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Economic Impact Analysis for the
Proposed Standards of Performance for Steel Plants:
Electric Arc Furnaces and Argon-Oxygen
Decarburization Vessels
U.S. Environmental Protection Agency
Office of Air and Radiation
Office of Air Quality Planning and Standards
Research Triangle Park, NC 27711
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EPA-452/R-22-001
April 2022
Economic Impact Analysis for the
Proposed Standards of Performance for Steel Plants:
Electric Arc Furnaces and Argon-Oxygen Decarburization Vessels
U.S. Environmental Protection Agency
Office of Air Quality Planning and Standards
Health and Environmental Impacts Division
Research Triangle Park, NC
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CONTACT INFORMATION
This document has been prepared by staff from the Office of Air and Radiation, U.S.
Environmental Protection Agency. Questions related to this document should be addressed to the
Air Economics Group in the Office of Air Quality Planning and Standards, U.S. Environmental
Protection Agency, Office of Air and Radiation, Research Triangle Park, North Carolina 27711
(email: OAQPSeconomics@epa.gov).
ACKNOWLEDGEMENTS
In addition to U.S. EPA staff from the Office of Air and Radiation, personnel from RTI
International contributed data and analysis to this document.
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TABLE OF CONTENTS
Table of Contents i
List of Tables n
List of Figures hi
1 Introduction 1-1
1.1 Industry Background 1-1
1.1.1 Electric Arc Furnace Production Processes and Air Emissions 1-1
1.1.2 Domestic Trends in Steel Production 1-2
1.2 Legal and Economic Basis for this Rulemaking 1-4
1.2.1 Statutory Requirements 1-4
1.2.2 Market Failure 1-1
1.3 This Proposal 1-5
1.3.1 Regulatory Background 1-5
1.3.2 Proposed Requirements 1-6
1.4 Baseline and Regulatory Options 1-7
1.5 Methodology 1-7
1.6 Organization of this EIA 1-8
2 Emissions and Engineering Costs Analysis 2-1
2.1 Introduction 2-1
2.2 Description of Regulatory Options 2-1
2.3 Model Plant-level Compliance Cost and Emissions Reduction Estimates 2-1
2.3.1 Model Plant-level Compliance Cost Estimates 2-2
2.3.2 Model Plant-level Emissions Reduction Estimates 2-6
2.4 Projected Compliance Costs and Emissions Reductions 2-8
2.4.1 Projection of Potentially Affected Sources 2-8
2.4.2 Projected Compliance Cost Estimates 2-10
2.4.3 Projected Emissions Reduction Estimates 2-11
2.5 Uncertainties and Limitations 2-14
3 Economic Impact Analysis and Distributional Assessments 3-1
3.1 Introduction 3-1
3.2 Economic Impact Analysis 3-1
3.3 Small Business Impact Analysis 3-5
3.4 Employment Impact Analysis 3-7
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LIST OF TABLES
Table 1-1 Regulatory Options Examined in this RIA 1-7
Table 2-1 Regulatory Options Examined in this EIA 2-1
Table 2-2 Compliance Cost Estimates by Model Plant Size across Proposed Requirements (2020 dollars) 2-6
Table 2-3 PM and PM2.5 Emissions Reduction Estimates by Model Plant Size and Proposed Requirement (short
tons per year) 2-8
Table 2-4 Capacity Ranges Used to Categorize EAFs into Model Plant Size Categories 2-9
Table 2-5 EAFs Constructed from 2011 to 2020 and Announced Future EAFs, Capacity, and Assumed Model
Plant Category3 2-9
Table 2-6 Projected Counts of Potentially Affected EAF Facilities 2-10
Table 2-7 Upper Bound Estimate of the Projected Capital and Annual O&M Compliance Costs, 2023-2032
(millions of 2020 dollars) 2-11
Table 2-8 Upper Bound Estimate of the Projected Present Value and Equivalent Annual Value of Compliance
Costs, 2023-2032 (2020 dollars) 2-11
Table 2-9 Health Effects of the Projected PM2.5 Emissions Reductions 2-12
Table 2-10 Projected PM and PM2.5 Emissions Reductions, 2023-2032 (short tons) 2-13
Table 2-11 Estimated PM2.5-related Health Benefits Per Ton by Discount Rate and Estimate (2020 dollars)3.2-14
Table 3-1 Firms that Own Potentially Affected Existing EAFs, Number of EAFs Owned and Firm-Level
Employment and Revenues 3-3
Table 3-2 Firm-level Employment and Revenues for EAFs Constructed from 2011 to 2020 and Announced
Future EAFs, Capacity, and Assumed Model Plant Category 3-4
Table 3-3 Hypothetical Cost-to-Sales Ratios under the Proposal 3-5
Table 3-4 Small Businesses that Own Potentially Affected EAFs, Number of EAFs Owned and Firm-Level
Employment and Revenues (Source: D&B Hoovers and Firm Websites) 3-6
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LIST OF FIGURES
Figure 1-1 Total Domestic Steel Production and Capacity (Million Metric Tons), 2000 to 2019 1-2
Figure 1-2 Domestic Steel Production Share by Furnace Type (Percent), 2000 to 2019 1-3
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1 INTRODUCTION
1.1 Industry Background
1.1.1 Electric Arc Furnace Production Processes and Air Emissions
An electric arc furnace (EAF) is a metallurgical furnace used to produce carbon and alloy
steels in the steel industry. The input material to an EAF is typically 100 percent scrap steel.
Cylindrical, refractory-lined EAFs are equipped with carbon electrodes that are raised or lowered
through the furnace roof. With electrodes retracted, the furnace roof can be rotated to permit the
charge of scrap steel by overhead crane. Electric current is passed between the electrodes and
through the scrap, generating arcing and enough heat to melt the scrap steel charge. Alloying
agents and fluxing materials usually are added through doors on the side of the furnace. After the
melting and refining periods, slag (an impurity) and refined steel are poured from the furnace.
If an argon-oxygen decarburization vessel (AOD) is present, it follows the EAF in the
production sequence and is used to oxidize carbon, silicon, and impurities, such as sulfur, and to
reduce alloy additions compared to an EAF alone. Use of AODs reduces EAF heat times,
improves quality control, and increases daily steel production. AODs are primarily used in
stainless steel making.
The production of steel in an EAF is a batch process. Cycles, or heats, range from about
1.5 to 5 hours to produce carbon steel and from 5 to 10 hours to produce alloy steel. Scrap steel
is charged to begin a cycle, and alloying agents and slag forming materials are added for
refining. Stages of each cycle normally are charging, melting, refining (which usually includes
oxygen blowing), and tapping. All of these operations generate PM emissions.
Air emission control techniques typically involve an air emission capture system and a
gas cleaning system. Air emission capture systems used in the EAF industry include direct shell
evacuation control (DEC) systems, side draft hoods, combination hoods, canopy hoods,
scavenger ducts, and furnace enclosures. The DEC system consists of ductwork attached to a
separate opening, or "fourth hole", at the top (or roof) of the furnace, which draws emissions to a
gas cleaner and which works only when the furnace is upright and the top (or roof) is in place.
Side draft hoods collect furnace off gases from around the electrode holes and work doors after
the gases leave the furnace. A combination hood incorporates elements from the side draft and
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DEC systems. Canopy hoods and scavenger ducts are used to address charging and tapping
emissions. Baghouses are typically used as gas cleaning systems, i.e., control devices. Particulate
matter emissions from the furnace via side draft or DEC systems are called "primary" emissions,
and emissions from charging and tapping are called "secondary" emissions.
1.1.2 Domestic Trends in Steel Production
Annual steel production in the U.S. has varied since 2000 but can be seen to have
declined with average production over the 2000 to 2009 period at about 92 million metric tons
per year, and about 84 million metric tons per year over the 2010 to 2019 period (Figure 1-1).
During this period, production capacity also varied and averaged about 113 million tons over
both the 2000 to 2009 and 2010 to 2019 periods (Figure 1-1).
140
120
100
80
60
40
20
^ ^ ^ ^
Steel Production (Million Metric Tons)
Capacity (Million Metric Tons)
Figure 1-1 Total Domestic Steel Production and Capacity (Million Metric Tons), 2000 to
20191
As shown in Figure 1-2, the share of domestic steel production from EAFs has risen from
2000 to 2019, as steel producers in the U.S. have continued to shift from Blast Furnace/Basic
Oxygen Furnace (BF/BOF) to EAFs since the 1990s.
1 USGS National Minerals Information Center. Iron and Steel Statistics and Information.
https://www.usgs.gov/centers/national-minerals-information-center/iron-and-steel-statistics-and-information.
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100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
•Basic Oxygen Furnaces (%)
¦Electric Arc Furnaces (%)
Figure 1-2 Domestic Steel Production Share by Furnace Type (Percent), 2000 to 20192
The increase in the production share of EAFs is due to a combination of factors. EAF
production relies primarily on scrap steel, of which the U.S. has a large supply. The U.S. has
been the world leader in scrap exports and has annual scrap production equal to total domestic
steel production.1 Since scrap is distributed broadly across the U.S., siting EAF facilities is less
restrictive compared to BF/BOF production whose feedstock is mainly raw iron ore/taconite that
is found in Minnesota and Michigan. Additionally, EAF production has been historically
confined to lower quality steel, such as rebar or sewer piping. This led to expectations that
BF/BOF production would eventually level off. However, technical advances and investment
have allowed EAF producers to begin producing advanced high strength steels.3 Imports of high-
quality scrap steel also have increased.
2 USGS National Minerals Information Center. Iron and Steel Statistics and Information.
https://www.usgs.gov/centers/national-minerals-information-center/iron-and-steel-statistics-and-information
3 S&P Global Platts, US Steel Sector Thrives as Mills Move up Quality Ladder, Nicholas Tolomeo, Insight Blog,
May 9, 2019. https://www.spglobal.com/platts/en/market-insights/blogs/metals/050919-us-steel-sector-thrives-
as-mills-move-up-quality-ladder
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1.2 Legal and Economic Basis for this Rulemaking
1.2.1 Statutory Requirements
Section 111 of the Clean Air Act (CAA) requires the EPA Administrator to list categories
of stationary sources that in the Administrator's judgment cause or contribute significantly to air
pollution that reasonably may be anticipated to endanger public health or welfare. The EPA must
then issue performance standards for new (and modified or reconstructed) sources in each source
category. These standards are referred to as new source performance standards (NSPS). The EPA
has the authority to define the scope of the source categories, determine the pollutants for which
standards should be developed, set the emission level of the standards, and distinguish among
classes, type, and sizes within categories in establishing the standards. The section requires the
Administrator to review and revise, if appropriate, the NSPS every eight years.
Section 111 also provides that performance standards are to "reflect the degree of
emission limitation achievable through the application of the best system of emission reduction
which (taking into account the cost of achieving such reduction and any nonair quality health and
environmental impact and energy requirements) the Administrator determines has been
adequately demonstrated." We refer to this level of control as the best system of emission
reduction (BSER).
1.2.2 Market Failure
Many regulations are promulgated to correct market failures, which uncorrected lead to a
suboptimal allocation of resources. Air quality and pollution control regulations address
"negative externalities" whereby the market does not internalize the full opportunity cost of
production borne by society as public goods such as air quality are unpriced.
While recognizing that the optimal social level of pollution may not be zero, PM
emissions impose costs on society, such as negative health and welfare impacts, that are not
reflected in the market price of the goods produced through the polluting process. For this
regulatory action the good produced is steel manufactured via EAFs and AODs. If producers
pollute the atmosphere when producing steel, the social costs will not be borne by the polluting
firm but rather by society as a whole. Thus, the producer is imposing a negative externality, or a
social cost of emissions, on society. The equilibrium market price of EAF and AOD-produced
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steel may fail to incorporate the full opportunity cost to society of these products. Consequently,
absent a regulation on emissions, producers will not internalize the social cost of emissions and
social costs will be higher as a result. This regulation will work towards addressing this market
failure by causing affected producers to further internalize the negative externality associated
with PM emissions.
1.3 This Proposal
1.3.1 Regulatory Background
This action proposes to amend existing new source performance standards (NSPS) under
the CAA section 111(b) for EAFs and AODs in the steel industry. The EPA is also proposing
new standards of performance for EAFs and AODs in the steel industry. This document presents
the regulatory impact analyses (RIA) for both the proposed amendments and new standards.
More detail on each of the proposed actions follows a brief background on the regulatory history
for this source category.
In 1975, the first NSPS for EAF were promulgated as subpart AA for EAF that
commenced construction after October 21, 1974. (40 FR 43852). The 1975 NSPS set particulate
matter (PM) standards for emissions from EAF control devices and set opacity limits for EAF
melt shop emissions, control device exhaust, and dust handling procedures
In 1984, the EAF NSPS were revised (49 FR 43843) and a new subpart was promulgated
as subpart AAa to add AOD as affected units for EAF and AOD that commenced construction
after August 17, 1983. Additionally, the 1984 amendments raised the melt shop opacity for AA
from 0 percent to 6 percent, same as the new subpart AAa. Both subparts AA and AAa (and
Appendix A to 40 CFR part 60) were revised in the 1984 amendments to include EPA Method
5D for the determination of PM emissions from positive-pressure fabric filters, which are
common control devices for EAF and AOD.
Subparts AA and AAa subsequently underwent a series of revisions, including:
• On February 14, 1989 (54 FR 6672), subparts AA and AAa (and Appendix A) were
revised to consolidate EPA test methods and referencing.
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• On May 17, 1989 (54 FR 21344), minor corrections were made to the February 1989
revisions.
• On March 2, 1999 (64 FR 10109), subparts AA and AAa were revised to add an option to
monitor furnace static pressure instead of melt shop opacity and to monitor baghouse fan
amperage instead of baghouse flowrate.
• On October 17, 2000 (65 FR 61758), amendments were made to subparts AA and AAa to
promulgate Performance Specification (PS) 15 for certifying continuous emission
monitoring systems (CEMS), to reformat various methods per recommendations by the
Environmental Monitoring Management Council, and to make miscellaneous technical
and editorial corrections.
• On February 22, 2005 (70 FR 8530), 40 CFR part 60, subparts AA and AAa were
amended to add bag leak detection systems (BLDS) as an alternative monitoring method
to the continuous opacity monitoring systems currently cited in the rules.
1.3.2 Proposed Requirements
For this proposed action, the EPA reviewed the requirements of 40 CFR part 60, subpart
AA and AAa and found that there were improvements in the performance of EAFs, AODs, and
their control devices since 1984. As explained in the preamble of the proposal, the EPA has
developed proposed performance standards for PM emissions and melt shop opacity that reflect
BSER, considering the cost of achieving such emission reductions, and any nonair quality health
and environmental impacts and energy requirements. The EPA is also making minor changes to
the existing rules, subparts AA and AAa, to clarify and refine some of the current provisions by
adding, removing, or revising ambiguous or outdated definitions, compliance procedures, and
measurement, monitoring, and reporting requirements; add alternative monitoring procedures;
and require electronic reporting. These changes also will be included in the new subpart.
The specific proposed requirements whose costs and emissions impacts are examined in
this EIA include:
• A proposed a new subpart AAb under which EAF facilities that begin construction,
reconstruction, or major modifications after publication of the proposal in the federal
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register would need to comply with a PM standard in the format of facility-wide PM
emitted per amount of steel produced and a melt shop opacity limit of zero.
• In the proposed new subpart, the PM testing frequency for control devices is set at once
every five years. This testing frequency is expected to be performed already for most
EAF facilities due to permit requirements.
• Last, the standards will apply at all times under the proposed new subpart.
1.4 Baseline and Regulatory Options
The impacts of regulatory actions are evaluated relative to a baseline that represents the
world without the regulatory action. In this EIA, we present results for the proposed AAb.
Throughout this document, we focus the analysis on the proposed requirements that result in
quantifiable compliance cost or emissions changes compared to the baseline. The proposed
regulatory options quantified in this EIA include the increased testing requirements proposed for
subpart AAb and the zero percent opacity requirements for melt shop emissions in the proposed
AAb. The proposed facility-wide PM limit is not projected to have any cost or emissions impacts
as it is expected that units would be able to comply without additional actions. Table 1-1 depicts
the proposed requirements evaluated in this EIA.
Table 1-1 Regulatory Options Examined in this RIA
Requirement
Proposed
Increased Emissions Testing
X
Zero Opacity for Melt Shop Emissions
X
Tighten Facility-wide Total PM Control Device Emissions Limit
X
1.5 Methodology
The impacts analysis summarized in this EIA reflects a nationwide engineering analysis
of compliance cost and emissions reductions. Using data on current facilities and historical EAF
construction data, we generate projections of counts of regulated facilities in the future. The
regulated facility projections are combined with information on control options, including capital
and annual operations and maintenance costs and control efficiencies. Impacts are calculated by
multiplying activity data by model plant cost and emissions estimates.
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For the analysis, we calculate the cost and emissions impacts of the proposed
requirements from 2023 to 2032. The initial analysis year is 2023 because we assume that year
will be the first full year the proposed requirements would be in effect, as the proposed
requirements will take effect immediately and impact sources constructed after publication of the
proposed rule. The final analysis year is 2032, which allows us to present ten years of potential
regulatory impacts.
1.6 Organization of this EIA
The remainder of this report details the methodology and the results of the RIA. Section 2
describes emissions, emissions control options, and engineering costs. Section 3 discussion of
potential economic, small entity, and employment impacts.
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2 EMISSIONS AND ENGINEERING COSTS ANALYSIS
2.1 Introduction
In this section, we present estimates of the projected engineering compliance costs and
emissions reductions associated with the proposed rule for the 2023 to 2032 period. These
estimates are generated by combining the model plant-level cost and emissions reductions used
in the BSER analysis with activity data projections based on historical trends.
2.2 Description of Regulatory Options
The proposed AAb standards would apply to all new, modified, or reconstructed EAF
and AOD, and their associated dust-handling systems in the steel industry, which commence
construction after Federal Register publication. The proposed standards would first limit total
PM emissions from all pollution control devices, i.e., baghouses, installed on EAF and AOD, in
terms of total mass of PM emitted at the facility per total mass of steel produced as a facility-
wide average of all control devices, to 79 milligrams PM per kilogram steel (mg/kg) [0.16
pounds (lb.) PM per ton steel produced (lb./ton)]). Second, visible emissions from EAF and
AOD that exit from the melt shop would be limited to an opacity of 0 percent during all phases
of operation. Visible emissions from control devices on EAF and AOD would remain at less than
3 percent opacity, as in the current subparts AA and AAa, and opacity of the dust handling
system would remain at less than 10 percent, also in the current subparts AA and AAa. Third, the
proposed PM testing frequency is set at once every five years, which will coincide with permit
cycles for most facilities. This testing frequency is expected to be performed already for most
EAF facilities due to permit requirements.
Table 2-1 depicts the requirements evaluated in this EIA across regulatory options.
Table 2-1 Regulatory Options Examined in this EIA
Requirement
Proposed
Increased Emissions Testing
X
Zero Opacity for Melt Shop Emissions
X
Tighten Facility-wide Total PM Control Device Emissions Limit
X
2.3 Model Plant-level Compliance Cost and Emissions Reduction Estimates
To project compliance costs and emissions reductions under the proposal, we combined
the affected facility projections with information on baseline emissions, testing and control costs,
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including capital and annual operations and maintenance costs, and control efficiencies
associated with the controls. This section focuses on developing estimates of compliance costs
and emissions reduction for model plants.
Information on control options is derived from the analysis underpinning the BSER
determinations. Detailed discussion of the control options and model plant costs and emissions
reductions can be found in the docketed memorandum (Docket ID No. EPA-HQ-OAR-2002-
0049) documenting the cost and emissions analyses to determine BSER for PM emissions and
opacity (referred to in this EIA as the "Cost Memo").
2.3.1 Model Plant-level Compliance Cost Estimates
Costs for Emissions Testing: In this proposal, the PM testing frequency is increased to
once every five years, which will coincide with permit cycles for most facilities. This testing
frequency is expected to be performed already for most EAF facilities due to permit
requirements. The cost of testing using EPA Method 5 is estimated at $18,500 per baghouse
tested, as is shown in
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Table 2-2. We also estimate that the 9 new units projected in the analysis have an average
of 1.64 baghouses per facility. While EPA Method 5 testing is already required upon startup, the
new testing requirements would not incur costs until five years after startup.
Costs for Installing and Operating a Partition Roof Canopy: Canopy hoods are a
common method of controlling fugitive EAF emissions. To estimate the costs for EAF facilities
to reduce their PM emissions and melt shop opacity from 6 percent to 0 percent opacity, the costs
for addition of a partition roof canopy (above the crane rails) were estimated using the procedure
and information from the National Emission Standards for Hazardous Air Pollutants (NESHAP)
for Ferroalloys, where EAF also are used and shop fugitives also are a concern.4 Detailed cost
information was not available to the EPA to support cost estimates for the canopy at steel-
making EAF facilities; whereas, the ferroalloy cost estimates included detailed cost input
parameters from the ferroalloy industry where EAFs are also used. Therefore, without source-
category specific information, the ferroalloy cost parameters were used in the cost calculations
for this proposed rule.
To adapt the ferroalloy cost-estimating procedure to steelmaking EAF facilities,
equipment costs and other parameters were scaled by the ratio of the ferroalloys EAF baghouse
flowrate to the average steel EAF flowrate. The capital and annual cost estimates resulting from
adapting the ferroalloy costs to steelmaking EAFs are presented in Table 2-2. Approximately 8
percent of the cost is due to electricity needed to power the fans that draw air into the canopy
hood and into the control device. Details of the cost estimating procedure for these facilities are
included in the docketed Cost Memo.
Based on information from 2010 through 2017 obtained by the EPA for 31 EAF
facilities, the EPA found the average opacity to be 0.14 percent, with about half of the units
achieving 0 percent opacity in the tests. Because opacity in the baseline is already low, the EPA
expects any new, modified, or reconstructed facility would be able to meet the proposed opacity
and PM limits without any additional control devices beyond those already required by the NSR
program or applicable state requirements or by minor process changes to improve capture of
exhaust flows or other process parameters, if needed. Because it is uncertain whether the
4 Cost Impacts of Control Options Considered for the Ferroalloys Production NESHAP to Address Fugitive HAP
Emissions. U.S. Environmental Protection Agency, Office of Air Quality Planning and Standards, Research
Triangle Park, North Carolina. August 2014. (Docket ID Item No. EPA-HQ-OAR-2010-0895-0177).
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facilities outperforming the baseline NSPS requirement do so because of state or local
requirements or facility-specific factors that affect environmental performance, assumptions
about the baseline represents an important source of uncertainty for projections of potential
compliance costs and emissions impacts.
While the actual cost impacts of the proposed 0 percent opacity limit would likely be
substantially lower, the EPA developed an upper bound estimate of potential compliance costs
based upon the assumption that affected units would install a partial roof canopy above the crane
rails to ensure 0 percent melt shop opacity compared to a hypothetical baseline model facility
meeting 6 percent opacity. The costs should be viewed as upper bound estimates on the potential
compliance costs as the EPA expects any new, modified, or reconstructed facility would be able
to meet the proposed opacity and PM limits without any additional control devices beyond those
already required by the NSR program or applicable state requirements or by minor process
changes to improve capture of exhaust flows or other process parameters, if needed.
Cost for Facility-Wide PM Limit: The control costs for a small, medium, and large
model plant exhibiting a range of baghouse performance levels were estimated based on
baghouse air-to-cloth (A/C) ratio, which is expressed in units of volume of air flow per unit bag
area {i.e., cloth), or meters [feet] per unit of time. The A/C ratio is generally accepted as the most
important design parameter between baghouses of different performance levels, where a low A/C
ratio is considered to be the best level of control (less air and more baghouse filter cloth) and a
high A/C ratio is a low or poor level control (high air volume and low baghouse filter area).5
Because no A/C ratio data were available in the EAF PM test reports, values for A/C ratios from
CAA section 114 responses submitted by the integrated iron and steel industry (II&S) industry
for the RTR for 40 CFR part 63, subpart FFFFF (85 FR 42074)6 were used in the EAF BSER PM
cost analysis. The baghouses used for emissions from furnaces in the II&S industry are expected
to be similar in operation as the baghouses used at EAF/AOD for the purposes of the analysis.
5 EPA Air Pollution Control Cost Manual, Sixth Edition, EPA/42/B-02-001. U. S. Environmental Protection
Agency, Research Triangle Park, NC. January 2002. Section 6, Particulate Matter Controls, Chapter 1,
Baghouses and Filters. Available at: https://www3.epa.gov/ttn/catc/dirl/c_allchs.pdf.
6 Summary of Questionnaire (Enclosure 1) Responses to EPA Information Collection Requests from Integrated Iron
& Steel Facilities. U.S. Environmental Protection Agency, Office of Air Quality Planning and Standards,
Research Triangle Park, North Carolina. (Docket ID Item No. EPA-HQ-OAR-2002-0083-0614).
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Costs of control were estimated based on model baghouses with flows and production
levels for baghouses at small, medium, and large facilities, as described above. Differences in
capital costs for the model plants mainly reflect the cost of bags needed for each AJC ratio. The
operating and maintenance (O&M) costs reflect periodic replacement of bags, along with other
typical baghouse O&M costs. Annual costs include the annualized capital costs combined with
the annual operating and maintenance costs. The capital and annual cost estimates relevant for
analyzing the more stringent regulatory option are presented in Table 2-2. Note there are no costs
for the proposed requirement tightening the facility-wide stack emissions standard as it not
expected that facilities would need to perform additional actions over the baseline to comply
with the standard. Details of the cost estimating procedure for are included in the docketed Cost
Memo.
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Table 2-2 Compliance Cost Estimates by Model Plant Size across Proposed
Requirements (2020 dollars)
Model Plant Type Capital Annual O&M
Compliance Testing for All EAFs
All plants 0 19,000
Melt Shop Fugitive Emissions from New, Modified, and Reconstructed EAFs (Upper Bound Estimates)
Small 480,000 27,000
Medium 6,800,000 340,000
Large 34,000,000 1,700,000
Facility-wide stack PM Emissions from New, Modified, and Reconstructed EAFs
Small 0 0
Medium 0 0
Large 0 0
Facility-wide stack PM Emissions from New, Modified, and Reconstructed EAFs (Upper Bound Estimates)
Small 480,000 46,000
Medium 6,800,000 360,000
Large 34,000,000 1,700,000
Note: Numbers rounded to two significant digits.
2.3.2 Model Plant-level Emissions Reduction Estimates
Emissions Reductions from Emissions Testing: While we do not expect emissions
impacts associated with the proposed emissions testing requirements in subpart AAb, the
requirement is expected to clarify the rule and enhance compliance and enforcement. Hence,
Table 2-3 does not present non-zero PM and PM2.5 reductions from the proposed increase in
emission testing.
Emissions Reductions from Operating a Partition Roof Canopy: As described in the
docketed Cost Memo, to estimate emissions associated with a 0 percent opacity requirement, we
compared an estimate of the PM emissions reductions with the lower opacity as compared to the
performance of existing facilities in opacity test data. As discussed in the Cost Memo, opacity
data for over 30 EAF facilities in test reports from the 2005 through 2011 period revealed that all
facilities operated at the limit for opacity from control device exhaust and for dust handling.
However, lower levels of opacity than the NSPS-required 6 percent were achieved for melt shops
at many of the EAF facilities. Out of 31 EAF facilities with melt shop opacity data, 15 facilities
achieved melt shop opacity of 0 percent, typically in more than one test report. It is uncertain
why facilities are achieving 0 percent opacity in the source test data submitted to the EPA when
not required by the rule.
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As the EAF data for 30 facilities in test reports showed that the average actual melt shop
opacity was 0.14 percent, we felt it appropriate to assume in this EIA that the projected new
EAFs would outperform the current NSPS requirements in the baseline and achieve an average
melt shop opacity of 0.14 percent. Given these assumptions, Table 2-3 presents the PM and
PM2.5 reductions anticipated under the proposed 0 percent melt shop opacity standard for small,
medium, and large model plant facilities. Note PM2.5 reductions are a subset of total PM
emissions.
Emissions Reductions from Facility-Wide PM Limit: As discussed in Section 2.4.2,
the control costs for a small, medium, and large model plant exhibiting a range of baghouse
performance levels were estimated based on baghouse air-to-cloth (A/C) ratio. The A/C ratio is
generally accepted as the most important design parameter between baghouses of different
performance levels, where a low A/C ratio be the best level of control (less air and more
baghouse filter cloth) and a high A/C ratio is a low or poor level control (high air volume and
low baghouse filter area). As presented in the Cost Memo, a range of emissions reduction
estimates were developed for small, medium, and large model plants operating at incrementally
decreasing levels of A/C ratio (which reduces the emissions rates). Given the EPA is proposing
tightening the facility-wide total PM control device limit to a level already achieved by facilities,
we do not expect incremental emissions impacts from that requirement. Hence, Table 2-3 does
not present non-zero PM and PM2.5 reductions from the proposed facility-wide limit.
2-7
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Table 2-3 PM and PM2.5 Emissions Reduction Estimates by Model Plant Size and
Proposed Requirement (short tons per year)
Model Plant-Level Emissions Reductions by Proposed Requirements
Tighten Facility-wide
Total PM Control Device
Zero Opacity for Melt
Increased Emissions
Emissions Limit
Shop Emissions
Model Plant Size
Testing (PM / PM2.5)
(PM / PM2.5)
(PM / PM2.5)
Small
0.0/0.0
0.0/0.0
5.7/1.2
Medium
0.0/0.0
0.0/0.0
16/3.4
Large
0.0/0.0
0.0/0.0
37/7.8
Note: Numbers rounded to two significant digits.
2.4 Projected Compliance Costs and Emissions Reductions
In this section, we present estimates of the projected engineering compliance costs and
emissions reductions associated with the proposed rule for the 2023 to 2032 period. These
estimates are generated by combining the model plant-level cost and emissions reductions used
in the BSER analysis with the projections of affected facilities. The methods and assumptions
used to construct the affected facility projections are also documented in this section.
2.4.1 Projection of Potentially Affected Sources
The initial analysis year is 2023 because we assume 2023 will be the first full year the
proposed requirements would be in effect. The final analysis year is 2032, which allows us to
provide ten years of impact projections after the proposed requirements are assumed to take
effect. While it would be desirable to analyze impacts beyond 2032, we have limited information
to model longer-term changes in technologies, production practices, and equipment use in the
iron and steel industry, making the choice of a longer time horizon infeasible.
To construct the activity data projections used in this analysis, we perform three steps.
First, we assume that the 88 existing NSPS-affected facilities continue to operate over the entire
time horizon of the analysis. Second, for new facilities affected by the proposed requirements,
using information from the BSER analysis underpinning the rule, we identify capacity ranges to
categorize projected facilities into small, medium, and large facilities. In the third step, we rely
on historical information on EAF construction and capacity from the Association for Iron &
Steel Technology (AIST) publication "2021 AIST Electric Arc Furnace Roundup"7 to develop a
profile of new EAF construction over the 2011 to 2020 period by model plant size. Table 2-4
7 http://digital.library.aist.org/categories/roundups.html
2-8
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shows the capacity ranges in tons per year (tpy) denominating whether a facility is a small,
medium, or large facility.
Table 2-4 Capacity Ranges Used to Categorize EAFs into Model Plant Size Categories
Model Plant Type
Model Plant Size Ranges
Small
Less than 524,000 tpy capacity
Medium
Between 524,000 tpy and 1,270,000 tpy capacity
Large
Greater than 1,270,000 tpy capacity
Table 2-5 lists the year of construction, company name, location, capacity, and assumed
model plant size for new EAFs constructed from 2011 to 2020. We also list new EAF facilities
that have been announced and may be in a construction stage but, as of this writing, have not
initiated production.
Table 2-5 EAFs Constructed from 2011 to 2020 and Announced Future EAFs,
Capacity, and Assumed Model Plant Category"
Stated Assumed
Capacity Model Plant
Year Built
Company
City
State
(Tons/Year)
Size
2011
Outokumpu
Calvert
AL
1,102,310
Medium
2011
Finkl Steelb
Chicago
IL
631,624
Medium
2013
Republic Steel0
Lorain
OH
999,795
Medium
2017
Commercial Metals Company
Durant
OK
396,832
Small
2017
Big River Steeld
Osceola
AR
1,598,350
Large
2020
Nucor
Sedalia
MO
496,040
Small
2020
Nucor
Frostproof
FL
496,040
Small
2020
Nucor
Birmingham
AL
551,155
Medium
2020
Big River Steeld
Osceola
AR
1,598,350
Large
Future
Steel Dynamics, Inc.
Sinton
TX
2,500,000
Large
Future
Nucor Corporation
Brandenburg
KY
1,200,000
Medium
Future
ArcelorMittal/Nippon Steel
Calvert
AL
1,653,000
Large
Future
Commercial Metals Company
Mesa
AZ
500,000
Small
a Source for existing facilities: year built, company, city, state, and stated capacity from AIST publication "2021
AIST Electric Arc Furnace Roundup." Model plant type assumed using stated capacity and capacity ranges
shown in Table 2-4. Source for future facilities: Firm announcements and news articles
b Finkl Steel is a subsidiary of Swiss Steel Group.
0 Republic Steel is a subsidiary of Grupo Simec.
d Big River Steel was acquired by United States Steel Corporation.
As is shown in Table 2-5, there were three small, four medium, and three large facilities
built over the 2011 to 2020 period. For the purposes of this analysis, in the absence of a means to
project new facilities, we assume the same number of facilities are constructed and affected by
the proposed rule during the 2023 to 2032 period as were built over the 2011 to 2020 period.
2-9
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Since we do not know with certainty when the four announced facilities will initiate construction
or production, we exclude them from this analysis.
We do not assume that the number and size of new facilities follows the exact trajectory
of the 2011 to 2020 period; rather, we assume that fractions of the assumed total facilities are
built annually adding up to the assumed total over the ten-year period. The fractional projections
are shown in Table 2-6. Note that, as the new facilities are built on an ongoing basis, the
projected number of affected facilities increases over time.
Table 2-6 Projected Counts of Potentially Affected EAF Facilities
Assumed New Facilities in a Given Cumulative New Facilities in a Given
Year Year
Year
Small
Medium
Large
Small
Medium
Large
Total
2023
0.3
0.4
0.2
0.3
0.4
0.2
0.9
2024
0.3
0.4
0.2
0.6
0.8
0.4
1.8
2025
0.3
0.4
0.2
0.9
1.2
0.6
2.7
2026
0.3
0.4
0.2
1.2
1.6
0.8
3.6
2027
0.3
0.4
0.2
1.5
2.0
1.0
4.5
2028
0.3
0.4
0.2
1.8
2.4
1.2
5.4
2029
0.3
0.4
0.2
2.1
2.8
1.4
6.3
2030
0.3
0.4
0.2
2.4
3.2
1.6
7.2
2031
0.3
0.4
0.2
2.7
3.6
1.8
8.1
2032
0.3
0.4
0.2
3.0
4.0
2.0
9.0
2.4.2 Projected Compliance Cost Estimates
The compliance costs are estimated by multiplying the model plant-level costs associated
with each applicable requirement and model plant type by the projected number of EAFs of that
model plant type. Table 2-7 and Table 2-8 summarize the projected compliance costs under the
proposed standards across the proposed requirements in this EIA. Table 2-7 presents the
projected compliance costs from 2023 to 2032 broken down into capital and annual operations
and maintenance (O&M) expenditures. Table 2-8 presents the present value (PV) and equivalent
annual value (EAV) of the projected compliance costs over the 2023 to 2032 period, discounted
to 2021 using 3 and 7 percent discount rates.
2-10
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Table 2-7 Upper Bound Estimate of the Projected Capital and Annual O&M
Compliance Costs, 2023-2032 (millions of 2020 dollars)
Proposed Requirements
Year
Capital
Annual O&M
Total
2023
9.65
0.48
10.13
2024
9.65
0.96
10.60
2025
9.65
1.44
11.08
2026
9.65
1.91
11.56
2027
9.65
2.39
12.04
2028
9.65
2.89
12.54
2029
9.65
3.37
13.01
2030
9.65
3.84
13.49
2031
9.65
4.32
13.97
2032
9.65
4.80
14.45
Table 2-8 Upper Bound Estimate of the Projected Present Value and Equivalent
Annual Value of Compliance Costs, 2023-2032 (2020 dollars)
3 Percent Discount Rate 7 Percent Discount Rate
Present Value 100 79
Equivalent Annual Value 12 11
Note: The projected PV and EAV are discounted to 2021. Numbers rounded to two significant digits. Totals may not
sum due to independent rounding.
2.4.3 Projected Emissions Reduction Estimates
Implementing the proposed new subpart, 40 CFR part 60, subpart AAb, is expected to
reduce PM emissions, including PM2.5. These emissions reductions would be expected to
produce health benefits in the affected locations. The Integrated Science Assessment for
Particulate Matter (ISA)8 synthesizes the toxicological, clinical, and epidemiological evidence to
determine whether each pollutant is causally related to an array of adverse human health
outcomes associated with either acute (i.e., hours or days-long) or chronic (i.e., years-long)
exposure. For each outcome, the ISA reports this relationship to be causal, likely to be causal,
suggestive of a causal relationship, inadequate to infer a causal relationship, or not likely to be a
causal relationship.
8 U.S. Environmental Protection Agency (U.S. EPA). 2019. Integrated Science Assessment (ISA) for Particulate
Matter (Final Report, 2019). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R-19/188,
2019.
2-11
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The ISA for PM2.5 found acute exposure to PM2.5 to be causally related to cardiovascular
effects and mortality (i.e., premature death), and respiratory effects as likely-to-be-causally
related. The ISA identified cardiovascular effects and total mortality as being causally related to
long-term exposure to PM2.5 and respiratory effects as likely-to-be-causal; and the evidence was
suggestive of a causal relationship for reproductive and developmental effects as well as cancer,
mutagenicity, and genotoxicity. Table 2-9 summarizes the health endpoints related to PM2.5.
None of these endpoints were quantified or monetized for this rule. This table does not include
benefits to ecosystems related to the reduction of nitrogen and sulfur deposition such as the
effects of acidification and nutrient enrichment both aquatic and terrestrial.
Table 2-9 Health Effects of the Projected PM2.5 Emissions Reductions
Category
Effect
Effect
Quantified
Effect
Monetized
Mci re
Information
Premature
mortality
from
exposure
to PM2.5
Adult premature mortality from long-term exposure (age 65-99
or age 30-99)
—
—
PM ISA
Infant mortality (age <1)
—
—
PM ISA
Heart attacks (age >18)
—
—
PM ISA
Hospital admissions—cardiovascular (ages 65-99)
—
—
PM ISA
Emergency department visits— cardiovascular (age 0-99)
—
—
PM ISA
Hospital admissions—respiratory (ages 0-18 and 65-99)
—
—
PM ISA
Emergency room visits—respiratory (all ages)
—
—
PM ISA
Cardiac arrest (ages 0-99; excludes initial hospital and/or
emergency department visits)
—
—
PM ISA
Stroke (ages 65-99)
—
—
PM ISA
Asthma onset (ages 0-17)
—
—
PM ISA
Asthma symptoms/exacerbation (6-17)
—
—
PM ISA
Lung cancer (ages 30-99)
—
—
PM ISA
Nonfatal
Allergic rhinitis (hay fever) symptoms (ages 3-17)
—
—
PM ISA
morbidity
Lost work days (age 18-65)
—
—
PM ISA
from
Minor restricted-activity days (age 18-65)
—
—
PM ISA
exposure
to PM2.5
Hospital admissions—Alzheimer's disease (ages 65-99)
—
—
PM ISA
Hospital admissions—Parkinson's disease (ages 65-99)
—
—
PM ISA
Other cardiovascular effects (e.g., other ages)
—
—
PM ISA2
Other respiratory effects (e.g., pulmonary function, non-asthma
ER visits, non-bronchitis chronic diseases, other ages and
populations)
—
—
PM ISA2
Other nervous system effects (e.g., autism, cognitive decline,
dementia)
—
—
PM ISA2
Metabolic effects (e.g., diabetes)
—
—
PM ISA2
Reproductive and developmental effects (e.g., low birth weight,
pre-term births, etc.)
—
PM ISA2
Cancer, mutagenicity, and genotoxicity effects
—
PM ISA2
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Table 2-10 summarizes the PM and PM2.5 emissions reductions projected under the
proposed standards, where PM2.5 emissions are a subset of total PM. The PM and PM2.5
reductions may also be in part composed on for non-mercury metal HAP. The emissions
reductions are estimated by multiplying the source-level emissions reductions associated with
each applicable control and model plant type by the projected number of EAFs of that model
plant type.
Table 2-10 Projected PM and PM2.5 Emissions Reductions, 2023-2032 (short tons)
PM
PM25
2023
16
3.3
2024
31
6.6
2025
47
10
2026
63
13
2027
79
16
2028
94
20
2029
110
23
2030
130
26
2031
140
30
2032
160
33
Total
860
180
Note: Numbers rounded to two significant digits. Totals may not sum due to independent rounding.
The benefits per ton of the emissions reductions above at 3 percent and 7 percent
discount rates for years 2025 and 2030 are presented in Table 2-11 below. Information regarding
the process by which these BPTs were calculated is available in the technical support document
"Estimating the Benefit per Ton of Reducing Directly-Emitted PM2.5, PM2.5 Precursors and
Ozone Precursors from 21 Sectors."9
9 U.S. Environmental Protection Agency, 2022. Estimating the Benefit per Ton of Reducing Directly-Emitted PM2.5,
PM2.5 Precursors and Ozone Precursors from 21 Sectors. Available at:
https://www.epa.gov/system/files/documents/2021-10/source-apportionment-tsd-oct-2021_0.pdf
2-13
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Table 2-11 Estimated PM2.5-related Health Benefits Per Ton by Discount Rate and
Estimate (2020 dollars)"
3 Percent
7 Percent
Year
Low
Estimate
High
Estimate
Low
Estimate
High
Estimate
2025
$407,000
$413,000
$366,000
$371,000
2030
$431,000
$449,000
$388,000
$404,000
a The range reported here reflects the use of risk estimates from two alternative long-term exposure PM-mortality
studies.
2.5 Uncertainties and Limitations
Throughout this, we encountered several sources of uncertainty, both quantitatively and
qualitatively, regarding the compliance costs and emissions reductions estimated for the
proposed rule. We summarize the key elements of our discussions of uncertainty below.
Source-level compliance costs and emissions impacts: As discussed in Section 2.3, the
first step in the compliance cost analysis is the development of representative costs and
emissions impacts using a model plant approach. The model plants are designed based upon the
best information available to the Agency at the time of the rulemaking. By emphasizing facility
averages, geographic variability, and heterogeneity across producers in the industry is masked,
and regulatory impacts at the facility-level may vary from the model plant averages.
Projection methods and assumptions: As discussed in Section 2.4.1, the second
component in estimating national impacts is the projection of affected facilities. Uncertainties in
the projections informing this EIA results include: 1) choice of projection method; 2) data
sources; 3) limited information about rate of modification or retirement of facilities; 4)
behavioral responses to regulation; and 5) unforeseen changes in industry and economic shocks.
Years of analysis: The years of analysis are 2023, to represent the full first-year facilities
are affected by this action, through 2032, to represent impacts of the rule over a longer period, as
discussed in Section 2.4.1. While it would be desirable to analyze impacts beyond 2032 in this
RIA, the EPA has chosen not to do this largely because of the limited information and
uncertainty associated with the projection of new facilities and the rate of modification or
retirement of facilities. Extending the analysis beyond 2032 would introduce substantial and
increasing uncertainties in the projected impacts of the proposal.
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Environmental performance in the baseline: As discussed in Section 2.3 .2, while the
baseline NSPS requirements requires a maximum 6 percent opacity for melt shop emissions,
testing results demonstrate that many existing facilities perform at lower levels of opacity. It is
uncertain whether the facilities outperforming the baseline NSPS requirement do so as a result of
state or local requirements or facility-specific factors that affect environmental performance. The
assumption that new EAFs would achieve an average level of 0.14 percent opacity absent the
proposed AAb requirements strongly influence the emissions projections under the rule and
represents an important source of uncertainty.
2-15
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3 ECONOMIC IMPACT ANALYSIS AND DISTRIBUTIONAL ASSESSMENTS
3.1 Introduction
The proposed NSPS is projected to result in environmental control expenditures by the
EAF sector to comply with the rule. The national level compliance cost analysis in Section 2
does not speak directly to potential economic and distributional impacts of the proposed rule,
which may be important consequences of the action. This section is directed toward
complementing the compliance cost analysis and includes an analysis of potential firm-level
impacts of regulatory costs, an analysis of small entities that are potentially affected, and a
discussion of potential employment impacts.
3.2 Economic Impact Analysis
Although facility-specific economic impacts (production changes or closures, for
example) cannot be estimated by this analysis, the EPA conducted a screening analysis of
compliance costs compared to the revenue of firms owning EAF facilities. The EPA often
performs a partial equilibrium analysis to estimate impacts on producers and consumers of the
products or services provided by the regulated firms. This type of economic analysis estimates
impacts on a single affected industry or several affected industries, and all impacts of this rule on
industries outside of those affected are assumed to be zero or inconsequential.10
If the compliance costs, which are key inputs to an economic impact analysis, are small
relative to the receipts of the affected industries, then the impact analysis may consist of a
calculation of annual (or annualized) costs as a percent of sales for affected parent companies.
This type of analysis is often applied when a partial equilibrium or more complex economic
impact analysis approach is deemed unnecessary given the expected size of the impacts. The
annualized cost per sales for a company represents the maximum price increase in the affected
product or service needed for the company to completely recover the annualized costs imposed
by the regulation. We conducted a cost-to-sales analysis to estimate the economic impacts of this
proposal, given that the EAV of the compliance costs are about $12 million in 2020 dollars,
which is small relative to the revenues for the affected industry.
10 U.S. EPA. Guidelines for Preparing Economic Analyses. May 2016. p. 9-17. Available at
https://www.epa.gov/sites/production/files/2017-09/documents/ee-0568-Q9.pdf.
3-1
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The EPA prefers a "sales test" as the impact methodology in economic impact analyses
as opposed to a "profits test", in which annualized compliance costs are calculated as a share of
profits.11 This is consistent with guidance published by the U.S. Small Business Administration
(SB A) Office of Advocacy, which suggests that cost as a percentage of total revenues is a metric
for evaluating cost impacts on small entities relative to large entities.12 This is because revenues
or sales data are commonly available for entities impacted by the EPA regulations and profits
data are often private or tend to misrepresent true profits earned by firms after undertaking
accounting and tax considerations.
While a "sales test" can provide some insight as to the economic impact of an action such
as this one, it assumes that the impacts of a rule are solely incident on a directly affected firm
(therefore, no impact to consumers of affected product), or solely incident on consumers of
output directly affected by this action (therefore, no impact to companies that are producers of
affected product). Thus, an analysis such as this one is best viewed as providing insight on the
polar examples of economic impacts: maximum impact to either directly affected companies or
their consumers. A "sales test" analysis does not consider shifts in supply and demand curves to
reflect intermediate economic outcomes.
For context, Table 3-1 presents a list of firms that own existing EAFs, the number of
EAFs owned by each firm and the total employment and revenues for each firm. The list was
compiled using the EPA's list of EAFs and from research using D&B Hoovers, a private
business information provider, and firm websites.
11 More information on sales and profit tests as used in analyses done by U.S. EPA can be found in the Final
Guidance for EPA Rulewriters: Regulatory Flexibility Act as Amended by the Small Business Regulatory
Enforcement Fairness Act, November 2006, pp. 32-33.
12 U.S. SBA, Office of Advocacy. 2010. A Guide for Government Agencies, How to Comply with the Regulatory
Flexibility Act, Implementing the President's Small Business Agenda and Executive Order 13272.
3-2
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Table 3-1 Firms that Own Potentially Affected Existing EAFs, Number of EAFs
Owned and Firm-Level Employment and Revenues
Firm Name
Firm-Owned
EAFs
Total Firm
Employment
Firm Revenues
($ millions)
Acciaierie Valbruna S.p.a.
1
1,600
670
Acerinox S.A.
1
6,600
940
Allegheny Technologies Inc.
1
8,100
3,000
Berkshire Hathaway Inc.
1
360,000
250,000
Bluescope Steel Limited
1
6,100
9,600
Carpenter Technology Corp.
2
4,600
1,500
Charter Manufacturing Company, Inc.
2
2,000
570
Cleveland-Cliffs Inc.
4
12,000
5,400
Commercial Metals Company
9
11,000
6,700
Ellwood Group, Inc.
2
1,900
660
Evraz PLC
1
67,000
9,800
G. 0. Carlson, Inc.3
1
220
49
Gerdau S.A.
10
25,000
520
Grupo Simec, S.A.B. De C.V.
2
4,200
1,700
Haynes International, Inc.3
1
1,200
340
Hoganas Holding AB
1
2,400
940
JSW Steel Limited
1
13,000
9,400
KCI Holdings, Inc.
1
35,000
190
Kyoei Steel Ltd.
1
4,000
2,100
Leggett & Piatt, Inc.
1
20,000
4,300
Melrose Industries PLC
1
55,000
11,000
Nippon Steel Corporation
1
110,000
46,000
NLMK, PAO
1
27,000
6,100
Nucor Corporation
21
27,000
20,000
Outokumpu
1
10,000
6,400
Schnitzer Steel Industries, Inc.
1
3,000
2,800
SSAB U.S. Holding, Inc.
2
14,000
1,600
Steel Dynamics, Inc.
6
9,600
9,600
Sumitomo Corporation
1
75,000
44,000
Swiss Steel Holding AG
1
9,000
3,300
Tenaris Global Services (USA) Corporation
1
4,600
1,200
Timkensteel Corporation
2
3,000
1,200
United States Steel Corp
2
24,000
9,700
Universal Stainless & Alloy Products, Inc.3
1
800
180
Vallourec Deutschland Gmbh
1
3,400
960
Whemco Inc.
1
1,800
180
Grand Total
88
960,000
470,000
Source: Information on existing EAFs from AIST publication "2021 AIST Electric Arc Furnace Roundup."
Information on firm-level employment and revenues from D&B Hoovers and firm websites.
a Firm identified as small business.
We find that the great majority of the estimated 36 firms affected are large, sometimes foreign-
owned multinational companies with substantial revenues. Many firms are engaged in a broad
3-3
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range of economic activities, not just steel production from EAFs. The EPA has not estimated
any cost impacts associated with the proposed minor changes to the existing rules AA and AAa
to clarify and refine some of the current provisions. As a results, under this proposal, the cost-to-
sales ratios based on the proposed changes to AA and AAa are zero for firms owning existing
facilities.
With respect to the proposed melt shop requirements for new, modified, and
reconstructed EAFs, the EPA does not know what firms will construct new facilities in the future
and, as a result, cannot perform a cost-to-sales analysis with the same confidence as we do with
firms owning existing facilities. However, we can perform an illustrative assessment using the
firm's owning EAFs which begin operating during the 2011 to 2020 and firms that own future
EAFs that have been announced as presented in Table 3-2.
Table 3-2 Firm-level Employment and Revenues for EAFs Constructed from 2011 to
2020 and Announced Future EAFs, Capacity, and Assumed Model Plant Category
Assumed Firm
Model Revenues
Plant Total Firm ($
Year Built
Company
City
State
Size
Employment
millions)
2011
Outokumpu
Calvert
AL
Medium
10,000
6,400
2011
Finkl Steel3
Chicago
IL
Medium
9,000
3,300
2013
Republic Steelb
Lorain
OH
Medium
4,200
1,700
2017
Commercial Metals Company
Durant
OK
Small
11,000
6,700
2017
Big River Steel0
Osceola
AR
Large
24,000
9,700
2020
Nucor
Sedalia
MO
Small
27,000
20,000
2020
Nucor
Frostproof
FL
Small
27,000
20,000
2020
Nucor
Birmingham
AL
Medium
27,000
20,000
2020
Big River Steel0
Osceola
AR
Large
24,000
9,700
Future
Steel Dynamics, Inc.
Sinton
TX
Large
9,600
9,600
Future
Nucor Corporation
Brandenburg
KY
Medium
27,000
20,000
Future
ArcelorMittal/Nippon Steeld
Calvert
AL
Large
110,000
46,000
Future
Commercial Metals Company
Mesa
AZ
Small
11,000
6,700
As can be seen in Table 3-2, the firms owning new and announced facilities are all
relatively large enterprises with annual revenues in the billions. According to the Cost Memo the
annualized costs, inclusive of annualized capital and O&M, for including a partial roof canopy
above the crane rails to ensure 0 percent melt shop opacity are estimated to be $60,000,
$800,000, and $4 million per year per facility for small, medium, and large facilities,
respectively. To inform an illustrative analysis of potential impacts of regulatory costs to new
3-4
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facilities in the future, we assume that the same firms which established or announced new
facilities in the period covered by Table 3-2 incur the annualized regulatory costs associated with
this proposal for each model plant size. Under this illustrative analysis, 13 EAFs are established
and incur total annualized costs of about $20 million per year (Table 3-3).
Table 3-3 Hypothetical Cost-to-Sales Ratios under the Proposal
Model Plant Type
Company
Small
Medium
Large
Hypothetical
Annualized
Regulatory
Costs ($
millions)
Firm
Revenues ($
millions)
Hypothetical
Cost-to-Sales
Ratio (%)
Outokumpu
0
1
0
0.8
6,400
<0.1%
Finkl Steel
0
1
0
0.8
3,300
<0.1%
Republic Steel
0
1
0
0.8
1,700
<0.1%
Commercial Metals Company
2
0
0
0.1
6,700
<0.1%
Big River Steel
0
0
2
8.0
9,700
<0.1%
Nucor
2
2
0
1.7
20,000
<0.1%
Steel Dynamics, Inc.
0
0
1
4.0
9,600
<0.1%
ArcelorMittal/Nippon Steel
0
0
1
4.0
46,000
<0.1%
As can be seen in Table 3-3, the cost-to-sales ratios derived in this illustrative analysis are all
below 0.1 percent. These results indicate, under the assumptions applied to construct this
hypothetical scenario, the potential economic impacts of this proposal are likely to be small. This
conclusion is reinforced by the likelihood that the actual compliance costs are likely to lower
than the upper bound estimates presented here, as is discussed in Section 2.4 in the EIA as well
as the preamble and Cost Memo.
3.3 Small Business Impact Analysis
The Regulatory Flexibility Act (RFA) generally requires an agency to prepare 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 this rule on small entities, a small entity is
defined as: (1) a small business as defined by the Small Business Administration's (SBA)
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regulations at 13 CFR 121.201; (2) a small governmental jurisdiction that is a government of a
city, county, town, school district or special district with a population of less than 50,000; and (3)
a small organization that is any not-for-profit enterprise that is independently owned and
operated and is not dominant in its field. For this source category, which has the NAICS code
331110 (Iron and Steel Mills and Ferroalloy Manufacturing), the SBA small business size
standard is 1,500 employees according to the SBA small business size standard definitions.13
Using the current SBA small business size definitions, three of the potentially affected
firms that currently own and operate EAFs are small businesses (Table 3-4).
Table 3-4 Small Businesses that Own Potentially Affected EAFs, Number of EAFs
Owned and Firm-Level Employment and Revenues (Source: D&B Hoovers and Firm
Websites)
Firm-
Owned
Total Firm
Firm Revenues
Firm Name
EAFs
Employment
($ millions)
G. O. Carlson, Inc.
1
220
49
Haynes International, Inc.
1
1,200
340
Universal Stainless & Alloy Products, Inc.
1
800
180
As mentioned in the previous section, the EPA has not estimated any regulatory cost impacts
associated with the proposed minor changes to the existing rules AA and AAa to clarify and
refine some of the current provisions. As a result, under this proposal, the cost-to-sales ratios
based on the proposed changes to AA and AAa are zero for firms owning existing facilities,
including the three small business listed in Table 3-4.
With respect to the proposed melt shop requirements for new, modified, and reconstructed EAFs,
the EPA does not know what firms will construct new facilities in the future and, as a result,
cannot perform a cost-to-sales analysis with the same confidence as we do with firms owning
existing facilities. However, based on an assessment of the new units built during the 2011 to
2020 period and the units that have been announced, which are all owned by firms that are not
considered to be small businesses, the EPA does not believe it is likely that any future facilities
will be built by a small business. Based on the likelihood that the small businesses that are
potentially affected by this proposed rule will not incur incremental compliance costs as a result
of the proposed requirements, we can certify that there is no significant economic impact on a
13 https://www.sba.gov/document/support-table-size-standards
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substantial number of small entities (SISNOSE) for this rule. This conclusion is reinforced by the
likelihood that the actual compliance costs are likely to lower than the upper bound estimates
presented here, as is discussed in Section 2.4 in the EIA as well as the preamble and Cost Memo,
so if a future small entity were to build a new EAF or modify or reconstruct a facility, the
compliance costs faced be the entity would likely be substantially lower than the upper bound
estimates presented in Section 2.4.
3.4 Employment Impact Analysis
This section presents a qualitative overview of the various ways that environmental
regulation can affect employment. Employment impacts of environmental regulations are
generally composed of a mix of potential declines and gains in different areas of the economy
over time. Regulatory employment impacts can vary across occupations, regions, and industries;
by labor and product demand and supply elasticities; and in response to other labor market
conditions. Isolating such impacts is a challenge, as they are difficult to disentangle from
employment impacts caused by a wide variety of ongoing, concurrent economic changes. The
EPA continues to explore the relevant theoretical and empirical literature and to seek public
comments in order to ensure that the way the EPA characterizes the employment effects of its
regulations is reasonable and informative.
Environmental regulation "typically affects the distribution of employment among
industries rather than the general employment level."14 Even if impacts are small after long-run
market adjustments to full employment, many regulatory actions have transitional effects in the
short run.15 These movements of workers in and out of jobs in response to environmental
regulation are potentially important and of interest to policymakers. Transitional job losses have
consequences for workers that operate in declining industries or occupations, have limited
capacity to migrate, or reside in communities or regions with high unemployment rates.
14 Arrow, K. J., Cropper, M. L., Eads, G. C., Hahn, R. J., Lave, L. B., Noll, R. G., Portney, P. R., Russell, M.,
Schmalensee, R., Smith, V. K., & Stavins, R. N. (1996). Benefit-Cost Analysis in Environmental, Health, and
Safety Regulation: A Statement of Principles. American Enterprise Institute, the Annapolis Center, and
Resources for the Future; AEI Press, https://www.aei.org/research-products/book/benefit-cost-analysis-in-
environmental-health-and-safety-regulation/
15 OMB. (2015). 2015 Report to Congress on the Benefits and Costs of Federal Regulations and Agency Compliance
with the Unfunded Mandates Reform Act. U.S. Office of Management and Budget, Office of Information and
Regulatory Affairs. https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/inforeg/inforeg/2015_cb/2015-
cost-benefit-report. pdf
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As indicated by the potential impacts on EAF-owning firms discussed in Section 3.2, the
proposed requirements are unlikely to cause large shifts in steel production and prices. As a
result, demand for labor employed in steel production activities and associated industries is
unlikely to see large changes but might experience adjustments as there may be increases in
compliance-related labor requirements such as labor associated with the manufacture,
installation, and operation of pollution control as well as changes in employment due to quantity
effects in directly regulated sectors and sectors that consume EAF-produced steel. For this
proposal, however, we do not have the data and analysis available to quantify these potential
labor impacts.
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United States Office of Air Quality Planning and Standards Publication No. EPA-452/R-22-001
Environmental Protection Health and Environmental Impacts Division April 2022
Agency Research Triangle Park, NC
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