United States
Environmental Protection
Agency
Air
Economic Impact Analysis of the
Hydrochloric Acid (HC1) Production
NESHAP
Final Report
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EPA 453/R-03-001
February 2003
Economic Impact Analysis of the Hydrochloric Acid (HC1) Production NESHAP
Final Report
By:
U.S. Office of Air Quality Planning and Standards
Air Quality Strategies and Standards Division
Integrated Strategies and Economics Group
Research Triangle Park, North Carolina
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Introduction
This regulatory action issues final national emission standards for hazardous air pollutants (NESHAP)
for hydrochloric acid (HC1) production facilities, including HC1 production at fume silica facilities. The
EPA has identified these facilities as major sources of hazardous air pollutant (HAP) emissions,
primarily HC1. Hydrochloric acid is associated with a variety of adverse health effects. These adverse
health effects include chronic health disorders (e.g., effects on the central nervous system, blood, and
heart) and acute health disorders (e.g., irritation of eyes, throat, and mucous membranes and damage to
the liver and kidneys).
These final NESHAP would implement section 112(d) of the Clean Air Act (CAA) by requiring all HC1
production facilities that are major sources to meet HAP emission standards reflecting the application of
the maximum achievable control technology (MACT). The EPA estimates that these NESHAP would
reduce nationwide emissions of HC1 by approximately 1,155 tons per year (tpy). This amount of
reduction is 46 percent of the baseline HC1 emissions estimate of 2,510 tpy. The EPA also estimates
that these NESHAP would reduce nationwide emissions of chlorine (Cl) by approximately 430 tpy.
This amount of reduction is 61 percent of the baseline HC1 emissions estimate of 700 tpy.
There are 65 HC1 facilities that will be subject to this final rule, according to the estimates prepared by
the Agency.l The production processes that this NESHAP will affect are processes that routes a
gaseous stream that contains HC1 to an absorber, thereby creating a liquid HC1 product. Among these
various processes are:
organic and inorganic chemical manufacturing processes that produce HC1 as a by-product;
the reaction of salts and sulfuric acid (Mannheim process);
the reaction of a salt, sulfur dioxide, oxygen, and water (Hargreaves process);
the combustion of chlorinated organic compounds;
the direct synthesis of HC1 through the burning of chlorine in the presence of hydrogen; and
fume silica production, including combustion of silicon tetrachloride in hydrogen-oxygen
furnaces.
It is important to note that most HC1 production is as a by-product of other processes such as aliphatic
and aromatic hydrocarbon chlorinations, the phosgenation of amines for isocyanates, and halogenations
for making chlorofluorocarbons. Only about 5 percent of HC1 is produced as primary product.
1 Memorandum. Maxwell, B., U.S. Environmental Protection Agency, to Hydrochloric Acid Production
NESHAP Docket. Final List of Facilities Potentially Subject to the Hydrochloric Acid Production NESHAP. June 24,
2002.
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The fume silica sources affected by this final rule include any facility engaged in the production of fume
silica. Fume silica is a fine white powder used as a thickener or reinforcing agent in inks, resins, rubber,
paints, and cosmetics. Emissions of HC1 and chlorine are the primary HAPs released from fume silica
production facilities and result from the HC1 recovery/production system. Because the largest HAP
emission source at fume silica facilities is related to the HC1 recovery/production system, we decided to
combine fume silica sources and HC1 production sources under this final rule.
Background for Economic Impact Analysis
The Agency has prepared an economic impact analysis in support of this final NESHAP. The legal
authority for this analysis is Section 317 of the CAA. As part of this analysis, the Agency has prepared
a small business analysis in order to comply with the Regulatory Flexibility Act (RFA), as amended by
the Small Business Regulatory Enforcement Fairness Act (SBREFA). This economic impact analysis
presents a short profile of the industries affected by this rule, a short look at the firms that will be
affected by this rule, and the impacts to these firms and their consumers from implementation of the rule.
Table 1 lists the three industries that will be affected by the requirements of this final rule.
Table 1. Affected Industries
Category
Industry
SIC3
2819
2821
2869
NAICSb
325188
325211
325199
Name of industry
All Other Basic Inorganic Manufacturing
Plastic Materials, and Resin Manufacturing
All Other Basic Organic Manufacturing
a Standard Industrial Classification
b North American Industrial Classification System
These industries are all large with a substantial number of firms and employees that make up their
operations. Table 2 contains estimates of total employees and the value of shipments for these
industries as a whole.2
Production of HC1 is but a small portion of output and activity in these industries. While the production
of output reaches many millions of tons for each of these industries, the total
2 U.S. Department of the Commerce: Bureau of the Census, International Trade Association. Found on the
Internet at www.ita.doc.gov/td/industrv/otea/usito98/tables naics. Downloaded on September 7, 2001.
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Table 2
Value of Shipments and Employment Data on Affected Industries
(Millions of 1997 Dollars)
Industry
NAICS
325188
NAICS
325199
NAICS
325211
Value of shipments
1997
17,275
52,405
45,226
1998
22,760
48,989
49,176
1999
23,279
47,151
48,024
Percentage
change from
1997 to 1999
34.7
-10.0
6.2
Total employment (thousands)
1997
53.4
88.2
61.6
1998
56.2
86.9
62.8
1999
53.8
81.2
58.5
Percentage
change from
1997 to 1999
1.2
7.9
5.0
production from the U.S. HC1 industry is roughly 4.2 million tons/year as of 1997. Most of the
production is captive capacity; that is, the HC1 is produced as an intermediate product to be used in
final output. Given that about 5 percent of HC1 produced in the U.S. is as primary product, this means
that only about 200,000 tons of primary HC1 output is generated in a typical year.
The use of HC1 in the production of other chemicals is the major way in which HC1 is used in the U.S.
Thirty percent of HC1 produced in the U.S. goes into production of other chemicals. The next most
common uses of HC1 are steel pickling (20 percent), oil well acidizing (19 percent), and food
processing (17 percent). Other uses for HC1 include semiconductor production and regeneration of
ion-exchange resins for water treatment.
The U.S. imports and exports very little HC1. In 1997, the U.S. imported 85,000 tons of HC1, or only
2 percent of U.S. capacity. During that same year, the U.S. exported 60,000 tons of HC1, or only 1.5
percent of U.S. production capacity.3 Hence, the U.S. imports as much or more HC1 as it exports, but
the trade balance is negligible compared to the output consumed within the U.S. Most of this trade is
with Canada.
The growth in U.S. HC1 production averaged about 4.2 percent per year from 1993 to 1998. Growth
has averaged roughly 3 percent per year from 1985 through 1998, so there has been some increase in
3U.S. Department of Commerce, Bureau of the Census. Current Industrial Reports, Series MA28A(97),
September, 1998.
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production growth in the decade of the 1990's.4 Prices for HC1 have increased considerably from
1992 to 1998. These prices generally ranged from $40/ton to $57/ton in 1992 and 1993, but rose to
over $90/ton in 1998 due to railroad disruptions that occurred late in 1997 and continued into 1998.
Projected growth is expected to be about 2.5 percent per year through 2003, though this amount could
be an underestimate if continued strength in oil drilling leads to additional demand for HC1.
Costs of the Final Rule
The estimated annual costs of the final rule are $5.9 million in 1999 dollars. These costs include not
only the costs of control but also those associated with monitoring, recordkeeping, and reporting. In
fact, the costs of monitoring, recordkeeping, and reporting are $4.18 million, or 71 percent of the
annual costs. The capital costs are estimated at $12.36 million. The costs are estimated using ten
model plants that are considered representative of the sources they are applied to. The data taken to
develop the linkage between the model plants and the actual facilities are based on facility information
taken from EPA permit applications and assumptions of the applicability of control equipment.
Estimates of what each of these 65 plants must do to meet the final rule, which is the MACT floor, are
listed in Table 4. The costs for each of the ten model plants are in Table 5. The annual costs
associated with each of these model facilities includes annualized capital costs for control and
monitoring equipment, annual operating and maintenance (O&M) costs for control and monitoring
equipment, and labor and O&M costs associated with reporting and recordkeeping (R&R)
requirements associated with the MACT floor regulatory alternative.5
The equipment costs include annualized capital as well as O&M and were obtained from calculations
performed to estimate regulatory alternative impacts that are available in the docket. The annual R&R
costs were calculated using the template used to calculate annual R&R burden in the Information
Collection Request for HC1 Production. The costs for the 4th year after promulgation, which is the first
year after the compliance date for existing sources, were calculated for a single facility.
In summary, the annual cost per facility for complying with the final MACT for HC1 Production ranges
from $64,348 to $169,538.
As can be seen in Table 3, sources at 41 facilities, or 63 percent of the total, will have to install a new
water or caustic scrubber to meet the MACT floor requirements. As seen above, the costs for any one
facility should be no higher than $169,538 (in 1999 dollars).
'Chemical News and Intelligence, ChemExpo Chemical Profile: Hydrochloric Acid. November 22, 1999.
www. chemexpo. com/news/PROFILE9 91122. cfm.
5Memorandum. Deering, A. andNorwood, P., EC/R, Incorporated, to Maxwell, B., U. S. Environmental Protection
Agency. Baseline Conditions and MACT Floor Impacts for Final Hydrochloric Acid Production NESHAP. July 2,2002.
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Table 3. Model Facility Actions Needed To Comply With MACT Floor Alternative
Model
facility
#
1
2
3
4
5
6
7
8
9
10
Equipment needed to comply with MACT floor alternative
Process vents (PV)
Control
equipment
None
None
Scrubber
None
None
Scrubber
Scrubber
NoPV
NoPV
NoPV
Monitoring
equipment?
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
No
Storage tanks (ST)
Control
equipment
None
None
Scrubber
Scrubber
NoST
Scrubber
NoST
Scrubber
None
Scrubber
Monitoring
equipment?
Yes
Yes
Yes
Yes
No
Yes
No
Yes
Yes
Yes
Transfer operations (TO)
Control
equipment
None
Scrubber
Scrubber
No TO
No TO
No TO
No TO
No TO
No TO
No TO
Monitoring
equipment?
Yes
Yes
Yes
No
No
No
No
No
No
No
#of
Facilities
8
5
3
7
13
8
5
6
3
7
Table 4. Annual Costs For Each Model Facility
Model
facility #
1
2
3
4
5
6
7
8
9
Annual costs per facility (1999$)
PV Equipment
$1,212
$1,212
$92,424
$1,212
$1,212
$92,424
$92,424
$0
$0
ST Equipment
$1,212
$1,212
$6,383
$6,383
$0
$6,383
$0
$6,383
$1,212
TO Equipment
$1,212
$6,383
$6,383
$0
$0
$0
$0
$0
$0
R&R Labor and
O&M
$64,348
$64,348
$64,348
$64,348
$64,348
$64,348
$64,348
$64,348
$64,348
Total
$67,984
$73,155
$169,538
$71,943
$65,560
$163,155
$156,772
$70,731
$65,560
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10
$0
$0
$0
$64,348
$64,348
The annual costs shown in Table 4 can be considered reasonable representations of potential facility-
level cost impacts associated with the MACT floor level of control. Appendix A provides more
specific information on the representation of facilities in the HC1 cost analysis.
Cost and Economic Impact Results
Table 5 lists the compliance (control, monitoring, and R&R) costs of the MACT floor regulatory
alternative per affected parent company, and these costs as a percentage of the parent companies's
revenues. All data below are based on 1999 statistics, unless more recent data are available.
The economic impact analysis, which is essentially a comparison of compliance costs for the affected
parent firms with their revenues, shows that the estimated costs associated with the MACT floor option
are no more than 1.0 percent of the revenues for any of the 33 affected firms. It is important to note
that most of the companies and facilities affected by this standard are large U.S. companies or
subsidiaries of large multinational companies. It is likely that the expected reduction in affected HC1 and
fume silica output is no more than 0.0015 percent or less from that industry, since the overall
compliance costs are less than 0.001 percent of the revenues for the affected parent firms, and a price
elasticity of demand of-1.5 that is applicable to NAICS 325199 and 325211 as prepared for another
economic analysis done for a recently proposed
Table 5.
Economic Impacts for Parent Companies Affected by
the Final HCl/Fume Silica MACT*
Parent company
Arch Chemicals
Ausimont USA
(subsidiary of
Montedison Group)
Aventis CropScience
BASF Corp.
CIBA-GEIGY Corp.
(subsidiary of Novartis)
Number of
employees
3,500
33,049
92,500
100,000
69,000
Large or
small
business?
Large
Large
Large
Large
Large
Revenues
(million 1999$
unless stated
differently)
900
11,266(2000)
20,021
32,226 (2000)
17,200
Annual
compliance
costs
(1999$)
67,984
163,155
70,731
67,984
156,772
Compliance
costs/revenues
(%)
0.0008
0.00145
0.0004
0.00021
0.0009
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Crompton Corp.
Detrex Corp.
Dover Chemical Corp.
(subsidiary of ICC
Industries Corp.)
Dow Chemical
DuPont
Elf Atochem (subsidiary
ofTotalFinaElf)
Ferro Corp.
FMC Corp.
General Electric Co.
Honeywell Corp.
Huntsman Corp.
ICI Americas (part of ICI
Corp.)
Jones-Hamilton Co.
Louisiana Pigment Co.
(owned by NL
Industries)
MDA Manufacturing
(owned by Daitkin
Products, Inc.)
Metachem Products
Miles Bayer (owned by
the Bayer Group)
Monsanto Co.
Occidental Chemical Co.
(owned by Occidental
Petroleum Co.)
Oxymar (owned by
Occidental Petroleum
Co. and Marubeni Co.)
8,300
353
3,200
41,943
93,000
127,252
6,700
15,000
313,000
125,000
14,000
45,130
81
2,500
14,000
110
120,400
14,700
8,800
13,851
Large
Small
Large
Large
Large
Large
Large
Large
Large
Large
Large
Large
Small
Large
Large
Small
Large
Large
Large
Large
3,038
96
1,500
23,008
28,268
67,352
1,360
3,900
129,500
23,735
7,000
8,592
27
908
3,799
30
27,320
5,500
13,574
73,000
65,560
71,943
64,348
65,560
169,538
163,155
70,731
67,984
318,927
163,155
65,560
73,155
67,984
70,731
163,155
156,772
65,560
67,984
73,155
156,772
0.0020
0.08
0.0043
0.00029
0.0006
0.00024
0.0052
0.0017
0.00025
0.0007
0.00094
0.0085
0.25
0.008
0.00452
0.523
0.00024
0.00124
0.00054
0.00021
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Oxyvinyls
PPG Industries
Shell
Velsicol Chemical Corp.
Vulcan Materials
Chao Group (of
Thailand, owner of
Westlake Monomers)
Fume Silica
GE Silicones (owned by
GE)
Cabot
Degussa
(a joint
venture of
Occidental
Petroleum Co.
and Polyone
International) -
18,800
33,000
95,000
600
9,315
25,000
313,000
4,200
63,000
Large
Large
Large
Small
Large
Large
Large
Large
Large
17,074,000
(combined
revenue of
Occidental
Petroleum and
Polyone
International)
8,370
149,146
200
2,492
3,000
128,543
1,517
12,567
163,155
169,538
156,772
73,155
70,731
163,155
65,560
65,560
169,538
0.0010
0.002
0.00011
0.037
0.0028
0.00544
0.00005
0.0043
0.00135
* Employee and revenue data taken from the large companies's Web sites, www.business.com. or Hoover's Online,
or from Ward's Business Directory for the small companies.
MACT standard affecting these NAICS codes.6 The price elasticity of demand is defined as the
percent change in consumer demand that occurs as a result of a percent change in product price. Given
the very small increase in cost to affected producers, and their fairly small ability to pass through these
costs to their consumers (any price elasticity of demand less than -1 is considered "highly elastic"). In
addition, it is likely that the impacts to individual firms should not be substantial, since the cost to sales
estimates per firm are much less than the average profit margin (i.e., profit per unit of sales by firm)
enjoyed by firms in these industries (about 5 percent).7 It should be noted that these results are based
on the application of costs from a subset of the affected facilities to the remaining facilities. This is
necessary due to incomplete facility-level cost data, as explained in the previous section on costs.
6 U.S. Environmental Protection Agency. Economic Impact Analysis of Air Pollution Regulations: Organic
Liquid Distribution. Produced by the Research Triangle Institute. February 2002.
7 Reference 6.
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Small Business Impacts
The RFA generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to
notice and comment rulemaking requirements under the Administrative Procedure Act or any other
statute unless the agency certifies that the rule will not have a significant economic impact on a
substantial number of small entities. Small entities include small businesses, small organizations, and
small governmental jurisdictions.
For purposes of assessing the impacts of today's rule on small entities, small entity is defined as a small
business according to Small Business Administration size standards8 by the North American Industry
Classification System (NAICS) category of the owning parent entity. The small business size standard
for the affected industries (NAICS 325188, All Other Basic Inorganic Chemical Manufacturing,
NAICS 325199, All Other Basic Organic Manufacturing, and NAICS 325211, Plastics Materials, and
Resins Manufacturing) is a maximum of 1,000 employees for an entity.
After considering the economic impact of today's final rule on small entities, I certify that this action will
not have a significant impact on a substantial number of small entities. In accordance with the RFA, as
amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA), 5 U.S.C. 601, et.
seq.. EPA conducted an assessment of the final standard on small businesses within the industries
affected by the rule. Based on SBA size definitions for the affected industries and reported sales and
employment data, the Agency identified four affected small businesses out of 33 affected parent
businesses (or 12 percent of the total number). In order to estimate impacts to affected small
businesses, the Agency conducted a screening analysis that consists of estimates of the annual
compliance costs these businesses are expected to incur as compared to their revenues. Since the data
are such that costs can only be estimated for a subset of the affected facilities, the available data were
used to determine the costs to the facilities outside of this subset. The results of this screening analysis
show that none of the small businesses is expected to have annual compliance costs of 1 percent or
more. Therefore, this analysis allows us to certify that there will not be a significant impact on a
substantial number of small entities from the implementation of this final rule.
A summary of the small business impacts, with a comparison to the impacts to the large companies, is in
Table 6. The median compliance cost as a percent of sales for the affected small companies affected is
0.39 percent, which is larger than that for the affected large companies (0.001 percent).
8 Small Business Administration, Washington, B.C. Found on the Internet at www.sba.gov/size.
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Table 6
Summary of Small Business Impacts for HC1 Production and Fume Silica
MACT Floor Option
Total number of companies
Total number of small companies
Total number of large companies
Average annual compliance cost per small company
(in 1999 dollars)
Average annual compliance cost per large company (in
1999 dollars)
33
4
29
$92,463
$118,471
Comparison of compliance costs to sales
Compliance costs of <1% of sales
Compliance costs of >1% of sales
Compliance cost to sales: Statistics (%)
Small: 4 Share:
Large: 29 Share
Small: 0 Share:
Large: 0 Share
100%
100%
0%
0%
Average: 0.0288
For Small: 0.220
For Large: 0.0021
Median: 0.00145
ForSmall:0.165
For Large: 0.001
Maximum: 0.523
For Small: 0.523
For Large: 0.0085
Minimum: 0.0001
For Small: 0.037
For Large: 0.00005
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Appendix A
Summary of Representation of Actual Facilities in
HC1 Production NESHAP Cost Analysis
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Summary of Representation of Actual Facilities in the HC1 Production Impacts Analysis
No process vents
Process vents
99+%
95%
No storage tanks
Storage tanks
99+%
95%
0%
No transfer operations
Transfer operations
99+%
95%
0%
Number of
facilities in MACT
Floor Data Set
4
12
9
3
6
10
4
3
3
12
4
2
1
1
Assumed
controls needed
None
New scrubber
None
New scrubber
New scrubber
None
Scrubber
Scrubber
Scrubber
Plant Names
DuPont, KY; LaRoche, LA; PPG, WV; Vista, LA
AlliedSignal,LA;Bayer, WV; Degussa,NY; Dow,LA;'DuPont, LA; DuPont, WV; Formosa, TX;
Georgia Gulf, LA; Louisiana Pigment
Dow, LA;' DuPont Dow, LA; Shell, LA
Bayer, WV; Degussa, NY; DuPont, LA; Formosa, TX; Georgia Gulf, LA; Shell, LAf
Dow, LA;a DuPont, KY; PPG, WV; DuPont, WV
Allied Signal,-LA; DuPont Dow, LA; Vista, LA
Louisiana Pigment; Dow, LAa; LaRoche, LA
Allied Signal,LA; Bayer, WV; Degussa, NY; Dow, LA;a DuPont, LA; DuPont Dow, LA;
DuPont, WV; Georgia Gulf, LA; LaRoche, LA; Louisiana Pigment; PPG, WV; Vista, LA
DuPont, KY; Formosa, TX
Dow, LA a
Shell, LA
a There are two facilities at this plant site. For process vents and storage tanks, the two facilities control at different levels. Only one of the two facilities has a
transfer operation.
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TECHNICAL REPORT DATA
(Please read Instructions on reverse before completing)
1. REPORT NO.
EPA-452/R-03-001
2.
4. TITLE AND SUBTITLE
Economic Impact Analysis of the Hydrochloric Acid Production
NESHAP
7. AUTHOR(S)
9. PERFORMING ORGANIZATION NAME AND ADDRESS
U.S. Environmental Protection Agency
Office of Air Quality Planning and Standards
Air Quality Strategies and Standards Division
Research Triangle Park, NC 27711
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
3. RECIPIENT'S ACCESSION NO.
5. REPORT DATE
February 2003
6. PERFORMING ORGANIZATION CODE
8. PERFORMING ORGANIZATION REPORT NO.
10. PROGRAM ELEMENT
NO.
11. CONTRACT/GRANT NO.
13. TYPE OF REPORT AND PERIOD COVERED
14. SPONSORING AGENCY CODE
EPA/200/04
15. SUPPLEMENTARY NOTES
16. ABSTRACT
This document is an economic impact analysis for the industries and other entities subject to the
Hydrochloric Acid Production National Emission Standards for Hazardous Air Pollutants (NESHAP). The
analysis shows price and production changes for affected entities as a result of incurring the costs of this
rule, and provides some financial data for those entities and the industries they are in.
'17.
KEY WORDS AND DOCUMENT ANALYSIS
a. DESCRIPTORS
Control Costs
Industry Profile
Economic Impacts
18. DISTRIBUTION STATEMENT
Release Unlimited
b. IDENTIFIERS/OPEN ENDED TERMS
Air Pollution control
19. SECURITY CLASS (Report)
Unclassified
20. SECURITY CLASS (Page)
Unclassified
c. COSATI Field/Group
21. NO. OF PAGES
15
22. PRICE
EPA Form 2220-1 (Rev. 4-77) PREVIOUS EDITION IS OBSOLETE
15
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