U . S. Environmental Protection Agency
February 2000

Draft: February 2000

Specialty-batch chemicals represent one segment of the chemical industry. The specialty-
batch sector is characterized by:
Batch processing;
The manufacture of intermediate and custom formulations, as well as end-use
An emphasis on product differentiation and performance; and
In general, the production of products in relatively small volumes and the
sale of these products at a higher profit margin than commodity or bulk
chemicals, although this may vary widely for different types of specialty-
batch chemicals.
The specialty-batch sector is highly competitive and proprietary in nature; companies tend to
develop a market niche and focus on their competitive advantages. The sector consists primarily
of small and medium-sized companies, a characteristic which has a significant impact on decision-
Facilities in this sector generally fall into two broad categories, although there is some
Manufacturers perform chemical reactions using raw materials (typically commodity
chemicals) to create specialty chemicals, which are generally used as intermediates.
Formulators and packagers blend specialty chemicals and other chemical intermediates to
create chemical specialties, which may be household or industrial/institutional end-use
There is a trend in the chemical industry toward semi-batch processing, which is more
continuous than typical batch processing. Semi-batch processing requires less human capital input
compared to batch processing, and reduces material loss by generating less by-product.
The majority of four-digit SIC codes within SIC 28 (Chemicals and Allied Products) include
specialty-batch manufacturers and/or formulators. Exhibit 1 at the end of this document presents
the SIC 28 four-digit codes likely to contain specialty-batch facilities. We estimate that specialty-
batch facilities represent between 10 to 100 percent of these different SIC codes. In addition, some
formulators also may fall into several SIC codes other than SIC 28 (e.g., 2992 and 5100).
The information presented in this document is based on research and interviews with
manufacturers and formulators. Unless otherwise noted, the information provided pertains to both
of these types of facilities.
Principal Findings: Specialty-Batch Chemical Sector 1
Draft: February 2000

Economic and Demographic Characteristics
•	There are approximately 5,400 specialty-batch facilities in the U.S., employing nearly 275,000 people.1
•	Sales of specialty-batchproducts were $80 billion in 1996, approximately 22 percent of the total value of shipments
for the chemical industry as a whole in that year, and 2 percent of value of shipments for all manufacturing.2'3
•	Specialty-batch facilities are likely to be concentrated in the same states as the Chemical and Allied Products
industry (SIC 28) as a whole. The states with the most SIC 28 facilities are California, Texas, New Jersey, New
York, and Illinois. North Carolina, Georgia, and Louisiana also have high concentrations of chemical facilities.
•	Manufacturers tend to locate in proximity to sources of raw materials, while formulators tend to situate near
markets and distribution centers.
•	The specialty-batch sector is small-business dominated. Over 75 percent of the manufacturers in the Synthetic
Organic Chemical Manufacturers Association (SOCMA) and 30 percent of those in the Chemical Specialties
Manufacturers Association (CSMA) are smaller businesses. It is common for large chemical companies to own
smaller subsidiaries with specialty-batch operations.
•	The chemical industry as a whole (SIC 28) spends roughly 50 percent more on new capital equipment than the
manufacturing sector overall (based on 1995 data). This high capital intensity likely characterizes both the
specialty-batch and commodity sectors.4
•	In dealing with regulators, quick turnaround and certainty are critical for business success (e.g., permit process).
•	Some facilities are moving out of states where
regulations are more restrictive (e.g.,
California) or where the regulatory process is
more cumbersome (e.g., New Jersey) to states
where regulations are less restrictive or where
there is less uncertainty about timing of
agency actions (e.g., North Carolina). There
is also a trend of facilities locating in
countries and regions where regulatory
enforcement is less stringent or labor costs are
lower (e.g., Mexico, India, Latin America, and
. There is increasing consolidation within the
industry. This may be particularly true for
mature markets that are becoming more
commodity-like, such as water treatment
chemicals, lubricants, adhesives, dyes, and
•	Companies are pursuing new opportunities for
business development through increased
outsourcing of processes.
>	Facilities may sell more products and get
them to market more quickly by
contracting with custom manufacturers and
>	Outsourcing may increase sales and profits
for custom manufacturers and tollers.
•	High growth segments include adhesives and
sealants, electronic chemicals, specialty
polymers, flavors and fragrances, polymers,
and pharmaceuticals.6
Principle Findings: Specialty-Batch Chemical Sector
Draft: February 2000

Economic and Demographic Characteristics (continued)

•	Facilities increasingly use computers to
control their operations.
. There is a trend toward developing "green"
products and those with health-benefit claims.
•	[What are current trends in technology and
new products?]
Environmental Characteristics7
•	Batch processing generates many different types of emissions, discharges, and wastes.
>	For manufacturers, air emissions may be the most difficult environmental release to control, because of the
wide variation of products and raw materials in batch manufacturing and the frequent opening of vessels,
which creates fugitive air emissions.
>	Formulators generate relatively small amounts of air emissions because most inputs are conserved. However,
they must control VOC emissions and levels in their products.
>	Manufacturers and formulators must rinse and wash reactors, tanks, and pipes, generating wastewater with a
wide range of constituents. BOD, pH, and TSS are common wastewater constituents. Heavy metals are
uncommon in specialty-batch chemical wastewater.
•	Specialty-batch facilities generated an estimated 15.7 million tons of hazardous waste in 1995, accounting for
approximately 20 percent of SIC 28 hazardous waste, and seven percent of hazardous waste generated through all
manufacturing in the U.S.8
>	The hazardous waste generated by specialty-batch manufacturers is often listed hazardous waste under 40 CFR
Part 261 Subpart D.
>	Specialty-batch facilities treat little of their hazardous waste on-site, shipping it off-site for treatment instead.
For larger, commodity manufacturers, on-site treatment is much more common.
>	Nearly half of all the hazardous waste that is managed on-site is treated. Incineration is another common waste
management method.
. Formulators are shifting toward aqueous-
based ingredients and away from solvent-
based and volatile ingredients for many
reasons including:
>	Reducing VOCs (particularly due to
California standards and Form R
requirements) and fugitive emissions;
>	Reducing costs -solvents are more costly
than aqueous-based substitutes;
>	End-use requirements, such as customer
reporting issues.
• Many environmental improvements have
already been achieved. Additional
improvements are possible at the facility level,
but technology and resource limitations make
them increasingly difficult and expensive to
achieve. Further reductions in fugitive air
emissions will be very difficult to achieve.
The greatest opportunities for improvement
are in the areas of waste reduction and
recovery for re-use.
Principle Findings: Specialty-Batch Chemical Sector
Draft: February 2000

Environmental Characteristics (continued)
. Greenhouse gas (GHG) emissions from specialty-batch facilities were approximately 13 million metric tons of
carbon equivalents in 1994, or 15 percent of total GHG emissions from SIC 28 and less than one percent of the
total GHG emissions generated in the U.S. Nearly all of the GHG emissions from the specialty-batch sector were
from energy consumption.9
• Specialty-batch facilities accounted for an estimated 400 million pounds of toxic chemical releases and transfers
in 1995, or 30 percent of all chemical industry (SIC 28) releases and transfers, based on Toxics Release Inventory
(TRI) data.10 The chemicals industry as a whole reported more total TRI releases in 1995 than any other industry
group. Of SIC 28 total TRI releases and transfers, approximately 29 percent was related to energy recovery, 21
percent was released as air emissions, and 17 percent was recycled off-site. Less than 10 percent was discharged
to surface water or POTWs. For the specialty-batch sector, toxic chemical releases and transfers to water may
represent a greater percentage of the total.
. The chemicals industry as a whole (SIC 28)
has achieved the greatest reductions in Toxics
Release Inventory (TRI) "core" chemical
releases of all industry groups, posting a
reduction of nearly 50 percent between 1988
and 1995. [Note that certain reporting
requirements have changed since the
inception of the TRI program. For example,
EPA added 286 chemicals and chemical
categories for the 1995 reporting year, nearly
doubling the TRI chemical list. "Core "
chemicals are those that were on the TRI list
during both the years of comparison (i.e.,
1988 and 1995).]
Regulatory Requirements
•	Most manufacturers and formulators are subject to a wide range of environmental regulations at the state and
federal levels, including those related to air, solid and hazardous waste, and water. Many are also subject to the
Pre-Manufacture Notification (PMN) requirements of the Toxics Substances Control Act (TSCA), the Inventory
Update Rule under TSCA, TRI reporting, and Occupational Safety and Health Administration (OSHA) regulations.
The sector is also affected by Risk Management Plan (RMP) requirements under the Clean Air Act (CAA) and the
High Production Volume (HPV) Challenge program. Manufacturers and formulators may also be subject to
Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) regulations.
•	Companies in the pharmaceutical industry are subject to the Food and Drug Administration's current Good
Manufacturing Practice regulations.
•	Under the Children's Health Chemical Testing Program, EPA may ask facilities to volunteer to conduct testing of
chemicals with identified children's health concerns.
•	Based on EPA air permit data, less than five percent of specialty-batch facilities are subject to Title V permitting
requirements under the CAA.11 Industry representatives suggest that this estimate may be low.
•	Preparing Title V permit applications is difficult because many specialty-batch facilities cannot predict what
processes/materials they will use in upcoming years. Pharmaceutical companies in particular may have a tough
time planning for the future due to the nature of their products/market.
•	Facilities experience difficulty in maintaining
confidentiality while meeting regulatory
> RMP requirements make process and input
information available to the public.
•	Food Quality Protection Act (FQPA) new
tolerance requirements may reduce the
availability of active and inactive ingredients
on the market, forcing manufacturers to
reformulate their products.
•	Regulatory agencies are seeking more data
from companies on a voluntary basis,
especially information on human health
Principle Findings: Specialty-Batch Chemical Sector
Draft: February 2000

Regulatory Requirements (continued)
•	Specialty-batch facilities that are considered major sources for air toxics are likely to be subject to one of the
following Maximum Achievable Control Technology (MACT) standards:
>	Hazardous Organic NESHAP for the synthetic organic chemical manufacturing industry;
>	Polymers and Resins (Groups I and IV);
->¦ Miscellaneous Organic NESHAP.
. Many facilities must obtain state air permits. In New Jersey, for example, facilities that exceed specific emission
thresholds must obtain an operating permit, which lists processes and equipment and specifies operational
requirements, monitoring requirements, and emission limits. Smallerfacilities must obtain preconstruction permits
and operating certificates.
. Formulators and manufacturers typically are required to obtain stormwater permits.
•	Specialty-batch facilities may generate substantial amounts of wastewater. Many facilities discharge wastewater
to publicly owned treatment works (POTWs). Based on EPA water permit data, less than five percent of specialty -
batchfacilities are direct dischargers that are subject to National Pollution Discharge Elimination System (NPDES)
permit requirements.12
•	Specialty-batch manufacturers that are direct or indirect dischargers are subject to effluent guidelines for specific
industrial categories, e.g., Organic Chemicals, Plastics & Synthetic Fibers; Paint Formulating; Pesticide Chemicals
Formulating, Packaging & Repackaging; Pesticide Chemicals Manufacturing; or Soap and Detergent
. According to EPA data on hazardous waste generation, between 15 and 20 percent of specialty-batch facilities are
Large Quantity Generators under the Resource Conservation and Recovery Act (RCRA).13
. Many current environmental regulations, particularly air permitting requirements and regulations governing waste
recovery and reuse, do not allow for the operational flexibility needed by specialty-batch manufacturers.
•	Specialty-batch facilities must also comply with Department of Transportation, Coast Guard, and International
Maritime Organization (IMO) requirements.
•	Thresholds for reporting chemical usage and
emissions are being lowered as regulatory
agencies seek more information on potential
and actual chemical releases and exposure.
•	Increased chemical testing programs require
spending of additional resources, often
affecting specialty-batch manufacturers
•	There is interest among industry and
regulators to consider multimedia permits and
broader exemptions.
•	The regulatory agencies are generally
responsive to public outcry/concerns; there is
a trend toward public regulation of industry.
Principle Findings: Specialty-Batch Chemical Sector
Draft: February 2000

Regulatory Compliance
•	Facilities that are not in a trade association may find it more difficult to comply with regulations because they have
less access to compliance assistance information. These non-member facilities represent a substantial segment of
the sector.
•	Small facilities in particular may be unintentionally out of compliance, i.e., unable to recognize and/or address
difficulties with environmental performance.
•	Under the current Enforcement Targeting Plan, EPA has identified parts of the chemical industry as national
priorities, in part due to the high rate of RCRA violations per inspection.14 The Agency was uncertain of
compliance status in the sector because of the small number of inspections over the past several years.
. The chemical industry will not be targeted as
a priority sector under EPA's 2000/2001
Enforcement Targeting Plan.
Beyond Compliance and other Voluntary Initiatives
•	Approximately 400 specialty-batch facilities, over seven percent of the sector, participate in Responsible Care®,
an initiative implementedby CMA and SOCMA that requires facilities to make continuous improvement of health,
safety, and environmental quality.
•	Due to the great variation among specialty-batch facilities and operations, no voluntary program will be universally
valuable to facilities in the sector.
•	Other voluntary programs in which specialty-batch facilities participate include:
Environmental Other
>	EPA's Wastewi$e program > ISO 9001 certification
>	EPA's Climate Wise program > OSHA's Voluntary Protection Program
->¦ EPA's 33/50 program
>	EPA's Green Lights program
->¦ ISO 14001 certification
>	HPV Challenge program
>	EPA's Consumer Labeling Initiative
>	Green Chemistry Award Program
>	State Chemical Industry Council programs similar to Responsible Care®
>	National Association of Chemical Distributors' Responsible Distribution program
•	ISO 14001 certification is becoming more
important for remaining competitive in
foreign markets.
•	Participation in voluntary programs has
Principle Findings: Specialty-Batch Chemical Sector
Draft: February 2000

1.	Customer needs. Facilities seek to develop new products, processes and technology in order to please customers
and meet their specifications/timeframes in the most cost-effective manner.
2.	Good environmental performance and image. Facilities engage in activities to improve their environmental
compliance and performance, to minimize emissions and waste, and to ensure the safe handling and use of their
products in order to:
a.	Meet their desire to be environmentally responsible, a good neighbor, and a good example for other
b.	Help allay public concern about potential impacts of a facility or the industry as a whole.
c.	Gain a marketing advantage. For example, manufacturers may gain a competitive advantage through
increased product stewardship activities. Industry representatives suggest that environmental performance
is often a business consideration for a company's larger customers.
d.	For formulators, advertise to end-use customers that their products and processes have less environmental
e.	For manufacturers, advertise to formulators that their chemicals are less toxic, that they are in compliance
with all regulations, and/or that they meet the requirements of Responsible Care®.
f.	Increase efficiency. For example, inspections take less time for facilities that are ISO 14001 certified.
-Time pressures affect a facility's ability to plan
proactive environmental management or seek
new pollution prevention equipment/techniques.
-Facilities seek pollution prevention and other
opportunities that can reduce the cost of
producing their products in order to remain
-The desire to maintain a good public image
prompts facilities to commit resources to
improve their environmental performance,
including participating in voluntary initiatives.
Principle Findings: Specialty-Batch Chemical Sector
Draft: February 2000

Economics/Marketing (continued)
3. Increase efficiency. Facilities have an economic incentive to develop technologies that are faster, more efficient,
use less energy, or reduce/recycle hazardous wastes.
—Facilities can improve efficiency by
committing resources to projects aimed at
decreasing energy use and waste generated.

—Facilities can utilize recycled materials instead
of virgin raw materials to reduce their costs of
purchasing process inputs and to gain customer
4. Incentives to stay under regulatory thresholds. Although risks may increase (e.g., increased number of
loadings/unloadings), facilities have economic and marketing incentives to stay under regulatory thresholds in order
to avoid the time and expenses associated with permitting and other requirements, such as:
a.	Title V emissions thresholds;
b.	CAA RMP chemical-specific thresholds;
c.	RCRA small quantity generator thresholds;
d.	Significant industrial user discharge thresholds for non-categorical limits;
-Facilities may commit resources to improve
environmental performance and discharge/emit
fewer pollutants into the environment. Efforts
may include raw material substitutions, pollution
prevention measures, emissions controls, etc.
-Facilities that are below the regulatory
threshold may choose not to invest resources in
developing innovative technologies, even though
they have not achieved zero discharge.
HPV Challenge program testing thresholds;
TSCA Inventory Update Rule;
State permitting thresholds;
-Facilities re-evaluate their operations and
material inventories in an effort to operate below
regulatory thresholds.
California's Air Toxics Hot Spots Program

Principle Findings: Specialty-Batch Chemical Sector
Draft: February 2000

Economics/Marketing (continued)
5. Facilities fear legal actions and other repercussions of noncompliance.
a. Enforcement actions, including large fines or imprisonment for violations, especially given the
determination of inspectors to find violations.
-Facilities invest in activities to achieve
compliance/improve environmental performance,
sometimes through voluntary programs.
b. Liability for end-use products (formulators).

c. Bad press/public image.

6. Increased competition/uneven playing field due to environmental regulations. To manage costs, facilities
consider the ease of doing business and certainty of regulatory timing when making location/relocation decisions.
In addition, the restrictiveness of regulations and the degree to which regulations are enforced are important factors.
Together, these factors affect the level of competition that facilities face from those under other jurisdictions.
a.	California and New Jersey have some of the most restrictive requirements in the U.S.
b.	Regulatory enforcement in India, China, and Mexico may be less stringent than in the U.S.
—A possible unintended effect of regulations is
that some companies decide to move to or site
new facilities in states or countries where
regulatory timing is more certain or where
regulations or enforcement are less stringent.
-Environmental regulations may not result in the
intended environmental improvements.
c.	Some countries do not recognize property rights or patents, putting U.S. companies at a disadvantage.
d.	Tariff barriers create a disadvantage.
-Companies are reluctant to locate in countries
that do not recognize property rights or patents.
e. Signing the Basel Agreement could benefit U.S. firms with international operations.

f. Foreign countries may apply different standards and fees for chemical use/registration (e.g., chemical
registration in Canada differs from TSCA requirements; European Inventory of Existing Chemical

Principle Findings: Specialty-Batch Chemical Sector 9
Draft: February 2000

Regulatory Requirements
7. Time to get products to market. Extensive time and resources are required to bring new or modified products
to market, in part due to restrictive regulatory requirements. Regulatory inefficiencies exist more often at the federal
level than at the state level.
a.	FIFRA requires a facility to obtain a registration amendment when making changes in product composition,
including those that reduce or have no effect on the toxicity of the product.
b.	FIFRA and FQPA review deadlines are not always met by EPA.
c.	Air permitting process (permit applications, amendments, New Source Reviews) interferes with production
schedules, a company's ability to meet customers' needs, and business opportunities.
d.	Need to submit additional Pre-Manufacture Notice information to use a chemical for a purpose other than
the one for which it was originally registered.
8. Cost of compliance.
a.	Cost of obtaining environmental permits for new buildings, process lines, products, and modifications can
hinder potential environmental improvements associated with upgrades.
b.	Cost of complying with multiple regulations. Examples of burdensome and time consuming regulatory
requirements include: Title V air permitting requirements; BACT requirements; and Community Right-to-
Know requirements. For small companies, testing requirements canbe particularly costly. Compliance with
these and other regulations may involve use of consultants or in-house staff, purchase of new control
equipment, and completion of substantial amounts of paperwork. Industry would like to see EPA focus on
increasing compliance with existing regulations rather than developing new ones.
c.	Investments in "compliance" projects generally pay for themselves relatively quickly.
d.	The cost of routine compliance tasks can be particularly critical for smaller firms.
-There is a disincentive for facilities to develop
innovative environmental improvements.
-Resources spent on paperwork reduce
opportunities for innovative environmental
-Newer, "cleaner" chemicals may not be
produced or be readily available to industry and
the public as substitutes for older and possibly
more toxic chemicals.
-Facilities may be overly cautious in deciding
upon upgrades or decide not to pursue
environmental enhancements that would require
permit modifications.
-Facilities focus resources on compliance rather
than environmental performance and innovation.
Principle Findings: Specialty-Batch Chemical Sector
Draft: February 2000

Regulatory Requirements (continued)
9. One-size-fits-all regulations. Regulatory agencies develop one-size-fits-all regulations rather than industry-
specific regulations, because agencies may be unaware of small business segments of industry or have only a general
understanding of the differences between sectors. Furthermore, the specialty-batch sector is not uniform; there are
great differences between facilities and between plants within a facility, necessitating flexibility at the plant level.
a.	Increased chemical testing programs add layers of additional resource requirements, often affecting
specialty-batch manufacturers disproportionately.
b.	EPCRA Tier II hazardous chemical reporting, TRI Form R reporting, TSCA Inventory Update Rule (IUR)
reporting, 12(b) reporting. Industry representatives suggest conducting drills with the local fire department
as a more useful alternative to Tier II reporting.
-Facilities focus resources only on compliance
rather than on innovation because regulations
are not applied appropriately.
-Facilities spend much time trying to comply
with regulations that are written for commodity
chemical manufacturers (e.g., OSHA's required
list of chemicals on site).
Paperwork requirements generally apply to solvents rather than active ingredients used by the specialty-
batch industry. Industry representatives question the usefulness of these reports.

Regulations may focus on a broad segment of the industry rather than specific activities of facilities within
the industry (e.g., FIFRA pesticide wastewater regulation for formulators).

\Are there other examples?]

10. Single media approach. Many regulations focus on controlling releases to a single media. This may cause a shift
of releases from one media to another rather than an overall reduction in releases to the environment, as can be
achieved through a cross-media approach.
-Facilities focus on meeting media-specific
requirements, which can lead to cross-media
transfer and limit the potential for achieving true
reductions in environmental releases.
Principle Findings: Specialty-Batch Chemical Sector
Draft: February 2000

Regulatory Requirements (continued)
11. Duplication, different interpretations, inconsistencies.
a.	EPA headquarters and regional offices sometimes interpret rules differently. Examples include air
permitting and hazardous waste management requirements.
b.	Regulations that have duplicative or inconsistent requirements. Examples include duplicative requirements
of EPA's RMP and OSHA's Process Safety Management (PSM) plan; use of different risk scenarios under
FDA's Federal Food, Drug, and Cosmetic Act requirements for testing new products and EPA's FIFRA; and
different EPA and DOT reporting thresholds for spills.
c.	Interpretation of rules may vary across states.
d.	EPA Regions differ in their priorities. For example, some promote innovative technologies, while others
are stricter about first completing paperwork. There are occasions where a Region may act independently
from the Agency.
e.	Federal oversight of issues that have already been resolved at the state or local level lengthens but does not
improve the outcome of the regulatory process.
f.	[Are there other examples?]
12. Conservative assumptions and politics. Regulatory requirements, policies, and programs are sometimes based
on conservative assumptions and political considerations instead of "sound science," which increases regulatory
burden and compliance costs. Examples include:
a.	Required use of worst case scenarios under FIFRA and for CAA potential-to-emit calculations and RMPs.
The chance of a worst case scenario actually occurring may be negligible;
b.	Great Lakes Initiative effluent standards, which are below background levels;
c.	Potential reduction of TRI threshold quantities;
d.	Proposed PM-2.5 standards under CAA;
-Facilities may choose not to invest in
innovative improvements based on
-Facilities may implement innovative
environmental ideas, but in the process violate
certain regulations due to misinformation. For
example, a facility may not know that a permit
modification is required.
-Facilities focus resources on compliance rather
than environmental performance improvements
that may be more cost-effective and
environmentally beneficial.
—Facilities may make environmental
improvements that are not cost-effective for
industry to achieve or result in changes that do
not significantly improve the environment.
-Facilities might be less opposed to lower
thresholds if EPA could provide indicators of the
benefits and could show it has assimilated and
acted upon what it has already regulated.
Principle Findings: Specialty-Batch Chemical Sector
Draft: February 2000

Regulatory Requirements (continued)
HPV Challenge Program;

Proposed Children's Health Chemical Testing Program;
Executive orders on environmental justice issues;

California's approach to RMPs.

\Are there other examples specific to state or local regulations?]

13. Regulatory requirements may make it difficult to maintain confidentiality. The public and other companies,
including foreign competitors, can gain access to a facility's information, which may threaten its ability to protect
confidential business information and result in adverse economic impacts.
-Facilities decide to focus on improving
community relations to avoid potential
misunderstandings about facility operations.
RMP requirements make process and input information available to the public.

Facility TRI information is publicly available and does not give facilities credit for recycling or reduction

Proposed FIFRA inert ingredients rule;

TSCAIUR and proposed changes;

New Jersey requirement for top five ingredients;

Department of transportation labeling requirements and shipping names;
California Business Plan/Hot Spots require a company to go to court to prevent release of data for FOIA

Principle Findings: Specialty-Batch Chemical Sector
Draft: February 2000

Regulatory Requirements (continued)
14. Counterproductive regulatory programs.
a.	FQPA new tolerance requirements may reduce the availability of active and inactive ingredients on the
market, forcing manufacturers to reformulate their products.
b.	Federal, state, and local regulations under the Clean Air Act and Clean Water Act lack flexibility for
emissions and wastewater discharge trading.
-The new requirements may force companies to
reformulate products to be more environmentally
-Companies may use ingredients that are not
fully tested.
-Facilities may have to invest in environmental
improvements that are not cost-effective.
-Facilities may choose not to spend time and
resources identifying opportunities for reducing
pollution at a lower cost, because the regulations
do not allow for flexible alternatives.
15. Constraints/disincentives to recycling.
a.	Low disposal costs of non-hazardous wastes.
b.	Regulatory constraints/disincentives under RCRA:
•	RCRA's current definition of hazardous waste places many restrictions on reusing materials. This issue
may affect tollers in particular. Definitions of solid waste, co-products, and by-products are also
. Difficult to recycle waste streams within the 90-day storage limit because of need to accumulate
sufficient volume for use or resale. Significant cost/burden of obtaining RCRA permit to hold waste
over 90 days.
•	Speculative accumulation rules do not provide sufficient flexibility to allow for increased recycling
activities. The limitations (e.g., accumulation for up to one year and requirement to recycle at least 75
percent of the material) are too restrictive.
•	Some regulatory agencies do not provide credit for out-of-process recycling. For example, New Jersey
facilities can not include -out-of-process recycling activities in pollution prevention reports they must
file with the state.
-Facilities choose to send waste to landfills or
cement kilns rather than reusing or recycling on-
-Facilities are conservative in their waste
management approaches in order to avoid future
Superfund liability. Disposal costs may be
greater in the long term.
Principle Findings: Specialty-Batch Chemical Sector
Draft: February 2000

Recycling/Reuse (continued)
c.	Difficulty of finding markets for recycling small quantities of low-value wastes generated by
specialty-batch processors.
d.	A collective recycling program for companies (similar to household recycling collection) may be
effective; however, such a program could raise liability concerns.
e.	Lack of technology (e.g., for recycling residual isobutane aerosols from the packaging process).
f.	Difficulty of collecting rinse water for reuse at facilities where equipment is spread out across the site.
g.	Customers may have negative perception of products made from recycled "waste."
h.	Repositories for and information on reusable wastes (e.g., latex paints, solvents, and pesticides) could
facilitate waste exchanges, particularly for small businesses. Incentives may be necessary, given the
lack of success of the recycled paper and plastic markets.
i.	Chemicals are banned except for particular uses, creating a barrier to chemical reuse.
j. Fear of liability if the customer goes out of business or uses a material inappropriately.

16. Lack of technology or in-house expertise (especially for small businesses) to manufacture a new product
safely/quickly. Small companies in particular lack the resources for investigating or keeping up with the latest
technologies, and/or they do not know how to use technology to approach their problems. Verification that a
technology does what it claims is important.
-Facilities may turn away customers if they do
not have the necessary technology to produce a
new product.
-Facilities may turn to consultants, who are not
always current on the latest technologies for
recent process developments in the specialty-
batch industry.
-Small companies in particular may wait until a
new technology has been proven effective before
making an investment.
Principle Findings: Specialty-Batch Chemical Sector
Draft: February 2000

Technology (continued)
17.	Difficulty of funding R&D (e.g., for new P2 technology) due to limited capital and other priorities. Banks
are reluctant to finance investments that will not yield a return, or that will not guarantee compliance. Companies that
are in compliance appear less risky to banks. Banks are unlikely to finance an investment that goes beyond
compliance, unless the facility can demonstrate some sort of return.
18.	Prescriptive regulations. Technology-based regulations create a disincentive to develop alternative technologies
and processes, in part because obtaining agency(s) approval for new technology can be resource intensive. For
example, scrubber technology may be effective for multiple applications, but facilities are reluctant to invest resources
to demonstrate to EPA that it works. For the specialty-batch sector, technologies are process-specific.
19.	Registration of new chemicals. Requirements for registration of new chemicals, particularly in foreign countries,
are a constraint to the research and development of new technologies for the specialty-batch chemical industry.
-Facilities may choose not to invest in long-term
environmental and process improvements that
could save the company money over time.
-Facilities focus resources on compliance rather
than risk investing in technology that may not be
-Facilities devote fewer resources to developing
new technologies that could have economic and
environmental benefits.
20. Complexity of regulations and difficulty of staying informed.
a.	Language in the Federal Register is difficult to understand. Facilities want straightforward information to
help answer the following questions: "Does this regulation apply to me?" "What do I need to do to
comply?" Finding this information often requires much referencing of other documents. Therefore,
opportunities for overlooking caveats are numerous.
b.	Insufficient government technical assistance and educational outreach, particularly relating to the
applicability of existing and new requirements. This has led to missed opportunities for increasing
compliance levels (e.g., developing applicability flowcharts, tutorials, and interactive websites).
c.	Companies lack time and resources for taking advantage of available compliance assistance, such as
documents and websites.
-Facilities spend resources on in-house regulatory
staff, consultants, and/or attorneys to interpret and
comply with regulations.
-Facilities join trade associations in part to utilize
provided resources for achieving compliance/
improving environmental performance.
Principle Findings: Specialty-Batch Chemical Sector
Draft: February 2000

Information/Assistance (continued)
d.	Compliance assistance materials are not always helpful. For example, they typically do not provide simple,
plain English answers. In addition, replies to requests for assistance from EPA and OSHA are often focused
on legal issues and do not answer specific questions. The plain language initiative has not been very
e.	Inspectors may be ignorant of the difference between continuous and batch processes, and significant power
is vested in lower-level agency employees, which can cause agencies to miss opportunities to identify areas
for improvement/share information to improve environmental performance.
f.	Industry trade associations provide performance improvement initiatives and guidance, regulatory
compliance assistance, and advocacy support.
g.	Small business assistance programs may miss companies/facilities that do not qualify for assistance based
on size but still need help.
h.	U.S. subsidiaries of international companies, which may not qualify for assistance based on size, may
receive little compliance assistance from the parent company.
i.	Some state agencies and/or Chemical Industry Councils (CICs) have developed programs/partnerships for
helping smaller companies. Industry representatives noted that the Illinois CIC is particularly helpful.
j. Compliance assistance information may be provided too late; by the time assistance is available, companies
may already have spent time and resources trying to understand the regulations.
k. Several resources are particularly useful: EPA's ChemAlliance website and the New Jersey compliance
assistance materials have saved time and eliminated confusion.
1. Assistance that must be paid for is less appealing than free services and resources.
m. Internal EPA policy memos may change regulations, unbeknownst to industry. EPA does not routinely
share these interpretive memos with the regulated community.
-Facilities are reluctant to work constructively
with agencies to test innovative approaches for
improving environmental performance. They do
not want to implement projects that may become
mired in legal hassles.
-Facilities choose not to fight misconceptions
about the industry held by high-level agency
employees due to the high costs that may be
Principle Findings: Specialty-Batch Chemical Sector
Draft: February 2000

Information/Assistance (continued)
21. Reluctance to take advantage of government assistance.
a.	Fear that asking for compliance and technical assistance from regulatory agencies will result in being
targeted for inspections.
b.	Inconsistency within the EPA (between HQ and Regions, and between two different Regions) in
responding to compliance questions.
c.	Inspectors may not be willing to provide technical or practical assistance (e.g., unwilling to make
inspection checklist available to facilities); only look for violations. Agency personnel have varying
knowledge levels of the industry.
-Facilities pay outside sources to provide
information rather than take advantage of
established programs and readily available
information provided by government agencies.
-Facilities may be out of compliance with the
law when they do not seek needed assistance
from regulatory agencies.
Voluntary Programs
22. Lack of incentive/disincentives for participating in voluntary programs. Some facilities have achieved
environmental performance improvements through participating in voluntary programs. However, utilization and
growth of some programs have suffered from a lack of incentive and/or disincentives for participation. Companies
seek tangible benefits.
a.	Benefits of ISO 14001 certification are not worth the costs for companies operating primarily in domestic
b.	Government programs suchas Texas/Clean Industries 2000 do not allow banking of air emissions reductions
for use on future projects.
c.	Threshold volume for testing under the voluntary HPV Challenge program is too low given the high cost
of chemical testing and the nature of the specialty-batch sector.
d.	Lack of regulatory flexibility; e.g., regulatory restrictions prevent facilities from implementing innovative
solutions that could result in environmental performance beyond compliance.
e.	Fear that implementing management approaches requiring written management plans (e.g., Responsible
Care® and ISO 14001) may subject facilities to greater scrutiny.
f.	Voluntary programs can be overly prescriptive.
-Facilities may not participate in voluntary
programs, therefore programs do not achieve the
maximum environmental improvements.
-Facilities may participate in voluntary programs
as a means for instilling pride in their employees.
-Facilities participate in voluntary programs to
gain guidance from the Agency, and to receive
individual attention outside of enforcement.
-Facilities select voluntary programs that
provide tangible benefits and have low costs.
-Facilities may prefer programs that encourage
continuous improvement over those with specific
goals and required procedures.
Principle Findings: Specialty-Batch Chemical Sector
Draft: February 2000

Voluntary Programs (continued)
g.	EPA's disregard of compliance and performance history in setting penalties for violations; companies with
generally good performance are treated the same as frequent violators.
h.	Lack of Agency support for multimedia approaches to solving environmental problems.
i.	Some voluntary programs require disclosure of confidential business information.
j. Under OSHA's voluntary inspection program, facilities receive audits and agree to make the necessary
improvements during a reasonable timeframe. OSHA also provides incentives such as reduced workers'
compensation and insurance premiums.
k. Through Texas' OSHCON program, facilities receive exemption from inspections for one year.
1. Voluntary initiatives promote better public perception of the industry.
m. Good incentives for participation might include exemptionfrom random inspections, paperwork reductions
(e.g., consolidated reporting), reduced monitoring requirements (e.g., HON leak detection and control), tax
incentives for reduced emissions, and/or public recognition of achievements by EPA.
[ What is the potentialfor voluntary programs to achieve environmental improvements? Are certain types of programs
(e.g., stewardship programs) more likely to succeed than others?]
-Facilities have increasingly chosen to
participate in OSHA's voluntary inspection
program. In some states, companies even pay a
small fee to have OSHA conduct the inspection.
-Facilities continue to participate in voluntary
programs that have tangible benefits. For
example, potential customers are quicker to reach
agreement or raise fewer concerns once they
know a facility participates in Responsible
Care® or ISO 14001.
Principle Findings: Specialty-Batch Chemical Sector
Draft: February 2000

Exhibit 1
SIC Code
SIC Description
Inorganic Pigments
Industrial Organic Chemicals, Not Elsewhere Classified
Plastic Materials, Synthetic Resins, & Non-Vulcanizable
Synthetic Rubber (Vulcanizable Elastomers)
Manmade Organic Fibers, Except Cellulosic
Medicinal Chemicals & Botanical Products
Pharmaceutical Preparations
In Vitro & In Vivo Diagnostic Substances
Biological Products, Except Diagnostic Substances
Soaps & Other Detergents, Except Specialty Cleaners
Specialty Cleaning, Polishing, & Sanitation Preparations
Surface Active Agents, Finishing Agents, Sulfonated Oils,
& Assistants
Perfumes, Cosmetics, & Other Toilet Preparations
Paints, Varnishes, Lacquers, Enamels, & Allied Products
Gum & Wood Chemicals
Cyclic Organic Crudes & Intermediates, and Organic Dyes
& Pigments
Industrial Organic Chemicals, Not Elsewhere Classified
Pesticides & Agricultural Chemicals, Not Elsewhere
Adhesives & Sealants
Printing Ink
Carbon Black
Chemicals & Chemical Preparations, Not Elsewhere
* Denotes SIC Codes estimated to be at least 50 percent specialty-batch.
SOURCE: Based on data from U.S. Census Bureau, 1992 Census of Manufactures, T able 1 - lb: Statistics for Industry Groups and
Industries: 1992 and Earlier Years. Demographic data are not readily available for the specialty-batch segment of the chemical
industry. These data are reported by Standard Industrial Classification (SIC) Codes, but most of the codes within SIC 28
(Chemical and Allied Products) include both commodity and specialty-batch processing. To compile demographic data for this
sector, we consulted with industry experts to estimate the percentage of each 4-digit SIC code within SIC 28 that is likely to be
specialty-batch manufacturing or formulating and applied these percentages to the available demographic data.
Principal Findings: Specialty-Batch Chemical Sector 20
Draft: January 2000

1	Based on data from U.S. Census Bureau, 1992 Census of Manufactures, Table 1-lb: Statistics for Industry Groups
and Industries: 1992 and Earlier Years. Demographic data are not readily available for the specialty-batch segment of
the chemical industry. These data are reported by Standard Industrial Classification (SIC) Codes, but most of the codes
within SIC 28 (Chemical and Allied Products) include both commodity and specialty-batch processing. To compile
demographic data for this sector, we consulted with industry experts to estimate the percentage of each 4-digit SIC code
within SIC 28 that is likely to be specialty-batch manufacturing or formulating and applied these percentages to the
available demographic data.
2	Specialty-batch sales reported in Strategic Analysis, Incorporated, in" Specialties' New Lineup," Chemical Week, April
30, 1997.
3	Value of shipments for all manufacturing and SIC 28 reported in U.S. Census Bureau, 1996 Annual Survey of
Manufactures: Statistics for Industry Groups and Industries, 1998.
4	U.S. Census Bureau, 1995 Annual Survey of Manufactures, Tables 2 and 3, 1996.
5	Ian Young, et al., "Specialties' New Lineup," Chemical Week, April 30, 1997.
6	Kerri Walsh, "Specialties Heat Up," Chemical Week, January 7, 1998. According to a SOCMA representative,
pharmaceuticals is a high growth area among members of the trade association.
7	Environmental data are not readily available for the specialty-batch segment of the chemical industry. These data are
reported by Standard Industrial Classification (SIC) Codes, but most of the codes within SIC 28 (Chemical and Allied
Products) include both commodity and specialty-batch processing. To compile environmental data for this sector, we
consulted with industry experts to estimate the percentage of each 4-digit SIC code within SIC 28 that is likely to be
specialty-batch manufacturing or formulating and applied these percentages to the available environmental data.
8	Based on U.S. EPA Office of Solid Waste, Environmental Protection Agency Biennial Reporting System, February,
9	U. S. Energy Information Administration, 1994Manufacturing Energy Consumption Survey and U.S. EPA's Inventory
of U.S. Greenhouse Gas Emissions and Sinks: 1990-1994 and 1990-1996.
10	U.S. EPA Office of Pollution Prevention and Toxics, 1995 Toxics Release Inventory, 1997.
"U.S. EPA Office of Air Quality Planning and Sta nda rds. , I IRS I Jala, Source SIC Report, December 3, 1998.
12U.S. EPA Envirofacts Warehouse, Water Discharge Permits, December 7, 1998.
13	U.S. EPA Office of Solid Waste, Environmental Protection Agency Biennial Reporting System, February, 1997.
14	U.S. EPA, Fiscal Year 98/99 OECA Memorandum of Agreement (MOA) Guidance, June 1997.
Principal Findings: Specialty-Batch Chemical Sector 21
Draft: January 2000