SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

APPPENDIX D: Socioeconomic Impact Analysis Report September 20, 2007

D-1 Final Staff Report with Appendices

for Proposed Amendments and Revised Proposed Amendments

to the Solvent Cleaning Portion of Eleven District Rules

APPENDIX D

SOCIOECONOMIC IMPACT ANALYSIS REPORT

SEPTEMBER 20, 2007
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

APPENDIX D: Socioeconomic Impact Analysis Report September 20, 2007

FINAL DRAFT SOCIOECONOMIC ANALYSIS

PROPOSED AMENDMENTS TO THE ORGANIC 

SOLVENT CLEANING SECTIONS OF VARIOUS 

RULES

September 20, 2007

Prepared for

San Joaquin Valley Unified Air Pollution Control District

1990 E. Gettysburg Avenue

Fresno, CA 93726
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

APPENDIX D: Socioeconomic Impact Analysis Report September 20, 2007

Prepared by

Applied Development Economics

2029 University Avenue • Berkeley, California 94704 • (510) 548-5912

1029 J Street, Suite 310 • Sacramento, California 95814 • (916) 441-0323

www.adeusa.com
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

APPPENDIX D: Socioeconomic Impact Analysis Report September 20, 2007

CONTENTS

1. Executive summary ........................................................................ 1

2. Introduction .................................................................................... 2

3. Description of Proposed Amendments...................................... 3

3. Description of Proposed Amendments...................................... 4

4. Methodology ................................................................................... 6

5. Impacted Industries Subject to Proposed Amendments.......... 8

 5.1 regional demographic and economic trends....................... 8

 Regional Demographic Trends.............................................. 8

 Regional Economic Trends.................................................... 9

5.2 Description of affected industries...................................... 11

 Profile of Industries Affected by Changes to VOC 

 Content Limits for Printing/Graphic Arts Cleaning 

Operations......................................................................12

 Profile of Industries Affected by Removal of the 

 Exemption for Cleaning of Architectural Coating 

 Equipment ....................................................................16

6. Socioeconomic Impacts............................................................... 18

 6.1 Compliance Cost Estimates................................................ 18

 6.2 Business Responses to Compliance Costs........................ 18

6.3 Impacts on Affected Industries.......................................... 19

 Socio-Economic Analysis: Industries Affected by 

 Changes to VOC Content Limits for 

 Printing/Graphic Arts Cleaning Operations............19

 Socioeconomic Impact Analysis: Industries Affected 

 by Removal of the Exemption for Cleaning of 

 Architectural Coating Equipment.................................20

6.4 IMPACT ON SMALL BUSINESSES.............................. 20

 Definition Of A Small Business.......................................... 21

 Small Business Disproportionate Impact Analysis: 

 Industries Affected by Changes to VOC Content 

 Limits for Printing/Graphic Arts Cleaning

 operations......................................................................22
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APPPENDIX D: Socioeconomic Impact Analysis Report September 20, 2007

 Small Business Disproportionate Impact Analysis: 

 Industries Affected by Removal of the Exemption 

for Cleaning of Architectural Coating Equipment...22
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1. EXECUTIVE SUMMARY

The San Joaquin Valley Unified Air Pollution Control District 

(―District‖) seeks to adopt the proposed amendments to 

revise the solvent-cleaning requirements of various rules to 

obtain as much VOC emission reductions as is expeditiously 

practicable, technologically feasible, and economically 

reasonable, as determined by the District’s Governing Board.

This report shows that there are 42 businesses that operate 67 

facilities that will be affected by the proposed amendments, 

particularly the portion of the amendments having to do with 

cleaning of ink application equipment. These businesses 

generate an estimated $805 million in revenues, off of which 

is generated $4.7 million in net profits. Annual compliance 

costs as a proportion of net profits amount to 2.4 percent, 

which is below the ten percent threshold of significance.

In addition to the 42 businesses, approximately 1,140 

businesses in NAICS Codes 325-335 may be subject to the 

amendments, particularly to proposed removal of the 

exemption for cleaning of architectural coating equipment. 

These 1,140 businesses will bear annual compliance costs 

ranging from $422,490 (low end scenario) to $3.6 million 

(high end scenario). As a percent of estimated net profits, the 

annual compliance costs amount to less than one percent of 

net profits in either scenario.

The report also examines whether small businesses are 

disproportionately impacted by the rule. While businesses in 

NAICS 325-335 that employ less than five workers warrant 

close scrutiny, the report concludes that small businesses are 

not disproportionately impacted by the proposed 

amendments.
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2. INTRODUCTION

This report describes the socioeconomic impacts of proposed 

amendments to revise the organic solvent-cleaning 

requirements of various rules listed below in Table 1, which 

the San Joaquin Valley Unified Air Pollution Control District 

(―District‖) seeks to implement to obtain as much VOC 

emission reductions as is expeditiously practicable, 

technologically feasible, and economically reasonable, as 

determined by the District’s Governing Board. Following this 

introduction, the report summarizes the proposed 

amendments and describes the methodology for the 

socioeconomic analysis. In Section 5, the report describes the

economic characteristics of sources affected by the proposed 

amendments. The sixth section analyzes the socioeconomic 

impacts of compliance costs on the affected sources and the 

regional economy. This report is based on the version of 

amendments that were published in April 2007.

The report is prepared pursuant to the provisions of AB2051 

(Section 40728.5 of the California Health and Safety Code), 

which requires an assessment of socioeconomic impacts of 

proposed air quality rules. The findings in this report can 

assist District staff in understanding the socioeconomic 

impacts of the proposed amendments, and can assist staff in 

preparing a refined version of the rule. A draft report will be 

presented at a meeting conducted by District staff in early 

summer 2007. Figure 1 is a map of the eight-county region 

that comprises the San Joaquin Valley Air Basin. As indicated 

in the map, Kern County is not completely in the District.
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FIGURE 1

San Joaquin Valley Unified Air Pollution Control District (SJVUAPCD) Air Basin
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3. DESCRIPTION OF PROPOSED AMENDMENTS

Through the proposed amendments, the San Joaquin Valley 

Unified Air Pollution Control District (―District‖) seeks to 

revise the organic solvent-cleaning requirements of various 

existing rules. The organic solvent cleaning portions of the 

rules incorporate three different types of emission control 

standards: performance standards, equipment standards, and 

work practice standards.

Performance Standards

The federal Clean Air Act’s definition of ―performance 

standards‖ refers to an allowable emission limit, meaning 

a limit on quantity of pollutant emitted over a specified 

period of time or a percent reduction. In all of the rules 

listed in Table 1 above, the allowable volatile organic 

compound (―VOC‖) content of the solvent used for 

solvent cleaning is specified.

Equipment Standards

Equipment standards specify the design, use, and 

operation of a particular piece of equipment. This 

standard is used in several rules for detailing add-on VOC 

emission control equipment requirements.

Work Practice Standards

Work practices refer to the management plans and 

procedures that would be undertaken to reduce 

emissions. Requiring that containers be covered except 

when adding or removing material from the container is 

one example of a work practice standard. Each rule in 

this rule project identifies at least one work practice 

standard to limit VOC emissions.

Proposed amendments that are the subject of this socioeconomic analysis are based on South Coast Air Quality 

Management District (SCAQMD) Rule 1171 (Solvent 

Cleaning Operations). In October 1999, SCAQMD Rule 

1171 established a two-tiered approach to lowering the VOC 

content limits for all solvent cleaning activities. Tier I was 

implemented in December 2001. The Tier II VOC limits had 

an original implementation date of July 1, 2005, but was 

subject to completion of technology assessments to 
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determine feasibility of VOC content limits. For all categories 

except the cleaning of ink application equipment used for 

lithography/letterpress, screen-printing, and 

ultraviolet/electron beam inks (UV/EB), the technology 

assessment was completed in August 2003. The technology 

assessment concluded that the Tier II VOC content limits 

were feasible for these source categories. For cleaning of ink 

application equipment used for lithography/letterpress, 

screen-printing, and UV/EB inks, an interim VOC content 

limit of 500 grams per liter was established. The technology 

assessment for the remaining source categories was 

completed in August 2006. SCAQMD staff recommended 

that the implementation date for the Tier II limits for the 

remaining source categories be extended by 18 months – until 

January 1, 2008.

Based on SCAQMD’s technology assessment, District staff is 

proposing similar VOC content limits for solvents used for 

solvent cleaning with a similar timeline. Operators would 

have 12 months to come into compliance with the new VOC 

content limit. Based on the current rule project schedule, the 

compliance date would be August 2008 for all of the rules 

except Rule 4612 (Motor Vehicle and Mobile Equipment 

Coating Operations – Phase II). Since Rule 4612 does not 

become effective until January 1, 2009, District staff is 

proposing that the solvent cleaning VOC content limits 

become effective on the same date. The solvent-cleaning 

portions of Rule 4602, the Phase I version of Rule 4612, will 

remain in place until Rule 4612 becomes effective.
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4. METHODOLOGY

The socioeconomic analysis involves the use of information 

provided directly by affected sources, as well as secondary 

data used to describe the industries affected by the proposed 

amendments to the organic solvent cleaning sections of 

various existing rules. The approach is briefly described 

below. 

Applied Development Economics (ADE) began the analysis 

by preparing a statistical description of the industry groups of 

which the affected sources are a part, analyzing data on the 

number of jobs, sales levels, the typical profit ratios and other 

economic indicators for each industry. 

This report relies heavily on the most current data available 

from a variety of sources, such as the 2002 Economic 

Census, 1997 Economic Census, US Bureau of Labor 

Statistics County Business Patterns, Minnesota IMPLAN 

Group, and the State of California’s Employment 

Development Department (EDD) Labor Market Information 

Division. For purposes of estimating profits, ADE relied on 

Dun and Bradstreet.

With the above information, ADE was able to estimate net 

after tax profit ratios for sources affected by the proposed 

amendments. ADE calculated ratios of profit per dollar of 

revenue for affected industries. The result of the 

socioeconomic analysis shows what proportion of profits the 

compliance costs represent. Based on assumed thresholds of 

significance, ADE discusses in the report whether the 

affected sources are likely to reduce jobs as a means of 

recouping the cost of rule compliance or as a result of 

reducing business operations. To the extent that such job 

losses appear likely, the indirect multiplier effects of the jobs 

losses are estimated using a regional IMPLAN input-output 

model.

When analyzing the socioeconomic impacts of proposed new 

rules and amendments, ADE works closely within the 

parameters of accepted methodologies discussed in a 1995 

California Air Resources Board report called ―Development 

of a Methodology to Assess the Economic Impact Required 
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by SB513/AB969‖ (by Peter Berck, PhD, UC Berkeley 

Department of Agricultural and Resources Economics, 

Contract No. 93-314, August, 1995). The author of this 

report reviewed a methodology to assess the impact that 

California Environmental Protection Agency proposed 

regulations would have on the ability of California businesses 

to compete. The California Air Resources Board (ARB) has 

incorporated the methodologies described in this report in its 

own assessment of socioeconomic impacts of rules generated 

by ARB. One methodology relates to determining a level 

above or below which a rule and its associated costs is 

deemed to have significant impacts. When analyzing the 

degree to which its rules are significant or insignificant, ARB 

employs a threshold of significance that ADE follows. Berck 

reviewed the threshold in his analysis and wrote, ―The Air 

Resources Board’s (ARB) use of a 10 percent change in 

[Return on Equity] ROE (i.e. a change in ROE from 10 

percent to a ROE of 9 percent) as a threshold for a finding of 

no significant, adverse impact on either competitiveness or 

jobs seems reasonable or even conservative.‖ 
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5. IMPACTED INDUSTRIES SUBJECT TO PROPOSED 

AMENDMENTS

This section of the socioeconomic analysis describes 

demographic and economic trends in the San Joaquin Valley 

region. The first part of this section compares the San 

Joaquin Valley region against California as a whole, and 

provides a context for understanding demographic and 

economic changes that occurred within the San Joaquin 

Valley region between 1995 and 2005. Starting with subsection 5.2, the second part of this section narrows the focus 

of the socioeconomic analysis to industries affected by Draft 

New Rule 4565. The second part of this section describes the 

economic characteristics of potentially impacted industries 

that might be subject to Rule 4565.

5.1 REGIONAL DEMOGRAPHIC AND 

ECONOMIC TRENDS

REGIONAL DEMOGRAPHIC TRENDS

The San Joaquin Valley region experienced tremendous 

population growth during the 1990s. Many came to this area 

because of affordable housing. As a result, population 

increased significantly. The eight-county region’s population 

increased by 22 percent (or approximately 2.0 percent 

annually), from 3.0 million in 1995 to 3.7 million in 2005. 

Population growth continued on its healthy pace, as regional 

population grew by 2.5 percent annually between 2000 and 

2005. While the State of California’s population increased by 

15 percent (or approximately 1.5 percent annually) between 

1995 and 2005, all the counties in the region experienced 

faster rates of growth than California, as Table 1 shows. 

While, by many standards, Madera County continues to be a 

small county– at 140,747 residents according to the 

Department of Finance–it still experienced an annual growth 

rate of 2.6 percent between 1995 and 2005. Kings County 

also grew rapidly at 2.4 percent per year. As demonstrated in 

the following section on regional economic trends, the 

demographic changes that occurred in the San Joaquin Valley 
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region during the 1990s and into the new century significantly 

influenced the economy of this eight-county region.

TABLE 1

Population Growth: San Joaquin Valley Region, 1995 - 2005

1995 2000 2005

Distribution 

2005

Annual % 

Change 

95-00

Annual % 

Change 

00-05

Annual % 

Change 

95-05

California 31,617,000 33,871,648 36,728,196 1.4% 1.6% 1.5%

SJV Region 3,064,700 3,302,792 3,741,225 1.5% 2.5% 2.0%

 Fresno 748,400 799,407 883,650 24% 1.3% 2.0% 1.7%

 Kern 615,600 661,645 757,882 20% 1.5% 2.8% 2.1%

 Kings 114,800 129,461 145,110 4% 2.4% 2.3% 2.4%

 Madera 108,800 123,109 140,747 4% 2.5% 2.7% 2.6%

 Merced 198,700 210,554 241,464 6% 1.2% 2.8% 2.0%

 San Joaquin 517,900 563,598 655,319 18% 1.7% 3.1% 2.4%

 Stanislaus 413,000 446,997 505,352 14% 1.6% 2.5% 2.0%

 Tulare 347,500 368,021 411,701 11% 1.2% 2.3% 1.7%

Source: Applied Development Economics, based on California Department of Finance

REGIONAL ECONOMIC TRENDS

Economic development practitioners and planners have 

traditionally divided economies into two broad industrial 

categories—the economic base and local support industries. 

Economic base industries are the drivers of local and regional 

economies in that these industries draw income into a local 

economy by selling products outside of the local economy, 

much like the export industries of a national economy. 

Accrued earnings then circulate throughout the local area in 

the form of wages and salaries; investments; purchases of 

fixed assets, goods, and services; and generation of more jobs 

and wealth. 

The economic base is typically comprised of industries within 

the manufacturing, minerals-resource extraction, and 

agricultural sectors. There are also the ―local support 

industries‖ such as retail or service sectors, the progress of 

which is a function of the economic base and demographic 

changes, and more so the latter than the former. As 

population increases in a given area, demand for services–

such as realtors, teachers, and healthcare–increases, as does 

demand for basic retail items like groceries, gas for 

commuting, or clothing at the local apparel shops.
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Agriculture is the economic base of the San Joaquin Valley 

region by virtue of the amount of goods this sector produces 

and exports throughout the nation and the globe. Fourteen 

percent of all workers in the region are employed by 

industries within agriculture, as Table 2 shows. However, in 

2000 almost 18 percent of all workers worked in agriculture. 

In fact, over the five-year period between 2000 and 2005, 

employment in agriculture declined by 3.4 percent per year, 

or by almost 16 percent over five years.

Between 2000 and 2005, local support industries gained in 

prominence within the San Joaquin Valley region. Servicerendering industries employed the most workers as a 

proportion of total employment in the region. As Table 2 

shows, excluding wholesale, retail, and transportation, 

service-rendering industries comprise the largest employment 

sector in the region, at 582,400 or 52 percent of all jobs. With 

retail, transportation and wholesale, services accounting for 

almost 72 percent of all jobs. In 2000, service-rendering 

industries represented 49 percent of all jobs, and when 

including retail, wholesale, and transportation in the mix, 68 

percent. 

Increases in employment in service-rendering industries are 

consistent with regional population growth. In the region, 

local support industries of construction, education and health, 

and financial activities increased annually by 5.6 percent, 3.4 

percent, and 2.5 percent respectively between 2000 and 2005. 
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TABLE 2

Employment Profile Of The San Joaquin Valley Region 2000 – 2005

MAJOR SECTORS

San Joaquin 

Valley 

Region 

Employment 

2000

San Joaquin 

Valley Region 

Employment 

2005

San Joaquin

Valley 

Region 

Employment 

Distribution, 

2005

Annual 

Percent 

Change 

2000 to 2005

California 

Employment 

Distribution, 

2005

Annual 

Percent 

Change 

California

2000 to 2005

Agriculture 190,500 160,357 14% -3.4% 3% -1.7%

Resources, Mining and Construction 38,700 50,700 5% 5.6% 6% 4.1%

Manufacturing 111,600 108,800 10% -0.5% 10% -4.1%

Wholesale 35,200 40,500 4% 2.8% 5% 0.9%

Retail 123,200 137,300 12% 2.2% 11% 1.2%

Transportation/Warehousing/Utilities 39,800 44,500 4% 2.3% 3% -1.2%

Information 15,300 14,800 1% -0.7% 3% -3.8%

Financial Activities 38,600 43,600 4% 2.5% 6% 3.1%

Professional and Business Services 95,000 98,800 9% 0.8% 15% -0.8%

Educational and Health Services 103,800 122,400 11% 3.4% 11% 2.5%

Leisure, Hospitality and Other Srvs 81,500 92,900 8% 2.7% 10% 2.0%

Government 195,500 209,900 19% 1.4% 16% 0.8%

Total Employment 1,068,700 1,124,557 100% 1.0% 100% 0.3%

Source: Applied Development Economics, based on data from California Employment Development Department LMID

The emergence of local support industries in the San Joaquin 

Valley region mirrors and leads statewide trends, as Table 2 

shows. In the region, construction and health-education 

increased annually by 5.6 percent and 3.4 percent, whereas, 

statewide, these industries grew by 4.0 percent and 2.5 

percent between 2000 and 2005. In short, while agriculture 

remains the leading edge of the economy, the San Joaquin 

Valley region’s economy has become more diverse, with the 

growth occurring within population-driven local support 

industries rather than the export-focused economic base 

industries of manufacturing and agriculture.

5.2 DESCRIPTION OF AFFECTED INDUSTRIES

The proposed amendments affect various existing rules’ 

respective limits VOC content for cleaning solvents. The 

discussion below is divided into two parts. First, the 

discussion reviews economic trends for business directly 

affected by changes to VOC content limits for 

printing/graphic arts cleaning operations. Then, the 

discussion reviews economic trends for industries affected by 

the removal of the exemption for cleaning of architectural 

coating equipment.
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Profile of Industries Affected by Changes to VOC 

Content Limits for Printing/Graphic Arts 

Cleaning Operations

As Table 3 shows, there are approximately 24 industries 

whose respective businesses are potentially subject to the rule, 

particularly the amendments that change VOC content limits 

for printing/graphic arts cleaning operations. Within these 24 

industries, there are 652 private and public sector entities that 

are subject to various rules the cleaning solvent portions of 

which the District seeks to amend. In particular, these 652 

entities are potentially subject to proposed rule changes 

related to VOC content limits for printing/graphic arts 

cleaning operations.

TABLE 3

List of Printing Press Operating Industries That Affected 

Businesses Are a Part of

NAICS Code Industry Description

322121 Paper Mills (Except Newsprint)

322130 Paperboard Mills

322211 Corrugated and Solid Fiber Box Manufacturing

322213 Setup Paperboard Box Manufacturing

322215 Nonfolding Sanitary Food Container Manufacturing

322221 Coated and Laminated Packaging Paper Plastics Film

322222 Coated and Laminated Paper Manufacturing

322224 Uncoated Paper and Multiwall Bag Manufacturing

323110 Commercial Lithographic Printing

323111 Commercial Gravure Printing

323112 Commercial Flexographic Printing

323116 Manifold Business Forms Printing

323117 Books Printing

324122 Asphalt Shingle and Coating Materials Manufacturing

332439 Other Metal Container Manufacturing

333293 Printing Machinery and Equipment Manufacturing

333411 Air Purification Equipment Manufacturing

448210 Shoe Stores

511110 Newspaper, Periodical, Book, and Directory Publishers

541430 Graphic Design Services

811118 Other Auto Mechanical\Electrical Repair Maintenance

922130 Legal Counsel and Prosecution

922140 Correctional Institutions

322121 Paper Mills (Except Newsprint)

322130 Paperboard Mills

Source: Applied Development Economics
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Below, Table 4 tracks employment trends of industries that 

the 652 businesses and public sector entities are a part of. 

Tables 4 and 5 are presented to establish the broader 

economic context in which the proposed amendments are 

being promulgated. As Table 4 indicates, employment in the 

region increased by 5,842 workers between 2000 and 2005, or 

by over six percent per year. Over the ten-year period 

stretching from 1995 to 2005, regional employment in 

industries that the 652 establishments are a part of also 

increased, by almost four percent annually. In contrast, 

employment in similar industries declined by two percent 

annually at the state level between 2000 and 2005, and by a 

slight 0.4 percent annually between 1995 and 2005. 

TABLE 4 

Employment Trends of Printing and Printing-Related Industries That Affected Sources Are a Part Of: 

San Joaquin Valley Region and California, 1995 - 2005

1995 2000 2005

Change 

00-05

Annual % 

Change 

95-00

Annual % 

Change 

00-05

Annual % 

Change 

95-05

California 198,467 214,788 191,268 -23,520 1.6% -2.3% -0.4%

SJV Region 15,244 16,225 22,067 5,842 1.3% 6.3% 3.8%

Source: Applied Development Economics, based on California EDD LMID

Table 5 compares regional and statewide trends in greater 

detail. The 652 establishments in the District’s database are 

part of a set of industries that, in the eight-county region, 

consists of 951 establishments that employ over 22,000 

workers at an average annual wage of $42,800. In the state as 

a whole, there are 11,381 establishments in comparable 

industries. In other words, eight percent of all establishments 

in the industries of interest are located in the eight-county 

region. Overall, there are 89,594 establishments in all

industries in the eight county region, or seven percent of all

establishments in all industries in the state. Thus, relative to 

the state as a whole, establishments in the industries of 

interest are concentrated in the region in a fashion similar to 

the way all businesses in all industries are concentrated in the 

region when compared to the state. 

TABLE 5

Profile of Industries That Affected Sources Are a Part of: Regional and State Trends, 2005 

------- Affected Industries Only, 2005 ------- ----- All Private and Public Industries, 2005 -----

Establishments Employment Avg. Ann Wage Establishments Employment Avg. Ann Wage

Region 951 22,067 $42,782 89,594 1,124,557 $31,497 
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California 11,381 188,145 $46,317 1,221,897 14,650,300 $46,211 

Region as percent of California 8% 12% 92% 7% 8% 68%

Source: Applied Development Economics, based on California EDD LMID

Table 5 also shows that the annual average wage in the region 

in the industries of interest is 92 percent of the average wage 

paid in the state as a whole for similar industries, or $46,782 

versus $46,317. By comparison, regional wages in all 

industries ob average lag significantly behind statewide 

average wages for all industries, or $31,497 versus $46,211. 

The discussion above described the economic context under 

which the proposed amendments are being promulgated. 

Tables 4 and 5 showed that industries potentially subject to 

the proposed amendments are growing and pay wages that 

are comparable to statewide wages. Below, this report 

profiles establishments that are directly affected by the 

proposed amendments. While there are 652 businesses and 

public sector establishments in the industries of interest, not 

all of these establishments are affected by the proposed 

amendments. Many do not use cleaning solvents, although 

they are in the database for other (non-solvent related) 

reasons pertaining to various existing rules that the District is 

now amending.

Table 6 below identifies the number of businesses that are 

potentially subject to the proposed rule changes, as well as the 

number of businesses that will be directly affected by the 

proposed amendments. As Table 6 shows, there are three 

kinds of printing and printing-related operations: 

flexographic, lexographic and gravure printing operations. 

The table shows that there are 35 individual businesses 

operating 37 facilities that utilize flexographic printers. Of 

the 35, only three operate facilities are in the District’s 

emission inventory database. These three businesses operate 

24 out of the 37 facilities that utilize flexographic printers. 

The three businesses and their respective 37 facilities are 

subject to the proposed amendments. 
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TABLE 6 

Number of Printing Businesses Potentially and Actually 

Subject To Proposed Amendments To Organic Solvent 

Cleaning Sections of Various Existing Rules

Type of Printers

Total Number 

of Businesses 

in District 

Database

Total Number 

of Facilities 

Operated By 

Total Number 

of Businesses

Actual Number 

of Affected 

Businesses 

Subject to 

Proposed 

Amendments

Affected 

Facilities with 

Emissions 

Inventory

Flexography 35 37 3 24

Lithography 38 37 33 37

 Public Sector 4 4 4 4

Gravure 2 2 2 2

79 80 42 67

Table 7 below includes information on gross sales and net 

profits of sources impacted by proposed amendments. 

Revenues are based on averages generated from the 

Economic Census 2002 data for California and counties in 

the eight-county region, which were then adjusted for 

inflation between 2002 and 2005. These averages were 

applied against the number of affected establishments. 

Estimated after-tax net profits are based on ten consecutive 

years worth of industry-level net profit data collected by Dun 

and Bradstreet, ratios for which were then applied against 

estimated revenues. No profit is estimated for public sector 

entities; the analysis assumes annual compliance costs will be 

absorbed by general operating budgets. As it is, the project 

annual compliance cost for public sector entities is relatively 

low, at $289 a year.

TABLE 7 

Economic Profile of Establishments Subject To Proposed Amendments To Organic Solvent Cleaning Sections of 

Various Existing Rules

Type of Printers Affected Businesses Affected Facilities Estimated Revenues Est. Net Profits

Flexography 3 24 $25,631,005 $834,694

Lithography 33 37 $103,202,860 $3,674,199

 Public Sector 4 4 $670,268,086 $0

Gravure 2 2 $5,929,274 $210,489

Total 42 67 $805,031,225 $4,719,382

Source: Applied Development Economics, based on California EDD LMID, US Economic Census 2002, SJVUAPCD, and Dun and Bradstreet
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Profile of Industries Affected by Removal of the 

Exemption for Cleaning of Architectural Coating 

Equipment

In addition to lowering the VOC content limit for solvents 

used to clean printing presses, the draft changes also remove 

the exemption for cleaning architectural coating application 

equipment. Whereas proposed rule changes that lower VOC 

content limits for solvents used to clean printing presses 

affect a discrete number of businesses (i.e. 42 businesses 

operating 67 facilities) that are already in the database of the 

District, removing the architectural coatings exemption could 

affect a wide range of businesses across a number of 

manufacturing industries. Table 2 in the District’s staff report 

of April 2007 identified a number of manufacturing industries 

that could be potentially subject to the amendments. These 

industries include manufacturers of electrical apparatus 

components, electric components, medical devices and 

pharmaceuticals, as well as tool, equipment and machinery 

manufacturers. These industries are classified within NAICS 

codes 325 and 335. Table 7 lists specific manufacturing 

industries between NAICS codes 325-335.

TABLE 7

List of Manufacturing Industries Potentially Affected By 

Removal of Architectural Coating Exemption

NAICS Code Industry Description

325 Chemical Manufacturing

326 Plastics and Rubber Manufacturing

327 Nonmetallic Mineral Products Manufacturing

331 Primary Metal Manufacturing

332 Fabricated metal Products Manufacturing

333 Machinery Manufacturing

334 Computer & Electronic Products Mfg

335 Electrical Equipment & Appliance Components Mfg

Source: Applied Development Economics

Below, Table 8 tracks employment trends of manufacturing 

industries in NAICS code 325-335. As Table 8 shows, 

employment in the region decreased by 5,226 workers 

between 2000 and 2005, or by three percent per year. Over 

the ten-year period stretching from 1995 to 2005, regional 

employment in NAICS 325-335 industries had decreased, by 

almost three percent annually. In contrast, employment in 
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similar industries declined by five percent annually at the state 

level between 2000 and 2005, and by one percent annually 

between 1995 and 2005.

TABLE 8 

Employment Trends of Manufacturing Industries NAICS 325-335: San Joaquin Valley Region and 

California, 1995 - 2005

1995 2000 2005

Change 

00-05

Annual % 

Change 

95-00

Annual % 

Change 

00-05

Annual % 

Change 

95-05

California 881,189 991,172 781,823 -209,349 2% -5% -1%

SJV Region 22,336 34,967 29,741 -5,226 9% -3% 3%

Source: Applied Development Economics, based on California EDD LMID

Table 9 shows that there are 1,140 establishments in the 

region in NAICS codes 325-335. These establishments 

generate an estimated $53.7 billion in revenues, off of which 

they earn an estimated $3.4 billion in net profits.

TABLE 9 

Economic Profile of Other Manufacturing Industries Affected By Removal of Architectural Coatings Exemption

NAICS Industry Codes

Potentially Affected 

Establishments Employment Estimated Revenues Est. Net Profits

325 - 335 1,140 29,741 $53,731,529,573 $3,402,835,017

Source: Applied Development Economics, based on California EDD LMID, US Economic Census 2002, SJVUAPCD, and Dun and Bradstreet
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6. SOCIOECONOMIC IMPACTS

This section of the report compares the economic 

characteristics of affected industries against the compliance 

costs. The first part of this section discusses annual 

compliance costs. Section 6.2 discusses general business 

responses to compliance costs. Section 6.3 analyzes the 

socioeconomic impacts of the proposed amendments to 

various existing rules, particularly section dealing with organic 

solvent cleaning.

6.1 COMPLIANCE COST ESTIMATES

Table 10 summarizes the estimated annualized costs 

associated with proposed amendments to various existing 

rules. Total annual cost of the rule ranges between $422,490 

and $3,590,132. 

TABLE 10

Total Annual Compliance Cost

Net Annual Cost ($/yr)

Low End High End

Remove exemption for architectural 

solvent cleaning $307,165 $3,474,807

Printing industry changes $115,325 $115,325

Flexography $3,235 $3,235

Lithography $110,249 $110,249

Gravure $1,841 $1,841

Other solvent cleaning changes $0 $0

Totals $422,490 $3,590,132

Source: San Joaquin Valley Unified Air Pollution Control District

6.2 BUSINESS RESPONSES TO COMPLIANCE 

COSTS

Industries impacted by the proposed amendments may 

respond in a variety of ways when faced with new regulatory 

costs. These responses may range from simply absorbing the 

costs and accepting a lower rate of return, to shutting down 

the affected business operation altogether and, where 

practical, shift from lower-value to higher-value product and 
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or service. Impacted industries might also seek to pass costs 

to users of services or purchasers of goods. Affected sources 

may also seek to renew efforts to increase productivity and 

reduce costs elsewhere in their operation in order to recoup 

the regulatory costs and maintain profit levels. 

6.3 IMPACTS ON AFFECTED INDUSTRIES

This section of the report analyzes estimated after tax net 

profits of affected industries against anticipated costs 

associated with implementation of the draft new rule. Similar 

to the economic profile of businesses and industries that will 

be affected by the proposed rule changes, the socioeconomic 

impact analysis below first analyzes the impacts associated 

with rule changes that affect printing presses. Then, the 

report analyzes socioeconomic impacts associated with the 

removal of the architectural coatings exemption.

Socio-Economic Analysis: Industries Affected by 

Changes to VOC Content Limits for 

Printing/Graphic Arts Cleaning Operations

There are 42 impacted businesses operating 67 facilities with 

either lexographic, flexographic or gravure printing presses. 

These businesses generate an estimated $805 million in 

revenues, off of which is earned an estimated $4.7 million in 

net profits. Excluding public sector entities subject to this 

rule, there are 38 businesses that generate $134.8 million in 

revenues. 

As Table 10 shows, the annual cost of the rule is a small 

percentage of estimated net profits. The three establishments 

operating flexographic printers will experience an estimated 

$3,235 in annual costs, which is less than one percent of

estimated net profits. Thirty-three establishments employing 

lithographic printers will experience $109,960 in aggregate 

costs, which represents three percent of combined net 

profits. Overall annual compliance costs at $115,325 

represents 2.4 percent of annual net profits, which is below 

the ten-percent threshold of significance. All of the cost-tonet profit ratios in Table 10 are below the 10 percent 

threshold of significance. 
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TABLE 10

Socioeconomic Impact Analysis: Annual Cost In Relation to Affected Industry Net Profits

Type of Printers

Affected 

Establishments

Affected 

Facilities

Estimated 

Revenues Est. Net Profits

Annual 

Compliance 

Cost

Compliance 

Cost As 

Percent of Net 

Profits

Flexography 3 24 $25,631,005 $834,694 $3,235 0.4%

Lithography 33 37 $103,202,860 $3,674,199 $109,960 3.0%

 Public Sector 4 4 $670,268,086 $0 $289 0.0%

Gravure 2 2 $5,929,274 $210,489 $1,841 0.9%

Total 42 67 $805,031,225 $4,719,382 $115,325 2.4%

Source: Applied Development Economics, based on California EDD LMID, US Economic Census 2002, SJVUAPCD, and 

Dun and Bradstreet

Socioeconomic Impact Analysis: Industries 

Affected by Removal of the Exemption for 

Cleaning of Architectural Coating Equipment

Table 11 compares annual compliance costs associated with 

removing the exemption on architectural cleaning solvents. 

The annual compliance costs range between $307,165 and 

$3,474,807. As the table shows, these costs represent between 

0.01 percent and 0.10 percent of industry net profits, which is 

below the significance threshold.

TABLE 11 

Economic Profile of Other Establishments Subject To Proposed Amendments To Organic Solvent

Cleaning Sections of Various Existing Rules: Removal of Architectural Cleaning Solvents Exemption

NAICS 

Industry 

Codes

Potentially 

Affected 

Establishments

Estimated 

Revenues Est. Net Profits

Annual 

Compliance 

Cost: Low

Annual 

Compliance 

Cost: High

Compliance 

Cost As 

Percent of 

Net Profits: 

Low

Compliance 

Cost As 

Percent of 

Net Profits: 

High

325 - 335 1,140 $53,731,529,573 $3,402,835,017 $307,165 $3,474,807 0.01% 0.10%

6.4 IMPACT ON SMALL BUSINESSES

In addition to analyzing the employment impacts of the 

proposed amendments of various existing rules, state 

legislation requires that the socioeconomic analysis assess 

whether small businesses are disproportionately affected by 

air quality rules. This section of the report analyzes impacts to 
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small businesses from the vantage point of how the State of 

California defines small businesses, beginning with a brief 

summary on how the state government defines small 

businesses for the purposes of qualifying certain businesses 

for various programs. This section concludes with a 

discussion as to whether the affected industries include small 

businesses, and assesses whether those small businesses are 

disproportionately impacted by the new rules. 

DEFINITION OF A SMALL BUSINESS

For purposes of qualifying small businesses for bid 

preferences on state contracts and other benefits, the State of 

California defines small businesses in the following manner1. 

To be eligible for small business certification, a business:

Must be independently owned and operated;

Cannot be dominant in its field of operation;

Must have its principal office located in California

Must have its owners (or officers in the case of a 

corporation) domiciled in California; and

Together with its affiliates, be either:

A business with 100 or fewer employees, and 

an average gross receipts of $10 million or less 

over the previous tax years, or

A manufacturer with 100 or fewer employees

Due to limitations of the data set, it is difficult to ascertain 

how many of the establishments are small businesses per 

many of the features identified directly above. It is possible to 

estimate how many affected establishments employ more 

than 100 workers, as well as to estimate the average revenues 

generated by affected establishments of a given size. 

Similar to the economic profile of businesses and industries 

that will be affected by the proposed rule changes, the small 

business disproportionate impact analysis below first analyzes 

the impacts associated with rule changes that affect printing 

 

1 State of California. Department of General Services. ―California Small Business Certification‖ (http: 

www.pd.dgs.ca.gov/smbus/sbcert.htm)
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presses. Then, the report analyzes disproportionate impacts 

associated with the removal of the architectural coatings 

exemption. 

Small Business Disproportionate Impact Analysis: 

Industries Affected by Changes to VOC Content 

Limits for Printing/Graphic Arts Cleaning 

Operations

There are 42 impacted businesses operating 67 facilities with 

either lexographic, flexographic or gravure printing presses. 

In analyzing the socioeconomic impacts of the proposed rule

changes, the consultants reviewed available data and 

calculated revenues and net profits on a business-by-business 

basis, concluding that that there are no significant impacts 

associated with the rule changes. Thus, this section 

concludes that small businesses are not disproportionately 

impacted by the proposed rule changes.

Small Business Disproportionate Impact Analysis: 

Industries Affected by Removal of the Exemption 

for Cleaning of Architectural Coating Equipment

Since the socioeconomic analysis of industries affected by 

removal of the exemption for cleaning of architectural 

coating equipment relied on summary data published by 

California Employment Development Department, which 

was combined with data from the US Economic Census for 

purposes of estimating revenues, additional analysis and data 

are needed to determine if small businesses are 

disproportionately impacted by the proposed rule changes. 

Table 12 below shows that, of the 1,140 establishments in the 

325-335 NAICS codes, 1,063 employ less than 100 workers. 

This is based on data for the eight-county region issued by 

the US Bureau of Labor Statistics County Business Patterns. 

On average, these establishments generate $26.8 million a 

year. From this vantage point, the typical establishment 

employing less than 100 workers is not a small business. 

Further examination of the US BLS’ data set leads us to 

believe that the typical NAICS 325-335 establishment 

employing less than 100 workers actually generates slightly 

under $10 million, based on the estimated median revenue. In 
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particular, establishments employing less than 5 workers may 

merit further scrutiny as these establishments generate on 

average $2.9 million in revenues. In other words, these 

establishments fall within California’s small business criteria 

as they employ less than 100 workers and generate less than 

$10 million in annual sales. The typical establishment 

employing between 5 and 9 workers (and more) is not a small 

business per the State of California as it generate on average 

$10 million.

TABLE 11

Socioeconomic Impact Analysis: 

Small Business Disproportionate Impact Analysis

Size Categories Establishments Employment Est. Revenues Average Revenues Median Revenues

< 100 workforce 1,063 19,305 $28,489,299,152 $26,795,237 $9,517,538

> 100 workforce 77 17,105 $25,242,230,421 $328,771,222 $147,970,588

Total 1,140 36,410 $53,731,529,573 $47,132,921 $10,204,819

Source: Applied Development Economics, based on US Bureau of Labor Statistics, ―County Business Patterns‖

While attention should be paid to establishments affected by 

the proposed amendments that employ less than five 

workers, the report concludes that small businesses are not

disproportionately impacted by the proposed amendments. 

Small establishments in NAICS 325-335 that employ less 

than five workers will experience annual compliance costs in 

accordance to their size, meaning their share of the total 

annual compliance costs of either $307,165 and $3,474,807 

when adjusted on a per worker basis will amount to less than 

ten percent of their respective net profit estimates.
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APPPENDIX D: Socioeconomic Impact Analysis Report September 20, 2007

D-28 Final Staff Report with Appendices

for Proposed Amendments and Revised Proposed Amendments

to the Solvent Cleaning Portion of Eleven District Rules

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