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# OAR Box 1415 Prepped by Ollie Stewart



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Number: 

# 5 ) IV-E- 5 Docket Number: 

# A-94-5 2

Printed 7/15/2008 9:38:25 AM

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# \\i-es Joh n Schweitze r < jschwtzr@gte.ne t > 01/28/200 2 04:0 2 P M Pleas e respon d t o Joh n Schweitze r To : Keit h Barnett/RTP/USEPA/US@EP A cc : Subject : meetin g o n affordabilit y

Keith , o n Thursday , Jan . 31 , a t 10am , Chuc k Elkins , Stuar

t Session s an d I ar

e meetin g wit h Keit h Mason , wh o i s wit h th e polic

y offic e (OPAR?

) a t Office o f Ai ran d Radiation , i n Washington . Th e subjec

t o f th e meetin g wil l b

e EPA' s affordabilit

y analysi s fo rth e above-the-floo r95 % C& C requirement . FYI , I'v e attache d th e handou t we wil l us e fo rth e meeting . I'l l b e i n my offic e most o f tomorro w (Tuesday) , an d the n o n my cel l phon e o n Wednesda y (734.604.9095) . FROM============== = Joh n Schweitze r Sr . Directo ro f Gov't . Affair s Composites Fabricator

s Assoc . voic e 734.622.016 2 fax 734.622.012 2 jschwtzr@ate.ne t 

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& www.cfa-hq.or abriefin g on affordabilit y 31jan0 EP A AI R DOCKE TP. 3 Composite s Fabricator s Associatio n - Januar y 31,200 2 Summar y o f Industr y Concern s Regardin g Affordabilit y o f th e Propose d Reinforce d Plastic/Composite s NESHAP 1 EP A mus t conside r th e affordability of an y propose d above-the-floo r MAC T standar d • EP A ha s correctly determine d tha t th e technolog y tha

t bes t characterize s th e MAC T floor s fo r th e composite s industr

y i s aset o f pollutio n preventio n techniques . • However , EP

A ha s propose d a

n above-the-floor

requirement

fo r larger existin g compos ite s operations . EP

A propose s that

existin g facilitie s emittin g mor e tha n 10 0 ton s o f HA P per yea r (o r mor e tha n 25 0 tp y i f

owne d b y asmal l business ) mus t captur e an d contro l a

t leas t 95 % of thei r emissions . Usin g EPA' s figures , about 65 % ofth e total cos t

fo r al l existin g source s to compl

y wit h th e rul e wil l fall o

n the estimate d 3 4 plant s subjec t t o th e above-the-floor

requirement ; thes e plant s accoun t fo r onl y 15 % o f industr y output . • T o justif

y a n above-the-floor

requirement , th e Clea

n Ai r Ac t require s EP

A t o sho w tha

t th e contro l passe s anumbe r of tests. 3

• In particular , the above-the-floor control must be affordable. EPA' s economi c analysi s fail s t o credibl y analyz e th e affordability o f th e control s • The Economi c Impac t

Analysi s EP

A prepare d i

n suppor t ofth e propose d rul e assume s that : a) the larg e majorit

y o f source s potentiall y subjec t to th e above-the-floor

require ment sel l thei r product s directly to acorporat e parent (i.e. , they ar

e captive producers , rather tha n merchant

producer s wh o mus t

compet e i n a n ope n marketplace) , an

d b ) thei r paren t companie s wil l simply pa

y fo r th e require d control s and absor b thei r costs , what eve r thei r magnitude . • B y makin g thes e tw o assumption s - bot h o f whic h ar e wron g - EPA's EIA completely fails to analyze the affordability ofth e propose d above-the-floor requirements . • Whil e EPA' s analysi s coul d b e somewha t improve d b y correctly assumin g tha t th e affecte d source s ar

e merchant

rather tha n captive , CF

A nevertheles s believe s tha t EPA's EIA model

represents a

fundamentally inappropriate methodology fo r evaluatin g eco nomi c impact s fo

r th e composite s industr

y facilitie s facin g th e captur e an d contro l re quirement . EPA' s economi c mode l i s no t appropriat e fo r assessin g th e affordability ofth e control s • EPA' s modelin g approac h demand s avast amount of data o n ever y facilit y in th e indus tr y (e.g. , market

prices , supply functions) , virtuall y non e o f whic h EP A has . In th e ab senc e o f data , EP A make s unjustifie d and , w e believe , incorrec t assumptions . • Thi s mean s tha

t th e economi c impac t

estimate s generate d b y the mode l ar e nearl y en tirel y afunction ofth e chose n assumptions . Differen

t assumptions , whic h ar

e equall y or mor e plausible , woul d lea

d t o differen

t analytica l conclusions .

^P. 4 Composite s Fabricator s Associatio n - Januar y 31 , 200 2 EPA' s ow n data , subject t o rationa l analysis , sho w significan t affordability concern s • Usin g asimple

r analysi s tha

t doe s no t rel y o n unproven assumptions , EPA's own data sho w tha t th e facilitie s facing th e captur e an d contro l requirement

wil l incur amuch higher compliance cost

tha n th e remainder

ofth e industry , an

d woul d b e unabl e to re cove r thos e cost s through higher marke t prices. 4
• EPA' s datafurthe

r sugges t tha t complianc e cost s fo

r 95 % captur

e an d contro l wil l con sum e a n averag e oi 23 percent

of profits fo r th e affecte

d producers. 5

• Thi s degre e o

f impact pose s seriou s affordabilit

y concern s fo

r a n alread y lo w profitabilit

y industry , an

d a t leas t severa l ofth e facilitie s ar

e likely t o clos e rather

tha n comply wit

h th e captur e an d contro l requirement . Analysi s o

f 1 0 representative facilitie s show s tha t at leas t 6 wil l clos e rathe r tha n compl y • Stuar t Sessions , o f

Environomics , Inc. , ha s conducte d adetaile d affordabilit y analysi s fo

r 1 0 representativ e facilitie s tha t wil l b e subjec t

to the propose d captur

e an d contro l re quirement . Usin g financial dataprovide d b y each facility , Environomic s judge d whether eac h facilit

y wil l b e abl e to affor

d t o compl

y b y comparin g the projecte d complianc e cost s fo r the facilit y agains t measure s of

it s economi c strength . • Environomic s conclude d that at least 6 ofthe 10plants are more likely to close tha n t o pa y th e cost s of

captur e an d control , and th e requirement s woul d pos e significant affordabilit y concern s fo

r th e remainin g plants. 6 EP A shoul d develo p a n accurat e an d reliabl e estimat e o f affordability • EPA' s October , 200 1 EI A ma y lea d th e Agenc y to mistakenly believ e tha t th e propose d above-the-floor

95 % captur

e an d contro l requirement

wil l b e affordable . T o th e contrary , thi s requirement

wil l caus e mos t

ofth e affected facilitie s t o clos e rather tha n comply. 7
• To avoi d thi s tragi c an

d unlawful outcome , EP

A shoul d analyz e affordabilit y usin g bot

h accurat e dataan d amodel tha

t i s areasonabl e fit

fo r th e affected source s i

n thi s industry . • An y conclusion s drawn b y EP A mus t b e consistent

wit h the industr

y analysi s base d o

n actua l datafromthe 1 0 representativ e affected facilities . Th e detaile d dat asubmission s fromthe facilitie s an

d ou r analysi s o f

thi s dat ahav e been provide d t o EP A o n aCB I ba sis . 1 Propose d Augus t

2,200 1 (6 6 F

R40324) . 2 Th e propose d rul e als o require s large r new source s t o achiev e 95 % control . Ou r concer n tha t thi s requirement

i s base d o n source s that

ar e fundamentall

y dissimilar

t o mos t likel y ne w source s i s addresse d in our comments . 3 W e believ e tha

t the propose d approac h fail s severa l o f thes e tests ; se e the attache d Summar y o f Majo r Concerns . 4 CF A believe s tha

t EP A ha s bot h significantly overestimate d the degre e o f contro l tha

t coul d feasibly b e achieve d by composit

e manufacturers , an

d underestimate d th e cos t

o f achievin g suc

h control . CF

A estimate s tha

t 76 % cap ture an d contro l i s th e maximumtha t coul d practicall y b e achieve d (on average) . W e estimate tha

t thi s 76 % contro l wil l cos t 1.4 5 time s mor

e per uni t o f productio n tha

t wha t EP A estimate s 95 % capture an d contro l wil l cost . 5 Usin g wha

t w e believ e to b e ou

r mor e accurate dataon complianc e cost s an d produc t prices , w e estimate instea

d tha t th e propose d requirement

will consum

e adevastatin g 6 3 percen t

on averag e o f

thes e facilities ' profits . 6 Again , fo

r eac h plant in th e analysis , w e assum

e maximu mpractical contro l o f

76 % on average . Th e impac t o f EPA' s propose d requirement o f 95 % contro l woul d b e much greater . 7 Th e propose d 95 % contro l requirement wil l als o effectivel

y prevent th e constructio n o f

an y larger new plants . 

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