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Economic Impact Analysis for the proposed Polyvinyl Chloride and Copolymer 

NESHAP 

This report is the final economic impact analysis for the proposed Polyvinyl Chloride 

(PVC) and Copolymer NESHAP, which will be signed as per a court-ordered schedule on April 

15, 2011. Implementation of the proposed rule is required by 3 years after promulgation of the 

final rule. The proposed standard is the MACT floor of control for each source type controlled. 

Details on the proposed rule can be found in the preamble contained in the public docket for this 

rulemaking. 

There are eight major chemical companies affected by the proposed rule. These chemical 

companies are found in NAICS 325211 (Polyvinyl chemical resins manufacturing). Most of 

these firms are multinational, and all of these firms have annual revenues above $2 billion for the 

last full year reported (2010). All of these firms have more than 1,500 employees, so none of 

these firms are a small business as defined by the Small Business Administration (SBA) for this 

industry – 750 employees or less for a parent owner in the polyvinyl chlorine resins 

manufacturing.1

 Thus, since there are no impacts on small business as a result of this proposal, it 

follows that there is no significant economic impact on a substantial number of small entities 

(SISNOSE) as a result of this rule. 

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

taken from the cost and emission reductions memo prepared for US EPA2, are in Table 1. The 

nationwide total annualized costs of this rule are $19.7 million. All costs are in 2010 dollars. 

Table 1. TAC for Each Parent Owner 

Parent Owner and Subsidiary Total Annualized Costs per Parent Owner 

Saint-Gobain (owner of Certain Teed) $332,351 

Dow $759,969 

Formosa Plastics Group (owner of Formosa 

Chemicals) 

$3,717,432 

Georgia Gulf $5,153,897 

Occidental Petroleum (owner of OxyVinyls) $2,485,213 

PolyOne $633,877 

Shin-Etsu Group (owner of Shintech) $3,341,325 

Westlake Chemical $3,241,273 

Total: $19,663,335 

 

                                                           

1

 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. 2

 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 Polyvinyl Chloride and Copolymers (PVC) Production 

Source Category.” Prepared by ERG, Inc. for Jodi Howard, U.S. Environmental Protection Agency, Office of Air 

Quality Planning and Standards. April 11, 2011. 
2

 

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 

product needed for the company to completely recover the annualized costs imposed by the 

proposed 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.3

 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. 

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 owner, and a number of the companies are multinational in 

corporate scope and are headquartered outside the U.S. Revenues are for 2010 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 Polyvinyl Chloride NESHAP 

Parent Owner and 

Subsidiary 

Total Annualized 

Costs per Parent 

Owner 

Total Revenues in 

2010 per Parent 

Owner (billions US 

dollars) 

Annualized Costs 

per Revenues for 

Each Parent Owner 

(in %) 

Saint-Gobain (owner of 

Certain Teed) 

 $332,351 $54.49a 

0.00061 

Dow $759,969 $53.67b 0.0014

Formosa Plastics Group 

(owner of Formosa 

Chemicals) 

$3,717,432 $55.09c

0.0067

Georgia Gulf $5,153,897 $2.82d 0.183

                                                           

3

 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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Occidental Petroleum 

(owner of OxyVinyls) 

$2,485,213 $19.05e

0.013

PolyOne $633,877 $2.61f 0.024

Shin-Etsu Group (owner of 

Shintech) 

$3,341,325 $9.86g

0.034

Westlake Chemical $3,241,273 $3.21h 0.101 a Revenue estimate found at Industry Week, 

http://www.industryweek.com/research/iw1000/2010/iw1000Company.asp?Input=59. Estimate is for Compaigne 

de Saint-Gobain. 

b Revenue estimate found in Dow Chemical Company’s 2010 Annual Report, p. B3. Found at 

http://www.dow.com/financial/pdfs/annual-report-2010.pdf. 

c Revenue estimate found in financial highlights of Formosa Plastics Group’s 2009 Annual Report, which is 

available at http://www.fpg.com/tw/html/eng/annu.asp. 

d

Revenue estimate found on Georgia Gulf’s home web page: http://www.ggc.com. 

e

Revenue estimate found on Occidental Petroleum’s web page at 

http://www.oxy.com/InvestorRelations/CompanyProfile/Pages/AtaGlance.aspx. 

f

Revenue estimate found at Plastics Today web site on April 7, 2011 from article, “Record results for plastics, 

PolyOne, ExxonMobil, Dow, and Eastman.” Found on the Internet at http://www.plasticstoday.com/articles/recordresults-plastics-polyone-exxonmobil-dow-and-eastman. 

g

 Revenue estimate found at Shin-Etsu Group web site (http://www.shin-etsu.jp.com ). Converted from revenue 

estimate in yen using 93 yen = $1, the rate of exchange on March 31, 2010. The conversion is found in the ShinEtsu annual report (p.2). 

h

 Revenue estimate found on Westlake Chemical’s web site at http://www.westlakechemical.com. 

On a firm by firm basis, the results show that no parent owner affected by this proposed 

rule will experience an annualized compliance cost of more than 1 percent of its sales; in fact, 

none of these firms will experience annualized compliance costs of more than 0.2 percent of its 

sales. 

It should be noted that this analysis does not presume any incidence of the costs on the 

consumers of PVC and other products made by these companies. Thus, no estimate of the 

impact of this rule on PVC consumers, for intermediate or end-use, is included in this report. 

However, the direct impact of this proposed rule appears quite minor, and thus it is reasonable to 

infer that the impact on PVC 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 proposed 

rule and in that memorandum can be found more information on the cost analysis.