1

MEMORANDUM

DATE: D e c e m

b e r 1 1 , 2013

SUBJECT: Draft Economic Impact Analysis for the Proposed Amendments to the NESHAP

for Acrylic and Modacrylic Fibers P r o d u c t i o n , Polycarbonate P r o d u c t i o n , and

Amino/Phenolic Resins P r o d u c t i o n S o u r c e C a t e g o r i e s

FROM: Julia Gamas (AEG, HEID)

TO: Nick Parsons (RCG, SPPD)

This memorandum contains the economic impact analysis for the proposed amendments to the

National Emissions Standards for Hazardous Air Pollution ( NESHAP ) for Acrylic and

Modacrylic Fibers P r o d u c t i o n , Polycarbonate P r o d u c t i o n , and Amino/Phenolic Resins

P r o d u c t i o n

.

Economic Impact Analysis for the Proposed Acrylic and Modacrylic Fiber s P r o d u c t i o n , Polycarbonate P r o d u c t i o n , and A m i n o / P h e n o l i c R e s i n s NESHAP

The economic impact and small business analysis for this proposed rulemaking are reported in

this document. R i s k a n d tec hn ol ogy reviews are proposed for t h e following s o u r c e c a t e g o r i e s :

Acrylic and Modacrylic Fibers P r o d u c t i o n ( A M F ) , Polycarbonate P r o d u c t i o n ( P C ) , and

Amino / Phenolic Resins P r o d u c t i o n ( A P R ) . The rules are: NESHAP for Source Categories:

Generic Maximum Achievable Control Technology Standards ( 4 0 C F R p a r t 6 3

, s u b p a r t Y Y ) ;

a nd NESHAP: Manufacture of Amino/Phenolic Resins ( 4 0 C F R p a r t 6 3

, s u b p a r t O O O )

. Table 1

lists the industries affected by these rules and covered in this analysis. M ore in formation on the

proposed rules can be found in the preamble for this rulemaking.

Table 1. Industrial Source Categories Affected by this Proposed NESHAP Review

NAICS Code

2007/(2012) Category & Description Plants

325222/( 325220 ) Acrylic and Modacrylic Fibers and Filaments Manufacturing (AMF): Production

of either of the following synthetic fibers:

(i) Acrylic fiber.

(ii) Modacrylic fiber. 1

325211 /( 325211 ) Polycarbonate Resins Manufacturi ng 4

325211 /( 325211 ) Amino and Phenolic Resins Manufacturing 18

This document contains a screening analysis for these three industries. It is expected that the

economic and small business impact of the proposed standard will be small given that the total

capital costs of the rule review s are e stimated to be $1. 6 million 2012 dollars and the annualized

costs (annualized capital costs, operation and maintenance costs and labor expenses) are

e stimated to be $0. 5 million 2012 dollars. The rule will affect plants owned by large, mostly U.S.

o wned multinational companies with substantial annual revenues and extensive product mixes.

Therefore, we assume zero or very small impacts outside of the affected industries. No small

businesses will be affected by the rulemaking.2

A partial equilibrium ana lysis is deemed more than necessary given the expected size of the

impacts. Therefore, a screening analysis was conducted by calculating the percent of sales that

the annual costs of compliance represent. The annualized cost per sales estimated for a compa ny

represents the maximum price increase in affected product needed for the company to

completely recover the annualized costs imposed by the proposed regulation. The “sales test” is

the impact methodology t h e EPA employs in economic impact analysis such as th is one as

opposed to a “profits test”, in which annualized compliance costs are calculated as a share of

profits. 1 This is because revenues or sales data are commonly available data for entities normally

impacted by EPA regulations and profits data normall y made available are 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 le ss 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 of an analysis in compliance wit h 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 large, regulated compani es.

Table 2 shows the estimated annualized cost faced by each parent company in order to comply as

well as the percentage this cost represents from its total revenues. The percentages for all of the

in dustries are between 0% and 0. 1 1 %, and at an average o f 0.01 %.

None but one of the affected com panies are small businesses, and none of the parent companies

have an employee size below the small business size definition established by the Small Business

Administration (SBA) for their industries. For NAICS 325211, the small business size definition

is 750 employees or less; for NAI CS 325222, the definition is 1,000 employees or less. 2

Therefore there is no small business impact from these NESHAP rule reviews. For the

manufacture of Amino/Phenolic R esins, Emerald Performance Materials reported 750 employees

in 2012. However, the co mpliance costs represent 0.00% of its revenues and thus, there is no

significant impact on a substantial number of small entities.

1 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.

2 SBA small business size definitions are found at

http://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf . This is the small business size table as of

March 26, 2012. NAICS codes in this table reflect the 2007 NAICS version.3

Table 2. Economic Impacts to Parent Firms

Source Category Parent Company Number of

plants Parent Company

Revenues

(Thousand 2012

Dollars) Total Annualized Costs

for Affected Parent

Company (Thousand

2012 Dollars) Total

Annualized

Cost/Revenues

for Affected

Pare nt

Companies (%)

Acrylic and Modacrylic Fibers

(AMF) Cytec 1 $ 1,708,100.00 $ 10.80 0.00%

Polycarbonates Production

(PC) Bayer 1 $ 49,147,095.18 $ 14.93 0.00%

Dow Chemical Company 1 $ 56,786,000.00 $ 7.46 0.00%

General Electric 2 $ 147,359,000.00 $ 7.46 0.00%

Amino and Phenolic Resins

(APR) Dynea 1 $ 7,354.94 $ 8.32 0.11%

Emerald Performance Materials 1 $ 164,800.00 $ 8.32 0.01%

Ineos 1 $ 43,000,000.00 $ 8.32 0.00%

Koch Industries 6 $ 115,000,000.00 $ 220.60 0.00%

Momentive 1 $ 747,900.00 $ 8.32 0.00%

Nuplex Resins 1 $ 1,257,507.39 $ 8.32 0.00%

Panolam Industries International 2 $ 67,800.00 $ 16.64 0.02%

SI Group International 1 $ 492,600.00 $ 8.32 0.00%

Eastman 1 $ 1,950,000.00 $ 8.32 0.00%

Tembec 1 $ 1,601,923.08 $ 178.99 0.01%

3M 2 $ 29,904,000.00 $ 16.64 0.00%

Source: Plant and cost data: U.S. EPA ; Revenue data: Company Annual Reports , company website reported revenues and sales, and Hoovers company profiles.