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October 27, 2011

Sent via Electronic Mail

Ms. Jodi Howard

U.S. EPA - Office of Air Quality Planning and Standards 

Sector Policies and Program Divisions 

Refining and Chemicals Group 

Mail Code: E143-01 

Research Triangle Park, NC 27711

RE: Vinyl Institute Estimate of Direct Economic Impact on PVC Industry from EPA’s 

Proposed PVC MACT – EPA-HQ-OAR-2002-0037

Dear Ms. Howard:

This letter and the enclosed attachment further supplement the comments of The Vinyl Institute 

PVC MACT Working Group1concerning the proposed PVC MACT rule. The Working Group 

expressed significant concerns that, if finalized as proposed, the PVC MACT would impose 

limits for stripped resins that no PVC producer could meet on a consistent basis, requiring either 

significant reformulation or loss of a significant number of resin products. 

The Working Group, allied organizations, and industry producers submitted extensive 

comments on the technical aspects of the rule. Because of the limited comment period, we 

chose to focus on the technical aspects of the rule rather than the economic impact, which we 

had planned to address fully if given more time. Industry did submit preliminary economic 

impact data, but believes further consideration is required given the magnitude of the economic 

impact and commercial disruption that would be created by the proposed rule. 

EPA estimated the costs for resin producers to meet the proposed limits, but the Agency 

substantially underestimated costs because it assumed that the proposed resin limits could be 

easily met through modest process changes, such as simply using additional steam during 

stripping. EPA did not consider the shutdown and resin replacement costs for the dispersion, 

blending, and specialty resin categories, or the potential costs and other impacts on 

 

1

See Comments of The Vinyl Institute, Inc. PVC MACT Working Group, Document No. EPA-HQ-OAR-2002-0037-

0146, at 4-6.
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downstream users of all PVC resins. This letter quantifies in more detail the overall impact on 

the entire PVC industry if the proposed rule were to be promulgated as EPA has drafted. 

We have taken a very conservative approach in making these economic projections. For 

example, we assumed, despite considerable disagreement within the industry, that all 

suspension resins can be reformulated, tested by customers and proven suitable during the 

three-year implementation period after the final rule is promulgated. Even if the capital 

improvements to retrofit the existing facilities (estimated at $127 million in Appendix A and as 

outlined in the Working Group comments) are implemented at the resin producers, it is highly 

uncertain that industry can be in compliance 100% of the time with EPA’s proposed RVCM 

limits on stripped resins and even more uncertain that today’s family of suspension resin 

products can continue to be produced domestically. The manufacture of dispersion resin 

products would completely end in the U.S. through plant closures if the rule is promulgated as 

proposed, and that is reflected in this estimate. 

The economic impact should be considered from at least two perspectives. First, one-time 

costs to the industry amounting to $200 million would include:

 retrofitting plants to meet the new limits, 

 closure of dispersion, blending and specialty resin plants where no technology exists 

to meet the proposed limits, 

 costs of users to carry inventory for foreign sourced replacement resins, 

 costs to reformulate resin recipes, 

 processor tooling adjustments, and 

 costs to re-list and re-qualify recipes and products with appropriate standards 

agencies and certifying organizations. 

Second, on-going costs to the industry amounting to $130 million annually would include higher 

operating expenses at resin plants, added costs to deliver foreign sourced resins to replace 

those that will need to be discontinued, and increased ingredient costs to compensate for poorer 

quality resin that will likely be produced under the new proposed limits. These cost estimates 

and their derivation are delineated in the attached Appendix A. 

Please note these are preliminary direct costs only and do not include indirect and induced 

costs. Those will be included in a forthcoming IHS Global Insights economic impact study, 

which will provide expert, third party conclusions on the economic impact of the proposed PVC 
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MACT rule.2 While the Vinyl Institute does not know the projections IHS Global Insights is 

developing, we expect that the overall impact, using EPA methodology, will be far in excess of 

the projections in this letter. We further emphasize that industry’s estimates assume that 

reformulating is possible and that additive ingredients are capable of correcting the unknown 

deficiencies associated with aggressively steam-stripped resins or of foreign sourced resins. 

Our calculations do not address the impact of reduced raw material consumption (vinyl chloride) 

and the associated impact on the upstream suppliers from diminished sales as a result of the 

aforementioned plant closures. It is not possible to consider all the variations in resin quality 

and types of resins available that will be discontinued if the Agency’s rule is promulgated as 

proposed, and, as such, this estimate should be considered as being highly or excessively 

conservative.

The limits for new sources would be so low as to make it impossible for any new PVC resin 

facility to be constructed within the U.S. An estimate of lost future growth revenue from new 

plants is not included in this letter’s estimate. It is, nonetheless, an important economic 

consideration because the U.S. industry is a large exporter and exports have been increasing. 

We estimate that a PVC MACT promulgated as proposed would cause the loss of at least 500 

jobs including operational, contract maintenance and services, and administrative functions as a 

result of the closure of all plants making dispersion, blending and specialty resins. The 

proposed stripped resin limits for dispersion, blending, and specialty resins are unachievable 

using any known technology. The closure of these facilities would force the customer base to 

source the resin from foreign producers. Under this scenario, small to mid-sized dispersion 

resin consumers may not be successful in obtaining a foreign supplier, possibly forcing their 

shutdown. In addition, a certain number of downstream resin consumers may be impacted 

because of loss of market share due to inability to make quality products with foreign sourced 

resins or the discontinuation of a specialty grade resin that is unique to a U.S. PVC producer; 

these indirect job losses are difficult to determine and are not included in this estimate. 

An overarching consideration is our assumption that all suspension resins can be successfully 

reformulated. If that assumption is incorrect, a significant number of additional jobs would be at 

risk at the resin producer and resin converter level as well as the corresponding downstream 

 

2

Recognizing that the Agency may be constrained by its rulemaking schedule, we also are providing a copy of this 

analysis and the IHS study, when available, to the Office of Information and Regulatory Affairs (OIRA) in order to 

inform OIRA’s review of the proposed PVC MACT pursuant to E.O. 12866, Regulatory Planning and Review.
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jobs linked to direct job lost. Because suspension resin converters operate in most States, the 

potential geographically broad job loss across the U.S. is significant.

While the IHS Global Insights report will provide a more robust analysis, if you have any 

immediate question, please feel free to contact me. 

Sincerely, 

Richard P. Krock

Technical Director

e-mail: rkrock@vinylinfo.org

phone: 571-970-3392

cell: 571-216-4474

cc: Peter Tsirigotis

Penny Lassiter

Richard M. Doyle (Vinyl Institute)
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Appendix A: Estimate of Economic Impacts of Proposed PVC MACT Rule

Industry Segment

PVC Resin 

Producers, not 

including dispersion 

and 

specialty(1),(2),(3)

PVC Dispersion, 

Blending, and 

Specialty Resin 

Producers (4)

PVC 

Compounders, 

Processors and 

Finished Goods 

Manufacturers (4)

Subtotals

Capital Costs To Retrofit 

Existing Facilities, $MM $127 N.A. N.A. $127 

Shutdown Costs, $MM $0 $30 $0 $30 

Costs to Reformulate with 

Different Resins and 

Re-qualify Products, $MM N.A. $1 $30 $31 

Incremental Inventory Costs 

for Import Replacements of 

Discontinued Resins, $MM N.A. N.A. $12 $12 

Total One Time Costs by 

Segment, $MM $127 $31 $43 $200 

Annual On-going Operating 

Costs, Testing, and 

Reporting, $MM $38 N.A. $50 $88 

Annual Costs to Import 

Replacements for 

Discontinued Resins, $MM N.A. N.A. $42 $42 

Total On-going Costs by 

Segment, $MM/Yr. $38 $0 $92 $130 

Estimated Jobs Lost Due 

to Plant Closures N.A. 500 N.A. 500 

Notes:

(4) Based on VI and Industry Estimate

Overall Economic Impact on PVC Industry for EPA's Proposed PVC MACT

(1) Capital Costs and Annual operating costs are based on information in 

URS July 29, 2011 Memorandum to R. Krock

(2) Capital and annual costs for new strippers at dispersion facilities have 

been excluded

(3) Testing, Monitoring and reporting costs have been extracted from 

EPA-HQ-OAR-2002-0037-114.2
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The specific costs have been broken out for three segments of the industry in order to illustrate 

the widespread effect of the proposed rule:

A. PVC Resin Producers – includes U.S. domestic producers of types and grades of PVC 

resins other than dispersion and specialty resins. Annual production of 14 billion 

pounds from calendar 2010 is used as the basis for calculations. 

B. PVC Dispersion, Blending, and Specialty Resin Producers – includes only those 

producers of dispersion, blending, and specialty resins, including copolymers. Annual 

production of 3% of total PVC resin or 420 million pounds is used as the basis for 

calculations. 

C. Rigid PVC Compounders, Processors and Finished Goods Manufacturers – includes 

those companies that compound PVC resin, and either sell merchant compounds or use 

the compounds to manufacture finished goods such as pipe, siding, flooring, windows, 

doors, fence, decking, electrical conduit, wiring devices, and packaging. This segment is 

estimated to process 10 billion pounds of PVC compounds and the resin portion is 

estimated to be 80% of the total compound weight. 

One-time costs have been identified for each of these factors:

1) Capital Costs To Retrofit Existing Facilities – the information for this estimate restates the 

estimates by URS and submitted with VI’s comments as Attachment 63but excludes any 

costs associated with retrofits to dispersion and specialty blending plants. Also included are 

costs associated with indicators and alarms for PRDs estimated to be $3.5 million4.

 

3

See Comments of The Vinyl Institute, Inc. PVC MACT Working Group, Document No. EPA-HQ-OAR-2002-0037-

0146, at Attachment 6, URS Memorandum to Richard Krock from John Martinez, Subject: Summary of Cost Review 

for Controls for Compliance With EPA’s Proposed PVC MACT Rule (40 CFR Part 63, Subpart HHHHHHH). 

4

See Comments of The Vinyl Institute, Inc. PVC MACT Working Group, Document No. EPA-HQ-OAR-2002-0037-

0146, at p. 97.
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2) Shutdown Costs – Estimates were completed by VI for costs associated with shutting down 

the existing dispersion, blending, and specialty resin producing plants. Costs included 

mothballing (not disposing) of all on-site equipment, disposing of chemicals and raw 

materials inventories, and employee severance packages. This cost could be considerably 

higher if write-down of assets are included and if the extent of the inability to produce proper 

grade resins that meet the proposed RVCM and HAPs limits is found to go beyond the 

dispersion, blending, and specialty resin facilities. 

3) Costs to Reformulate with Different Resins and Re-qualify Products – It is the belief of PVC 

industry experts that meeting the proposed lower RVCM limits will require longer residence 

times and/or hotter temperatures in the resin stripper, each of which will have a detrimental 

effect on the quality of the PVC resin. Even with the retrofits in place as estimated under 

capital costs item, the resin will still be of poorer quality than that produced before 

promulgation of the new rule. Estimates were completed by the PVC industry to attempt to 

compensate for poorer quality PVC resins (reduced stability and off-color resins) by 

adjusting rigid PVC compound recipes with added stabilizers, pigments, lubricants, process 

aids, and other ingredients needed to be able to process the new formulation. Costs were 

estimated in three manners:

a) First, those costs necessary to reformulate would include chemists’ time to reformulate, 

laboratory experiments, material and shipping costs, compound plant trials on 

developmental recipes, and trials with developmental compounds at processors 

(molders, and extruders). 

b) Second, any change in the compound may require the tools used to process the material 

to either be retuned or replaced if tooling changes are impractical5. 

c) Third, those costs are identified to re-qualify compound recipes in the product at listing 

agencies that require performance standards and recipe component verifications such 

as UL, NSF, and ASTM as detailed in VI’s comments6. 

 

5

See Comments of The Vinyl Institute, Inc. PVC MACT Working Group, Document No. EPA-HQ-OAR-2002-0037-

0146, at p. 9.

6

See Comments of The Vinyl Institute, Inc. PVC MACT Working Group, Document No. EPA-HQ-OAR-2002-

0037-0146, at Attachment 1, Technical Impacts of PVC MACT Comments on Change in Resin

Properties Affecting Downstream Users, Dated July 21, 2011.
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4) Incremental Inventory Costs for Import Replacements of Discontinued Resins – Costs 

associated with carrying two weeks additional inventory on site and in-transit from offshore 

producers that replace dispersion, blending, and specialty resins made at the shutdown 

plants. 

On-going costs have been identified for each of these factors:

5) Annual On-going Operating Expenses, Testing, and Reporting –

a) For PVC Resin Producers other than Dispersion, Blending, and Specialty Resins -

Testing and reporting expenses are extracted from EPA’s estimate for PVC producers7

excluding those estimated by EPA for dispersion, blending, and specialty resin plants. 

Additional testing and monitoring expenses for required CEMS devices at PVC resin 

plants, operating expenses of additional resin and wastewater steam strippers, and 

updated operated expenses for activated carbon injection for control devices are taken 

from the previously referenced URS estimates8.

b) For PVC Compounders, Processors and Finished Goods Manufacturers - Includes costs 

for additional recipe ingredients such as stabilizers, pigments, process aids, and 

lubricants for new formulations needed to compensate for poorer quality PVC resins. 

PVC processors are estimated to consume 10 billion pounds of PVC compounds 

annually. This cost estimate assumes that reformulation can successfully compensate 

for the quality parameters of resins likely to be produced under the proposed rule. 

6) Costs to Import Replacements for Discontinued Resins – includes inland and ocean freight, 

import duties, and sales commissions to source offshore dispersion, blending, and specialty 

resins. This cost assumes that foreign source resins are available to replace those 

discontinued at the affected U.S. facilities. Some U.S. resin producers make unique resins 

and those users of the unique resins must either substitute a different grade or stop making 

the products that use the U.S. producers’ unique grades. 

 

7

See EPA-HQ-OAR-2002-0037-114.2 EPA Polyvinyl Chloride and Copolymers Production Testing and Monitoring 

Cost Estimates, April 11, 2011, at PVC Industry T&M Costs tab.

8

See footnote 2.