Date: April 28, 2010

Subject: Minutes of the April 20, 2010 SBREFA Pre-Panel Outreach Meeting for the Brick and Structural Clay Products Industry Standards Development for Brick, Structural Clay, and Clay Ceramics Manufacturing EPA Contract No. EP-D-06-118; EPA Work Assignment No. 4-7 RTI Project No. 0210426.004.007

From: Richard Marinshaw Thomas Holloway

To: Jeffrey Telander OAQPS/SPPD/MMG (D243-02) U.S. Environmental Protection Agency Research Triangle Park, NC 27711

I. Introduction

A Small Business Regulatory Enforcement Fairness Act (SBREFA) pre-panel outreach meeting with potential small entity representatives (SERs) of the brick and structural clay products (BSCP) industry was held at the U.S. Environmen tal Protection Agency (EPA), East Building, in Washington, DC, on April 20, 2010. The purpose of the meeting was to get initial feedback from potential small entity representatives (SERs) on the impacts that the national emission standards for hazardous air pollutants (NESHAP) for the BS CP industry may have on small entities. This memorandum summarizes the major t opics discussed during the meeting.

II. Attendees

Alexander Cristofaro, SBAR Chair Jeff Telander, Workgroup Chair Scott Jordan, OGC Joan Rogers, OSBP Charley Maresca, SBA Joseph Johnson, SBA Keith Holman, SBA Paula Vanlare, OPEI Tom Walton, OAQPS (on phone) Cortney_Higgins, OMB (on phone) Thomas Holloway, RTI International (by telephone) Richard Marinshaw, RTI In ternational (by telephone)2 Susan Miller, Brick Industry Association Barry Miller, Redland Brick John Miller, Lee Brick and Tile John Burns, Whitacre Greer Terry Schimmel, Boral Bricks, Inc. (helper SER to Lee Brick) Davis Henry, Henry Brick Butch “Creighton” McAvoy, McAvoy Co. Harold Newman, Pine Hall Brick Co. Inc. Don Sult, Continental Brick Lance Jackson, Mutual Materials (on phone) Victor Shive, States ville Brick (on phone) Don Belcher, Elgin Butler Company (on phone) Steven Gerhart, Sioux City Brick and Tile Company (on phone) Richard Cunningham, Cunningham Brick Co, inc. (on phone) Carol Conley, Cherokee Brick and Tile (on phone) Brian Sims, Jenkins Brick (on phone) Ed Thebaud, Columbus Brick (on phone) Bob Harstock, Commercial Brick Corp. (on phone)

III. Discussion

Following introductions, Mr. Cristofaro, the m eeting chair, started the meeting by noting that, under SBREFA, EPA is required by Congress to convene a panel of representatives from the Small Business Administration (SBA), the Office of Management and Budget (OMB), EPA, and SERs from the regulated industry if a rulemaking has the potential to have a significant impact on a substantial number of small entities. Based on the findings by the panel, the EPA is directed to take whatever measures are appropriate to minimize the burden on small entities. Mr. Cristofaro

also noted that the invitees to this informal meeting from the BS CP industry were potential SERs and all of them may not be select ed for participation on the SBREFA panel. However, even if not selected for the SBREFA panel, the attende es can all provide input by submitting public comments on the rule once it has been proposed.

Mr. Telander gave a presentation on the bac kground and regulatory history of the BSCP NESHAP, number of small entities likely to be affected by the rule, current status of the rulemaking, and possible regulatory fl exibility options for small entit ies. The presentation slides are included as Attachment 1. Following Mr. Te lander’s presentation, the floor was opened up for

discussion. The main issues discussed ar e described in the following paragraphs.

To open the discussion, Ms. Mill er, a representative of th e Brick Industry Association (BIA), made the following points:

 The industry disagrees with the inclusion of synthetic area sources in the calculation of the maximum achievable control technology (MAC T) floors. She pointed out that, by definition, area sources are not included in the category and, therefore, cannot be3 considered when determining MACT floors. Including emissions data for synthetic

area sources in the floor calculation would re sult in an emissions limit that is much more stringent than would be the case if s ynthetic area sources were excluded from the

MACT floor determination.

 According to the information provided by EP A, the NESHAP would cost an estimated $188 million per year. However, the BSCP industry’s revenues in 2009 were only $750 million; even in a good year, total reve nues for the industry are only $2.2 billion.

 There is concern over EPA’s practice of setting MACT floors for each hazardous air pollutant (HAP) individually, rather than a floor for combined HAP (e.g., a floor for acid gases, rather than sepa rate floors for hydrogen fluoride [HF] and hydrochloric acid [HCl]).

 When the vacated NESHAP was promulgated, only about 5.9 percent of the approximately 300 tunnel kilns in the BSPC i ndustry were controlled. However, as a result of the NESHAP, about 33 percent of tunnel kilns are currently controlled. Basing the MACT floor on current kiln cont rols would essentia lly constitute MACTon-MACT and would result in a much more st ringent standard than would have been

set based on the kilns that were contro lled when the NESHAP was first proposed.

 There is a need to subcategorize by kiln si ze because a much lower percentage of small kilns are controlled. However, the 10 ton per hour (tph) cutoff us ed in the original NESHAP may not be the appropriate size cutoff.

Following Ms. Miller’s presen tation, representatives of indi vidual BSCP companies that

are small businesses described the situation for their companies and their concerns about the impact that the NESHAP would have. The first i ndustry representative noted that one of his plants has only 30 to 35 employees and said that the NE SHAP would have far greater impacts on such small plants. The cost to retrofit a dry injecti on fabric filter (DIFF) would be $1.1 to $1.5 million, but annual revenues for the plant are only about $10 million. The NESHAP could force the company to shut down the plant. Some of the employees have worked for 30 to 40 years, have only high school educations, no other marketable skills, and are older. As a result, it would be very difficult for them to find other employment . He also pointed out that the environmental benefits of regulating small kilns would be margin al compared to the cost s; he suggested that small kilns be exempt from the rule.

The EPA clarified that exempting kilns is not an option because the courts have ruled that

EPA must set numerical emission limits for all s ources within the source category. However, a separate emissions limit could be established fo r small kilns if there is a technical basis for subcategorizing by kiln size.

A second industry representative described the situation with his company, which is a family-owned business with a total of about 70 positions (jobs). The plant operates two small tunnel kilns, one of which is opera ting at about 60 percent capacity, and the other is currently shut down. Most employees are not working full time because of the downturn in the economy. He pointed out that, even in good times, the company c ould not afford to insta ll a new control device

on the kilns. As an indication of the current situation with the i ndustry, he pointed out that in the area around Sanford, North Ca rolina, there were 15 brick tunnel kilns in operation 5 years ago, but currently there are only 7 kiln s operating in the Sanford area.4 A third industry representativ e discussed the operation of dr y limestone adsorbers (DLAs) and the feasibility of retrofitting DLAs with DIFFs . He said that retrofitting a DIFF would force at least one of his company’s pl ants to close. Because of th e economy, they currently have one plant open, with the other four just restarting. He noted th at a DLA costs about $1 million, whereas a DIFF costs about $2 million. He had no id ea what it would cost to retrofit a DIFF on a kiln because he never thought he would have to do that. Furthermore, his company does not have the resources to pay for a retrofit. Most of his company’s employees have recently had to take pay cuts in order to keep their jobs. Regarding DLA operation, he pointed out that DLAs are very effective in controlling emissions and require much less maintenance than do DIFFs. Contrary to what EPA has indicated, DLAs control particulat e matter (PM) emissions. He also noted that DLAs are used extensively in Europe to control PM and other pollutants. DLAs are the preferred control device for reducing emissions of HF and HCl; DIFFs are designed primarily for controlling sulfur dioxide (SO 2 ) and other sulfur compounds.

The EPA clarified that the NESH AP would not prescribe which control device to use. The

rule would establish numerical emission limits. Although EPA has used DIFFs as the basis for estimating the costs of the rule, companies could use whatever control method they choose to meet

the emission limits.

Ms. Miller pointed out that HCl is the weakne ss of the DLA; that is, DLAs do not achieve good control of HCl emissions. However, wh en evaluating emission controls, EPA should consider overall performance on a long-term ba sis. She noted that DIFFs achieve very good instantaneous control, but have considerably more downtim e than do DLAs. Therefore, on an overall annual basis, DIFFs and DLAs are equivalent . She also noted that the incremental cost of

a DIFF over a DLA would be about $100,000 per ton of HAP removed.

Ms. Miller also pointed out th at if EPA were to establish a standard for combined HAP (HF and HCl), more plants with DLAs could meet the limit with their current controls. She noted that gaseous HAP account for more than 99 percent of total HAP emitted from a brick kiln. She pointed out that many coatings NESHAP have established emission limits for combined HAP.

The EPA noted that establishing a standard fo r combined HAP would be appropriate if it can be assumed that all HAPs are equally important . However, that may not be the case for the BSCP industry.

One industry representative stated that his company installed tw o DLAs to comply with the now vacated NESHAP. He stated that they tried to play by the rules and do the right thing. He believes that DLAs are good controls, and he hopes that his company will be allowed to continue using them to meet the emission limits.

A question was asked about the typical lifetim e of a DLA. One i ndustry representative responded that they installed one 15 years ago, a nd it is still in operation. He added that DLAs cost much less to operate than do DIFFs, whic h require more energy and have higher reagent

costs.5 One member of the panel challenged the potential SERs to identify options for subcategorization that could reduce the impact on small entities. However, any such options would have to conform with the provisions of th e Clean Air Act. The EPA clarified that there would need to be a technological basis for any subcategories; EPA could not subcategorize based simply upon the estimated economic impacts of the rule.

There was a brief discussion about the health effects of emissions from BSCP plants and the possibility of EPA consideri ng section 112(d)(4) of the Clean Air Act, which allows EPA to

establish standards based on health threshold levels . One industry representative stated that he saw no evidence that emissions from BSCP plants ha rm the environment. He noted that the areas around his plants are pristine.

To close the meeting, the chair explained that the next step would be to make a decision on the SERs, then schedule the first formal meeti ng of the panel, which would likely occur in September or October of this year. A member of the panel stated that, in the interim, pertinent materials from other rules (e.g., Portland Cement) c ould be sent out to the industry representatives for their review. One industry representative su ggested that the panel have another informal meeting before the start of the formal SBREFA panel meetings. The EPA noted that additional

emissions data and other information are needed be fore there could be any detailed discussion of subcategorization or other options for reducing the impacts on small entities.

IV. Action Items

At the close of the meeting, the fo llowing action items were discussed:

 The SERs would review the list of plants indicated in the presentation by EPA and inform EPA of any changes needed.

 Representatives from the SBA, OMB, a nd EPA would confer about the need for another informal meeting and would notify the SERs accordingly.

 Representatives from EPA would provide pertinent materials from other rules (e.g., Portland Cement) at the request of industry representatives.