From: "Higgins, Cortney" <Cortney_Higgins@omb.eop.gov>

To: Sharon Nizich/RTP/USEPA/US@EPA Cc: Nathaniel Jutras/DC/USEPA/US@EPA, JohnB Chamberlin/DC/USEPA/US@EPA Date: 12/10/2010 01:00 PM Subject: Part of E.O. 12866 Review: Interagency Discussion about uploading documents into ROCIS preamble pertaining to NESHAP: Mercury Emissions from Mercury Cell Chlor

- Alkali Plants 2060

- AN99

Hi Sharon,
Can you have the attached documents uploaded into ROCIS? I’ve opened it for amendment. I’ve copied Nate Jutras in OP who should help make sure it gets into ROCIS and follow the proper internal agency procedure.
Please let me know if you have any questions.
Regards, Cortney (See attached file: Me rcuryChloro_RIA_CLEAN COPY_12.10.10.docx)(See attached file: Supp

- Hgcell

coproposal_DRAFT _clean 12

- 07

- 10.docx)***E.O. 12866 Review

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EO12866_Mercury Emissions from Mercury Cell Chlor

- Alkali Plants 2060

- AN99 NPRM RIA_20101210


## November 2010



# Regulatory Impact Analysis: Pro posed National Emission Standards for Hazardous Air Pollutants (NESHAP) for Mercury Emissions from Mercury Cell Chlor Alkali Plants

Draft Report

U.S. Environmental Protection Agency Office of Air Quality Planning and Standards (OAQPS) Air Benefit and Cost Group

(MD

- C439

- 02) Research Triangle Park, NC 27711

### 1

- 1 CONTENTS

Section Page

Section 1 Introduction and Executive Summary

................................ ..................... 1

- 7

1.1 Executive Summary

................................ ................................ ............................. 1

- 7

1.2 Organization of this Report

................................ ................................ ................ 1

- 10

Section 2 Industry Profile

................................ ................................ ........................ 2

- 1

2.1 Supply Side

................................ ................................ ................................ .......... 2

- 1 2.1.1 Chlorine Production Process

................................ ................................ .... 2

- 1 2.1.2 Product Types

................................ ................................ .......................... 2

- 3 2.1.3 Materials and Costs of Production

................................ ........................... 2

- 3 2.1.4 Chlor

- alkali Transportation

................................ ................................ ...... 2

- 5

2.2 The Demand Side

................................ ................................ ................................ . 2

- 6 2.2.1 Who Uses Chlorine, Caustic Soda, and Caustic Potash?

......................... 2

- 6 2.2.2 What Factors Infl uence Demand?

................................ ............................ 2

- 9

2.3 Market Characteristics

................................ ................................ ....................... 2

- 1 0 2.3.1 Geography

................................ ................................ .............................. 2

- 10 2.3.2 Product Differentiation

................................ ................................ .......... 2

- 10 2.3.3 Entry

................................ ................................ ................................ ....... 2

- 11 2.3.4 Concentration

................................ ................................ ......................... 2

- 11

2.4 Overview of Businesses Affected by the Rule

................................ .................. 2

- 11 2.4.1 Mercury Cell Plants

................................ ................................ ............... 2

- 11 2.4.2 Ultimate Parent Companies

................................ ................................ ... 2

- 13

Section 3 Engineering Cost Analysis

................................ ................................ ....... 3

- 1

3.1 Capital Costs

................................ ................................ ................................ ........ 3

- 2

3.2 Annual Costs

................................ ................................ ................................ ........ 3

- 6 3.2.1 Capital Recovery Cost

................................ ................................ ............. 3

- 7 3.2.2 Annual Costs Associated with Storage of Unused Mercury

.................... 3

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### 3.2.3 Costs Savings Associated with the Elimination of Mercury

- Related Environmental Compliance Costs

................................ .......................... 3

- 11 3.2.4 Energy Savings and Costs

................................ ................................ ...... 3

- 14 3.2.5 Overall Annual Costs

................................ ................................ ............. 3

- 16

3.3 Uncertainty Analysis

................................ ................................ .......................... 3

- 17

3.4 Summary of Results

................................ ................................ ........................... 3

- 19

Section 4 Economic Impact Analysis (EIA)

................................ ............................ 4

- 1

4.1 Conversion Versus Plant Closure

................................ ................................ ........ 4

- 1

4.2 Market Concentration and Pricing Behavior

................................ ....................... 4

- 3

4.3 Impact on Employment

................................ ................................ ........................ 4

- 4

4.4 Trans portation Issues Associated with Plant Closure

................................ .......... 4

- 6

4.5 Small Entity Impact Analysis

................................ ................................ .............. 4

- 6 4.5.1 Identify Affected Small Entities

................................ .............................. 4

- 7 4.5.2 Sales Test Analysis

................................ ................................ .................. 4

- 7 4.5.3 Profit Test Analysis

................................ ................................ .................. 4

- 8

4.6 C onclusions

................................ ................................ ................................ .......... 4

- 8

4.7 References

................................ ................................ ................................ .......... 4

- 10

Section 5 Human Health Benefits of Emissions Reductions

................................ ... 5

- 1

5.1 Synopsis

................................ ................................ ................................ ............... 5

- 1

5.2 Mercury Benefits

................................ ................................ ................................ . 5

- 1

5.3 Energy Savings Co

- benefits

................................ ................................ ................. 5

- 4 5.3.1 PM 2.5 

### Co

- benefits

................................ ................................ ..................... 5

- 4 5.3.2 Social Cost of Carbon and Greenhouse Gas Co

- benefits

...................... 5

- 13 5.3.3 Total Monetized Co

- benefits of Energy Savings

................................ ... 5

- 16

5.4 Characterization of Uncertainty in the Monetized PM 2.5 

### Co

- Benefits

............... 5

- 16

5.6 References

................................ ................................ ................................ .......... 5

- 22

Section 6

................................ ................................ ................................ ................................ . 6

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### Comparison of Co

- Benefits and Costs

................................ ................................ ................... 6

- 1

Appendixes

A: Mercury Emissions Memo

................................ ................................ .................. A

- 1

B: Emissions Reductions Associated with Reduced Mercury Cell Chlor

- alkali Plant Electricity Consumption

................................ ................................ ............. B

- 1***E.O. 12866 Review

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### LIST OF FIGURES

Number Page

2

- 1. Industry

- wide Uses of Chlorine by Industry

................................ ................................ . 2

- 7 2

- 2. Use of Caustic Soda by Industry

................................ ................................ ................... 2

- 7 2

- 3. Use of Caustic Potash by Industry

................................ ................................ ................ 2

- 8 2

- 4. Income (or Loss) as Net a Percentage of Sales, B asic Chemicals, Resins, and Synthetics (NAICS 3251 and 3252): 2000

– 2005

................................ ....................... 2

- 14 3

- 1. Capital Cost Factor ($/ton Cl2 produced) vs. Capacity

................................ ................ 3

- 5 4

- 1. Price Trends: Alkalis and Chlorine Manufacturing: 2000 to 2009

............................... 4

- 2 4

- 2. Unemployment Rates by County: 2000

– 2008

................................ .............................. 4

- 5 4

- 3. Unemployment Rate Differences from National Average: May 2009 and Historical Average: 2000

– 2008

................................ ................................ .................... 4

- 6 4

- 4. Historical ECU Cash Margins

................................ ................................ ...................... 4

- 9 4

- 5. Profit Tests: ECU Cash Margin Reductions Associated with Conversion Costs

....... 4

- 10 5

- 1. Breakdown of Monetized PM 2.5 

### Health Co

- Benefits using Mortality Function from Pope e t al. (2002) a



### ................................ ................................ .............................. 5

- 10 5

- 2. Total Monetized PM 2.5 

### Co

- Benefits for the Proposed Mercury Chlor Alkali NESHAP in 2013 (Option 1)

................................ ................................ ...................... 5

- 13 5

- 3. Breakdown of Monetized Co

- benefits by Pollutant at 3% discount rate (Option 1)

.. 5

- 17 5

- 4. Percentage of Adult Population by Annual Mean PM 2.5 

### Exposure (pre

- and post

policy policy)

................................ ................................ ................................ .............. 5

- 20 5

- 5. Cumulative Distribution of Adult Population at Annual Mean PM 2.5 

### levels (pre

and post

- policy policy)

................................ ................................ ............................... 5

- 20 6

- 1. Net Benefits f

or the Proposed Mercury Chlor Alkali NESHAP at 3% Discount Rate (Option 1) a



### ................................ ................................ ................................ ............ 6

- 3 6

- 2. Net Benefits for the Proposed Mercury Chlor Alkali NESHAP at 7% Discount Rate (Option 1) a



### ................................ ................................ ................................ ............ 6

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### LIST OF TABLES

Number Page

1

- 1. Summary of the Monetized Co

- Benefits, Social Costs, and Net benefits for the Proposed Mercury Chlor Alkali NESHAP in 2013 (millions of 2 007$) a



### ................... 1

- 10 2

- 1. Comparison of the Processes

................................ ................................ ........................ 2

- 2 2

- 2. Approximate Energy Requirements of Different Cell Types

................................ ....... 2

- 4 2

- 3. Olin Corporation Products and Services and Major End Uses: 2008

........................... 2

- 9 2

- 4. 2002 Economic Census Sales and Employment by Establishment Size

.................... 2

- 12 2

- 5. Estimated Plant

- Level Sales and Employment: 2008

................................ ................. 2

- 12 2

- 6. Ultimate Parent Company Sales and Employment: 2008

................................ ........... 2

- 13 3

- 1. Cost Factors for Conversion of Mercury Cell Chlor

- Alkali Facilities to Membrane Cell Technology ($/ton Cl2 produced)

................................ ....................... 3

- 4 3

- 2. E stimated Capital Costs for Existing Mercury Cell Chlor

- Alkali Facilities

................ 3

- 6 3

- 3. Estimated Capital Recovery Costs for Varying Finance Periods (Using 7 percent interest rate)

................................ ................................ ................................ .................. 3

- 8 3

- 4. Estimate of Annual Mercury Storage Costs

................................ ................................ . 3

- 9 3

- 5. Environmental Compliance Cost Savings Factors from Elimination of the Mercury Process

................................ ................................ ................................ ......... 3

- 13 3

- 6. Annual Cost Savings from Elimination of the Mercury Processes, by Facility

......... 3

- 14 3

- 7. Energy Savings Associated with C onversion from the Mercury Cell to the Membrane Cell Process

................................ ................................ .............................. 3

- 16 3

- 8. Ranges of Individual Annual Cost/Savings Elements for the Conversion of Mercury Cells to Membrane Cells

................................ ................................ .............. 3

- 17 3

- 9. EPA Estimates of the Annual Costs of Conversion of Mercury Cells to Membrane Cells

................................ ................................ ................................ .......... 3

- 18 3

- 10.Results of the Monte Carlo Simulation Comp ared to the EPA Estimates

.................. 3

- 19 4

- 1. May 2009 County Employment Data (Not Seasonally Adjusted)

................................ 4

- 5 5

- 1. Human Health and Welfare Effects of PM 2.5 

### ................................ ................................ 5

- 5 5

- 2. Summary of Monetized PM 2.5 

### Energy Co

- benefits for the Proposed Mercury Chlor Alkali NESHAP in 2013 (2007$) (Option 1)

................................ ................... 5

- 11 5

- 3. Summary of Reductions in Health Incidences from PM 2.5 

### Co

- Benefits for the Proposed Mercury Chlor Alkali NESHAP in 2013 (Option 1) a



### ................................ . 5

- 11 5

- 4. All Monetized PM 2.5 

### Co

- Be nefits Estimates for the Proposed Mercury Chlor Alkali NESHAP at discount rates of 3% and 7% in 2013 (in millions of 2007$) (Option 1) a



### ................................ ................................ ................................ ................ 5

- 12 5

- 5. Social Cost of Carbon (SCC) Estimates (per to nne of CO 2 

### ) for 2013 a



### ..................... 5

- 15 5

- 6. Monetized Co

- benefits of CO 2 

### Emission Decreases in 2013 (Option 1) a



### .................. 5

- 16***E.O. 12866 Review

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### 6

- 1. Summary of the Mo netized Co

- Benefits, Social Costs, and Net benefits for the Proposed Mercury Chlor Alkali NESHAP in 2013 (thousands of 2007$) a



### .................. 6

- 2 B

- 1. Estimated Changes in Electricity Generation

................................ ............................... B

- 2 B

- 2. Share of Electricity Generation by Fuel 2009

................................ .............................. B

- 3 B

- 3. Power Company Emission Factors: Fuel=Coal (Short tons per kWh)

......................... B

- 4 B

- 4. Power Company Emission Factors: Fuel=Natural Gas (Short tons per kWh)

............. B

- 4 B

- 5. Emission Factor Calculations: 2010

................................ ................................ ............. B

- 5 B

- 6. Emission Reductions by Plant (22 percent reduction)

................................ .................. B

- 6 B

- 7. Emission Estimates by Plant (37 percent reduction)

................................ .................... B

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### SECTION 1 INTRODUCTION AND EXE CUTIVE SUMMARY
The U.S. Environmental Protection Agency (EPA) is proposing amendments to the national emission standards for hazardous air pollutants (NESHAP) for mercury emissions from
mercury cell chlor

- alkali plants. On June 11, 2008, EPA proposed NESHAP amendments in response to a petition for reconsideration filed by the Natural Resources Defense Council (NRDC); this action supplements the June 11, 2008, proposal. The proposed rule would am end the NESHAP to prohibit emissions of mercury from the mercury cell process within 2 years from promulgation of the final rule and cease operation of mercury recovery units 3 years from promulgation of the final rule.
In 2003, when the maximum achievabl e control technology (MACT) was promulgated, there were 12 mercury cell plants. EPA believes that by 2010 there will only be four plants still using the mercury cell process. The four plants using the mercury cell process are currently owned by three ultim ate parent companies:

 

### ASHTA Chemicals, Inc.: one plant (Ohio)

 

### Olin Corporation: two plants (Georgia and Tennessee)

 

### PPG Industries, Inc.: one plant (West Virginia)
ASHTA Chemicals is a small company with approximately 100 employees. Olin Corporation operate s 10 North American chlor

- alkali plants; its other line of business is Winchester Ammunition. Currently, Olin employs over 3,600 people within both business segments. PPG’s commodity chemicals segment operates two chlor

- alkali plants but operates over 100 coatings and glass manufacturing facilities and employees over 40,000 people
company

- wide.
As part of the regulatory process of preparing these amendments, EPA is required to develop a regulatory impact analysis (RIA). This report documents the RIA methods and results.

1.1 Executive Summary The key results of the RIA are as follows: Engineering Cost Analysis: For Option 1 (Non

- mercury Technology Option), the engineering cost analysis estimates the total capital costs of conversion to be just under $300 mil lion, which results in annual costs of $28 million per year annualized over 20 years. Individual plant

- level annualized capital conversion cost estimates***E.O. 12866 Review

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### range from $3

– 15 million per year. All estimates are in 2007$. The annual cost to store mercury is app roximately $250,000 per year. The individual plant

- level annual energy savings due to conversion may range from $1 million to $14 million per year depending on the energy consumption reduction level assumed. The total annual cost of conversion for all four facilities, considering the associated savings, is around $13 million per year. For Option 2 (Enhanced Work Practice Standards Option) the capital cost is $120 thousand and t he annual costs are $25 thousand . Because of the small magnitude of Option 2 com pared to Option 1, the market analysis only addresses Option 1.

 

### Plant Closure : EPA does not have sufficient data to predict whether individual companies would choose to convert or close directly affected plants. In some cases, if a plant were to close, the closure may affect other closely related manufacturing operations. For example, ASHTA uses potassium hydroxide made from the mercury cell process to make potassium carbonate. If the A SHTA plant were to choose not to convert and close the mercury cell proc ess, it is unclear whether existing technology and economics would allow the company to consider an alternative source of potassium hydroxide to continue making potassium carbonate. The economics of making potassium carbonate could influence ASHTA ’s decisi on on how to respond to this rulemaking.

 

### Local Job Effects : Because EPA is unable to estimate plant closures, job losses associated with any closures are not estimated nor are any changes in employment associated with conversion.

 

### Market Analysis: Of the th ree major chlor

- alkali products, the market for potassium hydroxide is the most highly concentrated. As of 2005, there were only four producers of potassium hydroxide (KOH) in the United States and approximately 50% is produced using mercury cells. A s a re sult, closure of one or more mercury cell plants could raise concerns about competitiveness and subsequent pricing behavior in the potassium hydroxide market. In highly concentrated markets, non

- mercury cell producers could have more scope to influence mar ket prices above competitive levels by altering production decisions. EPA’s review of publicly available sources also suggests that closures would have similar market concentration consequences for a downstream commodity: potassium carbonate. Competitive i ssues have also been raised in other regulatory contexts; the Federal Trade Commission set conditions on a proposed asset purchase that reduced the number of competitors in the potassium hydroxide and potassium carbonate markets.

 

### Small Business Analysis: EPA performed an impact analysis that compares annual conversion costs to sales. For Option 1 (Non

- mercury Technology Option), EPA estimates that the one small entity’s cost

- to

- sales ratio (CSR) would range from 1 to 2%, which suggests a significant econo mic impact. The other three plants are owned by large ultimate parent companies with significant company

- wide sales. As a result, the CSRs for the large ultimate parent companies are below 1%. In contrast, when plant

- only sales are considered, the***E.O. 12866 Review

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### CSRs for plants owned by large ultimate parent companies range from 4 to 10%. EPA also considered industry profitability effects by comparing annual conversion costs to reported industry margins for a representative electrochemical unit (ECU). The analysis confirm s the results of the sales tests; plant conversion costs will likely have an economically significant effect. In a typical year, conversion costs could reduce the margins by 10 to 20%. However, as explained in section 3, we do not consider this to be a sig nificant impact on a substantial number of small businesses. For Option 2 (Enhanced Work Practice Standards Option) CSR for the only plant estimated to incur costs is less than 0.1 % and is not a significant economic impact.

 

### Benefits Analysi s: In the year of full implementation (2013), EPA estimates the monetized energy c o

- benefits of Option 1 are $22 million to $43 million and $ 21 million to $ 40 million, at 3% and 7% discount rates, respectively. All estimates are in 2007$ for the year 2013. Using alterna te relationships between PM 2. 5 

### and premature mortality supplied by experts, higher and lower benefits estimates are plausible, but most of the expert

- based estimates fall between these estimates. There are no emission reductions for Option 2.

 

### Net Benefit s: The net benefits for Option 1 are $ 9 million to $30 million and $ 8 million to $2 7 million, at 3% and 7% discount rates, respectively (Table 1

- 1). The net benefits for Option 2 are $

- 2 5 ,000

. All estimates are in 2007$ for the year 2013.***E.O. 12866 Review

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### Table 1

- 1. Summ ary of the Monetized Co

- Benefits, Social Costs, and Net benefits for the

Proposed Mercury Chlor Alkali NESHAP in 2013 ( thousands of 2007$) a

3% Discount Rate 7% Discount Rate Option 1 : Non

- mercury Technology Option
Total Monetized Benefits b $22 ,000 to $4 3 ,000 $ 21,000 to $ 40,000 Total Social Costs c $13 ,000 $13 ,000 Net Benefits $ 9,000 to $30 ,000 $ 8,000 to $2 7,000
Non

- monetized Benefits 656 pounds of mercury (including energy co

- benefits)
Health effects from NO 2 and SO 2 exposure Ecosystem effects
V isibility impairment Option 2: Enhanced Work Practice Standards
Total Monetized Benefits b $0 $0
Total Social Costs c $25 $25
Net Benefits $

- 25 $

- 25

a All estimates are for the implementation year (2013), and are rounded to two significant figu res. b The total monetized co

- benefits reflect the human health co

- benefits associated with reducing exposure to PM 2.5 . It is important to note that the monetized co

- benefits include many but not all health effects associated with PM 2.5 exposure. It is im

portant to note that the monetized benefits include many but not all health effects associated with PM 2.5 exposure. Benefits are shown as a range from Pope et al. (2002) to Laden et al. (2006). These models assume that all fine particles, regardless of the ir chemical composition, are equally potent in causing premature mortality because there is no clear scientific evidence that would support the development of differential effects estimates by particle type. CO 2 - related benefits were calculated using the s ocial cost of carbon (SCC) , which is discussed in Section 5 . The net present value of reduced CO 2 emissions is calculated differently than other benefits. The same discount rate used to discount the value of damages from future emissions (SCC at 5, 3, 2.5 percent) is used to calculate net present value of SCC for internal consistency. This table shows monetized CO 2 co

- benefits at discount rates of 3 and 7 percent that were calculated using the global average SCC estimate at a 3% discount rate because the interagency workgroup on this topic deemed this marginal value to be the central value. In Section 5 , we also provide the monetized CO 2 co

- benefits using discount rates of 5 percent (average), 2.5 percent (average), and 3 percent (95th percentile)

. c The annual compliances costs serve as a proxy for the annual social costs of this rule. The compliance cost of a regulation is generally a slight overestimate of social cost for competitive markets. The size of the overestimate is roughly one half the price ch ange times the quantity change. The markets for chlorine and sodium hydroxide are expected to be competitive with the market share provided by the affected facilities quite small. However, the market share for potassium hydroxide is large and the market ma y not be competitive. In this case, social cost might be larger than compliance cost. Because insufficient data was available to estimate price and quantity changes the compliance cost was used as a rough estimate of the social cost.


### 1.2 Organization of th is Report The remainder of this report supports and details the methodology and the results of the RIA:

 

### Section 2 presents a profile of the affected industry and focuses on plants affected

by the proposed rule. Although extensive individual plant informati on would help***E.O. 12866 Review

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### assess the economic impacts of the rule, in most cases, detailed information is not publicly available. As a result, we frequently rely on parent company information provided in company annual reports (e.g., form 10

- K), local press and indust ry trade publications, and company Web sites.

 

### Section 3 describes the engineering cost analysis.

 

### Section 4 describes the economic impact analysis and small business impact analysis.

 

### Section 5 presents the benefits estimates.***E.O. 12866 Review

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### SECTION 2 INDUSTRY PROFILE

There are four mercury cell chlor

- alkali plants currently operating in the United States in 2010 that have the combined capacities to produce approximately 500,000 tons of chlorine per year. These plants are Olin Corporation in Augusta, Georgia (Olin GA); Olin Corpo ration in Charleston, Tennessee (Olin TN); PPG Industries in New Martinsville, West Virginia (PPG); and ASHTA Chemicals in Ashtabula, Ohio (ASHTA).
EPA has developed an industry profile to provide the reader a general understanding of the technical and ec onomic aspects of the industry. We outline processes and costs of getting chlorine products to market; identify key uses, consumers, and market characteristics; and provide economic data for the plants and owning companies affected by the proposed rule. Al though we prefer to have extensive individual plant information, in most cases this information is not publicly available. As a result, we frequently rely on parent company information provided in company annual reports (e.g., form 10

- K), local press and i ndustry trade publications, and company websites.

2.1 Supply Side

2.1.1 Chlorine Production Process Although chlorine can be generated as a by

- product in a variety of chemical reactions, brine electrolysis accounts for 95% of total world chlorine productio n (World Chlorine Council, 2002). Through a chemical reaction catalyzed by an electric current in a series of electrolytic cells, a salt

- based solution containing either sodium or potassium chloride yields elemental chlorine gas, a caustic solution, and hy drogen gas in fixed proportions (―Special Focus on Chlorine,‖ 2007). The electrolysis occurs when electric current flows between the negatively charged cathodes and the anodes, which are the positive electrodes from which the chlorine is collected (World C hlorine Council, 2002).
Three types of electrolytic cells can host this reaction: the diaphragm cell, the membrane cell, or the mercury cell. Although the three cell types share the basic chemical production formula, they are differentiated by the way in w hich the chlorine is kept separate from the co

products generated in the cathode in the chemical process (―Special Focus on Chlorine,‖ 2007). The predominant manufacturing process in North America involves diaphragm cell technology, which is characterized by the asbestos

- based diaphragm structure that keeps the cathodes separate from the anodes. The membrane cell is structurally similar, though it uses an ion

-***E.O. 12866 Review

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### exchange membrane to separate the anodes and chlorine gas from the caustic product. Mercury cell te chnology uses two distinct cells and functions through a sodium

- mercury stream that forms an amalgam and serves as the cathode (―Special Focus on Chlorine,‖ 2007).
Of the three electrolytic processes, the diaphragm and membrane processes are the most simil ar (Table 2

- 1). Both share the advantage of lower electricity consumption, but the unique ion

- exchange structure enables membrane cells to produce a purer caustic product than the asbestos

- based diaphragm. Another disadvantage of the diaphragm cell is the caustic limitations; although mercury and membrane cells can use sodium or potassium chloride for brine solution, diaphragm cells require sodium chloride. Mercury cells produce a high

- quality caustic solution and chlorine gas, but emit harmful mercury poll utants into the environment. New plant construction has favored membrane cell construction because of low capital investment and operating costs relative to diaphragm and mercury processes (―Special Focus on Chlorine,‖ 2007).

Table 2

- 1. Comparison of the P rocesses

Cell Type Diaphragm Mercury Membrane Separation Technique Asbestos

- based diaphragm Sodium

- mercury amalgam Ion

- exchange membrane Caustic Capabilities Sodium hydroxide Sodium hydroxide, potassium hydroxide Sodium hydroxide, potassium hydroxide Advantages • Use of well brine (no solid salt needed)

• Low electricity requirements

• Simplest brine system • High purity caustic, chlorine, hydrogen

• Simple purification of brine • Low energy consumption

• Low capital investment

• Easily operable cells

• High purity cau stic

• Immune from variations in cell load and shutdown Disadvantages • Asbestos use

• High steam requirements for caustic concentration • Mercury emissions and related environmental and regulatory costs

• Solid salt requirement

• Expensive cell operations

• Large phys ical floor space requirement • Solid salt requirement

• High purity brine requirements

• Expensive membrane

• High oxygen contamination in chlorine product

Source: ―Special Focus on Chlorine.‖ October 2007. Chemical Business . pp. 27

- 40. Accessed July 29, 2009, fr om Business Source Corporate database.***E.O. 12866 Review

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### 2.1.2 Product Types

2.1.2.1 Chlorine Chlorine takes form in a greenish

- yellow poisonous gas at STP. It has a pungent odor and is 2.48 times denser than air. When liquefied, it becomes a yellow mobile fluid with low el ectrical conductivity. As a solid, chlorine retains the yellow color in the form of rhombic crystals. Chlorine is soluble in cold water and in salt solutions, although the solubility decreases with salt strength and temperature. Chlorine is stored and tran sported as a liquefied gas (―Special Focus on Chlorine,‖ 2007).

2.1.2.2 Caustic Products: Sodium Hydroxide and Potassium Hydroxide Sodium hydroxide, commonly referred to as caustic soda, is produced as a co

- product with chlorine and usually sold in the for m of a 50% solution. All three cell types can use sodium chloride brine in the electrolysis process to derive sodium hydroxide, but the variations between the cell structures require different degrees of evaporation and purification to reach the 50%

concen tration. Only mercury cells generate the 50% liquid caustic solution directly; diaphragm cells yield a solution of 12% that is processed through filters and evaporators to reach the acceptable grade, while membrane cells produce a 30% liquid that is evapor ated to the 50% level ( Occidental Chemical Corporation , 2008b).

While most chlor

- alkali production involves sodium chloride brine, potassium hydroxide or caustic potash is the caustic solution produced when potassium chloride is used as a feedstock in the brine electrolysis process (Sim, 2005). Membrane and mercury cell electrolysis can produce a caustic potash solution that is evaporated to 45% or 50% concentration for sale. The solution can also be concentrated to dry form and sold as flakes or crystals ( Occidental Chemical Corporation, 2008a).

2.1.3 Materials and Costs of Production Energy, salt brine, and raw materials represent the majority of the production costs in the chlor

- alkali industry. The recent U.S. Census Bureau’s 2007 Economic Census provide s industry

- level expenditures on production inputs for North American Industry Classification System (NAICS) code 325181 (Alkalis and Chlorine Manufacturers). The cost of materials (including electricity and purchased fuels) was 62.7% of the total producti on costs and nearly half of the industry’s total value of shipments. Electricity and fuels made up over 31% of total production costs. Labor expenses account for around 12.5% of the total reported costs in the industry.***E.O. 12866 Review

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### Although the census data provide in sight into the chlor

- alkali industry cost structure on the aggregate level, there is variation between companies in the industry because of size, structure, and technology. Olin Corporation, (2008) operates a number of chlor

- alkali facilities across the co untry and cites electricity and salt as the largest share of raw material expenditures, which represent 55% of total production costs for the company. Other principle materials include potassium chloride, sulfur dioxide, and hydrogen (Olin Corporation, 200 8).
Although energy costs are important for all producers, each cell type requires a different combination of energy inputs. For example, membrane cell technology uses 25% less electricity than mercury cells but requires steam to concentrate the caustic p roduct that mercury cells do not (―Special Focus on Chlorine,‖ 2007). Table 2

- 2 illustrates the approximate energy requirements of the different cell types as well as the average electricity prices for the states in which the relevant plants are located.

T able 2

- 2. Approximate Energy Requirements of Different Cell Types

Cell Type Diaphragm Mercury Membrane Electricity (kWh) 2,800

– 3,000 3,200

– 3,600 2,600

– 2,800 Steam equivalent (kWh) 800

– 1,000 0 100

– 200 Total kWh 3,600

– 4,000 3,200

– 3,600 2,700

– 3,000
Rel ative energy 100 92 75 Average Electricity Price for Industrial Sector (2007 cents/kWh) Georgia (Olin GA) 5.53 Ohio (ASHTA) 5.76 Tennessee (Olin TN) 5.19 West Virginia (PPG) 3.95 Sources: ―Special Focus on Chlorine.‖ October 2007. Chemical Business

. pp. 27

- 40. Accessed July 29, 2009, from Business Source Corporate database. Energy Information Administration. 2009. ―Electric Power Annual 2007: State Data Tables.‖ http://www.eia.doe.gov/cneaf/electricity/epa/epa_sprdshts.html. Accessed July 31, 2009.



### I ndividual facility capital costs are also contingent on the specific requirements of the electrolytic cells used in the production process. For example, the complex mercury cell has a higher current density than the diaphragm or membrane and demands a rela tively higher capital investment. The variations in purification requirements impose the highest brine costs for membrane cell plants, whereas the relatively simple brine system accounts for only 3 to 4% of a diaphragm cell facility’s capital costs (―Speci al Focus on Chlorine,‖ 2007). A mid

- sized mercury***E.O. 12866 Review

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### cell plant not only bears the additional costs of the mercury itself, but also spends 10 to 15% of the total capital investment on equipment to prevent the hazardous emissions and to remove the mercury from the finished products (―Special Focus on Chlorine,‖ 2007).

2.1.4 Chlor

- alkali Transportation A critical element in any production industry is the successful transfer of final products from the facility to the client. However, the hazardous nature of chemi cal products requires chlor

- alkali companies to devote extra resources to developing a geographic network of facilities and shipping points that integrates both cost considerations and safety concerns. Industry experts are acutely aware of the risks associ ated with chemical production and strive to maintain security of their products, the safety of their employees and consumers, and the well

- being of local communities.
In addition to complying with carefully developed industry standards and stewardship
pra ctices, chlor

- alkali facilities are also subject to federal regulations regarding the proper handling of dangerous chemicals. The U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) regulates the transportatio n of chlorine and its derivatives under the Hazardous Material Regulations (49 CFR 171

- 180) (U.S. Department of Transportation, 2009a and 2009b). The PHMSA and other federal regulatory agencies control the movement of hazardous materials by all applicable modes of transportation. Chlorine and its derivatives are shipped via rail, highway, water vessel, and pipeline. According to the American Chemistry Council, rail hosts the majority of bulk chlorine shipments in the United States (30,000 tank car/yr) and i s the safest mode of chlorine transportation (American Chemistry Council, 2009). Although accidents are rare, a 2005 Norfolk Southern freight train collision in South Carolina that killed or injured over 200 people illustrates real risks that chlorine tran sportation poses to civilians and communities (Environmental News Service, 2005). Even though industry experts work in conjunction with transportation authorities to ensure that procedures and policies are carefully executed, the risk of an accident can ne ver be completely eliminated.
One way to mitigate the risk of an accident is to minimize the distance from the producer to the end

- user, which effectively curtails the potential for unexpected events or hazardous leaks during transit. Cutting down on trav el distance and time is not only cost

- effective for producers, but it also prevents unnecessary exposure of civilian communities to the dangers associated with a collision. Familiarity with travel routes and transportation contractors may also aid chlorine producers in reducing the potential for unforeseen circumstances that could threaten the security of the cargo.***E.O. 12866 Review

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### In light of these issues, companies in the chlor

- alkali industry have selected existing facility locations based on the financial, logistic, an d safety concerns involved with shipping their products. Plants, warehouses, and distribution centers are deliberately constructed in specific locations to serve customers safely and efficiently. ASHTA’s production facility is located adjacent to the titan ium dioxide plant to which it sells 100% of its chlorine (U.S. House of Representatives Committee on Commerce and Energy, 2009). The company also has warehouses, liquid distribution points, and sales headquarters placed strategically across the United Stat es to cater to nationwide potassium hydroxide demand (ASHTA, 2009a). PPG pioneered 1,100

- ton capacity barges as a safe mode of chlorine transport from the Natrium plant, which is ideally situated on the Ohio River easily accessible by the CSX rail line (PP G, 2009a). Olin Corporation’s Charleston plant produces potassium hydroxide and uses rail, barge and trucks to ship the product to customers and the terminal facility located in nearby Chattanooga (Olin Corporation, 2009c).

2.2 The Demand Side A variety o f applications use chlor

- alkali products to make other goods. As a result, the demand for chlor

- alkali products indirectly depends on conditions in downstream end

- use markets. The organic chemicals industry uses chlorine to make polyvinyl chloride (PVC), a nd the construction industry subsequently uses PVC materials. The pulp and paper industry uses caustic soda during manufacturing processes that create paper and other products. Electronic products (e.g., televisions and computer monitors) requiring glass c athode ray tubes use potassium carbonate made from caustic potash. As a result of these links, growth or downturns in end

- use markets ultimately influence the demand for chlor

- alkali products.

2.2.1 Who Uses Chlorine, Caustic Soda, and Caustic Potash?
Plan t

- specific information regarding end

- users and other within/between plant relationships is not generally available or is limited. According to company annual reports (Olin Corporation, 2009a), industry

- wide data show that the organic chemical industry uses over 60% of chlorine (Figure 2

- 1). Vinyl chemical producers are industrial consumers (37%), and other organic chemical producers use an additional 28%. For caustic soda (Figure 2

- 2), organic chemicals, pulp and paper, and inorganic chemicals are significa nt end users; each industry accounts for more than 20% of caustic soda demand. For caustic potash (Figure 2

- 3), potassium carbonate (28%), other potassium chemicals (15%), and potassium phosphates (10%) are the most significant end uses (The Innovation Gro up [TIG], 2009). The remaining applications are diverse and all account for less than 10% of the market.***E.O. 12866 Review

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### Figure 2

- 1. Industry

- wide Uses of Chlorine by Industry Source: Olin Corporation, 2009a.



### Figure 2

- 2. Use of Caustic Soda by Industry
Source: Olin C orporation, 2009a.***E.O. 12866 Review

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### Figure 2

- 3. Use of Caustic Potash by Industry Source: The Innovation Group (TIG). 2009. ―Caustic Potash Chemical Profile.‖ http://www.the

- innovation

group.com/welcome.htm. Accessed July 2009.


### Olin Corporation (2008) also reports detail s regarding company

- specific end uses and customers for their chlor

- alkali products in the company’s annual reports (Table 2

- 3). This information applies to all 10 North American chlor

- alkali plants and may not necessarily be representative of the end

- user s associated with the mercury cell plant. However, it is the best publicly available information EPA was able to identify. Olin sells a majority of its chlor

- alkali products to third parties; in 2008, no single customer bought more than 8% of total sales ( Olin Corporation, 2008). Chlorine is also sold to a relatively small number of industrial customers; In contrast, caustic soda is sold to a large number of users or distributors (Olin Corporation, 2008).
Trade publications report that ASHTA supplies chlor ine to a nearby titanium dioxide facility originally owned by Lyondell Chemicals (Sim, 1995); the plant is now owned by Cristal’s Millennium Inorganic Chemicals business and continues to produce titanium dioxide (Millennium Inorganic Chemicals, 2009). A S HT A reports that all of its chlorine is sold to ―a company located adjacent to ASHTA’s facility‖ (U.S. House of Representatives Committee on Commerce and Energy, 2009). Some of ASHTA’s other alkali products are used within the***E.O. 12866 Review

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### Table 2

- 3. Olin Corporation Pr oducts and Services and Major End Uses: 2008

Products and Services Major End Uses Location Chlorine/sodium hydroxide (caustic soda) Pulp and paper processing, chemical manufacturing, water purification, manufacture of vinyl chloride, bleach, swimming pool chemicals, and urethane chemicals Augusta, GA a Becancour, Quebec Charleston, TN a Henderson, NV McIntosh, AL Niagara Falls, NY St. Gabriel, LA Potassium hydroxide (caustic potash) Fertilizer manufacturing, soaps, detergents and cleaners, battery
ma nufacturing, food processing chemicals, and deicers Charleston, TN a

a Denotes plant using mercury technology.


### company to produce other chemicals. For example, liquid potassium hydroxide is used to make potassium carbonate. ASHTA (2009a) also reports tha t it is a manufacturer and marketer in the following chemical markets:

 

### 45% and 50% liquid potassium hydroxide

 

### anhydrous potassium carbonate K 2 

### CO 3

 

### anhydrous potassium carbonate flake

 

### chlorine

 

### 47% liquid potassium carbonate

 

### anhydrous potassium hydroxide waln ut (briquette)

 

### potassium hydroxide

 

### chloropicrin

2.2.2 What Factors Influence Demand?
The chlor

- alkali industry is considered a procyclical industry where demand for product depends on trends in overall economic activity. For example, Olin Corporation (2008 ) notes:
The business of most of our customers, particularly our vinyl, urethanes, and pulp and paper customers are, to varying degrees, cyclical and have historically experienced periodic downturns. These economic and industry downturns have been characte rized by diminished product demand, excess manufacturing capacity and, in some cases, lower average selling prices. Therefore, any significant downturn in our customers’ businesses or in global economic conditions could***E.O. 12866 Review

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### result in a reduction in demand for our products and could adversely affect our results of operations or financial condition. (p. 8)
Recent research has also suggested that environmental regulations affecting chlorine end

use markets have reduced the demand for chlorine and help explain the exit of selected chlorine plants (Snyder, Miller, and Stavins, 2003). Chlorine plants that were co

- located with pulp and paper mills and plants affected by the Montreal Protocol were more likely to shutdown (11 to 15% higher than the average chlorine plant ) (Snyder, Miller, and Stavins, 2003).

In addition to overall demand conditions, selected chlor

- alkali product markets are very sensitive to price changes of close substitute products. For example, when the price of caustic soda rises, soda ash can be subs tituted for caustic soda in certain uses (e.g., pulp and paper, water treatment, and certain chemical sectors) (U.S. Geological Survey [USGS], 2009).

2.3 Market Characteristics A review and description of market characteristics (i.e., geography, product di fferentiation, entry barriers, and degree of concentration) can enhance our understanding of how chlor

- alkali markets operate. These characteristics provide indicators of a firm’s ability to influence market prices by varying the quantity of product it sel ls. For example, in markets with large numbers of sellers and identical products, firms are unlikely to be able to influence market prices via their production decisions (i.e., they are ―price takers‖). However, in markets with few firms, significant barri ers to entry (e.g., licenses, legal restrictions, or high fixed costs), or products that are similar but can be differentiated, a firm may have some degree of market power (i.e., set or significantly influence market prices).

2.3.1 Geography
Most chlorine is not sold on the market and is consumed internally by the manufacturer. However, marketed chlorine and potassium hydroxide compete in a North American market; imports are limited by transportation costs and customer requirements for service and product

a vailability (Olin Corporation, 2008; U.S. Federal Trade Commission [FTC], 2005). In contrast, caustic soda producers sell their product in a worldwide market (Olin Corporation, 2008).

2.3.2 Product Differentiation
Product differentiation can occur both fro m differences in product attributes and quality and from brand name recognition of products. For a given end use, industrial consumers are likely to view chlor

- alkali products produced by different firms as very good substitutes. As a result, the products are likely to be sold primarily on a price basis (Olin Corporation, 2008). In***E.O. 12866 Review

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### addition, a close substitute for caustic soda exists (soda ash) and limits the ability of caustic soda producers to significantly influence caustic soda prices by varying the qua ntities produced (USGS, 2009).

2.3.3 Entry
Short

- term entry into the chlor

- alkali market is difficult because new plants require significant capital expenditures and take time to build. For example, the FTC concluded that new entry in the potassium hydrox ide market would not be ―timely, likely, or sufficient‖ in response to significant price increases (FTC, 2005, p. 5). Historically, imports have only played a major competitive role in the caustic soda markets only.

2.3.4 Concentration
Of the three chlor

- alkali products, the market for potassium hydroxide is the most highly concentrated. As of 2005, there were only four producers of potassium hydroxide in the United States (FTC, 2005b). Approximately 50% is produced using mercury cells; ASHTA Chemicals
rep orts a market share of approximately 15% (U.S. House of Representatives Committee on Commerce and Energy, 2009). The FTC (2005a, b) has also assessed competitive effects of proposed company acquisitions in this sector in some detail. Given these characteri stics and conclusions of the FTC study, significant changes in production levels at a single company using mercury cells are likely to influence market prices, particularly over short periods.

2.4 Overview of Businesses Affected by the Rule The proposed ru le affects four mercury cell plants operating in the United States. We provide basic economic statistics for each plant and the ultimate parent companies that own each plant. These data are subsequently used for the economic impact analysis described in Se ction 3.

2.4.1 Mercury Cell Plants The four mercury cell plants are located in four different states: Georgia, Ohio, Tennessee, and West Virginia. Annual plant sales ranges were estimated using economic data from the 2002 Economic Census (Table 2

- 4) and e mployment data. Given the uncertainties with sales data, we report a low and high range estimate for each plant. Lower

- bound sales were obtained by multiplying the average value of shipments per employee by the number of employees. The upper

- bound sales re present the average establishment value of shipments for the appropriate establishment size. In cases where census data were not disclosed, we used the industry average. As shown, annual plant sales estimates range from $30 to $130 million (Table 2

- 5).***E.O. 12866 Review

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### Tab le 2

- 4. 2002 Economic Census Sales and Employment by Establishment Size

Plant Establishments Employees Value of Shipments ($Million) $ per

Employee $ per

Establishment ($ Million)
All establishments 40 6,022 $2,702 $448,679 $68 1 to 4 employees 7 19 $8 $ 411,842 $1 5 to 9 employees 2 10 to 19 employees 4 52 $19 $358,231 $5 20 to 49 employees 7 246 $105 $428,415 $15 50 to 99 employees 1 100 to 249 employees 12 1,901 $980 $515,679 $82 250 to 499 employees 5 1,571 $662 $421,701 $132

Source: U.S . Census Bureau; generated by RTI International; using American FactFinder; ―Sector 31: Manufacturing: Industry Series: Industry Statistics by Employment Size: 2002.‖ <http://factfinder.census.gov>; accessed July, 2009.


### Table 2

- 5. Estimated Plant

- Level Sal es and Employment: 2008

Plant State Owned by Small Entity Sales Range

($ million) Employment Employment Source
ASHTA OH Yes $40

– $70 ~100 U.S. House of Representatives Committee on Commerce and Energy, 2009
Olin GA No $40

– $70 85 Pavey, 2008
Olin TN No $1 20

– $130 280 Cleveland/Bradley Chamber of Commerce, Economic Development Council, 2009
PPG WV No $30

– $70 540 a West Virginia Development Office, 2009

a Ward (2007) suggests that 60 employees are associated with mercury cell operations.***E.O. 12866 Review

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### 2.4.2 Ultimate Pare nt Companies EPA has reviewed industry information and publicly available sales and employment databases to identify the chain of ownership by accounting for subsidiaries, divisions, and joint ventures to appropriately group companies by size. Table 2

- 6 pr ovides sales and employment data for three ultimate parent companies operating mercury plants. EPA classified each parent company as a small or large entity using Small Business Administration (SBA) general size standard definitions for NAICS codes. These size standards are presented either by number of employees or by annual receipt levels, depending on the NAICS code. The chlor

- alkali companies are covered by NAICS code 325181 and are categorized as small if the total number of employees at the ultimate p arent company is fewer than 500; otherwise, the ultimate parent company is classified as large. As shown in Table 2

- 6 ASHTA Inc. is considered a small business.

Table 2

- 6. Ultimate Parent Company Sales and Employment: 2008

Plant State Parent Company Owned by Small Entity Sales Employment
ASHTA OH ASHTA Chemicals Inc. Yes <$75 million <100
Olin GA, TN Olin Corporation No $1.8 billion 3,600
PPG WV PPG Industries Inc. No $15.8 billion 44,900
Sources: Olin Corporation. December 31, 2008. Form 10

- K. Filed Fe bruary 25, 2009. http://b2i.api.edgar

online.com/EFX_dll/EdgarPro.dll?FetchFilingConvPDF1?SessionID=DOVFWfuqOuZBE

- 9&ID=6436012. Accessed July 2009. PPG Industries, Inc. December 31, 2008. Form 10

- K. Filed February 19, 2009. http://corporateportal.ppg.com/ NR/rdonlyres/EAC49DFC

- DB9C

- 4320

- B9A3

- 421E40162220/0/10KYREND2008.pdf. Accessed July 2009.


### 2.4.2.1 Company Profitability Measures Company profitability trends significantly influence the ability and desire to take on large

- scale capital projects. Although data on profits for individual companies are limited, historical government statistics about industry groups and publicly traded companies provide accounting measures of profit in annual reports. In Figure 2

- 4, we present information from the U.S. Census Q uarterly Manufacturing Reports about the Basic Chemicals, Resins, and Synthetics (NAICS 3251 and 3252) (U.S. Census Bureau, 2000

– 2006). This is the finest level of detail reported by the Census and includes other chemical industries in addition to the chlo r

- alkali industry. As shown, there is substantial variation in the profitability rates for the industry; before

tax profits as a percentage of net sales range from 1 to 10% during this period, with an average of 5% and a standard deviation of 3%.***E.O. 12866 Review

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### Figure 2

- 4. Income (or Loss) as Net a Percentage of Sales, Basic Chemicals, Resins, and

Synthetics (NAICS 3251 and 3252): 2000

– 2005
Source: U.S. Census Bureau. 2001

– 2006. Quarterly Financial Report for Manufacturing, Mining, and Trade Corporations, 1st Quarter re ports. http://www.census.gov/prod/www/abs/qfr

- mm.html. Accessed July 2009.


### Census data also show that smaller companies (defined by Census as companies with less the $25 million in assets) have profit rates that are smaller than industry averages. For exam ple, in a representative year during this period (2000), before

- tax profits as a percentage of net sales for small companies were less than 1% compared to approximately 6% for the industry as a whole.
To assess how representative the census data were for i ndividual companies, EPA examined annual reports for Olin Corporation and PPG Industries and found before

- tax profit rates were comparable with quarterly financial report (QFR) 2000 industry averages. Olin reported a rate of approximately 8% and PPG report ed a rate of 11% (Olin Corporation, 2001; PPG, 2001). These values are based on income statements and include all operations in addition to the chlor

- alkali segment. Olin reported similar profit rates for its chlor

- alkali segment (~7%), but PPG did not rep ort separate profitability information for their chemical commodity segment.***E.O. 12866 Review

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### 3

- 1 SECTION 3 ENGINEERING COST ANA LYSIS
Most of this section addresses the cost analysis for For Option 1 (Non

- mercury Technology Option) . The other option In order to estimate the capital and annual costs associated with a conversion from mercury cell chlor

- alkali technology to membrane cell technology, information was used from the following resources:

 

### EPA’s Mercury Report to Congress 1

 

### Recent news reports regarding plants converting or con sidering converting 2 , 3 , 4 , 5 , 6 , 7 , 8

 

### EPA waste minimization study 9

 

### Fact sheet from the conversion of a Canadian facility 10

 

### General chlor

- alkali reference 11

1 U.S. EPA. Mercury Study Report to Congress Volume VIII: An Evaluation of Mercury Control Technologies and Costs. U.S. Environmental Protection Agency, Office of Air Quality Planning and Standards, Research Triangle Park, NC. D ecember 1997.
2 Bradbury, D. Portrait of a Polluter

. Portland Press Herald. 1997.
3 Markets

— News Release. Houston Chronicle. January 30, 2007.
4 McCoy, M. PPG to Convert Chlorine Cells

. Chemical and Engineering News. August 8, 2005.
5 Wise, A. Port Edward

s sells School Forest Land to ERCO Worldwide; Nekoosa Considers Similar Deal. Wisconsin Rapids Tribune. January 13, 2009. Available on the Internet at: www.wisconsinrapidstribune.com

. 6 Westlake Chemic al Corporation (2003, December 31). Form 10

- K, United States Securities and Exchange Commission. Available on the Internet at http://www.sec.gov/Archives/edgar /data/1262823/000095012904001565/h13929e10vk.htm
7 Chlorine/Chlorate Newsletter. ―Tessenderlo Upgrades Chlorine; Expands VCM, PVC.‖ March 2002. p. 10

- 11. Available on the Internet at: http://www.eltechsystems.com/newsletter/ELTECH%20Newsletter%20March%202002.pdf

. Accessed 3/2/2007.
8 Hydrocarbon Processing (2007, November 19). "Uhde Opens New Electrolysis Plant."
9 Drabkin, M. and Rissmann, E. Project Summary Wa ste Minimization Audit Report: Case Studies of Minimization of Mercury Bearing Wastes at a Mercury Cell Chlor

- alkali Plant

. EPA/600/S2

- 88/011. U.S. Environmental Protection Agency, Hazardous Waste Engineering Research Laboratory, Cincinnati, OH. March 1988

. 10 Fact Sheet No. 12. PPG Canada

. St Lawrence Vision 2000, Beauhamois, Quebec, Canada. 1996.
11 Modern Chlor

- Alkali Technology, Volume 2. Jackson, C., Editor. Society of Chemical Industry, London, England. 1983.***E.O. 12866 Review

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### 3

- 2  

### European Best Available Techniques Document 12

 

### Oceana 13 

### and the Chlorine industry
In addition to reviewing t he Oceana correspondence, all directly relevant references cited by Oceana in their comments were obtained, reviewed, and considered. These references are compiled and available in the docket as one docket entry. 14



### 3.1 Capital Costs Initially, to determine capital costs of conversion to non

- mercury technology, EPA collected capital cost data for mercury cell conversion projects that occurred between 1992 and 2008 from the search of the resources listed above. In their September 15, 2009 memorandum, Oceana po inted out that several of the capital cost data points were not appropriate because either the costs were from unsubstantiated estimates or they were developed from conversions that were done so long ago that they did not apply to membrane cell technologie s currently being used.
Initially, Oceana identified seven capital cost data points for conversion to non

- mercury technology that were derived from estimates rather than actual conversions. These were:

 

### One 1997 estimate published by a HoltraChem facility where the conversion did not in actuality occur;

 

### One 1988 estimate for a facility in the U.S. that could not be identified;

 

### One 1992 estimate for a ―model plant‖ representing a mid

- range facility size, with no documentation included; and

 

### Four European est imates for conversions to non

- mercury technology, which did not include information on plant production capacities.
In addition, Oceana stated that conversion project costs prior to 1995 are not applicable to
current

- day conversion costs. According to Oce ana, newer membrane

- cell technology uses

12 Reference Document on Best Available Techn iques in the Chlor

- Alkali Manufacturing Industry. European Integrated Pollution Prevention and Control (IPPC) Bureau, Seville, Spain. December 2001. Available on the Internet at http://eippcb.jrc.es/re ference/cak.html

. 13 Oceana is a large international organization focused on ocean conservation ( www.oceana.org). They have provided comments on EPA’s analyses of the costs and other impacts of converting mercury cell chlor

- alkali plants to membrane cells on multiple occasions, along with providing substantial data and analyses to support their comments. 14 Memorandum from Brown, H.P., EC/R Incorporated, Chapel Hill, NC, to Docket EPA

- HQ

- OAR

- 2002

- 0017. Capital and Annual Costs References Cited By Oceana in Their Comments on EPA’s Cost Analysis of the Conversion of Mercury Cells to Membrane Cells. (Docket No. EPA

- HQ

- OAR

- 2002

- 0017). March 15, 2010.***E.O. 12866 Review

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### 3

- 3 bipolar electrolyzers, which were not commercially available until around 1997. The conversions prior to 1995 would have used the older monopolar electrolyzers. Therefore, we agree with Oceana’s position that for th is analysis it is not appropriate to include the data points derived from conversions that took place prior to 1995; thus these data points were not used in our current analysis.
We developed capital cost factors for conversion to membrane cell technology in units of dollars per ton ($/ton) of chlorine (Cl 2 

### ) production using data from conversions anywhere in the world that took place after 1995, excluding the cost data described above. These costs and cost factors are shown in Table 3

- 1. The cost factors ra nged from $267 to $941/ton Cl 2 

### produced and averaged $535/ton Cl 2 

### . In addition, Table 3

- 1 shows the average of the cost factors from only the most recent US conversions (since 2000), which is $596/ton Cl 2 

### . Since membrane cells are smaller than mercury cell s, in some conversions the companies have elected to use the extra available space to install additional membrane cells, thus increasing the chlorine and caustic production capacity of the facility. Therefore, for some conversion projects included in Table 3

- 1, an increase in production capacity was also included. Oceana indicated in their comments that a conversion cost analysis should either exclude the costs attributed to expanding capacity or include the cost saving benefits derived from expanding
capac ity. We do not believe that it is appropriate to make an assumption about savings because any benefits derived from additional sales due to increased capacity assumes that product demand would simultaneously increase. We do not disagree that the additional incremental costs of the expanded capacity should be excluded. However, the available information does not provide a breakdown of the costs associated with conversion versus the costs associated with the increased capacity. Therefore, the capital costs fo r some conversions may include expansion costs. This could result in the capital costs based on these data being biased high.
When providing comments on the June 2009 memorandum, ASHTA stated that differences in size, the new or expanded infrastructure req uired, and the end products desired (e.g., vapor or liquid chlorine, dilute or merchant concentration of caustic) all impact the actual cost of conversion. ASHTA suggested that, minimally, conversion cost estimates should take into account economies of sca le. However, Oceana expressed concern with the use of an equation that relates increasing size to lower conversion costs to estimate the cost of conversion for the four remaining facilities, since extrapolation of the costs to very small or very large
capa cities produces illogical conclusions. But we do believe that there could be some economies of scale. An equation we developed using the limited data set of the recent U.S. conversions***E.O. 12866 Review

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### 3

- 4 Table 3

- 1. Cost Factors for Conversion of Mercury Cell Chlor

- Alkali Fa cilities to

Membrane Cell Technology ($/ton Cl2 produced)

Year of Estimate Location of

Conversion Capital Cost

(as provided) Capacity

(ton Cl 2 /yr) Capital Cost Factor

($/ton Cl 2 produced/yr)
Reference Base Year 2007 a
1997 Europe $104,946,640 173,0 63 $606 $824 12 1997 Europe $32,856,014 110,231 $298 $405 12 1998 Europe $16,334,213 66,139 $247 $333 12 1998 Europ e $13,094,369 66,139 $198 $267 12 1998 Europe $29,923,557 44,092 $679 $915 12 1998 US (OxyTech) a $57,327,236 135,033 $425 $573 12 1998 Asia $39,775,832 182,983 $217 $293 12 1999 Europe $131,159,254 330,693 $397 $533 12 1999 Europe $31,026,058 82,673 $375 $505 12
2002 US (Westlake, KY) $86,100,000 205,000 $420 $497 

### 6
2004 Belgium $171,032,583 363,762 $470 $556 

### 7
2005 c US (PPG, LA) $90,000,0 00 275,000 $327 $367 

### 4
2007 c US (Pioneer, LA) $117,000,000 c 197,000 $594 $594 

### 3
2007 c Germany $109,678,733 250,000 $439 $439 

### 8
2008 c US (ERCO, WI) $107,112,676 b 118,000 $908 $908 

### 5 Average $535 Average of Recent US Conversions b $596

N/A = Not Available

a The conversion to 2007 dollars was estimated using the Chemical Engineering Plant Cost Index Economic Indicators. Base year costs were adjusted to 2007 dollars using the ratio of the 2007 economic indicator and the base year economic indicator. See Reference. 15

b Refers to conversions that occurred in the United States after 2000.

c Used in this analysis to develop an average factor for near future U.S. conversions.

15 Chemical Engineering Plant Cost Index

. Chemical Engineering. February 2009. Available on the Internet at www.che.com

.***E.O. 12866 Review

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### 3

- 5 showed a good correlation (correlation coefficient (R 2 

### ), 16 

### = 0.9981) of costs to facility size/capacity. 17 

### However, when the entire data set (in Table 3

- 1) was plotted, a similar correlation was not observed.
Figure 3

- 1 presents these cost factors versus plant chlorine capacity for all the facilities. As shown in Figure 3

- 1, there is little correlation between cost factor and plant chlorine capacity (R 2 

### = 0.010 2) for all global conversions with documented data. Therefore, we agree with Oceana that it is most appropriate to use a single cost factor to estimate the capital costs of conversion.

Figure 3

- 1. Capital Cost Factor ($/ton Cl2 produced) vs. Capacity

16 T he correlation coefficient is a measure of how accurately a regression predicts a value. The regression is most accurate when R 2 is equal to one (1).
17 Memorandum from Jones, D.L., PhD, EPA, Research Triangle Park, NC, Brown, H.P. and Norwood, P., EC/R Incorporated; Chapel Hill, NC; to Project File

— Mercury Chlor

- Alkali NESHAP. Revised Conversion Costs and Baseline Emissions

— Conversion From Mercury Cell Chlor

- Alkali to Membrane Cell Technology

. (Docket Item No. EPA

- HQ

- OAR

- 2002

- 0017

- 0105). September 15, 2009.***E.O. 12866 Review

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### 3

- 6 In order to develop capital cost factors for the current four mercury cell facilities, the chlorine production capacities from the 1997 Directories of Chemical Producers 18 

### were obtained and are shown in Table 3

- 2. The capital costs of converting to membrane c ell technology for the four facilities in current operation were then estimated using these capacities. As shown in Table 3

- 2, capital costs were estimated using both the average capital cost factor for the entire data set ($535/ton Cl 2 

### ) in Table 3

- 1, and then also using the average of only the four most recent U.S. conversions ($596/ton Cl 2 

### ) since 2000.

Table 3

- 2. Estimated Capital Costs for Existing Mercury Cell Chlor

- Alkali Facilities

Facility Cl 2 Production Capacity (ton/yr) a Capital Costs ($)
Based on Entire Data Set b Based on Recent U.S. Conversions c,d
ASHTA 47,421 25,375,938 28,246,460 Olin GA 119,031 63,695,899 70,901,169 Olin TN 262,451 140,442,954 156,329,838
PPG 72,848 38,982,173 43,391,830
Totals 268,496,964 298,869,297

a From Reference 18

. b Calculated using average capital cost factor of $535/ton Cl 2 for entire data set.

c Calculated using average capital cost factor of $596/ton Cl 2 for recent (i. e., after 2000) U.S. Conversions.
d Used in this analysis to develop costs for near future U.S. conversions.


### Because of several known factors, including environmental regulations and process safety management, we do not believe the broad range of data repr esented by all the facilities shown in Table 3

- 1 to be as accurate as the recent conversions that have occurred since 2000 in the U.S. to use to estimate the potential capital costs of conversion for the four remaining U.S. facilities. We believe that the average cost factor from the four recent U.S. conversions results in the best estimate of the capital costs that would occur for all four mercury cell chlor

- alkali plants to convert to membrane cells. The total estimated capital cost of conversion for all four facilities, therefore, is approximately $300 million, which is also shown in Table 3

- 2.

3.2 Annual Costs The annual costs associated with the conversion of mercury cells to membrane cells include costs related to capital recovery, unused mercury stora ge costs, and energy costs due to the need for increased steam required to further concentrate caustic. However, some of these

18 1997 Directory of Chemical Producers

— United States of America. Stanford Research Institute International. Menlo Park, CA. 1997.***E.O. 12866 Review

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### 3

- 7 additional annual costs will be offset by savings realized due to the elimination of mercury, e.g.,
mercury

- related environmental compliance costs and the reduced energy needs for the membrane cell process. Each of these costs and savings are described below.

3.2.1 Capital Recovery Cost Annualization of the capital costs involves establishing an annual ―payment‖ sufficient to financ e the investment over the expected lifetime of the equipment or loan period. This payment is typically referred to as the ―capital recovery cost.‖ The three key inputs into the capital recovery costs are the capital costs, the interest rate, and the financ e period. The estimates for capital costs were discussed above; the remainder of this discussion is focused on the interest rate and the finance period.
As pointed out by Olin in their February 2, 2010, correspondence ―access to capital and available inter est rates are a function of many things, including the overall financial environment, the financial condition of the prospective borrower (including its debt load), and the amount and length of the loan.‖ In their June 25, 2009 correspondence, Olin also st ated that ―a 7 percent interest rate is simply not available to industry in this economy.‖ They suggested replacing the 7 percent rate with a 10 percent, or even a 14 percent rate. In their February 2010 correspondence, Olin provided an example to support the use of an interest rate higher than 7 percent. Olin reported that they sold $150 million in Senior Notes, and that these notes had an interest rate of 8.875 percent and a maturity date of August 2019. According to Olin, the effective interest rate was over 9 percent considering the costs and discount.
The interest rate can result in significant differences in total annualized costs. For example, for a finance period of 15 years, the difference in capital recovery costs is approximately 20 percent higher for a 10 percent interest rate than for a 7 percent interest rate. This difference is even more profound for longer finance periods.
EPA’s Office of Air Quality Planning and Standards always provides an interest rate of 7 percent for cost analysis. While we do not disagree with Olin’s information, we feel that it is important to maintain uniformity to allow decision

- makers to consider consistent information across various regulatory decisions. Therefore, in this present analysis, an interest rate of 7
perc ent was used in the development of the capital recovery cost. It should be noted that for a particular firm at a particular time, this interest rate of 7% might not be available because of either the firms financial health or temporary economic condition. In previous versions of this analysis, a finance period of 15 years was used. Oceana commented that this underestimates the useful life of the equipment and overestimates the annualized costs. Oceana suggested that a 30

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### 3

- 8 year finance period was more appropr iate, and cited a previous analysis for the mercury cell industry where EPA used a 30

- year period to estimate the capital recovery costs. 19 

### However, it is important to note that the use of a 30

- year finance period in the analysis cited by Oceana was for

a s tationary building and not an operating industrial process. Therefore, we do not agree that this example establishes a precedent that is pertinent to our analysis.
To illustrate the importance of the choice of finance period, consider the fact that the
cap ital recovery costs for a 30

- year finance period at 7

- percent interest rate would be approximately 30 percent lower than those for a 15 year finance period. Table 3

- 3 shows the annual capital recovery costs for both a 15

- year and 30

- year period, using the capital cost estimates based on the cost factor from the average of recent U.S. conversions shown in Table 3

- 2 of the previous section. While we recognize that a 15

- year finance period may understate the lifetime of the membrane cell process equipment, we believe that the use of a 30

- year period will bias the annualized costs unreasonably low. Therefore, we chose to base our capital recovery cost estimates on a 20

- year finance period which is higher than our previous estimate of 15 percent. This results in total annualized costs for the four U.S. facilities of approximately $30 million/yr, which we believe represent the best estimate of the capital recovery costs, as shown in Table 3

- 3.

Table 3

- 3. Estimated Capital Recovery Costs for Varying Finance Periods (Using 7

percent interest rate)

Plant Best Estimate of

Capital Cost ($) a Capital Recovery Costs ($/yr) 15 years (CRF b = 0.1098) 30 years

(CRF b = 0.0806) 20 years c

(CRF b = 0.0944)
ASHTA $28,246,460 $3,101,309 $2,276,281 $2,666,266
Olin GA $70,901,169 $ 7,784,567 $5,713,670 $6,692,569
Olin TN $156,329,838 $17,164,176 $12,598,059 $14,756,431
PPG $43,391,830 $4,764,190 $3,496,792 $4,095,882
Totals $32,814,242 $24,084,802 $28,211,147

a Using the average cost factor from recent U.S. Conversions (See Table 3

- 2).
b CRF = Capital Recovery Factor.

c Used in this analysis to develop costs for near future U.S. conversions.

19 Memorandum from Brown , H.P., EC/R Incorporated, Chapel Hill, NC, to D.L. Jo nes, U.S. Environmental Protection Agency, Research Triangle Park, NC. Documentation of Building Replacement Cost Estimates. June 5. 2008.***E.O. 12866 Review

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### 3

- 9 3.2.2 Annual Costs Associated with Storage of Unused Mercury According to the Chlorine Institute, there were 1,376 tons of mercury available at the five mercury cell plants operating in 2008. 20 

### These plants operated a total of 264 mercury cells, which equates to 5.2 tons of mercury per cell (ton Hg/cell) on the average. To estimate the amount of mercury available at each of the four currently o perating facilities, that would need to be stored if they converted to membrane cells, this average factor was multiplied by the number of cells in each of the facilities. As shown in Table 3

- 4, this results in an estimated total of 1,272 tons of mercury t o be stored, ranging from 125 tons at ASHTA to over 550 tons at Olin TN.

Table 3

- 4. Estimate of Annual Mercury Storage Costs

Facility Number

Cells a Available

Mercury (ton) b Mercury Storage Costs ($/yr)

Using EPA Factor ($0.134/yr/lb) Using DOD Factor ($0.0561/yr/lb) Midpoint of EPA

and DOD Factors c
ASHTA 24 125 $33,399 $14,035 $23,717
Olin GA 60 313 $83,498 $35,088 $59,293
Olin TN 106 552 $147,513 $61,989 $104,751
PPG 54 281 $75,148 $31,579 $53,364
Totals 244 1,271 $ 339,558 $ 142,691 $ 241,125

a Reference 18

. b Total amount of available mercury (5 .28 tons/cell) distributed by number of mercury cells (see Reference 20 ).

c Used in this analysis to develop costs for near future U.S. conversions.


### There were two sources of information identified that provide d estimates of mercury storage costs. EPA’s Office of Pollution Prevention and Toxics and the EPA Office of Solid Waste and Emergency Response 21 

### has estimated future mercury storage costs at a private facility would be between $0.081 and $0.186 per year per pound of mercury stored, with an average of $0.134 per year per pound. The Defense National Stockpile Center also has presented information indicating that the cost associated with the federal mercury storage is $0.0561/yr/lb Hg. 22

20 The Chlorine Institute, Inc. ―Chlor

- Alkali Industry 2008. Mercury Use and Emissions in the United States (Twelfth A nnual Report).‖ August 2009.
21 Mercury Storage Cost Estimates

— Final Report. U.S. Environmental Protection Agency. Office of Pollution Prevention and Toxics and Office of Solid Waste and Emergency Response, Washington, DC. November 6, 2007. Page 28, Exhibit 15. Available on the Internet: http://www.epa.gov/mercury/stocks/Storage_Cost_Draft_Updated_11

- 6

- final.pdf
22 Lynch, Dennis, Environmental Protection Specialist. P resentation made at the Asia Mercury Storage Project Inception Workshop on March 4, 2009 at the Defense National Stockpile Center, Fort Belvoir, VA.***E.O. 12866 Review

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### 3

- 10 Table 3

- 4 shows the esti mated storage costs using both the average factor from EPA ($0.134/yr/lb) and the factor from the Department of Defense ($0.0561/yr/lb). While there is a considerable difference in these estimates, the sources of the information are reliable. Use of either factor could bias the annual cost estimates high or low. Therefore, we assumed that these two points represent the upper and lower bounds of the storage costs, and that the midpoint of the range of storage costs represents the best estimate of the mercury storage costs that would be incurred. These midpoint costs, which are also shown in Table 3

- 4, total just over $240,000 per year for all four plants.
The Mercury Export Ban Act (MEBA), which became public law on October 14, 2008 (Public Law No. 110

- 414), is intended to reduce the availability of elemental mercury in domestic and international markets. MEBA prohibits the export of elemental mercury as of January 1, 2013, and requires the Department of Energy (DOE) to designate and operate a facility (or fac ilities) for the purpose of long

- term management and storage of elemental mercury generated in the United States. MEBA also prohibits the transfer of elemental mercury held by federal agencies as of the date of enactment in order to further control the flo w of elemental mercury in the domestic market. MEBA covers elemental mercury but not mercury compounds.
MEBA requires DOE to publish guidance establishing procedures and standards for the receipt, management and long

- term storage of elemental mercury by O ctober 1, 2009. DOE issued an Interim Guidance document to fulfill this requirement, which is available at http://mercurystorageeis.com/Elem entalmercurystorage%20Interim%20Guidance%20(dated%20 2009

- 11

- 13).pdf (See also Notice of Availability, November 16, 2009, 74 FR 58952). DOE must designate a facility or facilities for long

- term management and storage of elemental mercury by January 1, 2010 according to MEBA. DOE has issued a Draft Long

- Term Management and Storage of Elemental Mercury Environmental Impact Statement (EIS) which analyzes a number of candidate facilities. The draft Mercury Storage EIS is available at http://www.mercurystorageeis.com/ (See also Notice of Availability, January 29, 2010, 75 FR 4801). DOE is due to release a draft environmental impact statement (dEIS) for evaluating potential storage sites by December 2010.
MEBA req uires that DOE to assess and collect fees for providing management and storage of elemental mercury. The amount of the fees will be made publicly available by October 1, 2012. MEBA also requires a designated facility or facilities to be operational by Janu ary 1, 2013; the facility will be subject to RCRA Subtitle C requirements, except for the storage prohibition contained in § 3004(j) of the Solid Waste Disposal Act. MEBA requires the storage facility to accept custody, for the purpose of management and st orage, of elemental mercury***E.O. 12866 Review

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### 3

- 11 generated within the United States and delivered to the facility, and that persons who deliver elemental mercury to the storage facility are indemnified against any liability related to the release or threatened release of mercu ry after delivery to the facility. MEBA also requires EPA or an authorized state to issue a final decision on a RCRA permit application for a DOE facility by January 1, 2015.
In addition, MEBA authorizes DOE to establish terms and conditions for the long

- term management and storage of elemental mercury. DOE has indicated that elemental mercury to be stored at the DOE facility or facilities must be of a purity of 99.5 percent or greater by volume (see DOE Interim Guidance document and Draft Mercury Storage EIS). Therefore, elemental mercury of lower purity would need to be further refined before it could be stored at the DOE facility (or facilities), but export or federal agency transfer of such mercury is still prohibited. MEBA does not affect RCRA or RCRA regulations except that elemental mercury stored at the DOE facility, or elemental mercury that is destined for the DOE facility and accumulated for 90 days or less is not subject to the RCRA storage prohibition, 3004(j) of the Solid Waste Disposal Act (42 U.S.C. 6924(j)). (See MEBA Sec. 5(g)(2)).
The elemental mercury that chlor

- alkali facilities store on

- site remains a commercial chemical product and its storage is not barred by federal environmental statutes as long as it is not discarded. This is the ca se whether the facility continues to operate a mercury cell process,
converts to a non

- mercury process or shuts down the plant. State or local restrictions may apply, however. After the establishment and operation of the DOE facility, mercury being stored at chlor

- alkali plants can continue to be stored as a product. However, if storage continues over a long period of time, or if the supply of commodity grade mercury exceeds domestic demand, EPA may assess on a case

- by

- case basis the legitimacy of a claim t hat elemental mercury storage does not constitute discard. For a full discussion, see http://www.epa.gov/boston/topics/cleanup/compendi um/2002

- Mercury

- from

- the

- HoltraChem

Manufacturing

- Co.pdf The EPA encourages responsible stewardship of the elemental mercury designated to go to a DOE facility, which could involve arranging secure temporary storage, such as a RCRA

- permitted facility with the capacity to store mercury on a short term basis, until the company can send it to DOE for long

- term storage.
3.2.3 Costs Savings Associated with the Elimination of Mercury

- Related Environmental Compliance Costs There are some expected costs savings r elated to the conversion from a mercury

containing process to the membrane cell process due to the elimination of compliance costs associated with the use of mercury. These savings can be categorized into three environmental***E.O. 12866 Review

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### 3

- 12 elements: air, waste, and water . Air

- related environmental compliance cost savings are realized when the facility no longer has to comply with mercury

- related air regulations, as well as labor due to the elimination of mercury

- related air monitoring, reporting, abatement measures, and

o ccupational exposure monitoring. Waste

- related environmental compliance cost savings are realized when a facility no longer incurs costs due to recycling, retorting, transporting, storing and/or disposing of mercury wastes. Water

- related environmental comp liance cost savings are realized when the facility no longer is required to operate mercury wastewater treatment
programs.

We used information from the literature 23 

### (with costs converted from Euros to U.S. dollars using the average 2004 exchange rate 24 

### of 1 .2439) and cost information presented to the State of Ohio by ASHTA as a part of their consent order 25 

### to estimate the cost savings. Information related to annual compliance costs associated with reducing mercury air emissions from the hydrogen and end box vent streams, presented to the Ohio EPA by ASHTA under the consent order, indicated that ASHTA would spend approximately $228,000 annually on air compliance. This value was converted to a $/ton Cl 2 

### value based on ASHTA’s capacity of 47,421 ton Cl 2 

### /yr, 18 

### resulting in a cost factor of $4.81/ton Cl 2 

### capacity. Since these costs would no longer be incurred after conversion, this factor represents a savings. In contrast, European information indicates that a savings o f approximately $2.20/ton Cl 2 

### in expenditures related to air compliance could be realized from the elimination of mercury. 23



### In addition to the air

- related compliance costs described above, ASHTA presented to the Ohio EPA that they would be spending approximately $256,500 annually on fugitive mercury emission

- related activities (including the implementation of leak detection and repair standards). Upon conversion to membrane cells, this would represent a saving s. These costs and savings are not relevant for the other three facilities because ASHTA is the only facility that did not install a cell room instrumental monitoring program and, therefore, is required to perform a leak program.
ASHTA also presented infor mation to the Ohio EPA related to costs for their water treatment system. According to ASHTA, they spend approximately $98,000 annually on their storm water recovery system. This converts to a cost/savings factor of $2.07/ton Cl 2 

### capacity for

23 Maxon, Peter, Director. Concorde East/West Sprl. Status Report: Mercury Cell Chlor

- Alkali Plants in Euro pe. Prepared for European Environmental Bureau, Brussels, Belgium. October 2006.
24 Historic Exchange Rates. Prepared by GOCurrency.com. Available on the Internet at www.gocurrency.com

. Accessed April 1, 2009 and Ap ril 30, 2009.
25 ASHTA Chemicals. Early MACT Compliance. Consent Agreement. Exhibits B and C. (Docket No. EPA

- HQ

OAR

- 2002

- 0017). August 2004.***E.O. 12866 Review

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### 3

- 13 elimination o f water

- related compliance costs due to mercury use. The European information indicates that a cost savings of approximately $1.92/ton Cl 2 

### could be realized by the eliminations of a mercury wastewater treatment system. 23



### Waste

- related environmental compliance cost savings are realized by facilities no longer being required to recycle, retort, transport, store and/or dispose of mercury

- containing wastes. The only information available was the European data that i ndicated that facilities could expect a cost savings of $6,470/ton waste, at an average mercury waste production rate of 4.2x10 - 5 

### ton waste per ton Cl 2 

### . 23 

### This results in a waste

- related cost savings of $0.27/t on Cl 2 

### capacity for elimination of waste

- related compliance costs due to mercury use.

Table 3

- 5 presents the cost savings factors for each environmental compliance element discussed above from both the information from ASHTA as well as the European literat ure. A total environmental compliance cost savings factor was obtained from the sum of all the individual elements in each data set. Since ASHTA did not provide data related to annual cost of handling mercury

- related wastes, the value from the literature w as used to obtain a total from all media. With this approach, a value of $7.15/ton Cl 2 

### shown in Table 3

- 5, was developed from data mostly from ASHTA, and a value of $4.63/ton Cl 2 

### was developed from the European literature.

Table 3

- 5. Environmental Complia nce Cost Savings Factors from Elimination of the

Mercury Process

Environmental Element Cost Saving Factors from Elimination of Mercury ($/ton Cl 2 )
ASHTA Factor a Literature Factor b
Air 4.81 2.20
Water 2.07 2.16
Waste 0.27 c 0.27
Totals 7.15 c,d 4.63

a See Reference 25

. b See Reference 23

.
c Since ASHTA did not provide data related to annual cost of compliance for mercury

- related wastes, the value from the literature was used for this element.
d Used in this analysis to develop costs for near future U.S. conversions.***E.O. 12866 Review

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### 3

- 14 Table 3

- 6 presents the estimated annual cost savings from the elimination of mercury

related compliance costs for ea ch of the four U.S. facilities using both total environmental compliance saving cost factors from Table 3

- 5. Since the cost data found in the literature were based on facilities in Europe and not from actual U.S. facilities, we believe that the annual cost savings from the elimination of mercury that is based mostly on the ASHTA cost factors represent the best estimate of the cost savings for the remaining U.S. facilities.

Table 3

- 6. Annual Cost Savings from Elimination of the Mercury Processes, by Facilit y

Facility Chlorine Capacity (tpy) Savings from Hg Elimination ($/yr)
ASHTA Factor a Literature Factor b
ASHTA c 47,421 595,386 595,386 Olin GA 119,031 850,634 550,600 Olin TN 262,451 1,875,561 1,214,017
PPG 72,848 520,592 336,970
Totals 3,842,173 d 2,696,973

a Using the ASHTA factor of 7.15 $/ton Cl2 presented in Table 3

- 5.
b Using the literature factor of 4.63 $/ton Cl2 presented in Table 3

- 5.

c As discussed above, the ASHTA compliance costs savings include $256,500 /yr related to their fugitive emissions compliance costs (that includes a leak detection and repair element, as well as the installation of a temporary canopy for the cell room); whereas, the other facilities do not include these costs because ASHTA was th e only facility that did not install an instrumental monitoring program to comply with the NESHAP.
d Used in this analysis to develop costs for near future U.S. conversions.


### 3.2.4 Energy Savings and Costs The membrane cell process requires less electricit y than the mercury cell process. Therefore, there are reduced energy requirements with membrane cells as compared to mercury cells. Energy cost savings due to reduced electricity usage were estimated using information from literature and average State elec tricity prices. 12 

### Although there could be variations in local electricity costs, according to the information in the literature, the electricity used by the membrane cell technology is approximately 2,500 kilow att hours per ton chlorine produced (kWh/ton Cl 2 

### ), which is about 700 kWh/ton Cl 2 

### less than that used by the mercury cell process (3,230 kWh/ton Cl 2 

### ). 12 

### This equates to an approximately 22 percent reduction in electricity usage. The total chlorine production capacity of the four mercury cell plants is 500,000 tons per year. Using the 700 kWh/ton decrease in electricity usage, the total estimated electricity reduction after conversion of the four plants would be around 350 million kWh/year, or 350,000 Megawatt hours/year.***E.O. 12866 Review

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- 15 Oceana provided information that indicated that a 37.5 percent reduction was Applying a 37.5 percent reduction to the mercury cell process electricity usage estimate of 3,230 kWhr/ton Cl 2 

### would y ield a reduction in energy usage of approximately 1,211 kWhr/ton Cl 2 

### . These energy cost savings from reduced electricity usage are slightly offset by an increase in energy required to concentrate the caustic co

- product generated in the membrane cell
proces s. Mercury cells produce caustic at the market concentration of 50 percent, and membrane cells produce caustic at a 33 percent concentration. Therefore, there is an increase in energy use (in the form of steam) due to the need to further concentrate the ca ustic produced with the membrane cell technology.
The energy requirement (in the form of steam) to concentrate the caustic to 50 percent was estimated to be 601 kWh/ton Cl 2 

### ($13.6/ton Cl 2 

### ), as obtained from the average of estimates provided for three U.S. facilities. This cost was deducted from the energy savings described above to develop an estimate of overall energy cost savings with membrane cell technology due to reduced energy needs. The energy cost savings are shown in Table 3

- 7.

Further evaluation of Oceana’s claim of a 37.5 percent energy cost reduction 26 

### shows that although the estimate is for an actual facility, it is not clear whether steam costs are included. In addition, Oceana also indicated in their September 16, 2009, letter that a 25 percen t reduction was commonplace. Therefore, we believe that the total energy cost savings based on the 22 percent electricity usage reduction represents the best cost estimate.
In their September 29, 2009, letter, Oceana stated that the steam cost was an overe stimate of the required energy needs to concentrate the caustic. Oceana argued that even though additional energy is required to generate steam, the steam could be obtained without additional expense. According to Oceana, facilities could use byproduct hyd rogen as fuel to generate the necessary steam. While it may be possible to assume that byproduct hydrogen could be used to generate the steam required to concentrate caustic from a membrane cell, we agree with industry’s claim that increases in the demand for and the value of high purity chemical hydrogen make this use of byproduct hydrogen economically impractical. Therefore, we have not made adjustments to the energy usage costs (in the form of steam) based on the use of byproduct hydrogen as fuel.

26 Government of India Bureau of Energy Efficiency. 2006. ―The Travancore

- Cochin Chemicals Limited.‖ December 14. http://www.bee

india.nic.in/sidelinks/EC%20Award/eca06/Award2006_CD/06ChlorAlkali/TheTravancore

CochinChemicalsLimited.pdf

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- 16 Table 3

- 7. Energy Savings Associated with Conversion from the Mercury Cell to the

Membrane Cell Process

Facility Chlorine

Capacity (tpy) Average

Industrial Retail Electricity Cost (cents/kWh) a Steam

Cost ($/yr) b Annual Energy Savings

($/yr) Total Energy Cost Sa vings ($/yr) f

22% Energy Reduction c,d 37.5%

Energy Reduction e 22%

Energy Reduction c,d 37.5%

Energy Reduction e
ASHTA 47,421 5.77 644,788 1,911,268 3,313,692 1,266,480 2,668,904
Olin GA 119,031 5.48 1,618,476 4,556,346 7,899,639 2,937,870 6,281,163
Olin TN 262,451 5.40 3,568,575 9,901,023 17,166,059 6,332,448 13,597,484
PPG 72,848 3.90 990,515 1,986,964 3,444,931 996,449 2,454,416
Totals 11,533,247 25,001,967

a Average retail price of electricity to ultima te customers by end

- use sector, by state (Reference 27 ).
b Steam cost associated with concentrating caustic produced by membrane cells from 33 percent to 50 percent at an average cost of $13.60/ton Cl 2 (Reference 12 ).

c Calculated using a 22 percent energy savings associated with the conversion, at 699 kWh/ton Cl 2 . (Reference 12 ).
d Used in this analysis to develop costs for near future U.S. conversions.

e Calculated using a 37.5 percent energy savings associated with the conversion, at 1,211 kWh/ton Cl 2 . f Energy Cost Savings = Energy Savings ($/yr)

– Steam Cost ($/yr).


### 3.2.5 Overall Annual Costs For each of the costs and savings elements discussed in the previous sections, there is credible information that would result in different estimated levels of costs/savings. For each element, this resulted in a high

- and low

- end estimate. These values are shown in Table 3

- 8.
For each element, we chose the method of estimat ion that we believe is the best estimate of the cost or savings, as follows:

 

### For capital recovery costs and mercury storage costs, we concluded that neither the high

- end nor the low

- end of the ranges represented the best estimate of the costs that would be incurred. Instead, we concluded that using a 20

- year finance period provided the best estimate. (See Table 3

- 3 above.)

 

### For the mercury storage costs, we determined that the midpoint of the range of data from two sources (list) was the best estimate. (See Table 3

- 4 above.)

27 U.S. Department of Energy. Average Retail Price of Electricity to Ultimate Customers by End

- Use Sector, by State for 2006

. Availa ble on the Internet at http://www.eia.doe.gov/cneal/electricity/epm/table5_6_b.html

. Accessed February 24, 2009.***E.O. 12866 Review

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- 17 Table 3

- 8. Ranges of Individual Annual Cost/Savings Elements for the Conversion of

Mercury Cells to Membrane Cells

Facility Capital Recovery Costs

($/yr) a Mercury Storage Costs ($/yr) b Environmental

Compliance Savings ($/yr) Energy Sav ings ($/yr)

7% and 30 years 7% and 15

years EPA

Factor DOD

Factor ASHTA

Factors c Literature

Factors 22%

Energy Reduction c 37.5%

Energy Reduction
ASHTA $2,276,281 $3,101,309 $33,399 $14,035 ($595,386) ($595,386) ($1,266,480) ($2,668,904)
Olin GA $5,713,670 $7,784,567 $83,498 $35,088 ($850,634) ($550,600) ($2,937,870) ($6,281,163)
Olin TN $12,598,059 $17,164,176 $147,513 $61,989 ($1,875,561) ($1,214,017) ($6,332,448) ($13,597,484)
PPG $3,496,792 $4,764,190 $75,148 $31,579 ($520,592) ($33 6,970) ($996,449) ($2,454,416)
Totals $ 24,084,802 $ 32,814,242 $ 0 $ 339,558 ($ 3,842,173 ) ($ 2,696,973 ) ($ 11,533,247 ) ($ 25,001,967 )

a A recovery period of 20 years and 7% was use in the final analysis.
b The midp oint of the EPA and DOD factor range was used in the final analysis.

c These data were used in the final analysis.

 

### For the environmental compliance savings element, we chose the higher estimated savings, using the cost factors developed mostly from ASHTA d ata to provide the best estimate for these U.S. facilities. (See Table 3

- 6 above.)

 

### For the energy savings, we believe that the lower savings level based on a 22 percent electricity usage reduction provides the best estimate. (See Table 3

- 7 above.)

Table 3

- 9 shows the estimates for each facility for each individual cost element that incorporate the choices described above, and also shows the total annual costs calculated using these estimates for each facility for conversion to non

- mercury technology. The v alues in Table 3

- 9 represent our best estimate of the annual costs that would be incurred due to the conversion of the four currently operating mercury cell facilities to membrane cells. These annual costs range from less than $1 million per year for ASHTA to almost $7 million per year for Olin TN, and a total estimate of $13 million for all four facilities.

3.3 Uncertainty Analysis While we selected the values that we believe provide the best estimates of the costs that would be incurred and savings that w ould be realized in the conversion from mercury cells to membrane cells at these four facilities, there is some uncertainty associated with the estimates. While most of the information obtained and provided by commenters appears to be credible and
represen tative of actual conversions that have occurred, there is a high amount of variability. This is most likely due to the fact that the conditions associated with the potential conversion of***E.O. 12866 Review

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### 3

- 18 each mercury cell plant are different, resulting in potentially sign ificant differences in the costs and savings.

Table 3

- 9. EPA Estimates of the Annual Costs of Conversion of Mercury Cells to

Membrane Cells

Facility Capital

Recovery Costs ($/yr) a Annual Costs
Total Annual Costs ($/yr) Mercury Storage Costs ($/yr) b Env ironmental

Compliance Savings ($/yr) c Energy Savings

($/yr) d
ASHTA $2,666,266 $23,717 ($595,386) ($1,266,480) $ 828,117 Olin GA $6,692,569 $59,293 ($850,634) ($2,937,870) $ 2,963,358 Olin TN $14,756,431 $104,751 ($1,875,561) ($6,332,448) $ 6,653,173
PPG $4,095,882 $53,364 ($520,592) ($996,449) $ 2,632,205
Totals $28,211,147 $ 241,125 ($ 3,842,173 ) ($ 11,533,247 ) $ 13,076,853

a Using 20 year finance period with a resulting CRF of 0.0944
b Using midpoint of EPA and DOD f actors.

c Using ASHTA factors for air and water compliance costs and a literature value for waste compliance costs not provided in ASHTA data.
d Using an estimate of 22 percent energy reduction with membrane process.


### In order to consider the uncertainties, we conducted a simple Monte Carlo simulation. 28 

### For this simulation, we assumed a normal distribution for each variable. We set the peak of the distribution at our best estimate. For the elements where we believe one end of the range provides the best esti mate (i.e., the environmental compliance savings and the energy savings), we truncated the distribution so that the peak of the distribution curve was at the best estimate. We ran the simulation with 100,000 calculations to create distributions of the indi vidual plant annual costs over all annual costs. The results are shown in Table 3

- 10. As can be seen, the results of this analysis are very close to our best estimated costs. This shows that collectively, considering the ranges of each parameter/input to t he annual costs, a mean value is obtained from the simulation that is only slightly lower (4 percent) than our estimate.

28 Monte Carlo simulation is a computerized mathematical technique that is used to account for uncertainty in quantitative analyses and is often used in decision making and risk analysis. The simulation technique builds models of possible results by substituting a range of values

– often a probability distribution

— for any factor that has inherent uncertainty, and then recalculates the results numerous times, each time using a different set of random values from the probability functions. The results of Monte Carlo analyses are distributions of possible outcome values.***E.O. 12866 Review

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### 3

- 19 Table 3

- 10. Results of the Monte Carlo Simulation Compared to the EPA Estimates

Facility EPA Estimate Total Annual Costs ($/yr) Monte Carlo Simulation Mean Total Annual Costs ($/yr)
ASHTA $828,117 $736,743
Olin GA $2,963,358 $2,821,114
Olin TN $6,653,173 $6,349,942
PPG $2,632,205 $2,608,708
Totals $13,076,853 $12,516,508



### 3.4 Summary of Results For Option 1 (Non

- mercury Technology Option) , t his section provided estimated costs for the conversion of the four currently operating mercury cell chlor

- alkali facilities to membrane cells. The EPA estimate of the total capital cost for this conversion is slightly under $300 million, with t he EPA estimate of total annual costs at approximately $13 million. Per facility estimated costs range from a low of $828,117 (ASHTA) to $6,653,173 (Olin TN).
For Option 2 (Enhanced Work Practice Standards Option) , only the ASHTA facility incurs costs. Th ese costs are estimated to be $120 thousand in capital costs and $25 thousand in total annualized costs.***E.O. 12866 Review

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### 4

- 1 SECTION 4 ECONOMIC IMPACT ANAL YSIS (EIA)
EPA prepares an EIA to provide information about a new environmental policy’s unfavorable effects (i.e., social cost s) and how these costs are distributed among stakeholders (EPA, 2000). Although several tools are available to estimate the economic costs of direct performance standards, the proposed regulation is unique in that it bans emissions of mercury from the merc ury cell process within 2 years from final promulgation and bans operation of mercury recovery units 3 years from final promulgation. EPA’s Guidelines note that this type of regulation can be more difficult to assess when compared with traditional direct p erformance standards because it is hard to predict how stakeholders will respond (EPA, 2000). Bans may lead to shutdowns that will involve adjustment costs for people working at the affected plants. Affected plants may also have strong links with other fir ms or downstream markets; as a result, secondary consequences of the regulation become more important to consider.

4.1 Conversion Versus Plant Closure The facilities currently in operation that do not already have plans to convert or close would have to co nvert to one of the non

- mercury technologies, such as membrane cells. As a result, the owners of a plant have to make an investment decision that compares the costs of conversion with future benefits of the conversion. Although there is historical evidence that owners have converted from mercury technologies in Europe and United States, other mercury plant owners have, to date, concluded the investment decision was currently not in their company’s interest given their assessment of future economic condition s (U.S. House of Representatives Committee on Commerce and Energy, 2009; PPG, 2009). The extremely concentrated markets (few suppliers) for some chlor

- alkali products may provide manufacturers with an ability to pass on cost increases. ASHTA is one of only three producers of liquid potcarb and domestic entry is very difficult.
Although EPA does not have quantitative data to evaluate investment decisions (e.g., using capital budgeting techniques), the economics literature has emphasized three characteristics that influence the owner’s best investment decision (Dixit and Pyndick, 2004):

 

### Uncertainty : the future rewards of an investment are unknown

 

### Irreversibility : the resources used to make the investment typically cannot be undone***E.O. 12866 Review

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### 4

- 2  

### Timing : owners who delay inve stment get more information that they value; as a result, there is an ―opportunity cost‖ associated with making an investment decision now versus later
Supply and demand conditions in the chlor

- alkali product markets are highly variable; chlor

- alkali produ ct prices regularly spike and fall during short periods (see Figure 4

- 1). Olin Corporation reports that the average product price for chlorine

- caustic soda co product (electrochemical unit or ECU) dropped from approximately $1,300 per short ton to just und er $600 per short ton in the first 6 months of 2009 (Olin Corporation, 2009). Figure 4.1 (below) shows that the long term price trend for chlor alkali products shows that prices have more than doubled since 2004, even when considering the recent price decr eases.

Figure 4

- 1. Price Trends: Alkalis and Chlorine Manufacturing: 2000 to 2009 Source: U.S. Bureau of Labor Statistics. 2009a. Producer Price Index Industry Data, Series ID = PCU PCU325181325181. http://data.bls.gov/PDQ/outside.jsp?survey=pc. Accesse d August 18, 2009.


### The sharp price changes highlight the risks associated with chlor

- alkali capital investments. For example, OxyChem completed an announced $60 million investment at its membrane chlor

- alkali plant in Taft, Louisiana, to produce KOH instea d of caustic potash (Access Intelligence, LLC, 2008). Almost a year later, an announcement suggests the plant has idled because of unstable market conditions (Access Intelligence, LLC, 2009).***E.O. 12866 Review

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### 4

- 3 Given the current market conditions, the benefits of delaying in vestment and waiting for new information are likely large if plants can delay conversion decisions. However, if plants delay, they risk other manufacturers entering the market before them and losing profits and market share. If for example, there are indus trial consumers of chlorine nearby, it is unlikely that chlorine manufacturers will not meet that demand. And it appears to be cost

- effective to produce chlor alkali products close to large industrial consumers. Firms would like to require rates of
return that exceed the cost of capital to make new capital investments now. As reported above, prices for large industrial consumers of these facilities’ products could be sufficient to justify the investment in conversion
To our knowledge, the only existing econ omics literature that examines regulation

induced plant closures in the chlor

- alkali industry is a study by Snyder and colleagues (2003). Environmental regulations affecting chlorine end

- use markets have reduced the demand for chlorine and help explain the exit of selected chlorine plants (Snyder, Miller, and Stavins, 2003). For example, chlorine plants that were co

- located with pulp and paper mills and plants affected by the Montreal Protocol were more likely to shutdown (11 to 15% higher than the average chlorine plant) (Snyder, Miller, and Stavins, 2003). In our case, the demand for chlorine and other products is not changing with the regulation. In contrast, regulatory factors did not appear to influence the decision to adopt membrane technologies at exi sting plants. EPA does not have sufficient data to predict whether individual companies would choose to convert or close, historical responses suggest that plant closure may be an option considered by some of these facilities. Of the last four plants to st op using this process, two converted and two closed.

4.2 Market Concentration and Pricing Behavior Of the three major chlor

- alkali products discussed in Section 2, the market for potassium hydroxide is the most highly concentrated. As of 2005, there were o nly four producers of potassium hydroxide in the United States (FTC, 2005b). Approximately 50% is produced using mercury cells; ASHTA Chemicals, Inc. reports a market share of approximately 15% (U.S. House of Representatives Committee on Commerce and Energ y, 2009). Producers of potassium hydroxide may have more ability to pass on costs of conversion than producers of other chlor

alkali products. Any closure of one or more mercury cell plants could raise concerns about competitiveness and subsequent firm pri cing behavior in the KOH market; the remaining companies could have more scope to influence market prices by altering production levels. Given the small number of remaining KOH producers, removing an extra ton of KOH from the market may raise the market pr ice and increase the profits on all the other KOH sold. If the price effect is large enough, the remaining companies may find it is more profitable to reduce***E.O. 12866 Review

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### 4

- 4 production levels below the levels that they would be choose in a market with a large number of

co mpetitors.
EPA’s review of publicly available sources also suggests that any closure would have similar market concentration consequences for a downstream commodity: potassium carbonate. ASHTA is one of only three producers of liquid potcarb and domestic entry is very difficult because it is very expensive; foreign entry (i.e., imports) has historically been limited (FTC, 2009b). In the absence of other market condition changes if ASHTA’s were to close, it would likely reduce competition and lead to higher prices in the liquid potcarb market. Although EPA does not have data to quantify the effect of higher potassium carbonate prices, we recognize that end users of potassium carbonate (e.g., specialty glasses including television tubes and the ceramics indus try [Armond Products Company, 2009; ERCO Worldwide, 2009]) and the consumers of these goods could indirectly be affected by a price increase. 29 

### Industry sources already suggest that high energy costs and reduced domestic demand in the video glass industry h as contributed potassium carbonate industry decline although there is some evidence that other ―niche‖ end users are emerging (Hoffmann, 2004).

4.3 Impact on Employment EPA does not have enough information to estimate whether individual plants will conver t or close and therefore no estimate of changes in employment are provided. In the following section we provide information on each plants’ job contributions relative to the size of local labor markets and current and historical conditions. In Table 4

- 1, w e use the latest monthly statistics about county labor forces and show the relative contributions of each plant in the context of current labor market conditions. In Figure 4

- 2, we compare the historical unemployment rates in the United States with unemplo yment rates for the counties where mercury cells are located. As shown in Figure 4

- 3, annual unemployment rates for three counties (Ashtabula, Richmond, and Wetzel) diverge and become higher than the national average beginning in 2004. Recent data for the month of May 2009 also suggest the relative difference between Ashtabula County and the United States is higher than historical differences.

29 Com panies using potassium products may also be concern ed about other events that tend to increase the cost of potassium products (e.g., recent increases in th e input costs of potash used to make potassium hydroxide)

. For example, Superior Plus (2008) notes th at a current contract to purchase potash on favorable terms expired in 2009 , and production costs are likely to rise once potash is purchased at current (higher) market prices. Superior plus owns ERCO Worldwide, one of the four companies that compete in th e U.S. potassium hydroxide market.***E.O. 12866 Review

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### 4

- 5 Table 4

- 1. May 2009 County Employment Data (Not Seasonally Adjusted)

Plant Location Plant Employees County Persons

Employed Plant Share of

Persons Employed County Persons

Unemployed
ASHTA Ashtabula County, OH 100 42,481 0.2% 6,526
Olin Richmond County, GA 85 82,416 0.1% 8,634
Olin Bradley County, TN 280 42,132 0.7% 4,397
PPG Wetzel County, WV 540 5,663 9.5% 731

So urce: U.S. Bureau of Labor Statistics. 2009b. LAU Local Area Unemployment Statistics Series Id: LAUPS39011004, LAUPS39011005, LAUPA47035004, LAUPA47035005, LAUCN13245004, LAUCN13245005, LAUCN54103004, LAUCN54103005. Accessed August 2009.



### Figure 4

- 2. Unem ployment Rates by County: 2000

– 2008 Sources: U.S. Bureau of Labor Statistics. 2009c. LAU Local Area Unemployment Statistics Series Id: LAUPS39011006, LAUPA47035006, LAUCN13245006, and LAUCN54103006. Accessed August 2009. U.S. Bureau of Labor Statistics. 20 09d. Current Employment Statistics

— CES (National) Series Id: LNU04000000. Accessed August 2009.***E.O. 12866 Review

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### 4

- 6 Figure 4

- 3. Unemployment Rate Differences from National Average: May 2009 and

Historical Average: 2000

– 2008
Source: U.S. Bureau of Labor Statistics. 2009c. LA U Local Area Unemployment Statistics Series Id: LAUPS39011006, LAUPA47035006, LAUCN13245006, and LAUCN54103006. Accessed August 2009.


### 4.4 Transportation Issues Associated with Plant Closure If one or more mercury cell plants were to close, customers with e xisting arrangements with the plants will have to identify another outside supply source to maintain chemical production. For example, ASHTA’s production facility sells 100% of its chlorine to an adjacent titanium dioxide plant (U.S. House of Representativ es Committee on Commerce and Energy, 2009). Although other chlorine supply sources may be available, transportation will likely be more expensive because of increased shipping distances between the supply source and its destination. Depending on the mode o f transportation selected, this may also indirectly increase the volume of existing shipments passing through certain urban areas.

4.5 Small Entity Impact Analysis The Regulatory Flexibility Act (RFA) generally requires an agency to prepare a regulatory fl exibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the agency***E.O. 12866 Review

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### 4

- 7 certifies that the rule will not have a significant economic impact on a substantial number o f small entities (SISNOSE). The first step in this assessment was to determine whether the rule will have SISNOSE. To make this determination, EPA used an impact analysis to indicate whether EPA can certify the rule as not having a SISNOSE. The elements of this analysis included

 

### identifying affected small entities,

 

### selecting and describing the measures and economic impact thresholds used in the analysis, and

 

### completing the assessment and determining the SISNOSE certification category.

4.5.1 Identify Affecte d Small Entities For the purposes of assessing the impacts of the proposed rule on small entities, a small entity is defined as (1) a small business as defined by the Small Business Administration’s regulations at 13 CFR 121.201; according to these size st andards, ultimate parent companies owning mercury cell chlor

- alkali facilities are categorized as small if the total number of employees at the ultimate parent company is fewer than 500; otherwise, the ultimate parent company is classified as large. As dis cussed in the previous section, ASHTA, Inc. is the sole entity that meets these qualifications.

4.5.2 Sales Test Analysis EPA assessed how the regulatory program may influence the profitability of ultimate parent companies by comparing annual conversion c osts to total sales (i.e., a ―sales‖ test). To do this, we divided an ultimate parent company’s total annualized compliance costs by its reported

revenue:

(4.1)

where

CSR = cost

- to

- sales ratio

TACC = total annualized compliance cos ts

TR j 

### = total sales from all operations of ultimate parent company j or annual government revenue***E.O. 12866 Review

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### 4

- 8 This method assumes the affected entity cannot shift pollution control costs to consumers (in the form of higher market prices). Instead, the owning entity e xperiences a one

- for

- one reduction in profits. For Option 1, EPA estimates that ASHTA’s CSR would range from 1 to 2%, which suggests a significant economic impact. For Option 2, EPA estimates that ASHTA’s CSR would be less than 0.1%. The other three plants are owned by large ultimate parent companies with significant company

- wide sales. As a result, the CSRs for the large companies are below 1%. However, when plant

- only sales are considered, the CSRs for plants owned by large ultimate parent companies range from 4 to 9%.

4.5.3 Profit Test Analysis
Economic models assume that a chlor

- alkali company acts in the best interest of its shareholders and tries to make the company’s profit (total revenue minus total costs) as large as possible. To measure of chlor

- al kali profits, EPA used trade publication data for a representative ECU called the ―cash margin‖ (CMAI, 2008). The measure approximates the average profit per metric ton of chlor

- alkali product made. As shown in Figure 4

- 4, historical data suggest that cash margins can fluctuate over time. Assuming the market prices for chlor

- alkali products do not change as a result of the proposed rule, the annual conversion costs ($/metric ton) associated with the proposed rule will reduce the average profit for chlor

- alk ali products. To assess the size of this effect, EPA compared the conversion costs with economic data for a typical year (using historical industry ECU margins and capacity utilization rates from 1991 to 2005). 30 

### As shown, conversion costs could reduce the margins by 10 to 20% (Figure 4

- 5). EPA also considered data in weak and strong margin years; as shown, margin reductions range from 5 to 100% for these years. As a result, the analysis confirms the results associated with the sales test; plant conversion c osts will likely have an economically significant effect.

4.6 Conclusions The EIA suggests Option 1 requirements are likely to have significant economic costs. Plants will either convert or close. Predicting whether, no plant, one plant, two plants, three plants, or all four plants will close or convert is not possible with the available data.

30 For a typical year, we used the observed average industry ECU cash margin (2008 dollars) and average industry utilization rate between 1991 and 2005. For weak and strong years, we considered cash margins and industry ut ilization rates one standard deviation (lower and higher) from the average.***E.O. 12866 Review

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### 4

- 9 Figure 4

- 4. Historical ECU Cash Margins Source: EPA estimates using data from CMAI (2008).


### Closure of one or more mercury cell process plants also raises concerns about competitiveness and subsequent pricing behavior in the potassium hydroxide and potassium carbonate markets. In highly concentrated markets with few producers, nonmercury cell producers may be able to influence market prices above competitive levels b y altering production decisions. Similar competitive issues have also been raised in other regulatory
contexts.
The small business impact analysis shows that one of the four plants is owned by a small business. A sales test suggests this small company will be significantly affected (CSR would range from 1 to 2% for Option 1 ). EPA also considered profitability effects by comparing annual conversion costs to reported industry margins for a representative ECU. Even in optimistic scenarios where ECU margins are higher than historical averages, conversion costs could significantly reduce the margins.***E.O. 12866 Review

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### 4

- 10 Figure 4

- 5. Profit Tests: ECU Cash Margin Reductions Associated with Conversion

Costs

4.7 References Access Intelligence, LLC. 2008. ―Oxychem Completes Taft, LA KO H Conversion.‖ ChemWeek’s Business Daily , April 29, 2008. Access Intelligence, LLC. June 16, 2009. Chlor

- alkali Market Wire. American Chemistry Council. 2000. ―Chlorine: Ensuring Rail Transportation Safety.‖ http://www.americanchemistry.com/s_acc/sec_article_acc.asp?CID=1695&DID=10018

. Accessed August 19, 2009. Armand Products Company. 2009. ―Potassium Carbonate Handbook.‖ http://www.armandproducts.com/pdfs/k2so3P1_12.pdf . Accessed August 2009. ASHTA Chemicals Inc. 2009a. About ASHTA. http://www.ashtachemicals.com/aboutfs.htm. Accessed August 2009. ASHTA Chemicals, Inc. 2009b. Potassium Hydroxide, Liq uid. http://www.ashtachemicals.com/products/lkohfs.htm . Accessed August 2009.***E.O. 12866 Review

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### 4

- 11 Cleveland/Bradley Chamber of Commerce, Economic Development Council. 2009. 2009 Industrial Directory. http://cle velandchamber.com/images/stories/pdf/2009inddir.pdf. Accessed August 7, 2009. Dixit, A.K., and R.S. Pindyck. 1994. Investment under Uncertainty . Princeton University Press: Princeton, NJ. Energy Information Administration. 2009. ―Electric Power Annual 2007 : State Data Tables.‖ http://www.eia.doe.gov/cneaf/electricity/epa/epa_sprdshts.html. Accessed July 31, 2009. Environmental News Service. January 10, 2005. ―Chlorine Gas from South Carolina Train Crash Kills Nine.‖ http://www.ens

- newswire.com/ens/jan2005/2005

- 01

- 10

- 04.asp . Accessed 18, 2009. ERCO Worldwide. 2009. ―Potassium Hydroxide.‖ http://www.ercoworldwide.com/ products_potassiumhydroxide.asp. Accessed August 2009.
Fullerton, D. 2 008. Distributional Effects of Environmental and Energy Policy: An Introduction

. Cambridge, MA: National Bureau of Economic Research. Hoffmann, J. April 19, 2004. ―Potassium Carbonate Faces Pressures from the Video Glass.‖ Chemical Market Reporte r, p. 15. Millennium Inorganic Chemicals. 2009. ―Site Fact Sheet Ashtabula Complex.‖ http://www.millenniumchem.com/NR/rdonlyres/6AE8BF59

- D7CD

- 4768

- 951F

37AE6F1C7321/0/SiteFactSheetAshtabula.pdf. Accessed August 2009. Occidental Chemical Corporation. 2008a. ―OxyChem Caustic Potash Handbook.‖ http://www.oxy.com/Our_Businesses/chemicals/Pages/chem_products_basic_alkali.aspx #alk_koh. Accessed July 28, 2009. Occidental Chemical Corporation. 2008b. ―OxyChem Caustic Soda Handbook.‖ http://www.oxy.com/Our_Businesses/chemica ls/Documents/caustic_soda/caustic.pdf. Accessed August 6, 2009. Olin Corporation. December 31, 2001. Form 10

- K405. Filed March 4, 2002. http://b2i.api.edgar

online.com/EFX_dll/EdgarPro.dll?FetchFilingConvPDF1?SessionID=n9ZFWjsyBGA3E

- 9&ID=1782286. Accessed August 2009. Olin Corporation. December 31, 2008. Form 10

- K. Filed February 25, 2009. http://b2i.api.edgar

online.com/EFX_dll/EdgarPro.dll?FetchFilingConvPDF1?SessionID=DOVFWfuqOuZB E

- 9&ID=6436012. Accessed July 2009.

Olin Corporation

. April 1, 2009a. ― BB&T Capital Markets Presentation Manufacturing and Materials Conference .‖ http://www.olin.com/ . Accessed July 31, 2009. Olin Corporation. 2009b. ―Olin Transportation of KOH.‖ http://koh.olinchloralkali.com/Facilities/chas/ChasLogistics.aspx . Accessed August 2009.***E.O. 12866 Review

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### 4

- 12 Pavey, R. 2008. ―Bill Would End Mercury Use at Chlorine Plants.‖ http://chronicle.augusta.com/stories/031308/met_190792.shtml. Acce ssed August 7, 2009.
PPG Industries, Inc. December 31, 2001. Form 10

- K. Filed February 22, 2002. http://www.secinfo.com/dV5Ff.32Wq.7.htm#25thPage. Accessed August 2009.
PPG Industries, Inc. December 31, 2008. Form 10

- K. Filed February 19, 2009. http://corp orateportal.ppg.com/NR/rdonlyres/EAC49DFC

- DB9C

- 4320

- B9A3

- 421E40162220/0/10KYREND2008.pdf. Accessed July 2009.
PPG Industries. 2009a. ―Chlorine Product Bulletin.‖ http://corporateportal.ppg.com/NA/Chemicals/CAD/ProductInformation/Bull /English/EN. Accessed August 19, 2009.

PPG Industries

. August 11, 2009b . ―PPG Reaches Agreement with State of Maryland.‖ PPG News Release. http://corporateportal.ppg.com/PPG/Newsroom/News/20090811.htm

. Accessed August 2009. Sim, P.W. January 19, 2005. ―ASHTA to Build Chlorine

- KOH Plant in Arkansas.‖ Chemical Week p. 13. Snyder, L.D., N.H. Miller, and R.N. Stavins. 2003. ―The Effects of Environmental Regulation on Technology Diffusion: The Case of Chlo rine Manufacturing.‖ American Economic Review 93(2):431

- 435. ―Special Focus on Chlorine.‖ October 2007. Chemical Business . pp. 27

- 40. Business Source Corporate database. Accessed July 29, 2009. Superior Plus. 2009. Annual Report 2008. http://www.olin.com/ . Accessed August 2009. The Innovation Group (TIG). 2009. ―Caustic Potash Chemical Profile.‖ http://www.the

innovation

- group.com/welcome.htm. Accessed July 2009. U.S. Bureau of Labor Statistics. 2009a. Current Employmen t Statistics

— CES (National) Series Id: LNU04000000. Accessed August 2009. U.S. Bureau of Labor Statistics. 2009b. LAU Local Area Unemployment Statistics Series Id: LAUPS39011004, LAUPS39011005, LAUPA47035004, LAUPA47035005, LAUCN13245004, LAUCN13245005, LA UCN54103004, LAUCN54103005. Accessed August 2009. U.S. Bureau of Labor Statistics. 2009c. LAU Local Area Unemployment Statistics Series Id: LAUPS39011006, LAUPA47035006, LAUCN13245006, and LAUCN54103006. Accessed August 2009.***E.O. 12866 Review

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### 4

- 13 U.S. Bureau of Labor Statistic s. 2009d. Producer Price Index Industry Data, Series ID = PCU PCU325181325181. http://data.bls.gov/PDQ/outside.jsp?survey=pc. Accessed August 18, 2009. U.S. Bureau of Labor Statistics. 2009e. Quarterly Census of Employment and Wages. Accessed August 2009.

U.S. Census Bureau. 2001

– 2006. Quarterly Financial Report for Manufacturing, Mining, and Trade Corporations, 1st Quarter reports. http://www.census.gov/prod/www/abs/qfr

mm.html. Accessed July 2009.

U.S. Census Bureau. Economic Census. 2007. Sector 31: EC07 31I1: Manufacturing: Industry Series: Detailed Statistics by Industry for the United States: 2007. NAICS code 325181. http://factfinder.census.gov/servlet/DatasetMainPageServlet?_program=ECN&_tabId=E CN1&_submenuId=datasets_4&_lang=en&_ts=24636668839. Acces sed July 23, 2009. U.S. Census Bureau; generated by RTI International; using American FactFinder; ―Sector 31: Manufacturing: Industry Series: Industry Statistics by Employment Size: 2002.‖ http://factfinder.cens us.go v. Accessed July 2009. U.S. Department of Transportation. 2009a. ― Part 172

— Hazardous Materials Table, Special Provisions, Hazardous Materials Communications, Emergency Response Information, Training Requirements, And Security Plans .‖ http://ecfr.gpoaccess.gov/cgi/t/text/text

idx?c=ecfr&sid=1dbcd9fcab84b206ffd37360976a4c4f&tpl=/ecfrbrowse /Title49/49cfr17 2_main_02.tpl . Accessed August 2009. U.S. Department of Transportation. 2009b. Pipeline and Hazardous Materials Safety Administration. http://www.phmsa.dot.gov/regulations . Accessed Augu st 2009. U.S. Environmental Protection Agency (EPA). September 2000. Guidelines for Preparing Economic Analyses . EPA 240

- R

- 00

- 003. Washington, DC: EPA. http://yosemite.epa.gov/ee/epa/eed.nsf/webpages/Guidelines.html. U.S. Federal Trade Commission (FTC). 2 005. ―With Conditions, FTC Clears Occidental Chemical’s Purchase of Vulcan’s Chemical Assets.‖ http://www.ftc.gov/opa/2005/06/vulcan.shtm. Accessed August 7, 2009. U.S. Geological Survey (USGS). 2009. Soda Ash. http://minerals.usgs.gov/minerals/pubs/
commo dity/soda_ash/mcs

- 2009

- sodaa.pdf. Accessed August 4, 2009. U.S. House of Representatives Committee on Commerce and Energy, Subcommittee on Commerce, Trade, and Consumer Protection; Pertaining to the Mercury Pollution Reduction Act of 2009 (H. R. 2190), Tes timony of Richard Jackson, Executive Vice President of Operations, ASHTA Chemicals Inc., May 12, 2009. http://energycommerce.house.gov/Press_111/20090512/testimony_jackson.pdf. Accessed August 2009.***E.O. 12866 Review

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### 4

- 14 Ward, K. Jr. 2007. ―Report Cites PPG Savings on Mercury P rocess Could Boost Efficiency, Phase Out Toxic Discharge at Marshall Plant.‖ http://www.wvrivers.org/news2007/CharlestonGazette

- Oceana.pdf . Accessed August, 2009. West Virginia D evelopment Office. 2009. PPG Industries Invests Nearly $6 million in Marshall County Plant.‖ http://www.wvopenforbusiness.com/OFB_0609/index.aspx#PPG. Accessed August 7, 2009. World Chlorine Council. April 2002. ―Chlor

- Alkali Manufacturing Processes.‖ The World Chlorine Council. http://www.worldchlorine.com/publications/pdf/mfg_processes.pdf. Accessed July 27, 2009.

### 5

- 1 SECTION 5 HUMAN HEALTH BENEFIT S OF EMISSIONS REDUC TIONS

5.1 Synopsis In this section, we provide analysis of the benefits associated with the propose d Mercury Chlor Alkali NESHAP. As there are no emission reductions or energy impacts associated with Option 2 (enhanced work practice standards), the benefits in this chapter correspond to Option 1 (non

- mercury technology option). The primary benefit of th is regulation is the reduction of mercury emissions from these sources. Due to data, time, and resource limitations, we were unable to model mercury dispersion, deposition, methylation, bioaccumulation in fish tissue, and human consumption of mercury

- conta minated fish that would be needed in order to estimate the human health benefits from reducing mercury emissions. In addition, this regulation would reduce electricity demand at these sources. Using benefit

- per

- ton estimates, we estimate the monetized huma n health co

- benefits of reducing cases of morbidity and premature mortality among populations exposed to particulate matter (PM) associated with the decreased electricity usage. Using the social cost of carbon (SCC), we estimate the monetized benefits asso ciated with reduced CO 2 

### emissions. At a 3% discount rate, we estimate the total monetized co

- benefits of the proposed NESHAP to be $22 million to $43 million in the implementation year (2013). At a 7% discount rate, we estimate the total monetized co

- benef its of the proposed NESHAP to be $14 million to $33 million in 2013. All estimates are in 2007$. These estimates reflect EPA’s most current interpretation of the scientific literature. Higher or lower estimates of PM 2.5 

### co

- benefits are possible using other assumptions; examples of this are provided in Figure 5

- 2 and Table 5

- 6. Data, resource, and methodological limitations prevented EPA from monetizing the co

- benefits from several important benefit categories, including benefits from reducing ecosystem effe cts and visibility impairment. It is important to emphasize that these monetized co

- benefits do not include the benefits associated with reducing mercury emissions.

5.2 Mercury Benefits Mercury is a highly neurotoxic contaminant that enters the food web as a methylated compound, methylmercury (U.S. EPA, 2008 c ) . The contaminant is concentrated in higher trophic levels, including fish eaten by humans. Mercury is emitted to the air from various man

made and natural sources. These emissions transport through th e atmosphere and eventually deposit to land or water bodies. This deposition can occur locally, regionally, or globally, depending on the form of mercury emitted and other factors such as the weather. The form of mercury emitted from these sources is estim ated to be about 98 percent elemental and two percent divalent mercury. Gaseous elemental mercury can be transported very long distances,***E.O. 12866 Review

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### 5

- 2 even globally, to regions far from the emissions source (becoming part of the global ―pool‖) before deposition occurs. Inorganic ionic (divalent) mercury has a shorter atmospheric lifetime and can deposit to land or water bodies closer to the emissions source. Furthermore, elemental mercury in the atmosphere can undergo transformation into ionic mercury, providing a signi ficant pathway for deposition of emitted elemental mercury.
This source category emitted about 640 pounds of mercury in the air in 2008 in the U.S. Based on the EPA’s National Emission Inventory, about 103 tons of mercury were emitted from all anthropogeni c sources in the U.S. in 2005. Moreover, the United Nations has estimated that about 2,100 tons of mercury were emitted worldwide by anthropogenic sources in 2005. We believe that total mercury emissions in the U.S. and globally in 2008 were about the same magnitude in 2005. Therefore, we estimate that in 2008, these sources emitted about 0.3% of the total anthropogenic mercury emissions in the U.S. and about 0.02% of the global emissions. Overall, this rule would directly reduce mercury emissions by about 640 pounds per year from current levels as well as an estimated 16 pounds per year indirectly through reduced electricity generation, and therefore, contribute to reductions in mercury exposures and health effects. Due to data, time, and resource limitatio ns, we were unable to model mercury dispersion, deposition, methylation, bioaccumulation in fish tissue, and human consumption of mercury

- contaminated fish that would be needed in order to estimate the human health benefits from reducing mercury emissions.
Potential exposure routes to mercury emissions include both direct inhalation and consumption of fish containing methylmercury. In the U.S., the primary route of human exposure to mercury emissions from industrial sources is generally indirectly through the consumption of fish containing methylmercury. As described above, mercury that has been emitted to the air eventually settles into water bodies or onto land where it can either move directly or be leached into waterbodies. Once deposited, certain micro organisms can change it into methylmercury, a highly toxic form that builds up in fish, shellfish and animals that eat fish. Consumption of fish and shellfish are the main sources of methylmercury exposure to humans. Methylmercury builds up more in some ty pes of fish and shellfish than in others. The levels of methylmercury in fish and shellfish vary widely depending on what they eat, how long they live, and how high they are in the food chain. Most fish, including ocean species and local freshwater fish, c ontain some methylmercury. For example, in recent studies by EPA and the U.S. Geological Survey (USGS) of fish tissues, every fish sample d from 291 streams across the country contained some methylmercury (Scudder, 2009).***E.O. 12866 Review

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### 5

- 3 The majority of fish consumed in t he U.S. are ocean species. The methylmercury concentrations in ocean fish species are primarily influenced by the global mercury pool. However, the methylmercury found in local fish can be due, at least partly, to mercury emissions from local sources. Rese arch shows that most people’s fish consumption does not cause a
mercury

- related health concern. However, certain people may be at higher risk because of their routinely high consumption of fish (e.g., tribal and other subsistence fishers and their families who rely heavily on fish for a substantial part of their diet). It has been demonstrated that high levels of methylmercury in the bloodstream of unborn babies and young children may harm the developing nervous system, making the child less able to think a nd learn. Moreover, mercury exposure at high levels can harm the brain, heart, kidneys, lungs, and immune system of people of all ages.
Several studies suggest that the methylmercury content of fish may reduce these cardio

protective effects of fish consu mption. Some of these studies also suggest that methylmercury may cause adverse effects to the cardiovascular system. For example, the NRC (2000) review of the literature concerning methylmercury health effects took note of two epidemiological studies that found an association between dietary exposure to methylmercury and adverse cardiovascular effects. 31 

### Moreover, in a study of 1,833 males in Finland aged 42 to 60 years, Solonen et al. (1995) observed a relationship between methylmercury exposure via fish c onsumption and acute myocardial infarction (AMI or heart attacks), coronary heart disease, cardiovascular disease, and all

- cause mortality. 32 

### The NRC also noted a study of 917 seven year old children in the Faroe Islands, whose initial exposure to methylmer cury was in utero although post natal exposures may have occurred as well. At seven years of age, these children exhibited an increase in blood pressure and a decrease in heart rate variability. 33 

### Based on these and other studies, NRC concluded in 2000 that , while ―the data base is not as extensive for cardiovascular effects as it is for other end points (i.e., neurologic effects) the cardiovascular system appears to be a target for methylmercury toxicity.‖ 34

31 National Research Council (NRC). 2000. Toxicological Effects of Methylmercury. Committee on the Toxicological Effects of Methylmercury, Board on Environmental Studies and Toxicol ogy. National Academies Press. Washington, DC. pp. 168

- 173.
32 Salonen, J.T., Seppanen, K. Nyyssonen et al. 1995. ―Intake of mercury from fish lipid peroxidation, and the risk of myocardial infarction and coronary, cardiovascular and any death in Eastern Fi nnish men.‖ Circulation, 91 (3):645

- 655.
33 Sorensen, N, K. Murata, E. Budtz

- Jorgensen, P. Weihe, and Grandjean, P., 1999. ―Prenatal Methylmercury Exposure As A Cardiovascular Risk Factor At Seven Years of Age‖, Epidemiology, pp370

- 375.
34 National Research Council (NRC). 2000. Toxicological Effects of Methylmercury. Committee on the Toxicological Effects of Methylmercury, Board on Environmental Studies and Toxicology. National Academies Press. Washington, DC. p. 229.***E.O. 12866 Review

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### 5

- 4 Since publication of the NRC report there have be en some 30 published papers presenting the findings of studies that have examined the possible cardiovascular effects of methylmercury exposure. These studies include epidemiological, toxicological, and toxicokinetic investigations. Over a dozen review pap ers have also been published. If there is a causal relationship between methylmercury exposure and adverse cardiovascular effects, then reducing exposure to methylmercury would result in public health benefits from reduced cardiovascular effects.
In early 2010, EPA sponsored a workshop in which a group of experts were asked to assess the plausibility of a causal relationship between methylmercury exposure and cardiovascular health effects and to advise EPA on methodologies for estimating population level ca rdiovascular health impacts of reduced methylmercury exposure. The report from that workshop is in preparation.

5.3 Energy Savings Co

- benefits
Because the membrane cell process requires less energy than the mercury cell process , this rule is anticipated to reduce electricity generated for these facilities by over 375 million kilowatt hours. Assuming a 22% reduction in electricity demand, the emission reductions associated with reduced electricity generation are estimated to be 68 tpy of PM 2.5 

### , 0.008 tpy (16 lbs) of mercury, and 287,000 tpy of CO 2 

### . The methodology for calculating these emission reductions is provided in Appendix B of this RIA.

5.3.1 PM

2.5 

### Co

- benefits The energy savings anticipated from this rule would decrease emissions of PM, thus reducing human exposure, and the incidence of PM 2.5 

### - related health effects. Due to time and resource limitations, it was not possible to provide a comprehensive estimate of the PM 2.5 

### - related

co

- benefits. Instead, we used the ―benefit

- per

- ton‖ approach to estimate t hese co

- benefits based on the methodology described in Fann, Fulcher, and Hubbell (2009). These PM 2.5 

### benefit

- per

- ton estimates provide the total monetized human health co

- benefits (the sum of premature mortality and premature morbidity) of reducing one to n of PM 2.5 

### from a specified source. EPA has used the benefit per

- ton technique in several previous RIAs, including the recent proposed Cement NESHAP (U.S. EPA, 2009a). For this analysis, we use the national average benefit

- per

- ton estimates associated with the electrical generating unit (EGU) sector. Because the anticipated emission reductions are assumed to occur across multiple EGUs, the national average benefit

per

- ton estimates best represent the regional scope of the anticipated emission reductions.***E.O. 12866 Review

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### 5

- 5 Ta ble 5

- 1 identifies the quantified and unquantified co

- benefits captured in those benefit

- per

- ton estimates.

Table 5

- 1. Human Health and Welfare Effects of PM 2.5

Pollutant/ Effect Quantified and Monetized in Primary Estimates Unquantified Effects Changes i n:
PM 2.5 Adult premature mortality

Bronchitis: chronic and acute Hospital admissions: respiratory and cardiovascular Emergency room visits for asthma Nonfatal heart attacks (myocardial infarction) Lower and upper respiratory illness Minor restricted

- acti vity days Work loss days Asthma exacerbations (asthmatic population) Infant mortality Subchronic bronchitis cases Low birth weight Pulmonary function Chronic respiratory diseases other than chronic bronchitis Non

- asthma respiratory emergency room visits Vi sibility Household soiling



### Consistent with the Portland Cement NESHAP (U.S. EPA, 2009a), the PM 2.5 

### co

- benefits estimates utilize the concentration

- response functions as reported in the epidemiology literature, as well as the 12 functions obtained in EPA’ s expert elicitation study as a sensitivity analysis.

 

### One estimate is based on the concentration

- response (C

- R) function developed from the extended analysis of American Cancer Society (ACS) cohort, as reported in Pope et al. (2002), a study that EPA has p reviously used to generate its primary benefits estimate. When calculating the estimate, EPA applied the effect coefficient as reported in the study without an adjustment for assumed concentration threshold of 10 μg/m 3 

### as was done in recent (2006

– 2009) Off ice of Air and Radiation RIAs.

 

### One estimate is based on the C

- R function developed from the extended analysis of the Harvard Six Cities cohort, as reported by Laden et al. (2006). This study, published after the completion of the Staff Paper for the 2006 P M 2.5 

### NAAQS, has been used as an alternative estimate in the PM 2.5 

### NAAQS RIA and PM 2.5 

### benefits estimates in RIAs completed since the PM 2.5 

### NAAQS. When calculating the estimate, EPA applied the effect coefficient as reported in the study without an adjustme nt for assumed concentration threshold of 10 μg/m 3 

### as was done in recent (2006

– 2009) RIAs.

 

### Twelve estimates are based on the C

- R functions from EPA’s expert elicitation study (IEc, 2006; Roman et al., 2008) on the PM 2.5 

### - mortality relationship and interpr eted for benefits analysis in EPA’s final RIA for the PM 2.5 

### NAAQS. For***E.O. 12866 Review

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### 5

- 6 that study, twelve experts (labeled A through L) provided independent estimates of the PM 2.5 

### - mortality concentration

- response function. EPA practice has been to develop independent est imates of PM 2.5 

### - mortality estimates corresponding to the concentration

- response function provided by each of the twelve experts, to better characterize the degree of variability in the expert responses.
The effect coefficients are drawn from epidemiology studies examining two large population cohorts: the American Cancer Society cohort (Pope et al., 2002) and the Harvard Six Cities cohort (Laden et al., 2006). 35 

### These are logical choices for anchor points in our presentation because, while both studies are well designed and peer reviewed, there are strengths and weaknesses inherent in each, which we believe argues for using both studies to generate co

benefits estimates. Previously, EPA had calculated co

- benefits based on these two empirical studies, but der ived the range of co

- benefits, including the minimum and maximum results, from an expert elicitation of the relationship between exposure to PM 2.5 

### and premature mortality (Roman et al., 2008). 36 

### Within this assessment, we include the co

- benefits estimates d erived from the concentration

- response function provided by each of the twelve experts to better characterize the uncertainty in the concentration

- response function for mortality and the degree of variability in the expert responses. Because the experts us ed these cohort studies to inform their concentration

- response functions, co

- benefits estimates using these functions generally fall between results using these epidemiology studies (see Figure 6

- 2). In general, the expert elicitation results support the c onclusion that the co

- benefits of PM 2.5 

### control are very likely to be substantial.
Readers interested in reviewing the methodology for creating the benefit

- per

- ton estimates used in this analysis should consult Fann, Fulcher, and Hubbell (2009). As describ ed in the documentation for the benefit per

- ton estimates cited above, national per

- ton estimates are developed for selected pollutant/source category combinations. The per

- ton values calculated therefore apply only to tons reduced from those specific poll utant/source combinations (e.g., NOx emitted from electric generating units; NO 2 

### emitted from mobile sources). Our estimate of PM 2.5 

### control co

- benefits is therefore based on the total PM 2.5 

### emissions controlled by sector and multiplied by this per

- ton val ue.

The benefit

- per

- ton coefficients in this analysis were derived using modified versions of the health impact functions used in the PM NAAQS Regulatory Impact Analysis. Specifically, this analysis uses the benefit

- per

- ton method first applied in the Port land Cement NESHAP RIA

35 These two studies specify multi

- polluta nt models that control for NOX, among other pollutants.
36 Please see the Section 5.2 of the Portland Cement proposal RIA in Appendix 5A for more information regarding the change in the presentation of co

- benefits estimates.***E.O. 12866 Review

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### 5

- 7 (U.S. EPA, 2009a), which incorporated three updates: a new population dataset, an expanded geographic scope of the benefit

- per

- ton calculation, and the functions directly from the epidemiology studies without an adjustment for an ass umed threshold. 37 

### Removing the threshold assumption is a key difference between the method used in this analysis of PM co

- benefits and the methods used in RIAs prior to Portland Cement, and we now calculate incremental co

benefits down to the lowest modeled PM 2.5 

### air quality levels.
EPA strives to use the best available science to support our benefits analyses, and we recognize that interpretation of the science regarding air pollution and health is dynamic and evolving. Based on our review of the current bo dy of scientific literature, EPA now estimates PM

- related mortality without applying an assumed concentration threshold. EPA’s Integrated Science Assessment for Particulate Matter (U.S. EPA, 2009b), which was recently reviewed by EPA’s Clean Air Scientific Advisory Committee (U.S. EPA

- SAB, 2009a; U.S. EPA

- SAB, 2009b), concluded that the scientific literature consistently finds that a no

- threshold log

- linear model most adequately portrays the PM

- mortality concentration

- response relationship while recognizing potential uncertainty about the exact shape of the concentration

- response function. Since then, the Health Effects Subcommittee (U.S. EPA

- SAB, 2010) of EPA’s Council concluded, ―The HES fully supports EPA’s decision to use a no

- threshold model to estimate mortality reductions. This decision is supported by the data, which are quite consistent in showing effects down to the lowest measured levels. Analyses of cohorts using data from more recent years, during which time PM concentrations have fallen, continu e to report strong associations with mortality. Therefore, there is no evidence to support a truncation of the CRF.‖ In conjunction with the underlying scientific literature, this document provided a basis for reconsidering the application of thresholds in PM 2.5 

### concentration

- response functions used in EPA’s RIAs. For a summary of these scientific review statements and the panel members commenting on thresholds since 2002, please consult the Technical Support Document (TSD) Summary of Expert Opinions on the Existence of a Threshold (U.S. EPA, 2010c).
Consistent with this finding, we have conformed the previous threshold sensitivity analysis to the current state of the PM science by incorporating a new ―Lowest Measured Level‖ (LML) assessment . This informatio n allows readers to determine the portion of population exposed to annual mean PM 2.5 

### levels at or above the LML of each study; in general, our confidence in the estimated PM mortality decreases as we consider air quality levels further below the LML in maj or cohort studies that estimate PM

- related mortality. While an LML

37 The benefit

- per

- ton estimates have also been updated since the Cement RIA to incorporate a revised VSL, as discussed on the next page.***E.O. 12866 Review

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### 5

- 8 assessment provides some insight into the level of uncertainty in the estimated PM mortality benefits, EPA does not view the LML as a threshold and continues to quantify PM

- related mortalit y impacts using a full range of modeled air quality concentrations. It is important to emphasize that we have high confidence in PM 2.5 

### - related effects down to the lowest LML of the major cohort studies, which is 5.8 μg/m 3 

### . Just because we have greater conf idence in the benefits above the LML, this does not mean that we have no confidence that benefits occur below the LML.
For this analysis, policy

- specific air quality data is not available due to time or resource limitations. For these rules, we are unable to estimate the percentage of premature mortality associated with this specific rule’s emission reductions at each PM 2.5 

### level. However, we believe that it is still important to characterize the distribution of exposure to baseline air quality levels. As a surrogate measure of mortality impacts, we provide the percentage of the population exposed at each PM 2.5 

### level using the most recent modeling available from the recently proposed Transport Rule (U.S. EPA, 2010e). It is important to note that baseline exp osure is only one parameter in the health impact function, along with baseline incidence rates population, and change in air quality. In other words, the percentage of the population exposed to air pollution below the LML is not the same as the percentage of the population experiencing health impacts as a result of a specific emission reduction policy. The most important aspect, which we are unable to quantify for rules without air quality modeling, is the shift in exposure associated with this specific rul e. Therefore, caution is warranted when interpreting the LML assessment. For more information on the data and conclusions in the LML assessment for rules without policy

specific air quality modeling, please consult the LML TSD (U.S. EPA, 2010d). The result s of this analysis are provided in Section 5.4.
As is the nature of Regulatory Impact Analyses (RIAs), the assumptions and methods used to estimate air quality co

- benefits evolve over time to reflect the Agency’s most current interpretation of the scientif ic and economic literature. For a period of time (2004

– 2008), the Office of Air and Radiation (OAR) valued mortality risk reductions using a value of statistical life (VSL) estimate derived from a limited analysis of some of the available studies. OAR arri ved at a VSL using a range of $1 million to $10 million (2000$) consistent with two meta

- analyses of the wage

- risk literature. The $1 million value represented the lower end of the interquartile range from the Mrozek and Taylor (2002) meta

- analysis of 33 s tudies. The $10 million value represented the upper end of the interquartile range from the Viscusi and Aldy (2003) meta

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### 5

- 9 analysis of 43 studies. The mean estimate of $5.5 million (2000$) 38 

### was also consistent with the mean VSL of $5.4 million estimated in t he Kochi et al. (2006) meta

- analysis. However, the Agency neither changed its official guidance on the use of VSL in rule

- makings nor subjected the interim estimate to a scientific peer

- review process through the Science Advisory Board (SAB) or other peer

- review group.
During this time, the Agency continued work to update its guidance on valuing mortality risk reductions, including commissioning a report from meta

- analytic experts to evaluate methodological questions raised by EPA and the SAB on combining e stimates from the various data sources. In addition, the Agency consulted several times with the Science Advisory Board Environmental Economics Advisory Committee (SAB

- EEAC) on the issue. With input from the
meta

- analytic experts, the SAB

- EEAC advised the Agency to update its guidance using specific, appropriate meta

- analytic techniques to combine estimates from unique data sources and different studies, including those using different methodologies (i.e., wage

- risk and stated preference) (U.S. EPA

- SAB, 200 7).
Until updated guidance is available, the Agency determined that a single, peer

- reviewed estimate applied consistently best reflects the SAB

- EEAC advice it has received. Therefore, the Agency has decided to apply the VSL that was vetted and endorsed by the SAB in the Guidelines for Preparing Economic Analyses (U.S. EPA, 2000) 39 

### while the Agency continues its efforts to update its guidance on this issue. This approach calculates a mean value across VSL estimates derived from 26 labor market and contingent valuation studies published between 1974 and 1991. The mean VSL across these studies is $6.3 million (2000$). 40 

### The Agency is committed to using scientifically sound, appropriately reviewed evidence in valuing mortality risk reductions and has made signific ant progress in responding to the SAB

- EEAC’s specific recommendations.
Figure 5

- 1 illustrates the relative breakdown of the monetized PM 2.5 

### health co

- benefits by health endpoint.

38 After adjusting the VSL for a different currency year (200 7 $) and to account for income growth to 2015 to the $5.5 million value, the VSL is $ 8.0 m illion.
39 In the (draft) update of the Economic Guidelines (U.S. EPA, 2008 b ), EPA retained the VSL endorsed by the SAB with the understanding that further updates to the mortality risk valuation guidance would be forthcoming in the near future. Therefore, this report does not represent final agency policy.
40 In this analysis, we adjust the VSL to account for a different currency year (200 7 $) and to account for income growth to 2015. After applying these adjustments to the $6.3 million value, the VSL is $9 .1 million.***E.O. 12866 Review

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### 5

- 10 Figure 5

- 1. Breakdown of Monetized PM 2.5 

### Health Co

- Benefits using Mortalit y Function

from Pope et al. (2002) a

a This pie chart breakdown is illustrative, using the results based on Pope et al. (2002) as an example. Using the Laden et al. (2006) function for premature mortality, the percentage of total monetized co

- benefits due t o adult mortality would be 97%. This chart shows the breakdown using a 3% discount rate, and the results would be similar if a 7% discount rate was used.



### Table 5

- 2 provides a general summary of the monetized co

- benefits results by pollutant, including the emission reductions and benefits

- per

- ton estimates at discount rates of 3% and 7%. 41 

### Table 5

- 3 provides a summary of the reductions in health incidences anticipated as a result of the pollution reductions. In Table 5

- 4, we provide the monetized co

- benefits using our anchor points of Pope et al. and Laden et al. as well as the results from the expert elicitation on PM mortality. Figure 5

- 2 provides a visual representation of the range of monetized co

- benefits estimates and the pollutant breakdown of the monet ized co

- benefits of the proposed option. As

41 To comply with Circular A

- 4, EPA provides monetized co

- benefits using discount rates of 3% and 7% (OMB, 2003). These co

- benefits are estimated for a specific analysis year (i.e., 2013), and most of the PM co

- benefits occur within that year wi th two exceptions: acute myocardial infarctions (AMIs) and premature mortality. For AMIs, we assume 5 years of follow

- up medical costs and lost wages. For premature mortality, we assume that there is a ―cessation‖ lag between PM exposures and the total rea lization of changes in health effects. Although the structure of the lag is uncertain, EPA follows the advice of the SAB

- HES to assume a segmented lag structure characterized by 30% of mortality reductions in the first year, 50% over years 2 to 5, and 20% over the years 6 to 20 after the reduction in PM 2.5 (U.S. EPA

- SAB, 2004). Changes in the lag assumptions do not change the total number of estimated deaths but rather the timing of those deaths. Therefore, discounting only affects the AMI costs after the a nalysis year and the valuation of premature mortalities that occur after the analysis year. As such, the monetized co

- benefits using a 7% discount rate are only approximately 10% less than the monetized
co

- benefits using a 3% discount rate.***E.O. 12866 Review

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### 5

- 11 there are no emission reductions or energy impacts associated with Option 2 (enhanced work practice standards), the benefits in this chapter correspond to Option 1 (non

- mercury technology option).

Table 5

- 2. Summ ary of Monetized PM 2.5 

### Energy Co

- benefits for the Proposed Mercury

Chlor Alkali NESHAP in 2013 (2007$) (Option 1)

Pollutant Emissions

Reductions (tons) Benefit

per ton (Pope, 3%) Benefit

per ton (Laden, 3%) Benefit

per ton (Pope, 7%) Benefit

per ton (Laden , 7%) Monetized PM 2.5

Co

- benefits (millions, 3%) Monetized PM 2.5

Co

- benefits (millions, 7%)
Direct PM 2.5 68 $220,000 $540,000 $200,000 $490,000 $15 to $37 $14 to $33

a All estimates are for the implementation year (2013), and are rounded to two signific ant figures so numbers may not sum across columns. All fine particles are assumed to have equivalent health effects, but the benefit per ton estimates vary because each ton of precursor reduced has a different propensity to become PM 2.5 . The monetized
co

- b enefits incorporate the conversion from precursor emissions to ambient fine particles. Confidence intervals are unavailable for this analysis because of the benefit

- per

- ton methodology.


### Table 5

- 3. Summary of Reductions in Health Incidences from PM 2.5 

### Co

- B enefits for the

Proposed Mercury Chlor Alkali NESHAP in 2013 (Option 1) a

Avoided Premature Mortality Pope et al. 2
Laden et al. 5 Avoided Morbidity
Chronic Bronchitis 1 Acute Myocardial Infarction 3 Hospital Admissions, Respiratory 0 Hospital Admi ssions, Cardiovascular 1 Emergency Room Visits, Respiratory 2
Acute Bronchitis 3 Work Loss Days 230
Asthma Exacerbation 31 Minor Restricted Activity Days 1,400 Lower Respiratory Symptoms 33 Upper Respiratory Symptoms 25

a All estimates are for the analysis year (2013) and are rounded to whole numbers with two significant figures. All fine particles are assumed to have equivalent health effects, but each PM 2.5 precursor pollutant has a different propensity to form PM 2.5 . Confidence intervals are unav ailable for this analysis because of the benefit

- per

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### 5

- 12 Table 5

- 4. All Monetized PM 2.5 

### Co

- Benefits Estimates for the Proposed Mercury Chlor

Alkali NESHAP at discount rates of 3% and 7% in 2013 (in millions of 2007$) (Option 1) a

3% 7%
Benef it

- per - ton Coefficients derived from Epidemiology Literature Pope et al. $15 $14
Laden et al. $37 $33
Benefit

- per - ton Coefficients Derived from Expert Elicitation Expert A $39 $35 Expert B $30 $27 Expert C $30 $27 Expert D $21 $19 Expert E $48 $43 Expert F $27 $24 Expert G $18 $16 Expert H $22 $20 Expert I $29 $27 Expert J $24 $22 Expert K $6 $5 Expert L $22 $20

a All estimates are rounded to two significant figures. Estimates do not include confidence intervals because they were derived thr ough the benefit

- per

- ton technique described above. The co

- benefits estimates from the Expert Elicitation are provided as a reasonable characterization of the uncertainty in the mortality estimates associated with the concentration

- response function. Confi dence intervals are unavailable for this analysis because of the benefit

- per

- ton methodology.***E.O. 12866 Review

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### 5

- 13 Figure 5

- 2. Total Monetized PM 2.5 

### Co

- Benefits for the Proposed Mercury Chlor Alkali

NESHAP in 2013 (Option 1)

a This graph shows the estimated co

- benefits at d iscount rates of 3% and 7% using effect coefficients derived from the Pope et al. study and the Laden et al. study, as well as 12 effect coefficients derived from EPA’s expert elicitation on PM mortality. The results shown are not the direct results from t he studies or expert elicitation; rather, the estimates are based in part on the concentration

- response function provided in those studies.


### 5.3.2 Social Cost of Carbon and Greenhouse Gas Co

- benefits EPA has assigned a dollar value to reductions in carbon d ioxide (CO 2 

### ) emissions using recent estimates of the ―social cost of carbon‖ (SCC). The SCC is an estimate of the monetized damages associated with an incremental increase in carbon emissions in a given year. It is intended to include (but is not limited t o) changes in net agricultural productivity, human health, property damages from increased flood risk, and the value of ecosystem services due to climate change. The SCC estimates used in this analysis were developed through an interagency process that inc luded EPA and other executive branch entities, and concluded in February 2010. EPA first used these SCC estimates in the co

- benefits analysis for the final joint EPA/DOT Rulemaking to establish Light

- Duty Vehicle Greenhouse Gas Emission Standards and Corpo rate Average Fuel Economy Standards; see the rule’s preamble for discussion about application of***E.O. 12866 Review

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### 5

- 14 SCC (75 FR 25324; 5/7/10). The SCC Technical Support Document (SCC TSD) provides a complete discussion of the methods used to develop these SCC estimates. 42



### Th e interagency group selected four SCC values for use in regulatory analyses, which we have applied in this analysis: $5, $21, $35, and $65 per metric ton of CO 2 

### emissions 43 

### in 2010, in 2007 dollars. The first three values are based on the average SCC from t hree integrated assessment models, at discount rates of 2.5, 3, and 5 percent, respectively. SCCs at several discount rates are included because the literature shows that the SCC is quite sensitive to assumptions about the discount rate, and because no con sensus exists on the appropriate rate to use in an intergenerational context. The fourth value is the 95th percentile of the SCC from all three models at a 3 percent discount rate. It is included to represent higher

- than

- expected impacts from temperature c hange further out in the tails of the SCC distribution. Low probability, high impact events are incorporated into all of the SCC values through explicit consideration of their effects in two of the three models as well as the use of a probability density f unction for equilibrium climate sensitivity. Treating climate sensitivity probabilistically results in more high temperature outcomes, which in turn lead to higher projections of damages.
The SCC increases over time because future emissions are expected to produce larger incremental damages as physical and economic systems become more stressed in response to greater climatic change. Note that the interagency group estimated the growth rate of the SCC directly using the three integrated assessment models rat her than assuming a constant annual growth rate. This helps to ensure that the estimates are internally consistent with other modeling assumptions. The SCC estimates for the analysis years of 2013, in 2007 dollars are provided in Table 5

- 5.

42 Docket ID EP A

- HQ

- OAR

- 2009

- 0472

- 114577, Technical Support Document: Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866, Interagency Working Group on Social Cost of Carbon, with participation by Council of Economic Advisers, Council on Envi ronmental Quality, Department of Agriculture, Department of Commerce, Department of Energy, Department of Transportation, Environmental Protection Agency, National Economic Council, Office of Energy and Climate Change, Office of Management and Budget, Offi ce of Science and Technology Policy, and Department of Treasury (February 2010). Also available at http://www.epa.gov/otaq/climate/regulations.htm 43 The interagency group decided that these es timates apply only to CO 2 emissions. Given that warming profiles and impacts other than temperature change ( e.g., ocean acidification) vary across GHGs, the group concluded ―transforming gases into CO 2 - equivalents using GWP, and then multiplying the carbon

- equivalents by the SCC, would not result in accurate estimates of the social costs of non

- CO 2 gases‖ (SCC TSD, pg 13).***E.O. 12866 Review

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### 5

- 15 Table 5

- 5. Soci al Cost of Carbon (SCC) Estimates (per tonne of CO 2 

### ) for 2013 a

Discount Rate and Statistic SCC estimate (2007$) 5% Average $5.3 3% Average $22.8 2.5% Average $37.0
3% 95%ile $69.6

a The SCC values are dollar

- year and emissions

- year specific. SCC val ues represent only a partial accounting of climate impacts.


### When attempting to assess the incremental economic impacts of carbon dioxide emissions, the analyst faces a number of serious challenges. A recent report from the National Academies of Science (NR C, 2008) points out that any assessment will suffer from uncertainty, speculation, and lack of information about (1) future emissions of greenhouse gases, (2) the effects of past and future emissions on the climate system, (3) the impact of changes in clim ate on the physical and biological environment, and (4) the translation of these environmental impacts into economic damages. As a result, any effort to quantify and monetize the harms associated with climate change will raise serious questions of science, economics, and ethics and should be viewed as provisional.
The interagency group noted a number of limitations to the SCC analysis, including the incomplete way in which the integrated assessment models capture catastrophic and non

catastrophic impacts, their incomplete treatment of adaptation and technological change, uncertainty in the extrapolation of damages to high temperatures, and assumptions regarding risk aversion. The limited amount of research linking climate impacts to economic damages makes
t he interagency modeling exercise even more difficult. The interagency group hopes that over time researchers and modelers will work to fill these gaps and that the SCC estimates used for regulatory analysis by the Federal government will continue to evolve with improvements in modeling. Additional details on these limitations are discussed in the SCC TSD.
In light of these limitations, the interagency group has committed to updating the current estimates as the science and economic understanding of climate change and its impacts on society improves over time. Specifically, the interagency group has set a preliminary goal of revisiting the SCC values within two years or at such time as substantially updated models become available, and to continue to support research in this area.***E.O. 12866 Review

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### 5

- 16 Applying the global SCC estimates to the estimated decreases in CO 2 

### emissions for the range of policy scenarios, we estimate the dollar value of the climate

- related co

- benefits captured by the models for each analysis year. For inte rnal consistency, the annual co

- benefits are discounted back to NPV terms using the same discount rate as each SCC estimate (i.e., 5%, 3%, and 2.5%) rather than 3% and 7%. 44 

### These estimates are provided in Table 5

- 6.

Table 5

- 6. Monetized Co

- benefits of CO 2 

### Emission Decreases in 2013 (Option 1) a

Discount Rate and Statistic SCC

- derived benefits (millions of 2007$) 5% Average $1.5 3% Average $6.5 2.5% Average $11
3% 95%ile $20

a The SCC values are dollar

- year and emissions

- year specific. SCC values repres ent only a partial accounting of climate impacts.


### 5.3.3 Total Monetized Co

- benefits of Energy Savings The energy savings would decrease emissions of several pollutants. In this analysis, we were able to monetize the co

- benefits associated with the decrease d emissions of PM and CO 2 

### , but we were unable to monetize the co

- benefits associated with the decreased emissions of mercury. We estimate that the total monetized co

- benefits are $22 to $43 million and $14 to $33 million, at discount rates of 3% and 7% res pectively. Figure 5

- 3 shows the breakdown of the monetized co

- benefits by pollutant.

5.4 Characterization of Uncertainty in the Monetized PM 2.5 

### Co

- Benefits In any complex analysis, there are likely to be many sources of uncertainty. Many inputs are used t o derive the estimate of monetized co

- benefits, including emission inventories, air quality models (with their associated parameters and inputs), epidemiological estimates of concentration

- response (C

- R) functions, estimates of values, population estimates , income estimates, and estimates of the future state of the world (i.e., regulations, technology, and human behavior). For some parameters or inputs it may be possible to provide a statistical representation of the underlying uncertainty distribution. For other parameters or inputs, the necessary information is not available. Because we used the benefit

- per

- ton approach for this analysis, confidence intervals are unavailable.

44 It is possible that other co

- benefits or costs of proposed regulations unrelated to CO 2 emissions will be discounted at rates that di ffer from those used to develop the S CC estimates.***E.O. 12866 Review

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### 5

- 17 Figure 5

- 3. Breakdown of Monetized Co

- benefits by Pollutant at 3% discount rate

(Option 1)

There are uncertainties associated with each analytical step to calculate the human health benefits associated with reducing electricity consumption. Important uncertainties associated with estimating the reduction in electricity consumption i nclude variability across facilities and variability in local energy costs. 45 

### Important uncertainties associated with estimating the emission reductions associated with a specific electricity consumption reduction include representativeness of historical e missions factors across regions and over time, transmission losses, electricity market response to changes in demand, and emissions trading effects. 46 

### Important uncertainties associated with estimating the human health benefits associated with those emissi on reductions include assumptions regarding the PM 2.5 

### - related mortality relationship, the value

- of

- a

- statistical

- life, and average benefit

- per

- ton estimates. 47 

### It should be noted that the method used to the change in PM 2.5 

### precursor emissions for this rule is consistent with the method used to calculated changes in CO 2 

### emissions. Given the strong desire to estimate the effects of regulations on greenhouse gas (GHG) emissions, we will continue to investigate and improve the methodology for estimating all bene fits categories associated with reducing electricity consumption, to the extent feasible.

45 These uncertainties are described in detail in Appendix B of this RIA. 46 These uncertainties are described in detail in Appendix B of this RIA. 47 These uncertainties are described in detail below.***E.O. 12866 Review

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### 5

- 18 Although this is the first RIA for which U.S. EPA’s Office of Air and Radiation has calculated the monetized human health benefits specifically associated with a redu ction in electricity consumption, there are several previous regulations that included the health benefits associated with energy changes. For example, the recently finalized Portland Cement NESHAP included the human health and climate disbenefits associat ed with increased electricity consumption and fuel usage from control devices (U.S. EPA, 2010i). U.S. EPA has previously calculated substantial human health benefits associated with reducing emissions from electrical generating units, including the propose d Federal Transport Rule (2010d), the SO 2 

### NAAQS (2010g), and the Clean Air Interstate Rule (2005). In addition, several recent regulations from U.S. EPA’s Office of Transportation and Air Quality assessed the air quality changes and associated human health impacts from changes in fuel consumption and/or fuel production and distribution, including the Light Duty Vehicle GHG rule (U.S. EPA, 2010f), 48 

### Renewable Fuel Standard II rule (U.S. EPA, 2010e), 49 

### and the Locomotive Marine rule (U.S. EPA, 2008a). 50 

### Furtherm ore, the Iron and Steel Foundries NESHAP (U.S. EPA, 2003) included an estimate of the emission reductions associated with decreased energy consumption for alternate control devices, but no benefits analysis was conducted for that rule.

In addition to RIAs, other recent attempts to calculate the human health benefits associated with electricity consumption are available in the literature. For example, Levy et al. (2009) estimated the median monetized health

- related damages associated with emissions of PM 2.5 

### , SO 2 

### , and NOx from coal

- fired power plants. In addition, the National Research Council (NRC) estimated the monetized health benefits associated emissions of PM, SO 2 

### , and NOx to be for coal and natural gas power plants. It is important to note that there ar e important methodological differences between these two analyses and EPA’s approach to estimating PM

-

48 In a ddition to downstream emission reductions, the Light Duty Vehicle GHG rule accounted for the emissions associated with the processes involved in getting petroleum to the pump, including the extraction and transportation of crude oil, and the production and distribution of finished gasoline. Changes were anticipated in upstream emissions due to the expected reduction in the volume of fuel consumed. Less gasoline consumed means less gasoline transported, less gasoline refined, and less crude oil extracted and transported to refineries. Thus, the analysis accounted for reductions in the emissions associated with each of these steps in the gasoline production and distribution process. 49 In addition to the effects of increased renewable fuel use on emissions from the vehicles and equipment that use the fuels, the RFS2 analysis accounted for shifts in the fuel production and transport/distribution methods that can have substantial impacts on emissions. These "upstream" emissions are associated with all stages of bi ofuel production and distribution, including biomass production (agriculture, forestry), fertilizer and pesticide production and transport, biomass transport, biomass refining (corn or cellulosic ethanol production facilities), biofuel transport to blendin g/distribution terminals, and distribution of finished fuels to retail outlets. 50 The locomotive and marine engine rule accounted for idle reduction technologies that provide substantial emission reductions as well as cost savings by reducing fuel consump tion. Reduced idling time results in reduced fuel consumption and reduced idle emissions. The analysis estimated annual fuel savings, the associated cost savings, and the emissions reductions that would result from the idle reduction requirements.***E.O. 12866 Review

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### 5

- 19 related monetized benefits, including characterization of secondary formation of PM 2.5 

### , population growth, income growth, the VSL, the cessation lag assum ed, among others. However, these studies provide additional examples of conceptually similar attempts to monetize the human health benefits associated with electricity consumption.
The annual benefit estimates presented in this analysis are also inherently variable due to the processes that govern pollutant emissions and ambient air quality in a given year. Factors such as hours of equipment use and weather are constantly variable, regardless of our ability to measure them accurately. As discussed in the PM 2.5 

### NAAQS RIA (Table 5.5) (U.S. EPA, 2006a), there are a variety of uncertainties associated with these PM co

- benefits. Therefore, the estimates of annual co

- benefits should be viewed as representative of the magnitude of co

benefits expected, rather than the actual co

- benefits that would occur every year.
It is important to note that the monetized benefit

- per

- ton estimates used here reflect specific geographic patterns of emissions reductions and specific air quality and co

- benefits modeling assumptions. F or example, these estimates do not reflect local variability in population density, meteorology, exposure, baseline health incidence rates, or other local factors. Use of these $/ton values to estimate co

- benefits associated with different emission control programs (e.g., for reducing emissions from large stationary sources like EGUs) may lead to higher or lower benefit estimates than if co

- benefits were calculated based on direct air quality modeling. Great care should be taken in applying these estimates to emission reductions occurring in any specific location, as these are all based on national or broad regional emission reduction programs and therefore represent average co

- benefits

- per

- ton over the entire United States. The

co

- benefits

- per

- ton for emis sion reductions in specific locations may be very different than the estimates presented here.

PM 2.5 

### mortality co

- benefits are the largest benefit category that we monetized in this analysis. To better characterize the uncertainty associated with mortality impacts that are estimated to occur in areas with low baseline levels of PM 2.5 

### , we included the LML assessment. Without policy

- specific air quality modeling, we are unable to quantify the shift in exposure associated with this specific rule. For this rule , as a surrogate measure of mortality impacts, we provide the percentage of the population exposed at each PM 2.5 

### level using the most recent modeling available from the recently proposed Transport Rule (U.S. EPA, 2010e). A very large proportion of the popu lation is exposed at or above the lowest LML of the cohort studies (Figures 5

- 4 and 5

- 5), increasing our confidence in the PM mortality analysis. Figure 5

- 4 shows a bar chart of the p ercentage of the population exposed to various air quality levels in the pre

and post

- policy policy. Figure 5

- 5 shows a cumulative distribution function of the same data.***E.O. 12866 Review

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### 5

- 20 Figure 5

- 4. Percentage of Adult Population by Annual Mean PM 2.5 

### Exposure (pre

- and

post
- policy policy)

Figure 5

- 5. Cumulative Distribution of Adult Pop ulation at Annual Mean PM 2.5 

### levels

(pre

- and post

- policy policy)***E.O. 12866 Review

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### 5

- 21 Both figures identify the LML for each of the major cohort studies. As the policy shifts the distribution of air quality levels, fewer people are exposed to PM 2.5 

### levels at or above the LML

. Using the Pope et al. (2002) study, the 85% of the population is exposed to annual mean PM 2.5 

### levels at or above the LML of 7.5 μg/m 3 

### . Using the Laden et al. (2006) study, 40% of the population is exposed above the LML of 10 μg/m 3



### . As we model mortality impacts among populations exposed to levels of PM 2.5 

### that are successively lower than the LML of the lowest cohort study, our confidence in the results diminishes. However, the analysis above confirms that the great majority of the impacts occur at or abov e the lowest cohort study’s LML. It is important to emphasize that we have high confidence in PM 2.5 

### - related effects down to the lowest LML of the major cohort studies. Just because we have greater confidence in the benefits above the LML, this does not mea n that we have no confidence that benefits occur below the LML.
Above we present the estimates of the total monetized co

- benefits, based on our interpretation of the best available scientific literature and methods and supported by the SAB

HES and the NAS (NRC, 2002). The co

- benefits estimates are subject to a number of assumptions and uncertainties. For example, for key assumptions underlying the estimates for premature mortality, which typically account for at least 90% of the total monetized co

- benefits , we were able to quantify include the following:

1. PM 2.5 

### co

- benefits were derived through benefit per

- ton estimates, which do not reflect local variability in population density, meteorology, exposure, baseline health incidence rates, or other local fact ors that might lead to an over

- estimate or under

estimate of the actual co

- benefits of controlling directly emitted fine particulates.

2. We assume that all fine particles, regardless of their chemical composition, are equally potent in causing premature m ortality. This is an important assumption, because PM 2.5 

### produced via transported precursors emitted from EGUs may differ significantly from direct PM 2.5 

### released from diesel engines and other industrial sources, but no clear scientific grounds exist for s upporting differential effects estimates by particle type.

3. We assume that the health impact function for fine particles is linear down to the lowest air quality levels modeled in this analysis. Thus, the estimates include health
co

- benefits from reducin g fine particles in areas with varied concentrations of PM 2.5, 

### including both regions that are in attainment with fine particle standard and those that do not meet the standard down to the lowest modeled concentrations.

4. To characterize the uncertainty i n the relationship between PM 2.5 

### and premature mortality (which typically accounts for 85% to 95% of total monetized co

- benefits), we include a set of twelve estimates based on results of the expert elicitation study in addition to our core estimates. Even these multiple characterizations omit the uncertainty in air quality estimates, baseline incidence rates, populations exposed and***E.O. 12866 Review

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### 5

- 22 transferability of the effect estimate to diverse locations. As a result, the reported confidence intervals and range of esti mates give an incomplete picture about the overall uncertainty in the PM 2.5 

### estimates. This information should be interpreted within the context of the larger uncertainty surrounding the entire analysis. For more information on the uncertainties associated with PM 2.5 

### co

- benefits, please consult the PM 2.5 

### NAAQS RIA (Table 5

- 5).
This RIA does not include the type of detailed uncertainty assessment found in the PM NAAQS RIA because we lack the necessary air quality input and monitoring data to run the co

benef its model. Moreover, it was not possible to develop benefit

- per

- ton metrics and associated estimates of uncertainty using the co

- benefits estimates from the PM RIA because of the significant differences between the sources affected in that rule and those r egulated here. However, the results of the Monte Carlo analyses of the health and welfare co

- benefits presented in Chapter 5 of the PM NAAQS RIA can provide some evidence of the uncertainty surrounding the co

- benefits results presented in this analysis.

5. 6 References Fann, N., C.M. Fulcher, B.J. Hubbell. 2009. The influence of location, source, and emission type in estimates of the human health benefits of reducing a ton of air pollution. Air Qual Atmos Health 2:169

- 176.
Kochi, I., B. Hubbell, and R. Krame r. 2006. ―An Empirical Bayes Approach to Combining Estimates of the Value of Statistical Life for Environmental Policy Analysis.‖ Environmental and Resource Economics 34:385

- 406. Laden, F., J. Schwartz, F.E. Speizer, and D.W. Dockery. 2006. ―Reduction in F ine Particulate Air Pollution and Mortality.‖ American Journal of Respiratory and Critical Care Medicine 173:667

- 672. Levy, J.I., L.K. Baxter, and J. Schwartz. 2009. ―Uncertainty and variability in health

- related damages from coal

- fired power plants in the United States.‖ Risk Anal . 29(7):1000

- 1014. Mrozek, J.R., and L.O. Taylor. 2002. ―What Determines the Value of Life? A Meta

- Analysis.‖ Journal of Policy Analysis and Management 21(2):253

- 270. National Research Council (NRC). 2002. Estimating the Public He alth Benefits of Proposed Air Pollution Regulations . Washington, DC: The National Academies Press. National Research Council (NRC). 2008. Estimating Mortality Risk Reduction and Economic Co

- benefits from Controlling Ozone Air Pollution. National Academies Press. Washington, DC.

National Research Council. 2010. Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use. National Academies Press: Washington, D.C.: 466 pp.***E.O. 12866 Review

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### 5

- 23 Pope, C.A., III, R.T. Burnett, M.J. Thun, E.E. Calle, D. Krewski, K. It o, and G.D. Thurston. 2002. ―Lung Cancer, Cardiopulmonary Mortality, and Long

- term Exposure to Fine Particulate Air Pollution.‖ Journal of the American Medical Association 287:1132

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- 2274. Scudder, B.C., Chasar, L.C., Wentz, D.A., Bauch, N.J., Brigham, M.E., Moran , P.W., and Krabbenhoft, D.P. 2009. Mercury in fish, bed sediment, and water from streams across the United States, 1998

– 2005: U.S. Geological Survey Scientific Investigations Report 2009

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< http://yosemite.epa.gov/ee/epa/eed.nsf/webpages/Guidelines.html/$file/cover.pdf >. U.S. Environmental Protection Agency (U.S. EPA). 2003. Economic Impact Analysis of Final Iron and Steel Foundries NESHAP. Office of Air Quali ty Planning and Standards, Research Triangle Park. EPA

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- 012. August. Available on the Internet at <http://www.epa.gov/ttn/ecas/regdata/EIAs/foundry_report.pdf>. U.S. Environmental Protection Agency (U.S. EPA). 2005 . Regulatory Impact Analysis for t he Final Clean Air Interstate Rule . EPA

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- 002. Office of Air and Radiation. March. Available on the Internet at <http://www.epa.gov/cair/pdfs/finaltech08.pdf>. U.S. Environmental Protection Agency (U.S. EPA). 2006. Regulatory Impact Analysis, 2006 N ational Ambient Air Quality Standards for Particulate Matter , Chapter 5. Available at
< http://www.epa.gov/ttn/ecas/regdata/RIAs/Chapter%205

-- Benefits.pdf >.
U.S. Environmenta l Protection Agency (U.S. EPA). 2008a. Regulatory Impact Analysis: Control of Emissions of Air Pollution from Locomotive Engines and Marine Compression Ignition Engines Less than 30 Liters Per Cylinder. EPA420

- R

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- 001a. Office of Transportation and Air Qu ality. May. Available on the Internet at <http://www.epa.gov/otaq/regs/nonroad/420r08001a.pdf>. U.S. Environmental Protection Agency (U.S. EPA). 2008b. Guidelines for Preparing Economic Analyses: External Review Draft. National Center for Environmental Eco nomics, Office of Policy Economics and Innovation. Washington, DC. Available at <http://yosemite.epa.gov/ee/epa/eermfile.nsf/vwAN/EE

- 0516

- 01.pdf/$File/EE

- 0516

- 01.pdf>. U.S. Environmental Protection Agency (U.S. EPA). 2008 c

. Integrated Science Assessment fo r Oxides of Nitrogen and Sulfur

– Ecological Criteria National (Final Report). National Center for Environmental Assessment, Research Triangle Park, NC. EPA/600/R

- 08/139. December. Available at <http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=201485>.***E.O. 12866 Review

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### 5

- 24 U. S. Environmental Protection Agency (U.S. EPA). 2009a. Regulatory Impact Analysis: National Emission Standards for Hazardous Air Pollutants from the Portland Cement Manufacturing Industry . Office of Air Quality Planning and Standards, Research Triangle Park , NC. April. Available at
< http://www.epa.gov/ttn/ecas/regdata/RIAs/portlandcementria_4

- 20

- 09.pdf >. U.S. Environmental Protection Agency (U.S. EPA). 2009b. Integrated Science Assessment for Particulate Matter (Final Report). EPA

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- 08

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— RTP Division. December. Available at <http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=216546>. U.S. Environmental Protection Agen cy (U.S. EPA). 2010b. Final Regulatory Impact Analysis (RIA) for the NO 2 

### National Ambient Air Quality Standards (NAAQS) . Office of Air Quality Planning and Standards, Research Triangle Park, NC. January. Available at
< http://www.epa.gov/ttn/ecas/regdata/RIAs/FinalNO2RIAfulldocument.pdf >. U.S. Environmental Protection Agency (U.S. EPA). 2010c. Summary of Expert Opinions on the Existence of a Threshold in the Concentration

- Re sponse Function for PM 2.5 

### - related Mortality: Technical Support Document . Compiled by Office of Air Quality Planning and Standards, Research Triangle Park, NC. July. Available at <http://www.epa.gov/ttn/ecas/benefits.html>. U.S. Environmental Protection Age ncy (U.S. EPA). 2010d. Lowest Measured Level (LML) Assessment for Rules without Policy

- Specific Air Quality Data Available: Technical Support Document . Office of Air Quality Planning and Standards, Research Triangle Park, NC. July. Available at <http://www .epa.gov/ttn/ecas/benefits.html>. U.S. Environmental Protection Agency (U.S. EPA). 2010e. Renewable Fuel Standard Program (RFS2) Regulatory Impact Analysis . EPA

- 420

- R

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- 006. Office of Transportation and Air Quality. March. Available on the Internet at <ht tp://www.epa.gov/oms/renewablefuels/420r10006.pdf>. U.S. Environmental Protection Agency (U.S. EPA). 2010f. Final Rulemaking to Establish Light

Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards Regulatory Impact An alysis . EPA

- 420

- R

- 10

- 009. Office of Transportation and Air Quality. April. Available on the Internet at <http://www.epa.gov/oms/climate/regulations/420r10009.pdf>. U.S. Environmental Protection Agency (U.S. EPA). 2010g . Final Regulatory Impact Analysis (RI A) for the SO 2 

### National Ambient Air Quality Standards (NAAQS ). Office of Air Quality Planning and Standards, Research Triangle Park, NC. June. Available on the Internet at <http://www.epa.gov/ttn/ecas/regdata/RIAs/fso2ria100602full.pdf>.

U.S. Environmental Protection Agency (U.S. EPA). 2010h. Regulatory Impact Analysis for the Proposed Federal Transport Rule. Office of Air Quality Planning and Standards, Research Triangle Park, NC. July. Available at <http://www.epa.gov/ttn/ecas/regdata/RIAs/proposaltrria_f inal.pdf>.***E.O. 12866 Review

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### 5

- 25 U.S. Environmental Protection Agency (U.S. EPA). 2010i. Regulatory Impact Analysis: Amendments to the National Emission Standards for Hazardous Air Pollutants and New Source Performance Standards (NSPS) for the Portland Cement Manufacturing Ind ustry

. Office of Air Quality Planning and Standards, Research Triangle Park, NC. August. Available on the Internet at <http://www.epa.gov/ttn/ecas/regdata/RIAs/portlandcementfinalria.pdf>. U.S. Environmental Protection Agency

— Science Advisory Board (U.S. E PA

- SAB). 2004. Advisory on Plans for Health Effects Analysis in the Analytical Plan for EPA’s Second Prospective Analysis

—

Benefits and Costs of the Clean Air Act, 1990

– 2020. Advisory by the Health Effects Subcommittee of the Advisory Council on Clean Air C ompliance Analysis. EPA

- SAB

- COUNCIL

- ADV

- 04

- 002. March. Available at <http://yosemite.epa.gov/sab%5CSABPRODUCT.NSF/08E1155AD24F871C85256E540 0433D5D/$File/council_adv_04002.pdf>. U.S. Environmental Protection Agency

— Science Advisory Board (U.S. EPA

- SAB). 200 7. SAB Advisory on EPA’s Issues in Valuing Mortality Risk Reductio n. EPA

- SAB

- 08

- 001. October. Available at
< http://yosemite.epa.gov/sab/sabpr oduct.nsf/4128007E7876B8F0852573760058A978/$F ile/sab

- 08

- 001.pdf

>. U.S. Environmental Protection Agency

— Science Advisory Board (U.S. EPA

- SAB). 2009a. Review of EPA’s Integrated Science Assessment for Particulate Matter (First External Review Draft, Decembe r 2008). EPA

- COUNCIL

- 09

- 008. May. Available at
< http://yosemite.epa.gov/sab/SABPRODUCT.NSF/81e39 f4c09954fcb85256ead006be86 e/73ACCA834AB44A10852575BD0064346B/$File/EPA

- CASAC

- 09

- 008

- unsigned.pdf

>. U.S. Environmental Protection Agency

— Science Advisory Board (U.S. EPA

- SAB). 2009b. Consultation on EPA’s Particulate Matter National Ambient Air Quality Sta ndards: Scope and Methods Plan for Health Risk and Exposure Assessment . EPA

- COUNCIL

- 09

- 009. May. Available at
< http://yosemite.epa.gov/sab/SABPRODUCT.NSF/81e39f4c09954fcb85256ead006be86 e/723FE644C5D758DF852575BD00763A32/$File/EPA

- CASAC

- 09

- 009

- unsigned.pdf >. Viscusi, V.K., and J.E. Aldy. 2003. ―The Value of a Statistical Life: A Critical Review of Ma rket Estimates throughout the World.‖ Journal of Risk and Uncertainty 27(1):5

- 76.

### 6

- 1 SECTION 6

COMPARISON OF CO

- BENEFITS AND COSTS
Using a 3% discount rate, we estimate the total monetized co

- benefits of Option 1 of the Mercury Chlor Alkali NESHAP to be $22 million t o $43 million in the implementation year (2013). Using a 7% discount rate, we estimate the total monetized co

- benefits of this option to be $ 21 million to $ 40 million. The annualized social costs of th is option HAP are $13 million at a 7% interest rate. 51 

### T hus, the net benefits of this option are $ 9 million to $30 million at a 3% discount rate and $ 8 million to $2 7 million at a 7% discount rate. All estimates are in 2007$ for the year 2013.
Option 2 does not have emission reductions, thus no monetized benef its. The annualized social costs of th is option HAP are $ 25,000 at a 7% interest rate. Thus, the net benefits of this option are $

- 25,000

.
Table 6

- 1 shows a summary of the monetized co

- benefits, social costs, and net benefits for the proposed Mercury Chlo r Alkali NESHAP, respectively. Figures 6

- 1 and 6

- 2 show the full range of net benefits estimates (i.e., annual co

- benefits minus annualized costs) utilizing the 14 different PM 2.5 

### mortality functions at discount rates of 3% and 7%. It is important to emphas ize that these monetized co

- benefits do not include the benefits associated with reducing mercury emissions. EPA believes that the co

- benefits are likely to exceed the costs under this rulemaking even when taking into account uncertainties in the cost and benefit estimates.

51 For mo re information on the annualized social costs, please refer to Section 3 of this RIA.***E.O. 12866 Review

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### 6

- 2 Table 6

- 1

. Summary of the Monetized Co

- Benefits, Social Costs, and Net benefits for the

Proposed Mercury Chlor Alkali NESHAP in 2013 ( thousands of 2007$) a

3% Discount Rate 7% Discount Rate Option 1 : Non

- mercury Technology Option
Tota l Monetized Benefits b $22 ,000 to $43 ,000 $ 21,000 to $ 40,000 Total Social Costs c $13 ,000 $13 ,000 Net Benefits $ 9,000 to $30 ,000 8,000 to $ 27,000
Non

- monetized Benefits 656 pounds of mercury (including energy co

- benefits)
Health effects from NO 2 and SO 2 exposure Ecosystem effects Visibility impairment Option 2: Enhanced Work Practice Standards
Total Monetized Benefits b $0 $0
Total Social Costs c $25 $25
Net Benefits $

- 25 $

- 25

a All estimates are for the implementation year (2013), and a re rounded to two significant figures. b The total monetized co

- benefits reflect the human health co

- benefits associated with reducing exposure to PM 2.5 . It is important to note that the monetized co

- benefits include many but not all health effects associ ated with PM 2.5 exposure. It is important to note that the monetized benefits include many but not all health effects associated with PM 2.5 exposure. Benefits are shown as a range from Pope et al. (2002) to Laden et al. (2006). These models assume that all fine particles, regardless of their chemical composition, are equally potent in causing premature mortality because there is no clear scientific evidence that would support the development of differential effects estimates by particle type. CO 2 - related be nefits were calculated using the social cost of carbon (SCC)

. The net present value of reduced CO 2 emissions is calculated differently than other benefits. The same discount rate used to discount the value of damages from future emissions (SCC at 5, 3, 2 .5 percent) is used to calculate net present value of SCC for internal consistency. This table shows monetized CO 2 co

- benefits at discount rates of 3 and 7 percent that were calculated using the global average SCC estimate at a 3% discount rate because th e interagency workgroup on this topic deemed this marginal value to be the central value. In Section 5 , we also provide the monetized CO 2 co

- benefits using discount rates of 5 percent (average), 2.5 percent (average), and 3 percent (95th percentile)

.
c Th e annual compliances costs serve as a proxy for the annual social costs of this rule given the lack of difference between the two.***E.O. 12866 Review

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### 6

- 3 Figure 6

- 1

. Net Benefits for the Proposed Mercury Chlor Alkali NESHAP at 3%

Discount Rate (Option 1) a

a Net Benefits are qu antified in terms of PM 2.5 co

- benefits for implementation year (2013). This graph shows 14 benefits estimates combined with the cost estimate. All combinations are treated as independent and equally probable. All fine particles are assumed to have equivale nt health effects, but the benefit per ton estimates vary because each ton of precursor reduced has a different propensity to become PM 2.5 . The monetized co

- benefits incorporate the conversion from precursor emissions to ambient fine particles. The net ben efits at a 3% discount rate also include CO 2 - related benefits calculated using the social cost of carbon.***E.O. 12866 Review

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### 6

- 4 Figure 6

- 2

. Net Benefits for the Proposed Mercury Chlor Alkali NESHAP at 7%

Discount Rate (Option 1) a

a Net benefits are quantified in terms of PM 2 .5 co

- benefits for implementation year (2013). This graph shows 14 co

benefits estimates combined with the cost estimate. All combinations are treated as independent and equally probable. All fine particles are assumed to have equivalent health effects, bu t the benefit per ton estimates vary because each ton of precursor reduced has a different propensity to become PM 2.5 . The monetized co

- benefits incorporate the conversion from precursor emissions to ambient fine particles. This table shows monetized CO 2 c o

- benefits at discount rates of 3 and 7 percent that were calculated using the global average SCC estimate at a 3% discount rate because the interagency workgroup on this topic deemed this marginal value to be the central value.***E.O. 12866 Review

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### A

- 1 APPENDIX A: MERCURY EMISSIONS ME MO***E.O. 12866 Review

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### A

- 2 MEMORANDUM

TO: Donna Lee Jones, PhD, USEPA/OAQPS/SPPD/MMG

FROM: Phil Norwood, EC/R Incorporated

DATE: March 15, 2010

SUBJECT: Mercury Emission Reductions and Other Mercury Waste Impacts

— Conversion

from Mercury Cell Chlor

- Alkali to Membrane Cell Chlor Al kali Technology
The purpose of this memorandum is present the mercury air emission and other mercury waste impacts that would result from the conversion of the four mercury cell chlor

- alkali plants currently operating in the U.S. to non

- mercury (membrane cell) technology. These plants are ASHTA Chemicals in Ashtabula, Ohio (ASHTA), Olin Corporation in Augusta, Georgia (OLIN

GA), Olin Corporation in Charleston, Tennessee (OLIN

- TN), and PPG in New Martinsville, West Virginia (PPG). The first two sections ad dress the baseline mercury air emissions and mercury releases to other media. In the event of conversion, these routine releases would be eliminated. This is followed by a discussion of the mercury releases and mercury

- contaminated wastes that would be gen erated during the cleanup and decommissioning of the mercury cell plants. The final section summarizes these air and other media impacts.

BASELINE MERCURY AIR EMISSIONS

Table 1 shows the mercury air releases reported in EPA’s Toxics Release Inventory (TRI) for 2007 and 2008 for each of the currently operating mercury cell chlor

- alkali plants. In addition to the TRI information available online, the companies operating these four facilities provided emission estimates (which matched the totals in Table 1 rep orted to TRI) in correspondence in the summer of 2009. 52 , 53 , 54 

### Later in 2009, EPA requested documentation of these emission estimates using their authority under section 114 of the Clean Air Act. In

52 Letter. Jackson, R.L., ASHTA Chemicals Inc., to Jones, D.L., U.S. Environmental Protection Agency. RE: Docket No. EPA

- HQ

- OAR

- 2002

- 0017

— National Emission Standards for H azardous Air Pollutants: Mercury Emissions from Mercury Cell Chlor

- Alkali Plants

— ASHTA Chemicals Inc. Comments and Rebuttal on Recent EC/R Study . June 30, 2009. 53 Letter. Hall, R.K., Olin Chlor Alkali Products, to Jones, D.L., U.S. Environmental Protection Agency. June 25, 2009. 54 Letter. Smith, T.P., PPG Industries, Inc., to Jones, D.L., U.S. Environmental Protection Agency. Re: Docket No. EPA

- HQ

- OAR

- 2002

- 0017

— National Emission Standards for Hazardous Air Pollutants: Mercury Emissions from Mercury Cell Ch lor

- Alkali Plants

— Memo: ―Updated Cost Impacts Associated with the Conversion from Chlorine Production Utilizing Mercury Cell Chlor

- Alkali Technology to Membrane Cell Technology,‖ from Heather P. Brown, P.E. (EC/R Inc.) to Donna Lee Jones, PhD (USEPA), date d June 5, 2009.‖ July 13, 2009.***E.O. 12866 Review

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### A

- 3 February of 2010, this documentation was submitted to the E PA. 55 , 56 , 57 

### This information, which is available in Docket EPA

- HQ

- OAR

- 2002

- 0017, was carefully reviewed. More discussion on the conclusions of this review is provided below.

Table 1. Mercury Air Releases Reported in TRI for 2007 and 2008

Plant TRI Mercury Air Releases (pounds/yr)
2007 2008 Fugitive Stack Total Fugitive Stack Total
ASHTA 0.0 0.0 0.0 0.0 0.2 0.2
OLIN

- GA 119 5 124 77 9 86
OLIN

- TN 353 67 420 241 43 285
PPG 145 55 200 149 58 207



### Summary of Reported Facility Emissions and Supporting Information

ASHTA

As shown in Table 1, ASHTA reported no mercury releases to the air in 2007 and 0.2 pounds in 2008. In the June 30, 2009 correspondence, ASHTA submitted emission estimates for 2007 and 2008. The estimates for 2008 were consistent with thos e in the 2008 TRI. For 2007, ASTA reported 0.12 pounds of point source emissions. Consistent with the TRI, they reported ―0 (Trace) lbs./yr‖ fugitive emissions for both 2007 and 2008.
The EPA section 114 requested documentation for the point source emissi ons reported in the June 30, 2009 correspondence. It also questioned the report that the fugitive emissions are zero and requested that ASHTA provide a ―precise, substantiated, fugitive emissions estimate.‖
In their February 15, 2010 response ASHTA provide d details of the calculation of the point source (i.e., stack) emissions. ASHTA conducted emissions tests on their hydrogen and cell end box air emission streams in March 2006, and they provided a copy of the report for this

55 Letter. Jackson, R.L., ASHTA Chemicals Inc., to Jones, D.L., U.S. Environmental Protection Agency. RE: Docket Response to USEPA Questions. February 15, 2010. 56 Letter. Hall, R.K., Olin Chlor Alkali Products, to Jones, D.L. , U.S. Environmental Protection Agency. Re: Information requested pursuant to section 114 of the Clean Air Act. February 2, 2010. 57 Letter. Smith, T.P., PPG Industries, Inc., to Jones, D.L., U.S. Environmental Protection Agency. Re: Response to Request for Information under Section 114 of the Clean Air Act, 42 U.S.C. § 7414, dated December 4, 2009, with regards to the Mercury Cell Chlor

- Alkali MACT and background data to support the estimates provided to USEPA by PPG in a letter dated July 13, 2009.‖ Februa ry 18, 2010.***E.O. 12866 Review

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### A

- 4 testing. ASHTA using the period ic testing alternative to demonstrate compliance with the emission limitation for by

- product hydrogen streams and end

- box ventilation systems, which means that they perform tests three times per week. They use alternative methods for this testing which hav e been approved by EPA. Results for each of the tests conducted in 2007 and 2008 were provided, along with the 52

- week rolling average calculations.
The calculations show point source mercury emissions of 0.09 pounds in 2007 and 0.11 pounds in 2008. These estimates are lower than previously reported because the earlier estimates included emissions from a noncontact cooling tower and not from the mercury cell
process. ASHTA did not provide any fugitive emission estimates in response to EPA’s request. They in dicated that, since EPA does not have an approved method for estimating fugitive mercury emissions from a mercury cell chlor

- alkali plant, they cannot provide emission estimates. ASHTA indicated that the zero emissions levels reported were determined from the annual mercury balance, the low floor level mercury levels, and the operation of mercury control systems. They said that they are ―confident that the fugitive emissions collection system installed on the cell room removes large amounts of off

- process m ercury emissions‖ but they are ―unable to provide the level of conclusion with any direct measurements.‖ The EPA estimate of these emissions is discussed at the end of this section.

OLIN
The mercury emission estimates provided in Olin’s June 25, 2009 corre spondence for 2007 and 2008 were consistent with those reported in the TRI for both their Augusta, Georgia, and Charleson, Tennessee facilities. In their February 2, 2010 correspondence, they provided documentation for these estimates.
At both facilities, Olin utilizes continuous mercury emission monitoring systems. These units were produced by Mercury Instruments GmbH Analytical Technologies of Germany, and are equipped with factory supplied calibration gas generators. Zero calibrations are performed
every hour the units are in operation as well as span checks at least once per day. These units measure and record the mercury concentrations for both the point sources and throughout the cell rooms. Stack velocity/flow rates are monitored for the point sources , and cell room flow rates are estimates using engineering equations.
For the point sources, Olin provided daily emission results for each point source, along with detailed ten

- minute readings for representative days to illustrate how the daily emissions***E.O. 12866 Review

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### A

- 5 w ere determined. For the fugitive emissions, Olin provided daily measured concentrations, estimated flow rates, and emissions. They also provided detailed calculation sheets illustrating how the emissions were calculated.

PPG
In their July 13, 2009 correspo ndence, PPG indicated that the mercury stack air releases in the TRI include 50 pounds/yr from coal

- fired boilers at the site. Therefore, they indicated that the 2007 stack emissions from the mercury cell chlor

- alkali plant should be 5 pounds for 2007 and 8 pounds for 2008. The fugitive emission estimates reported in this correspondence were consistent with those reported to TRI for 2007 (145 pounds) and 2008 (149 pounds). Therefore, PPG’s mercury emissions from mercury cell operations total 150 pounds in 2 007 and 157 pounds in 2008.
For their three point sources (Hydrogen De

- gas inlet box ventilation system, Chlorine De

- gas end box ventilation system, and Hydrogen Purification system), PPG operates continuous mercury emission monitors to measure the mercury concentration and flow meters to monitor the flow rate. In their February 28, 2010 correspondence PPG provided daily average measured concentrations, flow rates, and emission rates for 2007 and 2008. They also provided equations illustrating the calculati ons performed.
PPG also utilizes a continuous mercury monitoring system to measure mercury concentration throughout the cell room, and estimates the flow rate from the building based on the number of roof exhaust fans operating. They provided average cell room concentrations, flow rates, and emission rates for each day in 2007 and 2008. They also provided equations illustrating the calculations performed.
PPG has entered into an agreement with the Attorney General of Maryland regarding their West Virginia f

acility. As part of this agreement, PPG will limit mercury emissions to no more than 150 pounds/yr in 2011 and 2012, and no more than 145 pounds/yr in 2013 and beyond. Therefore, in 2011 and 2012 there will be around a 2 percent decrease from the average 2 007/2008 levels and around a 6 percent decrease in 2013 and beyond.
Estimating Fugitive Emissions for ASHTA
Because ASHTA did not provide data documenting and substantiating their claim of zero fugitive emission estimates, we estimated their fugitive emiss ions since it is not reasonable to assume there are no emissions. The approach we used was to develop a fugitive emissions factor***E.O. 12866 Review

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### A

- 6 based on the amount of mercury contained in their cells. Since a previous analysis found little correlation between chlorine p roduction and fugitive mercury emissions, 58 

### this other approach was not considered viable.
We developed the emissions factor for fugitive mercury emissions based on the estimated amount of mercury in the cells for the other three facilities and used this fa ctor to estimate ASHTA’s fugitive mercury emissions. These data are shown in Table 2. The data used to calculate the average factor, at approximately 0.5 pounds of fugitive mercury emissions per year per ton of mercury in the cells, shows reasonable agreem ent between the factors developed for the three other mercury cell facilities.
At ASHTA, there are 24 mercury cells. 59 

### Multiplying this number of cells by the average factor shown in Table 2 results in an estimated fugitive mercury emission estimate of 62 p ounds per year for ASHTA. For purposes of estimating the emissions for the whole industry, this value was used for both the 2007 and 2008 in this analysis.

Table 2. Development of Fugitive Mercury Emissions Factor Based on Mercury in Cells

Plant Number

of Cells a Mercury

in Cells b (tons) Fugitive Mercury Emissions (lb/yr) Fugitive Emissions

- to
Cell Mercury Factor (lb/yr emissions per ton mercury in cells) 2007 2008 Avg
OLIN

— GA 60 298 124 86 105 0.33576
OLIN

— TN 106 527 420 284 352 0.63712
PPG

— WV 54 2 68 145 149 147 0.52229 Average 0.49839

a From 1997 Directory of Chemical Producers (Reference 60 ).
b Using a factor of 5.2 tons of mercury per cell, which is the amount of mercury in the Chlorine Institute’s 2008 process inventory (1,376 tons) divided by the number of operating cells in 2008 (264) (Reference 61 ).

58 U.S. Environmental Protection Agency, Office of Air Quality Planning and Standards, Research Triangle Park, NC. ― Summary of 2005 Cell Room Mercury Emissions Data for Occidental Chemical Company Mercury Cell Chlor

- Alkali Plants: Delaware City , Delaware and Muscle Shoals, Alabama .‖ March 2008. 59 Reference 8. 60 1997 Directory of Chemical Producers

— United States of America. Stanford Research Institute International. Menlo Park, CA. 1997. 61 The Chlorine Institute, Inc. ―Chlor

- Alkali Industry 2008. Mercury Use and Emissions in the United States (Twelfth Annual Report).‖ August 2009.***E.O. 12866 Review

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### A

- 7 Summary of Baseline Air Emissions

Table 3 summarizes the mercury emissions from the four currently operating mercury cell chlor

- alkali plants for 2007 and 2008.

Table 3. Baseline Mercury Emission L evels

Plant Mercury Emissions (pounds per year)
2007 2008 Average 2007

– 2008
Point Fugitive Total Point Fugitive Total Point Fugitive Total
ASHTA 0.09 62 62 0.11 62 62 0.10 62 62
OLIN

— GA 5 124 129 9 86 95 7 105 112
OLIN

— TN 67 420 487 43 284 327 55 352 407
PPG 5 145 150* 8 149 157* 7 147 154
Total 77 751 828 60 581 641 69 666 735

Note : PPG’s emissions is limited by a court settlement to 150 pounds per year in 2001 and 2012, and 145 pounds per year in 2013 and thereafter.



### BASELINE NONAI R MERCURY RELEASES

Table 4 shows the nonair mercury releases reported to the TRI for 2007 and 2008. These releases include the total amount of mercury released to water or land on or at a facility’s site and the amount that is transferred from a facility s ite to another site and then released to the environment via water or land. Attachment 1 includes a detailed analysis of TRI mercury release data for these four facilities.

Table 4. Total Nonair Mercury Releases Reported in the TRI

Plant Total Nonair Mercu ry Releases (pounds/year)
2007 2008 Average
ASHTA 202 179 190
OLIN

- GA 82 105 93
OLIN

- TN 414 197 306
PPG 1,408 751 1,080
Total 2,106 1,232 1,669***E.O. 12866 Review

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### A

- 8 WASTE GENERATION FRO M CLEANUP/DECOMMISSI ONING
In addition to the elimination of the routine mercury r eleases discussed above, there would be one

- time environmental impacts associated with the clean

- up and decommissioning of the mercury cell chlor

- alkali plants. The discussion and quantification of these impacts are discussed below.

When cell rooms are clo sed and decommissioned, there will be some loss of mercury to the environment. The extent of the loss will be influenced by cell room design and geographic location. However, once the cells are shut down, the cell room temperature will decrease, and the

ev aporation rate of any exposed mercury is reduced. 62 

### Therefore, we estimated that there would not be measured mercury air emissions during cleanup/decommissioning.
There is little quantitative information available to estimate the amount of mercury

containin g waste that would need to be disposed of during cleanup/decommissioning. When the Borregaard mercury cell chlor

- alkali plant in Norway was decommissioned, a large number of samples were taken to determine the quantity of mercury

- contaminated wastes. The t otal quantity of contaminated waste material was estimated at 1,750 cubic meters, of which around 55 percent was contaminated process equipment such as steel and rubber

- lined steel. 63 

### Assuming this level of waste is representative, this would mean approxima tely 7,000 cubic meters of waste could be generated during the conversion/closure of the four currently operation U.S. plants.
However, information available for the Borregaard plant provided no estimate of the mass amount of mercury in the wastes. In ord er to obtain an estimate of the potential mass, the release information in the TRI was examined for closed or converted facilities. There are six former mercury chlor

- alkali plants in the TRI that have at least five years worth of release data to analyze. For each of these facilities, the average air releases during the years prior to the last year for which release data were reported in the TRI was compared to the air releases in the last year. If those air releases in the last year were less than 50 perce nt of the average air releases for the previous years for which TRI releases were reported, it was assumed that the mercury cell plant had ceased operations during that year and was in the process of cleanup/decommissioning. For those situations, the ratio of the offsite transfers during that year was calculated to represent an estimate of the amount that offsite transfers could increase during cleanup/decommissioning. This information is summarized in Table 5.

62 European Commission. Integrated Pollution Prevention and Control (IPPC). Reference Document on Best Available Techniques in the Chlor

- Alkali Manufacturing Industry. De cember 2001. p. 96 63 Reference 11, pp. 93, 97.***E.O. 12866 Review

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### A

- 9 Table 5. Summary of TRI Information Used to E stimate Mercury

Cleanup/Decommissioning Wastes

Plant Last

Yr Air Mercury Releases

(pounds/yr) Offsite Mercury Transfers (pounds/yr)

Avg a Last Yr Last

Year ÷ Avg Avg a Last Yr Last Year ÷ Avg
Westlake Calvert City, KY 2002 983 6 1% 10,108 27,777 275%

Occidental Muscle Shoals, AL 2008 667 322 48% 4,405 12,806 291%

Occidental New Castle, DE 2008 649 0.4 0% 3,166 16,520 522%

Holtrachem Orrington, ME 1999 660 116 18% 2,103 1,612 77%

Holtrachem Reigelwood, NC 1999 1,176 328 28% 171 176 103%

PPG Wes tlake, LA 2005 997 1,211 121% b b b

Average 253%

a Avg = average of all years for which data were reported except for the last year.
b Since the air releases in the last reporting year were greater than 50 percent of the average for the previous years, it was assumed that the plant was operating during this year and the offsite transfers did not represent cleanup/decommissioning activities.


### In order to estimate the mercury contaminated wastes that would be generated during cleanup/decommissioning and tra nsferred offsite for the four currently operating mercury cell chlor

- alkali plants, the average level of nonair releases for reported for all years of operation are multiplied by 253 percent. These estimates are shown in Table 6.
Therefore, it is estimated that the closure/conversion of the four currently operating mercury cell chlor

- alkali plants in the U.S. could result in the generation of around 7,000 cubic meters of hazardous wastes containing over 6 tons of mercury. Given the unique aspects of each

me rcury cell plants, the extreme paucity of specific data on the wastes generated during mercury cell closures/conversions, and the major assumptions in this analysis, there is significant uncertainty in these estimates.***E.O. 12866 Review

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### A

- 10 Table 6. Estimated Cleanup/Decommissi oning Wastes for Mercury Cell Plants

Plant Average Reported Nonair Releases

Over All Years (pounds/yr) Estimated Cleanup/ Decommissioning Wastes (pounds/yr)
ASHTA 620 1,571
OLIN

— GA 1,264 3,203
OLIN

— TN 1,364 3,457
PPG 1,651 4,185
TOTAL 12,416



### SUMMAR

Y
If the four currently operating mercury cell chlor

- alkali plants converted to membrane processes, the result would be the elimination of mercury emissions, the elimination of mercury releases to the water and other media, and the termination of the creat ion of mercury

contaminated wastes from the routine operation of the mercury cells. As discussed above, the estimated levels of these routine releases are:

 

### Mercury air emissions of between 600 and 800 pounds per year.

 

### Nonair mercury releases of between 1,2 00 and 2,000 pounds per year.
During the cleanup and decommissioning, there will be mercury

- contaminated wastes that will be created and that will need to be treated. A rough estimate is approximately 7,000 cubic meters of waste created during this process that contains over six tons (12,000 lb) of
mercury.***E.O. 12866 Review

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### A

- 11 ATTACHMENT 1 Detailed Analysis of Toxic Release Inventory (TRI) Data

# E C 

# / R Incorporated Providing Environmental Technical Support Since 1989

501 Eastowne Drive, Suite 25 0  Chapel Hill, North Carolina 2751 4 Telephone: (919) 484

- 0222  Fax: (919) 484

- 0122 

### MEMORANDUM

DATE: January 5, 2010

SUBJECT: Summary of Mercury Cell Chlor

- Alkali Plant Mercury Releases Reported in the

Toxics Rel ease Inventory (TRI)

FROM: Phil Norwood, EC/R

TO: Dr. Donna Lee Jones, EPA/OAQPS/SPPD/MMG
The purpose of this memo is to present mercury release information from EPA’s Toxics Release Inventory (TRI) ( http://www.ep a.gov/tri/ ) from the four currently operating mercury cell chlor

- alkali plants in the U.S. These plants are ASHTA Chemicals in Ashtabula, Ohio (ASHTA), Olin Corporation in Augusta, Georgia (OLIN

- GA), Olin Corporation in Charleston, Tennessee (OLIN

- TN), an d PPG in New Martinsville, West Virginia (PPG). In addition to presenting historical release information, the final section presents what are estimated to be ―typical‖ annual levels of Nonair mercury releases that would be eliminated in the event that thes e facilities ceased to operate.

TRI MERCURY RELEASE INFORMATION
These four mercury cell chlor

- alkali plants have been operating since the 1970s. The TRI contains mercury release data beginning in 1988. Attachment 1 contains annual release information for e ach of the four plants for the 21 years from 1988 to 2008. Table 1 shows the sum of the average annual releases from these four plants for the entire 21

- year period, the most recent ten years (1999

– 2008), and the most recent two years (1997 and 1998), and Figure 1 shows the 21 year trends for total mercury releases for each of the four plants. Table 2 provides more detailed plant

- specific averages. As can be seen in Tables 1 and 2, Figure 1, and Attachment A, mercury releases from these four mercury cell ch lor

- alkali plants have steadily decreased in the 21 year period from 1988 to 2008.
There appears to be an anomaly in the offsite releases for the PPG facility in 2001 (see Figure 1 and Attachment A). In 2001, PPG reported almost 17,000 pounds released offs ite (While not shown in the table, the specific release reported was attributed to ―Offsite Landfill/Surface Impoundment). This value is over 12 times higher than the next highest level of offsite mercury release for any year in the 10

- year period. We beli eve it is reasonable to assume***E.O. 12866 Review

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### A

- 13 the activities in 2001 that resulted in this large release represent a unique and nonroutine event. Therefore, the PPG average release for the period 1999

– 2008 was calculated excluding the 2001 values, and a separate total of the plant

- specific averages calculated. This was shown in Table 2. Therefore, both the 10

- year total and the 2007

– 2008 total Nonair releases were just under 2,000 pounds per year.

Table 1. Total Average Mercury Releases from Mercury Cell Chlor

- Alkali Plan ts

Period Sum of Average Mercury Releases (pounds/yr)
Total Releases Total Air Releases Total Nonair Releases
1988

– 2008 9,410 4,510 4,900 1999

– 2008 6,839 3,459 3,380
2007

– 2008 2,331 661 1,669

Note : These plants are ASHTA Chemicals in Ashtabula, Ohio (ASHTA), Olin Corporation in Augusta, Georgia (OLIN

- GA), Olin Corporation in Charleston, Tennessee (OLIN

- TN), and PPG in New Martinsville, West Virginia (PPG).***E.O . 12866 Review

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A
- 14



### Table 2. Average Mercury Release Values***E.O . 12866 Review

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A
- 15 Average Mercury Releases (pounds/yr) Total (On & Off Site) Total Nonair

(On & Off Site) Onsite Air Onsite Nonair Onsite Water Offsite 21

- Year Average (1988

– 2008) ASHTA 1,875 620 1,255 102 2 518 OLIN

– GA 2,263 1,264 1,000 10 10 1,254 OLIN

– TN 2,583 1,364 1,218 1,333 21 31 PPG 2,689 1,651 1, 037 60 59 1,591 Total of Averages 9,410 4,900 4,510 1,505 92 3,394 Total of Averages (excluding PPG 2001) 8,646 4,148 4,498 1,507 94 2,641 10

- Year Average (1999

– 2008) ASHTA 1,096 212 885 0 0 212 OLIN

– GA 761 106 655 10 10 96 OLIN

– TN 1,716 648 1,068 584 11 64 PPG 3,265 2,414 852 27 25 2,387 Total of Averages 6,839 3,380 3,459 621 46 2,759 Total of Averages (excluding PPG 2001) 5,207 1,794 3,413 621 46 1,173 2007

– 2008 Average ASHTA 191 190 0 0 0 190 OLIN

- GA 199 93 105 11 11 82 OLIN

- TN 658 306 352 305 7 1 PPG 1,283 1,080 204 23 23 1,057 Total 2,331 1,669 661 340 41 1,329***E.O . 12866 Review

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A
- 16 

### ATTACHMENT A. Annual Mercury Release Data from TRI 1988

– 2008

Facility Year Mercury Releases Reported in TRI (pounds/yr)
Onsite Releases

Off Site Releases Tot al

Releases (On & Off Site) Total Nonair

Releases (On & Off Site) Total Onsite Releases Fugitive

Air Stack

Air Total Air Onsite

Nonair Water Land
ASHTA 1988 1,569 1,046 516 1,562 7 6 1 1,877 3,446 1,884
ASHTA 1989 1,303 1,046 250 1,296 7 6 1 2,215 3,518 2,222
ASHTA 1990 1,804 1,046 750 1,796 8 6 2 0 1,804 8
ASHTA 1991 1,306 1,046 250 1,296 10 5 5 978 2,284 988
ASHTA 1992 1,653 1,046 595 1,641 12 7 5 792 2,445 804
ASHTA 1993 1,652 1,046 596 1,642 10 5 5 551 2,203 561
ASHTA 1994 2,871 1,046 614 1 ,660 1,211 6 1,205 1,177 4,048 2,388
ASHTA 1995 2,530 1,046 608 1,654 876 5 871 0 2,530 876
ASHTA 1996 1,658 1,046 607 1,653 5 5 0 524 2,182 529
ASHTA 1997 1,654 1,046 607 1,653 1 1 0 347 2,001 348
ASHTA 1998 1,653 1,046 607 1,653 0 0 0 297 1,950 297
ASHTA 1999 1,653 1,046 607 1,653 0 0 0 242 1,895 242
ASHTA 2000 1,390 1,046 344 1,390 0 0 0 219 1,609 219
ASHTA 2001 1,396 1,046 350 1,396 0 0 0 100 1,496 100
ASHTA 2002 1,395 1,046 349 1,395 0 0 0 173 1,568 173
ASHTA 2003 1,383 1,046 337 1,383 0 0 0 1 28 1,511 128
ASHTA 2004 813 464 349 813 0 0 0 134 947 134
ASHTA 2005 813 464 349 813 0 0 0 434 1,247 434
ASHTA 2006 2 0 2 2 0 0 0 306 308 306
ASHTA 2007 0 0 0 0 0 0 0 202 202 202***E.O . 12866 Review

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- 17 

### ATTACHMENT A. Annual Mercury Release Data from TRI 1988

– 2008

Facility Year Mercury Releases Reported in TRI (pounds/yr)
Onsite Releases

Off Site Releases Tot al

Releases (On & Off Site) Total Nonair

Releases (On & Off Site) Total Onsite Releases Fugitive

Air Stack

Air Total Air Onsite

Nonair Water Land
ASHTA 2008 0 0 0 0 0 0 0 179 179 179
OLIN

- GA 1988 1,329 1,048 271 1,319 10 10 0 6,014 7,343 6,024
OLIN

- GA 1989 1,327 1,046 271 1,317 10 10 0 2,129 3,456 2,139
OLIN

- GA 1990 1,331 1,046 271 1,317 14 14 0 4,730 6,061 4,744
OLIN

- GA 1991 1,285 1,000 270 1,270 15 15 0 5,740 7,025 5,755
OLIN

- GA 1992 1,329 1,046 271 1,317 12 12 0 5,933 7,262 5,945
OLIN

- GA 1993 1,324 1,046 271 1,317 7 7 0 712 2,036 719
OLIN

- GA 1994 1,328 1,046 271 1,317 11 10 1 23 1,351 34
OLIN

- GA 1995 1,325 1,046 271 1,317 8 8 0 23 1,348 31
OLIN

- GA 1996 1,324 1,046 271 1,317 7 7 0 8 1,332 15
OLIN

- GA 1997 1,32 3 1,046 271 1,317 6 6 0 5 1,328 11
OLIN

- GA 1998 1,326 1,046 271 1,317 9 9 0 50 1,376 59
OLIN

- GA 1999 1,245 1,046 189 1,235 10 10 0 23 1,268 33
OLIN

- GA 2000 730 562 157 719 11 11 0 21 751 32
OLIN

- GA 2001 773 608 158 766 7 7 0 39 812 46
OLIN

- GA 2002 746 585 154 739 7 7 0 282 1,028 289
OLIN

- GA 2003 742 563 169 732 10 10 0 114 856 124
OLIN

- GA 2004 753 563 182 745 8 8 0 36 789 44
OLIN

- GA 2005 835 563 261 824 11 11 0 136 971 147
OLIN

- GA 2006 591 493 86 578 13 13 0 149 740 162***E.O . 12866 Review

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A
- 18 

### ATTACHMENT A. Annual Mercury Release Data from TRI 1988

– 2008

Facility Year Mercury Releases Reported in TRI (pounds/yr)
Onsite Releases

Off Site Releases Tot al

Releases (On & Off Site) Total Nonair

Releases (On & Off Site) Total Onsite Releases Fugitive

Air Stack

Air Total Air Onsite

Nonair Water Land
OLIN

- GA 2007 138 119 5 124 14 14 0 68 206 82
OLIN

- GA 2008 96 77 9 87 9 9 0 96 192 105
OLIN

- TN 1988 4,421 1,046 282 1,328 3,093 26 3,067 0 4,421 3,093
OLIN

- TN 1989 5,750 1,045 249 1,294 4,456 25 4,431 0 5,750 4,456
OLIN

- TN 1990 5,236 1,045 240 1,285 3,951 25 3,926 5 5,241 3,956
OLIN

- TN 1991 3,780 1,045 378 1,423 2,357 22 2,335 12 3,792 2,369
OLIN

- TN 1992 4,353 1,045 180 1,225 3,128 17 3,111 3 4,356 3,131
OLIN

- TN 1993 2,777 1,045 192 1,237 1,540 26 1,514 0 2,777 1,540
OLIN

- TN 1994 1,704 1,045 464 1,509 195 53 142 0 1,704 195
O LIN

- TN 1995 1,719 1,045 488 1,533 186 43 143 0 1,719 186
OLIN

- TN 1996 1,868 1,045 249 1,294 574 40 534 0 1,868 574
OLIN

- TN 1997 2,165 1,045 428 1,473 692 31 661 0 2,165 692
OLIN

- TN 1998 3,279 1,045 255 1,300 1,979 15 1,964 0 3,279 1,979
OLIN

- TN 1999 2, 640 1,045 584 1,629 1,011 13 998 0 2,640 1,011
OLIN

- TN 2000 2,185 1,045 369 1,414 771 7 764 1 2,186 772
OLIN

- TN 2001 2,126 1,045 85 1,130 996 8 988 0 2,126 996
OLIN

- TN 2002 2,137 1,045 85 1,130 1,007 14 993 375 2,512 1,382
OLIN

- TN 2003 1,711 1,046 85 1 ,131 580 18 562 26 1,737 606
OLIN

- TN 2004 1,455 1,049 105 1,154 301 14 287 30 1,485 331
OLIN

- TN 2005 1,517 1,046 204 1,250 267 12 255 5 1,522 272***E.O . 12866 Review

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- 19 

### ATTACHMENT A. Annual Mercury Release Data from TRI 1988

– 2008

Facility Year Mercury Releases Reported in TRI (pounds/yr)
Onsite Releases

Off Site Releases Tot al

Releases (On & Off Site) Total Nonair

Releases (On & Off Site) Total Onsite Releases Fugitive

Air Stack

Air Total Air Onsite

Nonair Water Land
OLIN

- TN 2006 1,440 1,032 109 1,141 299 13 286 198 1,638 497
OLIN

- TN 2007 834 353 67 420 414 8 406 0 834 41 4
OLIN

- TN 2008 481 241 43 285 196 6 191 1 482 197
PPG 1988 1,500 1,000 250 1,250 250 250 0 4,300 5,800 4,550
PPG 1989 1,500 1,000 250 1,250 250 250 0 750 2,250 1,000
PPG 1990 1,500 1,000 250 1,250 250 250 0 250 1,750 500
PPG 1991 1,145 1,000 85 1,085 60 60 0 1,800 2,945 1,860
PPG 1992 1,163 1,045 85 1,130 33 33 0 250 1,413 283
PPG 1993 1,152 1,045 85 1,130 22 22 0 1,340 2,492 1,362
PPG 1994 1,256 1,045 193 1,238 18 18 0 230 1,486 248
PPG 1995 1,266 1,045 192 1,237 29 29 0 250 1,516 279
PPG 1996 1, 275 1,045 190 1,235 40 40 0 191 1,466 231
PPG 1997 1,254 1,045 188 1,233 21 21 0 102 1,356 123
PPG 1998 1,258 1,045 189 1,234 24 24 0 80 1,338 104
PPG 1999 1,254 1,045 187 1,232 22 22 0 62 1,316 84
PPG 2000 1,239 1,045 182 1,227 12 12 0 93 1,332 105
P PG 2001 1,301 1,045 227 1,272 29 29 0 16,658 17,959 16,687
PPG 2002 1,267 1,045 188 1,233 34 34 0 900 2,167 934
PPG 2003 1,238 1,045 177 1,222 16 16 0 1,130 2,368 1,146
PPG 2004 1,248 1,045 171 1,216 32 32 0 1,145 2,393 1,177***E.O . 12866 Review

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A
- 20 

### ATTACHMENT A. Annual Mercury Release Data from TRI 1988

– 2008

Facility Year Mercury Releases Reported in TRI (pounds/yr)
Onsite Releases

Off Site Releases Tot al

Releases (On & Off Site) Total Nonair

Releases (On & Off Site) Total Onsite Releases Fugitive

Air Stack

Air Total Air Onsite

Nonair Water Land
PPG 2005 425 169 231 400 2 5 25 0 657 1,082 682
PPG 2006 356 172 134 306 50 34 0 1,115 1,471 1,165
PPG 2007 230 145 55 200 30 30 0 1,378 1,608 1,408
PPG 2008 223 149 58 207 16 16 0 735 958 751***E.O . 12866 Review

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### B

- 1 APPENDIX B: EMISSIONS REDUCTIONS ASSOCIATED WITH REDU CED MERCURY CELL

CHLOR

- ALKALI PLANT ELECT RICITY CONSUMPTION
As discussed in Section 3 of the RIA, EPA analysis estimates that electricity requirements may be 700 to 1,211 kWh per short ton of chorine lower after conversion, which corresponds to a 22% and 37.5% reduction in electricity consumption , respectively. 64 

### Using the range of estimates and plant chlorine capacities, EPA calculated changes in the annual electricity consumption for four chlorine plants: OLIN Corporation (facilities in Augusta, GA and Charleston, TN), PPG Industries (New Martins ville, WV), and ASHTA Chemicals (Ashtabula, OH). This corresponds to a reduction of approximately 350 million kilowatt hours per year of reduced electricity consumption associated with converting the four existing mercury chlor

- alkali plants to membrane ce lls.
Due to transmission and distribution losses, electrical generating units (EGU) supplying the electricity grid need to generate more electricity (and emissions) to meet each plant’s electricity consumption. EPA has assumed approximately 10% of power is lost during transmission and distribution. This factor is commonly used to approximate losses and selected using professional judgment. To account for the possible losses and convert consumption changes to equivalent electricity generation changes, we div ided the kWh consumption reductions by 0.9 (electricity generated = electricity consumed / (1

- fraction transmission and distribution loss)) (Table B

- 1). Therefore, the total amount of reduced electricity generation associated with converting the four exist ing mercury chlor

- alkali plants to membrane cells is estimated to be 375 million kilowatt hours per year. Depending on assumed capacity factors, this is approximately equivalent to the electricity produced annually by a 40 to 60 megawatt power plant.

B.1 Share of Electricity Generation by Fuel Type EPA recognizes there are alternative methods for determining electricity generation by fuel type (i.e., the fuel mix that produced the electricity). As a result, we have documented the results and sources of the information to allow comparisons with the other methods (e.g., use of NERC region electricity grid generation statistics by fuel type). EPA’s analysis reviewed the

64 As discussed in Section 3, EPA believe s that the 22 percent electricity reduction represents is the best estimate of reduced electricity demand, but we provide estimates based on the 37.5 percent electricity reduction to represent the data provided by Oceana.***E.O . 12866 Review

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### B

- 2 Table B

- 1. Estimated Changes in Electricity Generation

Change in Electricity Generation (kWh) for a

Chlorine Plant Assumed Electricity Provider Capacity 22 % Consumption reduction a 37.5 %

consumption reduction b OLIN Corp. (Augusta, GA) Southern Company 47,421 36,883,000 63,807,590 OLIN Corp. (Charleston, TN) TVA 119,031 92,579,667 160,1 62,823 PPG Industries (New Martinsville, WV) American Electric Power 262,451 189,839,557 c 328,422,433 c

ASHTA Chemicals (Ashtabula, OH) First Energy 72,848 56,659,556 98,021,031
Total 375,961,779 650,413,877

a Electricity Consumption = Capacity (tpy) × 700 (kwh/ton) / (0.9).
b Electricity Consumption = Capacity (tpy) × 1,211 (kwh/ton) / (0.9).

c PPG produces 70 percent of its electricity requirements. The remaining 30 percent is purchased from Wheeling Electric Co., a subsidiary of American Electric P ower. 

### location for the four facilities and used the Homeland Security Information Program (Gold), a multiple layer geospatial database, to identify the two closest power plants and companies (DHS, 2009). 65 

### Using physical location information and engineering assessments EPA selected a power company that most likely provides the electricity to each plant (Table B

- 1, Column 2). In the case of PPG Industries New Martinsville, WV facility generates 70% of their electricity demand. Therefore, EPA assumes only 30% of the plant’s electricity requirements are provided by another power company.

B.2 Electricity Generation by Fuel For each power company, the share of electricity generation provided by fuel type is reported in Table B

- 2. EPA collected the latest historic al information (2009) from electricity provider websites including annual reports 66 

### and the engineering assessment considers it representative for the analysis year (2013) and the fuel mix of the electricity generated to meet the chlorine plants electricity requirements.

65 http://proceedings.esri.com/library/userconf/feduc08/papers/hifld_hsip_overview_esri_feduc_feb_2008_jms.pdf 66 American Electric Power.,(2009), First Energy (2009), Southern Company (2009). And the Tenn essee Valley Authority (2009).***E.O . 12866 Review

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### B

- 3 Table B

- 2. Share of Electricity Generation by Fuel 2009

Utility Coal Gas Nuclear Hydro Purchased Southern Company 57% 23% 16% 4% NA
TVA 46% 2% 23% 7% 13%
American Electric Power 88% 6% 5% 1% NA First Energy 54% 12% 29% 3% NA



### B.3 Emissi on Factors EPA’s eGRID2007 Version 1.1 provided pollutant emission factors (e.g., short tons per kWh) for several pollutants, including NO X 

### , SO 2 

### , CO 2 

### , and Hg, from EGUs in the U.S. (U.S. EPA, 2008). 67 

### The emissions data contained within eGRID2007 Version 1. 1 represents the year 2005 and also includes operator, parent company, owner, and electric grid configuration as of December 31, 2007. It is the latest version available. eGRID2010 covering year 2007 data is expected to be published at the end of 2010. We applied the appropriate conversion factors to eGRID2007’s reported power company emissions factors in common units (short tons) (Table B

- 3 and Table B

- 4). The emissions data contained within eGRID reflect EPA’s Emissions Tracking System/Continuous Emission s Monitoring data. 

### The engineering assessment considers the emissions factors representative and reasonable for the analysis given the physical location of chlorine plants and the power companies and the power companies fuel mix used to meet it customer’s electricity requirements.

67 The Emissions & Generation Resource Integrated Database (eGRID) is a comprehensive inventory of environmental attributes of electric power systems. The preeminent source of air emissions data for the electric power sector, eGRID is based on available plant

- specific data for all U.S. electricity generating plants that provide power to the electric grid and report data to the U.S. government. eGRID integrates many different federal data sources on power plants and power compan ies, from three different federal agencies: EPA, the Energy Information Administration (EIA), and the Federal Energy Regulatory Commission (FERC). Emissions data from EPA are carefully integrated with generation data from EIA to produce useful values like pounds per megawatt

- hour (lb/MWh) of emissions, which allows direct comparison of the environmental attributes of electricity generation. eGRID also provides aggregated data by state, U.S. total, company, and by three different sets of electric grid bounda ries. For more information on eGRID, please see http://www.epa.gov/cleanenergy/energy

- resources/egrid/index.html***E.O . 12866 Review

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### B

- 4 Table B

- 3. Power Company Emission Factors: Fuel=Coal (Short tons per kWh)

Power Company NO X SO 2 CO 2 Hg
American Electric Power Co 1.72E

- 06 5.71E

- 06 9.71E

- 04 2.96E

- 11 First Energy Corp 1.64E

- 06 6.41E

- 06 1.03E

- 03 3.76E

- 11
Souther n Company Services Inc 1.39E

- 06 6.41E

- 06 1.03E

- 03 2.60E

- 11 Tennessee Valley Authority 1.89E

- 06 4.50E

- 06 1.07E

- 03 2.15E

- 11



### Table B

- 4. Power Company Emission Factors: Fuel=Natural Gas (Short tons per kWh)

Power Company NO X SO 2 CO 2 American Electric Power Co 1.48E

- 06 9.15E

- 09 6.30E

- 04 First Energy Corp 1.73E

- 07 2.45E

- 08 5.70E

- 04 Southern Company Services Inc 1.23E

- 07 2.68E

- 08 4.66E

- 04 Tennessee Valley Authority 1.14E

- 07 2.80E

- 09 4.86E

- 04



### Emission factors could not be identified for PM 2.5, 

### NH 3 

### , and VOC s in eGRID. As a result, EPA calculated the emission factors using information from two different sources. The first source, Co

- Benefits Risk Assessment model (COBRA), provided total U.S. emissions estimates by fuel type and by pollutant for 2010 (U.S. EPA , 2009). 68 

### The model contains detailed emissions estimates projected for the years 2010 and 2015 that were developed by EPA for its 2005 regulatory analysis of the Clean Air Interstate Rule (CAIR) (U.S. EPA, 2005). Emissions data undergoes quality assurance at both the state and federal level.
The second source, the EIA’s Annual Energy Outlook 2009 (Table 8), reports electricity supply, disposition, prices, and emissions and provides 2010 electricity generation (billion kWh) by fuel. EPA calculated emission factors by fuel type by dividing COBRA emissions estimates by the Energy Information Administration’s (EIA) electricity generation estimates (Table B

- 5) (EIA, 2009).

68 The Co

– Benefits Risk Assessment (COBRA) screening model is a stand

– alone Windows application that enables policy analysts to quickly obtain a first

– order approximation of the costs and benefits of different emission scenarios and to compare outcomes in terms of changes in ambient particulate matter (PM) concentrations, related health effects, and monetary impacts. For more information on COBRA, please see http://www.epa.gov/statelocalclimate/resources/cobra.html***E.O . 12866 Review

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### B

- 5 Table B

- 5. Emission Factor Calculations: 2010

Variable Coal Gas Petroleum Generation (bi llion kWh) AEO 2009 Electricity 2,057 814 56 Emissions (Short tons) COBRA Model
PM 2.5 506,294 6,696 17
NH 3 390 1,762 0
VOC 36,135 5,360 0

Emission Factor (Short tons per kWh) EPA Calculations
PM 2.5 2.46E

- 07 8.22E

- 09 3.02E

- 10
NH 3 1.90E

- 10 2.16E

- 09 0
VOC 1.76E

- 08 6.58E

- 09 0



### B.4 Emissions Reductions Emission reductions were calculated in three steps. First, we allocate each change in electricity generation (Table B

- 1) by fuel source using the share data (Table B

- 2). The engineering assessment conc luded it was reasonable to assume electricity demand declines proportionally for all fuel types. In reality, power companies would presumably reduce generation at the EGU with the highest average production costs. However, data was not available to refine the analysis. Next, we multiplied the generation reduction by fuel by the appropriate fuel emission factors (Tables B

- 3, B

- 4, B

- 5). Since the reductions in kWh requirements per ton of chlorine is uncertain, EPA considered two scenarios: a 22% reduction (Ta ble B

- 6) and 37% reduction (Table B

- 7).
It is important to note that we assume that these emission reductions occur across the multiple EGUs associated with the presumed electricity provider. Although we identify the location of the mercury chlor alkali pl ant that would consume less electricity in the tables below, those locations do not reflect the location of the emission reductions from the EGUs. Because the emission reductions occur across multiple EGUs over a large geographic area, these estimates are representative of regional emission reductions.***E.O . 12866 Review

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### B

- 6 Table B

- 6. Emission Reductions by Plant (22 percent reduction)

Emission Sources (Short Tons)
Chlorine Plant PM 2.5 NH 3 VOC NO X SO 2 CO 2 Hg OLIN Corp. (Augusta, GA) 5.2 0.02 0.4 30.2 135.0 25,508 0.001
OLIN Corp. (Charleston, TN) 10.5 0.01 0.8 80.7 191.4 46,400 0.001 PPG Industries (New Martinsville, WV) 45.1 0.04 3.2 320.5 1,045.0 179,882 0.005

ASHTA Chemicals (Ashtabula, OH) 7.6 0.02 0.6 51.3 196.4 35,207 0.001

Total 68.4 0.10 5.0 482.6 1,567.8 286,997 0.008



### Table B

- 7. Emission Estimates by Plant (37 percent reduction)

Emission Sources (Short Tons)
Chlorine Plant PM 2.5 NH 3 VOC NO X SO 2 CO 2 Hg OLIN Corp. (Augusta, GA) 9.1 0.04 0.7 52.2 233.5 44,129 0.001 OLIN Corp. (Charleston, TN) 18.2 0.02 1.3 139 .6 331.2 80,272 0.002 PPG Industries (New Martinsville, WV) 78.0 0.07 5.6 554.4 1,807.8 311,195 0.009

ASHTA Chemicals (Ashtabula, OH) 13.1 0.03 1.0 88.8 339.7 60,907 0.002

Total 118.3 0.17 8.7 835.0 2,712.3 496,504 0.014



### B.5 Uncertainties This appendi x provides sufficient documentation to reproduce the calculations of emission reductions anticipated to occur as a result of this proposed regulation. In any complex analysis, there can be many sources of uncertainty that could affect the results, especial ly if the analysis involves predicting future behaviors. In addition, there are always analytical choices that could have incorporated alternate assumptions. Below, we include a qualitative discussion of some of the main sources of uncertainty, including t he direction and general magnitude of the potential bias to the extent feasible given data limitations.***E.O . 12866 Review

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### B

- 7  

### There are several uncertainties associated with the estimate of reduced electricity demand. As shown in this appendix, assuming a 37.5% reduction as sug gested by Oceana would nearly double the magnitude of the emission reductions.

 

### EPA has assumed a 10 percent transmission and distribution loss factor. In 2007, the national average transmission loss was 6.5%, but varied by state (EIA, 2008). Using the EIA reported value lowers emission reductions by approximately 2 percent.

 

### The underlying historical data from analyses/models represent different points of time (between 2005 and 2010). EPA has assumed they are reasonable representations of the analysis year (2013). To our knowledge, forecasts of portfolio mixes and emission factors for the analysis year are not readily available. Although it is possible that current year or projected data may more accurately reflect the regulatory scenario, this analysis is b ased on the best available data.

 

### There are a variety of sources of uncertainty implicit within the emissions factors, including changes over time. For example, new emissions reduction technologies may be introduced earlier than planned and reduce emission factors. Other regulations on EGUs may result in lower emissions factors in the future. In contrast, higher natural gas prices relative to fuels like coal may change power company generation portfolios with higher emission rates. To the extent the emissio ns factors are higher than those used, the current analysis understates emissions reductions. In contrast, if the emissions factors are lower, the current analysis overstates emissions reductions.

 

### Since NOx and SO2 are covered by capped emissions trading programs, we're only estimating Pm2.5 emission reductions from reduced electricity demand.

 

### The analysis of energy savings assumes that the four facilities all convert rather than close. If one or more were to close, the reduction in electricity use would b e greater at the facility (e.g., rather than a 22% reduction for the process there would be a 100% reduction). However, if the facility closing no longer provided chlorine and caustic, most of it would be produced elsewhere with an associated increase in e lectricity use in another place. Since this would have to be at a facility that uses a process similar to the one the closing facility would have converted to, the national electricity savings would be expected to be similar for either conversion or closur e although the resulting pollution reductions would differ spatially. If closure of the process led to closing other processes being produced at the same facility, the same reasoning would apply. Therefore, it is likely that in the event of closure, the em issions reductions would be similar. However if prices increased as a result closure and overall quantities decreased then emission reductions would have been underestimated by the amount of emissions associated with the reduced production.***E.O . 12866 Review

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### B

- 8  

### There are other pre

- existing conditions in electricity markets such as taxes and imperfect competition and taxes. EPA has only accounted for the externality associated with selected pollutant emissions reductions. While these other factors may influence benefit

- cost anal ysis, we believe that they are likely to be small compared to the health effects associated with the emissions from the pollutants considered in the analysis.

B.6 References American Electric Power. 2009. Available on the internet at http://www.aep.com/in vestors/edgar/docs/AEP_10K_2009.pdf First Energy. 2009. Available on the internet at http://investors.firstenergycorp.com/phoenix.zhtml?c=102230&p=irol

- sec10k Southern Company. 2009. Available on the internet at http://www.southerncompany.com/sotogo/SOtoGo .pdf Tennessee Valley Authority. 2009. Available on the internet at http://www.tva.com/finance/reports/pdf/fy2009ar.pdf U.S. Department of Homeland Security. Homeland Security Information Program Gold (HSIP Gold), Version 2 (April 2007) U.S. Energy Informa tion Administration. 2008. State Electricity Profiles. Table 10. Available on the internet at http://tonto.eia.doe.gov/ftproot/electricity/stateprofiles/07st_profiles/062907.pdf U.S. Energy Information Administration. 2009. Supplemental Tables to the Annua l Energy Outlook 2010. Table 2. Available on the internet at http://www.eia.doe.gov/oiaf/aeo/aeoref_tab.html U.S. Environmental Protection Agency (U.S. EPA). 2005. Clean Air Interstate Rule Emissions Inventory Technical Support Document. Office of Air Qual ity Planning and Standards. March. Available on the internet at http://www.epa.gov/CAIR/pdfs/finaltech01.pdf U.S. Environmental Protection Agency (U.S. EPA). 2008. The Emissions and Generation Resource Integrated Database for 2007 (eGRID2007) Technical Su pport Document. Office of Atmospheric Programs Climate Protection Partnerships Division. November. Available on the internet at http://www.epa.gov/cleanenergy/documents/egridzips/eGRID2007TechnicalSupportDoc ument.pdf U.S. Environmental Protection Agency (U .S. EPA). 2009. User’s Manual for the Co

- Benefits Risk Assessment (COBRA) Screening Model. Climate Protection Partnerships Division State and Local Climate and Energy Programs. November. Available on the internet at http://www.epa.gov/statelocalclimate/doc uments/pdf/COBRA_manual.pdf***E.O. 12866 Review

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EO12866_Mercury Emissions from Mercury Cell Chlor

‐ Alkali Plants 2060

‐ AN99 NPRM RIA_20101210



### 6560-50-P **ENVIRONMENTAL PROTECTION AGENCY**

**40 CFR Part 63**
**[EPA-HQ-OAR-2002-0017; FRL-** ]

**RIN 2060-AN99**

**National Emission Standards for Hazardous Air Pollutants:**

**Mercury Emissions from Mercury Cell Chlor-Alkali Plants**

**AGENCY:** Environmental Protection Agency (EPA).

**ACTION:** Supplemental proposed rule.

**SUMMARY:** This action proposes amendments to the national
emission standards for hazardous air pollutants (NESHAP) for
mercury emissions from mercury cell chlor-alkali plants (Mercury
Cell NESHAP). On June 11, 2008, EPA proposed amendments to this
NESHAP in response to a petition for reconsideration filed by
the Natural Resources Defense Council (NRDC). This action is a
supplement to the June 11, 2008, proposal. Specifically, this
action proposes two options for amending the NESHAP for mercury
emissions from mercury cell chlor-alkali plants. The first
option would require the elimination of mercury emissions and
thus encourage the conversion to non-mercury technology. The
second option would require the measures proposed in 2008.
These measures, which included significant improvements in the
work practices to reduce fugitive emissions from the cell room,***E.O. 12866 Review

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### Page 2 of 136 would result in near-zero levels of mercury emissions while
still allowing the mercury cell facilities to continue to
operate. We are specifically requesting comment on which of
these options is more appropriate, and may finalize either
option or a combination of elements from them. In addition,
this action proposes several amendments that would apply
regardless of which option we select. These proposed amendments
are (1) provisions of the existing NESHAP that would apply to
periods of startup, shutdown, and malfunction (SSM), and (2)
corrections to compliance errors in the currently effective

rule.

**DATES:** Comments must be received on or before **[INSERT DATE 60**

**DAYS AFTER PUBLICATION OF THIS PROPOSAL IN THE FEDERAL**

**REGISTER]** . Under the Paperwork Reduction Act, comments on the
information collection provisions must be received by the Office
of Management and Budget (OMB) on or before **[INSERT DATE 30 DAYS**

**AFTER PUBLICATION OF THIS PROPOSAL IN THE FEDERAL REGISTER]**

. Public Hearing. If anyone contacts EPA by **[INSERT DATE 15**

**DAYS AFTER PUBLICATION OF THIS PROPOSAL IN THE FEDERAL REGISTER]**
requesting to speak at a public hearing, EPA will hold a public
hearing on **[INSERT DATE 30 DAYS AFTER PUBLICATION OF THIS**

**PROPOSAL IN THE FEDERAL REGISTER].** If a public hearing is held,
it will be held at EPA’s Campus located at 109 T.W. Alexander***E.O. 12866 Review

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### Page 3 of 136 Drive in Research Triangle Park, NC, or an alternate site
nearby. Contact Ms. Pamela Garrett at (919) 541-7966 to request
a hearing, to determine if a hearing will be held, or to
determine the hearing location. If no one contacts EPA
requesting to speak at a public hearing concerning this proposed
rule by **[INSERT DATE 15 DAYS AFTER PUBLICATION OF THIS PROPOSAL**

**IN THE FEDERAL REGISTER]** , the hearing will be cancelled without

further notice.

**ADDRESSES:** You may submit comments, identified by Docket ID No.
EPA-HQ-OAR-2002-0017, by any of the following methods:
• Federal eRulemaking Portal:
http://www.regulations.gov: Follow the instructions
for submitting comments.

• Agency Web Site: http://www.epa.gov/oar/docket.html

. Follow the instructions for submitting comments on the

EPA Air and Radiation Docket Web site.

• E-mail: a-and-r-docket@epa.gov. Include Docket ID
No. EPA-HQ-OAR-2002-0017 in the subject line of the

message.

• Fax: (202) 566-9744.

• Mail: National Emission Standards for Hazardous Air
Pollutants for Mercury Cell Chlor-alkali Plants
Docket, Environmental Protection Agency, EPA Docket***E.O. 12866 Review

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### Page 4 of 136
Center (EPA/DC), Air and Radiation Docket, Mail Code
2822T, 1200 Pennsylvania Ave., NW, Washington, DC
20460. Please include a total of two copies. In
addition, please mail a copy of your comments on the
information collection provisions to the Office of
Information and Regulatory Affairs, Office of
Management and Budget (OMB), Attn : Desk Officer for

EPA, 725 17 th 

### St., NW., Washington, DC 20503.

• Hand Delivery: EPA Docket Center, Public Reading
Room, EPA West, Room 3334, 1301 Constitution Ave., NW,
Washington, DC 20460. Such deliveries are only
accepted during the Docket’s normal hours of
operation, and special arrangements should be made for

deliveries of boxed information.
Instructions: Direct your comments to Docket ID No. EPAHQ-OAR-2002
**-** 0017. EPA’s policy is that all comments received
will be included in the public docket without change and may be
made available online at http://www.regulations.gov, including
any personal information provided, unless the comment includes

information claimed to be confidential business information
(CBI) or other information whose disclosure is restricted by
statute. Do not submit information that you consider to be CBI
or otherwise protected through www.regulations.gov or e-mail.***E.O. 12866 Review

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### Page 5 of 136 The www.regulations.gov Web site is an “anonymous access”
system, which means EPA will not know your identity or contact
information unless you provide it in the body of your comment.
If you send an e-mail comment directly to EPA without going
through www.regulations.gov, your e-mail address will be
automatically captured and included as part of the comment that
is placed in the public docket and made available on the
Internet. If you submit an electronic comment, EPA recommends
that you include your name and other contact information in the
body of your comment and with any disk or CD-ROM you submit. If
EPA cannot read your comment due to technical difficulties and
cannot contact you for clarification, EPA may not be able to
consider your comment. Electronic files should avoid the use of
special characters, any form of encryption, and be free of any

defects or viruses.

Docket: All documents in the docket are listed in the
www.regulations.gov index. Although listed in the index, some
information is not publicly available, e.g., CBI or other
information whose disclosure is restricted by statute. Certain
other material, such as copyrighted material, is not placed on
the Internet and will be publicly available only in hard copy
form. Publicly available docket materials are available either
electronically through www.regulations.gov or in hard copy at***E.O. 12866 Review

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### Page 6 of 136
the National Emission Standards for Hazardous Air Pollutants for
Mercury Cell Chlor-alkali Plants Docket, EPA/DC, EPA West, Room
3334, 1301 Constitution Ave., NW, Washington, DC. The Public
Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through
Friday, excluding legal holidays. The telephone number for the
Public Reading Room is (202) 566-1744, and the telephone number
for the Air Docket is (202) 566-1742.

**FOR FURTHER INFORMATION CONTACT:** Sharon Nizich, Sector Policies
and Programs Division, Office of Air Quality Planning and
Standards (D243-02), Environmental Protection Agency, Research
Triangle Park, North Carolina 27711, telephone number: (919)
541-2825; fax number: (919) 541-5450; e-mail address:
nizich.sharon@epa.gov

.
**SUPPLEMENTARY INFORMATION:**
The supplementary information in this preamble is organized

as follows:

I. General Information A. Does this action apply to me? B. What should I consider as I prepare my comments to EPA? C. Where can I get a copy of this document? D. When would a public hearing occur? II. Background Information A. What is the history of the Mercury Cell NESHAP? B. What petitions were filed after promulgation of the Mercury Cell NESHAP in 2003? C. What were the considered decisions proposed in 2008? D. What current legislation is related to this effort? III. Summary of Proposed Amendments A. What is the non-mercury technology option (Option 1)? B. What is the enhanced work practices option (Option 2)?***E.O. 12866 Review

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### Page 7 of 136 C. What amendments are being proposed that are independent of which option is selected? IV. Request for Comment V. Statutory and Executive Order Reviews A. Executive Order 12866: Regulatory Planning and Review B. Paperwork Reduction Act C. Regulatory Flexibility Act D. Unfunded Mandates Reform Act E. Executive Order 13132: Federalism F. Executive Order 13175: Consultation and Coordination with Indian Tribal Governments G. Executive Order 13045: Protection of Children from Environmental Health and Safety Risks H. Executive Order 13211: Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use I. National Technology Transfer and Advancement Act J. Executive Order 12898: Federal Actions to AddressEnvironmental Justice in Minority Populations and LowIncome Populations

**I. General Information**
A. Does this action apply to me?
The regulated categories and entities potentially affected
by this proposed action include:

Category NAICS code 1 

### Examples of regulated entities Industry. . . . . 325181 Alkalis and Chlorine Manufacturing Federal government . . . . Not affected. State/local/tribal government . . . . Not affected.

1 

### North American Industry Classification System.
This table is not intended to be exhaustive, but rather
provides a guide for readers regarding entities likely to be
affected by this action. To determine whether your facility
would be regulated by this action, you should examine the***E.O. 12866 Review

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### Page 8 of 136 applicability criteria in 40 CFR 63.7682 of subpart IIIII,

National Emission Standards for Hazardous Air Pollutants
(NESHAP): Mercury Emissions from Mercury Cell Chlor-Alkali
(hereafter called the “2003 Mercury Cell NESHAP”). If you have
any questions regarding the applicability of this action to a
particular entity, consult either the air permitting authority
for the entity or your EPA regional representative as listed in
40 CFR 63.13 of subpart A (General Provisions).
B. What should I consider as I prepare my comments to EPA?
Do not submit information containing CBI to EPA through
www.regulations.gov or e-mail. Send or deliver information
identified as CBI only to the following address: Roberto
Morales, OAQPS Document Control Officer (C404-02), Environmental
Protection Agency, Office of Air Quality Planning and Standards,
Research Triangle Park, North Carolina 27711, Attention Docket
ID EPA-HQ-OAR-2002-0017. Clearly mark the part or all of the
information that you claim to be CBI. For CBI information in a
disk or CD ROM that you mail to EPA, mark the outside of the
disk or CD ROM as CBI and then identify electronically within
the disk or CD ROM the specific information that is claimed as
CBI. In addition to one complete version of the comment that
includes information claimed as CBI, a copy of the comment that

does not contain the information claimed as CBI must be***E.O. 12866 Review

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### Page 9 of 136 submitted for inclusion in the public docket. Information so
marked will not be disclosed except in accordance with
procedures set forth in 40 CFR part 2.
C. Where can I get a copy of this document?
In addition to being available in the docket, an electronic
copy of this proposed action will also be available on the
Worldwide Web (WWW) through the Technology Transfer Network
(TTN). Following signature, a copy of this proposed action will
be posted on the TTN’s policy and guidance page for newly
proposed or promulgated rules at the following address:
http://www.epa.gov/ttn/oarpg/. The TTN provides information and
technology exchange in various areas of air pollution control.
D. When would a public hearing occur?
If anyone contacts EPA requesting to speak at a public
hearing concerning the proposed amendments by **[INSERT DATE 10**

**DAYS AFTER PUBLICATION OF THIS PROPOSAL IN THE FEDERAL**

**REGISTER]** , we will hold a public hearing on **[INSERT DATE 30 DAYS**

**AFTER PUBLICATION OF THIS PROPOSAL IN THE FEDERAL REGISTER]** . If
you are interested in attending the public hearing, contact Ms.
Pamela Garrett at (919) 541-7966 to verify that a hearing will
be held. If a public hearing is held, it will be held at 10
a.m. at the EPA’s Environmental Research Center Auditorium,
Research Triangle Park, NC, or an alternate site nearby.***E.O. 12866 Review

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### Page 10 of 136 **II. Background Information**

A. What is the history of the Mercury Cell NESHAP?
On December 19, 2003, EPA promulgated the 2003 Mercury Cell
NESHAP (40 CFR part 63, subpart IIIII, 68 FR 70904). This rule
for mercury cell chlor-alkali plants implements section 112(d)
of the Clean Air Act (CAA), which requires all categories and
subcategories of major sources listed under section 112(c) to
meet hazardous air pollutant emission standards reflecting the
application of the maximum achievable control technology (MACT).
Mercury cell chlor-alkali plants are a subcategory of the
chlorine production source category listed under the authority
of section 112(c)(1) of the CAA. In addition, mercury cell
chlor-alkali plants are listed as an area source category under
section 112(c)(3) and (k)(3)(B) of the CAA. The 2003 Mercury
Cell NESHAP satisfied our requirement to issue 112(d)
regulations under each of these listings (for mercury). The
2003 Mercury Cell NESHAP required both existing major and area
sources to meet mercury emission limits on stack emission
sources from both chlorine production and from the recovery of
mercury from wastes and other scrap in mercury thermal recovery
units. The 2003 Mercury Cell NESHAP also required the
facilities to monitor and minimize fugitive mercury emissions***E.O. 12866 Review

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### Page 11 of 136 from the cell room by conducting either daily work practices or
work practices performed in response to high levels of mercury
emissions determined from continuous mercury monitoring. The
2003 rule required facilities to comply with applicable emission
limitations and work practice requirements at all times, except
during periods of SSM. Finally, the 2003 Mercury Cell NESHAP
prohibited mercury emissions from new and reconstructed

facilities.
B. What petitions were filed after promulgation of the Mercury

Cell NESHAP in 2003?
On February 17, 2004, the NRDC submitted an administrative
petition to EPA asking us to reconsider several aspects of the
2003 Mercury Cell NESHAP under CAA section 307(d)(7)(B). On the
same day as the administrative petition, NRDC and the Sierra
Club also filed a petition for judicial review of the 2003
Mercury Cell NESHAP in the U.S. Court of Appeals for the D.C.
Circuit (Civ. No. 04-1048).
By a letter dated April 8, 2004, Jeffrey Holmstead, thenEPA Assistant Administrator for the Office of Air and Radiation,
notified the NRDC that EPA had granted NRDC’s petition for
reconsideration of the 2003 Mercury Cell NESHAP. On July 20,
2004, the Court granted EPA’s motion to hold the case for***E.O. 12866 Review

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### Page 12 of 136 judicial review in abeyance pending EPA’s action on the
reconsideration of the 2003 Mercury Cell NESHAP.
C. What were the reconsideration decisions proposed in 2008?
On June 11, 2008 (73 FR 33257), EPA responded to NRDC’s
petition for reconsideration. In their petition, NRDC asked EPA
to reconsider five issues: (1) the decision to develop a set of
work practice requirements under Clean Air Act section 112(h) in
lieu of a numeric emission limitation for cell rooms; (2) the
decision to make the promulgated work practices optional for
sources that choose to undertake continuous monitoring; (3) the
decision to not require existing facilities to convert to a nonmercury chlorine manufacturing process; (4) the elimination of
the previously applicable part 61 rule’s 2,300 grams/day plantwide emission limitation; and (5) the decision to create a
subcategory of mercury cell chlor-alkali plants within the
chlorine production category. In the 2008 proposal, EPA
addressed each of these issues and proposed amendments where we
determined them to be appropriate. Following are brief

summaries of our reconsideration decisions. For a full
explanation of these decisions and the rationale supporting
them, please see the preamble for the June 11, 2008 proposal (73
FR 33258). The 2008 proposed amendments, which are being co-***E.O. 12866 Review

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### Page 13 of 136 proposed in this action as Option 2, are discussed in section

III.B of this document.
In addition, while not specifically listed as a major issue
in their petition, the uncertainty related to the magnitude of
fugitive mercury emissions was clearly a basis for much of
NRDC’s concern. This was also addressed in the 2008 proposal
and is summarized below after the five specific issues cited by
NRDC in the petition.

1. Emission limitation for cell room
In its petition for reconsideration NRDC stated that EPA
failed to adequately justify that a numeric emission limitation
was not feasible per the criteria prescribed in section 112(h)
of the Clean Air Act (CAA). In our 2008 reconsideration, we
concluded that it is not feasible to prescribe or enforce an
emission limitation for fugitive emissions from the cell room.
We maintained that fugitive emissions from mercury cells and
associated equipment are a clear example of the type of
situation to be addressed by the provisions of section 112(h).
The various points which led to our opinion on the feasibility
of establishing an emission standard were discussed in detail in
the 2008 proposal (73 FR 33267-33271). In summary, consistent
with CAA section 112(h), we believe that it is not feasible to
prescribe or enforce an emission standard in this case. There***E.O. 12866 Review

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### Page 14 of 136 are two independent bases for this conclusion. First,
consistent with CAA section 112(h)(2)(A), we concluded that
fugitive mercury emissions from a mercury cell chlor-alkali
plant cannot be emitted through a conveyance designed and
constructed to emit or capture such pollutant. Second,
consistent with CAA section 112(h)(2)(B), we established that
the application of measurement technology to mercury cell rooms
is not practicable due to technological and economic

limitations.
2. Optional work practices
The 2003 Mercury Cell NESHAP requires facilities to follow
a set of detailed work practices. The NESHAP also allows
facilities to institute a cell room monitoring program to
continuously monitor the mercury vapor concentration in the
upper portion of each cell room as an alternative to these work
practice standards. One of the objections raised by NRDC was
that this provision backtracked from the Agency’s proposed work
practice standards. NRDC pointed out that in the development of
the Mercury Cell NESHAP, EPA concluded that the housekeeping
activities that facilities in the industry follow to comply with
the part 61 mercury NESHAP (40 CFR 61, subpart E) represented
the MACT floor and that requiring practices based upon the most
detailed activities in the industry (i.e., “beyond-the-floor”***E.O. 12866 Review

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### Page 15 of 136 practices) was justified. But NRDC was concerned because the
work practices in the 2003 Mercury Cell NESHAP were optional if
facilities chose to do continuous monitoring and, therefore,
this option would allow sources to avoid conducting activities
that represent the MACT floor. NRDC argued that this was a
violation of section 112(d)(3) of the CAA, which requires all

facilities to meet the MACT floor.
As a result of our consideration of NRDC’s point, we
included proposed amendments in 2008 that would require that all
plants institute a cell room monitoring program and comply with
work practice standards (73 FR 33271-33272). As part of today’s
action, we are re-proposing the combination of work practices
and cell room monitoring program as option 2. The specific
proposed amendments are discussed in section III.B of this

document.
3. Requiring conversion to a non-mercury chlorine manufacturing

process In its petition NRDC argued that the 2003 Mercury Cell
NESHAP does nothing to limit the use of mercury cell technology
by existing chlor-alkali plants, and that the Agency ignored a
known technique for reducing mercury emissions from this
industry, namely, conversion to non-mercury processes.
According to NRDC, requiring the industry to convert to a non-***E.O. 12866 Review

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### Page 16 of 136 mercury process is cost-justified and would provide significant
non-air quality benefits. In response to NRDC's concerns that
we did not evaluate the conversion of mercury cell chlor-alkali
production plants to non-mercury technology, we performed an
analysis to estimate the capital and annual costs of this
action. In performing the analysis, we used information from
all readily available sources of information. Based on the
results of this analysis, we proposed to reject the option of
requiring conversion to non-mercury technology because of the
high cost impact this forced conversion would impose on the
facilities in the industry (73 FR 33274-33275).
Following the 2008 proposal, one commenter provided
detailed comments on our proposed decision to not require
existing facilities to convert to a non-mercury chlorine
manufacturing process. In addition to comments on the EPA cost
analysis described in our 2008 proposal, the commenter provided
a report to support its comments. We reviewed these comments,
examined the commenter’s report, and concluded that our cost
analysis could be improved. Therefore, we incorporated some
aspects of the commenter’s cost analysis, and gathered

additional cost information. The results of our revised
analyses, and our consideration of the policy and legal comments
made by the commenter regarding the benefits of non-mercury***E.O. 12866 Review

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### Page 17 of 136 technology to produce chlorine, provided the impetus for the
non-mercury mercury option being proposed today as Option 1.
Details of this proposed option are provided in section III.A of

this document.
4. Elimination of part 61 NESHAP numeric limit
NRDC stated that EPA illegally eliminated the 2,300 g/day
limit on plant-wide mercury emissions that existed under the
part 61 Mercury NESHAP. Upon reconsideration, we disagreed with
NRDC’s argument. We determined that the plant-wide emission
limit from the part 61 Mercury NESHAP was a standard to which no
mercury cell facility had ever demonstrated compliance by way of
emissions testing, that it is not an enforceable standard today,
and, more importantly, and that it did not reflect the MACT
level of emissions control required under CAA section
112(d)(3)(B). Therefore, we concluded that we did not
unlawfully remove any actual requirement of the part 61 Mercury
NESHAP. Instead, the 2003 Mercury Cell NESHAP adopted a set of
MACT-level work practice requirements under section 112(h) that
are more stringent in terms of controlling fugitive mercury
emissions than was allowed in the part 61 NESHAP. Details on
this conclusion were provided on pages 73 FR 33270 and 33271 of
the June 11, 2008 proposal.
5. Mercury Cell Chlor-Alkali subcategory***E.O. 12866 Review

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### Page 18 of 136 As stated in the preamble to the final 2003 Mercury Cell
NESHAP (68 FR 70905), we divided the chlorine production source
category into two subcategories: (1) mercury cell chlor-alkali
plants and (2) chlorine production plants that do not rely upon
mercury cells for chlorine production. In December 2003 (68 FR
70949), we issued our final decision to delete the subcategory
of the chlorine production source category for chlorine
production plants that do not utilize mercury cells to produce
chlorine and caustic. This action was made under our authority
in CAA section 112(c)(9)(B)(ii), and was not challenged in a
petition for judicial review. Nor did anyone ask us to
reconsider that action pursuant to CAA section 307(d)(7)(B).
The objection raised by NRDC in its petition for reconsideration
of the 2003 Mercury Cell NESHAP was that it was not appropriate
to create a mercury cell chlor-alkali plants subcategory.
According to NRDC, if the MACT floor for mercury emissions was
determined for the chlorine production source category as a
whole, the best-performing 12 percent of sources in the category
would be mercury-free. In our 2008 proposal (73 FR 33273-
33274), we explained that EPA has a long history of using
subcategorization to appropriately differentiate between types
of emissions and/or types of operations when analyzing whether
air pollution control technology is feasible for groups of***E.O. 12866 Review

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### Page 19 of 136 sources. Upon reconsideration of this situation for mercury
cell chlor-alkali plants, we concluded that our earlier decision
to create the mercury cell chlor-alkali plant subcategory was

sound.
6. Magnitude of fugitive mercury emissions
Prior to 2008, the uncertainty associated with fugitive
mercury emissions from mercury cell chlor-alkali plants had long

been an issue. Few studies had been conducted to measure these
fugitive mercury emissions, and the studies that had been
conducted were short-term and did not account for a range of
operating and maintenance conditions. For around 30 years,
mercury cell chlor-alkali plants had reported fugitive mercury
emissions of 1,300 grams per day (g/day), which equates to
around 0.5 tons per year per plant. These estimates were based
on two limited studies conducted by EPA in the early 1970’s.
The sensitivity and concern over the actual levels of
fugitive mercury emissions from the cell rooms was exacerbated
by the inability of the industry to fully account for all the
mercury that was added to the cells. In 2000, there were
approximately 65 tons of mercury unaccounted for at the 12
mercury cell plants in operation at that time. This discrepancy
was based on the difference between the amount of mercury used,
as reported in the Chlorine Institute’s 2001 annual report to***E.O. 12866 Review

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### Page 20 of 136 EPA’s Binational Toxics Strategy Mercury Workgroup, a 

### and the
amount of mercury released to all media, as reported in the 2000
Toxics Release Inventory. While industry representatives
provided explanations for this discrepancy, they could not fully

substantiate their theories. NRDC maintained that this
“missing” mercury was being emitted as fugitive emissions.
We recognized that the body of fugitive mercury emissions
data could be improved. Therefore, as part of our
reconsideration of the 2003 Mercury Cell NESHAP, we collected
additional information on fugitive mercury emissions from
mercury cell chlor-alkali plants. The primary purpose of this
effort was to address whether the fugitive emissions from a
mercury cell chlor-alkali plant are on the order of magnitude of
the historical assumption of 1,300 g/day, corresponding to
0.5 tons per year (tpy) per plant, or an order of magnitude
higher as estimated by NRDC.
Consequently, as part of our reconsideration efforts
leading the 2008 proposal, we sponsored a test program to
address the issue of the magnitude of the fugitive mercury
emissions at mercury cell chlor-alkali plants. In addition to

a 

### Binational Toxics Strategy Mercury Workgroup - Reducing Mercury in the Great Lakes Region. U.S. Environmental Protection Agency. http://www.epa.gov/reg5oair/mercury/reducing.html#regulation***E.O. 12866 Review

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### Page 21 of 136 this EPA test program, we also collected mercury emissions data
from the continuous mercury monitoring systems installed at
three mercury cell plants.
The daily fugitive mercury emission rates extrapolated from
these data sets ranged from around 20 to 1,300 g/day per
facility. The average daily emission rates ranged from around
420 g/day to just under 500 g/day per facility, with the mean of
these average values being slightly less than 450 g/day per
facility. Therefore, the information we obtained in the almost
one million dollar study of fugitive emissions from mercury cell
chlor-alkali plants shows that fugitive emissions are on the
order of magnitude of the historical assumption of 1,300 g/day
or less. There was no evidence obtained during any of the
studies that indicated that fugitive mercury emissions were at
levels higher than 1,300 g/day. All of the studies that
produced these data were of sufficient duration to encompass all
types of maintenance activities. Further, the length of these
studies was also sufficient to include emissions from a variety
of process upsets, such as: liquid mercury spills, leaking cells
and other process equipment, and other process upsets.
We also note that since 2008, the mercury cell plants with
continuous monitoring systems and methods to estimate the flow
rates have reported even lower mercury emissions than those***E.O. 12866 Review

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### Page 22 of 136 reported in the 2008 proposal. In 2008, these plants reported
fugitive mercury emissions averaging around 225 g/day/plant.
D. What current legislation is related to this action?
There is also U.S. legislation, both recently enacted and
proposed, that has or will have an impact on these mercury
chlor-alkali facilities. On October 14, 2008, President Bush
signed the Mercury Export Ban Act of 2008 into law. This law
bans U.S. export of elemental mercury (effective in 2013),
requires the Department of Energy (DOE) to designate and manage
a long-term storage facility for elemental mercury, and
prohibits the transfer of elemental mercury by federal agencies.
Both houses of Congress are currently considering
legislation that, if enacted, would affect this industry (S.1428
and H.R. 2190). These bills would amend the Toxic Substances
Control Act to prohibit the use of mercury at chlor-alkali
facilities. The House bill would require the facilities to
cease using mercury by 2013 if the plant chooses to close or by
2015 if the plant chooses to convert to non-mercury. If this
legislation passes Congress and is signed by the President into
law, we will evaluate the appropriate action for EPA in light of
the scope and impact of the law.
**III. Summary of Proposed Amendments*****E.O. 12866 Review

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### Page 23 of 136 In today’s action, we are proposing two options for
amending the Mercury Cell NESHAP. The first option (non-mercury
technology option) would encourage the conversion to non-mercury
technology by requiring the elimination of mercury emissions.
The second option (enhanced work practices option) would require
improvements in the work practice standards to reduce fugitive
emissions from the cell room including the requirement that
every facility institute a cell room monitoring program and
implement detailed work practices. These options, along with
the estimated impacts of each, are described below in sections

III.A and III.B. Also included is rationale for the selection
of each option.
In addition to these options, we are also proposing
amendments that would apply regardless of which option we

select. These amendments are described in section III.C.
A. What is the non-mercury technology option (Option 1)?
1. Summary of non-mercury technology option
This proposed option would amend the 2003 Mercury Cell
NESHAP by prohibiting mercury emissions from existing mercury
cell chlor-alkali plants. This would make the standard for
existing sources the same as the current standard for new and
reconstructed sources, which is codified at 40 CFR

63.8190(a)(1).***E.O. 12866 Review

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### Page 24 of 136 Since we believe it is improbable that a mercury cell
chlor-alkali plant can be operated without mercury emissions, we
believe that this proposal would effectively require existing
mercury cell chlor-alkali plants either to convert to a nonmercury technology or to cease production of chlorine with their
current mercury cell production methods. However, if there are
circumstances where the elimination of mercury emissions from an
operating mercury cell plant could be achieved, we are
interested in data and supporting information regarding
technologies that would eliminate mercury emissions from an
operating mercury cell facility.
This proposed option would provide a three-year period from
the date the final rule is published in the Federal Register to
comply. To demonstrate compliance, each owner or operator would
have to submit a report certifying that all mercury emissions
have been eliminated permanently. This report would have to be
submitted no later than 120 days following the applicable
compliance date.
2. Technical information and analyses for the non-mercury
technology option
a. Background on the 2008 proposal and costs analysis
Section 112(d)(2) of the CAA provides that emission
standards for new or existing sources of hazardous air***E.O. 12866 Review

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### Page 25 of 136 pollutants (HAP) shall require the maximum degree of reduction
in emissions (including a prohibition on such emissions, where
achievable) that EPA, taking into consideration the cost of
achieving such emission reduction, and any non-air quality
health and environmental impacts and energy requirements,
determines is achievable through application of measures,
processes, methods, systems or techniques. These may include,
but are not limited to, measures which (A) reduce the volume of
or eliminate emissions through process changes, substitution of
materials or other modifications; (B) enclose systems or
processes to eliminate emissions; (C) collect, capture or treat
such pollutants when released from a process, stack, storage or
fugitive emission point; (D) are design, equipment, work
practice, or operational standards; or (E) are a combination of

the above.
One of the claims presented in NRDC’s petition for
reconsideration of the 2003 Mercury Cell NESHAP was that EPA had
not adequately considered non-mercury technology as a “beyondthe-floor” MACT control measure for existing sources in the
original rulemaking for the Mercury Cell NESHAP (see section
II.D.3). Further, NRDC claimed that the cost-effectiveness of
such a requirement, in terms of the annualized costs of control
per pound of mercury eliminated, would be less than EPA***E.O. 12866 Review

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### Page 26 of 136 previously indicated was warranted for mercury emissions from
the mercury cell subcategory.
In response to this comment, we performed an analysis in
2008 to determine the capital and annual costs of requiring nonmercury technology (Docket Item EPA-HQ-OAR-2002-0017-0088).
Specifically, this analysis estimated the costs and the costeffectiveness of converting the existing mercury cell chloralkali plants to membrane cells.
In a chlor-alkali process, an electric current is passed
through a salt solution or brine (sodium chloride or potassium
chloride), causing the dissociation of salt to produce chlorine
gas and an alkaline solution (sodium hydroxide or potassium
hydroxide). Hydrogen gas is also produced as a by-product.
This dissociation occurs in chlor-alkali “cells,” where the
chloride ions stripped from the brine flow to the anode to form
the chlorine product, and the sodium/potassium ions flow to the
cathode, where they form the hydroxide product and hydrogen. In
a mercury cell, the cathode is a flowing layer of liquid
mercury. The sodium/potassium ions form an amalgam with the
mercury, which is routed to a decomposer. In the decomposer,
the amalgam is reacted with water to form the hydroxide product
and hydrogen. The mercury is then recycled.***E.O. 12866 Review

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### Page 27 of 136 In a membrane process, a polymer membrane is used to
separate the anode products from the cathode products. The
chloride ions (at the anode) and the hydrogen (at the cathode)
are kept apart by this membrane, which allows the sodium ions to
pass into the cathodic compartment and react to form the
hydroxide.
Conversion from mercury cells to membrane cells is
technically possible at all existing mercury cell chlor-alkali
plants, although the amount of significant changes will vary for
each individual situation. There are parts of the mercury cell
plant that could be re-used after conversion to the membrane
cells. It could be possible to use the existing cell room
building for the new membrane cells, provided that the building
is in good condition. However, constructing a new membrane cell
room building would reduce the production losses as the mercury
cells could continue to operate longer throughout the conversion
process. Other equipment and processes that possibly could be
retained include the rectifiers, the hydrogen treatment system,
and the chlorine compression and liquefaction process.
The mercury cells themselves (and associated decomposers)
would have to be replaced by membrane cells. Membrane cells
need purer brine than mercury cells, so a completely new brine
purification system would likely be needed. Other equipment