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U.S. Environmental Protection Agency

Office of Air Quality Planning and Standards

November 2011

Economic Impact and Initial Regulatory Flexibility Analysis – Proposed Mineral Wool and Wool 

Fiberglass RTR NESHAP

This report is the economic impact and initial regulatory flexibility analysis (or IRFA) for 

the proposed Mineral Wool and Wool Fiberglass Risk and Technology Review (RTR) standard. 

This standard is scheduled to be proposed under court-order on November 4, 2011. The report 

presents impacts to firms affected by the requirements in the proposal and their consumers. 

Impacts to small firms are accounted for in adherence to the Regulatory Flexibility Act as 

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

Background on Mineral Wool Industry

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

other products, such as ceiling tile, wall board, spray-one insulation, cement, and mortar. 
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Glass wool and stone wool production make use of different proprietary technologies, 

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

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

proprietary fiberising technologies are employed worldwide. Glass wool furnaces are 

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

heated. 

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

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

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

“nonbonded” production line. 

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

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

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

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

production lines are the application of binder and the presence of the curing oven. Four 

facilities only manufacture nonbonded products, while the other 3 facilities operate both 

bonded and nonbonded production lines. A total of 11 cupolas and 3 curing ovens are operated 

by the facilities in this source category. 

Mineral wool manufacturing facilities are included in NAICS 327993. The industry’s 

revenue for 2010 was $5.1 billion, and the estimated gross profit was 40.15%. Exports from US 

mineral wool firms exceeded imports by about $330 million in 2010.1 No new mineral wool 

facilities have been built in the last 21 years, but new mineral wool facilities may be built in the 

foreseeable future. According to the size definition applied to this industry by the U.S. Small 

Business Administration (500 company employees or less)2, five of the six parent firms in this 

 

1 Mineral Wood Manufacturing Industry in the U.S. and its International Trade (2011 Edition). LLC Supplier 

Relations US. Found on Amazon.com on August 2, 2011. 

2

Found at the web site for the U.S. Small Business Administration (http://www.sba.gov/size). 
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industry are classified as small businesses. Of the five small firms, their average number of 

employees is 108. All of these firms are U.S. owned. 

For these firms, the impacts of the proposed rule range from 0.01 percent to 6.7 

percent, expressed as annual compliance costs as a percent of sales.3 Only one firm is expected 

to experience an impact of more than 3 percent of sales, and thus it experiences a significant 

impact. The price elasticity of demand for the mineral wool industry is estimated at -0.84, and 

the price elasticity of supply for the industry is estimated at -0.7.5 With the responsiveness of 

mineral wool demand and supply to be less in percentage terms than the change in product 

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

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

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

response to this proposal will be less than 1 percent. The total annual compliance costs of the

proposal for this industry are less than $600,000 (2010 dollars).6 Since confidential business 

information (CBI) has been used to estimate these impacts, we will not provide the names of 

the affected firms nor provide impact estimates by firm. 

Background on the Wool Fiberglass Industry

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

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

 

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

regulation is consistent with the EPA guidance on SBREFA compliance 

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

4

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. 2008b. “Export Supply Elasticities.” <http://faculty.

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

TradeElasticities.html.>

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

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

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

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

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

Type T, for thermal insulation. 

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

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

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

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

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

properties, such as borax for chemical resistance. Waste glass, also called cullet, is also used as 

a raw material. The raw materials must be carefully weighed in exact quantities and thoroughly 

mixed together (called batching) before being melted into glass. 

Wool fiberglass facilities are also included in NAICS (North American Industrial 

Classification System) 327993 along with mineral wool facilities. There are two parent firms 

owning these facilities with major HAP sources affected by this proposal, and these firms are 

shown in Table 1. Neither of these two firms is a small business. Each of these firms have

revenues in excess of $1 billion in 2010. Both of the firms, Johns Manville and Owens Corning, 

are owned by parent companies based in the U.S. EPA used no CBI in generating economic 

impacts for this industry.

Table 1: Wool Fiberglass Firms Operating in the U.S. That Are Affected by the 

Proposed Rule

Wool Fiberglass Firm Annual Revenues in 2010 (billions)

Owens Corning $5.00d

Johns Manville (owned by Berkshire-Hathaway) $136.19

e

a

Revenues are for 2009. Taken from http://www.forbes.com/lists/2010/21/privatecompanies-10_Guardian-Industries_BARO.html. 
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b

Taken from http://www.reuters.com/article/2011/07/22/idUS50641+22-Jul2011+BW20110722. Conversion from euros uses euro to U.S. dollar value as of August 15, 

2011.

c Taken from 2010 annual report for Saint-Gobain, Inc., found at http://www.saintgobain.com/files/Rapport_annuel_2010_EN.pdf, p. 6. Conversion from euros uses euro to 

U.S. dollar value as of August 15, 2011.

d

Taken from http://investor.owenscorning.com/phoenix.zhtml?c=71581&p=irol-IRHome. 

e

Taken from the 2010 Berkshire-Hathaway annual report at 

http://www.berkshirehathaway.com/2010ar/2010ar.pdf, p. 27. 

The economic impact on these firms, measured in annual compliance costs as a percent 

of sales or revenues, is less than 0.001 percent for each of the affected parent firms. The total 

annualized costs of the proposal to the wool fiberglass industry are approximately $0.1 million 

(2010 dollars). The impacts to producers affected by this proposed rule are annualized costs of 

less than 0.1 percent of their revenues using the most current year available for revenue data. 

The price elasticity of demand for the wool fiberglass industry is estimated at -0.87, and the 

price elasticity of supply for the wool fiberglass industry is estimated at -0.7.8 With the 

responsiveness of wool fiberglass demand and supply at less than 1:1 compared to a price 

change of 1 percent, and with the change in product price as approximated by the cost to 

revenue ratio at less than 0.1 percent, for this ratio is the maximum price change that 

producers may face, it is expected that wool fiberglass price and output changes will be less 

than 0.1 percent. Hence, the overall economic impact of this proposed rule should be low on 

the affected industry and its consumers.The total annualized costs of the proposal are 

approximately $0.7 million (2010 dollars). For more information on the compliance costs (i.e., 

the costs of control + the costs of monitoring, testing, and other administrative costs), please 

refer to the cost memos for these industries for this proposal. 

 

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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. 2008b. “Export Supply Elasticities.” <http://faculty.

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

TradeElasticities.html.>
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For the proposal, we find that there is a significant impact on a substantial number of 

small entities (or SISNOSE). This is based on the high economic impact to one small firm 

affected by this proposal and the dominance of small businesses to the mineral wool industry, 

an industry that makes up about half of the facilities affected by this proposal. Thus, this report 

serves as the Initial Regulatory Flexibility Analysis (IRFA) for this proposal. Of the eleven firms 

affected by this proposal, five are small firms, and one of the small firms is affected 

significantly. All of these small firms are mineral wool manufacturers. 

A Small Business Regulatory Enforcement Fairness Act (SBREFA) panel was convened for 

this proposal. Details of the findings and conclusions of this panel can be found in the report of 

the panel in the docket for this rulemaking. Some of the flexibilities under consideration in this 

proposal for mitigation small entity impacts are the following:

• Subcategorize –applies only to collection – sets emission limits at current 

levels for all sources. Bundle collection with curing to maximize flexibility 

in reduction technology. 

• Basing cupola MACT limits on available existing test data (not emission 

factors as well) – sets COS, HCl, HF limits at cost effective levels

• Remove surrogacy (except PM for HAP metals)- low cost impact

• Extend compliance deadlines (up to 4 years total)