing
Electrostatic Precipitators (ESP) (1997$)
Model Kiln ID
C
D
G
Total Capital
Investment
($103)
1,136
1,426
676
Annualized
Capital Cost
($103)
107
135
64
Direct Annual
Cost
($103)
22
29
14
Indirect
Annual Cost
C$103)
51
64
32
Total Annual
Cos?'"''
(S103)
181
227
109
Notes:
" Total Annual Costs = Annualized Capital Cost + Direct Annual Cost + Indirect Annual Cost.
b Individual costs are rounded to the nearest thousand dollars and may not sum to the totals shown above.
major sources will incur these costs.
Source: U.S. Environmental Protection Agency (EPA). November 6, 2002. Memorandum from James
Crowder, EPA, to Ron Evans, EPA. Cost inputs for economic impacts analysis for the lime industry
NESHAP.
Table 3-6. Annual Costs of Installing a New Fabric Filter on a New Kiln (1997$)
Model Kiln ID
N
P
Q
R
Total Capital
Investment
(S103)
565
668
925
589
Annualized
Capital Cost
(SlO3)
54
63
88
56
Direct Annual
Cost
(SlO3)'
-3
-4
-8
111
Indirect
Annual Cost
mo3)
17
19
24
46
Total Annual
Cost"*"
mo3)
67
78
103
213
Notes:
° Negative direct annual costs reflect savings due to reduced electricity consumption because of a larger
baghouse with less pressure drop.
b Total Annual Costs = Annualized Capital Cost + Direct Annual Cost + Indirect Annual Cost.
c Individual costs are rounded to the nearest thousand dollars and may not sum to the totals shown above.
d All new kilns are expected to incur these costs.
Source: U.S. Environmental Protection Agency (EPA). November 6, 2002. Memorandum from James
Crowder, EPA, to Ron Evans, EPA. Cost inputs for economic impacts analysis for the lime industry
NESHAP.
3-9
-------
Table 3-7. Kiln Testing and Monitoring Costs8 (1997$)
Test Method or Total Capital Cost One Time Cost Total Annualized Cost
Monitoring Requirement ($) ($) ($)b
MethodS 10,000C 2,500
HC1 test (ASTM method) , 9,500" 2,400
Bag leak detector single stack 10,600 3,300
control device6
Bag leak detector for multi-stack 39,000 8,000
control device6
Costs for the start-up, shut- 10,000
down, and malfunction plan; the
— '"-— — ---:--^/-::— ir:'^::::.— -
monitoring plan; and other
miscellaneous requirements
Notes: I
* These costs will be incurred only at major sources, except for the costs associated with an HC1 test, which
will be incurred by every plant to verify major source status.
b One-time costs are annualized over a 5-year period using a 7 percent interest rate.
c Add $5,000 (one-time cost) for each kiln tested at same location ($1,250 annualized cost).
d Add $3,100 (one-time cost) for each kiln tested at same location ($775 annualized cost).
e Applies only to kilns with fabric filters (including those kilns that will install fabric filters to comply with
_______ theJgM.emissions limits). However, it was assumed that_all kilns will oise bag leak detectors for costing ---------
purposes. It was assumed that 55 percent of existing kilns with baghouses or scrubbers and 34 percent of
kilns with ESPs will install multi-stack control devices and the remainder will install single stack devices.
Source: U.S. Environmental Protection Agency (EPA). November 6, 2002. Memorandum from James
Crowder, EPA, to Ron Evans, EPA. Cost inputs for economic impacts analysis for the lime industry
NESHAP.
the cost associated with installing a bag leak detector should only be incurred by those kilns
that have fabric filters or that switch to fabric filters to meet PM requirements, it was
assumed that all kilns located at major sources would incur these costs for regulatory costing
purposes.3
3Recall that all uncontrolled kilns at major sources are expected to install fabric filters to comply with this
MACT. Those kilns that install fabric filters will also need to install bag leak detectors to help ensure that
their control devices are working properly.
3-10
-------
Testing and monitoring for MHO is assumed to require $15,000 in one-time costs for
PM tests, which is an annualized cost of $3,750.4 In addition, the Agency estimated that 95
percent of major source plants will incur $5,600 for annual monitoring costs, while 5 percent
of major sources will incur $12,600 for annual monitoring costs (EPA, 2002).5
3.3 Total Annual Control Costs
EPA estimated the total annual compliance cost of this rule to existing lime
manufacturing plants in the absence of market adjustments to be $22.4 million (1997$). This
estimate is based on the plant-specific costs estimated for small businesses and the national
proportion of lime kilns and plants expected to receive each of the costs included in this
section for plants owned by large businesses. EPA completed multiple simulations of a cost
esiimMlon nitTdelltrtlie
companies. This average cost for large companies was added to the plant-specific costs
available for small businesses to generate the total costs entering the economic model.
Table 3-8 summarizes the compliance cost inputs used for the economic model.
''This cost was annualized over 5 years.
5The discrepancy in annual monitoring costs results because most plants will only have to test annually (and
will incur the lower monitoring costs), but those plants that fail to meet the PM requirements in their annual
test will subsequently be required to perform monitoring monthly (and will incur the higher monitoring
costs). For costing purposes, all small businesses were assumed to incur the higher costs associated with
monthly monitoring.
3-11
-------
Table 3-8. National Engineering Control Cost Estimates (1997$)
Capital Cost ($106)
Large Firms ' 24.2
Small Firms 11.9
Total Capital Cost 36.1
Annual Compliance Cost ($106)" .. -
Large Finns 15.6
Small Firms 6.8
Total Annual Compliance Cost 22.4
Annual Compliance Cost Per Metric Ton of Lime ($/ton)
Small Firms" . ^ 2.55
Overall Annual Compliance Cost Per Metric Ton 1.16
i
The annual compliance cost estimates include annualized capital costs as well as ongoing costs resulting
from the rule.
These values were calculated based on market production only because no information was available
breaking captive production into small and large firms.
3-12
-------
SECTION 4
ECONOMIC IMPACT ANALYSIS: METHODS AND RESULTS
The MACT requires lime manufacturers to meet emission standards for the release of
HAPs into the environment. To meet these standards, companies will have to add or update
PM control devices and add controls to reduce emissions from their materials handling
operations for kilns located at major sources. These changes result in higher costs of
production for the affected producers and have additional welfare implications when these
costs are transmitted through market relationships. This section describes and quantifies the
changes in economic welfare required to achieve environmental improvements.
EPA developed measures of the size and distribution of economic impacts by
comparing baseline conditions in the 1997 national lime market with those expected to result
from implementing the MACT. The main elements of this section include the following:
• brief overview of the conceptual approach to estimating impacts as well as a
discussion of the EIA data inputs used to develop a spreadsheet model, and
• presentation and interpretation of economic estimates projected by the economic
model including
S market-level impacts (e.g., changes in price, domestic production, and
imports),
S industry-level impacts (e.g., changes in revenue, costs, closures, and
employment), and
S societal-level impacts (e.g., estimates of the consumer burden as a result
of higher prices and reduced consumption levels and changes in
domestic and foreign profitability).
4.1 EIA Methodology Summary
EPA developed this methodology using standard microeconomic theory. We rely
heavily on previous economic analyses, employing a comparative static approach, and
assume certainty in relevant markets. We also assume prices and quantities are determined in
4-1
-------
a perfectly competitive market for a single lime commodity as shown in Figure 4-1 (a)
determined by the intersection of market supply and demand curves. Under the baseline
scenario, a market price and quantity (P, Q) are determined by the downward-sloping market
demand curve (DM) and the upward-sloping market supply curve (SM) that reflects the
horizontal summation of the individual supply curves of directly affected and indirectly
affected facilities that produce a given product.
With the regulation, the cost of production increases for directly affected producers.
The imposition of the compliance costs is represented as an upward shift in the supply curve
for each affected facility from Sa to Sa'. As a result, the market supply curve shifts upward to
SM/ as shown in Figure 4-l(b) reflecting the increased costs of production at these facilities.1
In the baseline scenario without the standards, the industry would produce total output, Q, at
the price, P, with affected facilities producing the amount qa and unaffected facilities
accounting for Q minus qa, or qu. At the new equilibrium with the regulation, the market
price increases from P to P', and market output (as determined from the market demand
curve, DM) declines from Q to Q'. This reduction in market output is the net result from
reductions at affected facilities and increases at unaffected facilities.
4.2 Operational Model
To develop quantitative estimates of economic impacts, the Agency developed an
operational model using spreadsheet software. As described below and in more detail in
Appendix A, this model characterizes baseline supply and demand and the behavioral
responses to changes in costs and/or market prices.
4.2.1 Market Supply
EPA defined market supply in the lime market as the sum of domestic and foreign
supply. Domestic supply is the sum of baseline quantities supplied by commercial lime
plants within the market. Given the uncertainty of plant-specific costs and the limited
production data for large firms, we modeled one aggregate domestic producer owned by large
firms, one aggregate foreign producer using import data reported by USGS, and 14 plant-
level producers owned by small firms (see Appendix A for details). Each supply function's
parameters were calibrated using baseline production, price data, and the responsiveness of
supply to changes in price (supply elasticity). In the absence of available empirical estimates,
'Although compliance capital expenditures may not vary greatly with output, maintenance costs and compliance
capital depreciation are expected to vary directly with output such that purchases of compliance capital are
associated with an increase in the marginal cost of production.
4-2
-------
+ p
= p
Q
Affected Facilities
Unaffected Facilities
a) Baseline Equilibrium
Market
P'
P
P'
P
SM7 SM/
I I
Affected Facilities
Unaffected Facilities
Q' Q
Market
b) With-Regulation Equilibrium
Figure 4-1. Market Equilibrium without and with Regulation
4-3
-------
the domestic supply elasticity was assumed to be 1. The appropriateness of this assumption
was verified by econometric estimation of the supply elasticity. Based on regression
coefficients estimated using national lime market data for 1983—2001, the supply elasticity of
lime in 1997 was estimated to be 0.98 (RTI, 2003). Empirical estimates for the foreign
supply elasticity (7.0) were available for a similar commodity, Portland cement (EPA,
1999a), and it was assumed that the foreign supply elasticity for quicklime was the same as
for cement. To examine the sensitivity of the results to these assumptions, results were also
estimated for both larger and smaller supply elasticities. These results are presented in
Appendix B.
4.2.2 Market Demand
The Agency modeled two aggregate consumers (domestic and foreign) in the lime
market with downward-sloping demand curves consistent with the theory of demand. The
Agency constructed demand functions for both domestic and foreign consumers using
baseline quantity and price data and assumptions about the responsiveness of the quantity
demanded to changes in price (demand elasticity). Empirical estimates for demand
elasticities were available for a similar commodity, Portland cement, and for aggregate
commodity groups such as stone, clay and glass. An empirical estimate of the domestic
demand elasticity for Portland cement of-0.9 (EPA, 1999a) was assumed to apply to the
domestic demand for lime as well because of the similarity of these products. Ho and
Jorgenson (1998) report an export demand elasticity of-1.2 for the stone, clay and glass
industry, which was assumed to apply to lime, as well. A sensitivity analysis was conducted
to examine the influence of the demand elasticity assumptions on the results of the market
model.2 These results are presented in Appendix B.
4.2.3 Control Cost Inputs and With-Regulation Equilibrium
As described in Section 3, the Agency developed compliance cost estimates for model
kilns based on current controls and other kiln characteristics. To serve as inputs to the
analysis, the model kilns and associated compliance costs for each category of control are
mapped to actual kilns in the economic model. The total annual compliance costs are
expressed per unit of output and serve as "cost-shifters" of the kiln-level supply functions
described above. For kilns located at plants owned by small commercial firms, EPA
2In addition, several versions of an econometric model of the demand for lime were estimated to verify the
choice of demand elasticity (RTI, 2003). The results of the econometric analysis are generally supportive of
the elasticity magnitudes used for the EIA, with none of the specifications tested resulting in elasticity
estimates outside the range used in the sensitivity analysis presented in Appendix B.
4-4
-------
estimated kiln-specific costs and aggregated across the kilns located at each plant to get plant-
specific compliance costs. However, there were insufficient resources to estimate plant-level
costs for plants owned by large companies. Absent engineering determination of kiln-
specific applicability of controls, the computer model randomly determines which controls
each kiln owned by a large company faces based on rates of applicability determined by the
engineering analysis. The model estimates the impact variables through multiple simulations
given different random assignments of applicability.3 The Agency conducted 35 independent
simulations and averaged across those simulations to provide a measure of the total
compliance costs expected to fall on large firms. There is uncertainty about the actual
outcome for a given kiln because of the uncertainty associated with the applicability of
compliance costs. In each simulation, a given kiln either receives each type of control costs
or not based on the probability of the kiln getting that cost. The average results across all
simulations will then be a measure of the average outcome, but the actual outcome for a
given kiln will differ from this average because in actuality, each kiln will either get all of the
costs associated with a particular control or none of them. They will not actually get costs
equal to the average cost. Thus, rather than modeling individual kilns or plants for large
firms, EPA applied the average total compliance costs falling on large firms as estimated in
the simulation model to a single aggregate supplier representing all large firms. Although
there is a great deal of uncertainty about whether an individual kiln will incur compliance
costs, the total costs borne by all large firms can be estimated fairly accurately based on the
percentage of the total population expected to incur each type of compliance cost.
4.3 Economic Impact Results
The theory presented above suggests that producers attempt to mitigate the impacts of
higher-cost production by shifting the burden on to other economic agents to the extent the
market conditions allow. We would expect the model to project upward pressure on prices
for lime as producers reduced domestic output rates in response to higher costs. Unaffected
foreign production (imports) would increase in response to higher prices. Consumption rates
(domestic and exports) would be expected to fall. These interacting market adjustments
determine the social costs of the regulation and its distribution across stakeholders (producers
and consumers).
3A kiln is affected by the control if the random number indicator (Rj) is less than or equal to the applicability
percentage (N%). Additional information on controls and applicability are presented in Section 3.
4-5
-------
4.3.1 National Market-Level Impacts
The increased cost of production due to the regulation is expected to increase the
price of lime and reduce production/consumption from baseline levels. The level of increase
depends on the responsiveness of consumers and producers to changes in price, measured by
market demand and supply elasticities. As shown in Table 4-1, the price of lime increases
2.1 percent. Although the demand curve facing an individual firm operating in a perfectly
competitive market is expected to be perfectly elastic, implying the firm has no ability to
raise its price without losing all of its customers, the market demand curve for lime is not
perfectly elastic. An increase in the price of lime may decrease the quantity of lime that
buyers are willing to purchase, but it is not expected to cause them to stop purchasing lime
altogether. This expectation was verified through econometric estimation of the market
demand elasticity (RTI, 2003). Thus, while individual firms in a perfectly competitive
market have no ability to unilaterally increase their price, the market price they receive will
change in response to changes in market conditions, such as an increase in the cost of
producing lime.
It should be noted that the economic and social cost impacts described below are
overestimates of the impacts for today's action, for they reflect the higher cost estimates
associated with the proposed rule. For more information on the costs of the final rule, please
refer to the public docket (at www.epa.gov/edocket) or examine the cost memos at
http://www.epa.gov/ttn/atw/lime/limepg.html.
Production by small firms declines by 373,000 metric tons (Mt) and large firm
production increases by 34,000 Mt, for a net decline in domestic production of 339,000 Mt,
or 2.0 percent. Imports increase by 29,000 Mt, or 15.4 percent, resulting in a net decline in
the quantity of lime available of 310,000 Mt (1.8 percent). Although foreign lime suppliers
clearly gain under this regulation, imports of lime account for such a small share of the U.S.
lime market in the baseline that even a fairly large percentage increase in imports results in
only a small increase in the quantity of lime imported. The fact that imports account for such
a small share of the U.S. lime market implies that transportation costs are too high for
imported lime to be competitive in the majority of the U.S.
In addition to some substitution of imported lime for domestic lime, it is expected that
there would be some substitution towards lime substitutes in response to an increase in the
price of lime. There are substitutes for lime in many of the markets in which it competes,
such as crushed limestone, caustic soda, soda ash, and other products, although none of these
products is a perfect substitute. Potential substitution is not explicitly quantified in this
4-6
-------
Table 4-1. National-Level Market Impacts of the Lime Manufacturing MACT: 1997
Price ($/metric ton)
Quantity (metric tons/yr)
Domestic
Large
Small
Imports
Baseline
$56.60
16,937,000
16,751,000
14,098,690
2,652,310
186.000
Change
Absolute
$1.17
-310,146
-338,867
34,243
-373,110
28.721
Relative
2.1%
-1.8%
-2.0%
0.2%
-14.1%
15.4%
report because of insufficient data, although the sensitivity analysis shows the effects of
assuming a more elastic demand response, which is one way of reflecting the influence of
close substitutes.
4.3.2 National Industry-Level Impacts
Revenue, costs, and profitability of the directly affected industry also change as prices
and production levels adjust to increased costs associated with compliance. For domestic
lime producers, pre-tax earnings are projected to decrease by $0.8 million (1997$) (see Table
4-2). These losses are the net result of three effects:
• Increased revenue ($0.1 million)—small revenue increases resulting from
increases in the price of lime are offset by reductions in revenue resulting from
output declines.4
• Reductions in production costs as output declines ($18.0 million)—production
costs fall as firms reduce their output, reducing expenditures on inputs that vary
with output.
4The fact that the estimated change in revenue is almost exactly equal to zero is driven by the assumption that
the supply elasticity is equal to one. Given this elasticity, equilibrium price and quantity change by the same
percentage in opposite directions, leaving total industry revenue essentially unchanged. Alternative versions
of the model were estimated with different supply elasticities. The quantitative results differ somewhat
depending on the elasticities chosen, but the major qualitative implications are very similar across models.
4-7
-------
Table 4-2. National-Level Industry Impacts of the Lime Manufacturing MACT (1997$)
Change
Domestic Commercial Plants Owned by Large Firms
Revenue ($106/yr)
Costs ($106/yr)
Control3
Production
Pre-Tax Earnings ($106/yr)
Domestic Commercial Plants Owned by Small Firms
Revenue ($106/yr)
Costs ($106/yr)
Control3
Production
Pre-Tax Earnings ($106/yr)
Domestic Commercial Plants, Total
Revenue ($106/yr)
Costs ($106/yr)
Control3
Production
Pre-Tax Earnings ($105/yr)
Domestic Captive Plants
Pre-Tax Earnings ($ 1 06/yr)b
Foreign Commercial Plants
Re venue ($106/yr)
Costs ($106/yr)
Control3
Production
Pre-Tax Earnings ($106/yr)
Baseline
$798.0
$742.1
$0.0
$742.1
$55.9
$150.1
$141.6
$0.0
$141.6
$8.6
$948.1
$883.7
$0.0
$883.7
$64.4
NA
$10.5
$9.8
$0.0
$9.8
$0.7
Absolute
$18.5
$16.6
$14.6
$1.9
$1.9
-$18.4
-$16.6
$3.1
-$19.9
-$1.9
$0.1
$0.0
$18.0
-$18.0
$0.0
-$0.8
$1.9
$1.6
$0.0
$1.6
$0.2
Relative
2.3%
2.2%
NA
0.3%
3.5%
-12.3%
-11.7%
NA
-14.1%
-22.1%
0.0%
0.0%
NA
-2.0%
0.1%
NA
17.8%
16.8%
NA
16.8%
31.8%
NA = Not available.
"Estimate of control costs after market adjustments.
bChange in pre-tax earnings is equal to the engineering cost estimate.
4-8
-------
• Increased control costs ($18.0 million)—we have assumed total annual ,
compliance costs vary with the level of output. As noted above, although
expenditures on compliance capital may not vary directly with output,
maintenance and compliance equipment depreciation are expected to be a function
of output. Therefore, the compliance costs being incurred with regulation are
smaller than the engineering compliance costs input into the model ($22.4
million) both because output declines due to regulatory costs as well as the two
projected firm closures (because those firms choose to shut down rather than incur
compliance costs).
The national-level results also provide insight into distributional impacts of the rule
among different producers. Small firm pre-tax earnings are projected to decline by $1.9
million, or 22.1 percent, while large firms experience a $1.9 million increase in pre-tax
earnings (3.5 percent). Captive firms have reductions in earnings of $0.8 million (based on
the assumption that they absorb all compliance costs they incur). In contrast, foreign
producers gain approximately $0.2 million as they benefit from higher lime prices but do not
incur compliance costs.
Although the economic analysis to this point projects a net decline in small
commercial plant pre-tax earnings, we want to emphasize this result should not be interpreted
to suggest all of these plants experience profit losses. As shown in Table 4-3, several plants
will become more profitable. These plants have lower average per-unit compliance costs
($0.63 per metric ton) than plants that become less profitable or close (>$2.00 per metric
ton).
4.3.3 Closure Estimates
Plant-level control cost and production data were available for small firms and the
Agency modeled plant-level supply decisions and closure decisions for these plants (see
Appendix A). Unfortunately, supply from large firms could only be characterized by an
aggregate producer because of limited data and the uncertainty surrounding plant-specific
compliance costs. Therefore, we limited the assessment of potential for closures to small
commercial lime plants. For these plants, the Agency evaluated the economic impacts of the
rule using two different assumptions regarding firm choices and market feedbacks. These
assumptions and the results of the analysis are described below.
4-9
-------
Table 4-3. Distributional Impacts on Facilities Owned by Small Lime Manufacturers
Facilities
Lime production
Total (1 03 metric tpy)
Average (metric tons/facility)
Compliance costs
Total ($1 06/yr)
o Average ($/metric ton)
Change in pre-tax earnings ($lD6/yr)
Less
Profitable
6
1,287,091
214,515
$2.80
$2.f8
-$1.3
More
Profitable
6
1,005,351
167,558
$0.64
$0.63
$0.5
Closure
2
359,869
179,934
$3.33
$9.26
-$1.2
Total
14
2,652,310
1 89,451
$6.77
$2.55
-$1.9
-------
The first approach assumes affected producers have very limited choices and cannot
adjust production rates in response to higher production costs. They fully absorb these costs
resulting in a one-to-one reduction in pre-tax earnings. If the additional compliance costs
associated with the rule reduce a plants' pre-tax earnings below zero, the lime producer
ceases their operations. The Agency developed quantitative estimates of closure impacts
under this assumption by computing the ratio of annual compliance costs to baseline lime
revenue and comparing these ratios to the average industry profit margin of 5.7 percent. As
shown in Table 4-4, two small commercial lime plants have ratios exceeding 5 percent, and
thus may potentially close under both alternatives.
The second approach relaxes the constraint on producer choices and assumes
producers and consumers adjust production/consumption levels to new optimal rates
consistent with changes in production costs and market prices. Just as for the full-cost
absorption scenarios described above, the closure criteria used are based on whether pre-tax
earnings are projected to be positive or negative after regulation. The economic analysis
concludes that two of the 14 plants owned by small firms may close, which is the same
conclusion reached using a full-cost absorption assumption. The average control costs for
these plants are $9.26 per metric ton of lime. The average cost-to-sales ratio for these plants
is far higher than the average profit ratio reported for the industry (>8 percent). Although the
estimated increase in market price would enable the plants to pass some of the costs on to
consumers, those two plants are still expected to have negative pre-tax earnings if they were
to comply with the regulation. Therefore, the Agency expects that these plants would choose
to cease operations rather than comply.
Estimates of plant closures are sensitive to the accuracy of the baseline
characterization of these entities (i.e., revenue and costs of production, and costs of
compliance with the rule). Although the Agency employed the best data available, we
acknowledge critical parameters for these analyses are based on'industry-level accounting
data (i.e., profit rates) and/or assumed values (i.e., supply elasticity). These limitations
should be considered when interpreting the results. Appendix B contains a sensitivity
analysis showing the effects of varying key parameters on the results.
4.3.4 Employment Impacts
Reduction in domestic production leads to changes in industry employment. These
changes were estimated by multiplying the change in domestic production by census data on
industry employment:
4-11
-------
Table 4-4. Full-Cost Absorption Analysis for Small Commercial Lime Plants
Total number of plants
Total annual compliance
costs (TACC)
Average (TACC) per plant
14
$6,772,475
$483,748
Plants
Compliance costs are 0% of
lime only sales
Compliance costs are <1 % of
lime only sales
Compliance costs are 1 % to
3% of lime only sales
Compliance costs are 3% to
5% of lime only sales
Compliance costs are >5% of
lime only sales
Number
0
1
6
5
2
Share
0.0%
7.1%
42.9%
35.7%
1 4.3%
Compliance cost-to-sales ratios (CSRS)
Mean
Median
Minimum
Maximum
4.7%
2.7%
0.9%
28.4%
Note: Annual costs are in 1997$
-------
AE,= [AQ/Q]. EO (4.2)
Domestic employment is projected to decline by 98 employees (full-time equivalents
[FTEs]).
4.3.5 Social Costs
The value of a regulatory action is traditionally measured by the change in economic
welfare that it generates. The regulation's welfare impacts, or the social costs required to
achieve environmental improvements, will extend to consumers and producers alike.
Consumers experience welfare impacts due to changes in market prices and consumption
levels associated with the rule. Producers experience welfare impacts resulting from changes
in pre-tax earnings corresponding with the changes in production levels and market prices.
However, it is important to emphasize that this measure does not include benefits that occur
outside the market, that is, the value of reduced levels of air pollution with the regulation.
The economic analysis accounts for behavioral responses by producers and consumers
to the regulation (i.e., shifting costs to other economic agents). This approach provides
insights into the way in which the regulatory burden is distributed across stakeholders. As
shown in Table 4-5, the economic model estimates the total social cost of the rule of $20.3
million (1997$). As a result of higher prices and lower consumption levels, consumers
(domestic and foreign) are projected to lose $19.7 million. Domestic producer surplus
declines by $0.8 million. Foreign producers unambiguously gain as a result of the regulation
with profit increasing by $0.2 million. These foreign producers benefit from the higher prices
associated with additional control costs on domestic producers and the fact that they do not
have to incur the costs.
The majority of costs associated with the Lime Manufacturing MACT are passed on
to consumers. This distribution depends in part on the elasticities selected for the analysis,
but is also being caused by the projected facility closures. The result of the firm closures is
an increase in price for all remaining firms that more than offsets the loss in earnings for the
firms that shut down, at least for the range of this analysis.
4.4 Energy Impacts
EO 13211, "Actions Concerning Regulations that Significantly Affect Energy Supply,
Distribution, or Use" (66 Fed. Reg. 28355, May 22, 2001), requires federal agencies to
estimate the energy impact of significant regulatory actions. Thus, a screening analysis
4-13
-------
Table 4-5. Distribution of Social Costs Associated with the Lime Manufacturing MACT
(million 1997$/yr)
Change in Consumer Surplus -$19.7
Domestic -$19.5
Foreign -$0.2
Change in Producer Surplus -$0.6
Domestic
Commercial <$0.1
Large -$1.9
Small -$1.9
Captive3 -$0.8
Foreign $0.2
Total Social Cost -$20.3
" Assumed to be equal to the engineering cost estimates.
was conducted to determine the magnitude of the rule's impact on energy consumption. In
this analysis, we provide quantitative estimates of the projected changes in energy use due to
• expected changes in the pollution abatement equipment used in the lime
manufacturing industry (e.g., substitution of fabric filters for wet scrubbers) and
• declines in lime production due to the increased costs of production.
These impacts are then compared with thresholds used to define "significant energy actions"
under EO 13211.
4.4.1 Changes in Lime Manufacturing Energy Consumption
To assess the potential energy impacts associated with the rule, baseline energy
consumption data reported by the 1994 Manufacturing Energy Consumption Survey (DOE,
1999) were collected for the lime industry (SIC 3274).5 As shown in Table 4-6, the lime
industry uses approximately 66.15 kWh of electricity, 0.02 barrels of petroleum, 689.67 cubic
feet of natural gas, and 0.19 metric tons of coal and coke per metric ton of lime. The
5The Energy Information Administration recently published 1998 survey data. However, the available
consumption data for 1998 are not sufficiently disaggregated to identify usage specific to the lime industry.
4-14
-------
Table 4-6. Energy Usage in the Lime Manufacturing Industry (1994)
Industrial Sector
Electricity (kWh)
Petroleum (bbls)
Natural gas (cu. ft.)
Coal and coke (metric tons)
Energy Usage
1,151,000
361,000
12,000,000
3,375,000
Energy Use per Metric Ton of
Lime Produced8
66.15
0.02
689.67
0.19
a Based on 17,400,000 metric tons of lime sold and used.
Source: Miller, M.M. 2000b. Minerals Yearbook: Lime-1998. . Last updated December 22, 2000.
U.S. Department of Energy, Energy Information Administrations. 1999. 1994 Manufacturing Energy
Consumption Survey (MECS): Table Al.
. Last updated May 26, 1999.
economic model described in Section 4.2 projects a decline in annual domestic lime
production of approximately 340,000 metric tons. Based on this projected reduction in lime
production and the values for average energy use per metric ton of lime provided in
Table 4-6, EPA estimated the change in energy use expected to result from the lime
manufacturing NESHAP.
In addition to the reductions in energy use implied by declines in lime output, the rule
is expected to increase electricity consumption due to changes in air pollution controls on
lime kilns. Existing sources are likely to replace existing wet scrubbers with Venturi wet
scrubbers to comply with the rule. Engineering analysis suggests electricity use by existing
sources would increase by 7.2 million kWh per year under the rule due to this substitution
between types of wet scrubbers. New sources are projected to consume an additional 0.066
million kWh per year under the regulation.
Summing the impacts on energy markets due to projected output reductions and
changes in compliance equipment yields the projected changes in energy use provided in
Table 4-7. Clearly, the changes in energy consumption expected to occur under this rule fall
far below the thresholds for significance under EO 13211 in every case.
4-15
-------
Table 4-7. Significant Energy Action Impact Analysis
Energy Sector
Crude Oil (barrels per day)
Fuel (barrels per day)
Electricity (billion kWh per year)
Coal (million metric tons per year)
Natural Gas (billion cu. ft. per year)
Threshold
> 10,000
>4,000
>1
>5.5
>25
Change
-60.4
-19.3
-0.02
-0.07
-0.23
Significant?
No
No
No
No
No
Source: Miller, M.M. 2000b. Minerals Yearbook: Lime-1998. . Last updated December 22, 2000.
U.S. Department of Energy, Energy Information Administration. 1999. 1994 Manufacturing Energy
Consumption Survey (MECS): Table Al.
. Last updated May 26, 1999.
4.4.2 Assessment
Although the rule leads to declines in energy use, impacts on energy markets are all
well below thresholds used to define "significant energy action." Therefore, the Agency
concludes that the rule is not a "significant energy action" as defined in EO 13211, "Actions
Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use" (66
Fed. Reg. 28355 [May 22, 2001]).
4-16
-------
SECTION 5
SMALL BUSINESS FLEXIBILITY ANALYSIS
Section 1 12 of the CAA requires the Agency to list categories and subcategories of
major sources, and, in some cases, area sources of HAP and to establish national emission
standards. Lime manufacturing facilities that are major sources are included on the list of
source categories. Lime production leads to emissions of PM, including metals; HC1; and
gaseous pollutants, including CO, CO2, SO2, and NOX. The rule is primarily intended to
demonstrated to cause adverse health effects. Therefore, the objective of the rule is to
protect air quality and promote public health by applying MACT standards to all major
sources in this source category. The criteria used to establish MACT are contained in section
1 12 (d) of the CAA.
This regulatory action will potentially affect the economic welfare of owners of lime
kilns. These individuals may be owners/operators who directly conduct the business of the
.firm or, more commonly, investors or stockholders who employ others to conduct the
business of the firm on their behalf through privately held or publicly traded corporations.
The individuals or agents who manage these facilities have the capacity to conduct business
transactions and make business decisions that affect the facility. The legal and financial
responsibility for compliance with a regulatory action ultimately rests with plant managers,
but the owners must bear the financial consequences of the decisions. Although
environmental regulations can affect all businesses, small businesses may have special
problems complying with such regulations.
The Regulatory Flexibility Act (RFA) of 1980 requires that special consideration be
given to small entities affected by federal regulations. The RFA was amended in 1996 by the
Small Business Regulatory Enforcement Fairness Act (SBREFA) to strengthen its analytical
and procedural requirements. Under SBREFA, the Agency must perform a regulatory
flexibility analysis for rules that will have a significant impact on a substantial number of
small entities.
5-1
-------
The Agency has prepared this Small Business Flexibility Analysis (SBFA) to
examine the impact of the rule on small entities within this source category along with
regulatory alternatives that could reduce that impact. As detailed in this section, EPA
identified the businesses that this rule will affect and conducted an econpmic analysis to
determine whether this rule is likely to impose a significant impact on a substantial number
of the small entities (SISNOSE) within this industry. The screening analysis employed here
is a "sales test" that computes the annualized compliance costs as a share of sales for each
company. In addition, the SBFA provides information about the impacts on small businesses
using a market analysis that accounts for behavioral responses to the rule and the resulting
changes in market prices and output.
As required by Section 609(b) of the RFA, as amended by SBREFA, the Agency
convened a Small Business Advocacy Review (SBAR) panel to obtain advice and
recommendations of'representatives of the small entities that potentially would be subject to
the rule's requirements. Prior to convening the SBAR panel, EPA conducted a sales test for
small businesses based on earlier provisions considered for inclusion in the current rule. The
results of that analysis indicated much more significant impacts on small entities than the
current rule. The reduction in impacts is a direct result of the SBAR panel's
recommendations incorporated in this rule.
5.1 Identifying Small Businesses
In October 2000, the Small Business Administration (SB A) released guidelines that
provide small business definitions based on NAICS codes that replace the previous
definitions based on SIC codes. Under these new guidelines, the SBA classifies firms in the
lime manufacturing industry (NAICS 32741) as small if they have fewer than 500
employees. For firms that primarily operate in other industries, but produce lime as one of
their lines of business (e.g., for captive use), the small business criteria differs. For beet
sugar producers and steel mills, the definition of a small business is one with fewer than 750
employees and 1,000 employees, respectively. As described in Section 2, the Agency has
identified 19 of the 45 lime companies as small businesses based on these SBA size
definitions. These small companies owned and operated 21 lime plants in 1997.
5.2 Screening-Level Analysis
To assess the potential impact of this rule on small businesses, the Agency calculated
the share of annual compliance costs relative to baseline sales for each company. Annual
compliance costs include annualized capital costs and operating and maintenance costs
5-2
-------
imposed on these companies.1 When a company owns more than one affected facility, EPA
combined the costs for each facility owned by that company to generate the numerator of the
cost-to-sales ratio. Given the uncertainty of company-specific cost data for large firms, EPA
compared the total annual compliance costs for large firms with total sales of large firms
(reported in Section 2). This type of analysis does not consider interaction between
producers and consumers in a market context. Therefore, it likely overstates the impacts on
producers and understates the impacts on consumers because it does not consider potential
increases in the price of lime.
It should be noted that the small business impacts described below are overestimates
of the impacts for today's action, for they reflect the higher cost estimates associated with the
proposed rule. For more information on the costs of the final rule, please refer to the public
docket (at -www.epa.gov/edocketlQr examine me ^^ cost memos thjtt aie avjEflable at
http://www.epa.gov/ttn/atw/lime/lirnepg.html.
5.2.1 Small Business Costs
Small businesses are expected to incur about 31 percent of the. total industry
compliance costs of $22.4 million (1997$) (see Table 5-1). The average total annual
compliance cost is projected to be $358,000 per small company. The mean (median) cost-to-
sales ratio for the 19 small businesses is 1.6 percent (0.9 percent), with a range of 0 to 8.3
-pereent. r-EPA-estimates4hat £ -of- 4he-l§-smaltbusinesses (4Zpercent)jexperiencje-aiwmpact,
greater than 1 percent of sales. Four firms (21 percent) have costs greater than 3 percent of
sales. In contrast, the total annual compliance costs for large firms are approximately
0.01 percent of total company sales.
Similar analysis of earlier provisions under consideration for inclusion in this rule
indicated much greater impacts on small businesses than the current rule. In draft versions of
this rule, the average total annual compliance cost was about $567,000 per small company
and the mean (median) cost-to-sales ratio for the 19 small businesses was 2.6 percent (3.0
percent). The Agency estimated that 1 1 small businesses (58 percent) would experience an
impact greater than 1 percent of sales and 10 small businesses (53 percent) would experience
impacts greater than 3 percent of sales. The reduction in small business costs between earlier
'Annualized capital costs include purchased equipment costs (PEC), direct costs for installation (DCI), and
indirect costs for installation (ICI) related to engineering and start up. Operating and maintenance costs
include direct annual costs (DAC), such as catalysis replacement, increased utilities, and increased labor,
and indirect annual costs (IAC), such as costs due to tax, overhead, insurance, and administrative burdens.
5-3
-------
Table 5-1. Summary Statistics for SBREFA Screening Analysis (1997$)
Total Number of Companies
Total Annual Compliance Costs (TACC) ($106/yr)
Average TACC per company
Companies with Sales Data
Compliance costs are 0% of company sales
Compliance costs are < 1 % of company sales
Compliance costs are 1% to 3% of company
sales
Compliance costs are ^3% of company sales
Compliance Cost-to-Sales Ratios
Average
Median
Maximum
Minimum
NA.- not.available , • , .• .
Small
19
$6.8
$358,000
19 (100.0%)
6 (31.6%)
4(21.1%)
•5 (26.3%)
4 (21.1%)
1.6%
0.9%
8.3%
0.0%
1
1
Large
26
$15.6
$592,000
26 (100.0%)
NA
NA
NA
NA
1 0.01%
NA
NA
NA
Note: Assumes no market responses (i.e., price and output adjustments) by regulated entities.
versions of this rule and the final rule are attributable to EPA's outreach and accommodation
for small firms, which includes the conduct of the SBAR panel.
«
5.3 Economic Analysis
The Agency also analyzed the economic impacts on small businesses under with-
regulation conditions expected to result from implementing the NESHAP. Unlike the
screening analysis, this approach examines small business impacts in light of the behavioral
responses of producers and consumers to the regulation. As shown in Table 5-2, the
economic model projects pre-tax earnings to decline by about $1.9 million (22.1 percent).
This is the net result of three effects:
• decreased revenue—revenue declines as output declines. This is offset to some
degree by increases in the market price of quicklime (i.e., each ton of lime is sold
5-4
-------
Table 5-2. Small Business Impacts of the Lime Manufacturing MACT (1997$)
Change
Baseline Absolute Relative
Quantity (tons/yr)
Revenue ($106/yr)
Costs ($106/yr)
Control
Production
Pre-Tax Earnings ($106/yr)
NA = Not applicable.
2,652,310
$150.1
$141.6
$0.0
$141.6
•$8.6
•:!----•'-"'.•? '^" • K "-•--•- -"'?- ------ ?:-:^:----.__
-373,110
-$18.4
-$16.6
$3.4
-$19.9
-$1.9
^--.^.-J-'.JkL.- fciU, . =-T_- :; _•_— .._,.-.- _.- —
-14.1%
-12.3%
-11.7%
NA
-14.1%
-22.1%
at a higher market price). However, quantity falls by. a larger percentage than price rises for
small businesses due to a projected plant closure.
• decreased production costs — total production costs decline as output falls.
• increased pollution control costs — although these costs increase with the rule, the
estimated costs after allowing for behavioral adjustments are smaller than those
^es
vary with output. Given that output declines, pollution control costs also decline
relative to the costs estimated by the engineering analysis. In addition, two plants
are projected to close and avoid paying any compliance costs, reducing total
compliance costs compared with those generated under the engineering analysis
described in Section 3.
As highlighted in Section 4, 2 of the 14 commercial plants owned by small firms are
projected to close under both control cost scenarios.
5.4 Assessment
As a result of the SBAR panel, this rule contains a significant number of
accommodations for small businesses. The results presented here confirm that the mitigating
measures employed by the Agency have minimized the potential negative impacts of the rule
on small businesses while satisfying the objectives of the CAA. The share of small
companies affected at or above the 3 percent level has fallen from 53 percent to 21 percent.
5-5
-------
The screening analysis indicates that the average cost-to-sales ratio for small lime
companies is approximately 1.7 percent. There are four small firms with cost-to-sales ratios
above 3 percent. The market analysis shows impacts to small businesses are mitigated to
some degree after considering price and output changes resulting from behavioral responses
of producers and consumers. After allowing for these market adjustments, the economic
model predicts a reduction in pre-tax earnings for small businesses of about 22.1 percent.
Based oil the Quarterly Financial Report for Manufacturing, Mining, and Trade
Corporations (QFK) from the U.S. Bureau of the Census (U.S. Census Bureau, 1998), pre-
tax earnings for all reporting companies within the stone, clay, and glass industry group (of
which lime manufacturing is one component) were approximately 7.0 percent of revenue.
For smaller firms (defined as those with less than $25 million in assets), pre-tax earnings
were 5.7 percent of revenue. Assuming lime manufacturing has profit rates similar to those
reported Wthew
experience impacts larger than their estimated baseline pre-tax earnings from lime
manufacturing under both cost scenarios and are projected to cease operations as a result of
the rule.
We do not anticipate any impacts of the NESHAP on small governments or small
nonprofit organizations. We have no evidence that either small governments or nonprofit
organizations own or operate sources that will be impacted by the NESHAP.
~5.5 l*r^ecteff^ ——
The projected reporting and recordkeeping requirements for these small businesses
include initial notifications, startup notifications, and compliance reports. EPA estimates
that 14 existing facilities owned by small businesses will be impacted by these requirements.
In addition, EPA projects that three new kilns will be added at impacted facilities in the first
three years. The professional skills necessary to complete these reports include the ability to
calculate emissions and read and follow report format guidance. Facilities impacted by this
rule are generally expected to have personnel with the necessary skills because they would
need these skills to comply with other environmental regulations, such as the New Source
Performance Standards (NSPS) for lime plants.
These recordkeeping and reporting requirements are specifically authorized by
section 114 of the CAA (42 U.S.C. 7414) and are consistent with the General Provisions of
40 CFR part 63. All information submitted to EPA for which a claim of confidentiality is
made will be safeguarded according to our policies in 40 CFR part 2.
5-6
-------
5.6 Other Federal Rules That May Impact Lime Manufacturing Facilities
The NSPS for Lime Manufacturing Plants (40 CFR Part 60, Subpart HH) and Non-
Metallic Minerals Processing Plants (40 CFR Part 60, Subpart OOO) may apply to lime
manufacturing plants. In addition, some facilities have been regulated by State air emission
regulations as part of the State Implementation Plan. In general, the requirements for the
NSPS and the NESHAP are either similar and should not need to be duplicated, or the
requirements pertain to different things and could not be combined. However, monitoring
requirements differ between the NSPS and NESHAP. The NSPS (subpart HH) calls for
opacity monitoring on some types of fabric filters; whereas, the NESHAP calls for bag leak
detectors, an issue that was raised during the SBAR panel. In the NESHAP proposal, EPA
will be seeking comments on whether or not opacity monitoring should be an allowable
alternative to bag leak detectors.
5.7 Small Business Mitigation Efforts
As required by section 609(b) of the RFA, EPA conducted outreach to small entities
and convened a SBAR Panel to review advice and recommendations from representatives of
the small entities that potentially would be subject to the proposed rule requirements. The
Panel considered numerous regulatory flexibility options in response to concerns raised by
the SER. The major concerns included the affordability and technical feasibility of add-on
controls. We incorporated several alternatives into the final rule to minimize the impacts on
small businesses while still meeting the objective of the Clean Air Act (CAA). This section
identifies major Panel recommendations and EPA's responses. Detailed discussion of
background materials and recommendations are provided in the Panel report included in the
docket for this rule.
Panel Recommendations and EPA's Responses
• Recommend that the proposed rule should not include the HC1 work practice
standard, invoking section 112(d)(4) of CAA.
• Response: The proposed rule did not include an emission standard for HC1. The
final rule also contains no emission standard for HC1.
• Recommend that in the proposed rule, the MPO in the quarry should not be
considered as emission units under the definition of affected source.
• Response: The MPO in the quarry were excluded from the definition of affected
source in the proposed rule. They are also excluded in the final rule.
5-7
-------
• Recommend that the proposed rule allow for the "bubbling" of PM emissions
from all of the lime kilns and coolers at a lime plant, such that the sum of all
kilns' and coolers' PM emissions at a lime plant would be subject to the PM
emission limit, rather than each individual kiln and cooler.
I
Response: The proposed rule defined the affected source as including all kilns and
coolers (among other listed emission units) at the lime manufacturing plant. This
would allow the source to average emissions from the kilns and coolers for
compliance determination. We have retained this definition in the final rule.
• Recommend that we request comment on establishing a subcategory for existing
kilns that currently have wet scrubbers for PM control because of the potential
increase in SO2 and HC1 emissions that may result in complying with the PM
standard in the proposed rule.
Response: We requested comment on this issue in the proposed rule. Based on the
comments received, we determined that a separate subcategory for scrubber equipped
kilns was not appropriate. More detail on the comments and our decision may be
found in section V. Responses to Major Comments in the preamble.
• Recommend that we undertake an analysis of the costs and emissions impacts of
replacing scrubbers with dry APCD and present the results of that analysis in the
preamble; and that we request comment on any operational, process, product, or
—.--otherJechnical^dfor-spatial^o^
APCD.
Response: We requested comment on these issues in the proposed rule and presented
said analysis. We responded to all comments on these issues in the final rule.
• Recommend that the proposed rule allow a source to use the ASTM HC1 manual
method for the measurement of HC1 for area source determinations.
Response: The proposed rule included this provision. This provision has been
retained in the final rule.
• Recommend that we clarify in the preamble to the proposed rule that we are not
specifically requiring sources to test for all HAP to make a determination of
whether the lime plant is a major or area source, and that we solicit public
comment on related issues.
Response: The preamble of the proposed rule contained this language. In the final
rule, we do not specify that testing for all HAP is required. However, we do not
5-8
-------
specifically say it is precluded because we believe that these determinations are better
made on a case-by-case basis by the permitting authority.
I
• Recommend that we solicit comment on providing the option of using COMS in
place of BLDS; recommend that we solicit comment on various approaches to
using COMS; and recommend soliciting comment on what an appropriate opacity
limit would be.
Response: The preamble of the proposed rule solicited comment on these issues.
The comments and our responses may be found in section V. Responses to Major
Comments of the preamble.
• Recommend that EPA take comment on other monitoring options or approaches,
including the following: using longer averaging time periods (or greater
.,..,.. ,. frequencies of occurrencslfor-demojistrati^
demonstrating compliance with operating parameter limits using a two-tier
approach; and the suitability of other PM control device operating parameters that
can be monitored to demonstrate compliance with the PM emission limits, in lieu
of or in addition to the parameters currently required in the draft rule.
Response: The preamble of the proposed rule solicited comment on these issues.
The comments and our responses may be found in section V. Responses to Major
Comments of the preamble.
gyTefefence of X^fiapers TancTS of The
American Conference of Governmental Industrial Hygienists (ACGIH) Industrial
Ventilation manual be removed from the proposed rule.
Response: The proposed rule did not include this requirement. This requirement is
also not present in the final rule.
• Recommend that EPA reevaluate the assumptions used in modeling the economic
impacts of the standards and conduct a sensitivity analysis using different price
and supply elasticities reflective of the industry's claims that there is little ability
to pass on control costs to their customers, and there is considerable opportunity
for product substitution in a number of the lime industry's markets.
Response: The EIA does include the aforementioned considerations and analyses at
proposal. In addition we have performed additional economic sensitivity analyses for
the final rule.
In summary, to better understand the implications of the rule from the industries'
perspective, we engaged with the lime manufacturing companies in an exchange of
5-9
-------
information, including small entities, during the overall rule development. Prior to
convening the Panel, we had worked aggressively to minimize the impact of the proposed
rule on small entities, consistent with our obligations under the CAA. These efforts are
summarized below.
1. Lime manufacturing operations at beet sugar plants, of which three are small
businesses, will not be affected sources.
2. Lime manufacturing plants that produce hydrated lime only will not be affected
sources as well.
3. We proposed PM emission limits which allow the affected source, including
small entities, flexibility in choosing how they will meet the emission limit. And
in general, the emission limitations selected are all based on the MACT floor, as
~~""rv~"n^ An
emission limit for mercury was rejected since it would have been based on a
beyond-the-MACT-floor control option.
4. We proposed that compliance demonstrations for PSH operations be conducted
monthly rather than on a daily basis. This reduced the amount of records needed
to demonstrate compliance with the rule when implemented.
5. Furthermore, we proposed the minimum performance testing frequency (every 5
years), mohiiorihg, recordkeeping, and reporting requirements specified in the
general provisions (40 CFR part 63, subpart A).
6. Finally, many lime manufacturing plants owned by small businesses will not be
subject to the standards because they are area sources.
Comments on the Economic Impact Analysis Related to Small Business Concerns
We also received several comments on the economic analysis for the proposed rule.
The majority of these comments related to the analysis in general, rather than the initial
regulatory flexibility analysis. Two comments that specifically addressed small business
concerns follow.
Comment: One commenter claimed that EPA did not perform a sufficient sensitivity
analysis of different price and supply elasticities in the EIA as recommended in the Panel's
final report.
5-10
-------
Response: We estimated the market supply and demand elasticities for lime. The
values from the preferred model for 1997 are very close to the primary elasticities used in the
main text of the EIA for the rule and are well within the range of elasticities used in the
sensitivity analysis in Appendix B of the EIA for the rule. In addition to the preferred model,
numerous alternative models were estimated. As with any modeling exercise, there were
some differences in results across different model specifications. However, the results were
generally similar across specifications and there were no cases in which the estimated supply
or demand elasticity fell outside the ranges currently used in the Appendix B sensitivity
analysis included in the EIA. Thus, the current analysis adequately responds to SBREFA
panel recommendations that a reasonable sensitivity analysis be employed and the empirical
evidence is supportive of the current scenario presented in the main text;.
Comment: Onecommenter claims that although EPA has indicated its rule will have
larger impacts on small businesses than large ones, the disparity is even greater than EPA
estimates. The reductions in pre-tax earnings presented in the EIA understate losses for
small firms because the costs of implementation will be higher than EPA estimates and the
price of lime will not increase. They also state that even if only 2 to 3 of the 14 small lime
firms close, that would still be closure of 14 percent to 21 percent of the small lime firms in
the domestic industry. This seems to be such a significant economic impact that it should
encourage the EPA to seriously consider additional ways to minimize the impact on small
businesses^
Response: It is unclear what the basis for the first part of this comment is (it seems
the same claims about understating impacts on earnings they are making for small firms
would also apply to large firms). As far as the second part, to the extent that actual costs
differ from EPA estimates, it is possible that the actual losses experienced by firms will be
higher or lower than presented in the EIA. However, the costs of implementation currently
used for analysis reflect EPA's best estimate of actual costs. The assertion that lime prices
cannot increase in response to an increase in production costs is not credible (see comments
above).
We also disagree that the number of small firms at risk of closure, 2 to 3, can be
considered a significant number in the context of SBREFA. In any case, EPA has seriously
considered ways to minimize the impact on small businesses based on comments from
industry and has substantially reduced the costs of this rule relative to the draft of the rule we
were considering prior to the small business advocacy review panel. As previously
discussed, EPA, along with the Small Business Administration and the Office of
5-11
-------
Management and Budget, convened a panel under the authority of SBREFA to talk with
small business representatives on how to mitigate potential impacts to small businesses
associated with the lime manufacturing NESHAP. This panel yielded a report that included
many recommendations on how potential impacts to small businesses from this proposal
could be mitigated. Most of these recommendations are reflected in the final rule. The only
suggested change we did not incorporate in this final rule was a subcategory for existing
kilns with wet scrubbers, since there is no factual or legal basis to justify such a subcategory.
As discussed above, creating this subcategory would be in direct conflict with the
requirement of section 112 (d)(3) of the CAA that major sources of HAP control HAP
emissions at least as well as the average of the best 6 percent of existing best performing
sources.
5-12
-------
REFERENCES
American Business Information, Inc. (ABI). 1997. Electronic database of selected plant
information purchased by RTI.
Boynton, Robert S. 1980. Chemistry and Technology of Lime and Limestone. 2nd Ed. New
York: John Wiley & Sons.
Caldwell, Lawrence G. 1998. Multi-Router Inc. teleconference with Jean Domanico,
Research Triangle Institute. Coke production.
..- v:---^-afE-jr.^±-^=y*!p*»t;**^"^^
Dun & Bradstreet, Inc. 2000. D&B Business Rankings 2000. Bethlehem, PA: Dun&
Bradstreet.
Gale Group. 1999. Ward's Business Directory of U.S. Private and Public Companies.
Volume 1. Detroit: Gale Group.
Greenwald, Douglas. 1984. The Concise McGraw-Hill Dictionary of Modern Economics:
A Handbook of Terms and Organizations. New York, NY: McGraw-Hill Book
Gutschick, K.A. 1994. "Lime and Limestone." Kirk-Othmer Encyclopedia of Chemical
Technology. 4th Ed. p. 319-359. Vol.15. New York: John Wiley & Sons.
Ho, M., and Jorgenson, D. 1998. "Modeling Trade Policies and U.S. Growth: Some
Methodological Issues." Presented at USITC Conference on Evaluating APEC Trade
Liberalization: Tariff and Nontariff Barriers. September 11-12,1997.
.
Hoover's Online, .
Information Access Corporation. 1997. 1997 Business and Industry ASAP. Electronic
database.
Lycos Small Business, .
R-l
-------
Midwest Research Institute (MRI). 1994. Emission Factor Documentation for AP-42,
Section 11.15, Lime Manufacturing. Prepared for U.S. Environmental Protection
Agency, Office of Air Quality Planning and Standards, Emission Inventory Branch.
Gary, NC, Midwest Research Institute. I
Miller, M.M. 1994. Minerals Information: Lime. Reston, VA: U.S. Department of the
Interior, U.S. Geological Survey.
Miller, M.M. 1995. Minerals Information: Lime. Reston, VA: U.S. Department of the
Interior, U.S. Geological Survey.
Miller, M.M. 1996a. Mineral Commodity Summaries: Lime. Reston, VA: U.S.
Department of the Interior, U.S. Geological Survey.
-Miller, M;M. 1996b. Minei^s ibifQrmatiQn! Lime^-Reston, VA: UiSrDepaFtmeafcef4he-
Interior, U.S. Geological Survey, .
I
Miller, M.M. 1996c. Minerals Information: Lime Statistical Compendium. Reston, VA:
U.S. Department of the Interior, U.S. Geological Survey.
Miller, M.M.. 1997. U.S. Geological Survey, teleconference with Muth, Mary, Research
Triangle Institute. Discussion of lime industry.
Miller, M.M. 1999a. Minerals Information: Lime. Reston, VA: U.S. Department of the
Interior, U.S. Geological Survey. .
Miller, M.M. 1999b. Minerals Yearbook: Lime. Reston, VA: U.S. Department of the
Interior, Geological Survey, .
Miller, M.M. 2000a. Minerals Yearbook: Lime-1997. . Last updated December 22,2000.
Miller, M.M. 2000b. Minerals Yearbook: Lime-1998. . Last updated December 22,2000.
Miller, M.M. 2000c. Minerals Yearbook: Lime-1999. Last updated December 22,2000.
R-2
-------
Miller, M.M. 2000d. December 21,2000. Personal communication with Robert Beach,
Research Triangle Institute. Total quicklime production.
Nicholson, W. 1998. Microeconomic Theory, 7th edition. Chicago: Dryden Press.
Reference USA. 2000. InfoUSA Resource, .
Research Triangle Institute (RTI). 1996. Memorandum from Cole, Jeffrey, Research
Triangle Institute, to Joseph Wood, U.S. Environmental Protection Agency. August
19,1996. Model kilns for lime manufacturing industry-non-CBI version.
Research Triangle Institute (RTI). 1997. Memorandum from Brockmann, Cybele, Research
Triangle Institute, to Joseph Wood, U.S. Environmental Protectipn Agency.
December 3,1997. Memo on models for new kilns.
RTI international (RTl). 2003. Memorandum fronrBeach, £6bert, RTl, to Larry Sorrels,
U.S. Environmental,Protection Agency. April 21, 2003. Lime Manufacturing
Industry Supply and Demand Elasticities.
Sauers, D., N. Beige, Sr., and D. Smith. 1993a. "Comparing Lime Kilns. Part Four:
Product Quality and Fuel Types." Rock Products 96(6):53-56.
Sauers, D., N. Beige, Sr., and D. Smith. 1993b. "Comparing Lime Kilns. Part One:
Introduction." Rock Products 96(3):47-50.
Seeger, Arline, National Lime Association to Tom Kelly, EPA, June 25,2001.
Correspondence.
U.S. Bureau of the Census. 1998. Quarterly Financial Report for Manufacturing, Mining,
and Trade Corporations. First Quarter, Series QFR 98-1. Washington, DC:
Government Printing Office.
U.S. Department of Commerce, Bureau of Census. 1996. 1994 Annual Survey of
Manufactures. M94(AS)-1. Washington, DC: Government Printing Office.
U.S. Department of Commerce, Bureau of Census. 1997. 1995 Annual Survey of
Manufactures. M95(AS)-1. Washington, DC: Government Printing Office.
U.S. Department of Commerce, Bureau of the Census. 1999a. 1996 Annual Survey of
Manufactures. Washington, DC: Government Printing Office.
R-3
-------
U.S. Department of Commerce, Bureau of the Census. 1999b. 7997 Census of
Manufacturing, Manufacturing Industry Series—Lime Manufacturing. EC97M-
3274A. Washington, DC: Government Printing Office.
U.S. Department of Commerce, Bureau of the Census. 1999c. 1997 Census of
Manufactures, Industry Series—Concrete, Plaster, and Cut Stone Products.
Washington, DC: Government Printing Office.
U.S. Department of Energy, Energy Information Administrations. 1999. 1994
Manufacturing Energy Consumption Survey (MECS): Table Al.
.
U.S. Environmental Protection Agency (EPA). 1995. 17 "Lime Manufacturing." AP-42,
5th Ed., Vol. 1, Chapter 11. Mineral Products Industry. Research Triangle Park, NC:
Office of Air Quality Planning and Standards.
U.S. Environmental Protection Agency (EPA). 1996. Memorandum from Wood, Joseph P.,
U.S. Environmental Protection Agency, to Chappell, Linda M., U.S. Environmental
Protection Agency. November 6,1996. Engineering industry profile for the
economic analysis.
U.S. Environmental Protection Agency (EPA). 1997. Memorandum on models for new
kilns. December 3,1997.
U.S. Environmental Protection Agency (EPA). 1999a. Economic Analysis of Air Pollution
Regulations: Portland Cement. Research Triangle Park, NC: U.S. Environmental
Protection Agency.
U.S. Environmental Protection Agency (EPA). 1999b. OAQPS Economic Analysis
Resources Document. Durham, NC: Innovative Strategies and Economics Group.
U.S. Environmental Protection Agency (EPA). 2000. Memorandum from Joseph Wood,
EPA, to Lime Manufacturing Industry NESHAP Docket. July 13,2000. National
costs and environmental impacts for the proposed lime manufacturing NESHAP.
R-4
-------
U.S. Environmental Protection Agency (EPA). 2002. Memorandum from James Crowder,
EPA, to Ron Evans, EPA, November 6,2002. Cost inputs for economic impacts
analysis for the lime industry NESHAP.
Wood, Joe, EPA to Eric Crump, EPA, June 1, 2001. E-mail. "Summary of Total Annualized
Costs (and Some Sales Figures) to Affected Small Lime Firms, With and Without PM
CEMS Requirement."
R-5
-------
APPENDIX A
OVERVIEW OF ECONOMIC MODEL DATA, EQUATIONS, AND SOLUTION
ALGORITHM
The primary purpose of the EIA for the lime manufacturing NESHAP is to "describe
and quantify" the reallocation of society's resources in response to the regulatory action. To
develop estimates of the economic impacts on society resulting from the regulation, the
Agency used a basic framework that is consistent with economic analyses performed for
pthgr rules, JThisj^roach^n^^
responses expected to occur with regulation. This appendix describes the spreadsheet model
in detail and discusses how the Agency
• collected the baseline data set for the model,
• characterized the supply and demand of a single lime commodity,
• introduced a policy "shock" into the model by using control cost-induced shifts in
the supply functions of affected commercial lime producers, and
• used a solution algorithm to determine a new with-regulation equilibrium for the
commercial lime market.
A.I Baseline Data Set
EPA collected the following market information to characterize the baseline year,
1997:
Market quantities—Domestic production and import and export quantities for
quicklime were collected from the USGS (Miller, 2000b, 2000c). To compute an
accurate value for total domestic production of quicklime, the Agency adjusted
the hydrated lime tonnages reported by USGS by eliminating the weight of
A-l
-------
water.1 After this adjustment, the Agency estimated the tonnage of quicklime
exchanged in the market by applying the ratio of lime sold to total lime
production reported by the USGS for 1997 (17,300/19,700 = 0.88, or 88 percent).2
The remaining 12 percent of lime is produced not for commercial sale but for
captive use as part of a larger production process. Table A- 1 reports the
quantities used in the market model.
Market price — The Agency used the average price of quicklime for 1997 ($56.60
per metric ton) reported by the USGS (Miller, 2000a).
Supply and demand elasticities — Table A-2 shows the primary supply and
demand elasticities used in the model. In the absence of available empirical
estimates, the domestic supply elasticity was assumed to be 1. Empirical
estimates for other elasticities are available for similar commodities (i.e., Portland
cement) or aggregate commodity groups such as stone, clay, and glass, of which
is^
foreign supply elasticity of 7.0 reported in the analysis of air pollution regulations
of the Portland cement industry (EPA, 1999a). Ho and Jorgenson (1998) report
an export demand elasticity of -1.2 for the stone, clay, and glass industry, which
was used in this analysis for the lime export demand elasticity. To verify the
appropriateness of the elasticities used, demand and supply elasticities were
econometrically estimated and were supportive of the values used (RTI, 2003).
Because of the uncertainty in defining the elasticities, EPA also conducted a
sensitivity analysis where the supply and demand elasticities were varied from
these primary values to examine the effect on the estimated impacts (see
Appendix B).
A.2 Market for Quicklime
A.2.1 Market Supply
Market supply for quicklime can be expressed as
'Hydrated lime is made by adding water to quicklime. Hydration does not involve a lain, and this process is not
directly covered by the lime manufacturing MACT rule. However, the quicklime necessary to make
hydrated lime is subject to the rule. To generate estimates of the amount of quicklime needed to make the
reported quantities of hydrated lime, high calcium hydrate tonnages were multiplied by 0.73, and dolomatic
hydrate tonnages were multiplied by 0.70 based on information from Michael Miller, the USGS lime
specialist (Miller, 2000d).
2No information is available on the percentage of quicklime produced for commercial use, so the fraction of all
lime sold commercially was used. The proportion of quicklime produced for commercial sale may not be
exactly the same as for all lime, but it is expected to be reasonably close.
A-2
-------
Table A-l. Baseline Data Set, 1997
Domestic j
Average Price Production Imports Exports
Market ($/metric ton)' (103 metric tons)" (103 metric tons)c (103 metric tons)c
Quicklime . $56.60 16,751 186 52
a Miller, M. 2000c. Minerals Yearbook: Lime-1999. . Last updated December 22,2000.
b Miller, M. 2000c. Minerals Yearbook: Lime-1999. . Last updated December 22,2000.
Miller, M. 2000d. December 21,2000. Personal communication with Robert Beach, Research Triangle
Institute. Total quicklime production.
c Miller, M. 2000b. Minerals Yearbook: Lime-1998. . Last updated December 22,2000.
Table A-2. Supply and Demand Elasticities for Quicklime Used in,the Market Model
Market Supply Demand
Domestic 1.0* -0.9b
Foreign 7.0" -1.2C
' Assumed value.
b U.S. Environmental Protection Agency (EPA). 1999a. Economic Analysis of Air Pollution Regulations:
Ponlana^Cemeni. Research TriangIe~1?aik~,TTC: ^SnSnvTrOflmerital PfOtecfion AgencyT
c Ho, M., and Jorgenson, D. 1998. "Modeling Trade Policies and U.S. Growth: Some Methodological Issues."
Presented at USITC Conference on Evaluating APEC Trade Liberalization: Tariff and Nontariff Barriers.
September 11-12,1997. .
Qs = qLs + E qjs + qFs (A.D
1. • • j=i
where
qLs = commercial quicklime supply from plants owned by large plants,
qs = commercial quicklime supply from small plant j,
n = the number of small commercial plants producing quicklime (n=14),
S = quicklime supply from foreign sources (imports).
A-3
-------
A.2.1.1 Domestic Supply From Large Firms
EPA used a Cobb Douglas (CD) supply function for a single representative supplier
to represent the total supply from large firms. This function is expressed as follows:
qLs= A.(P-cL)e'ta» (A.2)
where
qLs = the supply of quicklime from large firms,
A = a parameter that calibrates the supply equation to replicate estimated
production.,
P = the average market price for quicklime,
edom = the domestic supply elasticity, and
CL = the per-unit control costs for large firms.
All large firms were modeled together as a single representative supplier because insufficient
data were available to assign plant-level costsjtoj)lajnts_gwp(|dJbyJhesefirms. Ihiis,-^ -
predictions concerning individual large firms are likely to be inaccurate, while an aggregate
supplier representing all large firms should more accurately predict the overall response of
the large firms in the market3
A.2.1.2Domestic Supply From Small Firms
EPA also used a CD supply function for each commercial plant owned by small
firms:
3Plants either receive costs or do not receive costs for each individual cost category, but averaging across
multiple simulations yields expected cost for each plant, which will not equal their actual costs. For
example, if a firm has a 70 percent chance of being a major source, the simulations would generate expected
costs for that firm base on this proportion. However, in actuality, each individual large firm either would
receive only nominal costs if they are an area source or would receive the full costs if they are a major
source. Although it is not possible to predict the actual costs for an individual plant, the average total cost
across the simulations should be reasonably close to the actual total costs that would be experienced by large
plants.
A-4
-------
q/= B.OP-CjT- (A.3)
where
s
qs = the supply of quicklime from plant j,
A = a parameter that calibrates the supply equation to replicate the estimated
production for each plant,
P = the average market price for quicklime,
Cj = the per-unit control costs for small plant j.
Regulatory Induced Shifts in the Supply Function (c). The upward shift in the supply
function is calculated by taking the annual compliance cost estimate and dividing it by
baseline output. Computing the supply shift in this manner treats the compliance costs as the
conceptual equivalent of a unit-tax on output. Typically, the Agency assumes that only the
varies with output levels. Jrithat ^ase^ the,
costs that vary with output are the only compliance costs that affect the firm's decision
regarding how much to produce, and the supply curve is assumed to shift up by the average
variable per-unit operating cost. The fixed cost component of compliance costs is assumed
to only influence the facility's decision regarding whether to operate or to exit the market.
However, an argument can be made that, prior to investing in compliance capital, the scale of
these expenditures could, at least in principle, vary with the level of output. Thus, the
Agency determined that including annual capital costs as part of the supply shift was
appropriate for this analysis.
Plant and Kiln Closure Analysis. One of the most sensitive issues to consider in the
EIA is the possibility that the regulation may induce a producer to shut down operations
rather than comply with the regulation. The data (i.e., direct observations of plant-level costs
and profits) necessary to make definitive projections of these impacts are unavailable from
the survey data. Therefore, the Agency developed a method of identifying firm closure
decisions using industry measures of profitability. The plant closure criterion used for this
analysis is:
A-5 .
-------
j - TVPCj - TAFPCj - TVCCj < 0 then q* = 0 (A.4)
where total revenue (TRj) is the product revenue from plant j, and total dost (TCj) is the sum
of the plants total variable production costs (TVPCj= area under the supply function), total
avoidable fixed production costs (TAFPCj [computed below]), total avoidable fixed
compliance costs (TAFCCj), and total variable compliance costs (TVCCj). The conceptually
correct view would assume the plant also has some positive liquidation value or opportunity
value4 in an alternative use that is not captured in the TC elements above. However, no data
are available to estimate these opportunity costs. Therefore, the Agency has assumed they
are exactly offset by the costs of closing a kiln (i.e., equal to zero).
The U.S.JBureau of Census reporte^
Financial Report for Manufacturing, Mining and Trade Corporations (U.S. Census Bureau,
1998). For 1997, the Census Bureau reports that income before income taxes (pre-tax
earnings) for SIC groups 32 and 33 was approximately 7.0 percent of revenue. For smaller
firms (i.e., firms with assets under $25 million) this ratio is 5.7 percent. Given the estimated
1997 values of revenue and variable production costs, EPA developed an estimate of the total
avoidable fixed production costs so that the pre-tax profit rate for each supply sector exactly
matches the rate reported by the Bureau of the Census.
A.2. 1.2 Foreign Suppty'(Iniports)
Foreign producers do not face additional costs of production with regulation.
However, their output decisions are only affected indirectly by price changes expected to
result from the regulation. Foreign supply is expressed as follows:
(A.5)
where
qS = the level of imports,
C = a parameter that calibrates the supply equation to replicate quicklime imports,
4Note this yalue could also be negative if costs are associated with liquidation that can be avoided by continuing
to operate a kiln.
A-6
-------
P = the average market price for quicklime, and
8p = the foreign supply elasticity. I
A.2.2 Market Demand
Market demand for lime can be expressed as the sum of domestic and foreign
demand, that is,
QD = qd°om+ qFD (A.6)
where aD is the domestic demand and n° is the foreign demand (or exports).
Hdom nr
A.2.2. 1 Domestic Demand \
Domestic demand was expressed as follows:
(A.7)
where ___ _„__
qP = domestic demand for quicklime,
D = a parameter that calibrates the demand equation to replicate domestic
demand,
P = the average market price for quicklime, and
J? = the domestic demand elasticity.
A.2.2.2 Foreign Demand (Exports)
Domestic demand was expressed as follows:
D
(A.8)
A-7
-------
where
qP = foreign demand (exports) for lime,
E = a parameter that calibrates the demand equation to replicate quicklime
exports,
P = the average market price for quicklime, and
t|P = the foreign demand elasticity.
A.3 With Regulation Market Equilibrium Solution Algorithm
Producer responses and market adjustments can be^conceptualized as an interactive
feedback process. Plants facing increased production costs due to compliance are willing to
supply smaller quantities at the baseline price. This reduction in market supply leads to an
increase in the market price that all producers and consumers face, which leads to further
responses by producers and consumers and thus new market prices, and so on. The new
with-regulation equilibrium is the result of a series of iterations in which price is adjusted
and producers and consumers respond, until a set of stable market prices arises where total
market supply equals market demand (i.e., Qs = QD). Market price adjustment takes place
based on_a_p_rice revision rule th^t adjusJi price upw^
response to excess demand (excess supply).
The algorithm for determining with-regulation equilibria can be summarized by 9
recursive steps:
1. Impose compliance costs.
2. Use supply functions to derive marginal responses given the base price.
3. Check if TR>TC (i.e., Eq. A.4) for small plants; if not set qj=0.
4. Compare aggregate supply and demand.
5. Revise prices using the Walrasian auctioneer approach.
6. Use supply functions to derive marginal responses given the revised price.
7. Check if TR>TC (i.e., Eq. A.4) for small plants; if not set qj=0.
A-8
-------
8. Compare aggregate supply and demand.
9. Go to Step #5 and continue until convergence is obtained (i.fe., the difference
between supply and demand is arbitrarily small).
A-9
-------
APPENDIX B
SENSITIVITY ANALYSIS
As noted in Section 4, no empirical estimates of supply or demand elasticities for
lime were identified in the economics literature. As a result, the Agency used the following
approaches to select the primary values used for these parameters in the economic model:
• Supply elasticity—a value of 1.0 was used under the assumption that suppliers
would be willing to change the quantity of lime they are willing to supply to the
markel by Aejsm^
This value has often been used by the Agency as a reasonable approximation of
supply response in cases where empirical estimates of the relevant supply
elasticities were not available.
• Demand elasticity—the best point estimates available for elasticities of similar
products (e.g., Portland cement) were used.
Although EPA believes these parameter values are reasonable given the currently available
data and information, the Agency conducted a sensitivity analysis using alternative
parameter vataesttrtetermfffe'tlT^^
approach used for the sensitivity analysis and reports the results of this analysis.
The choice of elasticity values is important because the ultimate distribution of costs
across producers and consumers depends on the relative supply and demand elasticities
selected for the analysis. As consumers become more (less) responsive to marginal changes
in price relative to producers, they will bear less (more) of the regulatory burden. Similarly,
as producers become more (less) responsive to marginal changes in price relative to
consumers, they will bear less (more) of the regulatory burden. We can see why these
changes occur by examining the results of very simple mathematical model of tax incidence:1
dp0 e8
~dc~ " ~i~~o '
-------
dpi
fr -? !
dc
8
where
dp0 = change in price paid by consumers
dps = change in price received by suppliers
^c~- -^TSMffiir^^
es = market elasticity of supply
T|d = market elasticity of demand
Equations B.la and B.lb generate the share of the costs being borne by consumers
and producers, respectively. B.lc shows that the ratio of supplier cost share to consumer
cost share is equal to the inverse of the ratio of their respective elasticities. For example, the
values'sHerle^oT^h^
implies consumers will bear more of the costs than producers. Assuming no plant closures,2
consumers would be projected to bear slightly more than half the total social costs associated
with the rule (Using equation B.la: -l/(l-(-0-9)) = 0.52, or 52 percent).
For the sensitivity analysis, we considered the following two general cases as well as
a third case in which lime elasticity parameters were based on econometric estimation by
RTI (2003) and report the elasticity assumptions for each scenario in Table B-l:
2 Although somewhat counterintuitive, when there are facility closures, the share of social costs borne by
producers actually tends to decline. The facilities that close often are estimated to have fairly small baseline
pre-tax earnings and, depending on the elasticities used, removing their output from the market may lead to
projected increases in price large enough that gains to their competitors more than offset the reduction in
pre-tax earnings for the firms that close.
B-2
-------
Table B-l. Supply and Demand Elasticities for Quicklime Used in the Market Model:
Sensitivity Analysis
Scenario/Agent
Al
Domestic
Foreign
A2
Domestic
Foreign
Bl
Domestic
Foreign
62
Domestic
Foreign
C
Domestic
Foreign
Supply
2
14
5
35
. 0.5
3.5
0.2
1.4
0.98
7
Demand
-0.45
-0.60
-0.18
-0.24
1 '
-1.8
-2.4
1
-4.5
-6.0
-1.14
-1.2
supply is significantly more responsive than demand, e.g., if there were sufficient
overcapacity at current production levels to cause very large supply responses
while demanders of lime were much less responsive to price
changes than demanders of Portland cement. In this case, suppliers can more
easily pass on compliance costs to their customers relative to the baseline case
presented in Section 4. In scenario Al, it was assumed that supply was twice as
elastic and demand was half as elastic as in the baseline scenario, whereas in
scenario A2, it was assumed that supply was five times as elastic and demand was
one fifth as elastic. These values were chosen to show a range of impacts as
conditions become more favorable to producers attempting to pass on compliance
costs.
B-3
-------
demand is significantly more responsive than supply, e.g., if purchasers of lime
are much more price sensitive than purchasers of Portland cement and lime
suppliers have only limited ability to change the quantity they supply in response
to price changes. In this case, it is much harder for producers to pass compliance
costs on to their customers than in the baseline scenario. In scenario Bl, it was
assumed that supply was half as elastic and demand was twice as elastic as in the
baseline scenarios, whereas in scenario B2, it was assumed that supply was one
fifth as elastic and demand was five times as elastic. These values were chosen to
show a range of impacts as conditions become less favorable to producers.
domestic demand and supply elasticities are based on econometric estimation.
The focus in this case was on domestic elasticities because trade accounts for only
a tiny share of the lime market. In addition, data were much more readily
available for the estimation of domestic supply and demand elasticities than
el^^ _
elasticities used in Section 4 of this report. This case is presented in Table B-l as
Scenario C.
As shown in Table B-2, the model projects a fairly broad range of price changes (0.5
percent to 2.1 percent) and quantity changes (-0.3 percent to -2.4 percent) across the
scenarios analyzed. These differences in market outcomes lead to differences in revenues
and earnings of lime facilities (see Table B-3), with pre-tax earnings changes ranging from
3.4 percent to -22.0 percent. The projected number of plant closures ranges from one to two
=es^
categories of producers and consumers. The total social costs of the rule remain almost
constant across the five scenarios presented, but the distribution varies widely. As expected,
scenarios Al and A2, the case where demand is less elastic than supply, consumers bear a
high share of the cost burden (about 90 percent of total social cost). Scenarios Bl and B2,
where demand is more elastic than supply, the burden to producers is high (about 75.5
percent of total social cost). Under Scenario C, which reflects the use of econometric
estimates of the supply and demand elasticities, results are quite similar to those in Section 4,
which provides support for the assumptions used in the primary analysis presented in
Section 4.
B-4
-------
w
i
j
i
Table B-2. National Market-Level Impacts of the Lime Manufacturing
Scenario Baseline
Price $56.60
($/ton)
Quantity 16,937,000
(tons/yr)
Domestic 16,751,000
Large 14,098,690
Small 2,652,310
Foreign 186,000
Base
Change
Absolute Relative
$1.17 2.1%
-310,146 -1.8%
-338,867 -2.0%
34,243 0.2%
-373,110 -14.1%
28,721 15.4%
Al
Change ;
Absolute Relative
$1.30 2.3%
-172,626 -l.Ofe
-242,355 -1.4^0
132,993 0.9&
-375,348 -14.2%
69,729 37,5%
A2
Change
Absolute Relative
$1.08 1.9%
-57,461 -0.3%
-231,362 -1.4%
52,410 0.4%
-283,772 -10.7%
173,901 93.5%
B
Chs
Absolute
$0.76
-100,854
^t09,712
-34,687
-375,025
8,858
kACT: Sensitivity Analysis
|P
[Relative
; 1.3%
: -2.1%
-2.4%
; -0.2%
-14.1%
4.8%
B2
Change
Absolute Relative
$0.30 0.5%
-404,868 -2.4%
-406,272 -2.4%
-36,594 -O.3%
-369,678 -13.9%
1,404 0.8%
C
Change
Absolute Relative
$1.05 1.8%
-349,938 -2.1%
-375,373 -2.2%
2,525 0.0%
-377,898 -14.2%
25,435 13.7%
-------
Table B-3. Industry-Level Impacts of the Lime Manufacturing MACT: Sensitivity Analysis (1997$)
Scenario Baseline
Domestic Commercial Plants
Owned by Large Firms
Revenue($10'/yr) $798.0
Costs($10'/yr) $742.1
Control $0.0
Production $742.1
Pre-Tax Earnings $55.9
($10'/yr)
Domestic Commercial Plants
Owned by Small Firms
Revenue($10«/yr) $150.1
Costs($106/yr) $141.6
Control $0.0
Production $141.6
Pre-Tax Earnings $8.6
($106/yr)
Domestic Commercial
Plants, Total
Revenue($106/yr) $948.1
Costs($10'/yr) $883.7
Control $0.0
Production $883.7
Pre-Tax Earnings $64.4
($106/yr)
Base
Change
Absolute Relative
$18.5 2.3%
$16.6 2.2%
$14.6 NA
$1.9 0.3%
$1.9 3.5%
-$18.4 -12.3%
-$16.6 -11.7%
$3.4 NA
-$19.9 -14.1%
-$1.9 -22.1%
$0.1 0.0%
$0.0 0.0%
$18.0 NA
-$18.0 -2.0%
$0.0 0.1%
Al I
Change i
Absolute Relative
$26.1
$22.3
$14.7
$7.5
$3.8
t
-$18.3 -
-$16.7 -
$3.4
-$20.1 '-,
3.3%
3.0%
NA
1.0%
6.8%
2.2%
1.8%
NA
4.2%
-$1.6 -18.5%
i
$7.8
$5.6
$18.1 !
-$12.5
$2.2
0.8%
0.6%
NA
-1.4%
3.4%
A2
Change
Absolute Relative
$18.2 2.3%
$17.6 2.4%
$14.7 NA
$3.0 0.4%
$0.6 1.1%
-$13.5 -9.0%
-$11.5 -8.1%
$3.9 NA
-$15.4 -10.9%
-$2.0 -23.3%
$4.7 0.5%
$6.1 0.7%
$18.5 NA
-$12.4 -1.4%
-$1.4 -2.2%
I
Ch
Absolute
$8.7
$12.6
$14.6
-$2.0
-$3.9
-$19.5
, -$16.7
$3.4
-$20.1
-$2.9
-$10.8
$4.0
$18.0
-$22.0
-$6.8
:
*
|nge
\ Relative
1.1%
1.7%
NA
-0.3%
-7.0%
-13.0%
-11.8%
NA
-14.2%
-33.3%
-1.1%
"-0.5%
NA
-2.5%
-10.5%
B2
.Change
Absolute Relative
$2.2 0.3%
$12.5 1.7%
$14.6 NA
-$2.1 -0.3%
-$10.3 -18.4%
-$20.2 -13.5%
-$16.3 -11.5%
$3.4 - NA
-$19.8 -14.0%
-$3.9 -45.5%
-$18.0 -1.9%
-$3.8 -0.4%
$18.0 NA
-$21.8 -2.5%
-$14.2 -22.0%
C
Change
Absolute Relative
$14.9 1.9%
$14.7 2.0%
$14.6 NA
$0.1 0.0%
$0.1 0.3%
-$19.0 -12.7%
-$16.8 -11.9%
$3.4 NA
-$20.2 -14.3%
-$2.2 -25.5%
-$4.1 -0.4%
-$271 -0.2%
$18.0 NA
-$20.1 -2.3%
-$2.0 -3.2%
td
(continued)
-------
Table B-3. Industry-Level Impacts of the Lime Manufacturing MACT: Sensitivity Analysis (1997$) (continued)
Scenario Baseline
Domestic Captive Plants
Pre— Tax Earnings NA
($106/yr)
Foreign Commercial Plants
Revenue($106/yr) $10.5
Costs($106/yr) $9.8
Control $0.0
Production $9.8
Pre-Tax Earnings $0.7
ttlOVvrt
Base
Change
Absolute Relative
-$0.84 NA
$1.9 17.8%
$1.6 16.8%
$0.0 NA
$1.6 16.8%
$0.2 31.8%
Al
Change
Absolute Relative
-$0.84 NA
$4.3 40.7*
$4.0 40.8%
$0.0 NA
$4.0 40.8^
$0.3 3S.7&
A2
Change
Absolute Relative
-$0.84 NA
$10.2 97.2%
$9.9 101.6%
$0.0 NA
$9.9 101.6%
$0.3 38.6%
Bl
Chang
Absolnte R
-$0.84
$0.6
$0.5
$0.0
$0.5
$0.1
lative
NA
j 6.2%
5.2%
NA
5.2%
19.6%
B2
Change
Absolute Relative
-$0.84 NA
$0.1 1.3%
$0.1 0.8%
$0.0 NA
$0.1 0.8%
$0.1 7.7%
C
Change
Absolnte Relative
-$0.84 NA
$1.7 15.8%
$1.5 14.8%
$0.0 NA
$1.5 14.8%
$0.2 28.2%
w
-------
Table B-4. Distribution of Social Costs Associated with the Lime Manufacturing
MACT (million 1997$/yr): Sensitivity Analysis
Change in Consumer Surplus
Domestic
Foreign
Change in Producer Surplus
Domestic
Commercial
Large
Small
Captive
Foreign
Total Social Cost
Base
-$19.7
-$19.5
-$0.2
-$0.6
$0.0
$1.9
.-$1,9
-$0.8
$0.2
-$20.2
Al
-$21.9
-$21.7
-$0.3
$1.6
$2.2
$3.8
-$1,6
-$0.8
$0.3
-$20.3
A2
-$18.2
-$17.9
-$0.3
-$2.0
-$1.4
$0.6
-$0.8
$0.3
-$20.2
Bl
1
1
-$12.7
-$12.5
-$0.1
-$7.5
-$6.8
-$3.9
-$0.8
$0.1
-$20.1
B2
-$5.1
-$5.0
-$0.1
-$15.0
-$14.2
-$10.3
-$0.8
$0.1
-$20.1
C
-17.5
-17.3
-0.2
-2.7
-2.0
0.1
-•—22
-0.8
0.2
-20.2
B-8
-------
TECHNICAL REPORT DATA
(Please read Instructions on reverse before completing)
1. REPORT NO.
EPA-452/R-03-013
2.
4. TITLE AND SUBTITLE
Economic Impact Analysis for the Lime Manufacturing MACT Standard
7. AUTHOR(S)
Robert Beach, Brooks Depro, and Jui-Chen Yang, RTI International
9. PERFORMING ORGANIZATION NAME AND ADDRESS
U.S. Environmental Protection Agency
Office of Air Quality Planning and Standards
Research Triangle Park, NC 277 1 1
12. SPONSORING AGENCY NAME AND,ADDRESS
Director
Office of Air Quality Planning and Standards
Office of Air and Radiation
U.S. Environmental Protection Agency
• Research Triangle Park, NC 27711
15. SUPPLEMENTARY NOTES
3. RECIPIENT'S ACCESSION NO.
5. REPORT DATE
July 2003
6. PERFORMING ORGANIZATION CODE
8. PERFORMING ORGANIZATION REPORT NO.
10. PROGRAM ELEMENT NO.
11. CONTRACT/GRANT NO.
68-D-90-024
13. TYPE OE REPORT AND PERIOD COVERED
Final report
14. SPONSORING AGENCY CODE
EPA/200/04
16. ABSTRACT
Pursuant to Section 1 12 of the Clean Air Act, the U.S. Environmental Protectioi
Emissions Standards for Hazardous Air Pollutants (NESHAP) to control emissions release
analyzes the economic impacts of the rule.
The total annual cost of this regulation was estimated to be $22.2 million (1997!
cost was used as an input to an economic impact model. The model estimated domestic pi
percent, while price would increase by about 2.1 percent. The Agency estimates pre-tax e,
in this source category will decline by about $0.8 million overall, hi addition, EPA concli
premature plant closures. According to the Small Business Administration size standards
source category are considered small. As a result of a Small Business Advocacy Review
significant number of accommodations for small businesses. The results presented here cc
by the Agency have minimized the potential negative impacts of the rule on small busines
17.
i Agency (EPA) is develop
•A from lime manufacturing
i) in the absence of market
eduction of lime would de
amings for the companies <
ides that the rule may pote
twelve companies owning
(SBAR) panel, the final ru
mfirm that the mitigating n
ses while satisfying the obj
KEY WORDS AND DOCUMENT ANALYSIS
a. DESCRIPTORS
18. DISTRIBUTION STATEMENT
Release Unlimited
b. IDENTIFIERS/OPEN ENDED TERMS
air pollution control, environmental
regulation, economic impact analysis,
maximum achievable control technology,
lime manufacturing
19. SECURITY CLASS (Report)
Unclassified
20. SECURITY CLASS (Page)
Unclassified
ing National
;. This report
adjustments. This
cUne by about 1.8
jwning the facilities
ntially result in two
facilities in this
e contains a
aeasures employed
ectives of the CAA.
c. COS ATI Field/Group
21. NO. OF PAGES
121
22. PRICE
EPA Form 2220-1 (Rev. 4-77) PREVIOUS EDITION IS OBSOLETE
-------
United States Office of Air Quality Planning and Standards Publication No. EPA-68-D-99-024
Environmental Protection Air Quality Strategies and Standards Division July 2003
Agency Research Triangle Park, NC
------- |