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Economic Impact Analysis for the Secondary Lead NESHAP

This report is the economic impact analysis for the final Secondary Lead NESHAP, 

which will be signed as per a court-ordered schedule on December 16, 2011. Implementation of 

the rule is required by 3 years after promulgation of the final rule. The standard is the MACT 

floor of control for each source type controlled. Details on the rule can be found in the preamble 

contained in the public docket for this rulemaking. 

The Secondary Lead Smelting source category is defined as any facility at which leadbearing scrap materials (including, but not limited to lead acid batteries) are recycled by smelting 

into elemental lead or lead alloys. For more information on the source category definition, 

please refer to the preamble. Secondary lead smelters can be found worldwide. In fact, 

secondary lead now accounts for more than half of all lead produced around the world. In the 

U.S., more than 80 percent of all lead comes from secondary production.1 Fourteen smelters can 

be found in the U.S. Production of secondary lead totaled 1.15 million tons in 2010, an amount 

equivalent to 82 percent of reported domestic lead consumption. Nearly all of it was recovered 

from old (post-consumer) scrap.2 In the U.S., a new secondary lead smelter being built by 

Johnson Controls, Inc. (JCI) will be completed in Florence, SC in 2012, and an existing 

EnviroFocus facility in Tampa, FL will expand by 400% in 2012.

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There are eight parent owner companies affected by the rule. These companies are found 

in NAICS 331492 – Secondary Lead Smelting. Two of these firms, Gopher Resources, LLC, 

and Battery Recycling Company, are small businesses as defined by the Small Business 

Administration (SBA) for this industry – 750 employees or less for a parent owner in the 

secondary smelting and refining of nonferrous metal (except copper and aluminum) industry.

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 A 

separate memo provides the impacts of the rule on these small companies, and concludes that 

 

1 Obtained from the International Lead Association’s web site found at http://www.ldaint.org/lead-information/leadproduction, downloaded on November 15, 2011. 

2 U.S. Geological Survey, Mineral Commodity Summaries, Lead. January 2011. Found on the Internet at 

http://minerals.usgs.gov/minerals/pubs/commodity/lead/mcs-2011-lead.pdf. 

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Paul White, International Zinc and Lead Study Group, October 14, 2011. Presentation found on the Internet at 

http://www.ilzsg.org/pages/438/document.aspx?page=14&ff_aa_document_type=P&from=2. Slide 12. 

EnviroFocus is a subsidiary of Gopher Resources, LLC. 

4 U.S. Small Business Administration, Table of Size Standards. November 5, 2010. Found on the Internet at 

http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf. 
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there is no significant economic impact on a substantial number of small entities (SISNOSE) as a 

result of this rule.5 

The total annualized costs (TAC) of the rule for each parent owner company, which 

includes the annualized control, monitoring and recordkeeping costs as taken from the cost and 

emission reductions memo prepared for US EPA6, are in Table 1. The nationwide total 

annualized costs of this rule are $13.2 million. All costs are in 2009 dollars.

Table 1. TAC for Each Parent Owner

Parent Owner and Subsidiary Total Annualized Costs per Parent Owner

Exide Technologies (owner of Exide 

Electronics)

$4,920,000

Quexco (owner of Revere Smelting and 

Refining – RSR and Quemetco)

$150,000

The Renco Group (owner of Doe Run 

Resources)

$3,600,000

East Penn Manufacturing $300,000

Sanders Lead $2,490,000

Gopher Resources, LLC (owner of 

EnviroFocus)

$600,000

Battery Recycling Company $700,000

Johnson Controls, Inc. (JCI) $420,000

Total: $13,180,000

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

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

significant economic impact on affected businesses. The analysis employed here is a “sales test” 

that computes the annualized compliance costs as a share of sales for each company. The 

annualized cost per sales for a company represents the maximum price increase in affected 

 

5 U.S. Environmental Protection Agency, Office of Air Quality Planning and Standards. “Draft Small Business 

Evaluation for the Secondary Lead Smelting Source Category.” Prepared by ERG, Inc. for Nathan Topham, U.S. 

Environmental Protection Agency, Office of Air Quality Planning and Standards. October, 2011.

6 U.S. Environmental Protection Agency, Office of Air Quality Planning and Standards. “Cost and Emission 

Reductions of the MACT Floor Level of Control for the Secondary Lead Smelting Source Category.” Prepared by 

ERG, Inc. for Nathan Topham, U.S. Environmental Protection Agency, Office of Air Quality Planning and 

Standards. December, 2011.
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product needed for the company to completely recover the annualized costs imposed by the 

regulation. 

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

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

calculated as a share of profits.7 This is because revenues or sales data is commonly available 

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

is often not the true profits earned by firms due to accounting and tax considerations. Firms and 

entities often have ways legally available in the tax code to minimize their reported profits; thus, 

using reported profits may lead to a less than accurate estimate of the economic impact of a 

regulation to an affected firm or entity and their consumers. While screening level analyses are 

often employed to estimate impacts to small business or entities as part an analysis in compliance 

with the Regulatory Flexibility Act (RFA) as amended by the Small Business Regulatory

Enforcement Fairness Act (SBREFA), a screening level analysis can also be employed in an 

economic impact analysis such as this one whose focus is on the regulated companies. 

Economic impact estimates are shown in Table 2 below. The table lists the 8 ultimate 

parent companies impacted by the rule, the costs of the rule for each company basis, the annual 

revenues for these companies, and then the impact to the company on a cost to sales basis. 

Revenues are for the ultimate parent owners, and are for 2009 to be consistent with the year for 

the cost estimates. Applying such a calculation yields the following results as shown below:

Table 2: Economic Impact Results by Parent Owner for the Secondary Lead NESHAP

Parent Owner and 

Subsidiary

Total Annualized 

Costs per Parent 

Owner

Total Revenues in 

2009 per Parent 

Owner (billions US 

dollars)

Annualized Costs 

per Revenues for 

Each Parent Owner

(in %)

Exide Technologies (owner 

of Exide Electronics)

$4,920,000 $3.32a 

0.152

Quexco (owner of Revere 

Smelting and Refining and 

Quemetco) 

$150,000 $0.44b

0.032

The Renco Group (owner of 

Doe Run Resources)

$3,600,000 $4.75c

0.076

 

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

http://www.epa.gov/sbrefa/documents/rfaguidance11-00-06.pdf, pp. 32-33. 
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East Penn Manufacturing $300,000 $1.1

d

0.027

Sanders Lead Company

(part of Wiley Sanders 

Truck Lines and KW 

Plastics)

$2,490,000 $0.10e

2.40

Gopher Resources, LLC $600,000 N/A <1%f

Battery Recycling Company $700,000 $0.03g2.33%

Johnson Controls, Inc. (JCI) $420,000 $28.50h0.015

a

Exide Technologies annual revenue for 2009 is found in the Annual Report for 2009 at 

http://www.annualreports.com/HostedData/AnnualReports/PDFArchive/xide2009.pdf., p. 2.

bQuexco’s revenue estimated for 2009 can be found at 

http://www.hoovers.com/company/Quexco_Incorporated/hkhyki-1.html. 

cThe Renco Group (Doe Run Resources)’s revenue estimated for 2009 can be found at 

http://www.forbes.com/lists/2010/21/private-companies-10_Renco-Group_QQ4T.html. 

dEast Penn Manufacturing’s revenue in 2009 can be found at http://www.indeed.com/cmp/East-PennManufacturing. 

e The Sanders’s companies’s revenue in 2009 is the sum of the revenues for Wiley Sanders Truck Lines, KW 

Plastics, and the Sanders Lead Company as taken from lower-bound estimates of revenues for each company found 

at www.manta.com. 

f Gopher Resources, LLC’s revenue is such that the TAC of this proposed rule is less than 1% of its revenues in 

2009. See U.S. Environmental Protection Agency, Office of Air Quality Planning and Standards. “Small Business 

Evaluation for the Secondary Lead Smelting Source Category” for more details. 

g Revenue data for the Battery Recycling Company is found in the “Small Business Evaluation for the Secondary 

Lead Smelting Source Category”. 

h

JCI’s revenues in 2009 can be found at 

http://investing.businessweek.com/research/stocks/financials/financials.asp?ticker=JCI:US. 

On a firm by firm basis, the results show that two parent owners affected by this rule will 

experience an annualized compliance cost of more than 2 percent of its sales. One of these 

companies is the Battery Recycling Company, located in Puerto Rico, and is a small business as 

mentioned earlier in the report. The other is the Sanders Lead Company of Troy, Alabama, a 

company that is part of a business that includes the Wiley Sanders Truck Lines and KW Plastics.

The impact on the small business, while not trivial, does not qualify as a significant impact and 

thus does not change the conclusion of the Agency that there is no SISNOSE for this rule. It 

should be noted that this company, and Johnson Controls, Inc. were not included in the 

Agency’s analysis for the proposed rule. 
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It should also be noted that this analysis does not presume any incidence of the costs on 

the consumers of secondary lead and other products made by these companies. Thus, no 

estimate of the impact of this rule on secondary lead consumers, for intermediate or end-use, is 

included in this report. However, it should be noted that available estimates show that the price 

elasticity of demand for secondary lead is -1.08, and the price elasticity of supply for secondary

lead is 0.6.9 Based on this information, one can conclude that demand will respond 1:1 with a 

change in secondary lead price, and that supply is inelastic (i.e., will respond less than 1:1) with

a change in secondary lead price. Thus, the direct impact of this rule appears quite minor, and 

thus it is reasonable to infer that the impact on secondary lead consumers from this rule should 

also be minor. The TAC is taken from the cost memorandum mentioned earlier that was 

prepared by U.S. EPA for the rule and in that memorandum can be found more information on 

the cost analysis. 

 

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

Discussion Paper 08-37). Http://Www.Rff.Org/Publications/Pages/Publicationdetails.Aspx?. 

Publicationid=20680. Accessed August 2009. Table 8.A.6.

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Broda, C., N. Limao, and D. Weinstein. 2008a. “Export Supply Elasticities.” 

http://faculty.chicagobooth.edu/christian.broda/website/research/unrestricted/TradeElasticities/TradeElastic

ities.html. Accessed September 2009.