1

U.S. Environmental Protection Agency

Office of Air Quality Planning and Standards

October 2014

Economic Impact and Small Business Analysis –Mineral Wool and Wool Fiberglass RTRs and Wood 

Fiberglass Area Source NESHAP

1. Introduction

This report is the economic impact analysis for the supplemental proposal of the 

Mineral Wool Production and Wool Fiberglass Manufacturing Risk and Technology Review (RTR) 

standards and also the Wool Fiberglass Area Source NESHAP. Proposal of these standards is 

scheduled to occur under court-order on October 15, 2014. Promulgation of these standards is 

scheduled to occur under court-order on June 18, 2015. The report presents impacts to firms 

affected by the requirements in the rules and their consumers. Results are presented 

individually for each proposed rule, and a discussion of cumulative impacts is presented at the 

end of the report. Impacts to small firms are accounted for in adherence to the Regulatory 

Flexibility Act as amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA). 

The industries affected by this rulemaking are found in NAICS 327993.

 This action is the culmination of a reproposal. On November 25, 2011 the EPA 

proposed revisions to the Mineral Wool and the Wool Fiberglass Manufacturing NESHAP, 40 

CFR part 63, subparts DDD and NNN, respectively, to address the results of the RTR that the 

EPA is required to conduct under sections 112(d)(6) and 112(f)(2)(76 FR 72812). The limits in 

those proposed amendments would apply only to major sources, that is, sources emitting at 

least 10 tons per year of a single HAP or 25 tons per year of any combination of HAP; area 

sources emit less than this amount.

This action proposes chromium emission limits for gas-fired glass-melting furnaces used 

to make wool fiberglass that are located at area sources (to become subpart NN). It also adds 

these sources to the source category list for the Urban Air Toxics Strategy of the Clean Air Act. 

Finally, it proposes amendments to the existing major source rules for Mineral Wool Production 

and Wool Fiberglass Manufacturing.

1.A. Summary of November 2011 revisions 

On November 25, 2011 (76 FR 72770) the EPA proposed revisions to the Mineral Wool 

and the Wool Fiberglass Manufacturing NESHAP, 40 CFR part 63, subparts DDD and NNN, 
2

respectively, to address the results of the residual risk and technology review (RTR) that the 

EPA is required to conduct under sections 112(d)(6) and 112(f)(2)(at 76 FR 72812). In the 

November 25, 2011 notice, we proposed several amendments to both NESHAP and announced 

our intention to list and regulate area sources in the wool fiberglass area source category 

pending the collection of new test data. 

The agency also noted that since promulgation of the 1999 NESHAP, at least 20 of the 

existing 30 wool fiberglass facilities are now exempt from the rule due to elimination of phenolformaldehyde binders and are also area sources. As noted previously, a facility that no longer 

uses phenol-formaldehyde binders does not meet the definition of “wool fiberglass facility” 

under Subpart NNN. However, the glass-melting furnaces at these sources continue to emit 

chromium and other HAP metal compounds, and are completely separate and independent 

from emissions from the bonding portion of the process. Further, while replacement of phenolformaldehyde binders with non-HAP binders is an environmentally responsible, or ‘green’ 

choice within the wool fiberglass manufacturing industry, recent data from industry show that 

gas-fired glass-melting furnaces specifically continue to emit chromium and other HAP metal 

compounds, and for furnaces located at area sources these emissions are not currently 

regulated pursuant to CAA section 112. We are now including regulation of wool fiberglass 

area sources in this supplemental proposal as a new subpart, NN. 

1.B. Summary of the April 15, 2013 supplemental proposal.

On April 15, 2013, the EPA published a supplemental proposal to the RTR. The 

supplemental proposal made corrections to the November 2011 proposal for both source 

categories, responded to comments, and proposed first time standards for gas-fired glassmelting furnaces at area sources in the wool fiberglass source category under EPA’s urban air 

toxics strategy (Strategy) as required by CAA Sections 112(c)(3) and 112(k)(3)(B)(ii).

1.C. What is the purpose of this supplemental proposal?

Today’s notice also proposes several revisions and clarifications to those proposals, 

including, but not limited to: 

 clarification of the upper predictive limit (UPL) approach
3

 changes to requirements affecting both source categories as a result of the affirmative 

defense vacatur

 revised startup and shutdown standards for both source categories

 changes to previously proposed mineral wool production emission limits

 changes to previously proposed standards for wool fiberglass manufacturing at both 

major and area sources

We are proposing changes to both the Mineral Wool Production and Wool Fiberglass 

Manufacturing NESHAPs to eliminate the SSM exemption. These changes would revise Table 1 

in 40 CFR part 63, subpart DDD and Table 1 in 40 CFR part 63, subpart NNN to indicate that 

several requirements of the 40 CFR part 63 General Provisions are no longer applicable.

Specifically, we are proposing to add provisions to the Mineral Wool Production and 

Wool Fiberglass Manufacturing NESHAPs requiring that facilities comply with work practice 

standards during periods of startup and shutdown, remove the SSM Plan requirement requiring 

affected sources to calculate their emissions during startup and shutdown, and remove the 

requirement to maintain records of the startup and shutdown emission calculations. Finally, we 

are proposing to revise the SSM-associated monitoring, recordkeeping and reporting 

requirements to require reporting and recordkeeping for periods of malfunction. The work 

practice standards for startup and shutdown are being incorporated into the first-time GACT 

standards for wool fiberglass area sources.

Emission limits for cupolas and for bonded lines are changing as a result of new 

representative detection level (RDL) values, new source test data and as a result of our 

reconsideration of small data set-derived emission limits, as introduced in the proposal notice. 

We are proposing revised COS emission limits for new and reconstructed closed-top cupolas 

based on the use of the RDL for source test values returned below the detection level (BDL) of 

the test method. We are seeking and accepting comments on the proposed revisions to COS 

emission limits for closed top cupolas. The revised COS emission limits being proposed in this 

action are summarized in Table 2 of the preamble. In addition, the proposed limits for 

formaldehyde, phenol, and methanol emissions from horizontal collection/curing lines are 
4

changing from previously proposed limits (April 15, 2013 (78 FR 22370 at 22386)) due to new 

test data we received from industry on this process.

We are proposing several changes based on comments we received to our April 15, 

2013 proposed rules for gas-fired glass-melting furnaces. These changes include new options 

and greater flexibility to achieve chromium emission reductions, explanation of the most cost 

effective option, annual performance tests, extended compliance deadlines and changes to 

previously proposed emission limits based on small data sets. 

We also are proposing work practice standards for HF and HCl emissions from all 

furnaces subject to subpart NNN. 

We estimate the economic impacts of these proposed standards in this report for all of 

the different rules covered in this rulemaking. 

2. The Mineral Wool Industry

2.A. Background on Mineral Wool Industry?

Mineral wood often is defined as any fibrous glassy substance made from minerals or 

mineral products such as slag and glass. The chemical composition of mineral wool can vary 

widely. The basic materials for glass wool manufacture include sand, soda ash, dolomite, 

limestone, sodium sulfate, sodium nitrate, and minerals containing boron and alumina. 

Traditional stone wool production involves melting a combination of alumino-silicate rock 

(usually basalt), blast furnace slag, and limestone or dolomite. In addition, for both glass and 

stone wool the batch may contain recycled process or product waste. For glass wool, other 

forms of waste glass (cullet) are also used as feedstock. 

These materials are processed into insulation and other fibrous building materials that 

are used for structural strength and fire resistance. Generally, these products take one of four 

forms: “blowing” wool or “pouring” wool, which is put into the structural spaces of buildings; 

batts, which may be covered with a vapor barrier of paper or foil and are shaped to fit between 

the structural members of buildings; industrial and commercial products such as high-density 

fiber felts and blankets, which are used for insulating boilers, ovens, pipes, refrigerators, and 

other process equipment; and bulk fiber, which is used as a raw material in manufacturing 

other products, such as ceiling tile, wall board, spray-on insulation, cement, and mortar. 
5

Glass wool and stone wool production make use of different proprietary technologies, 

including melting, fiberizing and curing. Production of mineral wool is a high temperature, 

energy intensive process. Mineral wool plants use a mix of technologies and fuels: a total of 11 

proprietary fiberizing technologies are employed worldwide. Glass wool furnaces are 

predominantly gas fired, but there are a substantial number of furnaces that are electrically 

heated. 

In the production of mineral wool products that do not require high rigidity, oil is 

typically applied to suppress dust and add some strength to the fiber; the fiber is then sized and 

bagged or baled. This is known as a “nonbonded” product which is manufactured on a 

“nonbonded” production line. 

For mineral wool products requiring a higher structural rigidity, a HAP-based 

(phenol/formaldehyde) binder may be applied to the fiber. This is known as a “bonded” 

product made on a bonded production line. The binder-laden fiber mat is then thermoset in a 

curing oven and cooled. The major differences between the “nonbonded” and bonded 

production lines are the application of binder during the collection process followed by the 

curing oven. Four facilities only manufacture nonbonded products, while the other 3 facilities 

operate both bonded and nonbonded production lines. A total of 11 cupolas and 3 curing ovens 

are operated by the facilities in this source category. 

2.B. Economic Impact Estimates

As mentioned previously, mineral wool manufacturing facilities are included in NAICS 

327993. The industry’s revenue for 2012 was reported at $5.6 billion, and the estimated 

gross profit was 32.07%. Exports from US mineral wool firms exceeded imports by about $600 

million in 2012.

1

 The year 2012 is the most recent year for which we are able to obtain 

economic data for NAICS 327993. According to the size definition applied to this industry by 

the U.S. Small Business Administration (SBA) (750 company employees or less)2, five of the 

seven parent firms in this industry affected by this final rule are classified as small businesses. 

Of the five small firms, their average number of employees is 108. All of these firms are U.S. 

 

1 Mineral Wood Manufacturing Industry in the U.S. and its International Trade (2014 Edition). LLC Supplier 

Relations US. Available on February 17, 2014. Can be found at http://www.marketresearch.com/SupplierRelations-US-LLC-v3418/Mineral-Wool-Manufacturing-International-Trade-8033092/. 

2

Found at the web site for the U.S. Small Business Administration (http://www.sba.gov/size), with small business 

size standards updated as of July 14, 2014. 
6

owned except for Roxul USA. Roxul USA is a subsidiary of a Danish company, Rockwool 

International, which is the world’s largest producer of mineral wool insulation. Roxul USA’s 

facility is located in Byhalia, Mississippi. This new production facility is in the construction 

permit review stage and we have included it as part of the estimated cost impacts. Based on 

the emissions test data provided by the industry, none of the existing facilities will have install 

additional control equipment to comply with the proposed rule requirements. 

We estimate that all 8 of the mineral wool production facilities will incur additional 

testing costs to demonstrate compliance with the new carbonyl sulfide (COS), hydrochloric acid 

(HCl), and hydrofluoric acid (HF) emission limits for cupolas. We also estimate that the 3 

existing facilities with bonded product lines will incur additional testing costs to demonstrate 

compliance with the revised formaldehyde and new phenol and methanol emission limits that 

will apply to collection and curing operations combined. We only have general information on 

the planned new facility but to estimate costs conservatively, we assume in the cost estimation 

that it would operate two cupolas and two bonded product lines that would be subject to the 

proposed limits of the rule. All of the new testing associated with the proposed rule 

requirements is based on a 5-year frequency. Therefore, the initial (first year) testing costs 

were divided by 5 to come up with “annualized” testing costs. 

This economic analysis identified the businesses that will be affected by this rule and 

provides an analysis at a screening level to assist in determining whether this rule is likely to 

impose a significant economic impact on affected businesses. The analysis employed here is a 

“sales test” that computes the annualized compliance costs as a share of sales for each 

company. The annualized cost per sales for a company represents the maximum price increase 

in affected product needed for the company to completely recover the annualized costs 

imposed by the regulation. A partial equilibrium analysis, a type of economic impact analysis 

that estimates changes in prices and output for the regulated sector resulting from a rule’s 

implementation, is deemed more than necessary for this proposal given the expected size of 

the impacts.

The “sales test” is the impact methodology EPA employs in economic impact analysis 

such as this one as opposed to a “profits test”, in which annualized compliance costs are 

calculated as a share of profits.3 This is because revenues or sales data are commonly available 

data for entities normally impacted by EPA regulations and profits data normally made 

 

3 More information on sales and profit tests as used in analyses done by U.S. EPA can be found at 

http://www.epa.gov/sbrefa/documents/rfaguidance11-00-06.pdf, pp. 32-33. 
7

available are often not the true profits earned by firms due to accounting and tax 

considerations. Firms and entities often have ways legally available in the tax code to minimize 

their reported profits; thus, using reported profits may lead to a less than accurate estimate of 

the economic impact of a regulation to an affected firm or entity and their consumers. While 

screening level analyses are often employed to estimate impacts to small business or entities as 

part an analysis in compliance with the Regulatory Flexibility Act (RFA) as amended by the Small 

Business Regulatory Enforcement Fairness Act (SBREFA), a screening level analysis can also be 

employed in an economic impact analysis such as this one whose focus is on the regulated 

companies. The costs used as input to the economic impact and small business analysis include 

the cost of emissions control and the costs of monitoring, recordkeeping, reporting and testing. 

The compliance costs by mineral wood facility are shown below in Table 1, and all compliance 

costs are in 2013$. More details on the compliance costs can be found in the mineral wool RTR 

cost memo prepared for this rulemaking.4

 

4 Memo from David Reeves, RTI, to Susan Fairchild, US EPA. Estimated Cost Impact for Mineral Wool Production 

Industry to Comply with Proposed Residual Risk and Technology Review (RTR) Amendments. August 29, 2014.
8

Table 1. Mineral Wool Production Facilities Costs to Comply with RTR Amendments -

Summary

Cupolasa Combined 

Collection/Curing

#

Cupolas

Annualized 

(New) COS 

Testing Costb

# 

Bonded 

Lines

Annualized 

(New) 

Testing 

Costc

Facility Location

Annualized 

(New) HCl/HF 

Testing Costb

Total Facility Incremental 

Annualized (New) Costs

Industrial 

Insulation 

Group (IIG) Phenix City, AL 1

$2,800 $800 1 $800 $4,400

Thermafiber Wabash IN 2 5,200 1,600 1 800 7,600

USG Interiors Red Wing, MN 2 5,200 1,600 0 0 6,800

USG Interiors Walworth, WI 1 2,800 800 0 0 3,600

Amerrock 

Products Nolanville, TX 2 5,200 1,600 0 0 6,800

Isolatek Int’l Huntington, IN 2 5,200 1,600 0 0 6,800

Rock Wool Mfg Leeds, AL 1 2,800 800 1 800 4,400

Roxul USA Byhalia, MS 2 5,200 1,600 2 1,600 8,400

SubTotal 13 $34,400 $10,400 5 $4,000 $48,800

a – 8 of the 13 cupolas currently have (or will have) incineration/afterburner controls. None of the facilities are 

expected to have any additional equipment or material cost impacts to meet the proposed emission limits. 

b – Cupola testing costs reflect incremental (new) costs for COS, HF, and HCl testing; current test requirements

 for PM not included.

c – Collection/curing costs reflect incremental costs for phenol and methanol testing; current test requirements 

 for formaldehyde not included.
9

For these mineral wool firms, the impacts of the proposed rule range from 0.006

percent to 0.1 percent, expressed as annual compliance costs as a percent of sales.5 The price 

elasticity of demand for the mineral wool industry is estimated at -0.86, and the price elasticity 

of supply for the industry is estimated at -0.7.7 With the responsiveness of mineral wool 

demand and supply to be less in percentage terms than the change in product price as 

approximated by the cost to revenue ratio, since this ratio is the maximum price change that 

producers may face, and with this ratio at or below 1 percent for the majority of production 

from this industry, it is expected that mineral wool price and output changes in response to this 

final rule will be less than 1 percent.8 The total annual compliance costs of the rule for this 

industry are $48,800 (2013 dollars) as shown in Table 1.

9

 Since confidential business 

information (CBI), particularly revenue data, received from the subject firms has been used to 

estimate these impacts, we will not provide provide economic impact estimates by firm. 

3. The Wool Fiberglass Industry

3.A. Background

Wool fiberglass is a thick, fluffy material made from discontinuous fibers, is used for 

thermal insulation and sound absorption. It is commonly found in ship and submarine 

bulkheads and hulls; automobile engine compartments and body panel liners; in furnaces and 

air conditioning units; acoustical wall and ceiling panels; and architectural partitions. Fiberglass 

can be tailored for specific applications such as Type E (electrical), used as electrical insulation 

 

5 Use of this metric for economic impacts when small businesses are prevalent in an industry affected by a 

regulation is consistent with the EPA guidance on SBREFA compliance 

(http://www.epa.gov/sbrefa/documents/Guidance-RegFlexAct.pdf), chapters 2 and 3. 

6 Ho, M. S, R. Morgenstern, and J. S. Shih. 2008. “Impact of Carbon Price Policies on US Industry.” RFF Discussion 

Paper 08-37. Http://Www.Rff.Org/Publications/Pages/Publicationdetails.Aspx?. Publicationid=20680 

Accessed August 2009. Table 8.A.6.

7 Broda, C., N. Limao, and D. Weinstein. 2008b. “Export Supply Elasticities.” <http://faculty.

chicagobooth.edu/christian.broda/website/research/unrestricted/TradeElasticities/

TradeElasticities.html.

8 This conclusion is consistent with perfect competition for this industry. This conclusion may change somewhat to 

the extent that this industry is imperfectly competitive. 

9

For more information on the costs of the rule, please refer to the cost memo prepared for this industry as part of 

this rule, which is a memo from David Reeves, RTI, to Susan Fairchild, US EPA. Estimated Cost Impact for Mineral 

Wool Production Industry to Comply with Proposed Residual Risk and Technology Review (RTR) Amendments. 

August 29, 2014.
10

tape, textiles and reinforcement; Type C (chemical), which has superior acid resistance, and 

Type T, for thermal insulation. 

The basic raw materials for fiberglass products are a variety of natural minerals and 

manufactured chemicals. The major ingredients are silica sand, limestone, and soda ash. Other 

ingredients may include calcined alumina, borax, feldspar, nepheline syenite, magnesite, and 

kaolin clay, among others. Silica sand is used as the glass former, and soda ash and limestone 

help primarily to lower the melting temperature. Other ingredients are used to improve certain 

properties, such as borides for chemical resistance and ductability. Waste glass, also called 

cullet, is also used as a raw material and may be ‘internal’ from the production of fiberglass or 

may be ‘external’ from glass recycling. The raw materials must be carefully weighed in exact 

quantities, their chemical compositions evaluated, and thoroughly mixed together (called 

batching) before being melted into glass for the manufacture of fiberglass. 

3.B. Impacts for Wool Fiberglass RTR Proposed Rule

Based on the information provided by the wool fiberglass manufacturing industry and 

their primary trade association, North American Insulation Manufacturers Association (NAIMA), 

there are currently 30 facilities in the U.S. producing wool fiberglass. A letter from NAIMA dated 

June 8, 2011, stated “non-formaldehyde binder products represent the vast majority of the 

industry” and “all major sources have already converted or have announced plans to convert to 

non-phenol formaldehyde binders.” Based on a review of the current permit status of all 

sources and recent information provided by industry, 10 facilities are major sources (subject to 

the existing MACT rule, subpart NNN) and 20 facilities are area source facilities. These 30 

facilities operate a total of 54 glass-melting furnace and 31 manufacturing lines that will have to 

comply with the RTR amendments to the NESHAP (subpart NNN) requirements. 

Industry comments on the proposed major source rule amendments (76 FR 72770) 

stated that some of the major source facilities have already switched some or most of their 

lines to non-HAP binders and would no longer be subject to subpart NNN. With the phase-out 

of phenol-formaldehyde binders, those sources will also be redesignated as area sources. While 

industry sources also predicted before proposal of the RTR amendments that no major sources 

would exist by the end of 2012, we now believe this to be inaccurate. The following cost 

impacts are based on the estimated 10 facilities that were identified as major sources in the 

most recent industry information provided in December 2012. 
11

We estimate that there are currently eight gas-fired furnaces located at five facilities 

designated as major sources. We also estimate that there are currently three gas-fired furnaces 

located at two facilities that emit chromium compounds above the proposed chromium 

emission limit. We have estimated the cost impact for those facilities based on the assumption 

that those furnaces will have a shortened operational life cycle and be rebuilt (or replaced) 

earlier than they might have been otherwise. The associated costing of this scenario is referred 

to as the net present value (NPV) approach which is described in the EPA Air Pollution Control 

Cost Manual (EPA/452/B-02-001), January 2002.10 

The furnace age and chromium emissions data show that furnaces may operate into 

their 10th year and still emit chromium at levels below the proposed chromium emission limit. 

The data also show that all furnaces older than 10 years emitted chromium at levels exceeding 

the proposed emission limit. We considered basing the NPV on an expected 12-year furnace life 

and an early rebuild at 10 years. While supported by the available data and resulting in a lower 

cost estimate (i.e., NPV Incremental Cost = $643,000 and Capital Recovery Cost = $119,000 per 

furnace), we decided to use a more conservative (i.e., more likely to overstate than understate 

cost estimates) approach and based our costs on an expected 10-year furnace life and an early 

rebuild at 7 years. We use the conservative approach because we estimate that there are 

currently three gas-fired furnaces located at two facilities that emit chromium compounds 

above the proposed chromium emission limit. We have estimated the cost impact for those 

facilities based on the assumption that those furnaces will have a shortened operational life 

cycle and be rebuilt (or replaced) earlier than they might have been otherwise. The associated 

costing of this scenario is referred to as the net present value (NPV) approach which is 

described in the EPA Air Pollution Control Cost Manual. More information on the furnace life 

cycle cost estimation can be found in the cost memo for the wood fiberglass RTR proposal.11

Using this more conservative approach, the total annualized cost per furnace is 

estimated at $212,000. The total cost for the five facilities to comply with the area source rule 

is estimated to be $716,000 per year with an overall cost effectiveness of $13,500 per pound of 

chromium compounds reduced. The annualized control costs for the gas-fired furnaces 

($716,000) divided by the emission reduction (567 pounds of chromium compounds) results in 

a cost effectiveness of $1,300 per pound of chromium compounds reduced (2013 dollars).

 

10 The EPA Air Pollution Control Cost Manual is available at http://epa.gov/ttn/catc/products.html#cccinfo. 

11 Memo from David Reeves, RTI, to Susan Fairchild, US EPA. Costs and Emission Reductions for the Proposed 

Wool Fiberglass Manufacturing NESHAP - Residual Risk and Technology Review (RTR) Amendments 
12

As noted previously, several facilities have already switched all or most of their rotary 

spin (RS) manufacturing lines to non-PF binders. Based on the most recent information 

provided by industry, we estimate that there will be 10 facilities subject to the proposed rule 

requirements with 18 RS manufacturing lines making bonded product. Two of those facilities 

also have 13 bonded flame attenuation (FA) lines producing heavy density products and/or pipe 

insulation. Based on facility information collected in the survey responses, most facilities 

currently have thermal oxidizers and we assumed that the estimated 6 facilities currently not 

meeting the proposed emission limits have thermal oxidizers (or scrubbers) on their bonded 

product lines. Therefore, there are no additional capital costs to comply with the new RS 

emission limits and we estimated operation and maintenance (O & M) costs for a thermal 

oxidizer at each facility to be $125,000 annually. All 10 major source facilities with bonded lines 

will incur additional testing costs to demonstrate compliance with the new phenol and 

methanol emission limits for forming and curing operations. 

The annualized control costs for the RS manufacturing lines ($774,800) divided by the 

total emission reduction (123 tons of organic HAP) results in a cost effectiveness of $6,300 per 

ton of organic HAP reduced (2013 dollars). On an individual facility basis, the cost effectiveness 

for the RS and FA manufacturing lines ranged from $1,132 to $14,000 per pound of organic HAP 

reduced. In sum, the total annualized costs to the industry for this proposed rule are $1.49 

million (2013 dollars).

This economic impact analysis identified the businesses that will be affected by this rule 

and provides an analysis at a screening level to assist in determining whether this rule is likely 

to impose a significant economic impact on affected businesses. The analysis employed here is 

a “sales test” that computes the annualized compliance costs as a share of sales for each 

company. The annualized cost per sales for a company represents the maximum price increase 

in affected product needed for the company to completely recover the annualized costs 

imposed by the regulation. This is the same methodology employed for economic impact 

analysis for the mineral wool industry, shown earlier in this report.

The “sales test” is the impact methodology EPA employs in economic impact analysis 

such as this one as opposed to a “profits test”, in which annualized compliance costs are 

calculated as a share of profits.12 This is because revenues or sales data are commonly available 

 

12 More information on sales and profit tests as used in analyses done by U.S. EPA can be found at 

http://www.epa.gov/sbrefa/documents/rfaguidance11-00-06.pdf, pp. 32-33. 
13

data for entities normally impacted by EPA regulations and profits data normally made 

available are often not the true profits earned by firms due to accounting and tax 

considerations. Firms and entities often have ways legally available in the tax code to minimize 

their reported profits; thus, using reported profits may lead to a less than accurate estimate of 

the economic impact of a regulation to an affected firm or entity and their consumers. While 

screening level analyses are often employed to estimate impacts to small business or entities as 

part an analysis in compliance with the Regulatory Flexibility Act (RFA) as amended by the Small 

Business Regulatory Enforcement Fairness Act (SBREFA), a screening level analysis can also be 

employed in an economic impact analysis such as this one whose focus is on the regulated 

companies. 

As mentioned earlier, wool fiberglass facilities are also included in NAICS (North 

American Industrial Classification System) 327993 along with mineral wool facilities. There are 

five parent firms owning these facilities with HAP sources affected by the major source RTR 

proposal, and these firms are shown in Table 2. None of these firms is a small business as 

defined by the SBA (750 employees or less for an ultimate parent company, as mentioned 

earlier for the relevant NAICS code). Each of these firms has revenues in excess of $3 billion in 

2013, as shown in Table 2. All of the firms are owned by parent companies based in the U.S.

except for CertainTeed, which is owned by Saint-Gobain, a French conglomerate, and Knauf, 

Inc., which is owned by the Knauf Group, Inc.) , a German conglomerate. Table 2 provides the 

annualized costs and economic impacts to the affected firms from this major source rule. All 

estimates of annualized costs are taken from the cost memo for the wool fiberglass RTR. EPA 

used no CBI in generating economic impacts for this industry.
14

Table 2: Wool Fiberglass Firms that Are Affected by the Proposed Major Source RTR, their 

Revenues and Costs Incurred from the Major Source RTR, and Economic Impacts from this 

Major Source RTR

Wool Fiberglass Firm

Annual Revenues 

in 2013 (billions)

Total Annualized 

Costs (2013

dollars)f

Annualized Costs as a 

Percentage of Annual 

Revenues in 2013

Owens Corning $5.30

a $493,600 0.0093

Johns Manville (owned by 

Berkshire-Hathaway) $182.15b 294,400 0.00016

Certain Teed (owned by SaintGobain) $31.64c 444,800 0.0014

Guardian, Inc. $5.60d 254,800 0.0045

Knauf, Inc. (owned by the 

Knauf Group) $4.72

e 3,200 0.0000068

aTaken from http://investor.owenscorning.com/financial-news/financial-news-details/2014/Owens-CorningReports-Fourth-Quarter-and-Full-Year-2013-Results/default.aspx. 

b Taken from the 2013 Berkshire-Hathaway annual report at

http://www.berkshirehathaway.com/2013ar/2013ar.pdf, p. 26. 

c Taken from the 2013 annual report for Saint-Gobain, Inc. http://www.saint-gobain.com/files/DDR_2013_GB.pdf, 

p. 6. Conversion from euros uses euro to U.S. dollar value as an average for 2013 using estimates from the U.S. 

Federal Reserve found at http://www.federalreserve.gov/releases/G5a/current/default.htm. The value is 1.3281. 

d Revenues available at http://www.forbes.com/companies/guardian-industries/. 

e

Taken from https://www.linkedin.com/company/knauf. Conversion from euros uses euro to U.S. dollar value as 

an average for 2013 using estimates from the U.S. Federal Reserve found at 

http://www.federalreserve.gov/releases/G5a/current/default.htm. The value is 1.3281. 

The economic impact on these wool fiberglass firms as result of the major source RTR 

rule, measured in annual compliance costs as a percent of sales or revenues, is less than 0.005

percent for each of the affected parent firms based on using available revenue data for 2013 to 

be consistent with the year for the cost estimates. The price elasticity of demand for the wool
15

fiberglass industry is estimated at -0.813, and the price elasticity of supply for the wool 

fiberglass industry is estimated at -0.7.14 With the responsiveness of wool fiberglass demand 

and supply at less than 1:1 compared to a price change of 1 percent, and with the change in 

product price as approximated by the cost to revenue ratio at less than 0.1 percent, for this 

ratio is the maximum price change that producers may face, it is expected that wool fiberglass 

price and output changes will be clearly less than 0.1 percent.15 Hence, the overall economic 

impact of this rule should be low on the affected industry and its consumers.

4. Wool Fiberglass Area Source Proposed Rule

4.A. Background

Based on the information provided by the wool fiberglass manufacturing industry and 

their primary trade association, North American Insulation Manufacturers Association (NAIMA), 

there are currently 30 facilities in the U.S. producing wool fiberglass. A letter from NAIMA dated 

June 8, 2011, stated “non-formaldehyde binder products represent the vast majority of the 

industry” and “all major sources have already converted or have announced plans to convert to 

non-phenol formaldehyde binders.” Based on a review of the current permit status of all 

sources and recent information provided by industry, 10 facilities are major sources (subject to 

the existing MACT rule, subpart NNN) and 20 facilities are area source facilities. These 30 

facilities operate a total of 54 glass-melting furnaces. Five of the area source facilities operate 

eight furnaces which meet the applicability requirements in the proposed area source NESHAP 

(subpart NN). Based on our current emissions data, two of the area source facilities, operating a 

total of three furnaces will be required by the rule to reduce chromium compound emissions. 

Industry comments on the proposed major source rule amendments (76 FR 72770) 

stated that some of the major source facilities have already switched some or most of their 

lines to non-HAP binders and would no longer be subject to subpart NNN. With the phase-out 

of phenol-formaldehyde binders, these sources will also be redesignated as area sources. While 

 

13 Ho, M. S, R. Morgenstern, and J. S. Shih. 2008. “Impact of Carbon Price Policies on US Industry.” RFF Discussion 

Paper 08-37. http://www.rff.org/Publications/Pages/Pulbicationdetails.aspx publicationid=20680. 

Accessed August 2009. Table 8.A.6.

14 Broda, C., N. Limao, and D. Weinstein. 2008b. “Export Supply Elasticities.” http://faculty.

chicagobooth.edu/christian.broda/website/research/unrestricted/TradeElasticities/

TradeElasticities.html.

15 This conclusion is consistent with perfect competition for this industry. This conclusion may change somewhat 

to the extent that this industry is imperfectly competitive. 
16

industry sources also predicted before proposal of the RTR amendments to NNN that no major 

sources would exist by the end of 2012, we now believe this to be inaccurate. Table 2 provides 

further information on wool fiberglass furnaces by furnace type and whether furnaces would 

currently be subject to the area source rule under subpart NN. The following cost impacts are 

based on the estimated five facilities and eight gas-fired glass-melting furnaces that would be 

subject to the proposed area source rule requirements. 

4.B. Economic Impact Estimates

We estimate that there are currently eight gas-fired furnaces located at five facilities 

designated as area sources. We also estimate that there are currently three gas-fired furnaces 

located at two facilities that emit chromium compounds above the proposed chromium 

emission limit. We have estimated the cost impact for those facilities based on the assumption 

that those furnaces will have a shortened operational life cycle and be rebuilt (or replaced) 

earlier than they might have been otherwise. The associated costing of this scenario is referred 

to as the net present value (NPV) approach which is described in the EPA Air Pollution Control 

Cost Manual. 

The furnace age and chromium emissions data show that furnaces may operate into 

their 10th year and still emit chromium at levels below the proposed chromium emission limit. 

The data also show that all furnaces older than 10 years emitted chromium at levels exceeding 

the proposed emission limit. We considered basing the NPV on an expected 12-year furnace life 

and an early rebuild at 10 years. While supported by the available data and resulting in a lower 

cost estimate (i.e., NPV Incremental Cost = $643,000 and Capital Recovery Cost = $119,000 per 

furnace), we decided to use a more conservative (i.e., more likely to overstate than understate 

cost estimates) approach and based our costs on an expected 10-year furnace life and an early 

rebuild at 7 years. More information on the furnace life cycle cost estimation can be found in 

the cost memo for the wood fiberglass area source proposal.16

Using this more conservative approach, the total annualized cost per furnace is 

estimated at $212,000. The total cost for the five facilities to comply with the area source rule 

 

16 Memo from David Reeves, RTI, to Susan Fairchild, US EPA Costs and Emission Reductions for the Wool Fiberglass 

Manufacturing NESHAP - Area Sources. August 27, 2014.
17

is estimated to be $716,000 per year with an overall cost effectiveness of $13,500 per pound of 

chromium compounds reduced.

The annualized control costs for the gas-fired furnaces ($716,000) divided by the 

emission reduction (54 pounds of chromium compounds) results in a cost effectiveness of 

$13,300 per pound of chromium compounds reduced (2013 dollars).

We prepared a similar economic impact analysis for the wool fiberglass area source 

proposal as that for the proposed RTR. As mentioned earlier, wool fiberglass facilities are also 

included in NAICS (North American Industrial Classification System) 327993 along with mineral 

wool facilities. There are three parent firms owning these facilities with HAP sources affected 

by the area source proposal, and these firms are shown in Table 3. None of these firms is a 

small business as defined by the SBA (750 employees or less for an ultimate parent company, as 

mentioned earlier for the relevant NAICS code). Each of these firms has revenues in excess of 

$3 billion in 2013, as shown in Table 3. All of the firms are owned by parent companies based 

in the U.S. except for CertainTeed, which is owned by Saint-Gobain, a French conglomerate, and 

Knauf, Inc., which is owned by the Knauf Group, a German conglomerate. Table 3 provides the 

annualized costs and economic impacts to the affected firms from this area source proposed 

rule. All estimates of annualized costs are taken from the cost memo for the wool fiberglass 

area source proposed rule. EPA used no CBI in generating economic impacts for this industry. It 

should be noted that Guardian, Inc. and Johns Manville do not have area sources that are 

subject to this proposal. Thus, the cost to each of these firms as a result of this area source 

NESHAP proposal is zero. 
18

Table 3: Wool Fiberglass Firms that Are Affected by the Proposed Area Source Rule, their 

Revenues and Costs Incurred from the Area Source Rule, and Economic Impacts from this Are 

Source Rule

Wool Fiberglass Firm

Annual Revenues 

in 2013 (billions)

Total Annualized 

Costs (2013 

dollars)

Annualized Costs as a 

Percentage of Annual 

Revenues in 2013

Owens Corning $5.30a $252,000 0.005

Certain Teed (owned by SaintGobain) $31.64b $20,000 0.00006

Knauf, Inc. (owned by The 

Knauf Group) $4.72

c $444,800 0.0094

a Taken from http://investor.owenscorning.com/financial-news/financial-news-details/2014/Owens-CorningReports-Fourth-Quarter-and-Full-Year-2013-Results/default.aspx. 

b

Taken from 2013 annual report for Saint-Gobain, Inc. http://www.saint-gobain.com/files/DDR_2013_GB.pdf, p. 

6. Conversion from euros uses euro to U.S. dollar value as an average for 2013 using estimates from the U.S. 

Federal Reserve found at http://www.federalreserve.gov/releases/G5a/current/default.htm. The value is 1.3281. 

cTaken from https://www.linkedin.com/company/knauf. Conversion from euros uses euro to U.S. dollar value as 

an average for 2013 using estimates from the U.S. Federal Reserve found at 

http://www.federalreserve.gov/releases/G5a/current/default.htm. The value is 1.3281. 

The economic impact on these wool fiberglass firms as result of the area source rule, 

measured in annual compliance costs as a percent of sales or revenues, is less than 0.01percent 

for each of the affected parent firms based on using available revenue data for 2013 to be 

consistent with the year for the cost estimates. The price elasticity of demand for the wool

fiberglass industry is estimated at -0.817, and the price elasticity of supply for the wool 

fiberglass industry is estimated at -0.7.18 With the responsiveness of wool fiberglass demand 

 

17 Ho, M. S, R. Morgenstern, and J. S. Shih. 2008. “Impact of Carbon Price Policies on US Industry.” RFF Discussion 

Paper 08-37. http://www.rff.org/Publications/Pages/Pulbicationdetails.aspx publicationid=20680. 

Accessed August 2009. Table 8.A.6.

18 Broda, C., N. Limao, and D. Weinstein. 2008b. “Export Supply Elasticities.” http://faculty.

chicagobooth.edu/christian.broda/website/research/unrestricted/TradeElasticities/

TradeElasticities.html.
19

and supply at less than 1:1 compared to a price change of 1 percent, and with the change in 

product price as approximated by the cost to revenue ratio at less than 0.1 percent, for this 

ratio is the maximum price change that producers may face, it is expected that wool fiberglass 

price and output changes will be less than 0.1 percent.19 Hence, the overall economic impact of 

this rule should be low on the affected industry and its consumers.

5. Conclusion – Summary of Impacts Across Rules

The total annualized costs of the RTR and area source rules for the mineral wool and 

wool fiberglass manufacturing categories combined are $2,256,400 (2013 dollars). For more 

information on the annualized compliance costs (i.e., the costs of control + the costs of 

monitoring, testing, and other administrative costs), please refer to the cost memos for this rule

for these industries. We also see that no firm is expected to experience an impact of more than 

0.15 percent of annualized costs as a percent of sales from the cumulative costs of these rules. 

For the rules, we find that we can certify that there is not a significant impact on a 

substantial number of small entities (or SISNOSE). This is based on no small firm being 

significantly impacted by this rule as shown in the impact results presented in this economic 

impact and small business impact analysis. We include all small firms affected by this rule in 

the determination of this conclusion. Of the eleven firms affected by these three rules, five 

mineral wool companies are small firms, and none of the small firms is affected significantly. All 

of these small firms are mineral wool manufacturers; no wool fiberglass manufacturer is a small 

business. Since the major and area source rules for wool fiberglass manufacturing does not 

impact small businesses, the Agency can provide a certification of no SISNOSE for the entire 

rulemaking in today’s action.

Although these proposed rules would not have a significant economic impact on a 

substantial number of small entities, the EPA nonetheless has tried to reduce the impact that 

these rules would have on small entities. The actions we are taking to reduce impacts on small 

businesses include less frequent compliance testing for the entire mineral wool industry and 

subcategorizing the Mineral Wool Production Source Category in developing the COS, HF and 

HCl emissions limits.

 

19 This conclusion is consistent with perfect competition for this industry. This conclusion may change somewhat 

to the extent that this industry is imperfectly competitive. 
20