1 Economic Impact Analysis for the prop osed Polyvinyl Chloride and Copolymer NESHAP
This report is the final economic impact anal ysis for the proposed Polyvinyl Chloride (PVC) and Copolymer NESHAP, which will be si gned 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 pr eamble 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 ch emical resins manufacturing). Most of these firms are multinational, and all of these fi rms 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 th e Small Business Administration (SBA) for this industry – 750 employees or less for a parent owner in the polyvi nyl chlorine resins manufacturing. 1 Thus, since there are no impacts on sma ll business as a result of this proposal, it follows that there is no significant economic im pact 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 redu ctions memo prepared for US EPA 2 , are in Table 1. The nationwide total annualized cost s 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 (o wner 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 Standa rds. 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 Qu ality 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 determ ining whether this rule is likely to impose a significant economic impact on affected businesses. The analysis employed he re is a “sales test” that computes the annualized compliance cost s as a share of sales for each company. The annualized cost per sales for a company repres ents the maximum price increase in affected product needed for the company to completely recover the an nualized costs imposed by the proposed regulation.
The “sales test” is the impact methodology EP A 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 regula tions and profits data normally made available is often not the true profits ear ned by firms due to accounting and tax considerations. Firms and entities often have ways legally available in the tax code to minimize thei r 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, a nd a number of the companies are multinational in corporate scope and are headquartered outside th e 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 Paren t 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 $54.49 a 0.00061 Dow $759,969 $53.67 b 0.0014 Formosa Plastics Group (owner of Formosa Chemicals) $3,717,432 $55.09 c

0.0067 Georgia Gulf $5,153,897 $2.82 d 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/docum ents/rfaguidance11-00-06.pdf , pp. 32-33.3 Occidental Petroleum (owner of OxyVinyls) $2,485,213 $19.05 e 0.013 PolyOne $633,877 $2.61 f 0.024 Shin-Etsu Group (owner of Shintech) $3,341,325 $9.86 g 0.034 Westlake Chemical $3,241,273 $3.21 h 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/financia l/pdfs/annual-report-2010.pdf

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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

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

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e Revenue estimate found on Occidental Petroleum’s web page at http://www.oxy.com/InvestorRelations/C ompanyProfile/Pages/AtaGlance.aspx

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f Revenue estimate found at Plastics Today web site on Apri l 7, 2011 from article, “Record results for plastics, PolyOne, ExxonMobil, Dow, and Eastman.” Found on the Internet at http://www.plasticstoda y.com/articles/recordresults-plastics-polyone- exxonmobil-dow-and-eastman

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

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On a firm by firm basis, the results show th at no parent owner aff ected 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 comp liance costs of more than 0.2 percent of its sales.
It should be noted that this analysis does not presume any inciden ce 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 intermed iate or end-use, is in cluded 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 th at was prepared by U.S. EPA for the proposed rule and in that memorandum can be found more information on the cost analysis.